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Exhibit 10.12  


  



  



  



 
 

2004 Omnibus Stock and Incentive
  Compensation Plan    
    
    Neenah Paper, Inc.    
    
    Effective December 1, 2004    




  



  



  



  



   




   




   




   




  



  



  









Contents  



	

	Article 1. Establishment, Purpose, and Duration	 	1
	

Article 2. Definitions	
 	

1
	

Article 3. Administration	
 	

7
	

Article 4. Shares Subject to the Plan and Maximum Awards	
 	

7
	

Article 5. Eligibility and Participation	
 	

9
	

Article 6. Stock Options	
 	

9
	

Article 7. Stock Appreciation Rights	
 	

12
	

Article 8. Restricted Stock and Restricted Stock Units	
 	

14
	

Article 9. Performance Units/Performance Shares	
 	

15
	

Article 10. Cash-Based Awards and Other Stock-Based Awards	
 	

16
	

Article 11. Performance Measures	
 	

17
	

Article 12. Covered Employee Annual Incentive Award	
 	

19
	

Article 13. Nonemployee Director Awards	
 	

19
	

Article 14. Dividend Equivalents	
 	

19
	

Article 15. Beneficiary Designation	
 	

20
	

Article 16. Deferrals	
 	

20
	

Article 17. Rights of Participants	
 	

22
	

Article 18. Change in Control	
 	

22
	

Article 19. Amendment, Modification, Suspension, and Termination	
 	

23
	

Article 20. Withholding	
 	

24
	

Article 21. Successors	
 	

24
	

Article 22. General Provisions	
 	

24











   Neenah Paper, Inc.

2004 Omnibus Stock and Incentive Compensation Plan  


Article 1. Establishment, Purpose, and Duration  



        1.1   Establishment. Neenah Paper, Inc., a Delaware corporation (the "Company"), establishes an incentive compensation
plan to be known as the 2004 Omnibus Stock and Incentive Compensation Plan (the "Plan"), as set forth in this document. 


        The
Plan permits the grant of Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Covered Employee Annual Incentive Awards, and Other Stock-Based Awards. 


        The
Plan was adopted by the Board of Directors on August 31, 2004 and approved by the Company's sole shareholder on August 31, 2004. The Plan shall become effective
December 1, 2004 (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof. 


        1.2   Purpose of the Plan. The purpose of the Plan is to provide a means whereby Employees, Directors, and Third-Party Service
Providers of the Company develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to the
business of the Company, thereby advancing the interests of the Company and its shareholders. A further purpose of the Plan is to provide a means through which the Company may attract able individuals
to become Employees or serve as Directors or Third-Party Service Providers of the Company and to provide a means whereby those individuals upon whom the responsibilities of the successful
administration and management of the Company are of importance, can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company. 


        1.3   Duration of the Plan. Unless sooner terminated as provided herein, the Plan shall terminate ten (10) years from
the Effective Date. After the Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the
Plan's terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) adoption of the Plan by the Board,
or (b) the Effective Date. 


Article 2. Definitions  


        Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be
capitalized. 


        2.1   "Affiliate" means the Company and any company, person or organization which, on the date of determination, (A) is
a member of a controlled group of corporations (as defined in Code section 414(b)) which includes the Company; (B) is a trade or business (whether or not incorporated) which controls, is
controlled by or is under common control with (within the meaning of Code section 414(c)) the Company; (C) is a member of an affiliated service group (as defined in Code
section 414(m)) which includes the Company; or (D) is otherwise required to be aggregated with the Company pursuant to Code section 414(o) and regulations promulgated thereunder. 


        2.2   "Annual Award Limit" or "Annual Award Limits" have the meaning set forth
in Section 4.3. 


        2.3   "Award" means, individually or collectively, a grant under this Plan of Cash-Based Awards, Nonqualified Stock
Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Covered Employee Annual Incentive Awards, or Other Stock-Based Awards, in each
case subject to the terms of this Plan. 


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        2.4   "Award Agreement" means either (i) a written agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award granted under this Plan, or (ii) a written statement issued by the Company to a Participant describing the terms and provisions of such Award. 


        2.5   "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. 



        2.6   "Board" or "Board of Directors" means the Board of Directors of the
Company. 


        2.7   "Cash-Based Award" means an Award granted to a Participant as described in Article 10. 


        2.8   "Cause," unless otherwise set forth in the Participant's Award Agreement, means the Participant's: 



	(a)
	Willful
failure to perform his duties and responsibilities;



	(b)
	Embezzlement,
fraud, or misappropriation against or with respect to the Company, its Subsidiaries, and/or their assets;



	(c)
	Conviction
of a felony charge or a plea of guilty or nolo contendre to a felony charge;



	(d)
	Use
of alcohol and/or drugs (whether prescription or nonprescription) which impairs the Participant's ability to perform his duties and responsibilities;



	(e)
	Unlawful
trading in the securities of any corporation (including the Company) based on information gained as a result of the Participant's performance of services for the Company;



	(f)
	Violation
of any of the corporate policies, work rules, or standards of the Company, including but not limited to the Code of Conduct, sexual harassment policy, and insider trading
policy, or violation of any applicable statute, regulation, or rule, or provision of any applicable code of professional ethics; or



	(g)
	Willful
disclosure to unauthorized persons of confidential information or trade secrets of the Company. 




The
Committee shall determine, in its sole discretion, whether a Participant is being terminated for any of the reasons outlined in (a) through (g); provided that such determination by the
Committee shall apply only to Awards granted under this Plan. 




        2.9   "Change in Control" means any of the following events: 



	(a)
	The
acquisition by any Person of Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to
vote generally in the election of Directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this Section 2.9, the following acquisitions shall not
constitute a Change in Control: (i) any acquisition by a Person who on the Effective Date is the Beneficial Owner of thirty percent (30%) or more of the Outstanding Company Voting Securities,
(ii) any acquisition directly from the Company, including without limitation, a public offering of securities, (iii) any acquisition by the Company, (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates or Subsidiaries, or (v) any acquisition by any corporation pursuant to a transaction
which complies with subparagraphs (i), (ii), and (iii) of Section 2.9(c);



	(b)
	During
any period of two consecutive years, individuals who at the beginning of such period constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a Director whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a 



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majority
of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened election contest relating to the election or removal of the Directors of the Company or other actual or threatened
solicitation of proxies of consents by or on behalf of a Person other than the Board; 



	(c)
	Consummation
of a reorganization, merger, or consolidation to which the Company is a party or a sale or other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case unless, following such Business Combination: (i) all or substantially all of the individuals and entities who were the Beneficial Owners of Outstanding
Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of the combined voting power of the outstanding voting
securities entitled to vote generally in the election of directors of the company resulting from the Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) (the "Successor Entity") in substantially the same proportions as
their ownership immediately prior to such Business Combination of the Outstanding Company Voting Securities; and (ii) no Person (excluding any Successor Entity or any employee benefit plan, or
related trust, of the Company or such Successor Entity) beneficially owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding voting securities
of the Successor Entity, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the
Successor Entity were members of the Incumbent Board (including persons deemed to be members of the Incumbent Board by reason of the proviso to paragraph (b) of this Section 2.9) at the
time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or



	(d)
	Approval
by the shareholders of the Company of a complete liquidation or dissolution of the Company. 




        2.10 "Code" means the U.S. Internal Revenue Code of 1986, as amended from time to time, and as construed and interpreted by
valid regulations or rulings issued thereunder. 


        2.11 "Committee" means the Compensation Committee of the Board or a subcommittee thereof, or any other committee designated
by the Board to administer this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. 


        2.12 "Company" means Neenah Paper, Inc., a Delaware corporation, and any successor thereto as provided in
Article 21 herein. 


        2.13 "Consolidated Operating Earnings" means the consolidated earnings before income taxes of the Company, computed in
accordance with generally accepted accounting principles, but shall exclude the effects of Extraordinary Items. 


        2.14 "Covered Employee" means a Participant who is a "covered employee," as defined in Code Section 162(m) and the
treasury regulations promulgated under Code Section 162(m), or any successor statute. 


        2.15 "Covered Employee Annual Incentive Award" means an Award granted to a Covered Employee as described in
Article 12. 


        2.16 "Director" means any individual who is a member of the Board of Directors of the Company. 


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        2.17 "Disability" means a physical or mental illness, injury or impairment which causes a Participant to meet the
requirements to receive long-term disability benefits under a plan sponsored by the Company, its Affiliates, and/or its Subsidiaries or if no such plan is applicable, a Participant's
inability to engage in the essential functions of his duties due to a medically-determinable physical or mental impairment, illness or injury, which can be expected to result in death or to be of
long-continued and indefinite duration, as determined by a medical professional selected by the Committee. Notwithstanding the foregoing, Disability means, as to an ISO, a "permanent and
total disability" within the meaning of Code section 22(e)(3). 


        2.18 "Disabled" means a Participant is (a) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by
reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant's employer. 


        2.19 "Effective Date" has the meaning set forth in Section 1.1. 


        2.20 "Employee" means any employee of the Company, its Affiliates, and/or its Subsidiaries. 



        2.21 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. 


        2.22 "Extraordinary Items" means (i) extraordinary, unusual, and/or nonrecurring items of gain or loss;
(ii) gains or losses on the disposition of a business; or (iii) the effect of a merger or acquisition, recorded in accordance with the criteria for Extraordinary Items in APB No 30,
"Reporting the Results of Operations." 


        2.23 "Fair Market Value" or "FMV" means a price that is based on the opening,
closing, actual, high, low, or average selling prices of a Share reported on the New York Stock Exchange ("NYSE") or other established stock exchange (or exchanges) or national securities market on
the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Unless the Committee determines
otherwise, if the Shares are traded over the counter at the time a determination of its Fair Market Value is required to be made hereunder, its Fair Market Value shall be deemed to be equal to the
average between the reported high and low or closing bid and asked prices of a Share on the most recent date on which Shares were publicly traded. In the event Shares are not publicly traded at the
time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate. Such
definition(s) of FMV shall be specified in each Award Agreement and may differ depending on whether FMV is in reference to the grant, exercise, vesting, settlement, or payout of an Award. For purposes
of determining the Fair Market Value of a Share on the date the Company becomes a separate publicly traded Company, the Fair Market Value of a Share shall be determined as the average of the opening
and closing prices of the Company's common stock on the New York Stock Exchange on the first day of regular-way trading. 


        2.24 "Freestanding SAR" means an SAR that is granted independently of any Options, as described in Article 7. 



        2.25 "Good Reason," unless otherwise set forth in the Participant's Award Agreement, means either of the following: 



	(a)
	A
reduction of a Participant's base salary by ten percent (10%) or more, unless substantially similar salary reductions are applicable to other similarly-situated employees of the
Company; or 



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	(b)
	Without
the express written agreement of the Participant, any assignment or change in duties that would require the relocation of the Participant's work place to a location that is
more than fifty (50) miles from the Participant's work place immediately prior to a Change in Control of the Company; provided however, the relocation of the Participant's work place must also
increase the regular commute distance between the Participant's residence and work place by more than twenty-five (25) miles (one-way). 




Notwithstanding
the foregoing, if a Participant is also a participant in the Company's Executive Severance Plan, "Good Reason" shall have the same meaning as any definition of "good reason" under the
Executive Severance Plan. 




        2.26 "Grant Price" means the price established at the time of grant of an SAR pursuant to Article 7, used to determine
whether there is any payment due upon exercise of the SAR. 


        2.27 "Incentive Stock Option" or "ISO" means an Option to purchase Shares granted under Article 6 to an Employee and
that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision. 


        2.28 "Insider" shall mean an individual who is, on the relevant date, an officer, or Director of the Company, or a more than
ten percent (10%) Beneficial Owner of any class of the Company's equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with
Section 16 of the Exchange Act. 


        2.29 "Nonemployee Director" means a Director who is not an Employee. 



        2.30 "Nonemployee Director Award" means any Award granted, whether singly, in combination, or in tandem, to a Participant who
is a Nonemployee Director pursuant to such applicable terms, conditions, and limitations as the Board or Committee may establish in accordance with this Plan. 


        2.31 "Nonqualified Stock Option" or "NQSO" means an Option that is not
intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements. 



        2.32 "Operating Cash Flow" means cash flow from operating activities as defined in SFAS No 95, Statement of Cash Flows. 


        2.33 "Option" means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6. 


        2.34 "Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option. 


        2.35 "Option Term" means the period of time an Option is outstanding as the Committee shall determine at the time of grant;
provided, however, no Option shall be outstanding later than the tenth (10th) anniversary date of its grant. 


        2.36 "Other Stock-Based Award" means an equity-based or equity-related Award not otherwise described by the terms of this
Plan, granted pursuant to Article 10. 


        2.37 "Participant" means any eligible individual as set forth in Article 5 to whom an Award is granted. 



        2.38 "Performance-Based Compensation" means compensation under an Award that satisfies the requirements of
Section 162(m) of the Code and the applicable treasury regulations thereunder for certain performance-based compensation paid to Covered Employees. 


        2.39 "Performance Measures" means measures as described in Article 11 on which the performance goals are based and
which are approved by the Company's shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation. 


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        2.40 "Performance Period" means the period of time during which the performance goals must be met in order to determine the
degree of payout, exercisability and/or vesting with respect to an Award. 


        2.41 "Performance Share" means an Award under Article 9 herein and subject to the terms of the Plan, denominated in
Shares, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved. 


        2.42 "Performance Unit" means an Award under Article 9 herein and subject to the terms of the Plan, denominated in
units, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved. 


        2.43 "Period of Restriction" means the period when Restricted Stock or Restricted Stock Units are subject to a substantial
risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in
Article 8. 


        2.44 "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections
13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof. 


        2.45 "Plan" means this Neenah Paper, Inc. 2004 Omnibus Stock and Incentive Compensation Plan. 



        2.46 "Plan Year" means the short period beginning on the Effective Date and ending on December 31, 2004; and
thereafter, each twelve (12) calendar month period beginning on January 1 and ending on the following December 31. 


        2.47 "Restricted Stock" means an Award granted to a Participant pursuant to Article 8. 


        2.48 "Restricted Stock Unit" means an Award granted to a Participant pursuant to Article 8, except no Shares are
actually awarded to the Participant on the date of grant. 


        2.49 "Retirement" means termination of employment by a Participant, who is also an Employee, after (i) the later of
attaining age sixty-five (65) or the fifth anniversary of the Participant's date of hire, or (ii) attaining age fifty-five (55) with at least five
(5) Years of Vesting Service; provided, however, that if a Participant is a participant under the Company's Pension Plan or Retirement Contribution Plan, "Retirement" shall mean satisfying the
requirements for "retirement" or "early retirement" as defined in the applicable plan. 



        2.50 "Service Vesting Awards" means an Award, the vesting of which is contingent solely on the continued service of the
Participant as an Employee or a Director. 


        2.51 "Share" means a share of common stock of the Company, $.01 par value per share. 


        2.52 "Stock Appreciation Right" or "SAR" means an Award, designated as an
SAR, pursuant to the terms of Article 7 herein. 


        2.53 "Subsidiary" means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains,
directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise. 


        2.54 "Tandem SAR" means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the
exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled). 



        2.55 "Third-Party Service Provider" means any consultant, agent, advisor, or independent contractor who renders services to
the Company, its Affiliates, and/or its Subsidiaries that (a) are not in connection with the offer and sale of the Company's securities in a capital raising transaction, and (b) do not
directly or indirectly promote or maintain a market for the Company's securities. 


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        2.56 "Unforseeable Emergency" means a severe financial hardship to the Participant or beneficiary resulting from a sudden and
unexpected illness or accident of the Participant or beneficiary, loss of the Participant's or beneficiary's property due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant or beneficiary. 


        2.57 "Year of Vesting Service" shall be determined in the same manner as year of vesting service is determined in the Neenah
Paper Pension Plan or Neenah Paper Retirement Contribution Plan, whichever is applicable to the Participant; however, if such plan is subsequently terminated, the Committee shall determine the meaning
of such term, in its sole discretion. 


Article 3. Administration  


        3.1   General. The Committee shall be responsible for administering the Plan, subject to this Article 3 and the other
provisions of the Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers
and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be
final and binding upon the Participants, the Company, and all other interested individuals. 


        3.2   Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and
the intent of the Plan and any Award Agreement or other agreement or document ancillary to or in connection with the Plan, to determine eligibility for Awards and to adopt such rules, regulations,
forms, instruments, and guidelines for administering the Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients,
establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements, and, subject to Article 19, adopting modifications and amendments to the Plan or
any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries
operate. 


        3.3   Delegation. The Committee may authorize individuals other than its members to carry out its policies and directives
subject to the limitations and guidelines set by the Committee, and may delegate its authority under the Plan, provided, however, the delegation of authority to grant Awards shall be limited to grants
by the Chief Executive Officer to newly hired employees, or to respond to special recognition or retention needs, and any such grants shall be limited to eligible Participants who are not subject to
section 16 of the Exchange Act. The delegation of authority shall be limited as follows: (a) with respect to individuals who are subject to section 16 of the Exchange Act, the
authority to grant Awards, the selection for participation, decisions concerning the timing, pricing and amount of a grant or Award and authority to administer Awards shall not be delegated by the
Committee; (b) the maximum number of Shares covered by Awards which may be granted by the Chief Executive Officer within any calendar year period shall not exceed three hundred thousand
(300,000); (c) any delegation shall satisfy all applicable requirements of rule 16b-3 of the Exchange Act, or any successor provision; and (d) no such delegation shall
result in the disallowance of a deduction to the Company under section 162(m) of the Code or any successor section. Any individual to whom such authority is granted shall continue to be
eligible to receive Awards under the Plan. 


Article 4. Shares Subject to the Plan and Maximum Awards  


        4.1   Number of Shares Available for Awards. 



	(a)
	Subject
to adjustment as provided in Section 4.4 herein, the maximum number of Shares available for issuance to Participants under the Plan (the "Share Authorization") shall be
three million five hundred thousand (3,500,000) Shares. 



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	(b)
	Subject
to the limit set forth in Section 4.1(a) on the number of Shares that may be issued in the aggregate under the Plan, the maximum number of Shares that may be issued
pursuant to ISOs shall be: three million five hundred thousand (3,500,000) Shares that may be issued pursuant to Awards in the form of ISOs.



	(c)
	Subject
to the limit set forth in Section 4.1(a) on the number of Shares that may be issued in the aggregate under the Plan, the maximum number of shares that may be issued to
Nonemployee Directors shall be five hundred thousand (500,000) Shares, and no Nonemployee Director may receive Awards subject to more than fifty thousand (50,000) Shares in any Plan Year. 




        4.2   Share Usage. Shares covered by an Award shall only be counted as used to the extent they are actually issued. Any Shares
related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the
Committee's permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under the Plan. Moreover, if the Option Price of any Option granted under
the Plan or the tax withholding requirements with respect to any Award granted under the Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if an
SAR is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for delivery under
the Plan. The Shares available for issuance under the Plan may be authorized and unissued Shares, treasury Shares or from Shares reacquired by the Company, including Shares purchased in the open
market. 


        4.3   Annual Award Limits. Unless and until the Committee determines that an Award to a Covered Employee shall not be designed
to qualify as Performance-Based Compensation, the following limits (each an "Annual Award Limit" and, collectively, "Annual Award Limits") shall apply to grants of such Awards under the Plan: 



	(a)
	Options: The maximum aggregate number of Shares subject to Options granted in any one (1) Plan Year to any one
(1) Participant shall be three hundred thousand (300,000) Shares.



	(b)
	SARs: The maximum number of Shares subject to Stock Appreciation Rights granted in any one (1) Plan Year to any one
(1) Participant shall be three hundred thousand (300,000) Shares.



	(c)
	Restricted Stock or Restricted Stock Units: The maximum aggregate grant with respect to Awards of Restricted Stock or Restricted Stock
Units in any one (1) Plan Year to any one (1) Participant shall be two hundred thousand (200,000) Shares.



	(d)
	Performance Units or Performance Shares: The maximum aggregate Award of Performance Units or Performance Shares that any one
(1) Participant may receive in any one (1) Plan Year shall be two hundred thousand (200,000) Shares if such Award is payable in Shares, or equal to the value of two hundred thousand
(200,000) Shares if such Award is payable in cash or property other than Shares determined as of the earlier of vesting or payout.



	(e)
	Cash-Based Awards: The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any
one (1) Participant in any one (1) Plan Year may not exceed five million (5,000,000) dollars.



	(f)
	Covered Employee Annual Incentive Award: The maximum aggregate amount awarded or credited in any one (1) Plan Year with respect
to a Covered Employee Annual Incentive Award shall be determined in accordance with Article 12. 



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	(g)
	Other Stock-Based Awards: The maximum aggregate grant with respect to Other Stock-Based Awards pursuant to Section 10.2 in any
one (1) Plan Year to any one (1) Participant shall be two hundred thousand (200,000) Shares. 




        4.4   Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a
change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock
split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like
change-in-capital structure or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in
its sole discretion, in order to prevent dilution or enlargement of Participants' rights under the Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued
under the Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award
Limits, and other value determinations applicable to outstanding Awards. 


        The
Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under the Plan to reflect or related to such changes or distributions and to
modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing
adjustments, if any, shall be conclusive and binding on Participants under the Plan. 



        Subject
to the provisions of Article 19, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits
under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with
the ISO rules under Section 422 of the Code, where applicable. 


Article 5. Eligibility and Participation  



        5.1   Eligibility. Individuals eligible to participate in this Plan include all Employees, Directors, and Third-Party Service
Providers. 


        5.2   Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all
eligible individuals, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award. 



Article 6. Stock Options  


        6.1   Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number,
and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion; provided, that ISOs may be granted only to eligible Employees of the Company
or of any parent or subsidiary corporation (as permitted by Section 422 of the Code and the treasury regulations thereunder). 


        6.2   Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the
maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee
shall determine which are not inconsistent with the terms of the Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO. 


9









   
        6.3   Option Price. The Option Price for each grant of an Option under this Plan shall be as determined by the Committee and
shall be specified in the Award Agreement. The Option Price shall be: (i) based on one hundred percent (100%) of the FMV of the Shares on the date of grant, or (ii) set at a premium to
the FMV of the Shares on the date of grant; provided, however, the Option Price on the date of grant must be at least equal to one hundred percent (100%) of the FMV of the Shares on the date of grant;
provided however, the Option Price of a converted Kimberly-Clark option shall be determined in the sole discretion of the Committee. 


        6.4   Duration of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at
the time of grant; provided, however, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. Notwithstanding the foregoing, for Nonqualified Stock
Options granted to Participants outside the United States, the Committee has the authority to grant Nonqualified Stock Options that have a term greater than ten (10) years. 



        6.5   Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to
such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant. 


        6.6   Payment. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the
Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth
the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. 


        A
condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the
time of exercise equal to the Option Price (provided that except as otherwise determined by the Committee, the Shares that are tendered must have been held by the Participant for at least six
(6) months prior to their tender to satisfy the Option Price or have been purchased on the open market); (c) by a combination of (a) and (b); or (d) any other method
approved or accepted by the Committee in its sole discretion, including, without limitation, if the Committee so determines, a cashless (broker-assisted) exercise. 


        Subject
to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax
withholding), the Company
shall deliver to the Participant evidence of book entry Shares, or upon the Participant's request, Share certificates in an appropriate amount based upon the number of Shares purchased under the
Option(s). 


        Unless
otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars. 


        6.7   Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the
exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares. Unless
otherwise specified in the Participant's Award Agreement, such Shares acquired pursuant to the exercise of an Option shall not be subject to any transfer restriction. 


10







 



        6.8   Termination of Employment. Unless otherwise provided in a Participant's Award Agreement, the Options, which become
exercisable as provided in Section 6.5 above, shall be treated as follows: 



	(a)
	If
a Participant's employment terminates during the Option Term by reason of death, the Options shall immediately vest and terminate and have no force or effect upon the earlier of:
(i) thirty-six (36) months after the date of death; or (ii) the expiration of the Option Term.



	(b)
	If
a Participant's employment terminates during the Option Term by reason of Disability, the Options shall immediately vest and terminate and have no force or effect upon the earlier
of: (i) thirty-six (36) months after the Participant's termination of employment; or (ii) the expiration of the Option Term.



	(c)
	If
a Participant's employment terminates during the Option Term by reason of Retirement, the Options shall immediately vest and terminate and have no force or effect upon the earlier
of: (i) sixty (60) months after the Participant's termination of employment; or (ii) the expiration of the Option Term.



	(d)
	If
a Participant's employment terminates during the Option Term due to dismissal by the Company for Cause, the Options terminate and have no force or effect upon the date of the
Participant's termination.



	(e)
	If
the Participant's employment terminates during the Option Term for any other reason, the Options terminate and have no force or effect upon the earlier of: (i) ninety
(90) days after the Participant's termination of employment; or (ii) the expiration of the Option Term.



	(f)
	If
the Participant continues employment with the Company through the Option Term, the Options terminate and have no force or effect upon the expiration of the Option Term. 




        6.9   Termination of Service for Directors or Third-Party Service Providers. Each Participant's Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's service with the Company, its Affiliates, and/or its Subsidiaries, as the
case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant who is a Director or Third-Party
Service Provider, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination. 


        6.10 Transferability of Options. 



	(a)
	Incentive Stock Options. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under this Article 6 shall be exercisable during his lifetime only by
such Participant.



	(b)
	Nonqualified Stock Options. Except as otherwise provided in a Participant's Award Agreement or otherwise determined at any time by the
Committee, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and
distribution; provided, that the Committee may permit further transferability, on a general or a specific basis, and may impose conditions and limitations on any permitted transferability. Further,
except as otherwise provided in a Participant's Award Agreement or otherwise determined at any time by the Committee, or unless the Committee decides to permit further transferability, all NQSOs
granted to a Participant under this Article 6 shall be exercisable during his lifetime only by such Participant. With respect to those NQSOs, if any, that are permitted to be transferred to
another individual, references in the Plan to exercise or payment of the Option Price by the Participant shall be deemed to include, as determined by the Committee, the Participant's permitted
transferee. 



11







 





        6.11 Notification of Disqualifying Disposition. If any Participant shall make any disposition of Shares issued pursuant to
the exercise of an ISO under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Participant shall notify the Company of such
disposition within ten (10) days thereof. 


        6.12 Substituting SARs. Only in the event the Company is not accounting for equity compensation under APB Opinion
No. 25, the Committee shall have the ability to substitute, without receiving Participant permission, SARs paid only in Shares (or SARs paid in Shares or cash at the Committee's discretion) for
outstanding Options; provided, the terms of the substituted SARs are the same as the terms for the Options and the aggregate difference between the Fair Market Value of the underlying Shares and the
Grant Price of the SARs is equivalent to the aggregate difference between the Fair Market Value of the underlying Shares and the Option Price of the Options. If, in the opinion of the Committee, this
provision creates adverse accounting consequences for the Company, it shall be considered null and void. 


Article 7. Stock Appreciation Rights  


        7.1   Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from
time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs. 


        Subject
to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the
provisions of the Plan, in determining the terms and conditions pertaining to such SARs. 


        The
Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and shall be specified in the Award Agreement. The Grant Price shall be: (i) based on one
hundred percent (100%) of the FMV of the Shares on the date of grant, (ii) set at a premium to the FMV of the Shares on the date of grant, or (iii) indexed to the FMV of the Shares on
the date of grant, with the index determined by the Committee, in its discretion; provided, however, the Grant Price on the date of grant must be at least equal to one hundred percent (100%) of the
FMV of the Shares on the date of grant. The Grant Price of Tandem SARs shall be equal to the Option Price of the related Option. 


        7.2   SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of
the SAR, and such other provisions as the Committee shall determine. 



        7.3   Term of SAR. The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion, and
except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th) anniversary date of its grant.
Notwithstanding the foregoing, for SARs granted to Participants outside the United States, the Committee has the authority to grant SARs that have a term greater than ten (10) years. 


        7.4   Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in
its sole discretion, imposes. 


        7.5.  Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon
the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. 


        Notwithstanding
any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will expire no later than the
expiration of the underlying ISO; (b) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the excess of the Fair Market Value of the
Shares subject to the 


12







 



underlying
ISO at the time the Tandem SAR is exercised over the Option Price of the underlying ISO; and (c) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject
to the ISO exceeds the Option Price of the ISO. 



        7.6   Payment of SAR Amount. Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company
in an amount determined by multiplying: 



	(a)
	The
excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by



	(b)
	The
number of Shares with respect to which the SAR is exercised. 




        At
the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in its sole
discretion. The Committee's determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR. 


        7.7   Termination of Employment. Unless otherwise provided in a Participant's Award Agreement, the SARs, which become
exercisable as provided in Sections 7.4 and 7.5 above, shall be treated as follows: 



	(a)
	If
a Participant's employment terminates during the SARs term by reason of death, the SARs shall immediately vest and terminate and have no force or effect upon the earlier of:
(i) twelve (12) months after the date of death; or (ii) the expiration of the SAR term.



	(b)
	If
a Participant's employment terminates during the SARs term by reason of Disability, the SARs shall immediately vest and terminate and have no force or effect upon the earlier of:
(i) thirty-six (36) months after the Participant's termination of employment; or (ii) the expiration of the SAR term.



	(c)
	If
a Participant's employment terminates during the SARs term by reason of Retirement, the SARs shall immediately vest and terminate and have no force or effect upon the earlier of:
(i) sixty (60) months after the Participant's termination of employment; or (ii) the expiration of the SAR term.



	(d)
	If
a Participant's employment terminates during the SARs term due to dismissal by the Company for Cause, the SARs terminate and have no force or effect upon the date of the
Participant's termination.



	(e)
	If
the Participant's employment terminates during the SARs term for any other reason, the SARs terminate and have no force or effect upon the earlier of: (i) ninety
(90) days after the Participant's termination of employment; or (ii) the expiration of the SAR term.



	(f)
	If
the Participant continues employment with the Company through the SARs term, the SARs terminate and have no force or effect upon the expiration of the SAR term. 




        7.8   Termination of Service for Directors or Third-Party Service Providers. Each Participant's Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise an SAR following termination of the Participant's service with the Company, its Affiliates, and/or its Subsidiaries, as the case
may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant who is a Director or Third-Party
Service Provider, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination. 



        7.9   Nontransferability of SARs. Except as otherwise provided in a Participant's Award Agreement or otherwise determined at
any time by the Committee, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws 


13







 



of
descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement or otherwise determined at any time by the Committee, all SARs granted to a Participant under the
Plan shall be exercisable during his lifetime only by such Participant. With respect to those SARs, if any, that are permitted to be transferred to another individual, references in the Plan to
exercise of the SAR by the Participant or payment of any amount to the Participant shall be deemed to include, as determined by the Committee, the Participant's permitted transferee. 


        7.10 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares received upon
exercise of an SAR granted pursuant to the Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares
received upon exercise of an SAR for a specified period of time. 


Article 8. Restricted Stock and Restricted Stock Units  


        8.1   Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of the Plan, the Committee, at
any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall be
similar to Restricted Stock except that no Shares are actually awarded to the Participant on the date of grant. 



        8.2   Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as
the Committee shall determine. 


        8.3   Transferability. Except as provided in this Plan or an Award Agreement, the Shares of Restricted Stock and/or Restricted
Stock Units granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee
and specified in the Award Agreement (and in the case of Restricted Stock Units until the date of delivery or other payment), or upon earlier satisfaction of any other conditions, as specified by the
Committee, in its sole discretion, and set forth in the Award Agreement or otherwise at any time by the Committee. All rights with respect to the Restricted Stock and/or Restricted Stock Units granted
to a Participant under the Plan shall be available during his lifetime only to such Participant, except as otherwise provided in an Award Agreement or at any time by the Committee. 


        8.4   Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted
Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of
Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the
performance goals, time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded,
or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units. 



        To
the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all
conditions and/or restrictions applicable to such Shares have been satisfied or lapse. 


        Except
as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all
conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any 


14







 



applicable
tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine. 


        Any
such restrictions shall be evidenced by a legend on the certificates (if such Shares are certificated) representing the Restricted Stock. 


        8.5   Certificate Legend. In addition to any legends placed on certificates pursuant to Section 8.4, each certificate
representing Shares of Restricted Stock granted pursuant to the Plan may bear a legend such as the following or as otherwise determined by the Committee in its sole discretion: 



        The
sale or transfer of Shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set
forth in the Neenah Paper, Inc. 2004 Omnibus Stock and Incentive Compensation Plan, and in the associated Award Agreement. A copy of the Plan and such Award Agreement may be obtained from
Neenah Paper, Inc. 




        8.6   Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant's Award Agreement, to the
extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. 


        8.7   Termination of Employment. Unless otherwise provided in a Participant's Award Agreement, upon termination of employment
due to death, Disability, or Retirement, all restrictions on such Restricted Stock or Restricted Stock Units shall terminate. In the event a Participant's employment terminates for any other reason,
including but not limited to, termination with or without Cause by the Company, its Affiliates, and/or its Subsidiaries, or voluntary termination by the Participant, all of the unvested Shares of
Restricted Stock and Restricted Stock Units a Participant holds at the time of such termination shall be forfeited to the Company. 



        8.8   Termination of Service for Directors or Third-Party Service Providers. Each Award Agreement shall set forth the extent to
which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant's service with the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant who is a
Director or Third-Party Service Provider, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination. 


        8.9   Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of Restricted Stock is
conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code. If a Participant makes an election pursuant to
Section 83(b) of the Code concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company. 


Article 9. Performance Units/Performance Shares  



        9.1   Grant of Performance Units/Performance Shares. Subject to the terms and provisions of the Plan, the Committee, at any
time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine. 


        9.2   Value of Performance Units/Performance Shares. Each Performance Unit shall have an initial value that is established by
the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set 


15







 



performance
goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that will be paid out to the
Participant. 


        9.3   Earning of Performance Units/Performance Shares. Subject to the terms of this Plan, after the applicable Performance
Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over
the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved. 


        9.4   Form and Timing of Payment of Performance Units/Performance Shares. Payment of earned Performance Units/Performance
Shares shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance
Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance
Period, or as soon as practicable after the end of the Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee
with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award. 


        9.5   Termination of Employment. Unless otherwise provided in a Participant's Award Agreement, upon termination of employment
due to death, Disability, or Retirement, any Performance Units and/or Performance Shares shall become payable on a pro rata basis assuming the performance goals have been achieved at target. The
proration shall be determined as a function of the length of time within the Performance Period that has elapsed prior to termination of employment. In the event a Participant's employment terminates
for any other reason, including but not limited to, termination with or without Cause by the Company, its Affiliates, and/or its Subsidiaries, or voluntary termination by the Participant, any
Performance Units and/or Performance Shares a Participant holds at the time of such termination shall be forfeited. 


        9.6   Termination of Service for Directors or Third-Party Service Providers. Each Award Agreement shall set forth the extent to
which the Participant shall have the right to retain Performance Units and/or Performance Shares following termination of the Participant's service with the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant who is a
Director or Third-Party Service Provider, need not be uniform among all Awards of Performance Units or Performance Shares issued pursuant to the Plan, and may reflect distinctions based on the reasons
for termination. 


        9.7   Nontransferability. Except as otherwise provided in a Participant's Award Agreement or otherwise determined at any time
by the Committee, Performance Units/Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's Award Agreement or otherwise determined at any time by the Committee, a Participant's rights under the Plan shall be exercisable
during his lifetime only by such Participant. 


Article 10. Cash-Based Awards and Other Stock-Based Awards  


        10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time and
from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms, including the achievement of specific performance goals, as the Committee may determine. 


16









   
        10.2 Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise
described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such
Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply
with or take advantage of the applicable local laws of jurisdictions other than the United States. 


        10.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a payment
amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may
establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based
Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met. 


        10.4 Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a
Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines. 


        10.5 Termination of Employment. The Committee shall determine the extent to which the Participant shall have the right to
receive Cash-Based Awards or Other Stock-Based Awards following termination of the Participant's employment with or provision of services to the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an Award Agreement entered into with each Participant,
but need not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination. 


        10.6 Termination of Service for Directors or Third-Party Service Providers. The Committee shall determine the extent to which
the Participant shall have the right to receive Cash-Based Awards or Other Stock-Based Awards following termination of the Participant's service with the Company, its Affiliates, and/or
its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an Award Agreement entered into with each
Participant who is a Director or Third-Party Service Provider, but need not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination. 


        10.7 Nontransferability. Except as otherwise determined by the Committee, neither Cash-Based Awards nor Other
Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise
provided by the Committee, a Participant's rights under the Plan, if exercisable, shall be exercisable during his lifetime only by such Participant. With respect to those Cash-Based Awards
or Other Stock-Based Awards, if any, that are permitted to be transferred to another individual, references in the Plan to exercise or payment of such Awards by or to the Participant shall be deemed
to include, as determined by the Committee, the Participant's permitted transferee. 



Article 11. Performance Measures  


        11.1 Performance Measures. Unless and until the Committee proposes for shareholder vote and the shareholders approve a change
in the general Performance Measures set forth in this Article 11, the performance goals upon which the payment or vesting of an Award to a Covered Employee (other than a Covered Employee Annual
Incentive Award awarded or credited pursuant to Article 12) that is 


17







 

intended
to qualify as Performance-Based Compensation shall be limited to the following Performance Measures: 



	(a)
	Net
earnings or net income (before or after taxes);



	(b)
	Earnings
per share;



	(c)
	Net
sales or revenue growth;



	(d)
	Gross
or net operating profit;



	(e)
	Return
measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);



	(f)
	Cash
flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital);



	(g)
	Earnings
before or after taxes, interest, depreciation, and/or amortization;



	(h)
	Gross
or operating margins;



	(i)
	Productivity
ratios;



	(j)
	Share
price (including, but not limited to, growth measures and total shareholder return);



	(k)
	Expense
targets;



	(l)
	Margins;



	(m)
	Operating
efficiency;



	(n)
	Customer
satisfaction;



	(o)
	Working
capital targets;



	(p)
	Economic
Value Added (EVA®);



	(q)
	Volume;



	(r)
	Capital
expenditures;



	(s)
	Market
share;



	(t)
	Costs;



	(u)
	Regulatory
ratings;



	(v)
	Asset
quality;



	(w)
	Net
worth; and



	(x)
	Safety.





        Any
Performance Measure(s) may be used to measure the performance of the Company, its Affiliates, and/or its Subsidiaries as a whole or any business unit of the Company, its Affiliates,
and/or its Subsidiaries or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies,
or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (j) above as compared to various stock market indices.
The
Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 11. 



        11.2 Evaluation of Performance. The Committee may provide in any such Award that any evaluation of performance may include or
exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in
tax laws, accounting principles, or other laws or provisions affecting reported 


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results,
(d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management's
discussion and analysis of financial condition and results of operations appearing in the Company's annual report to shareholders for the applicable year, (f) acquisitions or divestitures, and
(g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Code
Section 162(m) for deductibility. 


        11.3 Adjustment of Performance-Based Compensation. Awards that are intended to qualify as Performance-Based Compensation may
not be adjusted upward. The Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines. 



        11.4 Committee Discretion. In the event that applicable tax and/or securities laws change to permit Committee discretion to
alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.
In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without
satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 11.1. 


Article 12. Covered Employee Annual Incentive Award  


        12.1 Establishment of Incentive Pool. The Committee may designate Covered Employees who are eligible to receive a monetary
payment in any Plan Year based on a percentage of an incentive pool equal to the greater of: (i) twenty percent (20%) of the Company's Consolidated Operating Earnings for the Plan Year, or
(ii) twenty percent (20%) of the Company's Operating Cash Flow for the Plan Year. The Committee shall allocate an incentive pool percentage to each designated Covered Employee for each Plan
Year. In no event may (1) the incentive pool percentage for any one Covered Employee exceed forty percent (40%) of the total pool, and (2) the sum of the incentive pool percentages for
all Covered Employees cannot exceed one hundred percent (100%) of the total pool. 


        12.2 Determination of Covered Employees' Portions. As soon as possible after the determination of the incentive pool for a
Plan Year, the Committee shall calculate each Covered Employee's allocated portion of the incentive pool based upon the percentage established at the beginning of the Plan Year. Each Covered
Employee's incentive award then shall be determined by the Committee based on the Covered Employee's allocated portion of the incentive pool subject to adjustment in the sole discretion of the
Committee. In no event may the portion of the incentive pool allocated to a Covered Employee be increased in any way, including as a result of the reduction of any other Covered Employee's allocated
portion. The Committee shall retain the discretion to adjust such Awards downward. 


Article 13. Nonemployee Director Awards  


        All Awards to Nonemployee Directors shall be determined by the Board or Committee. The terms and conditions of any grant to any such Nonemployee Director shall be
set forth in an Award Agreement. 



Article 14. Dividend Equivalents  


        Any Participant selected by the Committee may be granted dividend equivalents based on the dividends declared on Shares that are subject to any Award, to be
credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. Such dividend
equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Committee. Unless otherwise specified in the
Participant's Award Agreement, a 


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Participant
shall not be entitled to receive dividend equivalents based on the dividends declared on the Shares that are subject to an Award. 


Article 15. Beneficiary Designation  


        If the Committee so determines, each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant's lifetime. In the absence of
any such beneficiary designation, upon the Participant's death, benefits remaining unpaid or rights remaining unexercised, may be paid to or exercised by the Participant's executor or administrator. 


Article 16. Deferrals  


        16.1 Deferrals. The Committee may permit or require a Participant to defer such Participant's receipt of the payment of cash
or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock or
Restricted Stock Units, or the satisfaction of any requirements or performance goals with respect to Performance Shares, Performance Units, Covered Employee Annual Incentive Awards, Other Stock-Based
Awards, or Cash-Based Awards. If any such deferral election is required or permitted, the Committee may establish one or more programs to permit a Participant the opportunity to defer
receipt of such consideration and, in its sole discretion, establish rules and procedures for such payment deferrals. 



        16.2 Awards Subject to Code Section 409A. The remaining provisions of this Article 16 shall apply to any Award
granted under this Plan that is or becomes subject to Code Section 409A. 


        16.3 Deferral and/or Distribution Elections. The following rules shall apply to any deferral and/or distribution elections
("Elections") that may be permitted or required by the Committee to be made in regard to an award: 



	(a)
	All
Elections must be in writing and specify the amount of the Award being deferred, as well as the time and form of distribution as permitted by this Plan.



	(b)
	All
Elections shall be made by the end of the Participant's taxable year prior to the year in which services commence for which an Award would otherwise be granted to the individual;
provided, however, that if the Award qualifies as "performance-based compensation" for purposes of Code Section 409A, then the deferral election can be made no later than six (6) months
prior to the end of the performance period.



	(c)
	Elections
shall continue in effect until a written election to revoke or change such Election is received by the Company, except that a written election to revoke or change such
Election must be made prior to the beginning of the calendar year for which such Election is to be effective. 




        16.4 Subsequent Elections. This Plan permits a subsequent election to delay the distribution or
change the form of distribution of an Award; however, such subsequent election shall comply with the following requirements: 



	(a)
	Such
subsequent election may not take effect until at least twelve (12) months after the date on which the subsequent election is made;



	(b)
	In
the case of a subsequent election related to a distribution of an award not described in Section 16.5(b), 16.5(c), or 16.5(f), such subsequent election must result in a
delay of 



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distribution
for a period of not less than five (5) years from the date such distribution would otherwise have been made; and 



	(c)
	Any
subsequent election related to a distribution pursuant to Section 6.4(d) shall not be made less than twelve (12) months prior to the date of the first scheduled
payment under such distribution. 




        16.5 Distributions Pursuant to Elections. Any Award deferred under this Plan may not be distributed
earlier than: 



	(a)
	Separation
from service (as determined by the Secretary of the United States Treasury);



	(b)
	The
date the Participant becomes Disabled;



	(c)
	Death;



	(d)
	A
specified time (or pursuant to a fixed schedule) specified in the deferral election as of the date of the deferral of such award;



	(e)
	To
the extent provided by the Secretary of the United States Treasury, a Change in Control; or



	(f)
	The
occurrence of an Unforeseeable Emergency. 




Notwithstanding
anything else herein to the contrary, to the extent that a Participant is a "Specified Employee" (as defined in Code Section 409A(a)(2)(B)(i)) of the Company, no distribution
pursuant to Section 16.5(a) of any deferred amounts may be made before six (6) months after such Participant's date of separation from service, or, if earlier, the date of the
Participant's death. 




        16.6 Unforeseeable Emergency. The Committee shall have the authority to alter the timing or manner of payment of deferred
amounts in the event that a Participant establishes, to the satisfaction of the Committee, the occurrence of an Unforeseeable Emergency. In such event, the amount(s) distributed with respect to such
Unforeseeable Emergency cannot exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such distribution(s),
after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant's assets (to the
extent the liquidation of such assets would not itself cause severe financial hardship). Furthermore, to the extent the Committee agrees an Unforeseeable Emergency has occurred for a Participant, the
Committee may, in its sole discretion: 



	(a)
	Authorize
the cessation of deferrals by such Participant under this Plan; or



	(b)
	Provide
that, subject to the above requirements, all, or a portion, of any previous deferrals by the Participant shall immediately be paid in a lump-sum payment; or



	(c)
	Provide
for such other payment schedule as deemed appropriate by the Committee under the circumstances. 




The
occurrence of an Unforeseeable Emergency shall be judged and determined by the Committee. The Committee's decision with respect to whether an Unforeseeable Emergency has occurred and the manner in
which, if at all, the payment of deferrals to the Participant shall be altered or modified, shall be final, conclusive, and not subject to approval or appeal. 




        16.7 Disabled



	(a)
	A
Participant may elect one or both of the following forms of distribution for his or her deferral(s) distributable by reason of the Participant becoming Disabled: (i) a single
distribution, or (ii) a distribution in approximately equal annual installments over a period of 



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either
five (5) or ten (10) years. The deferral(s) of a Participant who fails or refuses to elect a method of distribution upon becoming Disabled shall be paid in a single sum. 



	(b)
	A
distribution payable by reason of a Participant becoming Disabled shall be paid (in the case of a single distribution) or commence to be paid (in the case of annual installments) as
soon as practicable following the date the Participant becomes Disabled. 




        16.8 Death. If a Participant dies before complete distribution of his or her deferral(s) under this Plan has occurred, the
Participant's undistributed deferrals shall commence to be distributed to his or her beneficiary under the distribution method for death elected by the Participant as soon as administratively possible
following receipt by the Committee of satisfactory notice and confirmation of the Participant's death. The deferral(s) of a Participant who fails or refuses to elect a method of distribution upon
death shall be paid in a single distribution. 


        16.9 No Acceleration of Distributions. Notwithstanding anything to the contrary herein, this Plan does not permit the
acceleration of the time or schedule of any distribution under this Plan, except as provided by Code Section 409A and/or the Secretary of the United States Treasury. 


Article 17. Rights of Participants  


        17.1 Employment. Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company,
its Affiliates, and/or its Subsidiaries, to terminate any Participant's employment or service on the Board or to the Company at any time or for any reason not prohibited by law, nor confer upon any
Participant any right to continue his employment or service as a Director or Third-Party Service Provider for any specified period of time. 



        Neither
an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to
Articles 3 and 19, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the
Company, its Affiliates, and/or its Subsidiaries. 


        17.2 Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award. 


        17.3 Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have none of the rights of a
shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares. 


Article 18. Change in Control  


        18.1 Change in Control of the Company. Notwithstanding any other provision of this Plan to the contrary, the provisions of
this Article 18 shall apply in the event of a Change in Control, unless otherwise determined by the Committee in connection with the grant of an Award as reflected in the applicable Award
Agreement. 


        Upon
a Change in Control, all then-outstanding Options and Stock Appreciation Rights shall become fully vested and exercisable, all other then-outstanding Awards
that are Service Vesting Awards shall vest in full and be free of restrictions, and unless otherwise determined by the Committee and set forth in the Participant's Award Agreement, the target payout
opportunities attainable under all outstanding Awards of performance-based Restricted Stock, performance-based Restricted Stock Units, Performance Units, Performance Shares, and performance-based
Cash-Based Awards shall be deemed to have been fully earned and payable as of the effective date of the Change in Control; provided however to the extent that another Award meeting the
requirements of Section 18.2 (a "Replacement Award") is provided to the Participant pursuant to Section 4.4 to replace such Award (the "Replaced 


22







 



Award").
The treatment of any other outstanding Awards shall be as determined by the Committee in connection with the grant thereof, as reflected in the applicable Award Agreement. 



        18.2 Replacement Awards. An Award shall meet the conditions of this Section 18.2 (and hence qualify as a Replacement
Award) if: (i) it has a value at least equal to the value of the Replaced Award, as determined by the Committee in its sole discretion; (ii) it relates to publicly traded equity
securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control; and (iii) its other
terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in
Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied.
The determination of whether the conditions of this Section 18.2 are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion. 


        18.3 Termination of Employment. Upon termination of employment without Cause by the Company, termination of employment with
Good Reason by the Employee, or termination of directorship of a Director, occurring during the period of two (2) years after such Change in Control, (i) all Replacement Awards held by
the Participant shall become fully vested, (if applicable) exercisable and free of restrictions, and (if applicable) fully earned and payable, and (ii) all Options and Stock Appreciation Rights
held by the Participant immediately before the termination of employment or termination of directorship that the Participant held as of the date of the Change in Control or that constitute Replacement
Awards shall remain exercisable for not less than one (1) year following such termination or until the expiration of the stated term of such Option or SAR, whichever period is shorter;
provided, that if the applicable Award Agreement provides for a longer period of exercisability, that provision shall control. 


Article 19. Amendment, Modification, Suspension, and Termination  



        19.1 Amendment, Modification, Suspension, and Termination. Subject to Section 19.3, the Committee may, at any time and
from time to time, alter, amend, modify, suspend, or terminate the Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company's shareholders
and except as provided in Sections 4.4 and 6.11, Options or SARs issued under the Plan will not be repriced, replaced, or regranted through cancellation, or by lowering the Option Price of a
previously granted Option or the Grant Price of a previously granted SAR, and no material amendment of the Plan shall be made without shareholder approval if shareholder approval is required by law,
regulation, or stock exchange rule. 


        19.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments
in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof)
affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Committee as to the
foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan. 



        19.3 Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, no termination, amendment,
suspension, or modification of the Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant
holding such Award. 


23







 



Article 20. Withholding  


        20.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit
to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as
a result of this Plan. 


        20.2 Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of
restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award
granted hereunder, Participants may elect, subject to the approval of the Committee and as permitted by the rules established by the Securities and Exchange Commission and/or the Code, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that
could be imposed on the transaction. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate. 


Article 21. Successors  


        All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of
such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 


Article 22. General Provisions  


        22.1 Forfeiture Events. 



	(a)
	The
Committee may specify in an Award Agreement that the Participant's rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture,
or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited
to, termination of employment or service for Cause, termination of the Participant's provision of services to the Company, its Affiliates, and/or its Subsidiary, violation of material Company,
Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is
detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.



	(b)
	If
the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is
one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement
of an Award earned or accrued during the twelve- (12-) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just
occurred) of the financial document embodying such financial reporting requirement. 




        22.2 Legend. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer of such Shares. 


24







 



        22.3 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include
the feminine, the plural shall include the singular, and the singular shall include the plural. 



        22.4 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 


        22.5 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 



        22.6 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under
the Plan prior to: 



	(a)
	Obtaining
any approvals from governmental agencies that the Company determines are necessary or advisable; and



	(b)
	Completion
of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be
necessary or advisable. 




        22.7 Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 


        22.8 Investment Representations. The Committee may require any individual receiving Shares pursuant to an Award under this
Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares. 


        22.9 Employees Based Outside of the United States. Notwithstanding any provision of the Plan to the contrary, in order to
comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees, Directors, or Third-Party Service Providers, the Committee, in its sole
discretion, shall have the power and authority to: 



	(a)
	Determine
which Affiliates and Subsidiaries shall be covered by the Plan;



	(b)
	Determine
which Employees and/or Directors, or Third-Party Service Providers outside the United States are eligible to participate in the Plan;



	(c)
	Modify
the terms and conditions of any Award granted to Employees and/or Directors or Third-Party Service Providers outside the United States to comply with applicable foreign laws;



	(d)
	Establish
subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan
terms and procedures established under this Section 22.9 by the Committee shall be attached to this Plan document as appendices; and



	(e)
	Take
any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals. 




        Notwithstanding
the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law. 



        22.10 Uncertificated Shares. To the extent that the Plan provides for issuance of certificates to reflect the transfer of
Shares, the transfer of such Shares may be affected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange. 


25







 



        22.11 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the
Company, its Affiliates, and/or its Subsidiaries may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent
that any individual acquires a right to receive payments from the Company, its Affiliates, and/or its Subsidiaries under the Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company, its Affiliates, and/or its Subsidiaries, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, its Affiliates, and/or its
Subsidiaries, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the
Plan. 


        22.12 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or
otherwise eliminated. 


        22.13 Retirement and Welfare Plans. Neither Awards made under the Plan nor Shares or cash paid pursuant to such Awards,
except pursuant to Covered Employee Annual Incentive Awards, may be included as "compensation" for purposes of computing the benefits payable to any Participant under the Company's, its Affiliates',
and/or its Subsidiaries' retirement plans (both qualified and nonqualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in
computing a Participant's benefit. 


        22.14 Nonexclusivity of the Plan. The adoption of this Plan shall not be construed as creating any limitations on the power
of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant. 



        22.15 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise
affect the Company's, its Affiliates', and/or its Subsidiaries' right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company, its Affiliates, and/or its Subsidiaries to
take any action which such entity deems to be necessary or appropriate. 


        22.16 Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, excluding any
conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. 


        22.17 Indemnification. Subject to requirements of Delaware law, each individual who is or shall have been a member of the
Board, or a committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Article 3, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he
may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him in settlement thereof, with the
Company's approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own behalf, unless such loss, cost, liability, or expense is a result of his own willful misconduct or except as expressly
provided by Delaware law. 


        The
foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. 


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QuickLinks


2004 Omnibus Stock and Incentive Compensation Plan Neenah Paper, Inc. Effective December 1, 2004