Document:

Exhibit 10.1

 

CORPORATE SERVICES AGREEMENT

 

 

                THIS AGREEMENT for the performance of corporate
services is dated as of November 30, 2004, between Kimberly-Clark Corporation,
a Delaware corporation (“Kimberly-Clark”), and Neenah Paper, Inc., a
Delaware corporation (“Neenah”), and, as of the date hereof, a wholly-owned
subsidiary of Kimberly-Clark.

 

WHEREAS, Kimberly-Clark, through its pulp and paper
division and certain subsidiaries and affiliates, is engaged in the business of
(i) manufacturing and selling fine paper and technical paper and (ii) producing
and selling pulp (the “Neenah Business”);

WHEREAS, the Board of Directors of Kimberly-Clark has
determined that it would be advisable and in the best interests of
Kimberly-Clark and its stockholders for Kimberly-Clark to transfer and assign,
or cause to be transferred and assigned, to Neenah the business, operations,
assets and liabilities related to the Neenah Business;

                WHEREAS, Kimberly-Clark has agreed to transfer and
assign to Neenah substantially all of the assets and properties of the Neenah
Business and Neenah has agreed to the transfer and assignment of such assets
and to assume, or cause to be assumed, substantially all of the liabilities and
obligations arising out of or relating to the Neenah Business;

 

                WHEREAS, the date on which the above transaction is
to become effective is referred to as the “Distribution Date” as defined in
that certain Distribution Agreement between Kimberly-Clark and Neenah, dated as
of the date hereof; and

 

                WHEREAS, the parties hereto deem it to be appropriate
and in the best interests of Neenah and Kimberly-Clark that Kimberly-Clark
provide certain services to Neenah to facilitate the transaction described
above on the terms and conditions set forth herein;

 

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

 

                1.             Description
of Kimberly-Clark Services. 
Kimberly-Clark shall, subject to the terms and provisions of this
Agreement:

 

                (a)           provide
Neenah with general services of a financial, technical, commercial,
administrative and/or advisory nature, with respect to the Neenah Business, as
set forth on Exhibit A hereto; and

 

                (b)           assist
Neenah in the efficient transfer of each of the services provided by
Kimberly-Clark under this Agreement to Neenah, including training of the Neenah
personnel primarily responsible for each of the services going forward, or to a
third party designated by Neenah; and

 

                (c)           render
such other specific services as Neenah may from time to time reasonably
request, subject to Kimberly-Clark’s discretion and its being in a position to
supply such 

 

1

 

additional services at
the time of such request.

 

Unless otherwise
specifically provided on Exhibit A, Kimberly-Clark will provide each of
the services until December 31, 2005. 
Neenah may, at its option, upon no less than thirty (30) days prior
written notice (or such other period as the parties may mutually agree in
writing), direct Kimberly-Clark to provide no longer all or any category of
such services.

 

                2.             Consideration
for Kimberly-Clark Services.  Neenah
shall pay Kimberly-Clark in accordance with this Section 2 and
Kimberly-Clark shall accept as consideration for the services rendered to Neenah
hereunder the following service charges:

 

                (a)           for
the services rendered by Kimberly-Clark for or on behalf of Neenah pursuant to
Section 1(a), Neenah will be charged the fees set forth on Exhibit A;

 

                (b)           for
the services rendered by Kimberly-Clark for or on behalf of Neenah pursuant to
Section 1(b) or 1(c), Neenah will be charged certain fees to be negotiated and
agreed to by the parties at the time such services are requested.

 

 

                3.             Terms
of Payment.  Kimberly-Clark shall
submit in writing an invoice covering its charges to Neenah for services
rendered hereunder.  Such invoice shall
be submitted on a monthly basis and shall contain a summary description of the
charges and services rendered.  Payment
shall be made no later than thirty (30) days after the invoice date.

 

                4.             Method
of Payment.  All amounts payable by
Neenah for the services described on Exhibit A shall be remitted to
Kimberly-Clark in United States dollars to a bank to be designated in the
invoice or otherwise in writing by Kimberly-Clark, unless otherwise provided
for and agreed upon in writing by the parties. 
Detailed billing information will be provided upon request.

 

                5.             WARRANTIES.  THIS IS A SERVICE AGREEMENT.  EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT,
THERE ARE NO EXPRESS WARRANTIES OR GUARANTIES AND THERE ARE NO IMPLIED
WARRANTIES OR GUARANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES
OF MERCHANTABILITY, TITLE AND FITNESS FOR A PARTICULAR PURPOSE.

 

                6.             Limitation
on Liability.

 

                (a)  In no
event shall either party have any liability, whether based on contract, tort
(including, without limitation, negligence), warranty or any other legal or
equitable grounds, for any punitive, consequential, special, indirect or
incidental loss or damage suffered by the other party arising from or related
to this Agreement, including without limitation, loss of data, profits
(excluding profits under this Agreement), interest or revenue, or use or
interruption of business, even if such party is advised of the possibility of
such losses or damages.

 

                (b)           The
limitations set forth in Section 6(a) above shall not apply to liabilities
which may arise as the result of (i) willful misconduct or gross negligence of
Kimberly-Clark or its subsidiaries or Neenah or its subsidiaries, (ii) amounts
inadvertently overpaid by either party, or (iii) amounts for charges otherwise
due and payable under this Agreement.

 

2

 

 

                (c)           In
no event will Kimberly-Clark’s liability, whether based on contract, tort (including
without limitation, negligence), warranty or any other legal or equitable
grounds, exceed in the aggregate the amount of fees paid to Kimberly-Clark
under this Agreement.

 

                7.             Termination.  This Agreement shall terminate on January 31,
2006, but may be terminated earlier in accordance with the following:

 

                (a)           upon
the mutual written agreement of the parties;

 

                (b)           by
either Neenah or Kimberly-Clark for material breach of any of the terms hereof
by Kimberly-Clark or Neenah, as the case may be, if the breach is not corrected
within thirty (30) calendar days after written notice of breach is delivered to
the breaching party;

 

                (c)           by
either Neenah or Kimberly-Clark forthwith, upon written notice to
Kimberly-Clark or Neenah, as the case may be, if Kimberly-Clark or Neenah, as
the case may be, shall become insolvent or shall make an assignment for the
benefit of creditors, or shall be placed in receivership, reorganization,
liquidation or bankruptcy;

 

                (d)           by
Kimberly-Clark forthwith, upon written notice to Neenah, if, for any reason,
the ownership or control of Neenah or any of Neenah’s operations, becomes
vested in, or is made subject to the control or direction of, any direct
competitor of Kimberly-Clark’s consumer products, service and industrial or
health care businesses, or any governmental or regulatory authority; or

 

                (e)           by
Neenah forthwith, upon written notice to Kimberly-Clark, if for any
reason, the ownership or control of Kimberly-Clark or any of Kimberly-Clark
‘s operations becomes vested in, or is made subject to the control or direction
of, any direct competitor of Neenah, or any governmental or regulatory
authority.

 

Upon any such
termination, each party shall be compensated for all services performed to the
date of termination in accordance with the provisions of this Agreement.

 

                8.             Performance.  The services rendered by Kimberly-Clark
hereunder shall be performed in the same manner and with the same skill and
care as Kimberly-Clark employs in service of its own business.

 

                9.             Independent
Contractor.  Kimberly-Clark is
providing the services pursuant to this Agreement as an independent contractor
and the parties hereby acknowledge that they do not intend to create a joint
venture, partnership or any other type of agency between them.

 

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

 

                11.           Ownership
of Information .  Any information
owned by one party or any of its subsidiaries that is provided to the other
party or any of its subsidiaries pursuant to this Agreement shall remain the
property of the providing party. Unless specifically set forth herein, 

 

3

 

nothing contained in this
Agreement shall be construed as granting or conferring rights of license or
otherwise in any such information.

 

                12.           Records.  Kimberly-Clark shall maintain and retain
records related to the provision of the services under this Agreement
consistent with Kimberly-Clark’s historical policies regarding its own
retention of records. As needed from time to time during the period in which
services are provided, and upon termination of the provision of any service,
the parties agree to provide each other with records related to the provision
of the services under this Agreement to the extent that (i) such records exist
in the ordinary course of business, (ii) such records do not involve the
incurrence of any material expense to the party providing such records, and
(iii) such records are reasonably necessary for such party to comply with its
obligations under this Agreement or applicable law.

 

                13.           Amendment.  This Agreement may be modified or amended
only by the agreement of the parties hereto in writing, duly executed by the
authorized representatives of each party.

 

                14.           Force
Majeure.  Any delays in or failure of
performance by any party hereto, other than the payment of money, shall not
constitute a default hereunder if and to the extent such delays or failures of
performance are caused by occurrences beyond the reasonable control of such
party, including, but not limited to: 
acts of God or the public enemy; expropriation or confiscation of
facilities; compliance with any order or request of any governmental authority;
acts of war; riots or strikes or other concerted acts of personnel; or any
causes, whether or not of the same class or kind as those specifically named
above, which are not within the reasonable control of such party, and which by
the exercise of reasonable diligence, such party is unable to prevent.

 

                15.           Assignment.  This Agreement shall not be assignable by
either party hereto without the prior written consent of the other party
hereto.  When duly assigned in accordance
with the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the assignee.

 

                16.           Notices.  All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
facsimile transmission or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

 

	
  If to Kimberly-Clark:

  	
   

  	
  Kimberly-Clark
  Corporation

  
	
   

  	
   

  	
  351 Phelps Drive

  
	
   

  	
   

  	
  Irving, Texas
  75038

  
	
   

  	
   

  	
  Attn: General
  Counsel

  
	
   

  	
   

  	
  Facsimile: (214)
  281-1492

  

 

4

 

	
  If to Neenah:

  	
   

  	
  Neenah Paper, Inc.

  
	
   

  	
   

  	
  Preston Ridge III

  
	
   

  	
   

  	
  3460 Preston Ridge Road

  
	
   

  	
   

  	
  Alpharetta, Georgia
  50005

  
	
   

  	
   

  	
  Attn: General Counsel

  
	
   

  	
   

  	
  Fax: (678) 518-3283

  

 

 

                17.           GOVERNING
LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
GEORGIA, U.S.A.

 

5

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date and year first above
written.

 

 

 

	
   

  	
   

  	
  KIMBERLY-CLARK
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark A. Buthman

  
	
   

  	
   

  	
  Mark A. Buthman, Senior
  Vice

  
	
   

  	
   

  	
  President and Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NEENAH PAPER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sean Erwin

  
	
   

  	
   

  	
  Sean Erwin, President
  and

  
	
   

  	
   

  	
  Chief Executive Officer

  
				

 

 

6

 

EXHIBIT A

 

SERVICES TO BE RENDERED
BY KIMBERLY-CLARK

 

 

Management
Information Services 

 

Kimberly-Clark will provide support and services for Neenah business
systems applications and Neenah computer operations at the same service levels
and subject to the same priority ranking system as were provided to the
businesses of Neenah prior to the date of this Agreement (“MIS Services”).  Kimberly-Clark shall provide those services
until January 31, 2006, subject to Neenah’s right to terminate categories of
services pursuant to Section 1 of the Agreement.  Should Neenah require services beyond January
31, 2006, a new agreement defining, cost structure and remaining services to be
provided must be negotiated.

 

Each of Kimberly-Clark and Neenah shall from time to time designate an
individual as the authorized representative for all communications with respect
to MIS Services.

 

The categories of MIS Services and monthly fee schedule for normal and
routine operating assistance, minor maintenance and computer operations are set
forth below.  The monthly charge for
Computer Services Support will be reduced when software and/or hardware
licensing fees are charged directly to Neenah rather than to
Kimberly-Clark.  The charge will be
reduced by the amount that Kimberly-Clark is currently allocating to the Neenah
businesses.

 

 

	
  Business Systems
  Project Charges

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fine Paper

  	
   

  	
  $/Month

  	
   

  
	
  PIMS Maintenance

  	
   

  	
  2,800

  	
   

  
	
  PIMS O/A

  	
   

  	
  1,500

  	
   

  
	
  Payroll/Benefit
  Support

  	
   

  	
  10,400

  	
   

  
	
  Training &
  Doc Consulting

  	
   

  	
  1,000

  	
   

  
	
  Legacy Systems
  Support

  	
   

  	
  9,900

  	
   

  
	
  Purchasing/Stores
  Support

  	
   

  	
  3,800

  	
   

  
	
  Legacy Stores
  Operating Assistance

  	
   

  	
  100

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Technical Paper

  	
   

  	
   

  	
   

  
	
  General Mfg and
  Order Entry Support

  	
   

  	
  13,600

  	
   

  
	
  PIMS Support
  & Identified Projects

  	
   

  	
  4,500

  	
   

  
	
  General
  Maintenance and Staff Support

  	
   

  	
  2,100

  	
   

  
	
  General O/A

  	
   

  	
  3,900

  	
   

  
	
  Payroll/Benefit
  Support

  	
   

  	
  8,000

  	
   

  
	
  Training &
  Doc Consulting

  	
   

  	
  600

  	
   

  
	
  Legacy Systems
  Support

  	
   

  	
  6,500

  	
   

  
	
  Purchasing/Stores
  Support

  	
   

  	
  1,900

  	
   

  
	
  Legacy Stores
  Operating Assistance

  	
   

  	
  100

  	
   

  

 

 

	
  Computer
  Services Support Charges

  	
   

  	
   

  	
   

  
	
  Desktop Services
  and Messaging

  	
   

  	
  97,400

  	
   

  
	
  Connectivity
  Services

  	
   

  	
  67,500

  	
   

  
	
  Voice

  	
   

  	
  41,800

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SAP R/3

  	
   

  	
  30,400

  	
   

  
	
  SAP B/W

  	
   

  	
  13,000

  	
   

  
	
  Mainframe
  Services

  	
   

  	
  52,400

  	
   

  
	
  UNIX Services

  	
   

  	
  23,000

  	
   

  
	
  Windows Services

  	
   

  	
  43,100

  	
   

  
	
  AS/400 Services

  	
   

  	
  25,900

  	
   

  
	
  e-Business

  	
   

  	
  11,900

  	
   

  

 

Notwithstanding Section 1
of the Agreement, Neenah shall give Kimberly Clark no less than ninety (90)
days written notice of any such termination of any of the above services;
provided that K-C will accommodate a shorter notice period and terminate the
service sooner to the extent a particular service so permits at the time of
termination.

 

For all additional services (other than normal operating assistance and
minor maintenance)  including without
limitation, additional project work, systems or application enhancements,
maintenance and changes to systems or applications, support or services to
separate the systems of Neenah and Kimberly-Clark and creation or generation of
current or historical data(“Additional MIS Services”), Neenah will submit to
Kimberly-Clark a written request for the Additional MIS Services, together with
reasonable documentation and specifications to allow Kimberly-Clark to
determine the estimated cost and priority for such Additional MIS
Services.  To the extent that
Kimberly-Clark agrees in its sole discretion to provide the Additional MIS
Services, it will provide to Neenah a written estimate of the cost and priority
for such Additional MIS Services and Neenah shall inform Kimberly-Clark in
writing if Neenah desires to have Kimberly-Clark provide the Additional MIS
Services.

 

Hourly labor rates for K-C staff will be $90 per hour.  Hourly rates for K-C obtained consultants,
contractors or other third parties utilized on Additional Special Projects will
be charged at actual hourly rates, plus any reasonable travel and living
expenses, plus applicable administrative charges.

 

Neenah shall be solely liable for (i) all license fees, charges or
other amounts from any third parties (“Vendor Fees”), including consultants,
contractors, vendors or licensors, incurred as a result of Kimberly-Clark
providing MIS Services or otherwise as a result of utilizing products or
software licensed to Kimberly-Clark and utilized by or on behalf of Neenah,
regardless of whether such products or services are utilized on the systems or
equipment of Kimberly-Clark or Neenah and (ii) all legal or administrative fees
and expenses incurred by Kimberly-Clark in responding to requests for Vendor
Fees.  Kimberly-Clark will notify Neenah
promptly of any Vendor Fees.

 

Notwithstanding anything to the contrary herein (i) all support and
services relating to Kimberly-Clark systems applications or IT infrastructure
shall be performed only by Kimberly-Clark personnel or contractors or
consultants either retained by Kimberly-Clark or approved in advance in writing
by Kimberly-Clark; (ii) MIS Services shall only be provided for hardware or

 

 

other IT infrastructure that is a part of Kimberly-Clark’s
infrastructure road map or technology standards on the date of this Agreement
or that is added by Kimberly-Clark to its infrastructure roadmap or technology
standards after the date of this Agreement; (iii) Kimberly-Clark shall have no
obligation to incur additional expenditures or investments relating to
additional features or functionality for existing systems or applications, it
being understood that in the near future many of the systems or applications in
connection with the delivery of MIS Services may become obsolete or may not be
used or improved by Kimberly-Clark; and (iv) Neenah shall not attach to,
install or otherwise incorporate into the Kimberly-Clark Enterprise Network any
equipment, software, product, infrastructure or other device (A) without the
prior written consent of Kimberly-Clark and (B) that is not fully compatible
with the then existing Kimberly-Clark systems, infrastructure and standards
roadmap.

 

At all times during the term of this Agreement, Neenah shall comply
with Kimberly-Clark’s Corporate Security, Computer Security and Global
Information Technology Standards, as they may be amended or modified by
Kimberly-Clark from time to time during the term of this Agreement.  Neenah acknowledges that it has received a
copy of such Standards as they exist on the date of this Agreement.

 

Kimberly-Clark’s Enterprise Network, systems and other intellectual
property, including any applications, software code, technology, trade secret,
infrastructure, hardware and other products or devices used by Kimberly-Clark
and any enhancements, modifications or additions thereto (whether as a result
of or in connection with this Agreement or otherwise) shall be and remain the
sole and exclusive property of Kimberly-Clark and shall not be deemed works for
hire, and Neenah shall have no right, title or interest therein.  If Neenah desires to have Kimberly-Clark
license or transfer to Neenah any of the same, Kimberly-Clark, in its sole
discretion, may license or transfer the same to Neenah on terms agreed to by
Neenah and Kimberly-Clark, provided that Neenah shall be liable for all costs
and expenses incurred in connection therewith, including any third party
license, transfer and other fees, and all costs and expenses incurred to “uninstall”
and “re-install” the same.   Excluded
from the requirements of this paragraph are systems that were built for and
used primarily by Neenah.

 

 

Employee
Benefits Administration and Payroll Services

 

Payroll Administration: 
Kimberly-Clark will provide payroll administration services to Neenah
with respect to Neenah’s U.S. employees, and such employees will continue to report attendance and absence
information using the system maintained by Kimberly-Clark for such purpose,
until the earlier of (i) the date Neenah arranges for its own payroll
administration services and establishes its
own employee and time collection processes and (ii) December 31, 2005,
at a cost to Neenah of $20,000 per month. 
These costs do include (i) all E-memos, mass wage changes, job title set
ups, relocation gross-ups and other personnel administrative actions needed by
Neenah for the benefit of Transferred Employees, (ii) the preparation of
personnel or management reports through HR Browser, consistent with those
previously provided, as requested by Neenah with turnaround times consistent
with those normally provided by the K-C Payroll Center, and (iii) the
preparation and submission of personnel records to outside providers such as
Cendant Mobility, EquiServe, EAP vendors, or other 3rd party providers as
required by Neenah.  These costs do not
include the systems costs associated with these 

 

 

activities. Systems costs
will be billed according to the Management Information Services portion of this
Agreement.

 

Canadian Payroll Bank
Account:  Kimberly-Clark will continue to use its bank
account at Royal Bank of Canada (“RBC”) on behalf of Neenah to facilitate the
electronic transfer of paychecks to Neenah’s employees.  Neenah will be responsible for funding the
amount to be transferred prior to the distribution of the electronic
paychecks.  Neenah is responsible for
communicating to RBC the correct distribution of the payroll.  This service will be provided at no
additional cost until December 31, 2004.

 

Data Conversions:  Kimberly-Clark shall assist in the conversion
of employee and payroll data to benefit providers, a payroll administrator and
an enterprise system engaged or established by Neenah, including
any related analysis, design and development of interfaces and reports. The
cost to Neenah for these conversion
services shall be $36,000 for payroll team support.  Systems cost related to the development of
interfaces and reports will be billed according to the Management Information
Services portion of this agreement.

 

Group Health and Welfare Plans
Administration:  Neenah
shall use reasonable commercial efforts to contract with Hewitt & Associates
(“Hewitt”) to provide group health and welfare benefits (“GH&WB”)
administrative services to Neenah
through December 31, 2004, at a cost to Neenah equal to the actual cost of such services.  Provided that Neenah enters into such a contract with Hewitt,
Kimberly-Clark will provide services related to the administration of GH&WB
through December 31, 2004 at a cost to Neenah of $5,000 per month.  These
services will include enrollment activities, customer service, and deduction
processing.  To facilitate these
transition services, Kimberly-Clark and Neenah agree to enter into mutual business associate agreements under the
privacy provisions of HIPAA.

 

US Pension Plan.  Neenah shall use
reasonable commercial efforts to contract with Hewitt & Associates (“Hewitt”)
to provide defined benefit administrative services through a date not later
than June 30, 2005, at a cost to Neenah equal to the actual cost of such services.  Neenah will pay Kimberly-Clark from its assets, and not out of any pension plan
assets, a fee in the amount of $500 per month for services to be provided by
Kimberly-Clark relating to the management of the investment structure for the
Kimberly-Clark Corporation Pension Plan for the period beginning with the
Distribution and ending on the date the assets and liabilities of the
Kimberly-Clark Corporation Pension Plan attributable to current employees of Neenah’s U.S. operations (the “Transferred Employees”)
are transferred to the trustee of the corresponding pension plan established by
Neenah (the “Transfer Date”).

 

Kimberly-Clark will be available to provide
consulting services requested by Neenah which
relate to (i) the administration of the defined benefit and defined
contribution plans maintained by Neenah for the benefit of Transferred Employees, at a cost to Neenah of $125 per hour and (ii) after the Transfer
Date, the investment of assets in the defined benefit and defined contribution
plans maintained by Neenah for the
benefit of Transferred Employees, at a cost to Neenah of $200 per hour; provided, however, that
Kimberly-Clark shall have the sole discretion to decline to provide any such
services so requested.

 

Canadian Pension Plans.  Neenah will pay
Kimberly-Clark from its assets, and not out of any pension plan assets, a fee
in the amount of $1,500 per month for services to be provided by

 

 

Kimberly-Clark relating to the management of the
investment structure for the Canadian pension plans for the period beginning
with the Distribution and ending on the date the assets and liabilities are
transferred to the trustee of the corresponding pension plan established by Neenah
(the “Transfer Date”).

 

Kimberly-Clark will be available to provide
consulting services requested by Neenah which
relate to the administration of, and investment of assets in, the defined
benefit and defined contribution plans maintained by Neenah for the benefit of current and former employees
of the Canadian pulp and woodlands operations (the “Canadian Employees”), at a cost to Neenah of $200 per hour.

 

 

Compensation:  Kimberly-Clark
will be available to provide consulting services requested by Neenah until
March 31, 2005 which relate to the administration of various compensation plans
and stock programs maintained by Neenah for the benefit of current transferred
employees at a cost to Neenah of $100 per hour.

 

Relocation: 
Kimberly-Clark will provide relocation and global assignment program
administrative services to Neenah until January 31, 2005 consistent with the
services provided prior to the distribution date.   K-C will provide advice and counsel on
special requests and on arrangements to set up new relocation providers.  The cost of such special services will be $70
per hour.

 

General:

Neenah will reimburse Kimberly-Clark for any
out-of-pocket costs incurred by Kimberly-Clark while providing the employee
benefits administration services, but not the payroll administration services,
described in this section, including but not limited to, costs incurred for
postage, printing and supplies.  

 

International
Employee Services:  Kimberly-Clark agrees to retain Keith Johnson
on the payroll of Kimberly-Clark International Services Corp. through December
31, 2004.  For the period from the
Distribution Date until January 1, 2005 (the “Lease Period”), Neenah agrees to
lease Keith Johnson from Kimberly-Clark for the performance of management
duties in Canada.  During the Lease
Period, Neenah agrees to pay Kimberly-Clark a monthly amount equal to the cost
of Mr. Johnson’s monthly salary, benefits, other fees and other income paid to
him by Kimberly-Clark (except any bonus or other amounts paid to him that are
attributable to a period prior to the Lease Period).  As of January 1, 2005, Neenah intends to hire
Mr. Johnson as an employee.

 

Kimberly-Clark
agrees to retain Peter VanDerBogt on the payroll of Kimberly-Clark Benelux
through December 31, 2004.  For the
period from the Distribution Date until January 1, 2005 (the “Lease Period”),
Neenah agrees to lease Mr. VanDerBogt from Kimberly-Clark for the performance
of duties in Europe.  During the Lease
Period, Neenah agrees to pay Kimberly-Clark a monthly amount equal to the cost
of Mr. Peter VanDerBogt’s monthly salary, benefits other fees, and other income
paid to him by Kimberly-Clark (except any bonus or other amounts paid to him
that are attributable to a period prior to the Lease Period).  As of January 1, 2005, Neenah intends to make
other arrangements to compensate Mr. VanDerBogt for his services.

 

 

Transportation
Services

 

Kimberly-Clark
will provide advice, counsel on freight rate contract renewal negotiation and
assistance during periods of transportation disruption related to inclement
weather, major strike, terror attack, etc., only as may be necessary to
maintain operations at Kimberly-Clark consuming mills.  Such services will cost $2,100 per
month.  Notwithstanding Section 1 of the
Agreement, Neenah shall give Kimberly Clark no less than sixty (60) days
written notice of any such termination.

 

 

Environment
and Energy Services

 

Kimberly-Clark
will provide the following environmental and energy related services:

 

•                  Boiler and related equipment inspections and operational advice;

•                  Energy (electrical and natural gas) rate/purchase assistance, hedging
and contract negotiation;

•                  Fuel and energy cost and consumption report data management;

•                  Thermographic electric surveys;

•                  Performance of Corporate Environmental Inspections at Neenah mills;

•                  Environmental regulatory/technical advice and assistance;

•                  Forestry audits and certification advice and assistance; and

•                  Wastewater testing (tickler, product formulation toxicity and permit
compliance bioassays)

 

All services will
be provided on an as requested basis at a cost of $90 per professional hour
spent plus travel expenses.

 

Treasurer’s
Office Services

 

Kimberly-Clark’s
Treasurer’s Office will provide services to Neenah relating to Cash Management,
Hedging, Debt Management and other treasury-related functions.  The fee for advice and counsel relating to
treasury services will be $200 per hour.  These services will be available for six
months after the Distribution Date.

 

Purchasing
Services

 

Kimberly-Clark
will provide those support services of the type that have been traditionally
provided by it to the Business and which are related to purchasing chemicals,
research materials, trial support, capital projects and the maintenance of the
Purchasing System Information Center and Purchasing Systems.  Fees for these services will be as follows:

 

 

	
  Transaction
  processing for Purchasing System

  	
   

  	
  $

  	
  6,100

  	
  per month

  
	
  Systems support
  for Purchasing System

  	
   

  	
  $

  	
  2,000

  	
  per month

  

 

These services do
not include the renegotiation of and related transactional activity associated
with  establishing contracts for Neenah
that were previously part of Kimberly-Clark’s multiple

 

 

facility
contracts.

 

Kimberly-Clark
shall endeavor, whenever possible, to arrange for the purchase of goods or
services in the name of Neenah, which shall provide Kimberly-Clark with written
authorizations or such other documents as Kimberly-Clark may reasonably require
from time to time in order to provide evidence of Kimberly-Clark’s authority to
act on behalf of Neenah pursuant to this provision.

 

Risk
Management

 

Kimberly-Clark’s
Risk Management Department will provide advice as requested on whether Neenah’s
insurance brokers are properly following through on and assisting with
administration of Neenah insurance coverages. The cost of such services will be
$200 per month.  Such services will be
available until December 31, 2004.

 

Tax
Services

 

Kimberly-Clark
will provide advice and counsel on tax planning issues relating to the
preparation of U.S. federal income and excise tax, and state and local income,
franchise, property and sales tax return. 
Such tax planning services will be provided at a cost of $ 250 per hour
and will be available for 6 months after the Distribution Date.

 

Activities
required by the Tax Sharing Agreement dated the date hereof between
Kimberly-Clark and Neenah are specifically excluded from this hourly charge and
will be provided free of charge under the terms set forth in the Tax Sharing
Agreement.

 

Accounting
Services

 

Kimberly-Clark
will provide the following accounting services to Neenah -US at the identified
costs to Neenah:

 

	
  Service

  	
   

  	
  Cost per Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Centralized Mill
  Accounting — Fine Paper

  	
   

  	
  $

  	
  11,900

  	
   

  
	
  Centralized Mill
  Accounting — Technical Paper

  	
   

  	
  $

  	
  4,700

  	
   

  
	
  Cost Accounting

  	
   

  	
  $

  	
  7,300

  	
   

  
	
  Knoxville AP

  	
   

  	
  $

  	
  10,700

  	
   

  
	
  SYZYGY

  	
   

  	
  $

  	
  16,500

  	
   

  
	
  Property
  Accounting

  	
   

  	
  $

  	
  4,000

  	
   

  
	
  Accounts
  Receivable/Credit

  	
   

  	
  $

  	
  7,900

  	
  * 

  
	
  Financial
  Reporting

  	
   

  	
  $

  	
  10,900

  	
   

  
	
  Corporate
  Accounting Support

  	
   

  	
  $

  	
  500

  	
   

  

 

*Kimberly-Clark
will also bill for the cost of a temporary employee if required to handle
manual accounts receivable transactions for the first 90 days after the
Distribution Date.

 

In order to
simplify the transition of Accounts Payable balances, Kimberly-Clark will pay
from its bank account any outstanding invoices as of the distribution date on
Neenah Paper’s behalf.

 

 

These invoices
will be paid when payments are due. 
Neenah will then reimburse Kimberly-Clark for the payments that
Kimberly-Clark makes on their behalf.

 

Kimberly-Clark will
provide Neenah access to those accounting practices and procedures relevant to
the Sarbanes-Oxley Act for the Accounting Services activities that are
performed by Kimberly-Clark on Neenah’s behalf. 
Kimberly-Clark will provide Neenah and/or Neenah’s auditor access to
transactions in order to perform testing of the systems.  Transaction testing will be conducted by
Neenah at their expense.

 

Additional
accounting project work requested by Neenah will be provided at a cost of $200
per hour.

 

These costs do not
include the systems costs associated with these activities. Systems costs are
addressed in the MIS section of this Agreement.

 

Patent
Services

 

Kimberly-Clark
will provide patent support services to Neenah consistent with the services
provided prior to the Distribution Date.  
Such services of Kimberly-Clark attorneys and paralegals as requested by
Neenah and agreed to by Kimberly-Clark will be provided until March 31, 2005 at
$250 per hour for attorney time and $150 per hour for paralegal time.  If Kimberly-Clark deems it necessary to
outsource patent support during this period, Neenah will pay the costs
associated with the outsourcing.  All
costs of maintaining patents and patent applications, as requested by Neenah,
anywhere in the world, will be charged directly to Neenah.

 

Trademark
Services

 

Kimberly-Clark
will provide trademark services to Neenah, consistent with services provided
prior to the Distribution Date, related to searching, prosecution and
maintenance of trademarks. Such services of Kimberly-Clark attorneys and
paralegals will be provided as requested by Neenah at $250 per hour for
attorney time and $150 per hour for paralegal time.  Neenah will be directly responsible for
trademark conflicts and litigation. All outside fees, such as search fees,
counsel fees and trademark maintenance and prosecution fees as requested by
Neenah, anywhere in the world, will be charged directly to Neenah.

 

Roswell
Technical Support

 

Kimberly-Clark
will provide Analytical Lab support and Product Safety support to Neenah on an
as requested basis at a cost of $ 225 per hour spent plus the cost of any
outside services required. Such services will be provided until December 31,
2004.

 

Tenancy

Neenah will be
provided a month-to-month tenancy in the space which is occupied by the
Business, as of the date hereof, at Kimberly-Clark’s Roswell, Georgia
Operations Headquarters complex.  Rent
and related tenancy charges for the space occupied by the Technical Papers
research team will be $13,600 per month. 
Neenah will provide Kimberly-Clark with at least thirty (30) days’
prior written notice of the specific day in such month that Neenah will vacate

 

 

such
premises.  The related tenancy charges
include charges for all taxes, utilities, and tenant services that are
currently being provided by Kimberly-Clark or third parties on behalf of
Kimberly-Clark (primarily Site Administration and the Health Center),
including, but are not limited to, electricity, maintenance, security,
groundskeeping, mail service, warehouse service and access to cafeteria and
health services.  Neenah will make a good
faith effort to vacate such premises and terminate the tenancy no later than
December 31, 2005.

 

Corporate
Security

 

Kimberly-Clark
will provide corporate security services to Neenah consistent with those
services provided prior to the distribution date.  The cost of such services will be $150 per
hour plus direct expenses associated with pre-employment background reviews and
special investigations.Exhibit 10.2

TAX
SHARING AGREEMENT

 

                This Tax Sharing Agreement (the “Agreement”) is dated
as of November 30, 2004 (the “Distribution Date”), by and between
Kimberly-Clark Corporation, a Delaware corporation (“KCC”), and Neenah Paper,
Inc., a Delaware corporation (“NPI”).

 

                WHEREAS, KCC, through its Neenah Paper and Technical
Paper divisions and through certain Canadian subsidiaries, is engaged in the
business of manufacturing and distributing a range of premium and specialty
paper grades and more than 700,000 metric tons of bleached kraft pulp per year
(the “Business”);

 

                WHEREAS, the Board of Directors of KCC has determined
that it would be advisable and in the best interests of KCC and its
stockholders for KCC to transfer the Business to NPI and to thereafter
distribute all of the outstanding shares of NPI’s common stock on a pro rata
basis to the holders of KCC’s common stock (the “Distribution”) pursuant to an
agreement, dated as of the date hereof, between KCC and NPI (the “Distribution
Agreement”);

 

                WHEREAS, KCC and NPI intend that the contribution of
assets by KCC and certain of its subsidiaries to NPI and certain of its
subsidiaries (the “Contribution”) immediately prior to the Distribution will
qualify as a transfer made pursuant to a reorganization within the meaning of
Section 368(a)(1)(D) of the Code and the Distribution will qualify as a
distribution described in Section 355 of the Code;

 

                WHEREAS, KCC and NPI believe that it is in their
mutual best interests to set forth in this Agreement the rights and duties of
each party with respect to various tax matters relating to NPI and its
subsidiaries and the business which may arise as a result of the Distribution;

 

                NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 

1.                                       Definitions

 

(a)           Applicable Federal Rate. As
used herein, the term “Applicable Federal Rate” means a rate of interest equal
to the Federal Long Term Rate published pursuant to Section 1274(d) of the
Code, compounded annually.

 

(b)           Audit.  As used herein, the term “Audit(s)” shall
mean any audit or examination undertaken by any Tax authority with respect to
Taxes.

 

(c)           Code.  As used herein, the term “Code” means the
United States Internal Revenue Code of 1986, as amended.

 

(d)           Controversy.  As used herein, the term “Controversy(ies)”
shall mean any

 

 

action involving a Tax
authority before any administrative or judicial body which results from a
disagreed Tax adjustment proposed during the course of an Audit.

 

(e)           Final Determination.  As used herein, “Final Determination” means
(i) a decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has become final
and not subject to further appeal or (ii) a closing agreement (whether or not
entered into under Section 7121 or 7122 of the Code) or any other binding
settlement agreement (whether or not with the Internal Revenue Service) entered
into in connection with or in contemplation of an administrative proceeding if
a judicial contest is not or is no longer available.

 

(f)            Incidental Costs.  As used herein, “Incidental Costs” means
reasonable legal fees and costs or expense incurred by a party hereto relating
to the investigation and defense of a claim for Taxes by a Tax authority.

 

(g)           KCC Company.  As used herein, “KCC Company(ies)” shall
mean, for any period, KCC, or an entity that is an affiliate of KCC after the
Distribution Date.  For purposes of the
foregoing, “affiliate” means any entity that directly or indirectly controls,
is controlled by, or is under common control with, KCC. For the purposes of
this definition, the term “control” means the power to direct the management of
an entity, directly or indirectly, whether through the ownership of voting
securities, by contract, or otherwise; and the term “controlled” has the
meaning correlative to the foregoing. 
Notwithstanding the foregoing, for any period, NPI and KCC shall not be
deemed to be under common control for purposes hereof solely due to the fact
that NPI and KCC have (directly or indirectly) common stockholders.

 

(h)           KCC Tainting Act. As used
herein, “KCC Tainting Act” shall mean:

 

                                (i)            any
inaccuracy or breach of any representation, warranty, or covenant that is made
by KCC pursuant to Section 2(a) of this Agreement;

 

                                (ii)           any
action (or failure to take any reasonably available action) by any of the KCC
Companies; or

 

                                (iii)          any
acquisition or other transaction involving KCC’s capital stock (other than the
Distribution).

 

(i)            NPI Company.  As used herein, “NPI Company(ies)” shall
mean, for any period, NPI, or an entity that is an affiliate of NPI after the
Distribution Date.  For purposes of the
foregoing, “affiliate” means any entity that directly or indirectly controls,
is controlled by, or is under common control with, NPI.  For the purposes of this definition, the term
“control” means the power to direct the management of an entity, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the term “controlled” has the meaning correlative to the
foregoing.  Notwithstanding the
foregoing, for any period, NPI and KCC shall not be deemed to be under common
control for purposes

 

 

2

 

hereof solely due to the
fact that NPI and KCC have (directly or indirectly) common stockholders.

 

(j)            NPI Tainting Act. As used
herein, “NPI Tainting Act” shall mean:

 

                                (i)            any
inaccuracy or breach of any representation, warranty, or covenant that is made
by NPI pursuant to Section 2(b) of this Agreement;

 

                                (ii)           any
action (or failure to take any reasonably available action) by any of the NPI
Companies; or

 

                                (iii)          any
acquisition or other transaction involving NPI’s capital stock (other than the
Distribution).

 

(k)           Pre-Distribution Period.  As used herein, “Pre-Distribution Period”
means any taxable year or other taxable period that ends on or before the Distribution
Date and, in the case of a Straddle Period, that portion of the taxable period
ending on the close of the Distribution Date.

 

(l)            Restructuring Taxes. As used
herein, “Restructuring Taxes” means any Taxes imposed and any Incidental Costs
incurred as a result of a Final Determination that the Distribution fails to
qualify as tax-free due to the application of Sections 355(d) or 355(e) of the
Code.

 

(m)          Ruling Request.  As used herein, “Ruling Request” means the
original and supplemental requests or submissions filed by KCC with the
Internal Revenue Service with respect to the Distribution.

 

(n)           Straddle Period.  As used herein, “Straddle Period” means any
taxable year or other tax period for an NPI Company that begins before the
Distribution Date and ends after the Distribution Date.

 

(o)           Tax or Taxes.

 

(i)            As used herein, “Tax” or “Taxes”
shall mean all taxes, however denominated, including any interest, penalties or
other additions that may become payable in respect thereof, imposed by any
governmental entity, or any agency or political subdivision of any such
governmental entity, including, but not limited to, all income or profits taxes
(including but not limited to any U.S. federal income taxes, state and
territorial income taxes and income taxes imposed by any governmental entity
other than the United States, its states, territories and local jurisdictions),
alternative or add on minimum tax, payroll and employee withholding taxes,
unemployment insurance, social security taxes, production taxes, windfall
profits taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise
taxes, customs taxes, gross receipt taxes, business license taxes, occupational
taxes, real and personal property taxes, workers’ compensation, and other
obligations of the same or of a similar

 

3

 

nature to any of the
foregoing.

 

(ii)           The term “Tax” or “Taxes” shall
include any liability imposed under Treas. Reg. §1.1502-6 of the Code (or any
similar provision of state, local or foreign law that imposes liability as a
result of being a member of a consolidated, combined or unitary group) or as a
result of any tax sharing or indemnity agreement.

 

(p)           Tax Return or Return.  As used herein, “Tax Return” or “Return”
shall mean any return, filing, questionnaire, information report, declaration
or estimated tax, or other document required to be filed, including amended
returns and claims for refund that may be filed, for any Tax period with any
Tax authority in connection with any Tax or Taxes (whether or not payment is
required to be made with respect to such filing).

 

2.             Representations and Warranties.

 

(a)           KCC hereby represents and warrants
that: (i) it has examined the Ruling Request and (ii) the facts set forth
therein, and the representations made therein, to the extent such facts and
representations are descriptive of the KCC Companies or the businesses
conducted by them, and the representations made therein regarding the corporate
business purpose for the Distribution and stating that the Distribution is not
used principally as a device for the distribution of the earnings and profits
of KCC or NPI or both, were true, correct and complete in all material respects
on the Distribution Date.

 

(b)           NPI hereby represents and warrants that:
(i) it has examined the Ruling Request and (ii) the facts set forth therein,
and the representations made therein, to the extent descriptive of the NPI
Companies or the Business were, to its knowledge, information and belief, true,
correct and complete in all material respects on the Distribution Date.

 

 

3.                                       Preparation and Filing of
Tax  Returns, Payment of Taxes and Audits
and Controversies.

 

(a)                                  Preparation and Filing of Returns.

 

(i)  The preparation and filing of any Tax Return
for the NPI Companies for a Tax period which ends on or prior to the
Distribution Date shall be the responsibility of KCC.

 

(ii)  The preparation and filing of any Tax Return
for the NPI Companies for a period which ends after the Distribution Date shall
be the responsibility of NPI.  Until the
third anniversary of the Distribution Date, or unless consented to by KCC in
writing (which consent shall not be unreasonably withheld), NPI shall prepare
such Tax Returns in a manner consistent with the past practices and methods
used in preparing the Tax Returns for the Business for periods ending on or
prior to the Distribution Date (unless such practices or methods are no longer
permissible under the Code or any other applicable Tax law).   Said consistency shall include, but not be
limited to, tax depreciation method, tax useful life, tax accounting methods
and other tax elections previously made

 

4

 

by KCC but shall not
prohibit NPI from adopting a method different from that utilized by KCC for
determining its inventory. 
Notwithstanding the foregoing, NPI is free to take Tax positions on its
Tax Returns, unless such positions might reasonably affect the Tax liability of
KCC for any Pre-Distribution Period.  The
parties shall cooperate in accordance with Section 6 below for purposes of
determining whether a KCC Tax position would be compromised by positions taken
by NPI on a Tax Return that NPI has responsibility for preparing and filing.

 

(iii)  NPI shall prepare and deliver to KCC by overnight
mail to KCC any Straddle Period Tax Return for KCC’s review no later than
twenty (20) days prior to the due date or extended due date for filing such
Straddle Period Tax Return.   KCC shall
provide any comments or objections to the draft Straddle Period Tax Return to
NPI no later than fifteen (15) days prior to the due date or extended due date
for filing such return.  If KCC disagrees
with any material item to be reported or reflected in such Tax Return, such
dispute shall be resolved as provided for under Section 7.

 

(iv)  NPI and KCC shall cooperate fully with
respect to the preparation and filing of any Tax Return hereunder, and each
shall promptly make available to the other, upon reasonable request, such
records, documents, information and other available data within each company’s
possession or control which is pertinent to such Return.

 

(v) All reasonable costs
and expenses incurred in preparing and filing such Straddle Period Tax Returns
shall be paid by NPI; provided, however, that KCC shall reimburse
NPI for the portion of such costs that are apportioned to the Pre-Distribution
Period.  Such costs will be apportioned
to the Pre-Distribution Period by multiplying the total amount of such costs by
a fraction, the numerator of which is the number of days in the period covered
by the Tax Return falling within the Pre-Distribution Period and the
denominator of which is the total number of days in the period covered by the
Tax Return.

 

(vi)  If for any taxable year beginning on or after
the Distribution Date, the NPI Companies recognize a net operating loss or a
net capital loss which any member of the NPI Companies, under applicable law,
is permitted or required to carry back to a prior taxable year of KCC or a KCC
Company, then, KCC (or a KCC Company) shall, at NPI’s sole cost and expense,
file appropriate refund claims within a reasonable period after being requested
to do so by NPI.  KCC (or the KCC Company
receiving such refund) shall promptly remit to NPI any refunds it receives with
respect to any such net operating loss or net capital loss carried back.  Notwithstanding the foregoing, a loss that is
permitted, but not required, to be carried back, shall only be carried back
with the prior written consent of KCC (which consent may be given or denied in
the sole discretion of KCC).

 

(b)                                 Liability for Taxes.

 

(i)            KCC shall be liable for and shall
make payment of any Tax on account of the NPI Companies for any period ending
on or prior to the Distribution Date. 
Except as otherwise provided in Section 3(a)(vi) of this Agreement, KCC
shall be entitled to receive any  refund
of such Taxes for any such Tax periods. 
All reasonable costs and expenses incurred in

 

5

 

preparing and filing the
Tax Returns reporting such Tax shall be paid by KCC.  Refunds of Taxes paid by KCC, if any,
received by NPI shall be remitted to KCC within thirty (30) days following
receipt.  KCC shall indemnify and hold
harmless NPI for the Taxes described in this Section 3(b)(i).

 

(ii)           NPI shall be liable for and shall
make payment of any Tax on account of the NPI Companies for any period
beginning after the Distribution Date. 
NPI shall be entitled to receive any refund of such Taxes for any such Tax
periods.  Refunds of Taxes paid by NPI,
if any, received by KCC shall be remitted to NPI within thirty (30) days
following receipt.  NPI shall indemnify
and hold harmless KCC for the Taxes described in this Section 3(b)(ii).

 

(iii)          NPI shall file all Straddle Period Tax
Returns and pay any Tax shown as due and owing thereon.  In the case of any Straddle Period, KCC and
NPI will elect, to the extent permitted under applicable law, to treat the
Distribution Date as the last day of the taxable period of the relevant entity
and the liability for Taxes shall be apportioned to the Pre-Distribution Period
based on the “closing of the books” method described in Treas. Reg.
§1.1502-76(b)(2)(i) or any similar provision of state, local or foreign
law.  In any case where applicable law
does not permit the parties to treat the Distribution Date as the last day of
the taxable year or period, any Taxes arising out of or relating to a Straddle
Period will be apportioned to the Pre-Distribution Period based on a closing of
the books of the relevant entity; provided, however, that (a)
exemptions, allowances or deductions that are calculated on an annualized basis
(including depreciation, amortization and depletion deductions) will be
apportioned on a daily pro rata basis and (b) solely for purposes of
determining the marginal tax rate applicable to income during such period in a
jurisdiction in which such tax rate depends upon the level of income,
annualized income will be taken into account. 
Notwithstanding the foregoing, Taxes imposed on a periodic basis (e.g., property taxes) will be apportioned to the
Pre-Distribution Period by multiplying the Taxes by a fraction, the numerator
of which is the number of days in the period falling within the
Pre-Distribution Period and the denominator of which is the total number of
days in the period upon which the Tax is imposed.  KCC shall indemnify NPI for those Taxes that
are apportioned to the Pre-Distribution Period, and shall be entitled to any
refunds thereof.  NPI shall pay the Tax
due on all Straddle Period Tax Returns, but will be entitled to receive any
refund of those Taxes to the extent they are not owed to KCC.

 

(iv)          With respect to any
Straddle Period Tax Returns to be filed by NPI after the Distribution Date
pursuant to Section 3(a)(iii) of this Agreement, NPI shall provide KCC with a
written request showing in reasonable detail the calculation of the amount of
KCC’s Taxes (and any other amounts) owing by KCC to NPI pursuant to this
Agreement 30 days prior to the due date for filing the Return.  KCC shall provide its comments to NPI and
shall pay to NPI any amount not in dispute at least 15 days prior to the due
date for filing the Return.  In the event
that KCC disagrees with a position taken on the Return, the parties shall
resolve their dispute in accordance with Section 7 of this Agreement; provided,
however, that any matter in dispute 10 days prior to filing the Return
shall be submitted to a third party in accordance with Section 7 of this
Agreement for resolution before the due date of the Return.

 

(v)           Notwithstanding the
foregoing, and notwithstanding anything in Sections 8 and 9 of this Agreement,
to the contrary:

 

6

 

(A)          KCC shall be liable
for Restructuring Taxes imposed solely as a result of a KCC Tainting Act;

 

(B)           NPI shall be liable
for Restructuring Taxes imposed solely as a result of an NPI Tainting Act; and

 

(C)           KCC
and NPI shall each bear 50% of the liability for Restructuring Taxes in the
event there is both a KCC Tainting Act and an NPI Tainting Act.

 

(c)           Tax Consequences
of Payments.  To the extent permitted
by applicable law, the parties hereto shall treat any payment made pursuant to
this Agreement as a capital contribution or a distribution, as the case may be,
immediately prior to the Distribution Date and, accordingly, as not includible
in the taxable income of the recipient. 
Notwithstanding the immediately preceding sentence, if any such payment
(or portion thereof) causes, directly or indirectly, an increase in the taxable
income of the recipient (or one of its subsidiaries) the payor’s payment
obligation (or portion thereof) shall be grossed up to take into account the
additional Tax owed by the recipient (or any of its subsidiaries), assuming the
highest aggregate marginal statutory federal, state, local or foreign Tax rates
in effect at the time of payment.

 

(d)                                 Audits and Controversies.

 

(i)            All Audits with respect to Taxes for
taxable periods ending on or before the Distribution Date shall be under the
exclusive control and direction of KCC.

 

(ii)           Except as provided in Section
3(d)(iii) of this Agreement, all Audits, with respect to Taxes for a taxable
period of an NPI Company which begins after the Distribution Date, shall be
under the exclusive control and direction of NPI.

 

(iii)          With respect to Straddle Periods:

 

(A)          NPI shall notify KCC of any such Audit
and shall provide KCC with all material information concerning such Audits as
it may affect KCC within thirty (30) days after such information becomes known
to NPI; and

 

(B)           No proposed resolution between the
appropriate Tax authority and NPI of any Audit adjustment relating to such
Taxes shall be accepted by NPI unless NPI shall have first notified KCC, in
writing, of such proposed resolution if the proposed resolution could affect
KCC’s indemnification obligations under this Agreement.  KCC shall then have thirty (30) days from the
date of receipt of notice to object to the resolution in writing and to provide
NPI with any additional support or proof with respect to its portion of such
adjustment or be bound by the adjustment as agreed to by NPI.  In the event KCC shall so object, and NPI
agrees, which agreement shall not be unreasonably withheld, that such
additional support and proof is relevant to the Audit adjustment, NPI will use
all reasonable efforts to resolve such Audit adjustment with the Tax authority
giving due regard to such additional support or proof.

 

7

 

(iv)          Notwithstanding the foregoing, if the
United States taxing authorities assert on Audit of a KCC Tax Return that a Tax
is due with respect to the Distribution for which NPI may be obligated to
indemnify KCC pursuant to this Agreement, KCC shall notify NPI of any such
Audit and shall provide NPI with all material information concerning such Audit
as it may affect NPI within thirty (30) days after such information becomes
known to KCC.  The party that is liable
for such Tax with respect to the Distribution and acknowledges such liability
in writing shall control the Audit or the Controversy to the extent it relates
to such Tax.  In the event that neither
party acknowledges its liability in writing or in the event that both parties
are liable for the aforementioned Tax, KCC shall control the Audit or
Controversy; provided, however, that KCC shall: (i) take
reasonable steps to ensure that NPI is notified of any developments in the
Audit or Controversy to the extent it relates to such Tax, (ii) provide NPI
with copies of any written materials relating to such Audit or Controversy as
far as it relates to such Tax, (iii) consult with NPI and offer NPI a
reasonable opportunity to comment before submitting any written materials to
any Tax authority in connection with such Audit or Controversy to the extent it
relates to such Tax, and (iv) defend (or settle) such Audit or Controversy in
good faith.

 

(e)           Termination of Tax Sharing
Agreements.  Except as set forth in
this Agreement or the Distribution Agreement, and in consideration for the
mutual indemnities and other obligations of this Agreement, any and all Tax
sharing agreements between any of the KCC Companies, on the one hand, and the
NPI Companies, on the other hand, shall be terminated as of the Distribution
Date.

 

4.                                       Certain Tax Adjustments.

 

Notwithstanding anything
herein to the contrary, the parties recognize that during the course of an
Audit or Controversy certain adverse Tax adjustments imposed on KCC or NPI, in
any Tax period, may have an unintended beneficial effect with respect to NPI or
KCC, respectively, in the same or another Tax period.  Accordingly, the parties agree it is
appropriate to provide for the following:

 

(a)           KCC’s Tax Detriment.  If, during any twelve month period which ends
on December 31, as a result of one or more Audit(s) or Controversy(ies), additional
Taxes in excess of $50,000 are imposed upon KCC with respect to any Tax period
(a “Tax Detriment”) which causes less Tax to be incurred by NPI in any Tax
period for which NPI is liable under this Agreement which has not been closed
(a “Tax Benefit”), whether preceding or subsequent to or concurrent with the
Tax period in which KCC suffers the Tax Detriment, NPI shall pay to KCC, upon
thirty (30) days written notice and demand, in U.S. currency and subject to the
proviso set forth below, an amount equal to the value of such Tax Benefit,
based on the following assumptions:

 

(i)            NPI will have sufficient income to
use such Tax Benefit in the earliest open Tax period or periods it otherwise
would be entitled to use such Tax Benefit whether or not NPI does in fact have
such income;

 

(ii)           the applicable Tax rates for NPI will
equal the highest statutory 

 

8

 

marginal Tax rates in
effect for the Tax period in which the additional Taxes were imposed upon KCC;
and

 

(iii)          any such Tax Benefit to NPI, if for a
Tax period subsequent to the date of demand by KCC, shall be discounted back to
the date of payment using a discount rate equal to the Applicable Federal Rate,
compounded annually, as in effect at the date of such demand by KCC; provided,
however, NPI shall have the right to elect to defer the payment of such
Tax Benefit to KCC until the earliest Tax period or periods (“KCC’s Tax Benefit
Period”) in which KCC could have used such Tax Benefit had KCC not distributed
NPI to its shareholders.  Such election
by NPI shall be in writing and transmitted to KCC within thirty (30) days
following written notice and demand from KCC for such payment.  Payment shall be made on or before April 15
of the year following KCC’s Tax Benefit Period.

 

(b)           NPI’s Tax Detriment.  If, during any twelve month period which ends
on December 31, as a result of one or more Audit(s) or Controversy(ies), NPI
suffers a Tax Detriment in excess of $50,000 with respect to any Tax period
which provides KCC with a Tax Benefit in any Tax period which has not been
closed, whether preceding or subsequent to or concurrent with the Tax period in
which NPI suffers the Tax Detriment, KCC shall pay to NPI, upon thirty (30)
days written notice and demand, in U.S. currency and subject to the proviso set
forth below, an amount equal to the value of such Tax Benefit, based on the
following assumptions:

 

(i)            KCC will have sufficient income to
use such Tax Benefit in the earliest open Tax period or periods it otherwise
would be entitled to such Tax Benefit whether or not KCC does in fact have such
income;

 

(ii)           the applicable Tax rates for KCC will
equal the highest statutory marginal Tax rates in effect for the Tax period in
which the additional Taxes were imposed upon NPI; and

 

(iii)          any such Tax Benefit to KCC, if for a
Tax period subsequent to the date of demand by NPI, shall be discounted back to
the date of payment using a discount rate equal to the Applicable Federal Rate,
compounded annually, as in effect at the date of such demand by NPI; provided,
however, KCC shall have the right to elect to defer the payment of such Tax
Benefit to NPI until the earliest Tax period or periods (“NPI’s Tax Benefit
Period”) in which NPI suffered such Tax Detriment.  Such election by KCC shall be in writing and
transmitted to NPI within thirty (30) days following written notice and demand
from NPI for such payment.  Payment shall
be made on or before April 15 of the year following NPI’s Tax Benefit Period.

 

5.             Tax Attributes.

 

Any Tax attribute generated by the NPI Companies shall, to the extent
permitted by the applicable law of the Tax jurisdiction in question, remain
with the NPI Companies.  In any case
where the applicable law of the Tax jurisdiction in question requires such Tax
attribute to be allocated between KCC and NPI, such allocation shall be made as
provided by the law of such jurisdiction.

 

9

 

                6.             Cooperation
between Parties.

 

The parties to this
Agreement recognize that cooperation must be undertaken by them in numerous
circumstances involving Tax matters, including the preparation of Tax Returns,
the filing thereof, the defense of Audits, prosecution of Controversies with
Tax authorities before administrative or judicial bodies, Tax rulings regarding
the Tax consequences of certain transactions from appropriate Tax authorities,
including the Internal Revenue Service, and other efforts with respect to Tax
consequences involving the mutual interests of KCC and NPI, including administrative
and legislative matters.  Accordingly,
the parties hereby agree that they will cooperate with one another with respect
to the following:

 

(a)           Requests for Information.  Upon request, a party shall assist the other
party with respect to books, records, information, documents and any other
appropriate data reasonably requested by one party in writing to the
other.  Response to such request shall be
accomplished within a reasonable period of time, but in no event more than
thirty (30) days after receipt of such request unless unusual or special
circumstances exist for such delay.

 

(b)           Availability of Personnel.  The representatives of one party shall be
available to collect and interpret books, records, information, documents and
other appropriate data at the reasonable request of the other party.  The personnel of one party shall also be
reasonably available to assist the other party with respect to Audits and
Controversies.  Response to such request
for personnel assistance shall be accomplished within a reasonable period of
time, but in no event more than thirty (30) days after receipt of such request
unless unusual or special circumstances exist for such delay.

 

(c)           Notification of Adjustments.  Notwithstanding the materiality of an item or
whether the other party participates in an Audit, written notification of any
adjustment in a Tax Return of the party responsible for an Audit, which adjusts
an item which affects the other party, shall be furnished to the other party
upon final resolution of the Audit.

 

(d)           Retention of Records.  Unless an original is specifically requested
in writing and in good faith, KCC shall transfer to NPI copies of all books,
records, information, documents and any other appropriate data with respect to
Taxes which may affect NPI in subsequent Tax periods.  NPI shall retain, in a readily accessible
location, all books, records, information, documents, and any other appropriate
data which relate to Taxes that may affect KCC for any Tax period for as long
as KCC may be subject to assessment for Tax for any such Tax period for which
it may be liable under this Agreement, unless NPI shall have first obtained the
written consent of KCC to destroy any such books, records, information,
documents and other appropriate data. 
KCC will notify NPI of any Tax period for which it is no longer subject
to assessment, within a reasonable period of time after the statute of
limitation and any extensions thereof for the Tax period have lapsed.

 

10

 

                7.             Disputes.

 

                If the parties disagree as to the interpretation of
any Tax provision or the requirements of any Tax law, the parties shall attempt
in good faith to resolve such dispute. 
If such dispute is not resolved within thirty (30) days, the parties
shall jointly retain the services of a nationally recognized accounting or law
firm (“Arbitrator”) acceptable to each of the parties to resolve the
dispute.  The fees of the Arbitrator
shall be borne equally by the parties having the dispute, and the decision of
the Arbitrator shall be final and binding on all parties involved.  Following the decision of the Arbitrator, the
parties shall each take or cause to be taken any action that is necessary or
appropriate to implement such decision of the Arbitrator, including, without
limitation, the prompt payment of Taxes as directed by the Arbitrator.

 

                8.             NPI’s Assurances
with Respect to Certain Undertakings.

 

                NPI covenants as
follows:

 

(a)           Restrictions on Transfer.  NPI shall not transfer its business operations
or transfer any subsidiary to any related or unrelated party until the earliest
of the first to occur:

 

(i)  the second anniversary of the Distribution
Date;

 

(ii)  a favorable ruling from the Internal Revenue
Service to the effect that such transfer will not adversely affect the tax free
nature of the Distribution;

 

(iii)  the receipt of a written consent from KCC
with respect to such transfer, which consent shall not be unreasonably
withheld; or

 

(iv)  an opinion of tax counsel chosen by KCC and paid
for by NPI to the effect that such transfer will not adversely affect the
tax-free nature of the Distribution.

 

(b)           No Inconsistent Actions.  Until the second anniversary of the
Distribution Date, NPI, and its subsidiaries and affiliates, shall take no
action inconsistent with Sections 351, 355 and 368(a)(1)(D) of the Code and the
Regulations thereunder which is ultimately held to cause the formation of NPI,
the contribution of KCC assets to NPI, or the Distribution to be a taxable
transaction; provided, however, to the extent Sections 8(a)(ii),
(iii) or (iv) of this Agreement has been complied with, this covenant shall not
have been breached.

 

(c)           Breach of Covenants.  NPI shall indemnify KCC against, the full
amount of any Taxes and Incidental Costs (on an after-Tax basis assuming the
highest aggregate marginal statutory federal and state Tax rates in effect at
the time of payment of such damages) suffered as a result of any breach by NPI
of any of the covenants set forth in Section 8(a) or (b) of this Agreement.

 

                9.             Mutual 
Assurances with Respect to Certain Undertakings.

 

                                (a)           NPI
shall indemnify KCC against the full amount of any Taxes and Incidental

 

11

 

Costs (on an after-Tax
basis assuming the highest aggregate marginal statutory federal and state Tax
rates in effect at the time of payment of such damages) suffered as a result of
any breach by NPI of any representation made by NPI in connection with any Tax
opinion provided by Baker & McKenzie with respect to the qualification of
the Distribution as a distribution described in Section 355 of the Code.

 

                                (b)           KCC
shall indemnify NPI against the full amount of any Taxes and Incidental Costs
(on an after-Tax basis assuming the highest aggregate marginal statutory
federal and state Tax rates in effect at the time of payment of such damages)
suffered as a result of any breach by KCC of any representation made by KCC in
connection with any Tax opinion provided by Baker & McKenzie with respect
to the qualification of the Distribution as a distribution described in Section
355 of the Code.

 

10.           Representation as to Present Intention.

 

NPI represents to KCC
that neither it nor any of its officers or directors is aware of any
negotiations or intentions to sell or otherwise dispose of all or substantially
all of NPI’s assets or business operations (including any subsidiary or the
assets or business operations thereof) in a transaction or series of
transactions which would give rise to a gain or loss for Tax purposes.  In the event of a breach of such
representation by NPI, NPI shall indemnify KCC against, the full amount of
damages suffered as a result of such breach on an after-Tax basis (assuming the
highest aggregate marginal statutory federal and state Tax rates in effect at
the time of payment of such damages).

 

11.           Binding Effect.

 

(a)           Due Authorization.  KCC and NPI acknowledge and agree that
certain rights and obligations are imposed by this Agreement on their
respective foreign subsidiaries and affiliates which are not direct parties to
this Agreement.  KCC and NPI therefore
respectively represent and warrant that they are each:

 

(i)            duly authorized to act on behalf of
their respective subsidiaries and affiliates for all purposes under this
Agreement;

 

(ii)           responsible for the rights and
obligations of their respective subsidiaries and affiliates under this
Agreement; and

 

(iii)          fully liable for any and all amounts
due from their respective subsidiaries and affiliates which may arise under
this Agreement.

 

(b)           Binding Effect.  This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.

 

(c)           Governing Law.  This Agreement shall be interpreted under and
pursuant to the laws of the State of Delaware.

 

12

 

12.           Notices.

 

All notices, approvals,
consents, or other communications required to be given pursuant to this
Agreement shall be addressed to the parties as follows:

 

	
   

  	
  If to KCC:

  	
  Kimberly-Clark
  Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Riverview Plaza

  	
   

  
	
   

  	
   

  	
  Post Office Box 349

  	
   

  
	
   

  	
   

  	
  Neenah, WI 54957-0349

  	
   

  
	
   

  	
   

  	
  ATTN: Dave Bernard

  	
   

  
	
   

  	
   

  	
  Vice-President -
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  351 Phelps Drive

  	
   

  
	
   

  	
   

  	
  Irving, TX 75039

  	
   

  
	
   

  	
   

  	
  ATTN: General Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to NPI:

  	
  Neenah Paper, Inc.

  	
   

  
	
   

  	
   

  	
  Preston Ridge III

  	
   

  
	
   

  	
   

  	
  3460 Preston
  Ridge Road, Suite 600

  	
   

  
	
   

  	
   

  	
  Alpharetta, GA
  30005

  	
   

  
	
   

  	
   

  	
  ATTN: General Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Preston Ridge III

  	
   

  
	
   

  	
   

  	
  3460 Preston Ridge
  Road, Suite 600

  	
   

  
	
   

  	
   

  	
  Alpharetta, GA 30005

  	
   

  
	
   

  	
   

  	
  ATTN: John Herson,
  Vice-President - Taxes

  	
   

  

 

                All notices, approvals, consents, or other
communications shall be in writing and shall be sent first class mail, postage
prepaid, return receipt requested, unless otherwise specified herein.  All consents by KCC shall be given only by
KCC’s senior tax officer.

 

                13.           Miscellaneous.

 

(a)           Entire Agreement.  This Agreement constitutes the entire
agreement of the parties concerning the subject matter hereof and supersedes
all other agreements, whether or not written, in respect of any Tax between or
among the KCC Companies, on the one hand, or the NPI Companies, on the other
hand.  All such agreements are hereby
cancelled and any rights or obligations existing thereunder are hereby fully
and finally settled without any payment by any party thereto.

 

(b)           Amendments.  This Agreement may not be amended except by
an agreement in 

 

13

 

writing, signed by the
parties hereto.

 

(c)           Transfer Taxes.  Notwithstanding anything in this Agreement to
the contrary, the Distribution Agreement shall govern liabilities related to
sales, transfer, use or other taxes payable in connection with the transfer of
assets contemplated by the Distribution Agreement.

 

                (d)           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.  The Agreement may be delivered by facsimile
transmission of a signed copy thereof.

 

                (e)           Assignment.  This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.  Except with respect to a merger of a party,
neither this Agreement nor any of the rights or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the other
parties, which consent shall not be unreasonably withheld or delayed; provided,
however, that KCC and NPI may assign their respective rights, interests,
duties liabilities and obligations under this Agreement to any other KCC
Company, or NPI Company, respectively, but such assignment shall not relieve
KCC or NPI of its obligations hereunder.

 

                (f)            Severability.  Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. 
Any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

 

14

 

                IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be effective as of the date first above written.

 

 

 

	
  KIMBERLY-CLARK
  CORPORATION

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mark A. Buthman

  
	
   

  	
   

  
	
  Name:

  	
  Mark A. Buthman

  
	
   

  	
   

  
	
  Title:

  	
  Senior Vice President
  and Chief

  
	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  NEENAH PAPER, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Sean T. Erwin

  
	
   

  	
   

  
	
  Name:

  	
  Sean T. Erwin

  
	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  

 

15

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