Document:

<PAGE>

                                                                    Exhibit 10.8

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

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

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

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

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

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

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

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

                                   ARTICLE I

                                  DEFINITIONS

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -2-

<PAGE>

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

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

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

                                   ARTICLE II

                                SECURITY INTEREST

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

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

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

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

                                      -3-

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                                      -4-

<PAGE>

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

          (a) the failure of the Secured Party:

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

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

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

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

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

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

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

                                      -5-

<PAGE>

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

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

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

                                      -6-

<PAGE>

                                   ARTICLE IV

                                    COVENANTS

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

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

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

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

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

                                      -7-

<PAGE>

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

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

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

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

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

                                    ARTICLE V

                               THE SECURED PARTY

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

                                      -8-

<PAGE>

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

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

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

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

                                   ARTICLE VI

                                    REMEDIES

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

                                      -9-

<PAGE>

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

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

                                   ARTICLE VII

                               GENERAL PROVISIONS

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

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

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

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

                  with a copy to:

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

                                      -10-

<PAGE>

                  If to the Secured Party:

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

                  and

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

                  with a copy to:

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

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

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

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

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

                                      -11-

<PAGE>

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

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

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

                                      -12-

<PAGE>

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

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

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

                            [Signature Page Follows]

                                      -13-

<PAGE>

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

                                 GRANTORS:

                                 APPLETON PAPERS INC.

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

                                 PAPERWEIGHT DEVELOPMENT CORP.

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

                                 NEW APPLETON LLC

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

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

                                 SECURED PARTY:

                                 ARJO WIGGINS APPLETON p.l.c.

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

                                      -14-<PAGE>

                                                                    Exhibit 10.9

                             RELATIONSHIP AGREEMENT

          This AGREEMENT, dated as of November 9, 2001, is by and among ARJO
WIGGINS APPLETON p.l.c. ("AWA"), ARJO WIGGINS (BERMUDA) HOLDINGS LIMITED ("AWA
                          ---                                              ---
Sub" and, together with AWA, the "AWA Parties"), PAPERWEIGHT DEVELOPMENT CORP.
---                               -----------
("PDC"), PDC CAPITAL CORPORATION ("PDC Sub" and, together with PDC, the "PDC
  ---                              -------                               ---
Parties") and ARJO WIGGINS APPLETON (BERMUDA) LIMITED ("Bermuda").
-------                                                 -------

PRELIMINARY STATEMENTS:

          (1) AWA is the sole holder of all of the issued and outstanding Class
A Common Shares of AWA Sub.

          (2) PDC is the sole stockholder of PDC Sub.

          (3) AWA Sub is the legal and beneficial owner of 800 Class A Common
Shares and 1000 Class B Preference Shares of Bermuda (the "AWA Sub Bermuda
                                                           ---------------
Securities").
----------

          (4) PDC Sub is the legal and beneficial owner of 200 Class A Common
Shares and 1 Class C Preference Share of Bermuda (the "PDC Sub Bermuda
                                                       ---------------
Securities").
----------

          (5) AWA, PDC, New Appleton LLC and Appleton Papers Inc. ("API") are
parties to that certain AWA Fox River Environmental Indemnity Agreement, dated
November 9, 2001 (the "AWA Indemnity Agreement").
                       -----------------------

          (6) AWA and Bermuda are parties to that certain Assignment and
Assumption Deed, dated November 9, 2001 (the "Assumption Deed").
                                              ---------------

          (7) The parties wish to enter into this Agreement to set out certain
mutual agreements concerning the activities of Bermuda and the satisfaction of
claims under the Assumption Deed and the AWA Indemnity Agreement.

          NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

          SECTION 1. Definitions.
                     -----------

          (a) "Administrative Agent" means Toronto Dominion (Texas), Inc. or its
               --------------------
successor as administrative agent pursuant to the Credit Agreement.

          (b) "Credit Agreement" means that certain Credit Agreement, dated as
               ----------------
of November 9, 2001, by and among PDC, API, the several banks and other
financial institutions or entities from time to time parties thereto, Bear
Stearns & Co. Inc., as sole lead arranger and sole bookrunner, Bear Stearns
Corporate Lending Inc., as syndication agent, U.S. Bank National Association
d/b/a Firstar Bank N.A. and LaSalle Bank National Association, each as

<PAGE>

documentation agent, M&I Marshall & Ilsely Bank, as managing agent, Associated
Bank, N.A., and the Administrative Agent, together with any amendments or
modifications thereto.

     (c) "Trustee" means (i) AWA, any subsequent holder of more than fifty
          -------
percent (50%) of the outstanding principal amount of the $250,000,000 senior
subordinated note issued by API on the date hereof (the "Senior Subordinated
                                                         -------------------
Note") or a designee thereof and (ii) the trustee under an indenture providing
----
for the issuance of senior subordinated notes by API, the proceeds of which are
used alone or together with other funds to repay the Senior Subordinated Note
(the "New Notes") in whole.
      ---------

     (d) Other capitalized terms used in this Agreement not otherwise defined
herein shall have the meanings set forth in the AWA Indemnity Agreement.

     SECTION 2. Prohibition of Certain Activities.
                ---------------------------------

     (a) Except with the prior written consent of AWA, and, at a time that AWA
is required to maintain the Acceptable Protection Coverage, of the
Administrative Agent and the Trustee, PDC shall not:

         (i)   transfer, whether voluntarily or involuntarily, any of the equity
securities of PDC Sub (collectively, the "PDC Sub Equity Securities");
                                          -------------------------

         (ii)  grant, whether voluntarily or involuntarily, any option or right,
or enter into any agreement, that (A) calls for the issuance, sale or other
disposition of any PDC Sub Equity Securities or (B) relates to the voting or
control of any PDC Sub Equity Securities;

         (iii) create or permit to exist any pledge, lien, fixed or floating
charge or other encumbrance over any PDC Sub Equity Securities; or

         (iv)  vote as a stockholder of PDC Sub in favor of, or otherwise
permit, (A) any assignment by PDC Sub for the benefit of creditors, the
appointment of a receiver for the assets of PDC Sub or the filing of any
petition or application concerning PDC Sub under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or regulation,
(B) the issuance of additional equity securities by PDC Sub, (C) the amendment
of the Certificate of Incorporation or Bylaws of PDC Sub (collectively, the "PDC
                                                                             ---
Sub Constitutional Documents"), or (D) the taking of any act outside the
----------------------------
corporate powers of PDC Sub, as reflected in the PDC Sub Constitutional
Documents.

     (b) Except with the prior written consent of PDC, and, at a time
that AWA is required to maintain the Acceptable Protection Coverage, of the
Administrative Agent and the Trustee, AWA shall not:

         (i)   transfer, whether voluntarily or involuntarily, any of the equity
securities of AWA Sub (collectively, the "AWA Sub Equity Securities");
                                          -------------------------

         (ii)  grant, whether voluntarily or involuntarily, any option or right,
or enter into any agreement, that (A) calls for the issuance, sale or other
disposition of any AWA Sub Equity Securities or (B) relates to the voting or
control of any AWA Sub Equity Securities;

                                       2

<PAGE>

         (iii) create or permit to exist any pledge, lien, fixed or floating
charge or other encumbrance over any AWA Sub Equity Securities; or

         (iv)  vote as a stockholder of AWA Sub in favor of, or otherwise
permit, (A) any assignment by AWA Sub for the benefit of creditors, the
appointment of a receiver for the assets of AWA Sub or the filing of any
petition or application concerning AWA Sub under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or regulation,
(B) the issuance of additional equity securities by AWA Sub, (C) the amendment
of the Memorandum of Association or Bye-Laws of AWA Sub (the "AWA Sub
                                                              -------
Constitutional Documents") or (D) the taking of any act outside the corporate
------------------------
powers of AWA Sub, as reflected in the AWA Sub Constitutional Documents.

     (c) Except with the prior written consent of AWA, and, at a time that AWA
is required to maintain the Acceptable Protection Coverage, of the
Administrative Agent and the Trustee, PDC Sub shall not, and PDC shall cause PDC
Sub not to:

         (i)   transfer, whether voluntarily or involuntarily, the PDC Sub
Bermuda Securities;

         (ii)  grant, whether voluntarily or involuntarily, any option or right,
or enter into any agreement, that (A) calls for the issuance, sale or other
disposition of any PDC Sub Bermuda Securities or (B) relates to the voting or
control of any PDC Sub Bermuda Securities; or

         (iii) create or permit to exist any pledge, lien, fixed or floating
charge or other encumbrance over the PDC Sub Bermuda Securities.

     (d) Except with the prior written consent of PDC, and, at a time that AWA
is required to maintain the Acceptable Protection Coverage, of the
Administrative Agent and the Trustee, AWA Sub shall not, and AWA shall cause AWA
Sub not to:

         (i)   transfer, whether voluntarily or involuntarily, the AWA Sub
Bermuda Securities;

         (ii)  grant, whether voluntarily or involuntarily, any option or right
or enter into any agreement that (A) calls for the issuance, sale or other
disposition of any AWA Sub Bermuda Securities or (B) relates to the voting or
control of any AWA Sub Bermuda Securities; or

         (iii) create or permit to exist any pledge, lien, fixed or floating
charge or other encumbrance over the AWA Sub Bermuda Securities.

     (e) Except with the prior written consent of PDC and AWA, and, at a time
that AWA is required to maintain the Acceptable Protection Coverage, of the
Administrative Agent and the Trustee, neither PDC Sub nor AWA Sub shall vote as
a stockholder of Bermuda in favor of, or otherwise permit:

                                       3

<PAGE>

         (i)    any assignment by Bermuda for the benefit of creditors, the
appointment of a receiver for the assets of Bermuda or the filing of any
petition or application concerning Bermuda under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or regulation;

         (ii)   the voluntary or involuntary transfer by Bermuda of Indemnity
Claim Insurance Policy No. 5295316 (the "Policy") issued by Commerce & Industry
                                         ------
Insurance Company (the "Insurer");
                        -------

         (iii)  the commutation of the Policy pursuant to Section 3(6) of the
Policy without the presentation to the Insurer of certificates of the
Administrative Agent and the Trustee as to the discharge of certain indebtedness
of PDC and its Subsidiaries substantially in the forms attached hereto as
Exhibit A-1 and A-2 respectively;
-----------     ---

         (iv)   the amendment of or waiver of any right under the Policy other
than (A) a change of notice address or (B) to cure any ambiguity, omission,
defect or inconsistency in the Policy;

         (v)    the issuance of additional equity securities by Bermuda to a
party other than AWA Sub, PDC Sub or a third party holder of its Class D
Preference Shares;

         (vi)   the amendment of the Memorandum of Association or Bye-laws of
Bermuda;

         (vii)  the grant, whether voluntarily or involuntarily, of any option
or right, or enter into any agreement, that calls for the sale or other
disposition of the Policy; or

         (viii) the creation or continued existence of any pledge, lien, fixed
or floating charge or other encumbrance over the Policy, except pursuant to the
Collateral Assignment from Bermuda to PDC, API and New Appleton LLC dated as of
the date hereof.

     (f) PDC Sub and AWA Sub shall cause Bermuda actively to contest any
petition or application filed against it under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or regulation.

     (g) Neither AWA nor Bermuda shall permit the assignment of any rights or
obligations under the Assumption Deed without the prior written approval of (i)
at a time that AWA is obliged to maintain the Acceptable Protection Coverage, of
the Administrative Agent and, if such consent is required pursuant to Section 2
(h), of the Trustee or (ii) at all other times, PDC.

     (h) In the event that the consent of the Trustee is required under this
Section 2 or Section 9, or if there is proposed any amendment, modification,
waiver or alteration of terms (other than the Economic Terms (as defined below))
of this Agreement, the Policy, or the Assumption Deed, the prior written consent
of the Trustee shall also be required, and in either case the Trustee shall be
provided with 30 days prior written notice of the proposed amendment,
modification, waiver, alteration or other action to be taken, describing the
same in reasonable detail and providing any related documentation for the
proposed implementation thereof, together with the following, in each case in
form and substance satisfactory to the Trustee:

                                       4

<PAGE>

         (i)   a legal opinion from counsel acceptable to the Trustee, to the
effect that the proposed action, amendment, modification, waiver or alteration
will not have any adverse effect on the legal rights of the policyholder under
the Policy or the legal rights of API and PDC under the AWA Indemnity Agreement,
the PDC Indemnity Agreement, the Assumption Deed or this Agreement, and does not
have an adverse effect on the then remoteness of AWA Sub and Bermuda from AWA
and its other affiliates for bankruptcy, substantive consolidation or similar
purposes;

         (ii)  officer's certificates on behalf of PDC, certifying that it
believes that the proposed action, amendment, modification, waiver or alteration
is not adverse to the policyholder, PDC or API;

         (iii) an opinion from an investment bank of recognized national
standing, to the effect that the proposed action, amendment, modification,
waiver or alteration is not adverse, from a financial point of view, to the
policyholder or to the holders of the Notes and would not, in such investment
bank's opinion, result in any adverse effect on the trading or price of the
Notes; and

         (iv)  any additional opinions or certificates that the Trustee
determines may reasonably be required given the circumstances of any proposed
action, amendment, modification, waiver or alteration;

provided, however that the Trustee shall not be requested to approve and shall
not approve any amendment, modification, waiver or alteration of the
requirements of this Section 2(h) or of any of the following terms (the
"Economic Terms") of this Agreement, the Policy or the Assumption Deed: (i)
 --------------
Section I - Insuring Agreement, Section II - Limits of Insurance, Section III -
Conditions (other than Sections 3.d., 8, 9, 18 and 20 thereof) and all related
definitions of the Policy; (ii) any provisions of the Assumption Deed; (iii)
requirements for certificates of approval from the Trustee or other lenders in
this Agreement or the Policy; (iv) the identity of the insurer under the Policy;
and (v) changes in the jurisdiction of organization of the policyholder under
the Policy to any jurisdiction other than a jurisdiction set forth on Exhibit B
                                                                      ---------
hereto; it being agreed that any amendment, modification, waiver or alteration
of any of the Economic Terms shall require the prior consent of the holders of
the majority in aggregate principal amount of the then outstanding New Notes.
Notwithstanding the foregoing, the consent of the Trustee shall not be required
if AWA is the sole holder of the Senior Subordinated Note.

     (i) Any purported action in violation of this Section 2 shall be null and
void and of no force and effect whatsoever.

     SECTION 3. Satisfaction of Obligations Under Assumption Deed.
                -------------------------------------------------

     (a) Without limiting Bermuda's obligations under the Assumption Deed, to
the extent that funding under the Policy is available in respect of obligations
of AWA to PDC under the AWA Indemnity Agreement, Bermuda shall apply such
proceeds by making payment directly to PDC or API or to vendors or other third
persons entitled to payment thereof, in each case in a manner consistent with
the terms of the AWA Indemnity Agreement, in satisfaction of its

                                       5

<PAGE>

obligations under the Assumption Deed and the obligations of AWA under the AWA
Indemnity Agreement.

     (b) With respect to all other amounts payable by Bermuda pursuant to the
terms of the Assumption Deed, i.e. other than in satisfaction of AWA's
obligations to PDC under the AWA Indemnity Agreement, Bermuda shall make such
payments to AWA or such other person as AWA may designate from time to time;
provided that in the event of a default by AWA in the payment of its
indemnification obligations under Section Error! Reference source not found.
hereof, no payments shall be made to AWA or its designee until such obligations
have been satisfied in full.

     (c) Bermuda shall use commercially reasonable efforts to collect funds
under the Policy as promptly as amounts are available for payment under the
terms of the Policy.

     (d) In the event AWA has not made or caused to be made a payment under the
AWA Indemnity when due and payable (a "Late Payment"), PDC or PDC Sub may
                                       ------------
unilaterally cause Bermuda to make, and Bermuda agrees to make, such Indemnity
Claims (as defined in the Policy) and submit such Invoice Approval Packages (as
defined in the Policy) as PDC may deem appropriate to procure the Insurer's
payment of such Late Payment (so long as in accordance with the terms of the
Policy).

     SECTION 4. Tax Treatment.
                -------------

     (a) For so long as AWA continues to satisfy its obligation, if any, to
indemnify the PDC Parties in accordance with subsection Error! Reference source
not found.Error! Reference source not found., (i) the parties agree to cause
Bermuda to be classified as a partnership for United States federal income tax
purposes and (ii) PDC agrees that it shall, and shall cause PDC Sub to, report
all of the U.S. taxable income reportable by Bermuda in connection with its
ownership of the Policy. In the event AWA fails to satisfy its obligation to
indemnify PDC Parties in accordance with clause Error! Reference source not
found., PDC or PDC Sub may unilaterally cause Bermuda to revoke its election to
be classified as a partnership for United States federal income tax purposes and
PDC shall be relieved of its obligation to report in accordance with clause (ii)
above.

     (b) AWA shall cause Bermuda to provide to PDC, a reasonable time prior to
the due date for the filing thereof, written notice of U.S. taxable income to be
reported consistent with clause Error! Reference source not found., including
information sufficient to enable PDC to comply with its tax reporting
obligations.

     (c) AWA hereby covenants to indemnify and hold harmless the PDC Parties
from and against any and all increases in Taxes of a PDC Party or another Member
of the Buyers' Group (as defined in the AWA Indemnity Agreement) which in any
way relate to or arise from Bermuda, including Taxes arising from the receipt of
any indemnification payment hereunder.

     (d) AWA's indemnity set forth in clause Error! Reference source not found.
shall be governed, to the extent appropriate in the context, by the procedural
provisions set forth in Sections 4.1 and 5.1 of the AWA Indemnity Agreement. By
way of illustration and without limitation of the foregoing:

                                       6

<PAGE>

         (i)   AWA shall make payments to the PDC parties prior to the time that
the PDC Parties are obligated to pay indemnified Taxes, so that the PDC Parties
are never out of pocket in respect thereof.

         (ii)  The PDC Parties shall provide to AWA for AWA's review, a
reasonable time prior to filing, copies of the PDC Parties' tax returns
reporting taxable income in respect of the Bermuda.

         (iii) The Parties shall cooperate in respect of Bermuda tax matters as
provided in Section 5.1.5 of the AWA Indemnity Agreement.

     (e) If there shall be any change in United States, United Kingdom or
Bermuda tax law, regulation or ratings relevant to the relationships described
in this Agreement, or a change in any party's tax status, at the request of
either the PDC Parties or AWA, the parties shall negotiate in good faith to
amend (in accordance with Sections Error! Reference source not found. and 9
hereof) the relationships and tax treatment summarized herein.

     SECTION 5. Representations and Warranties.
                ------------------------------

     (a) The AWA Parties, jointly and severally, represent and warrant that (i)
AWA is the sole stockholder of AWA Sub and (ii) attached hereto as Exhibit 5(a)
                                                                   ------------
are true, complete and correct copies of the AWA Sub Constitutional Documents.

     (b) The PDC Parties, jointly and severally, represent and warrant that (i)
PDC is the sole stockholder of PDC Sub and (ii) attached hereto as Exhibit 5(b)
                                                                   ------------
are true, complete and correct copies of the PDC Sub Constitutional Documents.

     SECTION 6. Payment of Certain Obligations.
                ------------------------------

     (a) AWA shall provide AWA Sub, and AWA and AWA Sub shall provide Bermuda,
with sufficient funds to meet its statutory and other ordinary course
obligations.

     (b) PDC shall provide PDC Sub with sufficient funds to meet its statutory
and other ordinary course obligations.

     SECTION 7. Access to Books and Records. To the extent permitted by
                ---------------------------
antitrust and other applicable laws, the parties shall allow each other
reasonable access to their books and records, and to personnel having knowledge
of the whereabouts and/or contents of their books and records, for purposes of
confirming compliance with the terms of this Agreement. Any such access to and
review shall be permitted and conducted only during normal business hours and
upon reasonable notice. Each party shall be entitled to recover its
out-of-pocket costs (including, without limitation, copying costs and a
reasonable charge for employee time) incurred in providing their books and
records and/or personnel. The requesting party shall hold in confidence all
confidential information identified as such by the disclosing party or any of
its officers, agents, representatives or employees; provided, however, that
                                                    --------  -------
information that (i) was in the public domain; (ii) was in fact known to the
requesting party prior to disclosure by the disclosing party or its officers,
agents, representatives or employees; (iii) becomes known to the requesting
party from or through a third party not under an obligation of non-disclosure to
the

                                       7

<PAGE>

disclosing party; or (iv) any party is required by law, rule or regulation (of
any applicable stock or securities exchange or otherwise) or otherwise deems
necessary and proper to disclose in connection with the filing of any tax return
or other document required to be filed with, or as required by, any governmental
authority, shall not be deemed to be confidential information. In addition, the
parties agree that confidential information shall not be used for any purpose
other than the specific purpose for which it was supplied.

     SECTION 8. Dispute Resolution.
                ------------------

     (a) The AWA Parties, on the one hand, and the PDC Parties, on the other
hand, shall attempt in good faith to resolve any dispute or difference between
or among the parties arising out of or relating to this Agreement promptly by
negotiation between executives of the relevant parties who have authority to
settle the controversy within fifteen (15) days after delivery of a notice of a
dispute by one or more parties to the others. All negotiations pursuant to this
Section 8Error! Reference source not found. are confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.

     (b) Any dispute or difference between or among the parties arising out of
or relating to this Agreement which has not been resolved by negotiation
pursuant to Section 8(a) within fifteen (15) days as therein provided, shall be
settled by arbitration in accordance with the CPR Rules of Non-Administered
Arbitration in effect on the date of this Agreement, by a mutually acceptable
single arbitrator designated by the respective parties. If the parties are
unable to agree on an arbitrator within fifteen (15) days following the
expiration of the negotiation period described in Section 8(a), an arbitrator
shall be selected by the Center for Public Resources pursuant to the procedures
set forth in its Rule 6.4.b or by such other procedures as the parties may
elect. In order to expedite the process of selecting an arbitrator, the parties
shall use their best efforts to agree upon a standby arbitrator and an alternate
within thirty (30) days following the effective date of this Agreement, and
within thirty (30) days following the resignation or inability of any such
standby arbitrator or alternate to serve. The arbitration shall be governed by
the Federal Arbitration Act, 9 U.S.C. (S)(S) 1-16, and judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The place of arbitration shall be New York, New York. The language of
the arbitration shall be English. The arbitration shall be governed by the law
of the State of New York. The arbitrator is not empowered to award damages in
excess of compensatory damages and each party expressly waives and foregoes any
right to punitive, exemplary or similar damages unless a statute requires that
compensatory damages be increased in a specified manner. Following the final
arbitration hearings, which shall be completed within thirty (30) days following
the later of (i) the designation of the arbitrator and (ii) the expiration of
the negotiation period described in Section 8(a) unless otherwise mutually
agreed by the parties to the dispute, the arbitrator shall promptly deliver a
written decision with respect to the dispute to each of the parties, who shall
promptly act in accordance therewith. Each party agrees that any decision of the
arbitrator shall be final, conclusive and binding and that they will not contest
any action by any other party thereto in accordance with a decision of the
arbitrator. It is specifically understood and agreed that any party may enforce
any award rendered pursuant to the arbitration provisions of this Section 8(a)
by bringing suit in any court of competent jurisdiction.

                                       8

<PAGE>

     (c) All reasonable fees, costs and expenses (including attorneys' fees and
expenses) incurred by the party that prevails in any such arbitration commenced
pursuant to Section 8(b) or any judicial action or proceeding seeking to enforce
the agreement to arbitrate disputes as set forth in Section 8(b) or seeking to
enforce any order or award of any arbitration commenced pursuant to this Section
8 may be assessed (in whole or in part) against the party or parties that do not
prevail in such arbitration in such manner as the arbitrator or the court in
such judicial action, as the case may be, may determine to be appropriate under
the circumstances. All costs and expenses attributable to the arbitrator shall
be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.

     (d) The parties hereto shall take all required steps in order to avoid any
inconsistencies between the resolutions of disputes hereunder and resolutions of
disputes under the AWA Indemnity Agreement including, without limitation, the
consolidation of any dispute resolution procedures.

     SECTION 9. Amendment; Assignment. This Agreement may not be amended,
                ---------------------
modified or assigned except at a time that AWA is required to maintain the
Acceptable Protection Coverage, with the written approval of the Administrative
Agent and the Trustee pursuant to Section 2(h) Any purported amendment,
modification or assignment that is not in compliance with the preceding sentence
shall be null and void and of no force and effect whatsoever. Subject to the
foregoing, this Agreement shall inure to the benefit of the parties' respective
successors and assigns.

     SECTION 10. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
                 --------------------------------------
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. FOR THE LIMITED PURPOSE OF
ENFORCEMENT OF AN ARBITRAL JUDGMENT IN ACCORDANCE WITH SECTION 8(b), EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED
STATES OF AMERICA LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK FOR ANY ACTIONS,
SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING
ARISING OUT OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN THE
COURTS OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

     SECTION 11. Notices.
                 -------

     (a) All communications provided for hereunder shall be in writing and shall
be deemed to be given when delivered in person or by private courier with
receipt, when telefaxed and received, and,

                                       9

<PAGE>

                  If to any PDC Party:

                  Paperweight Development Corp.
                  c/o Appleton Papers Inc.
                  825 E. Wisconsin Avenue
                  P.O. Box 359
                  Appleton, WI 54912-0359
                  Facsimile:  (920) 991-7256

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

                  with copies to:

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

                  State Street Bank and Trust Company
                  Trustee of the ESOP Component of the
                  Appleton Papers Retirement Saving Plan
                  Two International Place
                  Boston, MA 02110
                  Facsimile:  (617)
                  Attention:  Kelly G. Driscoll

                  Jones Day Reavis & Pogue
                  77 West Wacker
                  Suite 3500
                  Chicago, IL 60601-1692
                  Facsimile:  (312) 782-8585
                  Attention:  Ronald S. Rizzo

                  If to any AWA Party:

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

                                       10

<PAGE>

                  Attention:  Company Secretary

                  and

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

                  with a copy to:

                  McDermott, Will & Emery
                  50 Rockefeller Plaza
                  New York, NY 10020
                  Facsimile:  212-547-5444
                  Attention:  C. David Goldman

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

     (b) Without limiting the generality of Section 11(a), AWA Sub and PDC Sub
hereby agree that any notices given or received by the party identified above on
behalf of them shall be deemed given and received by each of them and that,
pursuant thereto, the other parties may rely upon the applicability of any such
notice as being binding upon, and applicable to each of them.

     SECTION 12. Third Party Beneficiary. The Administrative Agent, on behalf of
                 -----------------------
the lenders pursuant to the Credit Agreement, and the Trustee, on behalf of the
holders of the Senior Subordinated Note or the New Notes, are third party
beneficiaries of this Agreement with full rights and remedies under or by reason
of this Agreement as if parties hereto. Other than the parties hereto and their
respective successors and permitted assigns and except as specifically set forth
in the preceding sentence, nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any other person any
rights or remedies under or by reason of this Agreement.

     SECTION 13. Conflict with Bermuda Bye-Laws. In the event of an
                 ------------------------------
inconsistency between any term of this Agreement and the Bye-Laws of Bermuda,
the provisions of this Agreement shall control.

                                       11

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

ARJO WIGGINS APPLETON p.l.c.                       PAPERWEIGHT DEVELOPMENT CORP.

By: /s/ Luca PaVeri-Fontana                         By: /s/ Doug Buth
Name:  Luca PaVeri-Fontana                          Name:  Douglas P. Buth
Title:  Director                                    Title:  President & Chief
                                                            Executive Officer

ARJO WIGGINS (BERMUDA) HOLDINGS LIMITED             PDC CAPITAL CORPORATION

By: /s/ Christopher Gower                           By: /s/ Paul J. Karch
Name: Christopher Gower                             Name: Paul J. Karch
Title: Director                                     Title: President

ARJO WIGGINS (BERMUDA) LIMITED

By: /s/ Christopher Gower
Name:  Christopher Gower
Title:  Director

                                       12

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