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APPVION, INC.

ENHANCED SEVERANCE AGREEMENT

AGREEMENT dated as of December 2, 2014, between Appvion, Inc. (the "Corporation") and ___________ (the "Key Employee").  Unless otherwise indicated, terms used herein and defined in Schedule A shall have the meanings assigned to them in Schedule A.

WHEREAS, the Corporation desires to continue to attract and retain skilled and dedicated management employees, by providing post-employment benefits in the event of certain terminations of employment; and

WHEREAS, the Corporation has employed the Key Employee in the capacity of _______________________ at Appleton, Wisconsin; and

WHEREAS,  Key Employee has specific duties and unique talents which are of benefit to the Corporation;

NOW, THEREFORE, it is agreed as follows:

1.Term of Agreement.

This Agreement shall become effective as of December 2, 2014 (the "Effective Date") and shall remain in effect for twenty-four  (24) months following a  Change of Control.  The Corporation may terminate this Agreement by giving the Key Employee at least twelve (12) months advance written notice of termination of the Agreement.  Notwithstanding the foregoing, this Agreement shall, if in effect on the date of a Change of Control, remain in effect for at least twenty-four  (24) months following such Change of Control.

2.Notice of Termination of Employment.

The Key Employee agrees to give the Corporation at least one (1) month written advance notice of Key Employee's voluntary termination of employment, other than for Good Reason, if such termination occurs prior to a Change of Control.

3.Benefits Payable Upon Termination of Employment.

(a)General Rule. 

In the event that, at any time other than within one (1) year after a Change of Control, the Corporation terminates the employment of the Key Employee, other than for misconduct or Permanent Disability, or the Key Employee terminates employment for Good Reason, the Key Employee shall receive from the Corporation, provided the Key Employee executes the Release described in Paragraph 3(d) below:

(i)an amount in cash equal to fifty-two (52) weeks of Base Salary at 100% of the Key Employee’s Base Salary for the first 26 weeks and 60% of Base Salary for the second 26 weeks in equal installments at the times set forth in the Corporation’s payroll policy, as in effect at the time of payment;

(ii)if the bonus amounts for the Corporation's fiscal year ending prior to the Key Employee's termination date have not, prior to such termination, been paid to Corporation employees generally, an amount in cash equal to the unpaid bonuses under the Corporation's annual Key Employee bonus program, based on actual defined performance measures during such fiscal year;

(iii)professional outplacement services for the Key Employee through a qualified service provider of the Corporation’s choice for services initiated within 90 days after termination of employment in accordance with the terms of the Corporation’s plan for a period of up to six (6) months; and

(iv)until the earlier of twelve (12) months following the date of termination of employment or the date on which the Key Employee is eligible for medical benefits provided by a new employer, medical benefits similar to such benefits provided immediately prior to the termination in terms of (i) level of actual benefits provided; and (ii) level of Key Employee’s monetary contribution to such benefits.  Any statutory rights of the Key Employee to continued health coverage shall be governed by the Key Employee's actual date of termination and not by the expiration of the salary continuation period provided, however, that any such continued coverage shall be subject to open enrollment changes to coverage, and/or coverage substitutions, made for all employees within the applicable level of coverage. The Corporation’s obligation under this provision shall not exceed the employer portion of the applicable premium for the Key Employee’s level of coverage at the date of termination of the Key Employee’s employment increased only pursuant to general premium increases during the twelve (12) month coverage period.    

(b)Termination after a Change of Control.

In the event that within two  (2) years after a Change of Control, the Corporation terminates the employment of the Key Employee, other than for misconduct or Permanent Disability, or the Key Employee terminates for Good Reason, the Key Employee shall receive:

(c)Termination for Misconduct.

Nothing in this Agreement shall be construed to prevent the Corporation from terminating Key Employee's employment under this Agreement for misconduct.  Such termination shall relieve the Corporation of its obligation to make any other payments under this Agreement, except those that may be otherwise payable under then existing employee benefit plans, programs and arrangements of the Corporation.

(d)Release of Claims.

To be eligible for and receive the benefits described in subparagraphs (a) or (b) of this Paragraph 3, Key Employee must, at the time of termination of employment, irrevocably execute a Release form prescribed by the Corporation (“Release”), file it with the person, and within the time period, the Corporation prescribes, and the Release must be enforceable in all respects.  The purpose of the Release is to release the Corporation from all claims and liability arising out of the employment relationship with the Corporation, including without limitation, claims arising under the Age Discrimination in Employment Act ("ADEA"), Title VII of the Civil Rights Act of 1964, and all other federal, state, local or other laws, regulations or rules, whether arising from statute or the common law, or in law or equity.  The Release shall be in a form that complies with regulations promulgated by the Equal Employment Opportunity Commission (“EEOC”).

4.Mitigation; Non-Compete.

(a)If the Key Employee's termination of employment occurs at any time other than within one (1) year after a Change of Control, the Corporation's obligation to make payments under Paragraph 3(a) shall cease completely and immediately if, without its prior written consent, at any time before all such payments have been made as scheduled, the Key Employee shall directly or indirectly (whether as a shareholder, owner, partner, consultant, employee, or otherwise), engage in any of the "major businesses" in which the Corporation or its subsidiaries are engaged. A "major business" for this purpose is any business segment of the Corporation or any of its subsidiaries (e.g. carbonless copy paper, thermal paper, microencapsulation, or other business segments) on the date of termination of employment that produced in the last fiscal year of the Corporation which ended before the termination occurred, or is projected to produce in the fiscal year in which the termination occurs or in the next succeeding fiscal years after the date of termination, more than 5% of the revenues of the Corporation. For this purpose, the Key Employee shall be deemed not a shareholder of a company that would otherwise be a competing entity if the Key Employee's record and beneficial ownership of the capital stock of such company amount to not more than one (1) percent of the outstanding capital stock of any such company subject to the periodic and other reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended.

(b)If the Key Employee's termination of employment occurs within one (1) year after a Change of Control, the Key Employee shall not be required to mitigate damages or the amount of any payment hereunder by seeking employment or otherwise, nor will any payments hereunder be subject to offset or reduction in respect of any claims which the Corporation may have against the Key Employee.

5.Trade Secrets.

Key Employee recognizes and acknowledges that the list of the Corporation’s customers and its subsidiaries’ customers, as well as other confidential information relating to the Corporation or its subsidiaries, as it may exist from time to time, is a valuable, special, and unique asset of the Corporation’s business.  The Key Employee will not, during or after the term of Key Employee's employment, disclose any such information or any part thereof to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever.  In the event of a breach or threatened breach by the Key Employee of the provisions of this Paragraph 5, the Corporation shall be entitled to an injunction restraining the Key Employee from disclosing, in whole or in part, this information.  The provisions of this Paragraph 5 are in supplement to, and not in derogation of, any prior agreements between the Key Employee and the Corporation concerning rights to inventions and/or confidential information.  The Corporation will be free to pursue any other remedies as it may in its discretion deem to be appropriate under the circumstances.

6.Effect on Retirement Income, Severance and Other Benefits.

Benefits payable under Paragraph 3 hereof shall not be counted towards any retirement income benefits to which Key Employee may otherwise be entitled; these benefits are also in lieu of, and not in addition to, any severance or similar benefits to which the Key Employee may otherwise be entitled under the terms of any policy, plan or program of the Corporation.  Unless expressly otherwise stated, this Agreement is not intended to deprive and does not have the effect of depriving Key Employee of any benefits to which the Key Employee may be entitled under employee benefit, disability, insurance, deferred compensation or similar plans or programs of the Corporation.

7.Change of Control Tax Provisions.

If any payments or benefits provided to Key Employee in connection with a Change of Control under this Agreement (the “Payments”) constitute “excess parachute payments” as defined in Section 280G of the Internal Revenue Code (the “Code”), which are subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Payments will either be (i) reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such Payment, as so reduced, constitutes an excess parachute payment or (ii) delivered in full, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax (and any equivalent state or local excise taxes), results in the receipt by the Key Employee, on an after tax basis, of the greatest amount of payment or benefits, notwithstanding that all or some portion of such payments or benefits may be subject to the excise tax.  The fact that the Key Employee's right to payments or benefits may be reduced by reason of the limitations contained in this Paragraph 7 will not of itself limit or otherwise affect any other rights of the Key Employee other than pursuant to this Agreement.  In the event that any payment or benefit intended to be provided under this

Agreement or otherwise is required to be reduced pursuant to this Paragraph 7, cash severance payable hereunder shall be reduced first, then other cash payments that qualify as Excess Parachute Payments payable to the Key Employee, then non cash benefits shall be reduced, as determined by the Corporation.  

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 Key Employee in connection with a Change of Control or Key Employee’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 Corporation’s independent auditors and acceptable to Key Employee 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 Corporation’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

8.Assignment.

This Agreement shall be binding upon, inure to the benefit of and be enforceable by the Corporation and the Key Employee and their respective heirs, legal representatives, successors and assigns.  If the Corporation shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation.  The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such success had taken place.  The provisions of this Paragraph 8 shall continue to apply to each subsequent employer of the Key Employee hereunder in the event of any subsequent merger, consolidation or transfer of assets of such subsequent employer.

9.Separability Clause.

Any provision of this Agreement which is held to be unenforceable or invalid in any respect in any jurisdiction shall be ineffective in such jurisdiction to the extent that it is unenforceable or invalid without affecting the remaining provisions hereof, which shall

continue in full force and effect.  The unenforceability or invalidity of a provision of this Agreement in one jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.Taxation and Withholding.

The Key Employee shall be responsible for federal, state and local income taxes on the Payments due to the Key Employee hereunder.

Notwithstanding the provisions of Paragraph 4(b) hereof, the Corporation may, to the extent required by law, withhold applicable federal, state and local income and other taxes and other court ordered amounts from any payments due to the Key Employee hereunder.

11.Section 409A Compliance. The parties intend that payments and benefits under this Agreement comply with, or remain exempt from, Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  In no event whatsoever shall the Corporation be liable for any additional tax, interest or penalty that may be imposed on Key Employee by Section 409A or damages for failing to comply with Section 409A.

This Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin applicable to contracts made and to be performed therein.

This instrument contains the entire agreement of the parties, and supersedes any earlier agreement between them, relative to the matters described herein.  It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

IN WITNESS WHEREOF, the parties have executed this Agreement, dated as of December 2, 2014.

APPVION, INC.

By:

KEY EMPLOYEE

By:       

Schedule A

CERTAIN DEFINITIONS

As used in this Agreement, and unless the context requires a different meaning, the following terms have the meaning indicated:

"Base Salary" means the greater of the Key Employee's annual rate of base salary in effect on the date of the Change of Control or the date on which the Key Employee's employment terminates, determined before any deductions for salary deferrals under a non-qualified deferred compensation plan, or Internal Revenue Code Sections 125 or 402(g).

"Change of Control" means:  (1) a change in ownership or effective control of the Corporation, or in the ownership of a substantial portion of the assets of the Corporation, as defined by the occurrence of any one of the following events:

(a)the date upon which any one person (or persons acting as a group) acquires ownership of Corporation stock constituting more than 50% of the total fair market value or total voting power of the stock of the Corporation;

(b)the date upon which any one person (or persons acting as a group) acquires (during a 12‑month period ending on the date of the most recent acquisition) ownership of Corporation stock constituting more than 35% of the total voting power of the stock of the Corporation;

(c)the date upon which a majority of the Board of Directors are replaced during a 12-month period, and the new appointments are not endorsed by a majority of the Board prior to the date of appointment; or

(d)the date upon which any one person (or persons acting as a group) acquires (during a 12-month period ending on the date of the most recent acquisition) assets of the Corporation having a gross fair market value of at least 40% of the total gross fair market value of all assets of the Corporation immediately prior to such acquisition;

The Compensation Committee of the Board of Directors shall certify the occurrence of a Change of Control event, provided that the occurrence of such event shall be objectively determinable and the certification decision must be ministerial in nature and not involve any discretionary authority.  The definition of Change of Control shall in all events be subject to, and interpreted in a manner consistent with, Treasury Regulation §1.409A-3(i)(5).  Solely for purposes of determining whether a Change in Control has occurred, the “Corporation” shall be defined to be the “relevant corporation” within the meaning of Treasury Regulation §1.409A-3(i)(5)(ii).

"Good Reason" means:

(4)any breach of Paragraph 8 hereof (relating to assignment).

Notwithstanding anything herein to the contrary, the Key Employee shall provide written notice to the Corporation of any event constituting Good Reason no later than ninety (90) days following the occurrence of such event, and the Corporation shall have thirty (30) days following receipt of written notice to cure any such event.

"Notice of Disability Termination" means written notice by the Corporation which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Key Employee's employment for reason of Permanent Disability.

"Permanent Disability" means that Key Employee would be entitled to receive benefits under the Corporation’s long-term disability plan then in effect; provided, however, that any termination of the Key Employee on account of the Key Employee's Permanent Disability shall be communicated by the Corporation and shall not be effective without a Notice of Disability Termination.

"Target Bonus" means that percentage of Base Salary payable for "target performance" under the Corporation's annual Key Employee bonus program for the Corporation's fiscal year in which the Key Employee's employment terminates or, if no such percentage has been established, the year prior to such termination.