EMPLOYMENT AGREEMENT

THIS AGREEMENT is made effective as of October 2, 2006, by and among Pregis Holding I Corporation, a Delaware corporation (Pregis I), and its wholly owned subsidiaries, Pregis Holding II Corporation, a Delaware corporation (Pregis II), and Pregis Corporation, a Delaware corporation (Pregis) (Pregis I, Pregis II and Pregis, collectively, the Employers and individually an Employer), and Michael T. McDonnell (Executive).

RECITALS

WHEREAS, Executive desires to be employed by Employers;

WHEREAS, Employers desire to employ Executive and to utilize his management services as indicated herein, and Executive has agreed to provide such management services to Employers; and

WHEREAS, as a condition precedent and a material inducement for Employers to employ and pay Executive, Executive has agreed to execute this Agreement and the Noncompetition Agreement, dated as of the date hereof, between Pregis I and Executive (the Noncompetition Agreement), and be bound by the provisions herein and therein.

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

PROVISIONS

1. Term and Duties. Employers hereby agree to employ Executive as President and Chief Executive Officer, commencing on his first day of full time employment, but no later than October 31, 2006 (the Start Date), and continuing for a period of three (3) years (the Initial Term) or until terminated in accordance with this Section 1 or Section 4. Unless terminated by either Executive or Employers by written notice delivered at least thirty (30) days prior to the expiration of the Initial Term, Executives employment shall continue for successive one (1) year terms (each one (1) year term hereinafter referred to as a Subsequent Term and, together with the Initial Term, the Term) until terminated by written notice delivered at least thirty (30) days prior to the expiration of the Subsequent Term. Subject to the provisions of this Agreement, during the Term, Executive shall devote his best efforts and abilities to the performance of Executives duties on behalf of Employers, and to the promotion of their interests consistent with and subject to the direction and control of the Board of Directors of each Employer (the Board). Executive shall devote substantially all of his business time, energies, attention and abilities to the operation of the business of Employers and shall not be actively involved in any other trade or business or as an employee of any other trade or business. Nothing in this Agreement shall preclude Executive from (i)

engaging in charitable and community affairs, (ii) managing his personal investments (including acquiring or retaining securities of other companies and entities, provided such investments are passive), or (iii) subject to written approval of the Board, serving as a member of boards of directors of other companies or entities which do not compete with any Employer, or engaging in other activities which do not compete with any Employer or do not otherwise conflict with the provisions of this Agreement, in the case of each of (i) - (iii), which do not materially interfere with the performance of his duties hereunder. During the Term, Executive shall be a member of the Board of Directors of Pregis I and Pregis II.

2. Compensation During Term.

(a) Base Compensation. In consideration of the services to be rendered by Executive during the Term, Employers shall pay to Executive as base salary $500,000 per year (Base Compensation), payable bi-weekly and prorated for any partial employment period.

(b) Bonus. On the Start Date, Employers shall pay Executive a one-time signing bonus of $150,000. Subject to the limitations set forth in this Agreement, commencing with the fiscal year beginning January 1, 2007, Executive shall be eligible to receive an annual incentive bonus (the Incentive Bonus) based upon the achievement of one or more performance goals as determined by the Board in its sole discretion. The amount of the Incentive Bonus shall be determined in the manner set forth on Schedule A hereto. For the fiscal year ending December 31, 2006, the Employers shall pay the Executive a cash bonus of $250,000 at such time as bonuses are payable to senior executives generally.

3. Benefits.

(a) Executive shall be eligible to participate in such benefit programs offered by each Employer (other than bonus plans), such as health, dental, life insurance, vision, vacations and pension, as are offered to senior executive level employees (except in the case of equity-based incentive plans where awards are subject to Board (or committee thereof) approval) and in each case on no less favorable terms of benefits than are generally available to the senior executive level employees of Employers (based on seniority and salary level), subject in each case to the generally applicable terms and conditions of the plan, benefit or program in question.

(b) Employers shall reimburse Executive for all reasonable expenses incurred by him in the course of performing his duties under this Agreement which are consistent with Employers policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to Employers reasonable requirements with respect to reporting, documentation and approval of such expenses.

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(c) During the Term, Executive shall be entitled to paid vacation and holidays in accordance with Employers policy for senior executives.

(d) The Employers shall reimburse the Executive for the following reasonable expenses that the Executive incurs in relocating his primary residence to the Chicago, Illinois metropolitan area: (a) the cost of any temporary housing in the Chicago, Illinois metropolitan area for 6 months, not to exceed $5,000 per month, (b) transportation of belongings; (c) two house-hunting trips; (d) broker and other fees related to sale / acquisition of primary residence; (e) set-up costs of telephone, cable and broadband; and (f) airfare and lodging for family related to such relocation and house-hunting trips.

4. Termination. Executives employment shall terminate upon the first to occur of the following (each, a Termination Date):

(a) The expiration of the Term;

(b) Executives death or disability. The term disability shall mean a mental, physical or emotional condition such that Executive cannot substantially perform his duties hereunder for a period of ninety (90) consecutive days or for one hundred eighty (180) days during any three hundred sixty-five (365) day period during the Term;

(c) Executives voluntary termination of his employment for Good Reason (as defined below) upon written notice to the Employers within ten (10) days of the event constituting Good Reason; or

(d) Employers termination of Executives employment with or without Cause (as defined below).

5. Termination Payments.

(a) If Executives employment is terminated pursuant to Section 1 by thirty (30) days prior written notice or pursuant to Section 4, Executives Base Compensation and other benefits, if any, shall terminate on the Termination Date and the Employers shall pay the Executive the Accrued Payment (as defined below).

(b) Upon termination of Executives employment by Employers without Cause or by reason of Employers providing a notice of non-renewal of the Term, or Executives termination of his employment for Good Reason, Employers shall be obligated, in lieu of any other remedies available to Executive, to pay Executive (A) an amount equal to his then current Base Compensation (the Termination Payment); (B) (i) if the Termination Date occurs during the months of January-June of the fiscal year, a pro rata portion of the Incentive Bonus for the fiscal year in which the termination occurs (the Target Pro Rata Incentive Payment), based on Executives target Incentive

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Bonus for such fiscal year; or (ii) if the Termination Date occurs during the months of July-December of the fiscal year, a pro rata Incentive Bonus for the fiscal year in which the termination occurs (the Actual Pro Rata Incentive Payment), based on Employers actual performance through the end of such fiscal year; and (C) all accrued but unpaid amounts payable to Executive under this Agreement and under any employee benefit plan (the Accrued Payment). In addition, in the event of such termination of employment, Executive shall be eligible for continuation of medical benefits on the same terms that would have otherwise applied to Executive had he remained an active employee until the earlier of (i) twelve (12) months following the effectiveness of the Release (as defined below) or (ii) the date Executive becomes eligible for medical benefits from a subsequent employer (the Continued Medical Benefits). The Target Pro Rata Incentive Payment and the Actual Pro Rata Incentive Payment shall, in each case, be determined based on the number of days elapsed from the beginning of the fiscal year in which the termination occurs through and including the Termination Date. For purposes of clarity, Executive will be eligible to receive only one Termination Payment, one Accrued Payment and either one Target Pro Rata Incentive Payment or one Actual Pro Rata Incentive Payment (depending on when the Termination Date occurs) from Employers under this Section 5(b). Employers obligation to (x) make the Termination Payment and either the Target Pro Rata Incentive Payment or Actual Pro Rata Incentive Payment and (y) provide the Continued Medical Benefits shall, in each case, be conditioned upon: (i) Executives continued compliance with his obligations under the Noncompetition Agreement and (ii) Executives execution, delivery and non-revocation of a valid and enforceable general release of claims in a form reasonably acceptable to Employers (the Release). In the event that Executive breaches any of the covenants set forth in the Noncompetition Agreement, Executive shall immediately return to Employers any portion of the Termination Payment and either the Target Pro Rata Incentive Payment or Actual Pro Rata Incentive Payment that have been paid to Executive pursuant to this Section 5(b). Subject to this Section 5(b) and Section 5(e), the Termination Payment and the Target Pro Rata Incentive Payment, if applicable, shall be paid in installments on Employers regular payroll dates occurring during the 12-month period immediately following the effectiveness of the Release. Subject to Section 5(e), the Actual Pro Rata Incentive Payment, if applicable, shall be paid at the time Employers ordinarily pay incentive bonuses to its executives with respect to the fiscal year in which the termination occurs. Subject to Section 5(e), the Accrued Payment shall be paid within thirty (30) days following the Termination Date.

(c) In the event of a termination of Executives employment pursuant to Section 4(b) as a result of his death or disability, Employers shall (i) promptly pay to Executive, his estate or legal representative, as the case may be, all amounts accrued to the date of termination and payable to Executive hereunder and under any other bonus, incentive or other plan and (ii) pay to Executives estate or legal representative the Target Pro Rata Incentive Payment or the Actual Pro Rata Incentive Payment, whichever is payable, at the same time such payments are made pursuant to Section 5(b).

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(d) Any termination of the Term shall not adversely affect or alter Executives rights under any employee benefit plan of any Employer in which Executive, at the date of termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto.

(e) If Executive is a specified employee for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, any payments required to be made pursuant to this Section 5 which are subject to Section 409A shall not commence until six months from the Termination Date, with the first payment to be equal to the aggregate amount that would have been paid to Executive under Section 5 during the first six months immediately following the Termination Date had this Section 5(e) not been applicable. The Employers shall hold Executive harmless from and against taxes imposed on the Executive under Section 409A of the Code by reason of actions taken by the Employers without Executives consent, which consent shall not be unreasonably withheld.

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