Document:

LETTER AGREEMENT WITH J. LYLE PATRICK

 Exhibit 10.7 
 [US LEC Corp. Letterhead] 
 August 11, 2006 
 J. Lyle Patrick 
 Executive Vice President – Finance and Chief Financial Officer 
 c/o US LEC Corp. 
 Morrocroft III 
 6801 Morrison Blvd. 
 Charlotte, North Carolina 28211 
 Dear Lyle: 
 Once executed by both parties, this letter agreement (this
“Letter Agreement”) will constitute an agreement between US LEC Corp. (the “Company”) and you with respect to certain payments and benefits that may become payable to you in connection with a Change in Control (as defined in
Section 1). For purposes of this Letter Agreement, the “Effective Date” shall be the date first set forth above. 
 1. Certain Definitions

 For purposes of this Agreement: 
 “Cause” means
(1) your willful action or omission resulting in a material adverse effect to the Company and its affiliates, whether monetary or otherwise; (2) your substantial failure to perform your duties with the Company, other than a failure
resulting from physical or mental illness; (3) your violation of any of the restrictive covenants contained in Section 5 during employment; (4) your conviction for the commission of any felony; or (5) your commission of any act
of fraud in connection with your employment with the Company and its affiliates; 
 “Change in Control” means the first of the following events to
occur after the Effective Date: (1) consummation of a merger or other business combination involving the Company, as a result of which either (a) the Company’s shareholders immediately prior to such business combination hold,
immediately following such business combination, less than 50% of the voting power of the Company (or a successor or parent company) or (b) the members of the Company’s board of directors at the time of execution of the definitive
agreement with respect to such business combination do not, immediately following such business combination, constitute at least a majority of the membership of the board of directors of the Company (or a successor or parent company); or
(2) consummation of a sale or other disposition of all or substantially all of the Company’s assets. 

  J. Lyle Patrick —
 2
 
 August 11, 2006 
  

 “Closing Date” means the date on which a Change in Control occurs. 
 “Code” means the Internal Revenue Code of 1986, as amended. 
 “Constructive Termination” means, without your prior written consent, in each case as compared to that in effect immediately prior to the Effective Date: (1) a material adverse change in your duties or authorities (as such
duties or authorities may thereafter be increased); (2) a reduction in base salary or incentive opportunities (as such base salary or incentive opportunities may thereafter be increased), provided, however, that a reduction in your base salary
of less than 10% in connection with a diminution in duties and authorities which does not rise to the level of a Constructive Termination under subsection (1) of this definition shall not be deemed a Constructive Termination; or (3) the
relocation of your principal place of employment more than 50 miles; 
 “Pendency of a Change in Control” means the period commencing upon the
execution of a definitive agreement, consummation of which would constitute a Change in Control, and ending on the earlier to occur of (1) the date of such Change in Control and (2) the termination of such agreement; 
 “Person” means an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization, other than the Company or
any of its affiliates; and 
 “Termination Date” means the effective date of the termination of your employment with the Company and its
affiliates. 
 2. Release 
 In consideration for the
severance and other benefits provided to you under this Letter Agreement, you hereby agree to execute the Waiver and Release of Claims Agreement annexed hereto as Addendum A (the “Release”). You shall not be eligible to receive any
payments or other benefits under this Letter Agreement unless you first execute the Release and do not revoke such Release within the time permitted therein for such revocation. 
 3. Retention Bonus 
 You will be entitled to receive a retention bonus on the 60th day following the Closing Date if (a) you are employed by the Company and its affiliates on the Closing Date or (b) if your employment has
been terminated during the Pendency of a Change in Control either (i) by the Company without Cause or (ii) because of a Constructive Termination. Your retention bonus will be equal to 50% of your highest annual base salary in effect during
the Pendency of a Change in Control. 

  J. Lyle Patrick —
 3
 
 August 11, 2006 
  

 4. 2006 Bonus 
 Subject to the next succeeding sentence of this Section 4, if your employment with the Company and its affiliates is terminated as described in Section 5 prior to date (the “Bonus Payment Date”) on which bonuses (if any)
are paid with respect to the Company’s 2006 fiscal year under the Company’s 2006 annual bonus plan, you shall be entitled to payment of your bonus under such plan as though you had remained employed by the Company and its affiliates on
such bonus payment date. If prior to the Bonus Payment Date, the Company determines in good faith that you have violated any of the restrictive covenants in Section 8(a), 8(b) or 8(c), your rights to payment under this Section 4 shall be
forfeited immediately. 
 5. Qualifying Termination of Employment 
 If your employment with the Company and its affiliates is terminated (a) during the Pendency of a Change in Control or (b) during the period commencing on the Closing Date and ending on the date that is 18 months following such
Closing Date, either (i) by the Company or its affiliates without Cause or (ii) by you as the result of a Constructive Termination, you will be entitled to the payments and benefits outlined in Sections 6 and 7(a), subject to the terms and
conditions outlined in this Letter Agreement. 
 6. Severance Benefits 
 If your employment with the Company and its affiliates is terminated as described in Section 5, then subject to your satisfaction of the requirements of this Letter Agreement, you will be entitled to the
following severance benefits: 
  

	 	(a)	Severance Pay. You will be entitled to receive severance pay in an aggregate amount equal to $681,750, which is 1.5 times the sum of (1) your current base salary plus
(2) your target bonus for fiscal year 2006. Subject to Section 5(c), your severance pay will be paid over the 18-month period following the Termination Date, as follows: (i) on the payroll date (the “Delayed Payment Date”)
next following the expiration of six months from the Termination Date, you will receive the sum of $227,250; and (ii) on each subsequent payroll date, you will receive a portion of the remaining $454,500, the payments under this clause
(ii) being substantially equivalent and generally made consistent with the Company’s normal payroll cycles, but no less frequently than monthly. 

  

	 	(b)	Benefits Continuation. You and your eligible dependents shall be entitled to your “continuation coverage” within the meaning of section 4980B of the Code,
commencing on the Termination Date, at the same rates for which you were eligible immediately prior to the Termination Date, for so long as you are entitled to such continuation coverage; provided, however, that if you become eligible for group
health and dental benefits under plans maintained by a subsequent employer and such subsequent employment does not constitute a violation of the restrictive covenant contained in Section 8(b), the benefits provided under this Section 6(b)
shall be secondary to the benefits provided by such subsequent employer. 

  J. Lyle Patrick —
 4
 
 August 11, 2006 
  

	 	(c)	Earlier Termination of Benefits. Notwithstanding any other provision of this Letter Agreement, the Company’s obligation to pay or provide the severance payments and
benefits provided under this Section 6 shall terminate as of the date on which the Company determines in good faith that you have violated any of the restrictive covenants contained in Section 8(a), 8(b) or 8(c). 

7. Stock Options 
  

	 	(a)	Vesting Upon Qualifying Termination. If your employment with the Company and its affiliates is terminated as described in Section 5, then subject to your satisfaction of
the terms of this Letter Agreement, any stock options granted to you under the US LEC Corp. 1998 Omnibus Stock Plan, as amended, and held by you on the Termination Date (“Options”) which have not previously vested shall become immediately
vested and exercisable as of the Termination Date. Following the Termination Date, you may exercise vested Options until the later of (i) the date on which the Options would have expired following the Termination Date (without giving effect to
this Letter Agreement) and (ii) the earlier of (A) the date that is 18 months after the Closing Date or (B) the latest date to which exercise of the Options can be extended without being treated as an “extension” for
purposes of section 409A of the Code; provided, however, that in no event shall any Option be exercisable following its normal expiration date. 

  

	 	(b)	Forfeiture of Vested Options. If, during the one-year period immediately following the Termination Date, the Company determines in good faith that you have violated any of
the restrictive covenants in Section 8(a), (b), or (c), all of your remaining outstanding Options which became vested pursuant to Section 7(a) shall be forfeited and cancelled immediately. 

  

	 	(c)	Vesting With Continued Employment. If you continue to be employed by the Company and its affiliates on the date that is 18 months after a Change in Control, any Options which
have not previously vested shall become immediately vested and exercisable as of that date. 

 8. Restrictive Covenants 
  

	 	(a)	Confidentiality. During your employment with the Company and its affiliates and thereafter, you shall not disclose to any Person (except as required by applicable law), or
use for your own benefit or gain, any Confidential Information obtained by you incident to your employment or other association with the Company or any of its affiliates. For purposes of this Letter Agreement, references to the “Company and its
affiliates” shall also include any successors to the Company’s business. 

  J. Lyle Patrick —
 5
 
 August 11, 2006 
  

 “Confidential Information” means any and all information of the Company and its affiliates
that is not generally known by others with whom they compete or do business, or with whom they plan to compete or do business and any and all information, not publicly known, which, if disclosed by the Company or its affiliates would assist in
competition against them. Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its affiliates,
(ii) all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its affiliates, together with all services provided or planned by the Company or
any of its affiliates, during the Participant’s employment, (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its affiliates, (iv) the identity and special needs of the customers of the
Company and its affiliates and (v) the people and organizations with whom the Company and its affiliates have business relationships and those relationships. Confidential Information also includes comparable information that the Company or any
of its affiliates has received belonging to others or which was received by the Company or any of its affiliates with any understanding that it would not be disclosed. 
 Notwithstanding anything herein to the contrary, the term “Confidential Information” shall not include information that: (i) becomes subsequently available to you on a non-confidential basis from a
source not known or reasonably suspected by you to be bound by a confidentiality agreement or secrecy obligation owed to the Company; (ii) is or becomes generally available to the public other than as a result of a breach of this
Section 7(a) by you; or (iii) is independently developed by you without use, directly or indirectly, of Confidential Information. If only a portion of the Confidential Information falls under one of the foregoing exceptions, then only that
portion shall not be deemed Confidential Information. 
 In the event that you are requested or required, pursuant to any applicable court
order, administrative order, statute, regulation or other official order by any government or any agency or department thereof, to disclose any Confidential Information, you shall (i) provide the Company with prompt written notice of any such
request or requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement; and (ii) reasonably cooperate with the Company to obtain such protective order or
other remedy. In the event such protective order or other remedy is not obtained and the Company fails to waive compliance with the relevant provisions of this Agreement, you agree to (a) furnish only that portion of the Confidential
Information that you are advised by your legal counsel in writing that you are legally required to disclose, (b) upon the Company’s request and expense, use your reasonable efforts to obtain assurances that confidential treatment will be
accorded to such information, and (c) give the Company prior written notice of the Confidential Information to be disclosed as far in advance of your disclosure as is reasonably practicable. 

  J. Lyle Patrick —
 6
 
 August 11, 2006 
  

	 	(b)	Non-competition. You shall not, during your employment with the Company and its affiliates and, in the event your employment is terminated as described in Section 5, for
a period of 18 months following the Termination Date, engage in any business or enterprise (whether as owner, partner, officer, director, employee, consultant, investor, lender or otherwise, except as the holder of not more than 5% of the
outstanding stock of a publicly held company so long as you do not participate in the conduct of the business of such corporation) that develops, manufactures or sells any product or service that competes with any product or service developed,
manufactured, marketed or sold, or planned to be developed, manufactured, marketed or sold, by the Company and its affiliates in any geographic area in which the Company and its affiliates are operating at the Termination Date.

  

	 	(c)	Non-solicitation. You shall not, during your employment with the Company and its affiliates and for a period of 18 months following the Termination Date, directly or
indirectly, (i) hire or attempt to hire any employee of the Company or any of its affiliates, assist in such hiring by any Person, encourage any such employee to terminate his or her relationship with the Company or any of its affiliates,
except (A) with the prior written consent of the Company, (B) insofar as such employee responds to a bona fide public job advertisement of general circulation made by you (whether posted on a public site on the Internet or in a newspaper,
magazine or other publication), (C) if such employee initiates contact regarding employment with you without any direct or indirect solicitation by you, or (D) if such employee has been terminated by the Company and its affiliates prior to
the commencement of employment discussions between such employee and you, or (ii) solicit or encourage any customer or vendor of the Company or any of its affiliates to terminate its relationship with them, or, in the case of a customer, to
conduct with any Person any business or activity which such customer conducts or could conduct with the Company or any of its affiliates. 

  

	 	(d)	Non-disparagement. You shall not, during your employment with the Company and its affiliates and for a period of 18 months following the Termination Date, make statements or
representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any of its affiliates or their respective officers, directors,
employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Letter Agreement shall preclude you from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

  

	 	(e)	Cooperation. You shall, during your employment with the Company and its affiliates and for a period of 18 months following the Termination Date, cooperate with the Company by
being reasonably available to testify on behalf of the 

  J. Lyle Patrick —
 7
 
 August 11, 2006 
  

 Company or any of its affiliates in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Company or any of its affiliates in any such action, suit or proceeding, by providing information and meeting and consulting with the Board of Directors of the Company or the board of directors of
any of its affiliates or their respective representatives or counsel, or representatives or counsel to the Company or any of its affiliates as reasonably requested. 
  

	 	(f)	In the event that any provision of this Section 8 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too
great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law. 

 9. Injunctive Relief; Remedies 
 You acknowledge by accepting the
benefits under this Letter Agreement that any breach or threatened breach by you of any term of Section 8 of this Letter Agreement cannot be remedied solely by the recovery of damages or the withholding of benefits and the Company will
therefore be entitled to an injunction against such breach or threatened breach without posting any bond or other security. Nothing herein, however, will prohibit the Company or any of its affiliates from pursuing, in connection with an injunction
or otherwise, any other remedies available at law or in equity for such breach or threatened breach, including the recovery of damages. 
 10.
Miscellaneous 
  

	 	(a)	Death or Disability. In the event that you die or become disabled (within the meaning of the Company’s long-term incentive plan) prior to the receipt of all payments and
benefits which become payable under this Letter Agreement, any unpaid balance will be paid in a lump sum to you or, if applicable, the executor or administrator of your estate or to a properly qualified personal representative.

  

	 	(b)	Withholding. The Company shall be entitled to withhold from amounts to be paid to you under this Letter Agreement any federal, state or local withholding or other taxes which
it is from time to time required to withhold. 

  

	 	(c)	Section 409A of the Code. The parties agree that to the extent an arrangement described in this Letter Agreement fails to qualify for exemption from or satisfy the
requirements of section 409A of the Code, the affected arrangement may be operated in compliance with such section pending amendment to so comply. 

  

	 	(d)	Unenforceability. If any portion of this Letter Agreement is deemed to be void or unenforceable by a court of competent jurisdiction, the remaining portions will remain in
full force and effect to the maximum extent allowed by law. The parties intend and desire that each portion of this Letter Agreement be given the maximum possible effect allowed by law. 

  J. Lyle Patrick —
 8
 
 August 11, 2006 
  

	 	(e)	Headings. The heading of the several sections of this Letter Agreement have been prepared for convenience and reference only and shall not control, affect the meaning, or be
taken as the interpretation of any provision of this Letter Agreement. 

  

	 	(f)	Successors; Binding Agreement. This Letter Agreement will inure to the benefit of and be binding upon the parties’ personal or legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees. 

  

	 	(g)	Applicable Law. This Letter Agreement, and its interpretation and application, will be governed and controlled by the laws of the State of Delaware, applicable as though to a
contract made in Delaware by residents of Delaware and wholly to be performed in Delaware without giving effect to principles of conflicts of law. 

  

	 	(h)	Amendment. This Letter Agreement may not be changed, modified, or amended, except in a writing signed by both you and the Company. 

 11. No Termination of Employment 
 Notwithstanding anything to the
contrary contained in this Letter Agreement, the Company agrees not to terminate your employment (except for Cause) prior to December 3, 2006. 

  J. Lyle Patrick —
 9
 
 August 11, 2006 
  

 Your signature below means that: 
  

	 	(i)	You have had ample opportunity to discuss the terms and conditions of this Letter Agreement with an attorney and/or financial advisor of your choice and as a result fully understand
its terms and conditions; and 

  

	 	(ii)	You accept the terms and conditions set forth in this Letter Agreement; and 

  

	 	(iii)	This Letter Agreement supersedes and replaces any and all agreements or understandings, whether written or oral, that you may have with the Company concerning your termination of
employment and any other separation, termination, retirement or compensation arrangement. 

 If you find the foregoing acceptable, please sign
your name on the signature line provided below. Once this Letter Agreement is executed, please return it directly to my attention. Should you have any questions regarding this Letter Agreement or any of the terms hereof, now or in the future, please
contact [            ]. 
  

	
	Very truly yours,
	
	 US LEC CORP.
  

	By: 

 I accept the terms and conditions of this Letter Agreement. 
  

			
	Signed:	 	  

	J. Lyle Patrick
		
	Dated:	 	  

 ADDENDUM A 
 WAIVER AND RELEASE OF CLAIMS AGREEMENT 
 I HAVE BEEN ADVISED TO CONSULT AN ATTORNEY PRIOR TO SIGNING
THIS AGREEMENT. 
 I UNDERSTAND THAT I HAVE [FORTY-FIVE] [TWENTY-ONE] DAYS AFTER RECEIVING THIS AGREEMENT TO CONSIDER WHETHER TO SIGN
IT. 
 AFTER SIGNING THIS AGREEMENT, I UNDERSTAND THAT I HAVE ANOTHER SEVEN DAYS IN WHICH TO REVOKE IT, AND IT DOES NOT TAKE EFFECT UNTIL
THOSE SEVEN DAYS HAVE ENDED. 
 In consideration of, and subject to, the payments to be made to me by US LEC Corp. (“US LEC Corp.”
or the “Company”) or any of its subsidiaries or affiliates, pursuant to the Letter Agreement dated as of August 11, 2006, between US LEC Corp. and me (the “Letter Agreement”), which I acknowledge that I would not otherwise
be entitled to receive, I hereby waive any claims I may have for employment or re-employment by the Company or any subsidiary or affiliate thereof after the date hereof, and I further agree to and do release and forever discharge the Company or any
subsidiary or affiliate of the Company and their respective past and present officers, directors, shareholders, employees and agents from any and all claims and causes of action, known or unknown, arising out of or relating to my employment with the
Company or any subsidiary or affiliate of the Company or the termination thereof, including, but not limited to, wrongful discharge, breach of contract, tort, fraud, any State’s Human Relations Act, the Americans with Disabilities Act, Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, Sections 1981-1988 of Title 42 of the U.S. Code, Older Workers’ Benefit Protection Act, Family and Medical Leave Act, the Fair Labor Standards Act, any State’s Wage Payment
and Collection laws, the Age Discrimination in Employment Act of 1967, the Pregnancy Discrimination Act, the Employee Retirement Income Security Act of 1974 (“ERISA”), all as amended. Should I decide to file any charge or legal claim
against the Company, I agree to waive my right to recover any damages or other relief awarded to me which arises out of any such charge or legal claim made by me against the Company. 
 Notwithstanding the foregoing or any other provision hereof, nothing in this Waiver and Release of Claims Agreement shall adversely affect (i) my
rights under the Letter Agreement; (ii) my rights to vested benefits (other than severance benefits) under any “employee benefit plan” (within the meaning of Section 3(3) of ERISA) of the Company or any subsidiary or affiliate of
the Company; or (iii) my rights to indemnification under any indemnification agreement, applicable law and the certificates of incorporation and bylaws of the Company and any subsidiary of the Company, and my rights under any director’s
and officer’s liability insurance policy covering me. 
 I acknowledge that I have signed this Waiver and Release of Claims Agreement
voluntarily, knowingly, of my own free will and without reservation or duress, and that no 

 promises or representations, written or oral, have been made to me by any person to induce me to do so other than the
promise of payment set forth in the first paragraph above and the Company’s acknowledgment of my rights reserved under the preceding paragraph above. 
 I acknowledge that I have been given not less than [forty-five (45)] [twenty-one (21)] days to review and consider this Waiver and Release of Claims Agreement, and that I have had the opportunity to consult
with an attorney or other advisor of my choice and have been advised by the Company to do so if I choose. I may revoke this Waiver and Release of Claims Agreement seven days or less after its execution by providing written notice to the
[Vice-President of Human Resources] at the Company’s corporate headquarters (or some other designee). 
 Finally, I acknowledge that I
have carefully read this Waiver and Release of Claims Agreement and understand all of its terms. This is the entire Agreement between the parties and is legally binding and enforceable. 
  

 2 

 This Waiver and Release of Claims Agreement shall be governed and interpreted under federal law and the
laws of the State of Delaware. 
 I knowingly and voluntarily sign this Waiver and Release of Claims Agreement and agree to be bound by its
terms. 
  

									
	Date Delivered to J. Lyle Patrick:	 	 	  	USA LEC CORP.
				
	  
	 		  		  	
				
	Date Signed by J. Lyle Patrick:	 		  	By:	  	  

				
	  
	 		  	Title:	  	  

				
	Seven-Day Revocation Period Ends:	 		  		  	
				
	  
	 		  		  	
					
	Signed:	 	  
	 		  	Date:	  	  

				
	  
	 		  		  	
	J. Lyle Patrick	 		  		  	

  

 3Appleton Papers Inc. Long-Term Incentive Plan

 Exhibit 10.1 
 Appleton Papers Inc. 
 Long Term Incentive Plan 
 (As Amended and Restated Effective January 1, 2006) 

 Appleton Papers Inc. 
 Long Term Incentive Plan 
 (As Amended and Restate Effective January 1, 2006) 
 TABLE OF CONTENTS 
  

					
	ARTICLE 1. Purpose and Effective Date	  	1
	 1.1
	  	Purpose	  	1
	 1.2
	  	Effective Date	  	1
		
	ARTICLE 2. Definitions	  	1
	 2.1
	  	Board	  	1
	 2.2
	  	Cause	  	1
	 2.3
	  	Change of Control	  	1
	 2.4
	  	Committee	  	2
	 2.5
	  	Common Stock	  	2
	 2.6
	  	Company	  	2
	 2.7
	  	Disability	  	2
	 2.8
	  	Eligible Employee	  	2
	 2.9
	  	Employment	  	2
	 2.10
	  	ESOP	  	2
	 2.11
	  	Exercise Date	  	2
	 2.12
	  	Exercise Period	  	2
	 2.13
	  	Exercise Window	  	2
	 2.14
	  	Fair Market Value	  	3
	 2.15
	  	Participant	  	3
	 2.16
	  	Phantom Stock Unit	  	3
	 2.17
	  	Plan	  	3
	 2.18
	  	Plan Year	  	3
	 2.19
	  	Representative	  	3
	 2.20
	  	Retirement	  	3
		
	ARTICLE 3. Plan Administration	  	3
	 3.1
	  	Committee Administration	  	3
	 3.2
	  	Maximum Reserved Units	  	4
	 3.3
	  	Changes in Capital Structure	  	4
		
	ARTICLE 4. Participation and Awards	  	4
	 4.1
	  	Annual Grants	  	4
	 4.2
	  	New Hires and Employment Classification Changes	  	4
		
	ARTICLE 5. Vesting and Exercise of Units	  	4
	 5.1
	  	Vesting	  	4

  

 i 

					
	 5.2
	  	Expiration	  	5
	 5.3
	  	Exercise of Units	  	5
	 5.4
	  	Vesting and Exercise Upon Change of Control	  	5
	 5.5
	  	Payment For Exercised Units	  	5
	 5.6
	  	Unit Valuation	  	6
	 5.7
	  	Tax Withholding	  	6
	 5.8
	  	Change of Control Tax Provisions	  	6
	 5.9
	  	Forfeitures	  	7
	 5.10
	  	Presumed Competency	  	7
	 5.11
	  	Forfeiture of Unclaimed Benefits	  	7
		
	 ARTICLE 6. Miscellaneous Provisions
	  	7
	 6.1
	  	Nonguarantee of Employment	  	7
	 6.2
	  	No Rights As Shareholder	  	8
	 6.3
	  	Nonassignable	  	8
	 6.4
	  	Unfunded Plan	  	8
	 6.5
	  	Offsets	  	8
	 6.6
	  	Limitation of Actions	  	8
	 6.7
	  	Amendment and Termination	  	8
	 6.8
	  	Governing Law; Jurisdiction	  	8

 * * * * * 
  

 ii 

 Appleton Papers Inc. 
 Long Term Incentive Plan 
 (As Amended and Restated Effective January 1, 2006) 
 ARTICLE 1. 
 Purpose and Effective
Date 
 1.1 Purpose. The Board adopted the Plan for the purpose of assisting the Company in attracting and retaining key
management employees who are in a position to make a significant contribution to the growth and profitability of the Company by providing a reward for performance and incentive for future endeavor. The Plan will be implemented through the
opportunity to earn Phantom Stock Units, the value of which is related to the appreciation in the value of the Company’s stock. 
 1.2
Effective Date. The effective date of the Plan (the “Effective Date”) is the date upon which a controlling interest in the Company is acquired by Paperweight Development Corporation. The effective date of the Plan as restated herein
is January 1, 2006. 
 ARTICLE 2. 
 Definitions 
 Capitalized words and phrases used in the Plan have the following meanings unless
otherwise expressly provided herein: 
 2.1 Board. “Board” means the Board of Directors of Appleton Papers Inc. 

2.2 Cause. “Cause” in connection with the termination of the Participant’s employment with the Company, means that, in the
judgment of the Committee, based upon any information or evidence reasonably persuasive to the Committee, the Participant: (1) willfully engaged in activities or conducted himself or herself in a manner seriously detrimental to the interests of
the Company or its subsidiaries and affiliates; or (2) failed to execute the duties reasonably assigned to him or her in a reasonably timely, effective, or competent manner; provided, however, that the termination of the Participant’s
employment because of Disability shall not be deemed to be for Cause. 
 2.3 Change of Control. “Change of Control” means:
(1) the termination of the ESOP or amendment of the ESOP so that it ceases to be an employee stock ownership plan; (2) the ESOP ceases to own a majority interest in the Company; (3) the sale, lease, exchange or other transfer of all
or substantially all of the assets of the Company (in one transaction or in a series of related transactions) to a person or entity that is not controlled by the Company; (4) the approval by the Company shareholders of any plan or proposal to
terminate the Company’s business, to liquidate or dissolve the Company or to sell substantially all the Common Stock; (5) the Company merges or consolidates with any other company and the Company is not the surviving company of such merger
or consolidation; or (6) any other event or series of events whereby ownership and effective control of the Company is transferred or conveyed to a person or entity that is not controlled by the Company. 
  

 Page 1 of 8 

 2.4 Committee. “Committee” means the Compensation Committee of the Board. 
 2.5 Common Stock. “Common Stock” means the common stock of Paperweight Development Corporation. 
 2.6 Company. “Company” means Appleton Papers Inc., 825 East Wisconsin Avenue, Appleton, Wisconsin 54911-1703. “Company” also
means (except where the context relates solely to Appleton Papers Inc.) any subsidiary or other affiliate of Appleton Papers Inc. who employs an Eligible Employee (as designated by the Committee in accordance with Section 4.1). Any such
subsidiary or affiliate of Appleton Papers Inc. that has become a “Company” as provided above is deemed to have designated Appleton Papers Inc. as its agent with respect to amending or terminating the Plan. Any such action by Appleton
Papers Inc. shall be binding on such subsidiary or affiliate at the time taken. 
 2.7 Disability. “Disability” means a
physical or mental condition of the Participant which results in the Participant receiving benefits under an applicable Company’s long term disability insurance plan, or in the event the Participant is not participating in a Company long term
disability insurance plan, means disability as defined under the long term disability plan of Appleton Papers Inc. 
 2.8 Eligible
Employee. “Eligible Employee” means an employee of Appleton Papers Inc. in the following classifications: (1) the Chief Executive Officer, (2) a Vice President or Mill Manager, (3) a director-level employee; and
(4) any other key employee of a participating Company who has been designated by the Committee as an Eligible Employee. 
 2.9
Employment.References in the Plan to “employment” with the Company; “year(s) of employment” and “termination of employment” shall in all events refer to the total period of employment with Appleton Papers Inc.
and any of its subsidiaries or affiliates. For example, a Participant’s termination of employment for purposes of the Plan shall occur at the time the Participant is no longer employed by Appleton Papers Inc., or any of its subsidiaries or
affiliates. 
 2.10 ESOP.“ESOP” means the Appleton Papers Retirement Savings and Employee Stock Ownership Plan. 

2.11 Exercise Date. “Exercise Date” means the date upon which a Participant delivers a Notice of Exercise as provided herein during
the Exercise Period and within the Exercise Window indicating the Participant’s intention to cash out the Phantom Stock Units granted pursuant to a particular Grant Confirmation. 
 2.12 Exercise Period. “Exercise Period” means, with respect to a particular grant of Phantom Stock Units, the period or periods during
which such Phantom Stock Units are exercisable, as determined by the Committee on the Grant Date and as set out in the Grant Confirmation. 
 2.13 Exercise Window. “Exercise Window” means each 60 day period following the date of the announcement of the Fair Market Value assigned to the Common Stock as of June 30th and December 31st of
each year as confirmed by Notice sent to each Participant by the Company on a semi-annual basis as soon as administratively practical after the date of announcement. 
  

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 2.14 Fair Market Value. “Fair Market Value” means the fair market value of a Phantom
Stock Unit which is equal to the fair market value most recently assigned to Common Stock under the terms of the ESOP prior to the Grant Date or the Exercise Date, as applicable. For Example, an exercise of a Phantom Stock Unit during an Exercise
Window between January 1 and June 30 will be based on the fair market value assigned to the Common Stock under the ESOP on the prior December 31 valuation. An exercise during an Exercise Window between July 1 and December 31
will be based on the prior June 30 valuation. 
 2.15 Participant. “Participant” means an Eligible Employee who
participates in the Plan in accordance with Article 4. 
 2.16 Phantom Stock Unit. “Phantom Stock Unit” means a bookkeeping
unit and accounting mechanism designed to measure the value of a nonequity compensation unit payable as taxable compensation to the Participant in accordance with Article 5. One Phantom Stock Unit has a value, as of the date of grant to a
Participant pursuant to Section 4.1, equal to the value of one share of Common Stock at such time (as determined pursuant to Section 5.6). 
 2.17 Plan. “Plan” means the Appleton Papers Inc. Long Term Incentive Plan, as set forth herein and as amended from time to time. 
 2.18 Plan Year. “Plan Year” means the fiscal year of Appleton Papers Inc. 
 2.19 Representative. “Representative” means the personal representative of the Participant’s estate, and after final settlement of
the Participant’s estate, the successor or successors entitled thereto by law. 
 2.20 Retirement. “Retirement” means
termination of employment with the Company under a tax-qualified retirement plan maintained by the Company or an applicable subsidiary or affiliate, including early retirement under such plan. 
 ARTICLE 3. 
 Plan Administration 
 3.1 Committee Administration. The Committee shall be responsible for the operation and administration of the Plan. The decision of a majority of
the members of the Committee shall constitute the decision of the Committee. The Committee may act either at a meeting at which a majority of the members of the Committee is present or by a writing signed by all Committee members. The Committee
shall have full discretion, power and authority to make factual determinations, construe, interpret and administer the Plan, to adopt such rules and regulations governing the administration of the Plan, and shall exercise all other duties and powers
conferred on it by the Plan, or which are incidental or ancillary thereto, and may designate agents to assist it in administration of the Plan. The Committee shall have the sole, final and conclusive authority to determine, consistent with and
subject to the provisions of the Plan, the individuals eligible to participate in the Plan, the 
  

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Participants to whom Phantom Stock Units are to be awarded, the number of Phantom Stock Units to be awarded, vesting of awards and all other matters relating
to the Plan. Benefits will be paid only if the Committee determines in its discretion that the applicant is entitled to them. 
 3.2
Maximum Reserved Units. The maximum number of Phantom Stock Units that may be granted each year shall not exceed the number of Phantom Stock Units that would represent 3% of total stockholders’ equity in the Company immediately prior to
such grant, determined in accordance with generally accepted accounting principles. 
 3.3 Changes in Capital Structure. If there is a
change in the outstanding Common Stock by reason of the issuance of additional units, recapitalization, reclassification, reorganization or similar transaction, the Committee shall proportionately adjust, in an equitable manner, the aggregate number
of available Phantom Stock Units and the number of Phantom Stock Units held by Participants. The adjustment shall be made in a manner that will cause the relationship between the aggregate appreciation in the outstanding Common Stock and the
increase in value represented by each Phantom Ownership Unit to remain unchanged as a result of the transaction. 
 ARTICLE 4.

 Participation and Awards 
 4.1 Annual Grants. Phantom Stock Units shall be granted, as of the first day of a Plan Year (the “Grant Date”), to all Eligible Employees who are Participants with respect to that Plan Year. Before the beginning of each
Plan Year, the Committee shall designate those key management employees of the Company who are Eligible Employees for the Plan Year (in addition to those of the Chief Executive Officer, Vice Presidents, Mill Managers and director-level employees of
Appleton Papers Inc.) who are so designated for the Plan Year and shall notify Participants of such designation. The number of Units awarded to each Participant or class of Participants, if any, shall be determined by the Committee in its sole
discretion, before the beginning of each Plan Year. The Committee shall notify Participants of the Units awarded for a Plan Year (“Grant Confirmation”) as soon as administratively practical after such awards have been established by the
Committee. 
 4.2 New Hires and Employment Classification Changes. An individual who becomes an Eligible Employee after the beginning
of the Plan Year, either as a newly hired employee or as a result of a change in employment classification, shall be entitled to receive a grant of Phantom Stock Units for such Plan Year in accordance with Section 4.1, prorated based on the
number of days during the Plan Year that such individual was an Eligible Employee. 
 ARTICLE 5. 
 Vesting and Exercise of Units 
 5.1
Vesting. A Phantom Stock Unit shall vest and, except as otherwise provided in Section 5.3 or 5.4, become exercisable on the completion of three (3) full years of employment commencing with the Grant Date of the Phantom Stock Unit or
the occurrence of a Change of Control. Upon termination of employment due to the Participant’s death, Disability or Retirement, an award of Phantom Stock Units shall be 0% vested if such employment termination occurs before 
  

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the completion of one (1) full year of employment commencing with the Grant Date, 33.3% vested if such employment termination occurs on or after the
completion of one (1) full year of employment, but before completion of two (2) full years of employment commencing with the Grant Date, and shall be 66.7% vested if such employment termination occurs on or after the completion of two
(2) full years of employment but before the completion of three (3) full years of employment commencing with the Grant Date. Any grant of Phantom Stock Units, or portion thereof, not vested according to the foregoing schedule on the date
of the Participant’s termination of employment for any reason shall be forfeited. 
 5.2 Expiration. Phantom Stock Units shall
expire, and cease to be exercisable, at the earliest of the following times: (1) ten (10) years after the Grant Date; (2) the close of the second (2nd) Exercise Window that occurs after the Participant’s termination of employment with the Company due to death, Disability or Retirement; (3) the close of the first (1st) Exercise Window that occurs after the Participant’s termination of employment for any reason other than death,
Disability or Retirement; or (4) immediately on termination of employment with the Company for any reason, if the Phantom Stock Unit has not vested as of the employment termination date. 
 5.3 Exercise of Units. Vested Phantom Stock Units may be exercised by the Participant (or by the Participants Representative in the event of the
Participant’s death), in whole or in part, at any time on or before the applicable Unit expiration date. Notwithstanding the foregoing, Phantom Stock Units may be exercised only during the two (2) Exercise Window periods each Plan Year
that are established by the Committee and communicated in writing to Participants. To initiate the process for the exercise of a Phantom Stock Unit, the Participant shall deliver to the Committee a written notice of intent to exercise, on forms
approved by the Committee for such purpose, specifying the number of units being exercised (“Notice of Exercise”). The date of exercise of a Phantom Stock Unit shall be determined under procedures established by the Committee, but in no
event shall the date of exercise precede the date on which the written Notice of Exercise has been received by the Committee. Provided that all conditions precedent contained in the Plan are satisfied, the Committee shall make payment for the
exercised Units in accordance with Section 5.5. 
 5.4 Vesting and Exercise Upon Change of Control. Notwithstanding Sections 5.2
and 5.3 above, upon a Change of Control, all Phantom Units outstanding at the time of the Change of Control shall be fully vested and exercised automatically as of such date. 
 5.5 Payment For Exercised Units. Upon exercise of a vested Phantom Stock Unit in accordance with Section 5.3 or 5.4, payment, less applicable
withholding taxes (including without limitation income tax deducted at the source under the United Kingdom Pay As You Earn (“PAYE”) System, primary National Insurance Contributions (“NIC”) or any similar liability payable by
reason of any conferment of benefit under the Plan), shall be made to the Participant (or to the Participant’s Representative in the event of the Participant’s death) in a single sum cash payment in an amount equal to the value of the
Phantom Stock Unit on the date such unit is exercised minus the value of the unit on the grant date of such unit. This cash payment will be paid in the currency in which such Participant is paid the majority of his or her remuneration by multiplying
the amount by the appropriate currency exchange rate as posted in the Wall Street Journal on the last date of the valuation of the Common Stock. Payment will be made as soon as practicable after exercise, but no later than two and one-half months
following the year of exercise. 
  

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 5.6 Unit Valuation. The value represented by a Phantom Stock Unit shall be the greater of:
(1) the Fair Market Value of a share of Common Stock; (2) the price per share of Common Stock received as a result of a Change of Control; or (3) a public offering price. 
 5.7 Tax Withholding. The Committee shall deduct from payments made under the Plan any federal, state or local withholding or other taxes or
charges (including without limitation income tax deducted at the source under the United Kingdom Pay As You Earn (“PAYE”) System, primary National Insurance Contributions (“NIC”) or any similar liability payable by reason of any
conferment of benefit under the Plan) which the Company is required to deduct under applicable law. 
 5.8 Change of Control Tax
Provisions. If any payments or benefits provided to Executive under this Agreement (the “Payments”) will be subject to the tax imposed by Section 4999 of the Code (the “Excise Tax”), the Company shall pay to Executive,
at the time the Payments are paid to Executive, an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of any Excise Tax on the Payments and any federal, state and local income tax and
Excise Tax on the Gross-Up Payment itself, shall be equal to the Payments. 
 For purposes of determining whether any of the Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received by Executive in connection with a Change of Control or Executive’s termination of employment shall be treated as “parachute
payments” within the meaning of section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected
by the Company’s independent auditors and acceptable to Executive such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code, (ii) the amount of the Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount
of the Payments or (B) the amount of excess parachute payments within the meaning of Sections 280G(b)(1) and (4) (after applying clause (i) above, and after deducting any excess parachute payments in respect of which payments have
been made), and (iii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rates of taxation in the state and locality of Executive’s residence on the date of Executive’s termination of employment, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. 
 If the Excise Tax is subsequently determined to be less than the amount taken into
account hereunder, Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction. 

  

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If the Excise Tax is determined to exceed the amount taken in account hereunder (including by reason of any payment the existence or amount of which cannot
be determined at the time of the Gross-Up Payment), the Company shall make an additional gross-up payment in respect of such excess to Executive (plus any interest payable with respect to such excess) at the time that the amount of such excess is
finally determined. 
 5.9 Forfeitures. Notwithstanding any other provision of the Plan, all rights to any payments under the Plan,
shall be discontinued and forfeited, and the Company will have no further obligation to the Participant if the Participant is discharged from employment with the Company or its subsidiaries and affiliates for Cause, or the Participant performs
during the course of his employment with the Company or its subsidiaries and affiliates acts of willful malfeasance or gross negligence in a matter of material importance to the Company. Absent a Change of Control, any decision of the Committee with
respect to the application of the provisions of this Section 5.9 shall have a presumption of correctness, and the burden shall be on the Participant to rebut such presumption by clear and convincing evidence. 
 5.10 Presumed Competency. Every person receiving or claiming payments under the Plan shall be conclusively presumed to be mentally competent until
the date on which the Committee receives a written notice in a form and manner acceptable to the Committee that such person is incompetent and that a guardian, conservator or other person legally vested with the interest of his or her estate has
been appointed. In the event a guardian or conservator of the estate or any person receiving or claiming payments under the Plan shall be appointed by a court of competent jurisdiction, payments under the Plan may be made to such guardian or
conservator provided that the proper proof of appointment and continuing qualification is furnished in a form and manner acceptable to the Committee. Any such payments so made shall be a complete discharge of any liability or obligation of Company
or the Committee regarding such payments. 
 5.11 Forfeiture of Unclaimed Benefits. Each Participant shall keep the Committee informed
of his or her current address. The Committee shall not be obligated to search for the whereabouts of any person. If the Committee is unable to locate any person to whom a payment is due under the Plan or a distribution payment check is not presented
for payment, such payment shall be irrevocably forfeited at the earlier of: (1) the day preceding the date such payment would otherwise escheat pursuant to any applicable escheat law; or (2) the later of three (3) years after the date
on which the payment was first due or ninety (90) days after issuance of the check. Forfeited payments shall be returned to the Company. 
 ARTICLE 6. 
 Miscellaneous Provisions 
 6.1 Nonguarantee of Employment. No employee or other person shall have any claim or right to participate in the Plan except as designated by the Committee. Neither the Plan nor any action taken pursuant to the
Plan shall be construed as giving any employee any right to be retained in the employ of the Company. 
  

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 6.2 No Rights As Shareholder. Phantom Stock Units shall not entitle the Participant to an equity
interest in the Company nor give the Participant the rights of a shareholder in the Company. 
 6.3 Nonassignable. Phantom Stock Units
are an unfunded promise to pay and are not property. Any rights and privileges represented by a Phantom Stock Unit may not be transferred, assigned, pledged or hypothecated in any manner, by operation of law or otherwise, and shall not be subject to
execution, attachment or similar process except as provided in Section 6.5. 
 6.4 Unfunded Plan. The Plan shall at all times be
unfunded and no provision shall at any time be made with respect to segregating assets of the Company for payment of benefits under the Plan. No Participant or other person shall have any interest in any particular assets of the Company and shall
have only the rights of a general unsecured creditor of the Company with respect to any rights under the Plan. 
 6.5 Offsets. As a
condition to eligibility to participate in the Plan, each Participant consents to the deduction from amounts otherwise payable to the Participant under the Plan all amounts owed by the Participant to the Company and its subsidiaries and affiliates
to the maximum extent permitted by applicable law. 
 6.6 Limitation of Actions. No lawsuit with respect to any benefit payable or
other matter arising out or relating to the Plan may be brought before exhaustion of claim and review procedures established by the Committee, and any lawsuit must be filed no later than nine (9) months after a claim is denied or be forever
barred. 
 6.7 Amendment and Termination. The Board may amend or terminate the Plan at any time.; provided that no amendment to the
Plan may alter, impair or reduce the number of Phantom Stock Units earned before the effective date of the amendment without the written consent of the affected Participants. No Phantom Stock Units may be awarded after the date of Plan termination
although payments shall be made in accordance with the Plan with respect to Phantom Stock Units awarded before the date of Plan termination. Notwithstanding anything herein to the contrary, the Committee, in its sole discretion, may accelerate the
time for exercise of vested Phantom Stock Units upon Plan termination. 
 6.8 Governing Law; Jurisdiction. The Plan shall be governed
by, and construed in accordance with, the laws of the State of Wisconsin. By participating in the Plan, the Participant irrevocably consents to the exclusive jurisdiction of the courts of the State of Wisconsin and of any federal court located in
Milwaukee, Wisconsin in connection with any action or proceeding arising out of or relating to the Plan, any document or instrument delivered pursuant to or in connection with the Plan. 
 * * * * * 
  

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