Document:

Exhibit 10.3

PLIANT CORPORATION

2006 RESTRICTED STOCK INCENTIVE
PLAN

1.                 PURPOSE OF PLAN

The purpose of the Pliant Corporation 2006 Restricted
Stock Incentive Plan (this “Plan”) is to promote the success of Pliant
Corporation (the “Corporation”) and to increase stockholder value by
providing an additional means, through the grant of the right to acquire shares
of the Corporation’s Series M Redeemable Preferred Stock, no par value per
share (the “Restricted Stock” or the “Series M Preferred”), to
attract, motivate, retain and reward selected employees of the Corporation.

2.                 ELIGIBILITY

The Administrator (as such term is defined in Section
3.1) may grant the right to acquire Restricted Stock under this Plan (a “Restricted
Stock Award”) only to those persons that the Administrator determines to be
Eligible Persons. An “Eligible Person” is any person who is an officer
(whether or not a director), employee, consultant, advisor, agent or
representative of the Corporation or any of its Subsidiaries employed in such capacity
on the date such Restricted Stock is granted and is designated an “Eligible
Person” by the Administrator. An Eligible Person who has been granted a
Restricted Stock Award (a “participant”) may, if otherwise eligible, be
granted the right to purchase additional shares of Restricted Stock if the
Administrator shall so determine.

3.                 PLAN
ADMINISTRATION

3.1                               The Administrator. This
Plan shall be administered by, and all Restricted Stock Awards awarded under
this Plan shall be authorized by, the Administrator. The “Administrator”
means the Board of Directors of the Corporation (the “Board”) or one or
more committees appointed by the Board to administer all or certain aspects of
this Plan. Any such committee shall be comprised solely of two or more directors
who are not Eligible Persons or such number of directors who are not Eligible
Persons as may be required under applicable law and the Corporation’s Bylaws.

3.2                               Powers of the Administrator.
Subject to the express provisions of this Plan and any limitations contained in
a Restricted Stock Agreement (a “Restricted Stock Agreement”) entered
into by the participant, the Administrator is authorized and empowered to do
all things necessary or desirable in connection with the authorization of
shares of Restricted Stock and the administration of this Plan (in the case of
a committee, within the authority delegated to that committee, including,
without limitation, the authority to:

 

(a)                                  determine
eligibility and, from among those persons determined to be eligible, the
particular Eligible Persons who will receive a Restricted Stock Award under
this Plan;

(b)                                 grant
Restricted Stock Awards to Eligible Persons, determine the price at which
shares of Restricted Stock will be offered or awarded and the number of shares
of Restricted Stock to be awarded to any of such Eligible Persons, determine
the other specific terms and conditions of such Restricted Stock consistent
with the express limits of this Plan, establish the installments or terms (if
any) in which such shares of Restricted Stock shall vest (which may include,
without limitation, performance and/or time-based criteria), or determine that
no vesting is required, establish any applicable performance targets, and
establish the events of termination or reversion of such Restricted Stock;

(c)                                  approve
the forms of Restricted Stock Agreements, which need not be identical among
participants;

(d)                                 construe
and interpret this Plan and any agreements defining the rights and obligations
of the Corporation and participants under this Plan, further define the terms
used in this Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the Restricted Stock granted
under this Plan;

(e)                                  cancel,
modify, or waive the Corporation’s rights with respect to, or modify,
discontinue, suspend, or terminate any or all outstanding shares of Restricted
Stock;

(f)                                    accelerate
or extend the vesting of any or all outstanding shares of Restricted Stock in
such circumstances as the Administrator may deem appropriate (including,
without limitation, in connection with a termination of employment or services
or other events of a personal nature);

(g)                                 adjust
the number of shares of Restricted Stock subject to any Restricted Stock Award,
adjust the price of any or all outstanding shares of Restricted Stock or
otherwise change previously imposed terms and conditions, in such circumstances
as the Administrator may deem appropriate, in each case subject to Sections 4
and 8.6.2;

(h)                                 determine
the date of grant of a Restricted Stock Award;

(i)                                     determine
whether, and the extent to which, adjustments are required pursuant to Section
7 hereof and authorize the termination, conversion, substitution or succession
of shares of Restricted Stock upon the occurrence of an event of the type
described in Section 7;

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(j)                                     acquire
or settle (subject to Sections 7 and 8.6.2) rights under Restricted Stock in
cash, stock of equivalent value, or other consideration; and

(k)                                  determine
the fair market value of the shares of Restricted Stock awarded under this Plan
from time to time and/or the manner in which such value will be determined and
make all other elections or determinations under this Plan and under any
Restricted Stock Agreement.

3.3                               Binding Determinations.
Any action taken by, or inaction of, the Corporation or the Administrator
relating or pursuant to this Plan and within its authority hereunder or under
applicable law shall be within the absolute discretion of that entity or body
and shall be conclusive and binding upon all persons. Neither the Board nor any
Board committee, nor any member thereof or person acting at the direction
thereof, shall be liable for any act, omission, interpretation, construction or
determination made in good faith in connection with this Plan (or any shares of
Restricted Stock granted under this Plan), and all such persons shall be
entitled to indemnification and reimbursement by the Corporation in respect of
any claim, loss, damage or expense (including, without limitation, attorneys’
fees) arising or resulting therefrom to the fullest extent permitted by law,
under the Corporation’s Amended and Restated Certificate of Incorporation as
amended from time to time (the “Charter”) and/or, to the extent
available, under any directors and officers liability insurance coverage that
may be in effect from time to time.

3.4                               Reliance on Experts. In
making any determination or in taking or not taking any action under this Plan,
the Administrator may obtain and may rely upon the advice of experts, including
employees and professional advisors to the Corporation. No director, officer or
agent of the Corporation shall be liable for any such action or determination
taken or made or omitted in good faith.

3.5                               Delegation. The
Administrator may delegate ministerial, non-discretionary functions in
connection with the administration of the Plan to individuals who are officers
or employees of the Corporation or to third parties.

4.                 SHARES OF
RESTRICTED STOCK SUBJECT TO THE PLAN; SHARE LIMITS

4.1                               Shares Available. Subject
to the provisions of Section 7.1, the aggregate number of shares of Restricted
Stock that may be awarded to Eligible Persons under this Plan (the “Share
Limit”) shall not exceed 8,000 shares of Series M Preferred.

4.2                               Reissue of Awards and Shares.
Shares of Restricted Stock that are subject to awards which are cancelled or
terminated, are forfeited, fail to vest, or for any other reason are not
delivered under this Plan shall again be available for subsequent awards under
this Plan to Eligible Persons.

4.3                               Reservation of Shares; Fractional
Shares; Minimum Issue. The Corporation shall at all times reserve
a number of shares of Series M Preferred sufficient to cover the Corporation’s
obligations and contingent obligations, if any, to issue and sell shares of Restricted
Stock. The Corporation has initially reserved 8,000 

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shares of Series M
Preferred for issuance under this Plan. Fractional shares may be issued or
delivered under this Plan.

5.                 AWARDS

5.1                               Restricted Stock Agreements.
Each Restricted Stock Award shall be evidenced by a written Restricted Stock
Agreement as approved by the Administrator and executed on behalf of the
Corporation and by the recipient of the Restricted Stock Award. The
Administrator may authorize any officer of the Corporation to execute any or
all Restricted Stock Agreements on behalf of the Corporation. The Restricted
Stock Agreement shall set forth the material terms and conditions of such
Restricted Stock Award as established by the Administrator consistent with the
express limitations of this Plan.

5.2                               Consideration for Restricted Stock
Awards. The purchase price for any shares of Restricted Stock to
be delivered pursuant to a Restricted Stock Award, as applicable, may be paid
by means of any lawful consideration as determined by the Administrator,
including, without limitation, one or a combination of the following methods:

(a)                                  services
rendered by the recipient of such Restricted Stock Award;

(b)                                 cash,
check payable to the order of the Corporation, or electronic funds transfer; or

(c)                                  payment
in such manner as may be authorized by the Administrator;

In no event shall
any shares of Restricted Stock newly issued by the Corporation be issued for
less than the minimum lawful consideration for such shares or for consideration
other than consideration permitted by applicable state law. The Corporation
will not be obligated to deliver any shares of Restricted Stock unless and
until it receives full payment of the purchase price therefor, and any other
conditions to purchase have been satisfied.

5.3                               Transfer
Restrictions.

5.3.1   Limitations on Exercise and Transfer.
Unless otherwise expressly provided in (or pursuant to) this Section 5.3.1, by
applicable law, (a) all Restricted Stock Awards are non-transferable and shall
not be subject in any manner to sale, transfer, participation, alienation,
assignment, pledge, encumbrance or charge other than pursuant to, and in
accordance with Part C of Article Four of the Charter; and (b) amounts payable
or shares issuable pursuant to any Restricted Stock Awards shall be delivered
only to (or for the account of) the participant.

5.3.2   Exceptions to Limits on Transfer.
The transfer restrictions in Section 5.3.1 shall not apply to:

(a)                                  transfers
to the Corporation; or

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(b)                                 the
designation of a beneficiary to receive benefits in the event of the
participant’s death or, if the participant has died, transfers to the
participant’s beneficiary, or, in the absence of a validly designated
beneficiary, transfers by will or the laws of descent and distribution, or

(c)                                  transfers
to trusts or other entities controlled by the participant, and whose beneficiaries
or beneficial owners are, the participant and/or members of the participants
immediate family so long as (i) the Administrator receives evidence
satisfactory to it that such transfer is being made for tax and/or estate
planning purposes on a gratuitous or donative basis, without consideration
(other than nominal consideration or in exchange for an interest in the
qualified transferee) and (ii) the participant maintains control over the
voting and dispositive power of the Restricted Stock;

provided however, that in the case of clauses (b) and
(c) above, the beneficiary, successor, trust, trustee or other entity shall
agree in writing to be bound by this Plan and the participant’s Restricted
Stock Agreement.

6.                 EFFECT OF
TERMINATION OF SERVICE ON AWARDS

The Administrator shall establish the effect of a
termination of employment or service on the rights and benefits under each
Restricted Stock Award under this Plan and in so doing may make distinctions
based upon the cause of termination or otherwise.

7.                 ADJUSTMENTS

Upon or in contemplation of any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend) or reverse stock split; any merger, combination, consolidation, or
other reorganization; any exchange of Restricted Stock, or any similar, unusual
or extraordinary corporate transaction, in each case, in respect of the
Restricted Stock; then the Administrator shall, in such manner, to such extent
(if any) and at such time as it deems appropriate and equitable in the
circumstances, proportionately adjust any or all of (1) the number and type of
shares of Restricted Stock that thereafter may be made the subject of
Restricted Stock Awards, (2) the amount of shares of Restricted Stock then
subject to any or all outstanding Restricted Stock Awards, (3) the grant of any
or all outstanding Restricted Stock Awards or (4) the Share Limit. Notwithstanding
the foregoing, any adjustment made pursuant to this Section 7 shall be subject
to de novo review at the request of the participant to the extent provided in a
Restricted Stock Agreement.

In any of such events, the Administrator may take such
action prior to such event to the extent that the Administrator deems the
action necessary to permit the participant to realize the benefits intended to
be conveyed with respect to the underlying shares of Restricted Stock. In the
case of any stock split or reverse stock split, if no action is taken 

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by the Administrator, the proportionate adjustments
contemplated by clause (a) above shall nevertheless be made.

8.                 OTHER PROVISIONS

8.1                               Compliance with Laws.
This Plan, the granting and vesting of Restricted Stock Awards under this Plan,
the offer, issuance and delivery of shares of Restricted Stock, the acceptance
of promissory notes and/or the payment of money under this Plan or under
Restricted Stock Awards are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law, federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Corporation, be necessary or advisable in connection therewith.
Eligible Persons acquiring any Restricted Stock under this Plan will, if
requested by the Corporation, provide such assurances and representations to
the Corporation as the Administrator may deem necessary or desirable to assure
compliance with all applicable legal and accounting requirements.

8.2                               Employment Status. No
person shall have any claim or rights to be granted a Restricted Stock Award
(or additional Restricted Stock Awards, as the case may be) under this Plan,
subject to any express contractual rights (set forth in a document other than
this Plan) to the contrary.

8.3                               No Employment/Service Contract.
Nothing contained in this Plan (or in any other documents under this Plan or in
any Restricted Stock Award) shall confer upon any person any right to continue
in the employ or other service of the Corporation, constitute any contract or
agreement of employment or other service or affect an employee’s status as an
employee at will, or shall interfere in any way with the right of the
Corporation to change a person’s compensation or other benefits, or to
terminate his or her employment or other service, with or without cause. Nothing
in this Section 8.3, however, is intended to adversely affect any express
independent right of such person under a separate employment or service
contract other than a Restricted Stock Agreement.

8.4                               Plan Not Funded. Restricted
Stock Awards granted under this Plan shall be payable in shares of Restricted
Stock, and no special or separate reserve, fund or deposit shall be made to
assure payment of such Restricted Stock Awards. No participant, beneficiary or
other person shall have any right, title or interest in any fund or in any
specific asset of the Corporation by reason of any Restricted Stock Award
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Corporation and any participant,
beneficiary or other person.

8.5                               Tax Withholding. Upon
any vesting or payment of any Restricted Stock Award the Corporation shall have
the right at its option to:

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(a)                                  require
the participant (or the participant’s personal representative or beneficiary,
as the case may be) to pay or provide for payment of at least the minimum
amount of any taxes which the Corporation may be required to withhold with
respect to such vesting or payment; or

(b)                                 deduct
from any amount otherwise payable in cash to the participant (or the
participant’s personal representative or beneficiary, as the case may be) the
minimum amount of any taxes which the Corporation may be required to withhold
with respect to such vesting or payment.

8.6                               Effective
Date, Termination and Suspension, Amendments.

8.6.1                     Effective Date. This Plan is effective
as July 18, 2006 (the “Effective Date”).

8.6.2                     Amendments to Plan and Awards. This Plan
may be amended, modified, suspended or terminated with the written approval of
the Corporation; provided,  however, any amendment which
materially adversely affects an outstanding Restricted Stock Award shall
require the consent of the holder of such Restricted Stock Award. Changes,
settlements and other actions contemplated by Section 7 shall not be deemed to
constitute amendments, modifications or suspensions for purposes of this
Section 8.6.2.

8.7                               Governing
Law; Construction; Severability.

8.7.1                     Choice of Law. This Plan, the Restricted
Stock Awards, the Restricted Stock Agreements, all documents evidencing
Restricted Stock Awards and all other related documents shall be governed by,
and construed in accordance with the laws of the State of New York.

8.7.2                     Severability. If a court of competent
jurisdiction holds any provision invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.

8.8                               Captions. Captions
and headings are given to the sections and subsections of this Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of this Plan or
any provision thereof.

8.9                               Required
Sale in Connection with a Sale of the Company.

8.9.1                     Drag-Along
Rights. Subject to the provisions of this Section 8.9, if
the Board and the “Requisite Investor Stockholders” (as defined in the Stockholders’
Agreement of the Corporation dated July 18, 2006, as amended (the “Stockholders’
Agreement”)) approve a “Sale of the Company” (as defined pursuant to the
Stockholders’ Agreement)(such approved Sale of the Company, an “Approved
Sale”), each participant shall consent to, vote in favor of and raise no
objections against the Approved Sale, and if the Approved Sale is structured as

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a sale of the issued and
outstanding capital stock of the Corporation (whether by merger,
recapitalization, consolidation or sale or otherwise), then each participant
shall waive any dissenters rights, appraisal rights or similar rights in
connection with such Approved Sale and shall, so long as such participant shall
comply with Section 1 of Part C of Article Four of the Charter, be entitled to
receive the consideration for his or her Restricted Stock in connection with
such Approved Sale upon a Mandatory Redemption as provided in, and subject to,
Section 1 of Part C of Article Four of the Charter. Each participant shall take
all necessary and desirable actions in connection with the consummation of the
Approved Sale which are substantially equivalent to the actions being taken by
the parties to the Stockholders’ Agreement, including, but not limited to, the
execution of such agreements and instruments and other actions necessary to
provide the representations, warranties, indemnities, covenants, conditions,
escrow agreements and other provisions and agreements relating to such Approved
Sale as shall be determined by the Board of Directors; provided, however, that
the participant’s obligations with respect to any representations, warranties,
indemnities, covenants, conditions, escrow provisions and agreements of (i) the
Corporation and its subsidiaries shall be limited to such participant’s
Indemnity Cap; provided, further that in no event shall the maximum liability
of a participant on account of such participant’s Restricted Stock exceed the
sum of (x) the net proceeds received by such participant in connection with
such Approved Sale on account of such Restricted Stock and (y) any amounts paid
to such participant pursuant to the Company’s Deferred Cash Incentive Plan and
(ii) of such Participant shall not be so limited or restricted. In the event
that any participant fails for any reason to take any of the foregoing actions
after reasonable notice thereof, he, she or it hereby grants an irrevocable
power of attorney and proxy to any officer or member of the Board (as defined
in the Stockholders’ Agreement) or an assignee of such person to take all
necessary actions and execute and deliver all documents deemed by such person
to effectuate the terms of this Section 8.9. As used in this Section
8.9.1, “Indemnity Cap” shall mean, with respect to any participant, the
sum of the product of (x) the Indemnity Percentage and (y) the sum of (1) the
aggregate Series M Mandatory Redemption Price received by such Participant in
connection with such Approved Sale plus (2) the aggregate amount, if any, paid
to such participant pursuant to the Company’s Deferred Cash Incentive Plan. “Indemnity
Percentage” shall mean the percentage which the aggregate maximum
indemnification obligation of all holders of capital stock of all Covered
Classes (as defined in the Charter) represents of the Net Asset Proceeds (as
defined in the Charter) or Net Stock Proceeds (as defined in the Charter), as
the case may be; provided, however, that in the event that holders of capital
stock of the Covered Classes have different maximum indemnification obligations
for different matters (for example, if some representations or warranties are
excluded from a cap on indemnity), then the Indemnity Percentage shall be
calculated separately with respect to each type of indemnification obligations.

8.9.2                     Procedure.
The Corporation shall deliver written notice to each participant setting forth
in reasonable detail the terms (including price, time and 

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form of payment) of any
Approved Sale (the “Drag Notice”). Within twenty (20) days following
receipt of the Drag Notice, each such participant shall deliver to the
Corporation written notice setting forth such participants’ agreement to
consent to and raise no objections against, or impediments to, the Approved
Sale (including, waiving all dissenter’s and similar rights).

8.10                        Compliance
with Code Section 409A. The Restricted Stock Awards granted
hereunder are intended to comply with the requirements set forth in Section
409A of the Internal Revenue Code of 1986, as amended, and any regulations and
rulings thereunder (“Section 409A”), so as to avoid the imposition of excise
taxes and other penalties (“409A Penalties”) under Section 409A with respect to
the Restricted Stock. The Administrator shall not amend any Restricted Stock
Award in a manner that would subject the participant to Section 409A Penalties.
In the event that the grant of any Restricted Stock Award under this Plan or
the amendment of any Restricted Stock Award under this Plan would subject the
participant to 409A Penalties, the Administrator and the participant shall
cooperate diligently to amend the terms of the Restricted Stock Award to avoid,
insofar as possible, such 409A Penalties while minimizing any material and
adverse impact of any such amendment upon the economic, tax or accounting
implications of such Restricted Stock Award to the Company.

8.11                        Non-Exclusivity of Plan. Nothing in this
Plan shall limit or be deemed to limit the authority of the Board or the
Administrator to authorize any other compensation under any other plan or
authority.

 9Exhibit 10.4

PLIANT
CORPORATION

DEFERRED CASH INCENTIVE PLAN

Pliant Corporation, a Delaware corporation, has
determined that it is in the best interest of the Company to adopt the Pliant
Corporation Deferred Cash Incentive Plan (the “Plan”)
to provide financial benefits to key management employees of the Company and
its subsidiaries in the event of a Liquidation Event or a Redemption (each as
herein defined) in accordance with the terms and conditions set forth herein.

The purpose of the
Plan is to provide designated key employees with financial rewards in the event
of a Liquidation Event or Redemption in order to incentivize such employees to
increase the value of the Company and to secure their continued commitment and
dedication to the Company.

1.             Definitions.
The following definitions shall apply for purposes of this Plan:

(a)           “Applicable Percentage” means 8.0%.

(b)           “Asset Sale” has the meaning set
forth in the definition of “Liquidation Event” contained in Article Four, Part
C, Section 6 of the Certificate of Incorporation.

(c)           “Bonus” means with respect to an
eligible Participant upon a Liquidation Event or Redemption, the amount payable
to such eligible Participant under Section 3 of the Plan.

(d)           “Bonus Percentage” means the fixed
percentage of the Bonus Pool assigned to a Participant as set forth in Exhibit
A, with the Bonus Percentages to be assigned by the Board of Directors of the
Company, following consultation and discussions with the Company’s Chief
Executive Officer; provided, however, that the Bonus Percentage of any
Participant may not be reduced without the prior written consent of such
Participant. The sum of the Bonus Percentages for the Participants, in the
aggregate, may be less than, but shall not exceed, 100%.

(e)           “Bonus Pool” means:

(i)                                     With
respect to a Liquidation Event, an aggregate positive amount, if any, equal to
the Applicable Percentage of the lesser of:

(A)                              the
Hurdle Amount (or, to the extent the Initial Redemption has not occurred prior
thereto but there have been one or more prior redemptions of Series AA
Preferred Stock for which no Bonus Pool has been created, $224.8 million); and

(B)                                the
sum of (x) the Liquidation Proceeds of such Liquidation Event plus (y) the
Grossed-Up Other Distributions as of the date of such Liquidation Event, plus,
(z) only to the extent 

 

the Initial Redemption
had not occurred prior thereto but there had been prior redemptions of Series
AA Preferred Stock for which no Bonus Pool had been created, the sum of the
Redemption Proceeds in connection with all such prior redemptions.

(ii)                                  With
respect to a Redemption, an aggregate amount equal to the Applicable Percentage
of the Redemption Proceeds (which in the case of the Initial Redemption, shall
include the Redemption Proceeds from any prior redemptions of Series AA
Preferred Stock by the Company occurring prior to the occurrence of the Initial
Redemption for which no Bonus Pool has been created);

provided, however, that the amount of all Bonus Pools
created pursuant to clauses (i) and (ii) above shall in no event exceed an
aggregate amount equal to the Applicable Percentage of $224.8 million. For
purposes of clarification, in the event of the occurrence of a Liquidation
Event which includes or is consummated substantially simultaneously with a
Redemption, regardless of the actual order of the transaction, such transaction
shall be deemed to be a single transaction and shall be deemed to be a
Liquidation Event (and not a Redemption), with the proceeds of the redemption
portion of such transaction to be deemed to be proceeds payable in connection
with such transaction.

(f)            “Cause” means:

(i)                                     with
respect to Harold Bevis, “cause” as defined in Harold Bevis’ Employment
Agreement with the Company, dated as of July 18, 2006 (as it may be amended,
modified or restated from time to time, the “Bevis Employment Agreement”); and

(ii)                                  with
respect to any other Participant:

(A)                              the
Participant’s commission of a crime involving his or her fraud, theft or
dishonesty or engagement in willful or wrongful activities that are materially
detrimental to the Company;

(B)                                the
material and willful breach by the Participant of his or her responsibilities
as an employee of the Company or willful failure to comply with reasonable
directives or policies of the Company, the Board of Directors, the Chief
Executive Officer or his designees, but only if the Company has given
Participant written notice specifying the breach or failure to comply,
demanding that the 

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Participant remedy the
breach or failure to comply and the Participant (1) failed to remedy the
alleged breach or failed to comply within thirty days after receipt of the
written notice and (2) failed to take all reasonable steps to that end during
the thirty days after he received the notice.

(C)                                the
continued use of alcohol or drugs by the Participant to an extent that such use
interferes with the performance of the Participant’s duties and
responsibilities.

Notwithstanding the foregoing, the term “Cause”
shall not include any one or more of the following: (i) bad management decision-making
by the Participant or (ii) any act or omission reasonably believed by the
Participant in good faith to have been in and not opposed to the best interests
of the Company (without intent of the Participant to gain, directly or
indirectly, a profit to which the Participant was not legally entitled) and
reasonably believed by the Participant not to have been improper or unlawful.

(g)           “CEO” means the Chief Executive
Officer of the Company.

(h)           “Company” means Pliant Corporation, a
Delaware corporation, including its successor in interest by merger,
consolidation, purchase or otherwise.

(i)            “Covered Classes” shall mean
securities of any of the following classes and series of stock issued by the
Company: (a) Series AA Preferred Stock, (b) Common Stock, and (c) any class or
series of equity securities which are issued as a dividend or distribution with
respect to, or pursuant to a recapitalization of, any then outstanding Covered
Class of equity securities.

(j)            “Disability” means any medically
determinable physical or mental impairment that has lasted, or is reasonably
expected to last, for a period of at least six (6) months, can reasonably be
expected to be permanent or of indefinite duration, and renders the Participant
unable to perform his duties hereunder, as certified by a physician jointly
selected by the Company and the Participant or the Participant’s legal
representative.

(k)           “Effective Date” means July 18, 2006.

(l)            “Good Reason” means:

(i)                                     with
respect to Harold Bevis, “good reason” as defined in the Bevis Employment
Agreement; and

(ii)                                  with
respect to any other Participant, any of the following events in response to
which the Participant terminates his employment with the Company and its
subsidiaries:

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(A)                              the
assignment to the Participant of any material duty materially inconsistent with
the Participant’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities;

(B)                                any
reduction in the Participant’s base salary or bonus compensation (other than
any decrease in bonus compensation as a result of a failure to achieve
reasonable performance targets which are consistent with past performance
targets applied in connection with determining bonus compensation); or

(C)                                the
Company requires the Participant to, or assigns duties to the Participant which
would reasonably require him to, relocate his principal business office more
than forty (40) miles from where it is located on the date hereof;

provided, however that an event described above will
not constitute “Good Reason” unless (1) such event occurs without the
Participant’s express written consent, (2) the Participant delivers a written
notice to the Company of the occurrence of any such event not more than ninety
(90) days following the occurrence of such events, and (3) the Company fails to
cure or remedy such event within thirty days (the “Cure Period”) after
receiving written notice thereof from the Participant. The failure by the
Participant to terminate his or her employment with the Company and its
subsidiaries within thirty days after the end of the Cure Period in respect of
an event otherwise qualifying as Good Reason will preclude the Participant from
invoking such event as the basis for Good Reason.

(m)          “Grossed-Up Other Distributions” shall
mean the quotient of (x) the amount of Other Distributions divided by (y) the
then applicable Inverse Multiple.

(n)           “Hurdle Amount” shall mean an amount
equal to $224.8 million; provided that upon any redemption by the Company of
Series AA Preferred Stock in accordance with the terms thereof, the Hurdle
Amount shall be reduced by an amount equal to the aggregate Redemption Proceeds
in connection with such redemption; provided, that in no event shall the Hurdle
Amount be less than zero.

(o)           “Inverse Multiple” shall mean 0.92.

(p)           “JPMP” means J.P. Morgan Partners
(BHCA), L.P., a Delaware limited partnership, and its Affiliates (as defined
pursuant to the Charter).

(q)           “Liquidation” has the meaning set
forth in Article Four, Part C, Section 6 of the Certificate of Incorporation.

 4
 

 

(r)            “Liquidation Event” has the meaning
set forth in Article Four, Part C, Section 6 of the Certificate of
Incorporation.

(s)           “Liquidation Proceeds” means (a) in
connection with an Asset Sale or a Liquidation, the quotient of (x) the Net
Asset Proceeds divided by (y) the then applicable Inverse Multiple and (b) in
connection with a Stock Sale or a Merger, the quotient of (x) Net Stock
Proceeds divided by (y) the then applicable Inverse Multiple. Any Liquidation
Proceeds which are deposited into an escrow account (whether such escrow
account is established by the Corporation or any purchaser, acquiror or other
similar party in connection with a Liquidation Event) or subject to being
held-back by the purchaser for distribution upon the occurrence or satisfaction
of any event shall not be included in calculating “Liquidation Proceeds” until
such time as such amounts are released to the Corporation (in the case of an
Asset Sale or a Liquidation) or its stockholders (in the case of a Stock Sale
or a Merger).

(t)            “Merger” has the meaning set forth in
the definition of “Liquidation Event” contained in Article Four, Part C,
Section 6 of the Certificate of Incorporation.

(u)           “Net Asset Proceeds” has the meaning
set forth in Article Four, Part C, Section 6 of the Certificate of
Incorporation.

(v)           “Net Stock Proceeds” has the meaning
set forth in Article Four, Part C, Section 6 of the Certificate of
Incorporation.

(w)          “Other Distributions has the meaning
set forth in Article Four, Part C, Section 6 of the Certificate of
Incorporation.

(x)            “Participant” means a person who at
the time of designation is an employee of the Company or a subsidiary of the
Company and is designated for participation in this Plan by the Company’s Chief
Executive Officer with the approval of the Board; provided, however, that it shall be a
condition to the participation in this Plan, and partial consideration for the
rights granted hereunder, that any employee who owned Series B Preferred Stock
in the Company’s predecessor agree to waive his or her right to receive
any cash payment payable in consideration of the extinguishment of the Series B
Preferred Stock pursuant to the Company’s Plan of Reorganization. The
Participants shall be identified in Exhibit A, which may be amended by the
Company’s Chief Executive Officer with the approval of the Board to reflect the
addition of additional Participants; provided, however, that the Bonus
Percentages of any Participant may not be reduced with the written consent of
such Participant.

(y)           “Plan” means the Pliant Corporation
Deferred Cash Incentive Plan, as set forth herein and as amended from time to
time.

(z)            “Qualified Public Offering” shall
mean the sale in an underwritten public offering registered under the
Securities Act of 1933, as amended, of shares of capital stock of the Company
to the public resulting in aggregate proceeds (net of underwriting 

 5
 

 

discounts and
commissions) to the Company of not less than one hundred million dollars ($100
million).

(aa)         “Redemption” means either an Initial
Redemption or a Subsequent Redemption as follows:

(i)                                     An
“Initial Redemption” will occur at
such time as the Company has redeemed shares of Company’s Series AA Preferred
Stock resulting in aggregate Redemption Proceeds, including, without limitation
the Redemption Proceeds from any prior such Redemptions, of not less than $50 million.

(ii)                                  A
“Subsequent Redemption” will occur on
any date after the Initial Redemption that the Company redeems any shares of
Series AA Preferred Stock.

(bb)         “Redemption Proceeds” means, with
respect to any redemption of the Company’s Series AA Preferred Stock, the cash
proceeds received by the holders of the Series AA Preferred Stock upon such
redemption divided by the Inverse Multiple in effect at the time of such redemption.

(cc)         “Retained Securities” shall mean, in
connection with any Liquidation Event which is a Merger or Stock Sale, (i) any
capital stock in Covered Classes not transferred, if any, by the stockholders
of the Company in connection with such Liquidation Event and/or (ii) any
capital stock or debt securities received in consideration or exchange for,
capital stock in Covered Classes in connection with such Liquidation Event.

(dd)         “Stock Sale” has the meaning set
forth in the definition of “Liquidation Event” contained in Article Four, Part
C, Section 6 of the Certificate of Incorporation.

2.             Eligibility for Bonus.

(a)           A
Participant (other than Harold Bevis) shall be eligible to receive payment of
his or her Bonus with respect to a Liquidation Event or a Redemption as
provided in Section 3(a) if and only if the Liquidation Event or Redemption
occurs:

(i)                                     While
the Participant is employed by the Company or a subsidiary; or

(ii)                                  At
any time within ninety (90) days after the Participant’s termination of employment
with the Company or a subsidiary of the Company (x) by the Company or a
subsidiary of the Company without Cause, (y) by the Participant for Good
Reason, or (z) due to the Participant’s death or Disability.

 6
 

 

(b)           Harold
Bevis shall be eligible to receive payment of his Bonus with respect to a
Liquidation Event or Redemption as provided in Section 3(a) if the Liquidation
Event or Redemption occurs:

(i)                                     While
Harold Bevis is employed by the Company or a subsidiary of the Company;

(ii)                                  At
any time within one (1) year after Harold Bevis’ termination of employment with
the Company and all subsidiaries of the Company (x) by the Company or
subsidiary of the Company without Cause or (y) by Harold Bevis for Good Reason;
or

(iii)                               At any time within
ninety (90) days after Harold Bevis’ termination of employment with the Company
and all subsidiaries of the Company due to his death or Disability.

(c)           Harold
Bevis shall be eligible to receive payment of his Bonus with respect to a
Liquidation Event or Redemption as provided in Section 3(b) if he does not
otherwise meet the eligibility criteria in Section 2(b) and Harold Bevis’
employment with the Company and all of its subsidiaries is terminated after the
effective date of the Company’s plan of reorganization.

(d)           Notwithstanding
any provision herein to the contrary, no Bonus will be paid to any Participant
if no Liquidation Event or Redemption occurs prior to the twentieth (20th)
anniversary of the effective date of this Plan.

3.             Bonus
Payable Upon Creation of a Bonus Pool.

(a)           Simultaneously
with the occurrence of a Liquidation Event or a Redemption, the Company shall
pay each eligible Participant who satisfies the eligibility requirements
described in Section 2(a) or (b) above a Bonus, payable, subject to the terms
of Section 3(c), in cash, in an amount equal to the Bonus Pool established with
respect to such Liquidation Event or Redemption multiplied by the Participant’s
Bonus Percentage, as set forth in Exhibit A.

(b)           If
Harold Bevis does not otherwise meet the eligibility criteria in Section 2(b)
with respect to a Liquidation Event or Redemption and his employment with the
Company and its subsidiaries is terminated after the effective date of the
Company’s plan of reorganization, then simultaneously with the occurrence of a
Liquidation Event or Redemption, the Company shall pay Harold Bevis a Bonus in
an amount equal to the product of (x) the Bonus Pool established with respect
to such Liquidation Event or Redemption multiplied by (y) Harold Bevis’ Bonus
Percentage multiplied by (z) a fraction (not to exceed one (1)), the numerator
of which is the number of months, if any, that transpire from the effective
date of the Company’s plan of reorganization and his termination of employment
with the Company and all of the subsidiaries of the Company, and the
denominator of which is thirty-six (36).

 7
 

 

(c)           Notwithstanding
anything in this Section 3 to the contrary, to the extent that in connection
with a Liquidation Event which is a Merger or Stock Sale in which there are
Retained Securities, if (x) the aggregate fair market value of the Retained
Securities (as determined in good faith by the Board) divided by the then
applicable Inverse Multiple is in excess of (y) the greater of (1) $0 and (2)
the difference of the Liquidation Proceeds in connection with such Liquidation
Event minus the then applicable Hurdle Amount (the amount of any such excess of
(x) over (y) being referred to as the “Pre-Hurdle Retained Securities Amount”),
the Company shall have the option to pay a portion of the Bonuses payable
pursuant to this Plan in connection with such Liquidation Event, not to exceed
the Maximum In-Kind Amount (as defined in Section 3(d) below), by the delivery
of securities in the same class and/or series as the Retained Securities having
a fair market value (as determined in good faith by the Board) equal to the
portion of the Bonuses to be so paid; provided that Participants receiving any
such Retained Securities are provided similar rights relating to registration
of securities, redemption rights and tag along rights as provided to any holder
of Covered Classes of an equivalent class or series with respect to such
Retained Securities (it being understood that such Participants will be
entitled to participate in any collective rights of a class or group of former
holders of Covered Classes (such as rights permitting a majority of the holders
of a class or series of securities to require a redemption or a registration),
and the foregoing shall not provide any Participant an individual (rather than
collective) right with respect to such matter). If there is more than one class
or series of Retained Securities, the portion of the Bonuses payable by the
delivery of Retained Securities shall include a proportionate amount of each
such class or series. In the event that any portion of the Bonuses hereunder
are paid in Retained Securities, the Bonuses received by each Participant will
consist of substantially identical (subject to rounding in order to avoid
delivery of fractional shares) proportions of (i) cash and (ii) Retained
Securities of each such class or series.

(d)           For
the purposes of this Section 3, the “Maximum In-Kind Amount” shall mean the
lesser of (x) the aggregate amount of the Bonus Pool created in connection with
such Liquidation Event minus the Mandatory Cash Portion and (y) the Applicable
Percentage of the Pre-Hurdle Retained Securities Amount. For the purposes
hereof, the “Mandatory Cash Portion” shall mean the greater of:

(i)                                     the
Applicable Percentage of the sum of (x) any Grossed-Up Other Distributions plus
(y) only to the extent that the Initial Redemption had not occurred prior to
the date of such Liquidation Event but there has been redemption of Series AA
Preferred Stock for which no Bonus Pool had been created, the Redemption
Proceeds in connection with all such prior redemptions; and

(ii)                                  40%
of the Bonus Pool created in connection with such Liquidation Event.

 8
 

 

(e)           Any
portion of the Bonus Pool not delivered to the Participants as a result of a
deferral of payment of any Liquidation Proceeds by reason of any escrow or
holdback obligation, or otherwise, shall be delivered to the Participants pro
rata in accordance with the payments of the Bonus Pool promptly upon release of
any such Liquidation Proceeds to the Corporation (in the case of an Asset Sale
or a Liquidation) or its stockholders (in the case of a Stock Sale or a
Merger).

(f)            To
the extent that a Participant is not also a holder of Series M Preferred Stock
issued pursuant to the Company’s 2006 Restricted Stock Incentive Plan (the
“Restricted Stock Incentive Plan”), then, by acceptance of an award pursuant to
this Plan, the Participant will be deemed to be bound by, and agree to the
terms of, Section 8.9 of the Restricted Stock Incentive Plan, as if such
Participant was a holder of Series M Preferred Stock with respect to such
Participant’s award hereunder and payment in respect of such award under the
circumstances described in Section 8.9 of the Restricted Stock Incentive Plan.

4.             Withholding
Taxes. The Company shall withhold from the Bonus payable under this Plan,
all income, employment and payroll taxes which, by applicable federal, state,
local or other law, the Company is required to withhold.

5.             Termination
or Amendment of Plan.

(a)           Subject
to subsection (b) below, this Plan shall remain in effect until the earliest to
occur of (i) the twentieth (20th) anniversary of the Effective Date,
(ii) the first occurrence of a Liquidation Event, (iii) there have been
Redemptions resulting in Redemption Proceeds in excess of $243.8 million or
(iii) the consummation of a Qualified Public Offering. Upon consummation of a
Qualified Public Offering, the Plan will be terminated after distribution of
all Bonuses payable with respect to any Bonus Pool to be established as a
result of any Redemption in connection with, or as a result of the use of
proceeds from, the Qualified Public Offering. Except as provided in the
preceding sentence, no Bonuses will be payable hereunder with respect to any
Liquidation Event or Redemption that occurs after the termination of this Plan.

(b)           The
Company may amend, modify or terminate this Plan, in writing, at any time; provided, however; that
no amendment, modification or termination of the Plan that may adversely affect
the rights or potential rights of any Participant shall become effective,
unless the Participant consents to such amendment, modification or termination
in writing. Notwithstanding the foregoing, as a purely ministerial action, the
Company’s Chief Executive Officer may amend or modify Exhibit A from time to
time as necessary to reflect the identification of the Participants and their
respective Bonus Percentages in accordance with the terms of the Plan.

6.             Action
by the Company. Any action required or permitted to be taken by the Company
under this Plan shall be approved by the Board of Directors of the Company.

 9
 

 

(a)           If
the payment of any Bonus hereunder is prohibited by, or would result in or
cause a default or an event of default under, any of the agreements governing
any Indebtedness (as defined in the Company’s Certificate of Incorporation),
then consummation of the Liquidation Event (other than an involuntary
liquidation, dissolution or liquidation winding up of the affairs of the
Corporation) or the making of a redemption of the Series AA Preferred Stock
shall be prohibited until the provisions of Section 6(b) have been satisfied in
full.

(b)           If
the provisions of any Indebtedness Agreement (as defined in the Company’s
Certificate of Incorporation) would prohibit the Corporation from paying any
Bonus pursuant hereto, or if immediately after giving effect to the payment of
any such Bonus, a default or event of
default under any such agreement or instrument would be caused thereby,
as a condition to the consummation of a Liquidation Event or a redemption of
Series AA Preferred Stock, and the payment of any Bonus hereunder, the Company
shall, to the extent required to permit the payment of the applicable Bonuses
hereunder, (i) obtain the consent of the requisite holders of such Indebtedness
to permit the payment of such Bonuses by the Company, (ii) refinance all such
Indebtedness outstanding with the proceeds of other Indebtedness or equity
securities that permit or do not prohibit the payment of such Bonuses by the
Company or (iii) otherwise comply with the terms of such Indebtedness required
to permit the payment by the Company of the Bonuses. The Company shall not
consummate a Liquidation Event or a redemption of Series AA Preferred Stock
unless the conditions contained in this Section 6(b) are satisfied or waived by
the Participants with a majority of the outstanding Bonus Percentages then
outstanding pursuant to this Plan.

7.             Successors.

(a)           Subject
to Section 5(a), this Plan shall not be terminated by any merger,
consolidation, stock exchange or similar event involving the Company whereby
the Company is or is not the surviving or resulting corporation or other
entity. In the event of any merger, consolidation, stock exchange or similar
event, the provisions of this Plan shall be binding upon the surviving or
resulting corporation or other entity.

(b)           This
Plan shall inure to the benefit of and be enforceable by each Participant’s
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If a Participant shall die while
any amounts are payable to the Participant hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Plan to such person or persons appointed in writing by the Participant to
receive such amounts or, if no person is so appointed, to the Participant’s
estate.

8.             Governing
Law; Validity. The interpretation, construction and performance of this
Plan shall be governed by and construed and enforced in accordance with the
laws of the State of New York without regard to the principle of conflicts of
laws. The invalidity or 

 10
 

 

unenforceability of any
provision of this Plan shall not affect the validity or enforceability of any
other provision of this Plan, which other provisions shall remain in full force
and effect.

9.             Miscellaneous.

(a)           The
Company shall not be required to fund or otherwise segregate assets to be used
for the payment of any benefits under the Plan. The Company shall make such
payments only out of its general assets, and therefore its obligation to make
such payments shall be subject to any claims of its other creditors having
priority as to its assets.

(b)           This
Plan does not constitute a contract of employment or impose on the Company any
obligation to retain the Participant as an employee, to change the status of
the Participant’s employment, or to change the policies of the Company
regarding termination of employment.

(c)           This
Plan does not grant to any Participant any of the rights or privileges of equity
ownership in the Company.

(d)           This
Plan and Exhibit A attached hereto constitute the sole agreement by and between
the Company and the Participants with respect to the subject matter contained
herein.

 11

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