Exhibit 10.1

 

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT WAS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
OMITTED INFORMATION WAS REPLACED WITH BLANKS.

 

 

AMENDED AND RESTATED PULP SUPPLY AGREEMENT

BETWEEN

KIMBERLY-CLARK GLOBAL SALES, INC.

AND

NEENAH PAPER, INC.

MADE AS OF

November 30, 2004

and

AS AMENDED AND RESTATED AS OF

August 29, 2006

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

 

ARTICLE 1

 

DEFINITIONS

 

1

 

 

 

 

 

1.01

 

Airdry Metric Ton (“ADMT”)

 

1

1.02

 

Annual Supply Obligation or ASO

 

1

1.03

 

Annual Purchase Obligation or APO

 

1

1.04

 

Contract Year

 

1

1.05

 

Delivery Point

 

1

1.06

 

Distribution Date

 

1

1.07

 

Environmental/Safety Laws

 

2

1.08

 

Invoice Price

 

2

1.09

 

Option Pulp

 

2

1.10

 

Phase Down Period

 

2

1.11

 

Pulp

 

2

1.12

 

Regions

 

2

1.13

 

Shipping Points

 

2

1.14

 

Specifications

 

2

1.15

 

Transaction Price

 

2

1.16

 

2004 Supply Period

 

2

1.17

 

Force Majeure Event

 

2

1.18

 

Force Majeure Period

 

2

1.19

 

Force Majeure Notice

 

2

1.20

 

Freight Agreement Period

 

2

1.21

 

Resumption Notice

 

3

1.22

 

Step-down Notice

 

3

1.23

 

Seller Reduction Notice

 

3

1.23

 

K-C Reduction Notice

 

3

 

 

 

 

 

ARTICLE 2

 

ANNUAL PURCHASE AND SUPPLY OBLIGATIONS; ANNUAL FORECASTS AND QUARTERLY
ESTIMATES; SAFETY STOCKS

 

3

 

 

 

 

 

2.01

 

Annual Purchase and Supply Obligations

 

3

2.02

 

Regional Terms

 

4

2.03

 

Quarterly Estimates

 

4

2.04

 

Annual Forecasts

 

4

2.05

 

Safety Stocks

 

5

2.06

 

Ordering

 

5

 

 

 

 

 

ARTICLE 3

 

QUALITY AND SPECIFICATIONS; SPECIFICATION CHANGES; WARRANTIES; PRODUCT SAFETY
CERTIFICATIONS; REPORTS, RECORDKEEPING, AND ACCESS

 

6

 

 

 

 

 

3.01

 

Quality and Specifications

 

6

3.02

 

Specifications Change

 

6

3.03

 

Forestry

 

6

3.04

 

Warranties; Product Safety Certification

 

7

3.05

 

Reports, Recordkeeping, and Access

 

7

 

i

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Page

 

 

 

 

 

ARTICLE 4

 

PRICE AND PAYMENT TERMS

 

8

 

 

 

 

 

4.01

 

Price

 

8

4.02

 

Discounts

 

9

4.03

 

Freight and Other Shipping Costs

 

9

4.04

 

Payment Terms

 

9

 

 

 

 

 

ARTICLE 5

 

SHIPMENT AND DELIVERY

 

9

 

 

 

 

 

5.01

 

Shipment Method/Shipping and Delivery Points

 

9

5.02

 

Arrearage

 

10

5.03

 

Title and Risk of Loss

 

10

5.04

 

Bale Finishing

 

10

 

 

 

 

 

ARTICLE 6

 

TERM AND TERMINATION

 

10

 

 

 

 

 

6.01

 

Term

 

10

6.02

 

Termination

 

10

6.03

 

Termination Limitation

 

10

6.04

 

Termination Without Cause

 

11

6.05

 

Effect of Termination

 

11

6.06

 

Partial Termination by Seller

 

12

6.07

 

Partial Termination by KC

 

11

6.08

 

Freight Incentive During a Freight Agreement Period

 

11

6.09

 

Absence of a Resumption Notice by Sepetmber 29, 2006

 

12

 

 

 

 

 

ARTICLE 7

 

CLAIMS: DISPUTE RESOLUTION

 

13

 

 

 

 

 

7.01

 

Claims

 

13

7.02

 

Dispute Resolution

 

13

7.03

 

Litigation

 

13

7.04

 

Governing Law

 

13

 

 

 

 

 

ARTICLE 8

 

INDEMNIFICATION

 

13

 

 

 

 

 

ARTICLE 9

 

CONTINGENCIES

 

14

 

 

 

 

 

9.01

 

Force Majeure

 

14

9.02

 

Environmental/Safety Laws

 

17

9.03

 

Forestry Considerations

 

17

9.04

 

Notice

 

17

 

 

 

 

 

ARTICLE 10

 

CONFIDENTIALITY

 

18

 

 

 

 

 

ARTICLE 11

 

CUSTOMS

 

18

 

 

 

 

 

ARTICLE 12

 

GENERAL

 

18

 

 

 

 

 

12.01

 

Parties Bound/Assignment

 

18

12.02

 

Right of Offset

 

18

12.03

 

Compliance With Law

 

18

12.04

 

Independent Contractor Status

 

19

12.05

 

Waiver of Breach

 

19

12.06

 

Notices

 

19

 

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Page

 

 

 

 

 

12.07

 

Severability of Provisions

 

20

12.08

 

Headings

 

20

12.09

 

Entire Agreement

 

20

12.10

 

Counterparts

 

20

 

 

 

 

 

EXHIBIT A

 

PULP PURCHASE OBLIGATIONS, SUPPLY OBLIGATIONS, DELIVERY POINTS AND
TRANSPORTATION TERMS

 

 

 

 

 

 

 

EXHIBIT B

 

SPECIFICATIONS

 

 

 

 

 

 

 

EXHIBIT C

 

DISCOUNT SCHEDULE

 

 

 

 

 

 

 

EXHIBIT D

 

CERTIFICATE

 

 

 

 

 

 

 

SCHEDULE A

 

PULP PURCHASE OBLIGATIONS, SUPPLY OBLIGATIONS, DELIVERY POINTS AND
TRANSPORTATION TERMS FOLLOWING THE EFFECTIVE DATE OF A REDUCTION NOTICE BY
SELLER

 

 

 

iii

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AMENDED AND RESTATED PULP SUPPLY AGREEMENT

THIS AMENDED AND RESTATED PULP SUPPLY AGREEMENT (the “Agreement”), entered into
as of the 29th day of August, 2006, is by and between NEENAH PAPER, INC., a
Delaware corporation (“Seller”), and KIMBERLY-CLARK GLOBAL SALES, INC., a
Delaware corporation (“K-C”).

WITNESSETH

WHEREAS, pursuant to a Distribution Agreement (the “Distribution Agreement”)
dated as of November 30, 2004, Kimberly-Clark Corporation, a Delaware
corporation (“Parent”), transferred certain assets and businesses to Seller and
its subsidiaries in connection with a tax free spin-off of Parent’s United
States paper and Canadian pulp businesses to the stockholders of Parent (the
“Spin-off Transaction”); and

WHEREAS, following the Spin-off Transaction, Seller and its subsidiaries owned
and operated pulp mills and related woodlands operations in Terrace Bay, Ontario
and Pictou, Nova Scotia; and

WHEREAS, as part of the Spin-off Transaction, K-C and Seller entered into a Pulp
Supply Agreement (“PSA”), dated as of November 30, 2004, pursuant to which K-C
thereafter purchased from Seller, and Seller sold to K-C, Pulp, as defined
herein; and

WHEREAS, the PSA was amended by that certain Amendment to the PSA, dated as of
January 16, 2006 (the “Amended PSA”), entered into by Seller and K-C to address,
among other matters, a Force Majeure Event anticipated at Seller’s Terrace Bay,
Ontario mill (the “Terrace Bay Mill”); and

WHEREAS, Seller delivered to K-C a Force Majeure Notice on April 3, 2006 in
accordance with Section 9.01 of the Amended PSA stating that a Force Majeure
Event had occurred at its Terrace Bay Mill that prevented Seller from meeting
its obligations under the Amended PSA, effective on or about April 5, 2006; and

WHEREAS, Seller has informed K-C that Seller has entered into two asset purchase
agreements, one with Terrace Bay Pulp Inc. (“TBPI”) and the other with Eagle
Logging Inc (“Eagle”), whereby Seller will sell, respectively, to TBPI,
substantially all of the assets and properties used to produce pulp at its
Terrace Bay Mill (“Terrace Bay Operations”) and to Eagle, all of the assets and
properties of its Longlac Woodlands operations (“Longlac Operations”); and

WHEREAS, Seller has also informed K-C that (i) it intends to issue a Resumption
Notice to K-C on or before August 31, 2006 stating, among other things, the
dates and quantities of Pulp available for purchase by K-C and (ii) that
contemporaneously with the closing of the sale of its Terrace Bay Operations and
Longlac Operations, Seller will enter into a toll manufacturing agreement with
TBPI whereby TBPI will produce and sell Pulp to Seller who, in turn, will sell
Pulp to K-C under the terms of this Amended PSA; and

WHEREAS, K-C and Seller desire to enter into this Agreement in order to reflect
the foregoing circumstances and the terms and conditions under which K-C will
continue to purchase from Seller, Pulp produced at TBPI’s Terrace Bay Mill and
at Seller’s Pictou, Nova Scotia pulp mill (the “Pictou Mill”).

NOW THEREFORE, in consideration of the foregoing premises, which are
incorporated herein, and the mutual covenants recited hereinafter, it is hereby
agreed as follows.

1

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ARTICLE 1

DEFINITIONS

The following terms shall have the meanings set forth below when used in this
Agreement and when used in any Purchase Order issued pursuant to this Agreement.

1.01                           Airdry Metric Ton (“ADMT”).  One Thousand (1,000)
kilograms of air-dry Pulp, containing ninety percent (90%) bone-dry fiber and
ten percent (10%) moisture.

1.02                           Annual Supply Obligation or ASO.  The maximum
tonnage of Pulp, as set forth in Exhibit A hereto and as amended from time to
time, which Seller must make available to K-C for purchase in any one Contract
Year.

1.03                           Annual Purchase Obligation or APO.  The maximum
tonnage of Pulp, as set forth in Exhibit A hereto and as amended from time to
time, which K-C must purchase from Seller in any one Contract Year.

1.04                           Contract Year.  Any of the consecutive calendar
years in the term of this Agreement, with the first year beginning on January 1,
2005 and ending December 31, 2005.

1.05                           Delivery Point.  The facilities or ports set
forth in Exhibit A, or as otherwise mutually agreed to by the parties in writing
from time to time.

1.06                           Distribution Date.  As such term is defined in
the Distribution Agreement.                                       

1.07                           Environmental/Safety Laws.  Any foreign or
domestic law, regulation, rule, order or directive related to a concern for
human health, safety, welfare or the natural environment, which in any way
affects Seller’s ability to sell Pulp to K-C or K-C’s ability to purchase and
utilize Pulp, all pursuant to the terms hereof.

1.08                           Invoice Price.  Transaction Price less discounts
as set forth in Exhibit C.

1.09                           Option Pulp.  Has the meaning stated in section
2.01 (e) hereof.

1.10                           Phase Down Period.  The two (2) year phase down
period, invoked by either party pursuant to Section 3.02 or Section 6.03.

1.11                           Pulp.  Prime bleached Elemental Chlorine Free
(“ECF”) grade northern bleached softwood kraft (NBSK) or hardwood kraft (NBHK,
which is either High-Maple or Aspen as requested by K-C) pulp grades meeting the
Specifications and the provisions of Section 9.02 hereof.

1.12                           Regions.  K-C’s global locations referred to
regionally as: North America (US and Canada), and Europe.

1.13                           Shipping Points.  Seller’s existing stocking
terminals from which Pulp purchased by K-C is to be shipped, or such other
locations as the parties mutually agree in writing.

1.14                           Specifications.  Any or all of K-C’s Pulp
specifications listed in Exhibit B hereto, as amended from time to time by
mutual agreement of the parties.

2

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1.15                           Transaction Price.  The price, in USD, per ADMT
of Pulp from which discounts are to be taken as set forth in Article 4.

1.16                           2004 Supply Period.  The period from the day
after the Distribution Date to December 31, 2004, inclusive.

1.17                           Force Majeure Event.  Any cause or event that is
beyond the affected party’s immediate or reasonable control and which arises
without its fault or negligence, including an act of God, war or threat of war,
strike or other form of labor disturbances (but excluding a lock-out by the
employer), fire, explosion, or other casualty, any law, restraint, rule,
regulation or other governmental restriction, or by any Environmental/Safety
Laws.

1.18                           Force Majeure Period.  The period of time
beginning on the first day that a Force Majeure Event prevents a party from
performing its obligations hereunder and ending on the date that such event no
longer prevents the applicable party from performing its obligation hereunder. 
In the event of a Force Majeure Event affecting Seller’s ability to perform its
obligations, hereunder, the commencement date of such Force Majeure Period shall
be the day of the month on which Seller is no longer able to ship Pulp to K-C in
accordance with the K-C forecast in effect on the date of Seller’s Force Majeure
Notice.

1.19                           Force Majeure Notice.  A written notice given by
one party to the other pursuant to Section 9.01 that (a) specifies the Force
Majeure Event that prevents the affected party from timely performing its
obligations under this Agreement, (b) quantifies, to the extent practicable, the
quantities of Pulp that the affected party expects to be able to deliver or
purchase during the Force Majeure Period, and (c) provides the affected party’s
best estimate under the circumstances of when the Force Majeure Period commenced
or will commence and when the Force Majeure Period will end, each to the best
knowledge of the party providing the Force Majeure Notice.

1.20                           Freight Agreement Period.  Has the meaning stated
in Section 6.08 hereof.

1.21                           Resumption Notice.  A written notice given by a
party who has previously given a Force Majeure Notice stating that the Force
Majeure Event has ended and that such party is no longer prevented from
performing its obligations under this Agreement because of the Force Majeure
Event. The Resumption Notice shall specify the quantities of Pulp and the date
on which purchases and sales of such quantities of Pulp previously affected by
the Force Majeure Event will be available for purchase and sale, and the amount
of the Annual Supply Obligation and the Annual Purchase Obligation for the
remainder of the Contract Year in which the resumption date occurs.

1.22                           Step-down Notice.  A written notice given by K-C
pursuant to Section 9.01(f).

1.23                           Seller Reduction Notice.  A written notice given
by Seller pursuant to Section 6.06.

1.24                           K-C Reduction Notice.  A written notice given by
K-C pursuant to Section 6.07.  

3

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ARTICLE 2

ANNUAL PURCHASE AND SUPPLY OBLIGATIONS; ANNUAL FORECASTS

AND QUARTERLY ESTIMATES; SAFETY STOCKS

2.01                           Annual Purchase and Supply Obligations/Option
Tons.

(a)                                  Subject to the terms and conditions herein:

(i)                                     For the 2004 Supply Period, Seller shall
make available to K-C for purchase, and K-C shall purchase from Seller, Pulp in
each Region as set forth in Exhibit A; and

(ii)                                  Beginning January 1, 2005, Seller shall
make the Annual Supply Obligations available to K-C for purchase, and K-C shall
purchase from Seller, the Annual Purchase Obligations.  

(b)                                 Failure of K-C to Satisfy its Annual
Purchase Obligations.  If K-C fails to purchase the Annual Purchase Obligation
for any Contract Year, and such failure is not excused pursuant to this
Agreement, then in lieu of any other direct, indirect, incidental, special, or
consequential damages arising from K-C’s failure to purchase, Seller shall be
entitled to receive from K-C the Purchase Shortfall Amount (as defined below). 
Upon notification that K-C will be unable to meet the Annual Purchase
Obligation, Seller will diligently attempt to procure an alternate purchaser for
that quantity of Pulp which, when added to the quantity of Pulp actually
purchased by K-C during the applicable Contract Year, would equal the Annual
Purchase Obligation for such year (the “Purchase Shortfall Quantity”). 

The Purchase Shortfall Amount shall be equal to the amount Seller would have
received from K-C had K-C purchased the Purchase Shortfall Quantity in
accordance with the price and payment terms in Article 4 of this Agreement (the
“Purchase Shortfall Price”), reduced by the amount of payments made to Seller
for the Purchase Shortfall Quantity by alternate purchasers (the “Purchase
Shortfall Mitigation Amount”), and increased by ten percent (10%) of the
difference between the Purchase Shortfall Price and the Purchase Shortfall
Mitigation Amount.  If the Purchase Shortfall Mitigation Amount is greater than
the Purchase Shortfall Price, then the Purchase Shortfall Amount will be zero.

Any tonnage for which payment is made by K-C as a result of the circumstances
described in this subparagraph (b) shall be deducted from K-C’s Annual Purchase
Obligation and Seller’s Annual Supply Obligation for such Contract Year.

(c)                                  Failure of Seller to Satisfy its Annual
Supply Obligations.  If Seller fails to make available for purchase by K-C the
Annual Supply Obligation for any Contract Year, and such failure is not excused
pursuant to this Agreement, then in lieu of any other direct, indirect,
incidental, special, or consequential damages arising from Seller’s failure to
sell, K-C shall be entitled to receive from Seller the Supply Shortfall Amount
(as defined below). The quantity of Pulp which, when added to the quantity of
Pulp actually supplied by Seller during the applicable Contract Year, would
equal the Annual Supply Obligation for such year is referred to below as the
“Supply Shortfall Quantity”).

The Supply Shortfall Amount shall be equal to the price paid by K-C for the
Supply Shortfall Quantity on the open market (the “Supply Shortfall Cover
Amount”), reduced by the price K-C would have paid Seller for the Supply
Shortfall Quantity if Seller had supplied such Pulp as

4

--------------------------------------------------------------------------------

required by this Agreement (the “Supply Shortfall Price”) and increased by ten
percent (10%) of the difference between the Supply Shortfall Cover Amount and
the Supply Shortfall Price.  If the Supply Shortfall Cover Amount is less than
the Supply Shortfall Price, then the Supply Shortfall Amount will be zero.

Any tonnage purchased elsewhere by K-C as a result of the circumstances
described in this subparagraph (c) shall be deducted from K-C’s Annual Purchase
Obligation and Seller’s Annual Supply Obligation for such Contract Year.

(d)                            Shortfall Payments; Exclusive Remedy.  In the
event that a shortfall occurs in the Annual Purchase Obligation, or in the
Annual Supply Obligation, the Purchase Shortfall Amount or the Supply Shortfall
Amount, as the case may be, shall be payable within forty-five (45) days of the
date that a written claim is made, provided that such claim shall not be made
until the amount of the shortfall can be determined with reasonable certainty. 
Seller’s sole remedy for K-C’s unexcused failure to satisfy its Annual Purchase
Obligation shall be as set forth in paragraph 2.01(b).  K-C’s sole remedy for
Seller’s unexcused failure to satisfy its Annual Supply Obligation shall be as
set forth in paragraph 2.01(c).                         

(e)                             K-C Option Tons in 2006 and 2007.  In addition
to K-C’s Annual Purchase Obligations for 2006 and 2007, respectively, K-C shall
have the right to purchase additional ADMT of North American softwood Pulp for
delivery to North America Delivery Points (“Option Tons”) in 2006 and 2007,
respectively, to be allocated 75% to the Terrace Bay Mill and 25% to the Pictou
Mill, unless the parties otherwise agree in writing, and, further, subject to
the following limitations:

(i)                                     2006 Option Tons.  K-C may elect to
purchase from Seller during the months of October, November and December 2006 up
to 20,000 Option Tons by delivering to Seller on or before September 10, 2006 a
written notice specifying the ADMT quantity of Option Tons from each pulp mill
to be delivered to K-C during each such month; provided, however, that in no
event, shall Seller be obliged to deliver to K-C Delivery Points more than
10,000 Option Tons during any single month.

(ii)                                  2007 Option Tons.  K-C may elect to
purchase from Seller during 2007 up to 50,000 Option Tons by delivering to
Seller on or before October 15, 2006 a written notice specifying the ADMT
quantity of Option Tons from each pulp mill to be delivered to K-C and each
month in which such deliveries shall be made; provided, however, that in no
event shall Seller be obliged to deliver more than 6,500 Option Tons in any
single month in 2007.

2.02                           Regional Terms.  Both parties agree that the
terms and conditions of this Agreement adequately reflect differences in market
Regions for Pulp specifications, transaction price, delivery, and payment
terms.  

2.03                           Quarterly Estimates.  Beginning with the calendar
quarter commencing January 1, 2005, the parties shall communicate thirty (30)
days prior to the commencement of each quarter to forecast:  1) proposed
quarterly purchases to be made by K-C for each of K-C’s mills listed in Exhibit
A; and 2) the month within the calendar quarter upon which Seller shall make
such quantities available to K-C.

2.04                           Annual Forecasts.  By October 15 of each
preceding Contract Year, for general guidance, K-C shall provide Seller with
K-C’s preliminary non-binding forecast of purchases for the subsequent Contract
Year.  K-C shall provide Seller with its final non-binding forecast of purchases
for each

5

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subsequent Contract Year by November 15.  Additionally, on an annual basis
Seller and K-C may agree to start discussions on or before October 15, without
binding obligation unless so mutually agreed, to increase the volume of Pulp to
be supplied and purchased above the volumes required by this Agreement, and such
discussions will conclude by November 15 (regardless whether mutual agreement is
reached or not).  If mutually agreed upon, the additional volume of Pulp to be
supplied and purchased will be according to the terms and conditions of this
Agreement.

2.05                           Safety Stocks.  Seller shall maintain safety
stocks which are adequate to assure the continuous supply of Pulp to K-C set
forth in Exhibit A, taking into account K-C’s forecasts, Seller’s production
schedule, normal shipping times for vessel and inland shipments and other
pertinent factors.  In the event that K-C believes that additional safety stock
is required, K-C shall discuss in good faith the safety-stock levels with
Seller.  If after the discussions, K-C reasonably determines that additional
safety stock is needed, it shall so notify Seller and, at Seller’s election
either (i) Seller may bring the safety-stock level to the required level within
30 days of receipt of K-C’s notice or (ii) K-C may purchase Pulp from other
suppliers and Seller shall pay K-C the difference between the higher price paid
by K-C for safety stock on the open market and the price K-C would have paid
Seller if Seller had supplied Pulp as required by this Agreement, plus
liquidated damages equal to ten percent (10%) of such difference in lieu of any
other direct, indirect, incidental, special or consequential damages arising
from such failure to deliver. Any tonnage purchased by K-C from other suppliers
pursuant to this Section 2.05 shall be deducted from K-C’s Annual Purchase
Obligation and Seller’s Annual Supply Obligation.

2.06                           Ordering.  Periodic scheduling instructions for
Pulp shall be placed by K-C and followed by Seller as follows, or as the parties
may otherwise mutually agree in writing from time to time:

(a)                                  K-C shall advise Seller of K-C’s particular
need for Pulp under this Agreement (a “Delivery Schedule”).  The Delivery
Schedule shall be communicated to Seller, at least 30 days prior to the date on
which the shipment would be scheduled to leave the mill, by e-mail, or other
means mutually agreed upon in writing by K-C and Seller.  The Delivery Schedule
shall set forth:

(i)                                     the specific quantity and grade of Pulp
needed;

(ii)                                  the requested shipping date(s) and
delivery date(s); and

(iii)                               shipping instructions and Delivery Points.

(b)                                 Subject to K-C’s obligations pursuant to
Section 2.01, K-C may cancel any specific quantity of Pulp specified in the
Delivery Schedule by providing a revised Delivery Schedule to Seller for such
quantity, by e-mail, or other means mutually agreed upon in writing by K-C and
Seller.  If the revised Delivery Schedule for such quantity is received by
Seller prior to Seller delivering such quantity to a carrier for shipment, then
K-C will be responsible for any out-of-pocket demurrage or other costs incurred
by Seller as a result of such cancellation, provided that Seller uses
commercially reasonable efforts to mitigate any such additional costs.  If the
revised Delivery Schedule for such quantity is received by Seller after such
quantity has been delivered to a carrier for shipment, then K-C will be
responsible for any additional costs incurred by Seller in complying with the
revised Delivery Schedule for such quantity, provided that Seller uses
commercially reasonable efforts to mitigate any such additional costs.

(c)                                  Upon Seller’s receipt of a Delivery
Schedule, Seller shall promptly notify K-C of any proposed deviations from K-C’s
instructions.

6

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ARTICLE 3

QUALITY AND SPECIFICATIONS; SPECIFICATION CHANGES;

WARRANTIES; PRODUCT SAFETY CERTIFICATIONS;

REPORTS, RECORDKEEPING, AND ACCESS

3.01                           Quality and Specifications.  The Pulp to be sold
and purchased hereunder shall be consistent with the quality of prime pulp
grades used throughout the world and shall be produced in accordance with and
shall meet all of K-C’s requirements and Specifications as set forth in this
Agreement and K-C’s shipping instructions under Article 5. In the event of any
conflict or inconsistency between or among requirements, standards or conditions
and unless otherwise herein specifically provided otherwise, the higher or more
detailed requirement, standard or condition shall control. The parties agree to
work together to make any necessary changes to the Specifications to ensure that
the Pulp meets the performance, processing and other requirements in the
manufacture of products into which the Pulp is incorporated and that the
requirements of such products are met.

3.02                           Specifications Change.  K-C shall have the right
to propose reasonable changes to Specifications at any time during the term of
this Agreement, and Seller agrees to use its commercially reasonable efforts to
meet such changes within a reasonable period of time (not to exceed 90 days)
after K-C’s written request has been received.  For purposes of this paragraph,
a reasonable change to Specifications shall mean that the Specifications
requested could be met by third-party pulp suppliers in the commercial pulp
market.  If Seller is unable to meet such changes within such reasonable period,
K-C may purchase Pulp meeting changed Specifications elsewhere, and K-C’s Annual
Purchase Obligations shall be reduced accordingly.  If Seller is able to make
such changes, but Seller’s costs are increased or decreased as a direct result
of such revised Specifications, Seller and K-C agree to negotiate in good faith
to establish, within thirty (30) days of Seller’s knowledge that price changes
shall result, any commercially reasonable revisions in price and terms. If the
parties are unable to agree on a price adjustment within such 30 day period and
K-C elects not to forego the Specifications change, irrespective of any other
provision hereof, either party shall have the right to commence the Phase Down
Period immediately with respect to the quantity of Pulp for which the change to
Specifications was requested.

Seller understands that the introduction of process changes in its Pulp
manufacturing can potentially affect K-C’s manufacturing process and/or final
product attributes.  Therefore, Seller will provide K-C with Pulp samples for
evaluation at least one hundred twenty (120) days in advance of making any such
changes.  If, in the sole, reasonable opinion of K-C, a process change by Seller
will negatively affect K-C’s manufacturing process and/or final product
attributes, then K-C agrees to give Seller an additional ninety (90) days
written notice of such negative effects. At the end of such ninety (90) day
notice period Seller shall either revoke such process change or immediately and
permanently release K-C from its purchase obligations under this Agreement as to
the Pulp in question.

3.03                           Forestry. 

(a)                                  Seller shall, by December 31, 2005, cause
its wholly-owned wood fiber suppliers to be formally certified in one of the
internationally-recognized forest certification programs, such as the American
Forest and Paper Association’s (AF&PA) Sustainable Forestry Initiative® (SFI)
program.  In addition, Seller agrees that the woodlands operated by TBPI will
have submitted all appropriate applications and documentation, and done all
things necessary to support said applications, to be “audit ready” for
certification in the SFI program on or before March 31, 2007.  TBPI will exert
commercially reasonable best efforts to remediate any deficiencies noted in the
SFI audits of TBPI’s woodlands and to have formal SFI certification issued as
soon as reasonably possible following submission of its SFI certification
applications and will have obtained SFI certification for all of the woodlands
operated by TBPI on or before

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June 30, 2007. Notwithstanding the immediately preceding sentence, TBPI will
obtain SFI certification for the Ogoki forest (which, in conjunction with fiber
from other certified forests, will provide at least 85% of the wood fiber to the
Terrace Bay Mill) on or before April 30, 2007 and shall exert commercially
reasonable best efforts to obtain SFI certification on the Ogoki forest on or
before April 15, 2007.  TBPI shall provide copies of all applications for SFI
certification of the woodlands operated by TBPI to Seller and K-C within a
reasonable period of time following the filing of said applications and shall
provide copies of all audit reports to Seller and K-C when received.  Seller
shall also use its commercially reasonable efforts to work with and encourage
its other industrial contract wood fiber suppliers (including purchasers of land
from Seller in Nova Scotia as it relates to the purchased lands) to become
certified in one of the internationally-recognized forest certification programs
and shall encourage its non-industrial contract wood suppliers to adopt the
principles of sustainable forestry and to seek independent certification of
their woodlands in an appropriate program such as the American Tree Farm
System’s Standards of Sustainability for Forest Certification.  Further, for all
Pulp supplied by Seller to K-C from the Terrace Bay Mill, at least 85% of the
fiber used in the production of such Pulp shall be produced from certified wood
fiber on or before April 30, 2007 and all of the wood fiber used in the
production of such Pulp shall be manufactured from certified fiber on or before
June 30, 2007.  On or before June 30, 2007, and thereafter for the remainder of
the term of this Agreement, all Pulp supplied to K-C from the Terrace Bay Mill
will meet the labeling and certification requirements of one of the
internationally-recognized forest certification programs and on or before April
30, 2007, at least 85% of the Pulp supplied to K-C shall be produced with
certified wood fiber.  Seller further agrees that all Pulp supplied by Seller to
K-C from the Pictou Mill will continue to meet the labeling and certification
requirements of one of the internationally-recognized forest certification
programs during the term of this Agreement.

(b)                                 By January 1, 2007 Seller agrees that TBPI
shall develop and present to K-C a plan to obtain Forest Stewardship Council
certification for the Kenogami Woodlands including the shortest, reasonable
timeline for implementing such plan, and how, if possible, sufficient quantities
of FSC certified wood fiber could be made available to allow all Pulp sold to
K-C from the Terrace Bay Mill to meet the FSC’s labeling and certification
requirements for FSC certified pulp. The parties agree to negotiate in good
faith (including negotiations with TBPI) with respect to any changes necessary
to this Agreement required to implement said plan upon commercially reasonable
terms, including price, timing, contract length, cost allocation and any other
relevant terms and condtions for sale by Seller and purchase by K-C of such FSC
certified Pulp.

3.04                           Warranties; Product Safety Certification.

(a)                                  Each party represents and warrants to the
other party that: 

(i)                                     it is a corporation duly organized,
existing and in good standing under the laws of the state of Delaware and its
execution and performance of this Agreement is within its corporate powers, has
been duly authorized, and is not in contravention or violation of its charter,
by-laws or any corporate resolution or of law or of any indenture, agreement,
undertaking or other obligation to which it is bound;

(ii)                                  it has obtained all governmental licenses,
approvals and registrations necessary to perform and fulfill its obligations
under this Agreement;

(iii)                               the individual signing this Agreement on its
behalf is duly authorized to do so and this Agreement is legally valid, binding
and enforceable in accord with its terms; and

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(iv)                              it shall take all steps necessary to assure
that all delivery dates and other obligations established in this Agreement by
it to be performed are met in a timely fashion.

(b)                                 Seller agrees that the Pulp shall be, at the
time of delivery to K-C, free from contamination or other defects and shall
conform in all respects with the Specifications and other requirements hereof.

(c)                                  Seller agrees that, in addition to the
other requirements of this Agreement, each shipment of the Pulp:

(i)                                     shall conform to the U.S. Food and Drug
Administration requirement for pulp as defined in 21 C.F.R. Section 186.1673,
and requirements for Indirect Food Additives: Pulp and Paperboard Components as
defined in 21 C.F.R. Part 176; and

(ii)                                  will be sufficiently tested to certify
that it meets the Council of Northeast Governors (“CONEG”) heavy metal
requirements for levels of lead, mercury, cadmium and chromium.

Upon execution of this Agreement, Seller shall provide to K-C a certificate
attesting to the foregoing in the form attached hereto as Exhibit D. 

(d)                                 Seller represents and warrants to K-C that,
as long as TBPI manufacturers Pulp for Seller for sale to K-C under the terms of
this Agreement:

(i)                                     TBPI has obtained, or will obtain within
a commercially reasonable period of time following the execution of this
Agreement, all material governmental licenses, approvals and registrations
necessary to perform and fulfill its duties to manufacture Pulp in accordance
with this Agreement for Seller;

(ii)                                  Seller is at all times responsible for the
full performance of its obligations under this Agreement;

(iii)                               Seller will not create any obligation on the
part of K-C to pay any sums directly to TBPI;

(iv)                              Seller will be fully responsible for the acts
and omissions of TBPI in the performance of Seller’s obligations under this
Agreement to the extent such acts or omissions cause liability to K-C; and

(v)                                 Seller and TBPI have entered into a Pulp
Manufacturing Agreement and such agreement is legally valid, binding and
enforceable in accordance with its terms and is not inconsistent with the terms
of this Agreement.

3.05                           Reports, Recordkeeping, and Access.  Seller shall
maintain a quality assurance program that meets the sampling process, test
methods and technical attributes set forth in the Specifications in Exhibit B. 
Seller understands that K-C relies on Seller’s quality assurance program to
assure that Pulp delivered is in compliance with the Specifications and other
provisions set forth herein.  During the term of this Agreement, Seller shall
collect and for five (5) years after termination hereof, shall maintain: (i)
process control data and property data typical in the industry for the
production of Pulp, (ii) all data

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required to document compliance with the Specifications and other terms hereof,
and (iii) any other process control or property data related to the production
of Pulp as K-C may from time to time reasonably request.  Seller shall provide
K-C, upon its request, with access, at reasonable times, to Seller’s facilities
and cause TBPI to provide such access to the facilities of TBPI, for purposes of
reviewing such operations and Seller’s compliance with the terms hereof,
including Seller’s records required to be kept pursuant to this Section 3.05.

ARTICLE 4

PRICE AND PAYMENT TERMS

4.01                           Price. 

(a)                                  The parties acknowledge that the price for
Pulp fluctuates with market conditions and agree that the price at which Seller
shall sell and K-C shall purchase Pulp hereunder shall be determined as set
forth in this Article 4.  In order to determine the price for Pulp invoiced in
any given month, the parties shall first establish the Transaction Price which
shall be based on the prevailing price per ADMT of Pulp for the preceding month
as quoted by one or more major, regular market producers of prime bleached Pulp
for contract or regular, long-term customers for any given month.  Based upon
such quote(s), Seller and K-C shall attempt to mutually agree on the applicable
Transaction Price for any given month’s shipments.  If the parties cannot agree
on the Transaction Price, then the Transaction Price shall be determined by
reference to published market data as follows:

For Softwood (NBSK) Shipped to North American Delivery Points:

The Transaction Price shall be the average of:

1)                                      Pulp and Paper Week’s posted price in
the “Price Watch: Market Pulp” table for the preceding month.  In the case of a
range of prices, the range average; and

2)                                      The posted price in RISI World Pulp
Monthly’s “Table 5 Market Pulp Price Summary” Delivered to United States for the
preceding month.

In the event that the next issue of the subject publications adjusts or corrects
previously published prices, such resulting adjustments shall be credited to the
proper party and incorporated into the methodology on a going-forward basis.

For Hardwood (NBHK):

The Transaction Price shall be the posted Aspen and Maple price in RISI World
Pulp Monthly’s “Table 5 Market Pulp Price Summary” Delivered to United States
for the preceding month.

For Softwood (NBSK) Shipped to European Delivery Points:

The Transaction Price shall be the average of:

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1)                                      The Hawkins Wright PulpWatch posted
price in the “Price Indication” table for the preceding month.  In the case of a
range of prices, the range average; and

2)                                      The posted price in RISI World Pulp
Monthly’s “Table 5 Market Pulp Price Summary” Delivered to Europe for the
preceding month.

In the event that the next issue of the subject publications adjusts or corrects
previously published prices, such resulting adjustments shall be credited to the
proper party and incorporated into the methodology on a going-forward basis.

Discontinuation of a Publication

In the event that one or more of the subject publications cease to exist, then
the parties agree to negotiate in good faith to determine a commercially
reasonable alternative to that publication for use in this Section 4.01.

(b)                                 Notwithstanding anything in Section 4.01(a)
to the contrary, in no event shall the Transaction Price for NBSK shipped during
the period from the Distribution Date to and including December 31, 2007 to
North American Delivery Points be less than $       per ADMT or more than
$       per ADMT.

4.02                           Discounts.  The price to be paid by K-C for Pulp
purchased pursuant to this Agreement shall be the Transaction Price established
pursuant to Section 4.01 (including, if applicable Section 4.01(b)) less the
discounts set forth in Exhibit C.

4.03                           Freight and Other Shipping Costs.  Except as
otherwise set forth herein, Seller shall pay shipping costs for, and insure
deliveries of Pulp to the Delivery Points set forth in Exhibit A.  K-C may
request accelerated deliveries or designate other Delivery Points, in which
event the parties shall review costs associated with such accelerated deliveries
or other Delivery Points and establish appropriate shipping costs therefor.

4.04                           Payment Terms.  Seller shall invoice K-C on a per
load basis for all Pulp sold under this Agreement.  K-C North America’s payment
term is forty-five (45) days from date of shipment of Pulp.  Seller shall
invoice K-C Europe and K-C Europe shall pay Seller sixty (60) days from vessel
arrival.

ARTICLE 5

SHIPMENT AND DELIVERY

5.01                           Shipment Method/Shipping and Delivery Points. 
All purchases of Pulp made hereunder shall be shipped from Seller’s Pictou Mill
and TBPI’s Terrace Bay Mill to K-C Delivery Points consistent with the parties’
2004 shipping history or as mutually agreed.  Commencing October 1, 2006, all
deliveries of Pulp made hereunder shall be shipped from Seller’s Pictou pulp
mill or TBPI’s Terrace Bay Mill to K-C Delivery Points consistent with the
parties 2004 shipping history.  Seller shall deliver all Pulp to K-C at the
Delivery Points set forth in Exhibit A, or as otherwise mutually agreed from
time to time, in accordance with K-C’s shipping instructions.  All pulp received
by K-C’s European locations shall be supplied solely by Seller’s Pictou Mill.

5.02                           Arrearage.  Seller shall make and monitor all
shipments and deliveries in accordance with the shipment schedules specified in
K-C’s shipping instructions.  When Seller becomes aware that it may be unable to
ship any quantity of Pulp hereunder in accordance with K-C’s specified delivery
schedule,

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Seller shall immediately notify K-C both orally and in writing of this
possibility, and the parties shall determine whether Seller can effect delivery
to meet K-C’s requirements.  If, after discussion with Seller, K-C reasonably
determines, in its sole good faith judgment, that Seller will not be able to
make a delivery in time to meet K-C’s requirements, K-C shall have the right to
obtain delivery of the required quantities of Pulp from an alternate supplier. 
In the event that K-C is required to purchase Pulp from another supplier
pursuant to this Section 5.02, Seller shall pay K-C the difference between the
higher price paid by K-C for Pulp on the open market and the price K-C would
have paid to Seller if Seller had supplied Pulp as required by this Agreement,
plus liquidated damages equal to ten percent (10%) of such difference, in lieu
of any other direct, indirect, incidental, special or consequential damages
arising from such failure to deliver. Purchases by K-C of Pulp from another
supplier pursuant to this Section 5.02 shall be deducted from K-C’s Annual
Purchase Obligation and Seller’s Annual Supply Obligation.

5.03                           Title and Risk of Loss.  All shipments to North
American Delivery Points shall be made FOB Delivery Point at which point risk of
loss or damage shall pass to K-C.  All shipments to European Delivery shall be
made CIF European Delivery Point and risk of loss or damage shall pass in
accordance with such CIF terms.  Legal title to the Pulp shall pass to K-C at
the Delivery Point designated by K-C.

5.04                           Bale Finishing.  For North America, Seller will
use commercially reasonable best efforts to work with K-C to develop and supply
wireless bales meeting K-C technical and transportation requirements no later
than June 1, 2006 at Seller’s Pictou Mill and no later than June 1, 2007 at the
Terrace Bay Mill.  For Europe, Seller will continue to provide wired bales,
unless and until the parties mutually agree otherwise.  Additionally, Seller
will use commercially reasonable efforts to work with K-C to create uniform bale
shape, dimensions, weights, and wrap requirements that will be implemented by
June 1, 2006, but the parties acknowledge that transitioning to uniform bale
shape, dimensions, weights, and wrap requirements is capital intensive and that
there is not currently a provision in the budget of Seller or of TBPI for such
an outlay and operational priorities may delay the implementation of uniform
bale shape, dimensions, weights, and wrap requirements.

ARTICLE 6

TERM AND TERMINATION

6.01                           Term.  The term of this Agreement shall commence
on the Distribution Date, and shall continue until terminated in accordance with
the terms of this Agreement.

6.02                           Termination.  This Agreement may be terminated:

(a)                                  Upon the mutual written agreement of the
parties; or

(b)                                 Except as provided in Section 6.03 hereof,
by either party for material breach of any of the terms hereof by the other
party if the breach is not corrected (or remedied) within thirty (30) calendar
days after written notice of breach is delivered to the defaulting party; or

(c)                                  Except as provided in Section 6.03 hereof,
by either party, upon thirty (30) days written notice to the other party, for
three or more material breaches of the terms of this Agreement by the other
party within a Contract Year, whether or not such breaches have been cured; or

(d)                                 By either party, forthwith, upon written
notice to the other party, if such other party shall become insolvent, or shall
be placed in receivership, reorganization, liquidation or bankruptcy, by the
other party, immediately, upon written notice; or

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(e)                                  By K-C, forthwith, upon written notice to
Seller, if for any reason, the ownership or control of Seller or any of Seller’s
production facilities becomes vested in, or is made subject to the control or
direction of, any direct competitor of K-C or any governmental or regulatory
authority or any other third party, who in K-C’s reasonable judgment may not be
able to reliably perform the obligations of Seller hereunder; or

(f)                                    By either party, upon no less than ninety
(90) days written notice to the other party, in the event of a fundamental
change in the nature of the business of either party that may substantially
affect its ability to sell or to purchase and utilize Pulp hereunder; or

(g)                                 As otherwise provided for in this Agreement
in Article 6, Sections 9.01, Section 9.02, Section 9.03, or Article 11.

6.03                           Termination Limitaton.  Neither party shall have
the right to terminate its respective rights and obligations hereunder
pertaining to the Pictou Mill pursuant to Sections 6.02(b) or (c) for any breach
of the terms hereof relating to or otherwise arising out of the parties
respective rights and obligations hereunder pertaining to the Terrace Bay Mill. 
Additionally, neither party shall have the right to terminate its respective
rights and obligations hereunder pertaining to the Terrace Bay Mill pursuant to
Sections 6.02(b) and (c) hereof for any breach of the terms hereof relating to
or otherwise arising out of the parties respective rights and oblilgations
hereunder pertaining to the Pictou Mill.

6.04                           Termination Without Cause.

(a)                                  As to the Entire Agreement, at any time on
or after December 31, 2007, either party may provide written notice to the other
party of its intent to commence the Phase Down Period.  The notice shall specify
the commencement date of such Phase Down Period.  The earliest that the
twenty-four month Phase Down Period can start is January 1, 2009.  The Annual
Purchase Obligation and Annual Supply Obligation under the Phase Down Period are
set forth at Exhibit A.

(b)                                 As to that portion of the Agreement
concerning NBHK Pulp only, Seller may give a three month written notice,
consistent with timing of the Quarterly Estimate process per Section 2.03, to
terminate the Purchase and Supply Obligations for the remaining hardwood Pulp
grade.  The notice shall specify the effective termination date and must be
acknowledged by K-C in writing.  For clarity, it is recognized that as of June
30, 2005 the Aspen Pulp grade was removed from the Amended PSA.

6.05                           Effect of Termination.  Upon termination of this
Agreement:

(a)                                  The parties shall meet and discuss which
outstanding and not yet fulfilled orders should be filled and which shall be
cancelled.

(b)                                 Each party shall immediately return to the
other (or destroy) all items of Confidential Information delivered hereunder and
all copies thereof.

(c)                                  Seller shall continue to fulfill its
warranty obligations with respect to any Pulp sold by Seller to K-C pursuant to
this Agreement.

(d)                                 All requirements of warranties, reports,
recording, access, indemnification, payment terms, obligations related to use or
protection of Confidential Information, and

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provisions related to venue and choice of laws, shall survive termination or
expiration of this Agreement according to their terms.

6.06                           Partial Termination by Seller. Seller may, on
June 29, 2007 only, elect to permanently reduce its Annual Supply Obligation for
softwood Pulp sourced from the Terrace Bay Mill by giving K-C a Seller Reduction
Notice. The Seller Reduction Notice shall specify the Effective Date of the
reduction, the amount of the reduced Annual Supply Obligation in North America
for softwood Pulp from the Terrace Bay Mill, and shall reduce the Annual Supply
Obligation for hardwood Pulp to zero. The Seller Reduction Notice shall be
subject to the following limitations:

(a)                                  Without K-C’s written consent, Seller’s
Annual Supply Obligation for softwood Pulp may not be reduced below the amounts
set forth on the attached Schedule A.

(b)                                 Without the prior written consent of K-C,
the Effective Date of the Seller Reduction Notice may not be earlier than June
30, 2008. Notwithstanding such restriction on the Effective Date of the Seller
Reduction Notice, at the request of Seller, K-C shall exercise commercially
reasonable efforts to purchase Pulp from third party producers as promptly as
possible so as to enable the Effective Date to occur earlier than stated in the
Seller Reduction Notice. To this end, K-C shall regularly communicate with
Seller regarding its efforts to purchase Pulp from third party producers and
will provide Seller with such other information regarding such efforts as the
parties may reasonably agree upon. Nothing herein shall obligate K-C to disclose
to Seller any information that K-C deems to be confidential or proprietary in
the exercise of K-C’s reasonable commercial judgment, or that is subject to a
confidentiality agreement with a third party.  Any reduction in the Annual
Supply Obligation pursuant to this Section 6.06(b) shall reduce the Annual
Purchase Obligation by an equal amount.

(c)                                  To the extent permitted by applicable law,
rule, regulation or disclosure obligation, as determined in the sole discretion
of Seller, the Seller Reduction Notice will be provided to K-C no less than
thirty (30) days prior to any public disclosure of the event, circumstance or
reason for the giving of the Seller Reduction Notice.

(d)                                 Without the prior written consent of K-C, no
Seller Reduction Notice may be sent prior to December 1, 2006 unless accompanied
by (i) a legal opinion in form and substance, from McDermott, Will & Emery or
another law firm with a national reputation for a federal tax practice,
acceptable to K-C in its sole discretion who will act as counsel to K-C for the
purposes of such opinion, to the effect that any actions to be taken by Seller
with respect to its Terrace Bay pulp mill in connection with the submission of
the Seller Reduction Notice will not adversely affect the tax-free nature of the
transactions described in the private letter ruling issued by the Internal
Revenue Service (“IRS”) to Kimberly-Clark Corporation and dated September 15,
2004 (the “Private Letter Ruling”); (ii) a private letter ruling from the IRS
that (A) approves a change in the “active trade or business” under the existing
Private Letter Ruling from Seller’s Terrace Bay mill to another entity or
business of Seller and (B) does not otherwise adversely affect the tax-free
nature of the transactions described in the Private Letter Ruling, or (iii) a
private letter ruling from the IRS which would otherwise establish that the
actions to be conducted by Seller in connection with the submission of the
Seller Reduction Notice will not adversely affect the tax-free nature of the
transactions described in the Private Letter Ruling. At the request of Seller,
K-C will cooperate with and support Seller’s reasonable efforts (and K-C agrees
to undertake to engage the support and cooperation of Kimberly-Clark
Corporation), on a timely basis, to obtain the legal opinion or the private
letter rulings described in subparagraphs (i), (ii) and (iii) above; provided
that Seller shall be responsible for, and shall promptly reimburse K-C for, all
reasonable

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fees and expenses of K-C and/or Kimberly-Clark Corporation incurred by them in
connection with any such requested cooperation.

(e)                                  It is expressly understood and agreed
between the parties that during the period of time between the delivery date and
the Effective Date of the Seller Reduction Notice, Seller may satisfy its
obligation to supply Pulp under the Supply Agreement by supplying Pulp purchased
from third parties that meets the Specifications and the provisions of Sections
9.02 and 9.03 and Articles 3 and 11 of the Supply Agreement.

6.07                           Partial Termination by K-C.  K-C may, on June 29,
2007 only, elect to permanently reduce its Annual Purchase Obligation for
softwood Pulp sourced from the Terrace Bay Mill by giving Seller a K-C Reduction
Notice. The K-C Reduction Notice shall specify the Effective Date of the
reduction and the amount of the reduced Annual Purchase Obligation for softwood
Pulp from the Terrace Bay Mill. The K-C Reduction Notice shall be subject to the
following limitations:

(a)                                  Without Seller’s written consent, K-C’s
Annual Purchase Obligation for softwood Pulp may not be reduced below the
amounts set forth on the attached Schedule A.

(b)                                 Without the prior written consent of Seller,
the Effective Date of the K-C Reduction Notice may not be earlier than June 30,
2008. Notwithstanding such restriction on the Effective Date of the K-C
Reduction Notice, at the request of K-C, Seller shall exercise commercially
reasonable efforts to sell Pulp on substantially the same economic and other
terms and conditions to third party purchasers as promptly as possible so as to
enable the Effective Date to occur earlier than stated in the K-C Reduction
Notice. To this end, Seller shall use commercially reasonable efforts to cause
TBPI to regularly communicate with K-C regarding its efforts to sell Pulp to
third party purchasers and will provide K-C with such other information
regarding such efforts as K-C and TBPI may reasonably agree upon. Nothing herein
shall obligate Seller or TBPI to disclose to K-C any information that Seller or
TBPI deems to be confidential or proprietary in the exercise of Seller’s or
TBPI’s reasonable commercial judgment, or that is subject to a confidentiality
agreement with a third party.  Any reduction in the Annual Purchase Obligation
pursuant to this Section 6.07(b) shall reduce the Annual Supply Obligation by an
equal amount.

(c)                                  To the extent permitted by applicable law,
rule, regulation or disclosure obligation, as determined in the sole discretion
of K-C, the K-C Reduction Notice will be provided to Seller no less than thirty
(30) days prior to any public disclosure of the event, circumstance or reason
for the giving of the K-C Reduction Notice.

6.08                           Freight Incentive During a Freight Agreement
Period.

(a)                                  If during a Freight Agreement Period, as
defined in this Section 6.08, K-C requests that Seller supply Pulp from the
Pictou Mill to Delivery Points that are customarily supplied from Terrace Bay,
the parties acknowledge that the freight and other shipping costs to be incurred
by Seller under Section 4.03 could be higher because the Pictou Mill is further
from some Delivery Points than is Terrace Bay.  In order to create an incentive
for K-C to plan purchases of third party Pulp in a manner that will result in
lower freight and shipping costs under Section 4.03, Seller will make a payment
to K-C and K-C will make a payment to Seller, in the amounts and on the terms
and conditions set forth below:

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(i)                                     Definitions.

A.           Group I Delivery Points means Chester, Pennsylvania; Mobile,
Alabama; Huntsville, Ontario; and New Milford, Connecticut;

B.             Group II Delivery Points means Beech Island, South Carolina;
Jenks, Oklahoma; Corinth, Mississippi; and All European Delivery Points;

C.             Group I Base Line means 40% of Pictou Mill Pulp tonnage shipped
to all K-C delivery points during a Freight Agreement Period;

D.            Group II Base Line means 46% of Pictou Mill Pulp tonnage shipped
to all K-C delivery points during a Freight Agreement Period; and

E.              Freight Agreement Period means each period following the date of
a Force Majeure Event that begins on the first day of a Force Majeure Period and
ends six months after the end of such Force Majeure Period, unless the parties
otherwise agree in writing. Additionally, if, as a result of a Reduction Notice
given by Seller or K-C hereunder, the Terrace Bay Mill ceases supplying Pulp to
K-C Delivery Points and the Pictou Mill delivers Pulp to K-C Delivery Points
formerly supplied by Terrace Bay, the Freight Agreement Period shall begin on
the date that Terrace Bay ceases supplying Pulp to K-C Delivery Points and shall
continue in effect during the remaining term of this Agreement.

(ii)                                During any Freight Agreement Period:

A.           If Seller’s Pictou Mill ships more tons to Group I Delivery Points
than the Group I Base Line, then Seller will pay K-C $8.00/ADMT for each ton in
excess of the Group I Base Line;

B.             If Seller’s Pictou Mill ships less tons to Group I Delivery
Points than the Group I Base Line, then K-C will pay Seller $8.00/ADMT for each
ton less than the Group I Base Line;

C.             If Seller’s Pictou Mill ships more tons to Group II Delivery
Points than the Group II Base Line, then K-C will pay Seller $8.00/ADMT for each
ton in excess of the Group II Base Line; and

D.            If Seller’s Pictou Mill ships less tons to Group II Delivery
Points than the Group II Base Line, then Seller will pay K-C $8.00/ADMT for each
ton less than the Group II Base Line.

(iii)                               Such amounts shall be due and payable within
thirty (30) days after the end of each calendar quarter (i.e., March 31, June
30, September 30 and December 31) during a Freight Agreement Period.

(iv)                              In no event will any payments made under this
Section 9.01(f) by either party to the other party exceed $1,300,000 in any four
(4) consecutive calendar quarters.

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6.09                           Absence of a Resumption Notice by September 29,
2006 - In the event that Seller fails to issue a Resumption Notice for the
Terrace Bay Mill on or before September 29, 2006, Seller shall immediately
deliver a Seller Reduction Notice to K-C, for the amount of Seller’s Annual
Supply Obligation for softwood Pulp sourced from the Terrace Bay Mill under this
Agreement.  Subject to the limitations contained in Section 6.06(a), (b)(except
the June 30, 2008 Effective Date), (c), (d) and (e), such Seller Reduction
Notice shall take effect on March 31, 2007.

ARTICLE 7
CLAIMS: DISPUTE RESOLUTION

7.01                           Claims.  Claims by K-C relative to its inability
to utilize the Pulp as a result of the failure of the Pulp to meet the
Specifications must be made within thirty (30) calendar days after receipt and
acceptance of the shipment by K-C at one of the Delivery Points.  K-C shall
retain fifty percent (50%) of the Pulp shipment in dispute, when practical,
pending examination by Seller or its nominee.  Seller shall examine the Pulp
held by K-C or its consignee within ten (10) calendar days of notification by
K-C, and Seller shall immediately notify K-C regarding how to dispose of any
Pulp which is nonconforming.

7.02                           Dispute Resolution.  The parties shall attempt to
resolve claims or other disputes arising with respect to this Agreement within
ninety (90) calendar days of the time a claim or other dispute arises by
presenting the major issues for resolution to appropriate level managers in the
normal chain of command of the affected business units.

7.03                           Litigation.  Nothing herein, including the
provisions of Section 7.02 above, shall prohibit either party from at any time
pursuing or exercising any or all of its remedies at law or equity.

7.04                           Governing Law.  The interpretation, validity and
enforcement of this Agreement shall be governed by and construed in accordance
with the laws of the State of Wisconsin, without regard to choice of law
provisions, and shall not be governed by the Convention on Contracts for the
International Sale of Goods.

ARTICLE 8
INDEMNIFICATION

Each party hereto agrees to defend, indemnify and hold harmless the other party,
its officers, directors, agents and employees, from and against any and all
claims, demands, judgments, costs, expenses and damages for personal injury or
property damage caused by the indemnifying party’s negligent act or omission or
willful misconduct.

The foregoing indemnifications are subject to and conditioned upon:

(a)                                  prompt written notice being given to the
indemnifying party by the indemnified party of any threatened or pending claim
or other liability;

(b)                                 the indemnified party fully cooperating with
the indemnifying party in the investigation and/or defense of any such claim or
other liability; and

(c)                                  the indemnifying party having the absolute
right to direct the defense and/or settlement of any such claim or other
liability and to select counsel to represent it and the indemnified party.

17

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ARTICLE 9
CONTINGENCIES

9.01                           Force Majeure.

(a)                                  If either party is prevented or delayed in
the performance of its obligations under this Agreement because of a Force
Majeure Event, then the obligations of the parties to sell and deliver or to
purchase and receive Pulp shall be reduced or canceled during the Force Majeure
Period with regard to the quantity of Pulp which cannot be delivered or
purchased as a direct consequence of such event.

(b)                                 During the continuance of any one or more
Force Majeure Event(s) impairing Seller’s ability to perform, Seller shall offer
available supplies first to its long term contract customers, including K-C, and
shall allocate to K-C quantities not less than that quantity determined by
multiplying K-C’s percentage of such total long term contract amounts by the
total available supply. During the continuance of any one or more Force Majeure
Event(s) impairing K-C’s ability to accept or utilize Pulp, K-C’s obligations to
purchase Pulp shall be reduced by such quantity as K-C shall be unable to accept
or utilize.

(c)                                  Quantities which Seller is unable to
deliver by reason of a Force Majeure Event shall be deducted from K-C’s Annual
Purchase Obligation and Seller’s Annual Supply Obligation. If a Force Majeure
Event shall prevent a party from performing its obligations under this Agreement
for more than nine (9) months, the other party may, upon written notice,
terminate this Agreement as to that portion affected by the Force Majeure Event.

(d)                                 The party affected by a Force Majeure Event
shall promptly provide the other party with a Force Majeure Notice. During the
Force Majeure Period, the parties will regularly communicate with each other
about the progress, if any, that has been made in resolving the Force Majeure
Event. Subject to Section 9.01(e) below, the parties shall cooperate to the
extent commercially reasonable for the orderly resumption of the purchase and
sale of Pulp following the end of the Force Majeure Period. Upon receipt of a
Resumption Notice, the parties shall, subject to the provisions of Section
9.01(e) hereof, promptly endeavor to agree as appropriate upon quarterly
estimates pursuant to Section 2.03 and K-C shall provide Seller with Delivery
Schedules pursuant to Section 2.06.

(e)                                  Seller expects to issue a Resumption Notice
to K-C on or before August 31, 2006.  In order to ensure an orderly and
efficient resumption of production at the Terrace Bay Mill, Seller shall be
obliged to sell and deliver Pulp sourced from the Terrace Bay Mill and K-C shall
be obliged to purchase and accept delivery of such Pulp in the quantities and in
the time periods set forth in the following table, unless the parties otherwise
agree in writing:

 

Required/Minimum Purchases/Sales per

Time Period

 

Month of Terrace Bay Pulp

 

 

 

September 2006

 

6,000

 ADMT (if available)

October 2006

 

13,488

 ADMT

November 2006

 

13,488

 ADMT

December 2006

 

13,488

 ADMT

Each Month in 2007

 

14,879

 ADMT

 

18

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(f)                                    If Seller fails to deliver a Resumption
Notice to K-C on or before August 31, 2006 but delivers to K-C a Resumption
Notice on or before  September 29, 2006, K-C may at its option seek alternative
sources of Pulp, including entering into supply and purchase agreements for
third party pulp. In such event, K-C may elect to reduce its 2006 and 2007
Annual Purchase Obligations for Pulp sourced from the Terrace Bay Mill, in an
amount not to exceed 20,000 ADMT in the aggregate.  K-C may exercise this option
by giving Seller a Step Down Notice on or before September 29, 2006 stating the
aggregate amount of Pulp to be reduced (the “Reduction Amount”) during 2006 and
2007 (the “Reduction Period”) and specifying, for each month during the
Reduction Period, the ADMT portion of the Reduction Amount to be exercised in
such month.  Any Reduction in the Annual Purchase Obligation pursuant to this
Section 9.01(f) shall reduce the corresponding Annual Supply Obligation in an
equal amount.

9.02                           Environmental/Safety Laws.  Irrespective of any
provision herein to the contrary, if Seller is unable to supply K-C with Pulp or
K-C is unable to purchase and/or receive Pulp hereunder which complies with all
applicable Environmental/Safety Laws, K-C may reduce the quantity of Pulp to be
purchased hereunder in accordance with Section 9.01 during the period of
non-compliance.  Notwithstanding any such reductions, K-C and Seller shall work
together for a reasonable period of time (not to exceed ninety (90) days) to
determine whether Seller can provide any Pulp not affected by
Environmental/Safety Laws.  In the event Seller is unable to provide Pulp
meeting Environmental/Safety Laws by the end of such ninety (90) day period, K-C
may terminate this Agreement, in whole or in part, immediately upon written
notice to Seller.

9.03                           Forestry Considerations.

(a)                                  In the event that as a result of Seller’s
or TBPI’s forestry activities, continued use of Seller’s Pulp by K-C does, or in
the reasonable judgment of K-C is likely to, result in a substantial loss of
sales of K-C products or to otherwise materially and adversely affect the
reputation of K-C or its products, K-C shall give Seller written notice of the
facts or allegations upon which it relies to base its conclusion that continued
use of Seller’s Pulp will likely cause such consequences (such notice is
referred to herein as the “Section 9.03 Notice”). Within a reasonable time (not
to exceed 90 days from the receipt of K-C’s Section 9.03 Notice), Seller and K-C
shall discuss such facts or allegations and work together in good faith to
arrive at a mutually agreeable solution to reasonably address such facts or
allegations.

(b)                                 If Seller and K-C are able to agree on a
mutually acceptable solution, that agreement will be reduced to writing and will
set forth the respective obligations of the parties under the agreed solution.
If Seller and K-C are unable to agree on a solution, then K-C shall have the
right to terminate this Agreement as to the affected Pulp upon written notice
effective not earlier than one year following the date of such written notice.

9.04                           Notice.  If either party is prevented or delayed
in performance by any of the events specified in Section 9.01 or Section 9.02,
the party affected shall give immediate written notice to the other party of the
cause, the date of commencement and other relevant details of any such
nonperformance, and to the best of its knowledge, the extent of such
nonperformance and when deliveries, acceptance or utilization may be anticipated
to resume.  The parties agree to cooperate with each other and to use all
commercially reasonable efforts to resolve any such situation in good faith and
in a timely manner.  Such resolution may include, but shall not be limited to,
reapportioning or otherwise adjusting the Annual Purchase Obligation to be
purchased by K-C during the term hereof and/or the Annual Supply Obligation.

19

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ARTICLE 10
CONFIDENTIALITY

The specific terms and conditions of this Agreement and any information conveyed
or otherwise received by or on behalf of a party in conjunction herewith are
confidential and are subject to the terms of the Confidentiality provisions of
the Distribution Agreement.

ARTICLE 11
CUSTOMS

K-C is certified by the U.S. Customs Service as compliant with the Customs-Trade
Partnership Against Terrorism program (“C-TPAT”).  Seller agrees to familiarize
itself with the applicable standards of the C-TPAT program  (i.e., see
www.customs.gov/xp/cgov/import/ commercial_enforcement/ctpat/).  To the extent
Seller deals with K-C in the supply chain of products to be imported into the
U.S., Seller shall implement a verifiable, documented program that complies with
C-TPAT standards and K-C’s requests that K-C reasonably believes are necessary
to maintain K-C’s C-TPAT certification.   If K-C has received notice of
non-compliance with C-TPAT from the U.S. Customs Service or a court or federal
agency of competent jurisdiction or if K-C reasonably believes that Seller has
failed to comply with the preceding sentence, K-C shall give Seller written
notice stating in reasonable detail the factual basis for K-C’s claim of
non-compliance, including a copy (if any) of the notice of non-compliance with
C-TPAT from the U.S. Customs Service or a court or federal agency of competent
jurisdiction. The parties shall attempt to resolve K-C’s claim in accordance
with the Dispute Resolution procedure stated in §7.02 hereof and in good faith
discussions among K-C, Seller and the U.S. Customs Service or court or federal
agency of competent jurisdiction. If the parties have not resolved K-C’s claim
to the reasonable satisfaction of K-C or within the time period the U.S. Customs
Service provides to K-C for remedying the non-compliance, then K-C shall have
the right to terminate this Agreement, in whole or in part, without penalty by
giving 180 days written notice to Seller.

ARTICLE 12
GENERAL

12.01                     Parties Bound/Assignment.  This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, successors, and permitted assigns.  Neither
party shall assign or transfer any right, obligation or interest, including
sub-licensing and sub-contracting except as is customary in the industry,  under
this Agreement without the prior written consent of the other, provided that
either party may assign this Agreement to a wholly owned subsidiary and, except
for the situation described in Section 6.02(e), either party may assign to a
successor company by merger or corporate reorganization but only upon assumption
by such successor of the assignor’s obligations under this Agreement.  K-C
hereby consents to TBPI being a contract manufacturer of Pulp for Seller as set
forth in this Agreement.

12.02                     Right of Offset.  Upon written notice to the other
party, each party has the right to deduct from amounts owed to the other party
undisputed amounts due and owing to it by the other party if those amounts go
unpaid more than 60 days after they are due and owing.

12.03                     Compliance With Law.  Each party shall comply with all
applicable laws, rules, regulations or other requirements of any governmental
entity that affect such party’s obligations and other responsibilities hereunder
in performing this Agreement.

20

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12.04                     Independent Contractor Status.  Each party shall be an
independent contractor in its performance of this Agreement and shall not be
deemed, expressly or by implication, to be an agent, employee, representative or
servant of the other for any purpose whatsoever.

12.05                     Waiver of Breach.  No waiver of breach or
non-performance of any of the provisions of this Agreement shall be construed as
a waiver of any succeeding breach or non-performance of the same or any other
provision.

12.06                     Notices.  Other than routine communications in the
ordinary course of performing any obligations under this Agreement, all notices
and communications in connection with this Agreement shall be in writing and
shall be deemed complete upon transmittal by a recognized international courier
or by facsimile, with a confirmation of receipt, addressed to the parties hereto
at their respective addresses or facsimile numbers set forth below:

if to Seller:

Neenah Paper, Inc.
Preston Ridge III, Suite 600
3460 Preston Ridge Road
Alpharetta, Georgia 30005
Attn: Chief Executive Officer
Phone: (678) 566-6500
Fax:  (678)  518-3283

with copy to:

Neenah Paper, Inc.
Preston Ridge III, Suite 600
3460 Preston Ridge Road
Alpharetta, Georgia 30005
Attn: General Counsel
Phone: (678) 566-6500
Fax:  (678)  518-3283

if to K-C:

Kimberly-Clark Global Sales, Inc.
2300 Winchester Road
Neenah, WI  54956
Attn: Director Virgin Fiber Procurement
Phone: (920) 721-4116
Fax:  (920)  721-4976

with copy to:

Chief Counsel, Neenah Operations
Kimberly-Clark Corporation
401 N. Lake Street
Neenah, WI 54957 –0349
Phone:  (920) 721-2000
Fax:  (920) 721-8446

21

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or any other address or fax number and to the attention of any other person as
either of the parties may specify hereafter by written notice to the other.

12.07                     Severability of Provisions.  If any provision of this
Agreement shall be determined to be invalid, illegal or unenforceable under law,
the validity and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.

12.08                     Headings.  Article and section headings used in this
Agreement are for the purpose of reference only and shall not be considered in
construing this Agreement.

12.09                     Entire Agreement.  This Agreement, including its
Exhibits and documents referenced herein, constitutes the entire agreement
between the parties related to the subject matter hereof, and cancels and
supersedes all prior or contemporaneous agreements, whether oral or written,
relating to the subject matter of this Agreement and all prior agreements,
negotiations, dealings and understandings, whether written or oral, regarding
the subject matter hereof are hereby superseded and merged into this Agreement. 
No conditions, usage of trade, course of dealing or performance, understanding
or agreement purporting to modify, vary, explain or supplement the terms or
conditions of this Agreement shall be binding unless hereafter made in writing
and signed by the party to be bound, and no modification shall be effected by
the acknowledgement or acceptance of purchase order or shipping instruction,
invoice or other forms containing terms or conditions at variance with or in
addition to those set forth in this Agreement.

12.10                     Counterparts.  This Agreement may be executed by the
parties in two or more counterparts, each of which shall be deemed an original,
but which together shall constitute one and the same agreement.

*******

[Remainder of page intentionally left blank]

*******

22

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IN WITNESS WHEREOF, this Agreement has been executed in multiple counterparts by
the duly authorized representatives of the parties as of the date first written
above.

 

NEENAH PAPER, INC.

KIMBERLY-CLARK GLOBAL SALES, INC.

 

 

 

 

BY:

 

 

BY:

 

 

Sean T. Erwin

 

Dan M. Smith, Vice President

 

Chief Executive Officer

 

 

 

23

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EXHIBIT A

NORTH AMERICAN ANNUAL  SOFTWOOD PULP PURCHASE OBLIGATIONS,
SUPPLY OBLIGATIONS, DELIVERY POINTS AND TRANSPORTATION TERMS

Northern Bleach Softwood Kraft (NBSK)

Contract Year

 

Annual Purchase Obligation
(K-C)

 

Annual Supply Obligation (Seller)

 

 

 

 

 

2004 [Fourth Quarter Only]

 

93,000 ADMT (less tonnage transferred to K-C during the Fourth Quarter of 2004
prior to the Distribution Date)

 

93,000 ADMT (less tonnage transferred to
K-C during the Fourth Quarter of 2004 prior to the Distribution Date)

 

 

 

 

 

2005

 

360,000 ADMT

 

360,000 ADMT

 

 

 

 

 

2006

 

235,000 ADMT

 

235,000 ADMT

 

 

 

 

 

2007†

 

240,000 ADMT

 

240,000 ADMT

 

 

 

 

 

2008 and all subsequent Contract Years

 

275,000 ADMT

 

275,000 ADMT

 

 

 

 

 

Phase Down Year 1

 

225,000 ADMT

 

225,000 ADMT

 

 

 

 

 

Phase Down Year 2

 

150,000 ADMT

 

150,000 ADMT

 

--------------------------------------------------------------------------------

† Seller shall use its commercially reasonable best efforts so that, as of
January 1, 2007, each K-C mill shall receive pulp solely from one Seller mill.

Delivery Points and Transportation Terms for K-C North America

Beech Island, SC

 

Chester, PA

 

Owensboro, KY

Huntsville, Ontario

 

Loudon, TN

 

Marinette, WI

Mobile, AL

 

Corinth, MS

 

Cellu-Tissue Mills*

Jenks, OK

 

New Milford, CT

 

Schweitzer-Mauduit Lee, MA Mill*

 

Delivery during the Phase Down Period to be consistent with tonnages across
Delivery Points during the two contract years prior to the start of the Phase
Down Period.

All transportation costs to be paid by Seller.

--------------------------------------------------------------------------------

* Solely for fiber needs related to K-C products.

1

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NORTH AMERICAN ANNUAL  HARDWOOD PULP PURCHASE OBLIGATIONS,
SUPPLY OBLIGATIONS, DELIVERY POINTS AND TRANSPORTATION TERMS

Northern Bleached Hardwood Kraft (NBHK)

Contract Year

 

Annual Purchase Obligation (K-C)

 

Annual Supply Obligation
(Seller)

 

 

 

 

 

2004 [Fourth Quarter Only]

 

High-Maple 10,000 ADMT*
Aspen 12,500ADMT*

 

High-Maple 10,000 ADMT*
Aspen 12,500ADMT*

 

 

 

 

 

2005

 

High-Maple 40,000 ADMT
Aspen 40,000 ADMT

 

High-Maple 40,000 ADMT
Aspen 40,000 ADMT

 

 

 

 

 

2006

 

High-Maple14,000 ADMT **

 

High-Maple14,000 ADMT **

 

 

 

 

 

2007†

 

High-Maple 20,000 ADMT

 

High-Maple 20,000 ADMT

 

 

 

 

 

2008

 

High-Maple 10,000 ADMT

 

High-Maple 10,000 ADMT

 

 

 

 

 

2009 and all subsequent contract years

 

No obligation

 

No obligation

 

--------------------------------------------------------------------------------

* These amounts shall be reduced by any tonnage transferred to K-C during the
Fourth Quarter of 2004 prior to the Distribution Date.

** The volume of this Pulp purchased for January 2006 though the end of June
2006 was about 14,000 ADMT.  Anticipating an August start up means start
receiving Pulp again as of October 2006 and estimate receiving only 7,500 ADMT
for the months of October through the end of December 2006.

† Seller will use its commercially reasonable best efforts so that, as of
January 1, 2007, each K-C mill shall receive pulp solely from one Seller mill.

Delivery Points and Transportation Terms for K-C North America

Beech Island, SC

Chester, PA

Marinette, WI

Owensboro, KY

Huntsville, Ontario

Loudon, TN

Fullerton, CA*

Mobile, AL

Corinth, MS

Jenks, OK

New Milford, CT

Cellu-Tissue Mills**

 

All transportation costs to above delivery points to be paid by Seller.

--------------------------------------------------------------------------------

* Seller willnot be required to deliver to Fullerton, CA after December 31, 2004

** Solely for fiber needs related to K-C products.

2

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EUROPE ANNUAL  SOFTWOOD PULP PURCHASE OBLIGATIONS,
SUPPLY OBLIGATIONS, DELIVERY POINTS AND TRANSPORTATION TERMS

Northern Bleached Softwood Kraft (NBSK)

Contract Year

 

Annual Purchase Obligation (K-C)

 

Annual Supply Obligation (Seller)

 

 

 

 

 

2004 [Fourth Quarter Only]

 

21,250 ADMT (less tonnage transferred to K-C during the Fourth Quarter of 2004
prior to the Distribution Date)

 

21,250 ADMT (less tonnage transferred to K-C during the Fourth Quarter of 2004
prior to the Distribution Date)

 

 

 

 

 

2005

 

80,000 ADMT

 

80,000 ADMT

 

 

 

 

 

2006

 

67,000 ADMT

 

67,000 ADMT

 

 

 

 

 

2007†

 

75,000 ADMT

 

75,000 ADMT

 

 

 

 

 

2008 and all subsequent Contract Years

 

70,000 ADMT

 

70,000 ADMT

 

 

 

 

 

Phase Down Year 1

 

52,500 ADMT

 

52,500 ADMT

 

 

 

 

 

Phase Down Year 2

 

35,000 ADMT

 

35,000 ADMT

 

Delivery Points and Transportation Terms for K-C North America

Beech Island, SC

Chester, PA

Owensboro, KY

Huntsville, Ontario

Loudon, TN

Marinette, WI

Mobile, AL

Corinth, MS

Cellu-Tissue Mills*

Jenks, OK

New Milford, CT

Schweitzer-Mauduit Lee, MA*

 

All transportation costs to above delivery points to be paid by Seller.

--------------------------------------------------------------------------------

* Solely for fiber needs related to K-C products.

Delivery Points and Transportation Terms for K-C Europe

Europe (can only be supplied by Seller’s Pictou Mill)

 

Duffel

CIF* Flushing

Northfleet

CIF* Northfleet

Barrow

CIF* Northfleet/Barrow

Rouen

CIF* Rouen

Salamanca

CIF* Santander

VSE

CIF* Rouen

 

--------------------------------------------------------------------------------

* As defined according to INCOTERMS 2001(or applicable latest edition).

END OF EXHIBIT A

3

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EXHIBIT B

Kimberly-Clark Raw Material Specifications

K-C Raw Material Specification (RMS) documents listed below are incorporated
herein by reference.  These documents are controlled by the K-C Corporate
Quality Systems & Compliance team in Neenah, Wisconsin.  Copies of RMS documents
are forwarded directly to Seller’s Sales Department and are otherwise available
upon request.  These documents are the primary source of information necessary
to specify pulp for K-C pursuant to this Agreement.

Pulp Grade Specifications

K-C RMS Department

 

Material

RM 2763

 

LL-19 ECF

RM 3061

 

LL-16 ECF

RM 3082

 

Pictou Harmony

RM 3087

 

Hi-Mape Pictou

The RMS documents listed above contain Quality Parameters and summarize key
aspects of pulp quality mutually agreed to by K-C and Seller.  As used therein,
Quality Parameters have the following definitions:

ACCEPTANCE Characteristics:  used to determine suitability of pulp for shipment
to K-C.

TRACKING Characteristics:  not for ACCEPTANCE, but run-to-target is expected,
per vendor test results.

OTHER Instructions:  additional features of the material and packaging details
for shipping.

The RMS documents listed above shall govern purchases by all K-C locations. 
Should any K-C location seek different specifications for pulp to be delivered
to a specific mill(s), such requirements shall be detailed in a K-C regional
Purchase Order, and shall be accommodated in accordance with Section 3.02 of
this Agreement.

In order to continually and accurately specify the pulp materials being
purchased by K-C, the RMS documents listed above, any exceptions thereto, and
the information shown in this EXHIBIT B, may  be modified from time to time upon
mutual written agreement between K-C and Seller. All mutually approved
modifications will be communicated in writing and on a timely basis to all
concerned parties.

END OF EXHIBIT B

4

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EXHIBIT C

DISCOUNT  SCHEDULE

Northern Bleached Softwood Kraft (NBSK)

NORTH AMERICA:       % off of the North American Transaction Price for the prior
month.

EUROPE:       % off of the European Transaction Price for  the prior month.

Northern Bleached Hardwood Kraft (NBHK) (North America only)

Aspen:       % off the North American Transaction Price for the prior month.

Maple:       %  off the North American Transaction Price for the prior month.

END OF EXHIBIT C

5

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EXHIBIT D

CERTIFICATE

Seller will provide the following information for all bleached kraft Pulp grades
manufactured by Seller and supplied to Kimberly-Clark Global Sales, Inc.

1.                                       The Pulp has been sampled in the past
year and found to be non-detectable for 2,3,7,8 -TCDD (dioxin). We use elemental
chlorine free bleaching for all Pulp delivered to Kimberly-Clark Global Sales,
Inc.

2.                                       The Pulp has been sampled for CONEG
heavy metals in the past year.  All metals were non-detectable in all samples
and, therefore, easily meet the 100 ppm CONEG requirement.

3.                                       All wood Pulp produced by Seller is
manufactured with conventional processes and is considered Generally Recognized
As Safe (GRAS) as an indirect food additive under 21 CFR 186.1673.  Based on
this listing, a complete survey of our raw material suppliers and an independent
review by technical and legal consultants, our products and raw materials also
conform to 21 CFR 176.170 – Indirect Food Additives: Paper and Paperboard
Components.

4.                                       In addition, Seller does not use ozone
depleting substances (ODS) in the manufacture of its bleached kraft Pulp.

Contact us if you require additional information.

Date & Location

Signature
Title

END OF EXHIBIT D

6

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SCHEDULE A

NORTH AMERICAN AND EUROPEAN ANNUAL SOFTWOOD PULP PURCHASE OBLIGATIONS, SUPPLY
OBLIGATIONS, DELIVERY POINTS AND TRANSPORTATION TERMS FOLLOWING THE EFFECTIVE
DATE OF A REDUCTION NOTICE BY SELLER OR K-C

Northern Bleach Softwood Kraft (NBSK)

Contract Year*

 

Annual Purchase Obligation (K-C)**

 

Annual Supply
Obligation (Seller)**

 

 

 

 

 

2007†

 

235,000 ADMT

 

235,000 ADMT

 

 

 

 

 

2008
and all subsequent Contract Years

 

215,000 ADMT

 

215,000 ADMT

 

 

 

 

 

Phase Down Year 1

 

165,000 ADMT

 

165,000 ADMT

 

 

 

 

 

Phase Down Year 2

 

101,000 ADMT

 

101,000 ADMT

 

--------------------------------------------------------------------------------

* The prorated tonnage for any Contract Year during which a Reduction Notice
becomes effective shall be determined by multiplying the applicable Annual
Purchase/Supply tonnage for such Contract Year by a fraction the numerator of
which is the number of days from and including the Effective Date through the
last day of such Contract Year and the denominator of which is 365.

** K-C’s purchases of Pulp in any Contract Year for shipment to European
Delivery Points shall be no less than 15% of K-C’s Annual Purchase Obligation in
each Contract Year unless otherwise mutually agreed.

† Seller shall use its commercially reasonable best efforts so that, as of
January 1, 2007, each K-C mill shall receive pulp solely from one Seller mill;
provided, however, following the Effective Date of a Reduction Notice, each K-C
mill shall receive Pulp solely from Seller’s Pictou Mill.

Delivery Points and Transportation Terms for K-C North America

Beech Island, SC

 

Chester, PA

 

Owensboro, KY

Huntsville, Ontario

 

Loudon, TN

 

Marinette, WI

Mobile, AL

 

Corinth, MS

 

Cellu-Tissue Mills*

Jenks, OK

 

New Milford, CT

 

Schweitzer-Mauduit Lee, MA*

 

All transportation costs to above delivery points to be paid by Seller.

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* Solely for fiber needs related to K-C products.

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Delivery Points and Transportation Terms for K-C Europe

Europe (can only be supplied by Seller’s Pictou Mill)

Duffel

 

CIF* Flushing

Northfleet

 

CIF* Northfleet

Barrow

 

CIF* Northfleet/Barrow

Rouen

 

CIF* Rouen

Salamanca

 

CIF* Santander

VSE

 

CIF* Rouen

 

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* As defined according to INCOTERMS 2001(or applicable latest edition).

END OF SCHEDULE A

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