Document:

Exhibit 10.6  (00167250.DOC;1)

Exhibit 10.6

WAUSAU PAPER CORP.

1991 DIVIDEND EQUIVALENT PLAN

As amended May 4, 2007

WAUSAU PAPER CORP.

1991 DIVIDEND EQUIVALENT PLAN

1.

Purpose.

The purpose of the Wausau Paper Corp. Dividend Equivalent Plan (the “Plan”) is to attract and retain outstanding individuals as officers and key employees of Wausau Paper Corp. (the “Company”) and its subsidiaries, and to furnish incentives to such individuals through rewards based upon the performance of the Company and its common stock.  To this end, the Committee hereinafter designated may grant dividend equivalents to officers and other key employees of the Company and its subsidiaries, on the terms and subject to the conditions set forth in this Plan.

2.

Participants.

Participants in the Plan shall consist of such officers and other key employees of the Company and its subsidiaries as the Committee in its sole discretion may select from time to time to receive dividend equivalents.

3.

Administration of the Plan.

The Plan shall be administered by a committee (the “Committee”) consisting of at least two members designated by the Board of Directors of the Company from among those of its members who are not officers or employees of the Company or a parent or subsidiary of the Company and who otherwise satisfy the definition of a “Non-Employee Director” in Rule 16b-3(b)(3) promulgated under Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”).  In the absence of specific rules to the contrary, action by the Committee shall require the consent of a majority of the members of the Committee, expressed either orally at a meeting of the Committee or in writing in the absence of a meeting.  Subject to the provisions of the Plan, the Committee shall have authority (a) to determine which employees of the Company and its subsidiaries shall be eligible for participation in the Plan; (b) to select employees to receive grants under the Plan; (c) to determine the number of dividend equivalents subject to the grant, the time and conditions of vesting, and all other terms and conditions of any grant; (d) to determine the fair market value of the common stock of the Company for purposes of the Plan; and (e) to prescribe the form of agreement, certificate or other instrument evidencing the grant.  The Committee shall also have authority to interpret the Plan and to establish, amend and rescind rules and regulations for the administration of the Plan, and all such interpretations, rules and regulations shall be conclusive and binding on all persons; provided, however, that the Committee shall not exercise such authority in a manner adversely and significantly affecting dividend equivalents previously granted unless the action taken is required to comply with any applicable law or regulation.

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4.

Effective Date and Term of Plan.

The Plan shall become effective on June 19, 1991, the date of its approval by the Board of Directors of the Company.  The Plan shall terminate ten years after it becomes effective, unless terminated sooner by action of the Board of Directors.  No further grants may be made under the Plan after its termination, but the termination of the Plan shall not affect the rights of any participant under, or the authority of the Committee with respect to, any grants made prior to termination.

5.

Shares Subject to the Plan.

Subject to adjustment as provided in Section 7 hereof, the aggregate number of shares of common stock of the Company with respect to which dividend equivalents may be granted under the Plan shall not exceed 250,000.  Whenever dividend equivalents granted under the Plan are forfeited, the shares subject to such dividend equivalents shall thereupon be released from such dividend equivalents and shall thereafter be available for additional grants of dividend equivalents under the Plan.

6.

Dividend Equivalents.

(a)

Grants.  Dividend equivalents entitling the grantee to receive cash equal to the value of the hypothetical reinvested cash dividends (defined below) which would have been paid with respect to a stated number of shares of common stock of the Company between the date of grant and the date of termination of the grantee’s employment with the Company and its subsidiaries may be granted from time to time to such officers and other key employees of the Company and its subsidiaries as may be selected by the Committee.

(b)

Vesting of Grant.  Dividend equivalents shall vest in whole or in such installments and at such times as may be determined by the Committee.

(c)

Payment.  The value of dividend equivalents granted prior to December 16, 1996 shall be paid to the grantee (or his beneficiary in the event of his death) in the amount determined in accordance with this Section 6(c) upon the grantee’s termination of employment with the Company and its subsidiaries; provided, however, if the grantee’s termination occurred on his Retirement Date, the value of such dividend equivalents shall be paid to the grantee (or his beneficiary in the event of his death) on the first to occur of (i) his Retirement Date if the grantee had exercised a stock option granted in tandem with the grant of such dividend equivalents on or before such Retirement Date, (ii) if the grantee had not exercised a stock option granted in tandem with the grant of such dividend equivalents on or before such Retirement Date, the first date after his Retirement Date on which the grantee exercises such stock option granted in tandem with the grant of such dividend equivalents, and (iii) the second anniversary of such grantee’s Retirement Date; provided, however, in each case, that only the value of such proportion of the dividend equivalent as it corresponds to the proportion of shares subject to such option as are exercised shall be paid.   The value of dividend equivalents granted on or after December 16, 1996 shall be paid to the grantee (or his beneficiary in the event of his death) in the amount determined in accordance with this Section 6(c) upon the first to occur of (i) the 

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grantee’s termination of employment with the Company and its subsidiaries and (ii) the date on which the grantee exercises a stock option granted in tandem with the grant of such dividend equivalents; provided, however, if the grantee’s termination occurred on his Retirement Date, the value of such dividend equivalents shall be paid to the grantee (or his beneficiary in the event of his death) on the first to occur of (i) the first date after his Retirement Date on which the grantee exercises a stock option granted in tandem with the grant of such dividend equivalents and (ii) the second anniversary of such grantee’s Retirement Date; provided, however, in each case, that only the value of such proportion of the dividend equivalent as corresponds to the proportion of shares subject to such option as are exercised shall be paid.  For purposes of this Plan, the term “Retirement Date” shall mean the date on which the grantee’s employment with the Company (and any parent or subsidiary of the Company) terminates (including termination because of death) if the grantee had then attained age 55 and completed ten calendar years of service with the Company (or any parent or subsidiary of the Company).  An option shall be deemed to have been granted in tandem with a grant of dividend equivalents if such option grant was made at or about the same date, relates to the same number of shares of common stock and is subject to the same conditions on vesting or exercise the grant of such dividend equivalents.  The value of the dividend equivalents to be paid pursuant to this Section 6(c) shall be an amount in cash equal to the value of the hypothetical reinvested cash dividends associated with the aggregate number of shares of common stock of the Company with respect to which such dividend equivalents have been granted to the grantee.  The value of the hypothetical reinvested cash dividends associated with a share of common stock of the Company in respect of which a dividend equivalent has been granted shall be equal to the fair market value on the date of payment of the value of such dividend equivalents is provided for herein of the number of shares (or fraction thereof) of the Company’s common stock which the grantee would have owned if it is assumed (i) that cash dividends which would have been paid with respect to the share if the share had been outstanding from the date of grant of the dividend equivalent had been paid in cash to the grantee and then immediately reinvested by the grantee in the Company’s common stock at the fair market value thereof on the applicable dividend payment date, and (ii) that, once assumed issued, hypothetical shares resulting from assumed dividend reinvestment themselves paid cash dividends (at the same time and in the same amount as shares of the Company’s outstanding common stock) which were reinvested in a similar manner.

(d)

Additional Terms and Conditions.  The agreement or instrument evidencing the grant of dividend equivalents may contain such other terms, provisions, and conditions not inconsistent with the Plan as may be determined by the Committee in its sole discretion.  The Committee may at the time of grant or at any time thereafter impose such additional terms and conditions on dividend equivalents as it deems necessary or desirable for compliance with Section 16(a) or 16(b) of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

(e)

Fair Market Value.  For purposes of this Plan, the fair market value of the Company’s common stock means and shall be determined in accordance with the following:

(i)

If the principal market for the common stock is a national securities exchange, the closing price of the common stock on the New York Stock Exchange if the common stock is then listed for trading on such exchange, otherwise, the closing price of 

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the common stock as reported on the principal exchange on which the common stock is then listed for trading.

(ii)

If the principal market for the common stock is an over-the-counter market, the closing price of the common stock reported in the Nasdaq National Stock Market, or if the common stock is not then listed for trading in such market, the closing price reported on any other bona fide over-the-counter stock market selected in good faith by the Committee. 

(iii)

If the date on which fair market value is to be determined is not a business day, or, if there shall be no reported transactions for such date, such determination shall be made on the next preceding business day for which transactions were reported.

7.

Adjustments for Changes in Capitalization, Etc.

Dividend equivalents shall be subject to adjustment by the Committee in its sole discretion as to the number of shares subject to such grants in the event of changes in the outstanding common stock of the Company by reason of stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in corporate structure or capitalization occurring after the date of the grant of any dividend equivalent, provided that if the Company shall change its common stock into a greater or lesser number of shares through a stock dividend, stock split-up, or combination of shares, outstanding dividend equivalents shall be adjusted proportionately, consistent with existing law and regulation, to prevent inequitable results.

8.

Effect of Liquidation, Merger, Consolidation, or Other Events.

Nothing contained in the Plan or in any dividend equivalent granted under the Plan shall in any way prohibit the Company from merging with or consolidating into another company, or from selling or transferring all or substantially all of its assets, or from distributing all or substantially all of its assets to its stockholders in liquidation, or from dissolving and terminating its corporate existence; and in any such event, payment shall be made with respect to all then outstanding dividend equivalents (whether or not then vested) as if all of the grantees of such dividend equivalents had terminated employment with the Company and its subsidiaries at the time of such merger, consolidation, sale or transfer of assets, liquidation, or dissolution, except to the extent that any agreement or undertaking of any party to such merger, consolidation, or sale or transfer of assets, or any plan pursuant to which such liquidation or dissolution is effected, shall make specific provision to continue such dividend equivalents and the rights of the grantees under such dividend equivalents.

9.

Amendment and Termination of Plan.

The Plan may be amended or terminated by the Board of Directors of the Company in any respect; provided, however, that the Board shall not exercise such authority in a manner adversely and significantly affecting dividend equivalents previously granted unless the action taken is required to comply with any applicable law or regulation.

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10.

Miscellaneous.

(a)

No Right to a Grant.  Neither the adoption of the Plan nor any action of the Board of Directors or of the Committee shall be deemed to give any employee any right to be selected as a participant or to be granted a dividend equivalent.

(b)

Rights as Stockholder.  No person shall have any rights as a stockholder of the Company with respect to any shares covered by dividend equivalents.

(c)

Employment.  Nothing contained in this Plan shall be deemed to confer upon any employee any right of continued employment with the Company or any of its subsidiaries or to limit or diminish in any way the right of the Company or any such subsidiary to terminate his or her employment at any time with or without cause.

(d)

Taxes.  The Company shall be entitled to deduct from any payment under the Plan the amount of any tax required by law to be withheld with respect to such payment or may require any participant to pay such amount to the Company prior to and as a condition of making such payment.

(e)

Nontransferability.  No dividend equivalent shall be transferable.

11.

Change in Control.  

(a)

Definition of “Change in Control.”  For purposes of the Plan, a “Change in Control” means the happening of any of the following events:

(i)

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding Shares (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, (4) any acquisition pursuant to a transaction which complies with clauses (A), (B), and (C) of paragraph (iii) of this Section 11(a), (5) except as provided in paragraphs (iv) and (v), any acquisition by any of the Woodson Entities or any of the Smith Entities, or (6) any increase in the proportionate number of shares of Outstanding Company Common Stock or Outstanding Company Voting Securities beneficially owned by a Person to 20% or more of the shares of either of such classes of stock if such increase was solely the result of the acquisition of Outstanding Company Common Stock or Outstanding Company Voting Securities by the Company; provided, 

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however, that this clause (6) shall not apply to any acquisition of Outstanding Company Common Stock or Outstanding Company Voting Securities not described in clauses (1), (2), (3), (4), or (5) of this paragraph (i) by the Person acquiring such shares which occurs after such Person had become the beneficial owner of 20% or more of either the Outstanding Company Common Stock or Outstanding Company Voting Securities by reason of share purchases by the Company; or

(ii)

A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of the Plan, that any individual who becomes a member of the Board subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be deemed to be and shall be considered as though such individual were a member of the Incumbent Board, but provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so deemed or considered as a member of the Incumbent Board; or

(iii)

Consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of the assets or securities of any other entity (a “Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Resulting Corporation”) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company, any Woodson Entity, any Smith Entity, or such Resulting Corporation) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the Resulting Corporation or the combined voting power of the then outstanding voting securities of such Resulting Corporation entitled to vote generally in the election of directors except to the extent that such ownership existed with respect to the Company prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will 

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constitute at least a majority of the members of the board of directors of the Resulting Corporation; or

(iv)

The Woodson Entities acquire beneficial ownership of more than 35% of the Outstanding Company Common Stock or Outstanding Company Voting Securities or of the outstanding shares of common stock or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Resulting Corporation; or

(v)

The Smith Entities acquire beneficial ownership of more than 35% of the Outstanding Company Common Stock or Outstanding Company Voting Securities or of the outstanding shares of common stock or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Resulting Corporation; or

(vi)

The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

For purposes of this Section 11(a), the term “Woodson Entities” shall mean Aytchmonde P. Woodson, Leigh Yawkey Woodson and Alice Richardson Yawkey, members of their respective families and their respective descendants (the “Woodson Family”), heirs or legatees of any of the Woodson Family members, transferees by will, laws of descent or distribution or by operation of law of any of the foregoing (including of any such transferees) (including any executor or administrator of any estate of any of the foregoing), any trust established by any of Aytchmonde P. Woodson, Leigh Yawkey Woodson, or Alice Richardson Yawkey, whether pursuant to last will or otherwise, any partnership, trust or other entity established primarily for the benefit of, or any other Person the beneficial owners of which consist primarily of, any of the foregoing or any Affiliates or Associates of any of the foregoing or any charitable trust or foundation to which any of the foregoing transfers or may transfer securities of the Company (including any beneficiary or trustee, partner, manager or director of any of the foregoing or any other Person serving any such entity in a similar capacity). 

For purposes of this Section 11(a), the term “Smith Entities” shall mean David B. Smith and Katherine S. Smith, members of their respective families and their respective descendants (the “Smith Family”), heirs or legatees of any of the Smith Family members, transferees by will, laws of descent or distribution or by operation of law of any of the foregoing (including of any such transferees) (including any executor or administrator of any estate of any of the foregoing), any trust established by either of David B. Smith or Katherine S. Smith, whether pursuant to last will or otherwise, any partnership, trust or other entity established primarily for the benefit of, or any other Person the beneficial owners of which consist primarily of, any of the foregoing or any Affiliates or Associates of any of the foregoing or any charitable trust or foundation to which any of the foregoing transfers or may transfer securities of the Company (including any beneficiary or trustee, partner, manager or director of any of the foregoing or any other Person serving any such entity in a similar capacity).

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For purposes of this Section 11(a), the terms “Affiliate” and “Associate” shall have the meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Plan. 

(b)

Effects of Change in Control.  In the event of a Change in Control,

(i)

all dividend equivalents outstanding on the date on which such Change in Control has occurred (the “Change in Control Date”) shall, to the extent not then vested, immediately become vested in full, and

(ii)

each grantee may elect, with respect to each dividend equivalent held by such grantee on the Change in Control Date (the grantee’s “Election Right”), to surrender such dividend equivalent for an immediate lump sum cash payment in an amount equal to the value of the hypothetical reinvested cash dividends associated with the aggregate number of shares of common stock of the Company with respect to which such dividend equivalents have been granted to the grantee; provided, however, that the value of such hypothetical reinvested cash dividends shall be determined by the greater of (A) the Change in Control Price or (B) the highest fair market value of a share of common stock on any day in the 60-day period ending on the Change in Control Date.  For purposes of this Section 11(b), the “Change in Control Price” shall mean, if the Change in Control is the result of a tender or exchange offer or a Corporate Transaction (as defined in Section 11(a)(iii)), the highest price per share of common stock paid in such tender or exchange offer or Corporate Transaction.  To the extent that the consideration paid in any such transaction consists all or in part of securities or other noncash consideration, the value of such securities or other noncash consideration shall be determined in the sole discretion of the Committee.

-8-Exhibit 10.8  (00167252.DOC;1)

Exhibit 10.8

WAUSAU PAPER CORP.

DIRECTORS’ DEFERRED COMPENSATION PLAN

(as amended December 19, 2007)

WAUSAU PAPER CORP.

DIRECTORS’ DEFERRED COMPENSATION PLAN

1.

Establishment of Plan.  Wausau Paper Corp. (the “Company”) hereby amends and restates the Company’s Directors’ Deferred Compensation Plan previously in effect and renames such plan, as herein amended and restated, the Wausau Paper Corp. Directors’ Deferred Compensation Plan, all effective as of December 17, 1997 (the “Plan”).

2.

Purpose.  The purpose of the Plan is to provide an alternative method of compensating members (the “Directors”) of the Board of Directors of the Company (the “Board”), whether or not they otherwise receive compensation as employees of the Company, in order to aid the Company in attracting and retaining as Directors persons whose abilities, experience, and judgment can contribute to the continued progress of the Company and to provide a mechanism by which the interests of the Directors and the shareholders can be more closely aligned.

3.

Definitions.  As used in this Plan, the following terms shall have the meaning set forth in this paragraph 3:

(a)

“Beneficiary” shall mean such person or persons, or organization or organizations, as the Participant from time to time may designate by a written designation filed with the Company during the Participant’s life.  Any amounts payable hereunder to a Participant’s Beneficiary shall be paid in such proportions and subject to such trusts, powers, and conditions as the Participant may provide in such designation.  Each such designation, unless otherwise expressly provided therein, may be revoked by the Participant by a written revocation filed with the Company during the Participant’s life.  If more than one such designation shall be filed by a Participant with the Company, the last designation so filed shall control over any revocable designation filed prior to such filing.  To the extent that any amounts payable under this Plan to a Participant’s Beneficiary are not effectively disposed of pursuant to the above provisions of this paragraph 3(a), either because no designation was in effect at the Participant’s death or because a designation in effect at the Participant’s death failed to dispose of such amounts in their entirety, then for purposes of this Plan, the Participant’s “Beneficiary” as to such undisposed of amounts shall be the Participant’s estate.

(b)

A “Change of Control of the Company” shall mean the happening of any of the following events:

(1)

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding Common Stock (the “Outstanding Company Common Stock”) or (B) the combined 

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voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following: (i) any acquisition directly from the Company other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, (iv) any acquisition pursuant to a transaction which complies with clauses (A), (B), and (C) of subparagraph (3) of this paragraph 3(b), (v) except as provided in paragraphs (iv) and (v), any acquisition by any of the Woodson Entities or any of the Smith Entities, or (vi) any increase in the proportionate number of shares of Outstanding Company Common Stock or Outstanding Company Voting Securities beneficially owned by a Person to 20% or more of the shares of either of such classes of stock if such increase was solely the result of the acquisition of Outstanding Company Common Stock or Outstanding Company Voting Securities by the Company; provided, however, that this clause (vi) shall not apply to any acquisition of Outstanding Company Common Stock or Outstanding Company Voting Securities not described in clauses (i), (ii), (iii), (iv), or (v) of this paragraph (a) by the Person acquiring such shares which occurs after such Person had become the beneficial owner of 20% or more of either the Outstanding Company Common Stock or Outstanding Company Voting Securities by reason of share purchases by the Company; or

(2)

A change in the composition of the Board such that the individuals who, as of March 4, 1999, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of the Plan, that any individual who becomes a member of the Board subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be deemed to be and shall be considered as though such individual were a member of the Incumbent Board, but provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so deemed or considered as a member of the Incumbent Board; or

(3)

Consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of the assets or securities of any other entity (a “Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote 

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generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Resulting Corporation”) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company, any Woodson Entity, any Smith Entity, or such Resulting Corporation) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the Resulting Corporation or the combined voting power of the then outstanding voting securities of such Resulting Corporation entitled to vote generally in the election of directors except to the extent that such ownership existed with respect to the Company prior to the Corporate Transaction, and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the Resulting Corporation; or

(4)

The Woodson Entities acquire beneficial ownership of more than 35% of the Outstanding Company Common Stock or Outstanding Company Voting Securities or of the outstanding shares of common stock or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Resulting Corporation; or

(5)

The Smith Entities acquire beneficial ownership of more than 35% of the Outstanding Company Common Stock or Outstanding Company Voting Securities or of the outstanding shares of common stock or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Resulting Corporation; or

(6)

The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

For purposes of this paragraph 3(b), the term “Woodson Entities” shall mean Aytchmonde P. Woodson, Leigh Yawkey Woodson and Alice Richardson Yawkey, members of their respective families and their respective descendants (the “Woodson Family”), heirs or legatees of any of the Woodson Family members, transferees by will, laws of descent or distribution or by operation of law of any of the foregoing (including of any such transferees) (including any executor or administrator of any estate of any of the foregoing), any trust established by any of Aytchmonde P. Woodson, Leigh Yawkey Woodson, or Alice Richardson Yawkey, whether pursuant to last will or otherwise, any partnership, trust or other entity established primarily for the benefit of, or any other Person the beneficial owners of which consist primarily of, any of the foregoing or any Affiliates or Associates of any of the foregoing or any charitable trust or foundation to which any of the foregoing transfers or may transfer securities of the Company (including any beneficiary or trustee, partner, manager or director of any of the foregoing or any other Person serving any such entity in a similar capacity). 

 

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For purposes of this paragraph 3(b), the term “Smith Entities” shall mean David B. Smith and Katherine S. Smith, members of their respective families and their respective descendants (the “Smith Family”), heirs or legatees of any of the Smith Family members, transferees by will, laws of descent or distribution or by operation of law of any of the foregoing (including of any such transferees) (including any executor or administrator of any estate of any of the foregoing), any trust established by either of David B. Smith or Katherine S. Smith, whether pursuant to last will or otherwise, any partnership, trust or other entity established primarily for the benefit of, or any other Person the beneficial owners of which consist primarily of, any of the foregoing or any Affiliates or Associates of any of the foregoing or any charitable trust or foundation to which any of the foregoing transfers or may transfer securities of the Company (including any beneficiary or trustee, partner, manager or director of any of the foregoing or any other Person serving any such entity in a similar capacity).

For purposes of this paragraph 3(b), the terms “Affiliate” and “Associate” shall have the meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Plan. 

(c)

“Common Stock” shall mean the common stock, no par value, of the Company.  

(d)

“Directors’ Fees” shall mean all of the compensation to which a Director would otherwise become entitled for services to be rendered as a Director.

(e)

“Fair Market Value” of the Common Stock means

(1)

If the principal market for the Common Stock is a national securities exchange, the closing price of the Common Stock on the New York Stock Exchange if the Common Stock is then listed for trading on such exchange, otherwise, the closing price of the Common Stock as reported on the principal exchange on which the Common Stock is then listed for trading.

(2)

If the principal market for the Common Stock is an over-the-counter market, the closing price of the Common Stock reported in the Nasdaq National Stock Market, or if the Common Stock is not then listed for trading in such market, the closing price reported on any other bona fide over-the-counter stock market selected in good faith by the Board. 

(3)

If the date on which Fair Market Value is to be determined is not a business day, or, if there shall be no reported transactions for such date, such determination shall be made on the next preceding business day for which transactions were reported.  

(f)

“Participant” shall mean a Director who has made an election to defer Directors’ Fees in accordance with paragraph 4.

(g)

“Termination of Service” shall mean the bona fide termination of a Participant’s services as a member of the Board. 

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4.

Right to Defer Directors’ Fees.

(a)

Each Director may elect before January 1 of any fiscal year of the Company to become a Participant and to defer the payment of all or any portion of the Directors’ Fees to which the Participant would otherwise become entitled for services to be rendered during each fiscal year subsequent to the date on which such election is effective.  An election by a Director to defer Directors’ Fees pursuant to this subparagraph (a) shall be effective with respect to Directors’ Fees earned during the first fiscal year beginning after the date such election is made and during each subsequent fiscal year until revoked or amended, provided that any such revocation or amendment shall only be effective with respect to fiscal years beginning after the date written notice of such revocation or amendment is first received by the Company.  

(b)

Despite any other provision of subparagraph (a), if a person becomes a Director during a fiscal year, such Director may elect to become a Participant with respect to all or any portion of the Directors’ Fees earned and payable (1) from and after the date on which he is elected a Director if an election is filed on or before the date of such election or (2), if no election is filed pursuant to clause (1), on the first day of the first month immediately following the month in such fiscal year in which such election is made.  An election by a Director to defer Directors’ Fees pursuant to this subparagraph (b) shall remain in effect until the last day of the fiscal year in which such election is made and during each subsequent fiscal year until revoked or amended, provided that any such revocation or amendment shall only be effective with respect to fiscal years beginning after the date written notice of such revocation or amendment is first received by the Company.

(c)

Directors’ Fees deferred by a Participant shall be distributable in accordance with paragraph 9 hereof and only after such Participant’s Termination of Service.  Any Directors’ Fees not subject to an election made in accordance with this paragraph 4 shall be paid to the Director in cash.

5.

Accounting and Elections.

(a)

The Company shall establish a Deferred Cash Account and a Deferred Stock Account in the name of each Participant.

(b)

Each Participant shall make an initial election at the time his deferral election is filed pursuant to paragraph 4 to have his deferred Directors’ Fees allocated to his Deferred Cash Account or his Deferred Stock Account.  Each fiscal year, a Participant may file a new election with the Company specifying (1) the Account to which all Directors’ Fees deferred subsequent to the last day of such fiscal year (and prior to the effective date of any subsequent election) shall be allocated and/or (2) the Account to which all or any portion of the balance of his Accounts as of the last day of such fiscal year shall be allocated.  The transfer of a Participant’s Account balance shall be made in accordance with the following:

(1)

in the case of a transfer from a Deferred Cash Account into a Deferred Stock Account, that portion of the balance in the Participant’s Deferred Cash Account as of the 

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last day of the fiscal year in which the Participant has made an election to transfer his Deferred Cash Balance shall be determined after giving effect to all other adjustments required by this Plan and such portion shall be debited from the Participant’s Deferred Cash Account and credited to his Deferred Stock Account effective as of the first day of the next subsequent fiscal year.

 

(2)

in the case of a transfer from a Deferred Stock Account into a Deferred Cash Account, the number of Stock Equivalent Units in the Participant’s Deferred Stock Account as of the last day of the fiscal year to which the Participant has made an election to transfer his Deferred Stock Account shall be determined after giving effect to all other adjustments required by this Plan and such Stock Equivalent Units shall be converted into cash equivalent by multiplying the number of such units by an amount equal to the per share Fair Market Value of the Common Stock on the last day of the fiscal year.  Effective as of the first day of the next subsequent fiscal year the Participant’s Deferred Stock Account shall be debited by the number of Stock Equivalent Units so transferred and the Participant’s Deferred Cash Account credited by the amount of cash equivalent so determined.

Any election made by a Participant in accordance with this paragraph 5 shall remain in effect until a new election filed by the Participant becomes effective.  A Participant’s initial election shall be effective as of the date the Director becomes a Participant.  Notwithstanding any other provision of this Plan,

 an

 election pursuant to this paragraph 5 which changes the Account to which any balance in such Participant’s Accounts shall be allocated shall

not be effective (1) unless, in the case of an election which is not a “Discretionary Transaction” within the meaning of Rule 16b-3(b)(1), as promulgated pursuant to the Exchange Act (a “Discretionary Transaction”),

 such election has been approved by the

Board prior to the last day of the Fiscal Year in which such election is made or (2) with respect to a Discretionary Transaction,

 if it is made by a Participant within six months of

any

 immediately preceding election filed by such Participant

under this Plan or any other plan of the Company (the “Prior Election”) and (a) the Participant’s election under this Plan will result in a transfer from the Participant’s Deferred Cash Account to the Participant’s Deferred Stock Account and the Prior Election resulted in a disposition of the Company’s equity securities, as defined in Section 16 of the Exchange Act, and any regulations promulgated thereunder (“Equity Securities”), or (b) the Participant’s election under this Plan will result in a transfer to the Participant’s Deferred Cash Account from the Participant’s Deferred Stock Account and the Prior Election resulted in an acquisition of  the Company’s Equity Securities

..  

(c)

As of each date on which the Company shall make a payment of Director’s Fees and a Participant has a deferral election then in effect, there shall be credited to such Participant’s Deferred Cash Account or Deferred Stock Account, as the case may be in accordance with such Participant’s most recent effective election, the Directors’ Fees otherwise payable to such Participant in cash as of such date. 

(d)

Despite any other provision of this Plan, the most recent election in effect on December 17, 1997 made by a Participant with respect to the crediting of his Director’s Fees to such Participant’s Deferred Cash Account or Deferred Stock Account shall remain in effect as of 

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December 17, 1997 until changed by such Director for a future fiscal year in accordance with the terms of the Plan.

(e)

Within 90 days of the end of each fiscal year in which this Plan is in effect, the Company shall furnish each Participant a statement of the year end balance in such Participant’s Deferred Cash Account and Deferred Stock Account.

(f)

Effective as of March 31, 1998, each participant in the Mosinee Paper Corporation Deferred Compensation Plan for Directors as in effect on March 31, 1998 (the “Mosinee Plan”) shall become a Participant in the Plan (a “Mosinee Participant”) and (1) the Deferred Cash Account created in the name of each such Mosinee Participant pursuant to paragraph 5(a) shall be credited with the balance, if any, of such Mosinee Participant’s Deferred Cash Account in the Mosinee Plan as of March 31, 1998 and such Mosinee Participant’s Deferred Cash Account in the Mosinee Plan shall thereafter be represented by the Deferred Cash Account established hereunder and shall be subject to all terms and conditions of this Plan and (2) the Deferred Stock Account created in the name of each such Mosinee Participant pursuant to paragraph 5(a) shall be credited with the balance, if any, of such Mosinee Participant’s Deferred Stock Account in the Mosinee Plan as of March 31, 1998 and such Mosinee Participant’s Deferred Stock Account in the Mosinee Plan shall thereafter be represented by the Deferred Stock Account established hereunder and shall be subject to all terms and conditions of this Plan.  The Deferred Cash Account and the Deferred Stock Account of any Mosinee Participant who is, on March 31, 1998, or who thereafter becomes, a Participant by virtue of being a Director shall be combined with and maintained as one account with, respectively, the Deferred Cash Account and the Deferred Stock Account maintained for such Director with respect to his Directors’ Fees.

6.

Form for Elections.  The Secretary of the Company shall provide election forms for use by Directors in making an initial election to become a Participant and for making all other elections or designations permitted or required by the Plan. 

7.

Deferred Cash Account.  As of the last day of each fiscal quarter, there shall be computed, with respect to each Deferred Cash Account which is then in existence, an amount equal to interest on the average daily balance in such Account during such quarter, computed at a rate per annum equal to the prime rate of interest then in effect at The Chase Manhattan Bank of New York.  The amount so determined shall be credited to and become part of the balance of such Account as of the first day of the next fiscal quarter.

8.

Deferred Stock Account.  

(a)

As of each date on which the Company shall make a payment of Director’s Fees and a Participant has a deferral election then in effect which provides for the deferral of payment of such fees to the Participant’s Deferred Stock Account, the Directors’ Fees otherwise payable to such Participant in cash as of such date shall be converted into that number of “Stock Equivalent Units” (rounded to the nearest one ten thousandth of a unit) determined by dividing the amount of such Directors’ Fees by an amount equal to the per share Fair Market Value of the Common Stock on such date.  

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(b)

On each date on which a dividend payable in cash or property is paid on the Common Stock, there shall be credited to each Deferred Stock Account such number of additional Stock Equivalent Units as are determined by dividing (1) the amount of the cash or other dividend which would have then been payable on the number of shares of Common Stock equal to the number of Stock Equivalent Units (including fractional shares) then represented in such Account by (2) an amount equal to the per share Fair Market Value of the Common Stock on such date.  If the date on which a dividend is paid on the Common Stock is the same date as of which Directors’ Fees are to be converted into Stock Equivalent Units, the dividend equivalent to be credited to such Account under this paragraph 8 shall be determined after giving effect to the conversion of the credit balance in such Account into Stock Equivalent Units.

(c)

The number of Stock Equivalent Units credited to a Participant’s Deferred Stock Account shall be adjusted (to the nearest one ten thousandth of a unit) to reflect any change in the Common Stock resulting from a stock dividend, stock split up, combination, recapitalization or exchange of shares, or the like.

9.

Distribution of Deferred Amounts.

(a)

Distribution of amounts represented in a Participant’s Deferred Cash Account or a Deferred Stock Account shall be made in accordance with the following:

(1)

Payment of the balance of the Deferred Cash Account and Deferred Stock Account of a Participant whose Termination of Service occurs for a reason other than death and prior to a Change of Control of the Company shall be made in a lump sum as of the last day of the fiscal quarter coincident with or immediately subsequent to the Participant’s Termination of Service unless the Participant elects otherwise in accordance with the provisions of paragraph 9(b). 

(2)

In the event a Participant ceases to be a Director because of his death or in connection with a Change of Control of the Company, payment of the balance of his Deferred Cash Account and Deferred Stock Account shall be made in a lump sum as of the last day of the fiscal quarter coincident with or immediately subsequent to the Participant’s Termination of Service.

(b)

A Participant may elect, (1) before the first day of each fiscal year, (2) subject to the automatic distribution provisions of paragraph 9(a)(2), which shall govern the distribution of benefits in the event of Termination of Service which occurs because of death or a Change of Control of the Company, and (3) prior to his Termination of Service that payment of the balance of his Deferred Cash Account and Deferred Stock Account shall be made in installments and the:

(A)

fiscal quarter in which distribution of the Participant’s Accounts shall begin (but in no event (i) earlier than the Director’s Termination of Service or (ii) later than the earlier of (a) the Director’s 70th birthday or (b) the date five years after the date of the Director’s Termination of Service; and

-8-

(B)

number of fiscal quarters over which such Accounts shall be distributed to the Participant, which period shall not extend beyond the end of the 40th fiscal quarter following the fiscal quarter in which such distribution begins. 

Any election filed pursuant to this paragraph 9(b) shall be effective as of the first day of the first fiscal year which begins next subsequent to the fiscal year in which (1) such election has been made and (2) such election has been approved by the Board.

(c)

If installment payments were elected by the Participant pursuant to paragraph 9(b), distributions shall be made in quarterly installments beginning on the first day of the first fiscal quarter following the date on which such Participant’s Termination of Service occurs or each other later fiscal quarter as the Participant may have specified.

(1)

In the case of a Deferred Cash Account with respect to which installment payments were elected, the amount of each quarterly installment shall be determined by dividing the credit balance in such Account as of the distribution date by the number of installments then remaining unpaid.  The credit balance in such Account shall then be reduced by the amount of each distribution out of such Account.

(2)

In the case of a Deferred Stock Account with respect to which installment payments were elected, the amount to be distributed as each quarterly installment shall be determined as follows:  (A) multiply the number of Stock Equivalent Units (including any fraction thereof) then reflected in such Account by the Fair Market Value of the Common Stock on such date; (B) add to the product so determined the amount (if any) which has been credited to such Account but which has not been converted into Stock Equivalent Units; and (C) divide the total so obtained by the number of installments then remaining unpaid.  The number of Stock Equivalent Units represented in a Deferred Stock Account shall be reduced forthwith by that number (rounded to the nearest one ten thousandth of a unit) determined by dividing the amount of the distribution by the Fair Market Value of the Common Stock taken into account for purposes of clause (A) of the preceding sentence.

In the event that a Participant dies after receiving payment of some, but less than all, of the entire amount to which such Participant is entitled under this Plan, the unpaid balance shall be paid in a lump sum to the Participant’s Beneficiary.

(d)

In the case of a Deferred Cash Account or a Deferred Stock Account with respect to which payment is to be made in a lump sum, the amount of such payment shall be determined as if installment payments had been elected and the lump sum was the last (but only) such payment.

(e)

After a Participant’s Termination of Service occurs, neither such Participant or his Beneficiary shall have any right to modify in any way the schedule for the distribution of amounts credited to such Participant under this Plan as specified in the last election filed by the Participant.  However, upon a written request submitted to the Secretary of the Company by the person then entitled to receive payments under this Plan (who may be the Participant, or a 

-9-

Beneficiary), the Board may in its sole discretion, accelerate the time for payment of any one or more installments remaining unpaid.

10.

Incompetency.  If, in the opinion of the Board, a Participant shall at any time be mentally incompetent, any payment to which such Participant would be entitled under this Plan may, with the approval of the Board, be paid to the Participant’s legal representative, or to any other person for his benefit and in such case, the Board may in its sole discretion, accelerate the time for payment of any one or more installments remaining unpaid.

11.

Miscellaneous.

(a)

This Plan shall be effective upon adoption by the Board.

(b)

Amounts payable hereunder may not be voluntarily or involuntarily sold or assigned, and shall not be subject to any attachment, levy or garnishment.

(c)

Participation in this Plan by any person shall not confer upon such person any right to be nominated for re election to the Board, or to be re elected to the Board.

(d)

The Company shall not be obligated to reserve or otherwise set aside funds for the payment of its obligations hereunder, and the rights of any Participant under the Plan shall be an unsecured claim against the general assets of the Company.  All amounts due Participants or Beneficiaries under this Plan shall be paid out of the general assets of the Company.

(e)

The Board shall have all powers necessary to administer this Plan, including all powers of Plan interpretation, of determining eligibility, and the effectiveness of elections, and of deciding all other matters relating to the Plan; provided, however, that no Participant shall take part in any discussion of, or vote with respect to, a matter of Plan administration which is personal to him, and not of general applicability to all Participants.  All decisions of the Board shall be final as to any Participant under this Plan.  

(f)

The Board may amend this Plan in any, and all respects at any time, or from time to time, or may terminate this Plan at any time, but any such amendment or termination shall be without prejudice to any Participant’s right to receive amounts previously credited to such Participant under this Plan.

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