Exhibit
10.16


 


SCHWEITZER-MAUDUIT
INTERNATIONAL, INC.

DEFERRED COMPENSATION PLAN NO. 2


 


EFFECTIVE AS OF JANUARY 1,
2005


 


ARTICLE I

ESTABLISHMENT OF PLAN


 


1.1           Purpose.  The Schweitzer-Mauduit International, Inc.
Deferred Compensation Plan No. 2 is intended to enhance the Corporation’s
ability to attract to and retain for the Corporation outstanding executive
talent by providing a deferred compensation benefit to selected executives of
the Corporation as more fully provided herein. 
The benefits provided under the Plan are in addition to other employee
benefit plans and programs offered by the Corporation, including but not
limited to tax-qualified employee benefit plans.


 


1.2           Effective
Date and Term.  Schweitzer-Mauduit
International, Inc. adopts this unfunded deferred compensation plan effective
as of January 1, 2005 to be known as the Schweitzer-Mauduit International,
Inc. Deferred Compensation Plan No. 2, hereinafter referred to as the “Plan.”


 


1.3           Applicability
of ERISA.  This Plan is an unfunded
plan maintained primarily for the purpose of providing deferred compensation to
a select group of management and other highly compensated employees within the
meaning of ERISA. It is the intent of the Corporation that the Plan be exempt
from Parts 2, 3 and 4 of Subtitle B of Title I of ERISA as an unfunded Plan
that is maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees (the “ERISA exemption”). 
Notwithstanding anything to the contrary in any other provision of the
Plan, the Plan Administrator may, in its sole discretion, exclude any one or
more employees from eligibility to participate or from participation in the
Plan, and may take any further action the Plan Administrator considers
necessary or appropriate if the Plan Administrator reasonably determines in
good faith that such exclusion or further action is necessary in order for the
Plan to qualify for, or to continue to qualify for, the ERISA exemption.


 


ARTICLE II

DEFINITIONS


 


As used within this
document, the following words and phrases have the meanings described in this Article II
unless a different meaning is required by the context.  Some of the words and phrases used in the
Plan are not defined in this Article II, but for convenience, are defined
as they are introduced into the text. 
Words in the masculine gender shall be deemed to include the feminine
gender.  Any headings used are included
for ease of reference only, and are not to be construed so as to alter any of
the terms of the Plan.


 





















 


2.1           AIP
Awards.  The cash awards, if any,
that may be earned by participants in the Corporation’s Annual Incentive Plan.


 


2.2           Annual
Deferral.  The amount of Base Salary,
AIP Awards and/or LTIP Awards which the Participant elects to defer in each
Deferral Period pursuant to Article 4.1 of the Plan Document.


 


2.3           Base
Salary.  A Participant’s base annual
salary for the applicable Plan Year.


 


2.4           Beneficiary.  An individual or entity designated by a
Participant in accordance with Section 14.6.


 


2.5           Board
or Board of Directors.  The Board of
Directors of the Corporation.


 


2.6           Change
of Control.  For the purposes of this
Plan, a Change of Control shall mean the date as of which: (a) a third person,
including a “group” as defined in Section 13(d)(3) of the Securities Act
of 1934, acquires actual or beneficial ownership of shares of the Corporation
having 15% or more of the total number of votes that may be cast for the
election of Directors of the Corporation; or (b) as the result of any cash
tender or exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing transactions (a “Transaction”),
the persons who were Directors of the Company before the Transaction shall
cease to constitute a majority of the Board of Directors of the Company or any
successor to the Company.


 


Notwithstanding the
foregoing, in the event that the regulations of the Secretary of the Treasury
defining a “change in the ownership or effective control of the corporation, or
in the ownership of a substantial portion of the assets of the corporation” for
purposes of Section 409A of the Code are more restrictive than the
foregoing definition, then the definition in the Treasury Regulations shall be
substituted for the foregoing definition of Change of Control.


 


2.7           Code.  The Internal Revenue Code of 1986.  Reference to a section of the Code shall
include that section and any comparable section or sections of any
future legislation that amends, supplements or supersedes such section.


 


2.8           Committee.  The Compensation Committee of the Corporation’s
Board of Directors.


 


2.9           Corporation.  Schweitzer-Mauduit International, Inc.


 


2.10         Deferral
Account.  The account established for
a Participant pursuant to Section 5.1 of the Plan Document.


 


2.11         Deferral
Election.  The election made by the
Participant pursuant to Section 4.1 of the Plan Document.


 


2.12         Deferral
Period.  The Plan Year, or in the
case of a newly hired or promoted employee who becomes an Eligible Employee
during a Plan Year, the remaining portion of the Plan Year.


 


2





















 


In the case of the first Plan Year, the Deferral
Period commences January 1, 2005 and ends December 31, 2005.


 


2.13         Disability.  A Participant shall be considered to have
experienced a “Disability” or to be disabled, for purposes of this Plan, if the
Participant (i) is 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 (ii) is, by reasons 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, receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering employees of the Corporation.


 


2.14         Effective
Date.  January 1, 2005.


 


2.15         Eligible
Employee.  An employee of the
Corporation who is designated by the Plan Administrator as being eligible to
participate in the Plan or who is a member of a class of employees that the
Plan Administrator has designated as being eligible to participate in the Plan.
The employee shall remain eligible to participate in the Plan for such period
as is designated by the Plan Administrator.


 


2.16         ERISA.  The Employee Retirement Income Security Act
of 1974, as amended.


 


2.17         IRS.  The Internal Revenue Service.


 


2.18         LTIP
Awards.  The cash awards, if any,
that may be earned by participants in the Corporation’s Long-Term Incentive
Plan.


 


2.19         Participant.  Any Eligible Employee who is designated by
the Plan Administrator to participate in the Plan pursuant to Article III
of the Plan Document commencing as of such time and for such period as is
designated by the Plan Administrator. The list of Participants is set forth on
Appendix A hereto, as amended from time to time.


 


2.20         Participant
Agreement.  The written agreement,
including a Deferral Election Form, to defer Salary and/or AIP Awards made by
the Participant.  Such written agreement
and Deferral Election Form shall be in a format designated by the Corporation.


 


2.21         Plan.  The Schweitzer-Mauduit International, Inc.
Deferred Compensation Plan.


 


2.22         Plan
Administrator.  The Corporation’s
Human Resources Committee.


 


2.23         Plan
Year.  “Plan Year” means the 12-month
period beginning each January 1 and ending on the following December 31.


 


2.24         Rabbi
Trust.  The Rabbi Trust, which the
Corporation may, in its discretion, establish for the Schweitzer-Mauduit
International, Inc. Deferred Compensation Plan, as amended from time to time.


 


3





















 


2.25         Specified
Age.  Upon retirement at age 55 or a
later age chosen by the Participant on his Participation Agreement and Deferral
Election Form at which time the vested credits in the Participant’s Deferral
Account shall be paid out as benefits in accordance with the payment method
selected by the Participant in accordance with the Plan terms, unless benefits
have commenced to pay-out earlier as provided in Article VII of the Plan.


 


2.26         Unforeseeable
Emergency.   A severe financial
hardship to the Participant resulting from an illness or accident of the
Participant, the Participant’s spouse, or a dependent (as defined in Code section 152(a))
of the Participant, loss of the Participant’s property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant.  A withdrawal on account of an Unforeseeable
Emergency may be paid to the Participant only if the amounts distributed with
respect to an emergency do not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a
result of the distribution, 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).  This section shall be
interpreted in a manner consistent with Code section 409A and applicable
provisions of the Treasury Regulations.


 


2.27         Valuation
Date.  Each business day of the Plan
Year.


 


2.28         Year
of Service.  Each consecutive twelve
(12) month period during which a Participant is continuously and actively
employed by the Corporation.


 


ARTICLE III

ELIGIBILITY AND PARTICIPATION


 


3.1           Participation
– Eligibility and Initial Period. 
Participation in the Plan is open only to Eligible Employees of the
Corporation.  Each Eligible Employee of
the Corporation, as of the Effective Date, may become a Participant for the
Deferral Period from January 1, 2005 through December 31, 2005 (“Initial
Period”) if he submits a properly completed Participation Agreement and
Deferral Election Form to the Plan Administrator prior to December 31,
2004.  Following the Initial Period, a
Participant must submit a Deferral Election Form by December 15 of the
year preceding the Plan Year for which the Deferral Election was made. Any
employee becoming an Eligible Employee after the Effective Date, e.g., new
hires or promoted employees, may become a Participant with respect to services
performed subsequent to the filing of the Deferral Election Form for the
current Deferral Period if he submits a properly completed Participation
Agreement and Deferral Election Form within thirty (30) days after becoming
eligible for participation.


 


3.2           Participation
– Subsequent Entry into Plan.  An
Eligible Employee who does not elect to participate at the time of initial
eligibility as set forth in Section 3.1 shall remain eligible to become a
Participant in subsequent Plan Years as long as he continues his status as an
Eligible Employee.  In such event, the
Eligible Employee may become a Participant by submitting a properly executed
Participation Agreement and Deferral Election Form on or prior to December 15
of the year preceding the Plan Year for which it is effective.


 


4





















 


3.3           Determination
of Non-Eligibility to Participate. 
If, at any time, an Eligible Employee or Participant is determined or
reasonably believed, based on a judicial or administrative determination or
opinion of counsel, not to qualify as “management” or a “highly compensated
employee” under ERISA Sections 201(2), 301 (a) (3), and 401 (a) (1), the
employee shall cease active participation in the Plan as of the date of such
determination.


 


ARTICLE IV

CONTRIBUTIONS


 


4.1           Deferral
Election.  On or before the 15th day
of December preceding the first day of each Plan Year, a Participant may
file with the Plan Administrator, a Participation Agreement and Deferral
Election Form indicating the amount of Salary, AIP Award and/or LTIP Award
Deferrals for that Plan Year.  A
Participant shall not be obligated to make a Deferral Election in each Plan
Year to remain a participant in the Plan. 
After a Plan Year commences, such Deferral Election shall continue for
the entire Plan Year.


 


4.2           Maximum
Deferral Election.  A Participant may
elect to defer up to 25% of Base Salary. 
A Participant may also elect to defer up to 50% of AIP Awards that are
earned or paid during the first Plan Year, which includes the period from January 1,
2000 through December 31, 2000. 
Thereafter, a Participant may elect to defer up to 25% of Base Salary
and/or up to 50% of AIP Awards and/or LTIP Awards earned during the corresponding
Deferral Period.  The amount of deferral
may be stated as a flat dollar amount or as a percent rounded to the nearest
$100.  A Deferral Election may be
automatically reduced if the Plan Administrator determines that such action is
necessary to meet Federal or State tax withholding obligations.


 


4.3           Minimum
Deferral Election.  A Participant who
wishes to defer a portion of his qualifying compensation must elect to defer at
least $1,200 during the Deferral Period from Base Salary, AIP Awards, LTIP Awards
or a combination of Base Salary, AIP Awards and LTIP Awards.  The Participant may also elect not to make
any deferral for a Plan Year.


 


4.4           Employer
Contributions.  The Corporation, with
the Committee’s prior approval, may, in its sole discretion, make a
contribution to any one or more of the Participants’ Deferral Accounts.  Employer Contributions may also be mandated
by the terms of the AIP and/or LTIP where a participant in one or more of those
plans is also a “Covered Employee,” as such term is defined in Code Section 162(m)
and the total amount of non-exempt compensation payable to such participant in
any tax year exceeds the Code Section 162(m) limits.  Also, the amount by which any cash balance
benefit formula amount under the Schweitzer-Mauduit International, Inc.
Retirement Plan exceeds applicable Internal Revenue Service Limits (hereinafter
an “Excess Retirement Benefit”) shall be made as an Employer Contribution to
the Deferred Compensation Plan for the account of such participant.


 


4.5           Insurance.  The Corporation may insure the lives of
Participants.  A Participant whose
deferral is approved shall, as a condition of his deferral, cooperate in
providing any information or submitting to any necessary examinations that may
be requested by the Corporation in connection with its application for such
insurance policies.  The Corporation
shall be the applicant, owner and beneficiary of such policies.  The Participant shall have no interest in any


 


5





















 


policies nor will the Participant be able to look to
an insurance carrier for benefits under any such policies.


 


ARTICLE V

ACCOUNTS


 


5.1           Deferral
Accounts.  Solely for recordkeeping
purposes, The Plan Administrator shall establish a Deferral Account for each Participant.  A Participant’s Deferral Account shall be
credited with the contributions made by him or on his behalf by the Corporation
under Section 4.4 and shall be credited (or charged, as the case may be)
with the hypothetical or deemed investment earnings and losses determined
pursuant to Section 5.3, and charged with distributions made to or with
respect to him on Base Salary, AIP Award and/or LTIP Award Deferrals, dividends
on stock units and Corporate Contributions.


 


5.2           Crediting
of Deferral Accounts.  Salary
contributions under Section 4.1 shall be credited to a Participant’s
Deferral Account as of the date on which such contributions were withheld from
his Base Annual Salary.  AIP Award and
LTIP Award contributions under Section 4.1 shall be credited to a
Participant’s Deferral Account as of the date on which the contribution would
have otherwise been paid in cash. 
Contributions under Section 4.4 shall be credited to the
Participant’s Deferral Account as of the date declared by the Corporation or in
accordance with the AIP Award and/or LTIP Award provisions hereinabove, if
applicable.  Dividends deemed to be
earned on the stock units shall be credited as of the dividend payment date on
the Corporation’s common stock.  Excess
Retirement Benefit contributions shall be credited in accordance with the
crediting provisions of the Retirement Plan. 
Any distribution with respect to a Deferral Account shall be charged to
that Account as of the date the Corporation makes such payment or the trustee
of any Rabbi Trust established for the Plan.


 


5.3           Earning
Credits or Losses.  Amounts credited
to a Deferral Account shall be credited with deemed net income, gain and loss
on Deferred Base Salary, AIP Awards, LTIP Awards and deemed dividends on stock
units, including the deemed net unrealized gain and loss based on hypothetical
investment directions made by the Participant with respect to this Deferral
Account on a form designated by the Plan Administrator, in accordance with
investment options and procedures adopted by the Plan Administrator in its sole
discretion, from time to time.  Excess
Retirement Benefit contributions shall be credited with deemed net income, gain
and loss on such amounts as though invested in thirty-year Treasury Securities
(tracking instrument substituted for the thirty-year T-Bill).  Such earnings will continue to accrue during
any period in which installments of vested benefits are paid to a Participant
or his beneficiary pursuant to Article VII.  Earnings or losses in the market value of stock
units shall have no effect on the number of stock units that are reflected in
the Participant’s account.  The number of
stock units held in the Deferred Compensation Plan for a Participant shall be
tracked and the Participant shall recognize the bargain element associated with
the number of stock units held in his  
account as ordinary income or loss when the stock units are converted
into shares of the Corporation’s common stock and issued in the form of clean
stock certificates out of the Deferred Compensation Plan as permitted for a
mandatory deferral.


 


6





















 


5.4           Hypothetical
Nature of Accounts.  The Plan
constitutes a mere promise by the Corporation to make the benefit payments in
the future.  Any Deferral Account
established for a Participant under this Article V shall be hypothetical
in nature and shall be maintained for the Corporation’s recordkeeping purposes
only, so that any contributions can be credited and so that deemed investment
earnings and losses on such amounts can be credited (or charged, as the case
may be).  Neither the Plan nor any of the
Accounts (or subaccounts) shall hold any actual funds or assets.  The right of any individual or entity to
receive one or more payments under the Plan shall be an unsecured claim against
the general assets of the Corporation. 
Any liability of the Corporation to any Participant, former Participant,
or Beneficiary with respect to a right to payment shall be based solely upon
contractual obligations created by the Plan. 
The Corporation, the Board of Directors, the Committee, the Plan
Administrator and any individual or entity shall not be deemed to be a trustee
of any amounts to be paid 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 Corporation and a Participant, former
Participant, Beneficiary, or any other individual or entity.  The Corporation may, in its sole discretion,
establish a Rabbi Trust as a vehicle in which to place funds with respect to
this Plan.  The Corporation does not in
any way guarantee any Participant’s Deferral Account against loss or
depreciation, whether caused by poor investment performance, insolvency of a
deemed investment or by any other event or occurrence.  In no event shall the employee, officer,
director, or stockholder of the Corporation be liable to any individual or
entity on account of any claim arising by reason of the Plan provisions or any
instrument or instruments implementing its provisions, or for the failure of
any Participant, Beneficiary or other individual or entity to be entitled to
any particular tax consequences with respect to the Plan or any credit or
payment thereunder.


 


5.5           Statement
of Deferral Accounts.  The Plan
Administrator shall provide to each Participant quarterly statements setting
forth the value of the Deferral Account maintained for such Participant.


 


ARTICLE VI

VESTING


 


6.1           Vesting
of Corporate Elective and Mandated Contributions.  The Corporation’s contributions (excluding
AIP and LTIP Awards and Excess Retirement Benefit contributions), if any,
credited to a Participant’s Deferral Account under Plan Section 4.4 and
any deemed investment earnings attributable to these contributions shall be one
hundred percent (100%) vested or nonforfeitable when the Participant has
satisfied any vesting restrictions contained in the Board of Compensation Committee
approval of the award, irrespective of when the Corporate Contribution is
credited to the Participant’s Deferral Account.   A Participant shall be one hundred percent
(100%) vested in the Corporation’s contributions, including any deemed
investment earnings attributable to these contributions, upon his death or
Disability while he is actively employed by the Corporation or in the event of
a Change of Control.    The vesting of
mandated LTIP and AIP Awards and Excess Retirement Benefit contributions shall
occur as set forth in the respective plans governing those awards and
payments.  All other amounts credited to
a Participant’s Deferral Account shall be one hundred percent (100%) vested at
all times.


 


7





















 


ARTICLE VII

BENEFITS


 


7.1           Attainment
of Specified Age.  Unless benefits
have already commenced pursuant to another section in this Article VII,
a Participant shall be entitled to begin receipt of the vested amount credited
to his Deferral Account as of the Valuation Date coinciding with the Specified
Age or date chosen according to his Participation Agreement and Deferral
Election Form.  A Participant may make a
separate choice with respect to the timing of the commencement of distribution
of the amounts credited to the Deferral Account with respect to each Deferral
Period.  In addition, a Participant may
elect, with respect to a particular Deferral Election, to (i) receive payment
on a specified date of a flat dollar amount or a percentage of the amount
deferred for the Deferral Period and (ii) to have the remainder of the amount
deferred for that Deferral Period paid at a Specified Age; provided, however,
that the specified date shall not be earlier than January 1 of the fifth
Plan Year following the Plan Year with respect to which the amount was
deferred.  Payment of any amount under
this Section shall commence within thirty (30) days of the Participant’s
Specified Age or date and in accordance with the payment method elected by the
Participant on his Participation Agreement and Deferral Election Form.  Payments shall commence on or after that age
even if the Participant is still then employed.


 


7.2           Disability.  If a Participant suffers a Disability while
employed with the Corporation and before he is entitled to benefits under this
Article, he shall receive the amount credited to his Deferral Account as of the
Valuation Date coinciding with the Date on which the Participant is determined
to have suffered a Disability.  Payment
of any amount under this Section shall commence within thirty (30) days of
when the Committee determines the existence of the Participant’s Disability and
in accordance with the payment method elected by the Participant on his
Participation Agreement and Deferral Election Form.


 


7.3           Pre-Retirement
Survivor Benefit.  If a Participant
dies before becoming entitled to benefits under this Article, the Beneficiary
or Beneficiaries designated pursuant to Section 13.6, shall receive the
vested amount credited to the Participant’s Deferral Account as of the
Valuation Date coinciding with the date of the Participant’s death.  Payment of any amount under this Section shall
be made within thirty (30) days of the Participant’s death, or if later, within
thirty (30) days of when the Plan Administrator receives notification of or
otherwise confirms the Participant’s death.


 


7.4           Post-Retirement
Survivor Benefit.  If a Participant
dies after benefits have commenced, but prior to receiving complete payment of
benefits under this Article, the Beneficiary or Beneficiaries designated under Section 13.6,
shall receive in a single lump sum the vested amount credited to the
Participant’s Deferral Account as of the Valuation Date coinciding with the
date of the Participant’s death.  Payment
of any amount under this Section shall be made within thirty (30) days of
the Participant’s death, or if later, within thirty (30) days of when the Plan
Administrator receives notification of or otherwise confirms the Participant’s
death.


 


7.5           Termination.  If a Participant experiences a “separation
from service” with the Corporation (determined in accordance with the standards
of Code Section 409A) before he becomes entitled to receive benefits by
reason of any of the above Sections, he shall receive in a


 


8





















 


single lump sum or in five (5) annual installments, as
set forth in the Deferral Election form, at the Participant’s election, the
vested amount credited to his Deferral Account as of the Valuation Date
coinciding with the date on which the Participant’s employment terminates.  Payment of the first annual installment or
any lump sum amount under this Section shall be made within thirty (30)
days of when the Participant separates from service with the Corporation;
provided, however, that in the case of a Participant who is a “specified
employee” (within the meaning of Code section 409A and the Treasury
Regulations issued pursuant to that section), such payment shall be made as
soon as practicable after the date which is 6 months after the date of the
Participant’s separation from service with the Corporation.


 


7.6           Change
of Control.  If a Change of Control
occurs before a Participant becomes entitled to receive benefits by reason of
any of the above Sections or before the Participant has received complete
payment of his benefits under this Article, he shall receive a lump sum payment
of the amount credited to his Account as of the Valuation Date immediately
preceding the date on which the Change of Control occurs.  Payment of any amount under this section shall
commence within thirty (30) days of when the Change of Control occurs.


 


7.7           Payment
Methods.  Unless otherwise provided
in this Article VII, a Participant may elect to receive payment of the
vested amount credited to his Deferral Account based on a Participant deferral
in a single lump sum or in five (5), or ten (10) annual installments.  This election must be made in the
Participation Agreement and Deferral Election Form for the corresponding Plan
Year.  Any installment payments shall be
paid annually on the first practicable day after the distributions are
scheduled to commence.  Each installment
payment shall be determined by multiplying the Deferral Account Balance by a
fraction, the numerator of which is one and the denominator of which is the
number of remaining installment payments. Any Deferral Election may be amended
provided that all of the following requirements are met:


 


(i)                                     the
amendment of the Deferral Election shall not take effect until at least 12
months after the date on which such amendment is made;


 


(ii)                                  in
the case of an amendment of a Deferral Election related to a payment not made
on account of the Participant’s death or Disability or an Unforeseeable
Emergency, the first payment with respect to which the amendment is made shall
in all cases be deferred for a period of not less then 5 years from the date on
which such payment otherwise would have been made;


 


(iii)                               in the case of an
amendment of an election related to a payment that is to be made at a specified
time or pursuant to a fixed schedule, such an amendment of the election must be
made at least 12 months prior to the date of the first scheduled payment.


 


9





















 


ARTICLE VIII

UNFORESEEABLE EMERGENCY WITHDRAWALS


 


8.1           Unforeseeable
Emergency Withdrawals.  If a Participant
incurs an Unforeseeable Emergency, the Participant may make a written request
to the Plan Administrator for a withdrawal from his account.  In the event of a withdrawal on account of an
Unforeseeable Emergency, the Participant’s deferrals for the remainder of the
Plan Year shall be suspended.  Deferrals
may commence with the next following Plan Year provided the Participant
completes the appropriate Participation Agreement and Deferral Election Form
prior to January 1 of the corresponding Plan Year.


 


ARTICLE IX

ESTABLISHMENT OF TRUST


 


9.1           Establishment
of Trust.  The Corporation may
establish a Rabbi Trust (“Trust”) for the Plan. 
If established, all benefits payable under this Plan to a Participant
shall be paid directly by the Corporation from the Trust.  To the extent that such benefits are not paid
from the Trust, the benefits shall be paid from the general assets of the
Corporation and shall be reimbursed to the Corporation by the Trust at the
Corporation’s request upon presentation of reasonable proof that the
Corporation made such payment.  Any Trust
shall be an irrevocable grantor trust which conforms to the terms of the model
trust as described in IRS Revenue Procedure 92-64, I.R.B. 1992-33.  The assets of the Trust are subject to the
claims of the Corporation’s creditors in the event of its insolvency.  Except as to any amounts paid or payable to a
Trust, the Corporation shall not be obligated to set aside, earmark or escrow
any funds or other assets to satisfy its obligations under this Plan, and the
Participant and/or his designated Beneficiaries shall not have any property
interest in any specific assets of the Corporation other than the unsecured
right to receive payments from the Corporation, as provided in this Plan.


 


9.2           Payment
From the Trust.  In the event a Trust
is established and payments are not made by the Corporation in accordance with
the terms of the Plan, a Participant may petition the trustee of the Trust
directly for payment and the trustee may make such payment directly to the Participant
upon the trustee’s good faith determination that the payment was in fact owed,
was not timely paid by the Corporation and that there are sufficient assets in
the Trust to make the payment.


 


ARTICLE X

PLAN ADMINISTRATION


 


10.1         Plan
Administration.  The Plan shall be
administered by the Committee, and such Committee may designate an agent to
perform the recordkeeping duties and delegate to the Plan Administrator any of
the Committee’s functions specified in this Article X.  The Committee shall construe and interpret
the Plan, including disputed and doubtful terms and provisions and, in its sole
discretion, decide all questions of eligibility and determine the amount,
manner and time of payment of benefits under the Plan.  The determinations and interpretations of the
Committee shall be consistently and uniformly applied to all similarly situated
Participants and Beneficiaries, including but not limited to interpretations
and determinations of amounts due


 


10





















 


under this Plan, and shall be final and binding on all
parties.  The Plan at all times shall be
interpreted and administered as an unfunded deferred compensation plan, and no
provision of the Plan shall be interpreted so as to give any Participant or
Beneficiary any right in any asset of the Corporation which is a right greater
than the right of a general unsecured creditor of the Corporation.


 


ARTICLE XI

NONALIENATION OF BENEFITS


 


11.1         Nonalienation
of Benefits.  The interests of
Participants and their Beneficiaries under this Plan are not subject to the
claims of their creditors and may not be voluntarily or involuntarily sold,
transferred, alienated, assigned, pledged, anticipated, encumbered, attached or
garnished.  Any attempt by a Participant,
his Beneficiary, or any other individual or entity to sell, transfer, alienate,
assign, pledge, anticipate, encumber, attach, garnish, charge or otherwise
dispose of any right to benefits payable shall be void.  The Corporation may cancel and refuse to pay any
portion of a benefit which is sold, transferred, alienated, assigned, pledged,
anticipated, encumbered, attached or garnished. 
The benefits which a Participant may accrue under this Plan are not
subject to the terms of any Qualified Domestic Relations Order (as that term is
defined in Section 414(p) of the Code) with respect to any Participant,
and the Plan Administrator, Board of Directors, Committee and Corporation shall
not be required to comply with the terms of such order in connection with this
Plan.  The withholding of taxes from Plan
payments, the recovery of Plan overpayments of benefits made to a Participant
or Beneficiary, the transfer of Plan benefit rights from the Plan to another
plan, or the direct deposit of Plan Payments to an account in a financial
institution (if not actually a part of an arrangement constituting an
assignment or alienation) shall not be construed as assignment or alienation
under this Article XI.


 


ARTICLE XII

AMENDMENT AND TERMINATION


 


12.1         Amendment
and Termination.  The Corporation
reserves the right to amend this Plan at any time.  Such action may be taken in writing by the
Plan Administrator.  However, no such
amendment shall deprive any Participant or Beneficiary of any portion of any
benefit which would have been payable had the Participant’s employment with the
Corporation terminated on the effective date of such amendment or
termination.  Notwithstanding the
provisions of this Article XII to the contrary, the Corporation may amend
the Plan at any time, in any manner, if the Corporation determines any such
amendment is required to ensure that the Plan is characterized as providing
deferred compensation for a select group of management or highly compensated
employees and as described in ERISA Sections 201(2), 301(a)(3) and 401(a)(1) or
to otherwise conform the Plan to the provisions of any applicable law
including, but not limited to, ERISA and the Code (including without limitation
section 409A of the Code).


 


11





















 


ARTICLE XIII

GENERAL PROVISIONS


 


13.1         Good
Faith Payment.  Any payment made in
good faith in accordance with provisions of the Plan shall be a complete
discharge of any liability for the making of such payment under the provisions
of this Plan.


 


13.2         No
Right to Employment.  This Plan does
not constitute a contract of employment, and participation in the Plan shall
not give any Participant the right to be retained in the employment of the
Corporation.


 


13.3         Binding
Effect.  The provisions of this Plan
shall be binding upon the Corporation and its successors and assigns and upon
every Participant and his heirs, Beneficiaries, estates and legal
representatives.


 


13.4         Participant
Change of Address.  Each Participant
entitled to benefits shall file with the Plan Administrator, in writing, any
change of post office address.  Any check
representing payment and any communication addressed to a Participant or a
former Participant at this last address filed with the Plan Administrator, or
if no such address has been filed, then at his last address as indicated on the
Corporation’s records, shall be binding on such Participant for all purposes of
the Plan, and neither the Plan Administrator, the Corporation nor any other
payer shall be obliged to search for or ascertain the location of any such
Participant.  If the Plan Administrator
is in doubt as to the address of any Participant entitled to benefits or as to
whether benefit payments are being received by a Participant, it shall, by registered
mail addressed to such Participant at his last known address, notify such
Participant that:


 


(i)                                     All
unmailed and future Plan payments shall be withheld until Participant provides
the Plan Administrator with evidence of such Participant’s continued life and
proper mailing address; and


 


(ii)                                  Participant’s
right to any Plan payment shall, at the option of the Committee, be canceled
forever, if, at the expiration of five (5) years from the date of such mailing,
such Participant or his Beneficiary shall not have provided the Committee with
evidence of his continued life and proper mailing address.


 


13.5         Notices.  Each Participant shall furnish to the Plan
Administrator any information the Plan Administrator deems necessary for
purposes of administering the Plan, and the payment provisions of the Plan are
conditional upon the Participant furnishing promptly such true and complete
information as the Plan Administrator may request.  Each Participant shall submit proof of his
age when required by the Plan Administrator. 
The Plan Administrator shall, if such proof of age is not submitted as
required, use such information as is deemed by it to be reliable, regardless of
the lack of proof, or the misstatement of the age of individuals entitled to
benefits.  Any notice or information
which, according to the terms of the Plan or requirements of the Plan
Administrator, must be filed with the Plan Administrator, shall be deemed so
filed if addressed


 


12





















 


and either delivered in person or mailed to and received
by the Plan Administrator, in care of the Corporation at:


 


Schweitzer-Mauduit International, Inc.


100 North Point Center East


Suite 600


Alpharetta, Georgia 
30022


Attention: Human Resources Committee


 


13.6         Designation
of Beneficiary.  Each Participant
shall designate, by name, on Beneficiary designation forms provided by the Plan
Administrator, the Beneficiary(ies) who shall receive any benefits which might
be payable after such Participant’s death. 
A Beneficiary designation may be changed or revoked without such
Beneficiary’s consent at any time or from time to time in the manner as
provided by the Plan Administrator, and the Plan Administrator shall have no
duty to notify any individual or entity designated as a Beneficiary of any
change in such designation which might affect such individual or entity’s
present or future rights.  If the
designated Beneficiary does not survive the Participant, all amounts that would
have been paid to such deceased Beneficiary shall be paid to the Participant or
to his estate.


 


No Participant shall
designate more than five (5) simultaneous Beneficiaries, and if more than one
(1) Beneficiary is named, Participant shall designate the share to be received
by each Beneficiary.  Despite the limitation
on five (5) Beneficiaries, a Participant may designate more than five (5)
Beneficiaries provided such beneficiaries are the surviving spouse and children
of the Participant.  If a Participant
designates alternative, successor, or contingent Beneficiaries, such
Participant shall specify the shares, terms and conditions upon which amounts
shall be paid to such multiple, alternative, successor or contingent
beneficiaries.  Any payment made under
this Plan after the death of a Participant shall be made only to the
Beneficiary or Beneficiaries designated pursuant to this Section.


 


13.7         Claims.  Any claim for benefits must initially be
submitted in writing to the Plan Administrator. 
If such claim is denied (in whole or in part), the claimant shall
receive notice from the Plan Administrator, in writing, setting forth the
specific reasons for denial, with specific reference to applicable provisions
of this Plan.  Such notice shall be
provided within ninety (90) days of the date the claim for benefits is received
by the Plan Administrator, unless special circumstances require an extension of
time for processing the claim, in which event notification of the extension
shall be provided to the claimant prior to the expiration of the initial 90-day
period.  The extension notification shall
indicate the special circumstances requiring the extension of time and the date
by which the Plan Administrator expects to render its decision.  Any such extension shall not exceed 90
days.  Any disagreements about such
interpretations and construction may be appealed in writing by the claimant
within sixty (60) days to the Plan Administrator.  The Plan Administrator shall respond to such
appeal within sixty (60) days, with a notice in writing fully disclosing its
decision and its reasons, unless special circumstances require an extension of
time for reviewing the claim, in which event notification of the extension
shall be provided to the claimant prior to the expiration of the initial sixty
(60) day period.  Any such extension
shall be provided to the claimant prior to the commencement of the
extension.  Any such extension shall not
exceed 60 days.  No member of the Board
of Directors, or any


 


13





















 


committee thereof, and no officer, employee or agents
of the Corporation shall be liable to any individual or entity for any action
taken hereunder, except those actions undertaken with lack of good faith.  Provided that the Corporation has established
a Trust for the Plan pursuant to which the trustee has agreed to act in a
capacity other than as a directed trustee in the event of a Change of Control,
the trustee of the Trust shall perform the duties of the Plan Administrator
under this Section 13.7 following a Change of Control.


 


13.8         Action
by Board of Directors.  Any action
required to be taken by the Board of Directors of the Corporation pursuant to
the Plan provisions may be performed by the Compensation Committee of the
Board.


 


13.9         Governing
Law.  To the extent not superseded by
the laws of the United States, the laws of the State of Georgia shall be
controlling in all matters relating to this Plan.


 


13.10       Severability.  In the event any provision of this Plan shall
be held illegal or invalid for any reason, such illegality or invalidity shall
not affect the remaining provisions of the Plan, and the Plan shall be
interpreted and enforced as if such illegal and invalid provisions had never
been set forth.


 


IN WITNESS WHEREOF,
Schweitzer-Mauduit International, Inc. has adopted the foregoing instrument
effective as of January 1, 2005.


 


 


	
   

  	
  SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William R. Foust

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   Vice
  President - Administration

  	
   

  
					



 


14