Document:

Unassociated Document

     

    AMENDED AND RESTATED
ADDENDUM TO FINE PAPERS SUPPLY AGREEMENT

     

    
      	
               
      

            	
              This
      Addendum, originally effective as of April 1, 1998 and as amended and
      restated effective July 1, 2000, by and between Philip Morris
      Incorporated, a Virginia corporation with offices at 3601 Commerce Road,
      Richmond, Virginia 23234, doing business as Philip Morris U.S.A. ("Philip
      Morris"), and Schweitzer-Mauduit International, Inc., a Delaware
      corporation with offices at 100 North Point Center, Alpharetta, Georgia
      30022 ("SWM"), amends and supplements the Fine Papers Supply Agreement
      between the same parties.  The provisions of the Agreement, as
      amended and supplemented by this Addendum, shall be applicable to and
      govern Direct Purchases and Indirect Purchases of Banded Cigarette Papers
      hereunder.  Except as expressly amended or superseded herein,
      the terms and conditions of the Agreement shall continue in full force and
      effect. This Addendum is an Implementation Agreement, as that term is
      defined in Article I.AC of the
Agreement.

            

    

     

    RECITALS

     

    
      	
              1.

            	
              Philip
      Morris and SWM are parties to a certain Fine Papers Supply Agreement,
      originally effective January 1, 1993, which has been amended on several
      occasions and was most recently amended and restated, effective April 1,
      1998 (the "Agreement") and executed prior to this
      Addendum.  Philip Morris and SWM have executed a second amended
      and restated agreement that will become effective July 1, 2000 and upon
      its effectiveness, such second restatement will hereafter be deemed the
      “Agreement’ for all purposes
herein.

            

    

    

    
      	
              2.

            	
              Philip
      Morris and SWM are also parties to a certain agreement, effective November
      13, 1992, to develop the equipment, processes and know-how required to
      manufacture Banded Cigarette Papers (as defined in Article 1.5
      below).

            

    

     

    
      	
              3.

            	
              Philip
      Morris may, under the circumstances described in this Addendum, elect to
      purchase Banded Cigarette Papers from SWM, but in order to manufacture
      Banded Cigarette Papers for sale to Philip Morris and, potentially, other
      customers, SWM must upgrade and modify its equipment and processes at
      SWM's paper manufacturing facility in Spotswood, New Jersey (the
      "Mill").

            

    

     

    
      	
              4.

            	
              To
      induce SWM to make upgrades and modifications at the Mill to produce this
      new product, heretofore not marketed, and to undertake other measures to
      improve SWM's capability to produce current products at the Mill, Philip
      Morris has agreed to make advance payments to SWM in accordance with the
      terms of this Addendum against Philip Morris's future purchases of Banded
      Cigarette Papers and other Cigarette Papers from
  SWM.

            

    
 

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              5.

            	
              Philip
      Morris and SWM also desire that the Agreement be amended and supplemented
      to incorporate special provisions for the purchase by Philip Morris, and
      the sale by SWM, of Banded Cigarette
Papers.

            

    

     

    NOW  THEREFORE,
the Parties agree as follows:

     

    
      ARTICLE 1 -
DEFINITIONS

    

     

    Capitalized
terms not defined herein shall have the definition provided in the
Agreement.

     

    
      	
               
      

            	
              1.1

            	
              Advanced
      Payments — the payments to be made by Philip Morris to SWM as described in
      Article 4.1.

            

    

     

    
      	
               
      

            	
              1.2

            	
              Aggregate Post Conversion
      Practical Production Capacity — as defined in Exhibit G
      hereto.

            

    

     

    
      	
               
      

            	
              1.3

            	
              Aggregate Practical Production
      Capacity — as defined in Exhibit O
  hereto.

            

    

     

    
      	
               
      

            	
              1.4

            	
              Agreement or Fine Papers Supply
      Agreement — that certain amended and restated agreement between the
      Parties, effective July 1, 2000, under which Philip Morris has agreed to
      purchase, accept and pay for, and SWM has agreed to manufacture, sell and
      deliver, Fine Papers.  As used herein, the term also includes
      future amendments to such
agreement.

            

    

     

    
      	
               
      

            	
              1.5

            	
              Banded Cigarette Papers
      — the various Grades of a Group of Cigarette Papers for use in forming
      Cigarette rods having integrated cellulosic bands that encircle the
      finished Cigarette rod to modify the mass burn rate of the
      Cigarette.  This Group is limited to Cigarette Papers whose
      bands are applied to the paper using a process that incorporates a moving
      orifice device (the "MOD Process").

            

    

     

    
      	
               
      

            	
              1.6

            	
              Change of Management
      Control — a purchase by a cigarette manufacturing company or an
      Affiliate thereof of (a) any or all of SWM's Cigarette Paper manufacturing
      assets at the Mill, (b) more than [*****] of SWM's voting stock, or (c)
      [*****]or more of SWM's voting stock and, as a result of such stock
      purchase, [*****]

            

    

     

    
      	
               
      

            	
              1.7

            	
              Conversion Period — that
      period commencing with the date Philip Morris issues the Notice to Proceed
      and ending with the date identified in the Conversion Schedule as the date
      by which the last of the Paper Machines to be converted to Banded
      Cigarette Papers production hereunder will be qualified to produce Banded
      Cigarette Papers.

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              1.8

            	
              Conversion Schedule — as
      defined in Article 2.10.

            

    

     

    
      	
               
      

            	
              1.9

            	
              Direct Purchase
      Requirements — has the same meaning as Buyer's Direct Purchase
      Requirements in the Agreement.

            

    

     

    
      	
               
      

            	
              1.10

            	
              EDR — that certain
      engineering design report detailing the Parties' implementation strategy
      for the manufacture of Banded Cigarette Papers at the Mill, dated April
      1997.  As used herein, the term includes (1) the amendments and
      updates to such report described by the letter agreement that is attached
      hereto as Exhibit A and (2) any subsequent updates that may be agreed upon
      in writing by the Parties (see, e.g., Article
      2.3.2).

            

    

     

    
      	
               
      

            	
              1.11

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.12

            	
              [*****] — the amount, if
      any, by which the [*****] exceeds
      the [*****].

            

    

     

    
      	
               
      

            	
              1.13

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.14

            	
              Final Completion — shall
      occur when (a) the Work is completed in accordance with the Project
      Documents (including any testing and trials) to the extent that each of
      the Paper Machines to be converted to Banded Cigarette Papers production
      is ready for Qualification by Philip Morris, (b) all supporting
      documentation, drawings and manuals identified as deliverables in the
      Project Documents are delivered and Philip Morris has acknowledged that
      such documents conform to the requirements of the Project Documents, and
      (c) SWM has provided notices to Philip Morris that each of the Paper
      Machines to be converted to Banded Cigarette Papers production (other than
      any to which a change in the scope of the Work may be applicable) is
      complete and ready for
Qualification.

            

    

     

    
      	
               
      

            	
              1.15

            	
              Final Completion Date —
      the earlier to occur of (a) the date on which SWM provides Philip Morris
      notice of Final Completion and (b) six months after the day on which the
      last of the Paper Machines that is to be converted to Banded Cigarette
      Paper Production is removed from production for the Work required to
      prepare it for Banded Cigarette Paper
  production.

            

    

     

    
      	
               
      

            	
              1.16

            	
              First Machine Completion
      — shall occur when (a) the Work associated with the first of the Paper
      Machines is completed in accordance with the Project Documents to the
      extent that such machine is ready for Qualification to manufacture
      conventional Cigarette Papers (i.e., Cigarette
      Papers other than Banded Cigarette Papers) by Philip Morris and (b) SWM
      provides notice to Philip Morris of such completion and
      readiness.

            

    

     

    
      	
               
      

            	
              1.17

            	
              First Machine Completion
      Date — the date when SWM provides Philip Morris notice of First
      Machine Completion.

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              1.18

            	
              First Machine Down Date
      — the day on which the first Paper Machine is removed from production for
      the Work required to prepare it for Banded Cigarette Papers
      production.

            

    

     

    
      	
               
      

            	
              1.19

            	
              First Sale Date — the
      date after First Machine Completion Date that Philip Morris first makes a
      Direct Purchase or Indirect Purchase of one or more Bobbins of Banded
      Cigarette Papers.

            

    

     

    
      	
               
      

            	
              1.20

            	
              Guaranteed
      Sales Period — the period described in Article 3.2.3
    hereof.

            

    

     

    
      	
               
      

            	
              1.21

            	
              Indirect Purchase
      Requirements — has the same meaning as Buyer's Indirect Purchase
      Requirements in the Agreement.

            

    

     

    
      	
               
      

            	
              1.22

            	
              Individual Machine
      Completion — shall occur for each Paper Machine when (a) the Work
      associated with that Paper Machine is completed in accordance with the
      Project Documents to the extent that such machine is ready for
      Qualification to manufacture conventional Cigarette Papers by Philip
      Morris and (b) SWM provides notice to Philip Morris of such completion and
      readiness.

            

    

     

    
      	
               
      

            	
              1.23

            	
              Individual Machine Completion
      Date — the date when SWM provides Philip Morris notice of an
      Individual Machine Completion.

            

    

     

    
      	
               
      

            	
              1.24

            	
              Initial Commercial Production
      — after Philip Morris has issued the Notice to Proceed, the first
      day of the calendar month after the month in which SWM delivers Banded
      Cigarette Papers hereunder at an average rate of at least [*****]
      Standard Bobbins per month over a consecutive three-month
      period.

            

    

     

    
      	
               
      

            	
              1.25

            	
              Laws — the federal,
      state and local laws, regulations and ordinances applicable to a Party's
      performance under the Agreement, including this
  Addendum.

            

    

     

    
      	
               
      

            	
              1.26

            	
              Licensing Agreement —
      that certain agreement between the Parties, originally effective April 1,
      1998, and as amended and restated effective July 1, 2000, setting forth
      ownership rights and granting licenses and [*****] rights respecting
      technology and patents concerning the manufacture of Banded Cigarette
      Papers.  As used herein, the term includes future amendments to
      such agreement.

            

    

     

    
      	
               
      

            	
              1.27

            	
              Milestone Schedule — the
      milestone schedule set forth in Exhibit B hereto, which is incorporated by
      reference and made a part hereof.  This schedule identifies the
      durations (measured from the Notice to Proceed) within which SWM is to
      complete the Work prerequisite (a) to Individual Machine Completion for
      each Paper Machine and (b) to the manufacture of Banded Cigarette Papers
      generally at the Mill.  As used herein, the term includes
      updates to such milestone schedule that may be agreed upon in writing by
      the Parties (see, e.g., Article
      2.3.2).

            

    

     

    
      	
               
      

            	
              1.28

            	
              Mill — SWM's Spotswood,
      New Jersey manufacturing facility.

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              1.29

            	
              Mill Upgrade Project —
      that certain project to modify and upgrade the Mill to give it the
      capability to produce Banded Cigarette Papers, as more particularly
      described in Article 2 hereof.

            

    

     

    
      	
               
      

            	
              1.30

            	
              MOD Equipment — the
      class 1, class 2 and class 3 equipment to be installed at the Mill as part
      of the Mill Upgrade Project, as more particularly identified in Exhibit C
      hereto.  As used herein, the term includes the equipment
      identified on any updates to Exhibit C that may be agreed upon in writing
      by the Parties.

            

    

     

    
      	
               
      

            	
              1.31

            	
              Notice to Proceed — as
      defined in Article 2.1.

            

    

     

    
      	
               
      

            	
              1.32

            	
              Paper Machine — in the
      singular, any of the No. [*****] paper manufacturing machines at the
      Mill, or in the plural, more than one or all of such machines, as the
      context requires.

            

    

     

    
      	
               
      

            	
              1.33

            	
              Parties — Philip Morris
      and SWM.

            

    

     

    
      	
               
      

            	
              1.34

            	
              Party — either Philip
      Morris or SWM.

            

    

     

    
      	
               
      

            	
              1.35

            	
              Philip Morris Project
      Representative — the Philip Morris employee or agent designated
      from time to time in accordance with Article 8.3 hereof to be Philip
      Morris's on-site representative at the Mill during the performance of the
      Work.

            

    

     

    
      	
               
      

            	
              1.36

            	
              Post Completion Performance
      Report — a report prepared by SWM to document [*****], such report
      to be in accordance with SWM internal accounting policies and
      substantially in the form of Exhibit P
hereto.

            

    

     

    
      	
               
      

            	
              1.37

            	
              Post Conversion Practical
      Production Capacity — as defined in Exhibit G
    hereto.

            

    

     

    
      	
               
      

            	
              1.38

            	
              Practical Production
      Capacity — the capacity values set forth in Exhibit O
      hereto.

            

    

     

    
      	
               
      

            	
              1.39

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.40

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.41

            	
              Project Documents — the
      EDR and certain additional documents identified in Exhibit J
      hereto.

            

    

     

    
      	
               
      

            	
              1.42

            	
              Qualification — the
      demonstration by SWM, in accordance with Philip Morris's normal cigarette
      component qualification procedures, and the acknowledgement by Philip
      Morris, which shall not be withheld unreasonably, that a particular Paper
      Machine is capable of continuously and reliably manufacturing a particular
      Grade of Fine Papers in conformance with the Specifications that define
      such Grade.

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              1.43

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.44

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.45

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.46

            	
              Term of Supply — the
      period that Banded Cigarette Papers are to be purchased and sold hereunder
      as provided in Article 3.2.

            

    

     

    
      	
               
      

            	
              1.47

            	
              Total Advanced Payment Amount
      — the aggregate of the Advanced Payments that are paid by Philip
      Morris in accordance with Article
4.1.

            

    

     

    
      	
               
      

            	
              1.48

            	
              Total Project Cost — the
      aggregate of the Project Costs.

            

    

     

    
      	
               
      

            	
              1.49

            	
              [*****]

            

    

     

    
      	
               
      

            	
              1.50

            	
              Work — the specific
      tasks and actions to be performed and taken by SWM, directly or through
      its contractors, in implementing the Mill Upgrade Project, as further
      defined in the Project Documents.

            

    

     

    ARTICLE 2 - MILL UPGRADE
PROJECT

     

    
      	
               
      

            	
              2.1

            	
              Notice
      to Proceed

            

    

    
      	
               
      

            	
              Subject
      to Article 5.2.1, Philip Morris may issue a written notice directing SWM
      to proceed with the Mill Upgrade Project ("Notice to Proceed") at any time
      after the effective date hereof.

            

    

     

    
      	
               
      

            	
              2.2

            	
              Prosecution
      of the Work

            

    

     

    
      	
               
      

            	
              2.2.1

            	
              SWM
      Responsibilities

            

    

    
      	
               
      

            	
              Upon
      receipt of the Notice to Proceed, SWM, to the extent that it has not
      already done so, shall provide, or cause to be provided through a
      contractor or contractors, all engineering, supervision, labor,
      procurement of materials and equipment, fabrication, construction and
      installation services appropriate and required to perform the Work, which
      shall include (a) performing the activities described in the Project
      Documents, (b) effecting any additional operational changes SWM determines
      to be necessary to manufacture Banded Cigarette Papers at the Mill, and
      (c) delivering all supporting documentation, drawings and manuals
      identified by the Project Documents to be delivered to Philip Morris,
      including but not limited to those [*****].  SWM shall be
      solely responsible for obtaining any construction or permanent financing
      required to support the Work and for the payment of all material or
      equipment vendors and contractors SWM may retain in connection with the
      Work.  The Work shall be performed in strict accordance with the
      scope of work set forth in the Project Documents and otherwise in
      accordance with this Addendum and the Project
  Documents.

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.2.2

            	
              Project
      Objective

            

    

    
      	
               
      

            	
              Through
      the Mill Upgrade Project, SWM shall exercise commercially reasonable
      efforts to upgrade and modify the Mill to the extent that upon completion
      of the Work the Paper Machines will be capable of manufacturing Banded
      Cigarette Papers that conform to the ranges of process and product
      characteristics identified in Exhibit E hereto, all while achieving the
      projected individual and cumulative Post Conversion Practical Production
      Capacities set forth in Exhibit G.

            

    

     

    
      	
               
      

            	
              2.3

            	
              Milestone
      Schedule

            

    

     

    
      	
               
      

            	
              2.3.1

            	
              The
      First Machine Completion and Final Completion shall occur within the
      durations (from the Notice to Proceed) indicated in the Milestone
      Schedule.  Time is of the essence.  Durations in the
      Milestone Schedule that may be applicable for any Paper Machine shall be
      extended to the extent Qualification of such Paper Machine is delayed by
      Philip Morris, but unless otherwise mutually agreed, a delay by Philip
      Morris to the Qualification of any Paper Machine shall not extend
      durations in the Milestone Schedule applicable to any other Paper Machine
      (i.e.,
      work on other Paper Machines shall continue in accordance with the
      Milestone Schedule unless otherwise mutually
  agreed).

            

    

     

    
      	
               
      

            	
              2.3.2

            	
              At
      Philip Morris’s direction, the engineering and project management
      contractor originally engaged by SWM was demobilized
      temporarily.  That contractor was subsequently remobilized for
      the limited purpose of updating the EDR, the project cost estimate, the
      Milestone Schedule and the Conversion Schedule, each of which are to be
      resubmitted to Philip Morris for review and acceptance following the
      completion of such update.  Such update is presently scheduled
      to be completed no later than September 1, 2000.  The purpose of
      such update is to permit the general remobilization of the contractor with
      minimal impact on the durations allowed by the current Milestone
      Schedule.

            

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.3.3

            	
              If
      the engineering and project management contractor currently engaged by SWM
      is demobilized again prior to Philip Morris providing the Notice to
      Proceed, the durations allowed by the then agreed upon Milestone Schedule
      for First Machine Completion and Final Completion each shall be extended
      for a period to be mutually agreed, but not more than five months, to
      allow additional time for remobilizing and rebidding the Work, as
      necessary.  The Milestone Schedule also shall be adjusted to the
      extent that the delivery schedules of vendors and contractors to be
      engaged by SWM are different from the schedules on which the Milestone
      Schedule is based.

            

    

     

    
      	
               
      

            	
              2.4

            	
              Project
      Management

            

    

    
      	
               
      

            	
              SWM
      shall have sole responsibility for project management, which shall include
      procuring or arranging procurement of all the materials and equipment
      required for the Work and contracting for and administering all
      engineering, construction, installation and start-up services required to
      complete the Work.  SWM shall be responsible for seeing that the
      Work is prosecuted in accordance with such project schedules as it may
      maintain.  Such schedules shall be consistent with the Milestone
      Schedule.  SWM shall be solely responsible for seeing that the
      Work is performed in accordance with all applicable Laws, and for seeing
      that all on-site contractors have and implement safety programs consistent
      with paper industry practice.

            

    

     

    
      	
               
      

            	
              2.5

            	
              Philip
      Morris Review and Approval

            

    

     

    
      	
               
      

            	
              2.5.1

            	
              Philip
      Morris shall have the opportunity to review and approve (a) all material,
      equipment and process specifications and engineering, construction and
      fabrication drawings and (b) all bid packages, purchase orders, bid
      tabulations and contracts involving materials, equipment or services
      associated with the Mill Upgrade Project involving estimated Project Costs
      of $10,000 or more and (c) all change orders or amendments to purchase
      orders and contracts involving increases in Project Costs by $5,000 or
      more.  Such review and approvals shall be in accordance with a
      project procedures manual to be agreed upon by the
      Parties.  Philip Morris shall perform such reviews and provide
      approvals in a timely manner so as not to delay the scheduled progress of
      the Work provided SWM provides Philip Morris (a) timely copies of all
      contract documents requested by Philip Morris for Philip Morris's review
      and (b) reasonable notice of the review and approval schedule necessary to
      support completion of the Work in accordance with SWM's project
      schedules.  If Philip Morris fails to provide timely review and
      approvals pursuant to this Article 2.5.1 and such delay materially affects
      the Project Cost or SWM's ability to meet the Milestone Schedule, SWM may
      request equitable adjustments to the Milestone Schedule or the amount of
      Advanced Payments in accordance with Article 2.7.  In addition,
      Philip Morris shall at all times during the performance of the Work have
      access, for review and audit, to all purchase orders along with the most
      current drawings and schedules available to SWM with respect to the
      Work.

            

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.5.2

            	
              Philip
      Morris shall have the opportunity to review and comment upon (but not to
      approve) all project schedules (i.e., schedules other than the Milestone
      Schedule) maintained by SWM and all revisions
  thereto.

            

    

     

    
      	
               
      

            	
              2.5.3

            	
              The
      Philip Morris Project Representative shall have reasonable access to the
      Mill and to the Work throughout the period when the Work is being
      performed.

            

    

     

    
      	
               
      

            	
              2.6

            	
              Changes
      to Project and Suspension of Work

            

    

     

    
      	
               
      

            	
              2.6.1

            	
              SWM
      shall not authorize or permit any departure from or change to the scope of
      the Work unless Philip Morris gives its prior written consent to such
      departure or change.  The Philip Morris Project
      Representative shall
      be authorized to grant written approval of such departures or changes and
      to act on Philip Morris's behalf in all matters respecting changes to the
      scope of the Work; provided, however, Philip Morris shall only be bound by
      approvals and consents given by the Philip Morris Project
      Representative that are recorded in writing and signed by such Philip
      Morris Project Representative.

            

    

     

    
      	
               
      

            	
              2.6.2

            	
              Philip
      Morris may at any time, by written notice, make actual or constructive
      changes in, additions to or deletions from the scope of the Work to be
      performed by SWM; provided (a) such change, by itself, or in the aggregate
      with other Philip Morris changes (excluding those Philip Morris changes as
      to which the amount of an equitable adjustment to the Advanced Payments
      has been agreed upon by the Parties), does not cause an increase in
      Project Costs in excess of $2,500,000, (b) such change does not require
      physical modifications to or replacement of Mill facilities or equipment
      otherwise unaffected by the Mill Upgrade Project, (c) such change does not
      adversely affect SWM's ability to produce the cigarette paper products
      that SWM has manufactured or is currently manufacturing at the Mill as of
      the date of SWM's receipt of the Notice to Proceed and (d) such change
      does not adversely affect SWM's ability to perform its obligations under
      the Agreement and this Addendum including, but not limited to, SWM's
      ability to manufacture Banded Cigarette Papers that conform to the ranges
      of process and product characteristics identified in Exhibit
      E.  Changes pursuant to this Article 2.6.2 may include, but are
      not necessarily limited to, directives by Philip Morris to reduce in
      number the Paper Machines that are to be modified to be able to produce
      Banded Cigarette Papers.

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.6.3

            	
              Upon
      written notice from Philip Morris, SWM shall suspend performance of all or
      any part of the Work for such period as Philip Morris may
      direct.  Philip Morris shall not be liable or otherwise
      responsible for any Project Costs resulting from any unauthorized
      performance of the Work by SWM during any period of suspension, and upon
      receipt of Philip Morris's suspension notice, SWM shall not place further
      orders or enter into further subcontracts relating to the suspended
      Work.  Notwithstanding the preceding sentence, SWM shall notify
      Philip Morris and request authority to continue performance of all or part
      of the Work (a) to the extent that, in SWM's opinion, failure to continue
      or complete discrete elements of the Work will materially increase the
      overall Project Costs or (b) to the extent necessary to protect the Work
      in progress.  In addition, and whether or not Philip Morris
      consents, following receipt of a suspension notice from Philip Morris, SWM
      may take such actions as SWM concludes are reasonably necessary to restore
      the Mill's capability to resume the manufacture of Cigarette Papers other
      than Banded Cigarette Papers; provided, however, in arranging for the
      restoration of such manufacturing capability SWM shall undertake only
      those measures that are required to restore the Mill to a safe and
      operable state.

            

    

     

    
      	
               
      

            	
              2.6.4

            	
              Additional
      Work performed pursuant to change orders submitted by Philip Morris
      pursuant to Article 2.6.1 or Article 2.6.2 or otherwise agreed to by the
      Parties shall be subject to all applicable terms and conditions of this
      Addendum.

            

    

     

    
      	
               
      

            	
              2.7

            	
              Equitable
      Adjustments and Special Payments

            

    

     

    
      	
               
      

            	
              2.7.1

            	
              If
      (a) any delay by Philip Morris pursuant to Article 2.5.1, (b) any change
      initiated by Philip Morris pursuant to Article 2.6.2, agreed to by the
      Parties or initiated by SWM and approved by Philip Morris pursuant to
      Article 2.6.1 or (c) any suspension of the Work, in whole or in part,
      initiated by Philip Morris pursuant to Article 2.6.3 increases or
      decreases the time required for performance of the Work, then an equitable
      adjustment shall be made to the Milestone
  Schedule.

            

    

     

    
      	
               
      

            	
              2.7.2

            	
              If
      (a) any delay by Philip Morris pursuant to Article 2.5.1, (b) any change
      initiated by Philip Morris pursuant to Article 2.6.2, agreed to by the
      Parties or initiated by SWM and approved by Philip Morris pursuant to
      Article 2.6.1 or (c) any suspension of the Work, in whole or in part,
      initiated by Philip Morris pursuant to Article 2.6.3, increases or
      decreases the Project Costs, then there shall be an equitable adjustment
      in the amount
      of the Advanced Payments to be made by Philip Morris pursuant to Article
      4; provided, however, it is understood that any equitable adjustment in
      accordance with this Article 2.7 shall be intended to address changes in
      the Total Project Cost but, except as expressly provided in Article 2.7.3,
      shall not address or otherwise compensate SWM for any disruption or delay
      to Mill operations, lost sales or any other consequential or incidental
      costs SWM may incur as the result of the delay or
      suspension.  Project Costs increases incurred by SWM in
      performing Work within the scope of any Philip Morris change as to which
      an equitable adjustment in the amount of the Advanced Payments shall be
      applicable in accordance with this Article 2.7.2 shall be paid to SWM as
      Advanced Payments in accordance with Article 4.1 and not through
      Supplemental Capital Cost Charges pursuant to Article
    3.5.3.2.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              2.7.3

            	
              Notwithstanding
      Article 2.7.2, Philip Morris shall reimburse SWM for verifiable, direct,
      out-of-pocket capital costs incurred by SWM that must be expensed and
      written-off by SWM as the result of (a) any delay by Philip Morris
      pursuant to Article 2.5.1, (b) any change initiated by Philip Morris
      pursuant to Article 2.6.2, agreed to by the Parties or initiated by SWM
      and approved by Philip Morris pursuant to Article 2.6.1 or (c) any
      suspension of the Work, in whole or in part, initiated by Philip Morris
      pursuant to Article 2.6.3.  In addition, in the event of a
      suspension of the Work by Philip Morris as permitted by Article 2.6.3,
      Philip Morris shall reimburse SWM for verifiable, direct and out-of-pocket
      costs SWM may incur in accordance with Article 2.6.3 to restore the Mill's
      capability to resume the manufacture of Cigarette Papers other than Banded
      Cigarette Papers.  Finally, if a suspension of the Work directed
      by Philip Morris as permitted by Article 2.6.3 is anticipated to last
      longer than three months, Philip Morris shall reimburse SWM for any lost
      profits that SWM may suffer during a period that one or more of the Paper
      Machines is not available to manufacture Cigarette Paper as the result of
      such suspension, but only for the period any of the Paper Machines shall
      be inoperable, such lost profits to be estimated in the manner set forth
      in Article 3.5.4.2.    Amounts payable by Philip
      Morris pursuant to this Article 2.7.3 are hereinafter referred to as
      "Special Payments" and shall not be considered Project
    Costs.

            

    

     

    
      	
               
      

            	
              2.7.4

            	
              SWM's
      right to an equitable adjustment in the Schedule or in the amount of the
      Advanced Payments pursuant to Article 2.7.1 or Article 2.7.2 and/or any
      Special Payments pursuant to Article 2.7.3 is expressly conditioned on SWM
      providing Philip Morris notice of its intent to request such adjustment
      (a) within ten days after SWM receives Philip Morris's notice of change,
      (b) within ten days of the event relied upon by SWM as giving rise to any
      constructive change or (c) within ten business days after Philip Morris
      directs SWM to resume the Work following a suspension.  Within
      30 days after the event giving rise to a notice by SWM in accordance with
      the preceding sentence, SWM shall submit its formal request for equitable
      adjustment or Special Payment, which shall detail SWM's justification for
      any proposed equitable adjustment or Special Payments, as the case may
      be.  The Parties shall attempt to resolve any request by SWM for
      an equitable adjustment within 30 days.  Philip Morris shall pay
      SWM any Special Payments due in accordance with Article 2.7.3 within 60
      days after receipt of such formal request for such
  payment.

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.7.5

            	
              SWM
      shall proceed with performance of the Work as changed prior to or pending
      agreement upon (a) any requested equitable adjustment in the Milestone
      Schedule pursuant to Article 2.7.1 and/or the amount of any Advanced
      Payments pursuant to Article 2.7.2 and/or (b) any Special Payments
      requested pursuant to Article 2.7.3 and shall not halt or delay
      performance because of any failure to so agree to any such equitable
      adjustment or Special Payments.

            

    

     

    
      	
               
      

            	
              2.8

            	
              Monthly
      Reports and Financial
Certifications

            

    

     

    
      	
               
      

            	
              2.8.1

            	
              Following
      receipt of the Notice to Proceed, SWM shall provide Philip Morris monthly
      written reports on the status of the Mill Upgrade Project.  Such
      reports shall detail the progress of the Work and compare the actual
      progress of all significant facets of the Work to scheduled progress,
      reporting positive or negative "float" in the status of all "critical
      path" and "near critical" activities and identifying current and
      cumulative variances in actual Project Costs compared to the estimated
      Project Costs agreed upon by the Parties.  Such reports also
      shall include a forecast of activities for the coming month and a
      discussion of the safety performance of the contractors performing the
      Work.

            

    

     

    
      	
               
      

            	
              2.8.2

            	
              Commencing
      with the calendar quarter prior to the date the second Advance Payment is
      due, and continuing through the calendar quarter in which the Final
      Completion Date occurs, SWM shall provide Philip Morris a certificate
      signed by SWM's chief financial officer representing that (a) SWM is not
      past due by more than 45 days in the payment of any vendor or contractor
      invoice related to the Mill Upgrade Project (excluding amounts less than
      $25,000 that may be in dispute and excluding invoices, the nonpayment of
      which Philip Morris has been notified in writing), (b) there is no pending
      or threatened action or proceeding, excluding any actions or proceedings
      relating to tobacco products, affecting SWM before any court, governmental
      agency or arbitrator that could reasonably be expected to materially and
      adversely affect the overall financial condition of SWM in a way as to
      impair its ability to perform the Mill Upgrade Project and (c) SWM is not
      in default as to any loan or debt instrument wherein a default by SWM
      would have a material adverse affect on SWM's ability to complete, or
      prevent SWM from completing, the Mill Upgrade Project as provided
      herein.  Such certifications shall be provided each calendar
      quarter in the month in which SWM files its Form 10-K or 10-Q, as
      appropriate, with the Securities and Exchange
  Commission.

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.9

            	
              Project
      Meetings

            

    

    
      	
               
      

            	
              At
      least once each month during the performance of the Work, the
      representatives of SWM and Philip Morris shall meet to discuss the
      progress of the Work, including but not limited to the activities
      discussed in the most recent monthly status report and the safety
      performance of the contractors performing the
  Work.

            

    

     

    
      	
               
      

            	
              2.10

            	
              Commercialization
      Sequence

            

    

     

    
      	
               
      

            	
              2.10.1

            	
              Following
      Qualification to manufacture Banded Cigarette Papers, each Paper Machine
      that has been modified to be capable to produce Banded Cigarette Papers
      shall be converted to full or part-time production of Banded Cigarette
      Papers in accordance with the conversion schedule and sequence set forth
      in Exhibit F hereto (the "Conversion Schedule"), which is incorporated by
      reference herein and made a part hereof.  Such Conversion
      Schedule reflects the most rapid schedule that SWM is able to accommodate
      while still continuing to meet Philip Morris's Direct Purchase
      Requirements and Indirect Purchase
Requirements.

            

    

     

    
      	
               
      

            	
              2.10.2

            	
              At
      its sole option, Philip Morris may elect to pursue a less aggressive
      schedule for conversion of the individual Paper Machines than that
      provided in Exhibit F or to reduce the total production capacity to be
      converted and qualified to be capable of producing Banded Cigarette Papers
      for Philip Morris, in which case Philip Morris shall so notify
      SWM.  Thereupon, the Parties, by mutual agreement, will modify
      the Conversion Schedule accordingly.  If such notice results in
      one or more of the Paper Machines not being converted and qualified to be
      capable of manufacturing Banded Cigarette Papers, SWM shall determine the
      Paper Machines to be converted and qualified and the sequence of
      conversion for such machines but in doing so shall seek to minimize the
      Project Costs, Pre-Operating Costs and Reimbursable
  Costs.

            

    

     

    
      	
               
      

            	
              2.10.3

            	
              Philip
      Morris and its representatives shall have reasonable access to the Mill
      during trial runs on the converted Paper Machines for the purpose of
      monitoring the trials and sampling the Banded Cigarette Papers produced
      during such trials.

            

    

     

    
      	
               
      

            	
              2.11

            	
              Project
      Accounting

            

    

    
      	
               
      

            	
              Within
      90 days after the Final Completion Date, SWM shall provide Philip Morris
      with an accounting of the Project Costs incurred.  Such
      accounting shall be in sufficient detail for Philip Morris to verify, to
      Philip Morris's reasonable satisfaction, the Total Project Cost and the
      proper allocation of such costs to the categories of Project Costs
      specified in Exhibit D hereto.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    ARTICLE 3 - PURCHASE AND
SALE OF BANDED CIGARETTE PAPERS

     

    
      	
               
      

            	
              3.1

            	
              General
      Applicability of this Article 3

            

    

    
      	
               
      

            	
              As
      indicated herein, the provisions of this Article 3 amend and/or supplement
      the terms of the Agreement as regards Banded Cigarette Papers delivered
      through Direct Purchases and Indirect Purchases
  hereunder.

            

    

     

    
      	
               
      

            	
              3.2

            	
              Term
      of Supply

            

    

    
      	
               
      

            	
              If
      a Notice to Proceed is given by Philip Morris pursuant to Article 2.1
      hereof, the period that Banded Cigarette Papers are to be purchased and
      sold hereunder (the "Term of Supply") shall be the same as the Term as
      defined in the Agreement, except
that:

            

    

     

    
      	
               
      

            	
              3.2.1

            	
              [*****];

            

    

     

    
      	
               
      

            	
              3.2.2

            	
              A
      notice of termination of the Agreement by SWM pursuant to Article III.A
      thereof will not be effective to terminate the Agreement with respect to
      SWM's obligations to sell and deliver Banded Cigarette Papers sooner than
      the twelfth anniversary of the Initial Commercial Production
      Date.  Notwithstanding the preceding sentence, such a notice of
      termination shall terminate the Agreement with respect to SWM's
      obligations to sell and deliver Fine Papers other than Banded Cigarette
      Papers as provided in Article III of the
  Agreement;

            

    

     

    
      	
               
      

            	
              3.2.3

            	
              A
      notice of termination of the Agreement by Philip Morris pursuant to
      Article III.A of the Agreement shall not be effective to terminate the
      Agreement with respect to Philip Morris's obligations to order, accept
      delivery and pay for Banded Cigarette Papers sooner than seven years after
      Initial Commercial Production, which seven-year period is hereinafter
      referred to as the "Guaranteed Sales Period" both for purposes of this
      Addendum and as that term is used elsewhere in the Agreement (but only in
      the context of purchases and sales of Banded Cigarette Papers, i.e., not
      other New Products).  Notwithstanding the preceding sentence,
      such a notice of termination shall be effective to terminate the Agreement
      with respect to Philip Morris's obligations to order, accept delivery of
      and pay for Fine Papers other than Banded Cigarette Papers as provided in
      Article III of the Agreement;

            

    

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.2.4

            	
              Notwithstanding
      Article III.B.3 of the Agreement, in the event of a termination of the
      Agreement by either Party as the result of a reopening of the Agreement by
      SWM pursuant to Article VIII.K.1 due to a change in Laws, such termination
      shall not be effective to terminate the Parties' obligations to sell and
      purchase Banded Cigarette Papers sooner than the twelfth anniversary of
      the Initial Commercial Production Date;
and

            

    

     

    
      	
               
      

            	
              3.2.5

            	
              This
      Addendum shall be terminable by Philip Morris as provided in Article 5.2.2
      or Article 5.2.3 hereof and by SWM as provided in Article 5.2.1
      hereof.  The consequences of such a termination by either Party
      are discussed in Article 5.3 hereof.  In addition, the
      Agreement, including all obligations of the Parties with respect to the
      purchase and sale of Banded Cigarette Papers and other Fine Papers, shall
      be terminable by SWM as provided in Article
  3.5.10.

            

    

     

    
      	
               
      

            	
              Except
      as expressly provided above, the duties and obligations of the Parties
      under this Addendum shall be subject to Article III of the Agreement in
      all respects, including the provisions thereof respecting termination and
      the Phaseout Period.  (Given the limitations imposed by Article
      3.2.2, Article 3.2.3 and Article 3.2.4 above, it is possible that [*****],
      depending on the timing of a notice of termination of the
      Agreement.  For example,
[*****]

            

    

     

    
      	
               
      

            	
              3.3

            	
              Quantity
      of Supply

            

    

     

    
      	
               
      

            	
              3.3.1

            	
              For
      purposes of this Addendum and the Agreement, Banded Cigarette Papers will
      be treated as a new Group within the Category of Cigarette
      Papers.

            

    

     

    
      	
               
      

            	
              3.3.2

            	
              From
      time to time, Philip Morris shall propose the specifications for Grades of
      Banded Cigarette Papers to be delivered through Direct Purchases and
      Indirect Purchases.  The Grades of Banded Cigarette Papers to
      which the Addendum shall be applicable shall be limited to those Grades
      for which SWM has accepted the applicable Specifications proposed by
      Philip Morris. Each such Specification for a new Grade will specify the
      tolerance limits, if any, to be applicable to such Grade.  SWM
      will review such proposed Specifications
[*****]

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.3.3

            	
              Unless
      otherwise agreed by the Parties, at the same time as Philip Morris
      proposes the Specifications for any new Grade of Banded Cigarette Papers
      it shall also propose criteria defining the rates of rejection for
      nonconformity with such Specifications that will constitute an Event of
      Default for purposes of Article XXIII of the Agreement.  Such
      criteria shall be applicable with respect to the first [*****] that
      SWM delivers such Grade of Banded Cigarette Papers in lieu of the criteria
      otherwise applicable under Article XXIII.A.1.a of the Agreement for such
      period.  After the end of such [*****] period, the criteria
      otherwise applicable under Article XXIII.A.1.a of the Agreement shall
      apply to the new Grade.  If the criteria proposed by Philip
      Morris are unacceptable to SWM, SWM shall so notify Philip Morris promptly
      and in writing.  If the Parties are thereafter unable to agree
      upon the criteria defining the rates of rejection for nonconformity with
      such Specifications that shall constitute an Event of Default
      within[*****] after the criteria were first proposed by Philip Morris,
      then for the first [*****] of delivery of such new Grade it shall be an
      Event of Default if the rejection rate for the new Grade of Banded
      Cigarette Papers shall exceed[*****] .  After such [*****], the
      permissible rejection rate for such new Grade shall be as specified in
      Article XXIII.A.1.a of the
Agreement.

            

    

     

    
      	
               
      

            	
              3.3.4

            	
              The
      quantity of Banded Cigarette Papers to be purchased and sold hereunder
      each Year shall be as provided in Article IV of the Agreement except
      that:

            

    

     

    
      	
               
      

            	
              3.3.4.1

            	
              Notwithstanding
      Article IV.B and Article IV.C of the Agreement, Philip Morris covenants
      that prior to the end of the Guaranteed Sales Period Philip Morris will
      not purchase Banded Cigarette Papers for use in the manufacture of
      Cigarettes at the Plants from suppliers other than SWM, whether through
      Direct Purchases or Indirect Purchases, except as permitted by Article
      IV.D, Article IV.F and Article IV.G of the Agreement (i.e., this Article
      3.3.4.1 limits Philip Morris's right to purchase Banded Cigarette Papers
      from suppliers other than SWM as otherwise permitted by Article IV.B and
      Article IV.C of the Agreement);

            

    

     

    
      	
               
      

            	
              3.3.4.2

            	
              Notwithstanding
      Article IV.E of the Agreement, SWM's maximum sales obligation under the
      Agreement during any Year with respect to Banded Cigarette Papers shall
      not exceed the lesser of [*****];

            

    

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.3.4.3

            	
              Philip
      Morris shall have the right, but not the obligation, to [*****], but SWM's
      maximum sales obligation during any Year with respect to all Direct
      Purchases and Indirect Purchases of Banded Cigarette Papers hereunder
      shall be limited to SWM's maximum sales obligation with respect to Banded
      Cigarette Papers as stated in Article 3.3.4.2 above.  (The right
      to purchase Banded Cigarette Papers [*****] contained in this Article
      3.3.4.3 shall be in lieu of Philip Morris's purchase rights
      [*****].  Thus, as respects Cigarette Papers generally, the
      limitation on deliveries to Philip
  Morris[*****])

            

    

     

    
      	
               
      

            	
              3.3.5

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.3.6

            	
              If
      Philip Morris determines that its cumulative Direct Purchase Requirements
      and Indirect Purchase Requirements for Banded Cigarette Papers are such
      that Philip Morris will require deliveries of Banded Cigarette Papers in
      excess of those quantities that SWM is obligated to deliver hereunder at
      any time during the Conversion Period, Philip Morris
    [*****].

            

    

     

    
      	
               
      

            	
              3.4

            	
              Source
      of Supply

            

    

    
      	
               
      

            	
              Any
      Banded Cigarette Papers to be delivered pursuant to Direct Purchases and
      Indirect Purchases hereunder shall be [*****]  Unless otherwise
      agreed [*****] (As respects Banded Cigarette Papers only, this
      Article 3.4[*****]).

            

    

     

    
      	
               
      

            	
              3.5

            	
              Compensation

            

    

    
      	
               
      

            	
              As
      respects Banded Cigarette Papers only, the provisions of this Article 3.5
      shall be in lieu of the provisions of Article VIII.A, Article VIII.C,
      Article VIII.D, Article VIII.F, Article VIII.H, Article VIII.I, Article
      VIII.L, and Article VIII.M.  The Provisions of this Article 3.5
      do not amend, supplement or replace in any way the provisions of Article
      VIII.B, Article VIII.E, Article VIII.J or Article VIII.K of the
      Agreement.

            

    

     

    
      	
               
      

            	
              3.5.1

            	
              General

            

    

     

    
      	
               
      

            	
              3.5.1.1

            	
              For
      each Bobbin of any Grade of Banded Cigarette Papers sold and delivered
      through Direct Purchases hereunder, Philip Morris shall pay the applicable
      Invoice Price for such Grade.  The Invoice Price for each Grade
      shall be the [*****].

            

    

     

    
      	
               
      

            	
              3.5.1.2

            	
              For
      each Bobbin of any Grade of Banded Cigarette Papers sold and delivered
      through Indirect Purchases hereunder, SWM shall
  [*****].

            

    

     

    
      	
               
      

            	
              3.5.2

            	
              Definitions

            

    

    
      	
               
      

            	
              For
      purposes of this Article 3.5, each of the following terms shall have the
      meaning hereinafter set forth:

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.5.2.1

            	
              [*****].

            

    

     

    
      	
               
      

            	
              3.5.2.2

            	
              [*****].

            

    

     

    
      	
               
      

            	
              3.5.2.3

            	
              [*****].

            

    

     

    
      	
               
      

            	
              3.5.2.4

            	
              Consumer Price Index —
      the Consumer Price Index for
[*****]

            

    

     

    
      	
               
      

            	
              3.5.2.5

            	
              [*****].

            

    

     

    
      	
               
      

            	
              3.5.2.6

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.7

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.8

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.9

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.10

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.11

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.12

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.13

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.14

            	
              Price — the price to be
      paid for each Standard Bobbin of any Grade of Banded Cigarette Papers sold
      and delivered through Direct Purchases
  hereunder.

            

    

     

    
      	
               
      

            	
              3.5.2.15

            	
              Producer Price Index —
      the [*****]).

            

    

     

    
      	
               
      

            	
              3.5.2.16

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.17

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.18

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.19

            	
              [*****]

            

    

     

    
      	
               

            	
              3.5.2.20

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.2.21

            	
              [*****]

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.5.3

            	
              Determination
      of Price for All Times Other Than
[*****]

            

    

    
      	
               
      

            	
              Except
      as provided in Article 3.5.7, for each Grade of Banded Cigarette Papers,
      the Price for each Standard Bobbin of such Grade sold and delivered
      through Direct Purchases hereunder shall be the unit price equal to (a)
      the sum of (i) the Margin, (ii) the Project Capital Cost Charge (if
      applicable), (iii) the Unit Grade Cost and (iv) the Non-Manufacturing
      Overhead Charge minus (b) the sum of (i) the Advanced Payment Credit (if
      applicable) and the Sales Credit (if applicable)
  [*****]

            

    

     

    
      	
               
      

            	
              3.5.3.1

            	
              [*****]

            

    

     

    
      
        	
              	
                3.5.3.1.1

              	
                [*****]

              

      

    

     

    
      
        	
              	
                3.5.3.1.2

              	
                [*****]

              

      

    

     

    
      	
               
      

            	
               

            	
              UGC2
      =

            	
              [*****]

            

    

     

    
      	
               
      

            	
              UGC1
      =

            	
              [*****]

            

    

     

    
      	
               
      

            	
              I2

            	
              =

            	
              [*****]

            

    

     

    
      	
               
      

            	 	
              I1

            	
              =

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.3.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.3.3

            	
              [*****]

            

    

     

    
      
        	
              	
                3.5.3.3.1

              	
                [*****]

              

      

    

     

    
      
        	
              	
                3.5.3.3.2

              	
                [*****]

              

      

    

     

    
      
        	
              	
                3.5.3.3.3

              	
                [*****]

              

      

    

     

    
      	
               
      

            	
              3.5.3.4

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.3.5

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.3.6

            	
              [*****]

            
	 	 	 
	 	

              3.5.3.7

            	[*****]

    

      

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.5.4

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.4.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.4.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.4.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.5

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.5.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.5.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.5.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.2.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.2.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.2.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.2.4

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.4

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.6.5

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.7

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.7.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.7.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.8

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.9

            	
              [*****]

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.5.10

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.5.11

            	
              Third
      Party Audits

            

    

     

    
      	
               
      

            	
              3.5.11.1

            	
              SWM
      shall keep books and records providing the basis for and documenting the
      computation of all compensation payable to SWM hereunder.  Such
      records shall be retained for a minimum period of five years after they
      are created.

            

    

     

    
      	
               
      

            	
              3.5.11.2

            	
              Philip
      Morris shall have the right to have SWM's books and records pertinent to
      the computation of the compensation payable hereunder (other than during
      the Phaseout Period) reviewed and audited by a national accounting firm
      ("Auditor").  Philip Morris's right to have such an audit
      conducted shall be unlimited during the first 36 months after the First
      Machine Down Date.  Thereafter, such audits shall be conducted
      no more frequently than once each Year.  Philip Morris shall
      have no right to require such an audit hereunder during the Phaseout
      Period other than to confirm the appropriateness of SWM's computation of
      the Prices in effect as of the last day preceding the start of the
      Phaseout Period.

            

    

     

    
      	
               
      

            	
              3.5.11.3

            	
              The
      sole purpose for any such review or audit shall be for the Auditor to
      confirm that the compensation paid by Philip Morris for Banded Cigarette
      Papers delivered pursuant to Direct Purchases and Indirect Purchases
      hereunder was determined in accordance with the provisions of this Article
      3.5.  Philip Morris shall share with SWM any report prepared by
      any such Auditor.

            

    

     

    
      	
               
      

            	
              3.5.11.4

            	
              If
      the Auditor's report reveals an error or irregularity in SWM's computation
      of compensation hereunder, an appropriate adjustment shall be made in the
      computation of the relevant compensation within 30 days; provided,
      however, the adjustment shall only be made with respect to the
      compensation payable for Banded Cigarette Papers delivered within the 24
      month period immediately preceding the financial reporting period covered
      by the audit report (although the Auditor may consider all information
      contained in records maintained pursuant to Article 3.5.11.1
      herein).  Within 30 days after such adjustment, Philip Morris or
      SWM, as the case may be, shall remit to the other any underpayment or
      overpayment resulting from such error or
  irregularity.

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              3.5.11.5

            	
              If
      either Philip Morris or SWM disputes any aspect of the Auditors report
      that would necessitate an adjustment as provided herein, the dispute shall
      be referred to and resolved by an independent public accounting firm
      retained by Philip Morris but selected by mutual agreement of the Parties
      (the "Second Auditor").  The Parties shall be bound by the
      decision of the Second Auditor with respect to whether there is a need for
      an adjustment.

            

    

     

    
      	
               
      

            	
              3.5.11.6

            	
              Philip
      Morris shall bear the expense of the Auditor.  The Party
      disputing the report of the Auditor shall bear the cost of any Second
      Auditor.  Each Party agrees to bear its own costs incurred in
      connection with any such review or
audit.

            

    

     

    
      	
               
      

            	
              3.6

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.6.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.6.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.6.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              3.7

            	
              Force
      Majeure

            

    

     

    
      	
               
      

            	
              Notwithstanding
      any other provision of the Agreement, in the event of a Force Majeure
      Event that limits or prevents the Delivery of Banded Cigarette Papers
      manufactured at the Mill, SWM shall have no obligation to avoid or reduce
      the impact of the Force Majeure event through the Delivery of Banded
      Cigarette Papers produced at any manufacturing facility other than the
      Mill.

            

    

     

    
      	
               
      

            	
              3.8

            	
              Warranty

            

    

     

    The
following warranty and remedy shall be in lieu of the warranty and remedy found
in Article X.B.1.b and Article X.B.2.b of the Agreement with respect to Banded
Cigarette Papers delivered hereunder. Article X.B.1.b and Article X.B.2.b of the
Agreement shall continue to be applicable to all Fine Papers delivered hereunder
other than Banded Cigarette Papers, and Article X.B.1.a, Article X.B.2.a,
Article X.B.2.c and Article X.B.2.d shall continue to be applicable to all Fine
Papers delivered under, including Banded Cigarette Papers.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.8.1

            	
              Warranty

            

    

     

    
      	
               
      

            	
              SWM
      warrants that the continuous quality of Banded Cigarette Papers received
      as the result of Direct Purchases and Indirect Purchases hereunder and
      under the Agreement shall not result in a [*****]to account for changes in
      Philip Morris's floor inspection practices or mutually agreed changes to
      the Specifications that could affect
[*****].

            

    

     

    
      	
               
      

            	
              3.8.2

            	
              Remedy

            

    

     

    
      	
               
      

            	
              If
      the [*****] of Banded Cigarette Papers received hereunder during any
      calendar quarter [*****] Article 3.8.1 above, SWM shall promptly take all
      necessary action to identify and correct the cause or causes of the
      nonconformances that led to the [*****].  SWM shall provide
      Philip Morris with a written report evaluating the nonconformances and
      their causes and describing SWM's plans for preventing reoccurrence of
      such nonconformances in the
      future.  [*****]  Notwithstanding the preceding
      sentence, to the extent  SWM breaches the warranty contained in
      Article 3.8.1 above through nonconforming deliveries of Banded Cigarette
      Papers, [*****].  Moreover, if any such breach involving Banded
      Cigarette Papers shall occur during the period specified in Article
      3.5.3.3.1 of this Addendum but after the Final Completion Date, and if
      SWM's recommended remediation for such breach reasonably [****]. From
      time to time the Parties will consider the appropriateness of [*****]
      in light of [*****]. Nothing herein shall be deemed to relieve SWM of
      the obligation to advise Philip Morris as required by [*****] above of
      SWM's prospective inability to meet the Specifications for any Grade of
      Banded Cigarette Papers that may be proposed by Philip Morris
      [*****].

            

    

     

    
      	
               
      

            	
              3.9

            	
              [*****]

            

    

     

    ARTICLE 4 - ADVANCED
PAYMENTS OF INVOICE PRICE

     

    
      	
               
      

            	
              4.1

            	
              Advanced
      Payments to be Made by Philip
Morris

            

    

     

    
      	
               
      

            	
              4.1.1

            	
              Philip
      Morris agrees to advance SWM, for the use stated in 4.3 hereof, the
      amounts set forth on Exhibit N hereto (each an "Advanced Payment," and
      collectively the "Advanced
Payments").

            

    

     

    
      	
               
      

            	
              4.1.2

            	
              The
      first Advanced Payment shall be made on the date of execution of this
      Addendum.  Subsequent Advanced Payments shall be made via wire
      transfer (to the account designated in writing by SWM) on the first day of
      the calendar months indicated in Exhibit N (the durations indicated on
      Exhibit N indicate the number of calendar months that shall have begun
      after the Notice to Proceed is given before a particular Advanced Payment
      shall be due).

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              4.1.3

            	
              The
      amounts of such Advanced Payments shall be subject to adjustment, up or
      down, only as provided in Article 2.7 and Article 4.2.  The
      aggregate of such payments actually made, including the adjustments, if
      any, referred to in this Article 4.1.3, are referred to herein as the
      Total Advanced Payment Amount.

            

    

     

    
      	
               
      

            	
              4.2

            	
              Adjustments
      to Advanced Payments

            

    

     

    
      	
               
      

            	
              4.2.1

            	
              Not
      later than six months after receipt of Philip Morris's Notice to Proceed,
      SWM may advise Philip Morris of any changes that SWM anticipates in the
      estimated cost of the Work as the result of price changes received from
      vendors and contractors.  Thereafter, Exhibit N shall be amended
      to reflect such cost changes.

            

    

     

    
      	
               
      

            	
              4.2.2

            	
              At
      least 30 days prior to the date the last Advanced Payment is due to be
      made, SWM shall notify Philip Morris in writing if, given the best
      information then available to SWM, it appears to SWM that the aggregate of
      the Total Project Costs will be greater than or less than the Advanced
      Payments (including Advanced Payments previously made as well as the final
      Advanced Payment).  Such notice shall identify the amount of any
      projected excess of payments or deficiency of payments and SWM's best
      understanding of the reason for such excess or deficiency.  If
      SWM projects that there will be an excess of payments, then the final
      Advanced Payment shall be reduced by such projected excess.  If
      SWM projects that there will be a deficiency of payments, then the final
      Advanced Payment shall be increased (a) by the amount of any equitable
      adjustments pursuant to Article 2.7 that were not previously reflected in
      Advanced Payments made in accordance with Article 4.1, (b) by the mutually
      agreed upon increase in Project Costs associated with any excused Force
      Majeure Events that have affected the Work, and (c) by the amount
      determined in good faith by Philip Morris to be reflective of Project Cost
      increases incurred by SWM in the performance of the Work that were due to
      circumstances unforeseeable by SWM, if
any.

            

    

     

    
      	
               
      

            	
              4.3

            	
              Purpose
      of Advanced Payments

            

    

     

    
      	
               
      

            	
              4.3.1

            	
              The
      Advanced Payments are to be received and applied by SWM as advance
      payments for inventory and credited against the Prices applicable to
      future Direct Purchases and Indirect Purchases of Cigarette Papers,
      including Banded Cigarette Papers, under the Agreement.  Such
      credits shall be applicable beginning on the First Sale Date and
      continuing through the end of the Guaranteed Sales Period (or such shorter
      period as may be applicable) as provided in Article 4.3.3
      below.

            

    

      

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              4.3.2

            	
              For
      Banded Cigarette Papers, Price reductions are to be accomplished through
      the Advanced Payment Credits as provided in Article 3.5.3.4
      above.  For Cigarette Papers other than Banded Cigarette Papers,
      the Price reductions
      are to be accomplished through Advanced Payment Credits as provided in
      Article 4.3.1 above.

            

    

     

    
      	
               
      

            	
              4.3.3

            	
              Initially,
      the amount of each Advanced Payment Credit allowed for Cigarette Papers
      delivered under the Agreement shall be [*****] per Standard Bobbin, but
      from time to time the Parties will reconsider the appropriateness of the
      amount of such credit in light of (a) increases or decreases in Philip
      Morris's anticipated Direct Purchase Requirements and Indirect Purchase
      Requirements for Cigarette Papers and (b) the aggregate dollar value of
      any Sales Credits Philip Morris shall have received, and is then projected
      to receive, pursuant to Article 3.5.3.5, and by mutual agreement the
      Parties shall adjust the amount of the Advanced Payment Credit based on
      their best estimate of a credit amount to be applicable to future
      deliveries hereunder such that the total dollar value of all the Advanced
      Payment Credits and Sales Credits received by Philip Morris through the
      end of the Guaranteed Sales Period shall equal the Total Advanced Payment
      Amount; provided, however, notwithstanding the foregoing, the Advanced
      Payment Credits provided for in Article 3.5.3.4 and Article 4.3.1 and the
      Sales Credits provided for in Article 3.5.3.5 shall cease to be applicable
      the earlier to occur of (a) the expiration of the Guaranteed Sales Period
      and (b) when the total dollar value of all the Advanced Payment Credits
      and Sales Credits received by Philip Morris shall equal the Total Advanced
      Payment Amount.

            

    

     

    ARTICLE 5 -
TERMINATION

     

    
      	
               
      

            	
              5.1

            	
              General

            

    

     

    
      	
               
      

            	
              The
      Parties' rights to terminate the Agreement, and the limitations on such
      rights imposed by this Addendum, are discussed in Article 3.2
      above.  The Parties' rights to terminate this Addendum, along
      with the effect of a termination of the Agreement on the continued
      effectiveness of this Addendum, are discussed in Article 5.2
      below.  The consequences that a termination of this Addendum or
      of the Agreement will have on the rights and obligations of the Parties
      under this Addendum are discussed in Article 5.3
      below.  Finally, under certain circumstances Philip Morris shall
      be entitled to [*****].  These circumstances, and the rights and
      obligations of the Parties in such event, are set forth in Article 5.4
      below.

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              5.2

            	
              Termination
      of Addendum

            

    

     

    
      	
               
      

            	
              5.2.1

            	
              Termination of Addendum by
      SWM — If Philip Morris fails to provide SWM with the Notice to
      Proceed by December 31, 2002, SWM thereafter may provide notice to Philip
      Morris terminating this Addendum, such termination to become effective 30
      days after Philip Morris receives notice of such termination; provided,
      however, such termination shall not become effective, and SWM's notice of
      termination shall be of no effect, if Philip Morris provides SWM with the
      Notice to Proceed at any time within 20 days after Philip Morris receives
      SWM's notice of termination.

            

    

     

    
      	
               
      

            	
              5.2.2

            	
              Termination of Addendum by
      Philip Morris Prior to [*****] — Except as provided in Article
      5.2.3 below, Philip Morris may not terminate the Addendum prior to
      issuance of a Notice to Proceed except by terminating the Agreement
      pursuant to Article III thereof.  After issuance of a Notice to
      Proceed, Philip Morris may terminate this Addendum pursuant to this
      Article 5.2.2, but only if it provides written notice of termination to
      SWM prior to the [*****].  Such termination shall be effective
      upon SWM's receipt of Philip Morris's notice of
      termination.  This right of termination is in addition to any
      rights Philip Morris may have with respect to any breach of the Agreement
      that may [*****].

            

    

     

    
      	
               
      

            	
              5.2.3

            	
              Termination
      of Addendum by Philip Morris
[*****]

            

    

     

    
      	
               
      

            	
              5.2.4

            	
              Termination of Addendum upon
      the Expiration or Termination of the Agreement — Except as limited
      by Article 3.2 above, the Addendum shall terminate automatically and
      effective immediately (a) upon the expiration of the Agreement or (b) upon
      the effectiveness of any termination of the Agreement in accordance with
      Article III thereof; provided, however, if Philip Morris has issued a
      Notice to Proceed prior to expiration of the Agreement or prior to the
      effectiveness of any termination of the Agreement, then the Parties'
      obligations to sell and deliver Banded Cigarette Papers as set forth in
      this Addendum shall survive such expiration or termination of the
      Agreement as respects Fine Papers other than Banded Cigarette Papers and
      shall remain in effect as provided in Article 3.2 unless Philip Morris
      provides notice of termination of this Addendum prior to [*****] in
      accordance with 5.2.2 above or
[*****].

            

    

     

    
      	
               
      

            	
              5.3

            	
              Consequences
      of Termination of this Addendum or the
Agreement

            

    

     

    
      	
               
      

            	
              5.3.1

            	
              Discharge of Obligations
      — Except as expressly provided herein, termination of the Addendum by
      either Party shall have the effect of discharging the Parties from all
      duties and obligations the performance of which are not yet due under this
      Addendum.  Such termination shall not release or discharge
      either Party from any obligation incurred or any breach or failure to
      perform hereunder that shall have occurred prior to the effectiveness of
      such termination, nor shall such termination affect any rights and
      obligations of either Party arising under the Agreement with respect to
      Fine Papers other than Banded Cigarette
Papers.

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              5.3.2

            	
              Termination
      Charges

            

    

     

    
      	
               
      

            	
              5.3.2.1

            	
              Termination of Addendum by
      SWM. [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.2

            	
              Termination of Addendum by
      Philip Morris Pursuant to Article
5.2.2

            

    

     

    
      	
               
      

            	
              5.3.2.2.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.2.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.2.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.2.4

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.2.5

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.3

            	
              Termination of Addendum by
      Philip
Morris  [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.3.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.3.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.3.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.4

            	
              Termination of the Agreement by
      Philip Morris [*****].

            

    

     

    
      	
               
      

            	
              5.3.2.5

            	
              Termination
      of the Agreement by SWM

            

    

     

    
      	
               
      

            	
              5.3.2.5.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.5.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.5.2.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.3.2.5.2.2

            	
              [*****]

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              5.4

            	
              Transfer  [*****]

            

    

     

    
      	
               
      

            	
              Philip
      Morris shall be entitled to require SWM to
  [*****]

            

    

     

    
      	
               
      

            	
              5.4.1

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.4.2

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.4.3

            	
              [*****]

            

    

     

    
      	
               
      

            	
              5.4.4

            	
              [*****]

            

    

     

    ARTICLE 6 - REPRESENTATIONS
AND WARRANTIES

     

    
      	
               
      

            	
              6.1

            	
              By
      Philip Morris

            

    

     

    
      	
               
      

            	
              6.1.1

            	
              Philip
      Morris is a corporation duly organized, validly existing and in good
      standing under the laws of the Commonwealth of
  Virginia.

            

    

     

    
      	
               
      

            	
              6.1.2

            	
              Philip
      Morris has all requisite corporate power and authority to execute and
      deliver this Addendum and to carry out its obligations
      hereunder.  This Addendum constitutes the legal, valid and
      binding obligation of Philip Morris, enforceable in accordance with its
      terms, except to the extent enforceability may be limited by federal and
      other applicable bankruptcy, insolvency, reorganization, moratorium or
      similar laws relating to or affecting the enforcement of creditors' rights
      generally, now or hereafter in effect, and subject to usual principles of
      equity.  Neither the execution, delivery or performance of this
      Addendum by Philip Morris nor the compliance by Philip Morris with the
      terms and provisions of this Addendum will violate any Laws or will
      conflict with or result in a breach of any of the terms, conditions or
      provisions of the Articles of Incorporation or Bylaws of Philip Morris or
      any judgment, order, injunction, decree or ruling of any court or
      governmental agency or authority to which Philip Morris is subject or any
      agreement or instrument to which Philip Morris is a party or by which it
      is bound, or constitute a default
thereunder.

            

    

     

    
      	
               
      

            	
              6.1.3

            	
              To
      the knowledge of Philip Morris, there is no claim, suit, action or legal,
      administrative, arbitration or other proceeding or governmental
      investigation pending or threatened against Philip Morris, at law or in
      equity, before any federal, state, municipal or other governmental agency
      or instrumentality, domestic or foreign, that may materially affect Philip
      Morris's ability to perform its obligations under this Addendum; nor, to
      the best of Philip Morris's knowledge, are there any facts which might
      result in any such claim, action, suit or
  proceeding.

            

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              6.2

            	
              By
      SWM

            

    

     

    
      	
               
      

            	
              6.2.1

            	
              SWM
      is a corporation duly organized, validly existing and in good standing
      under the laws of the State of
Delaware.

            

    

     

    
      	
               
      

            	
              6.2.2

            	
              SWM
      has all requisite corporate power and authority to execute and deliver
      this Addendum and to carry out its obligations hereunder.  This
      Addendum constitutes the legal, valid and binding obligation of SWM,
      enforceable in accordance with its terms, except to the extent
      enforceability may be limited by federal and other applicable bankruptcy,
      insolvency, reorganization, moratorium or similar laws relating to or
      affecting the enforcement of creditors' rights generally, now or hereafter
      in effect, and subject to usual principles of equity.  Neither
      the execution, delivery or performance of this Addendum by SWM nor the
      compliance by SWM with the terms and provisions of this Addendum will
      violate any Laws or will conflict with or result in a breach of any of the
      terms, conditions or provisions of the Articles of Incorporation or Bylaws
      of SWM or any judgment, order, injunction, decree or ruling of any court
      or governmental agency or authority to which SWM is subject or any
      agreement or instrument to which SWM is a party or by which it is bound,
      or constitute a default thereunder.

            

    

     

    
      	
               
      

            	
              6.2.2

            	
              To
      the knowledge of SWM, there is no claim, suit, action or legal,
      administrative, arbitration or other proceeding or governmental
      investigation pending or threatened against SWM, at law or in equity,
      before any federal, state, municipal or other governmental agency or
      instrumentality, domestic or foreign, that may materially affect SWM's
      ability to perform its obligations under this Addendum; nor, to the best
      of SWM's knowledge, are there any facts which might result in any such
      claim, action, suit or proceeding.

            

    

     

    ARTICLE 7 - DEFAULT OF
OBLIGATIONS

     

    
      	
               
      

            	
              The
      Agreement, including this Addendum, shall be subject to cancellation in
      accordance with Article XXIII of the Agreement upon the occurrence of an
      Event of Default as set forth therein if such Event of Default is not
      cured or corrected within the periods prescribed; provided, however, a
      cancellation by either Party based on a default not related to the
      delivery or supply of Cigarette Papers, including Banded Cigarette Papers,
      shall not result in a right of cancellation of the Parties' obligations
      with respect to Banded Cigarette Papers as set forth in this
      Addendum.

            

    

     

    
      	
               
      

            	
              The
      following additional Events of Default shall be applicable with respect to
      this Addendum:

            

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              7.1

            	
              By
      Philip Morris

            

    

     

    
      	
               
      

            	
              7.1.1

            	
              Failure
      to make any Advanced Payment in accordance with Article 4
      above;

            

    

     

    
      	
               
      

            	
              7.1.2

            	
              Breach
      of any representation or warranty made by Philip Morris in Article 6.1
      above.

            

    

     

    
      	
               
      

            	
              7.2

            	
              By
      SWM

            

    

     

    
      	
               
      

            	
              7.2.1

            	
              Unexcused
      failure or refusal to prosecute, or delay in the performance of, the
      Work;

            

    

     

    
      	
               
      

            	
              7.2.2

            	
              Breach
      of any representation or warranty made by SWM in Article 6.2
      above;

            

    

     

    
      	
               
      

            	
              7.2.3

            	
              Failure
      or refusal to submit to Philip Morris any report or certificate required
      by Article 2 above; or

            

    

     

    
      	
               
      

            	
              7.2.4

            	
              The
      inclusion of any materially false or misleading information or
      representation in any report or certificate submitted to Philip Morris in
      accordance with Article 2.8.2
above.

            

    

     

    
      	
               
      

            	
              7.3

            	
              Effect
      of Cancellation

            

    

     

    
      	
               
      

            	
              7.3.1

            	
              By
      Philip Morris

            

    

     

    
      	
               
      

            	
              7.3.1.1

            	
              If
      the Agreement is canceled by Philip Morris as a result of a default by SWM
      with respect to the delivery or supply of Cigarette Papers or Banded
      Cigarette Papers and such cancellation is effective [*****] then in
      addition to such remedies as are specified in Article XXIII of the
      Agreement, [*****]. In addition, if and to the extent requested by Philip
      Morris, SWM shall [*****].

            

    

     

    
      	
               
      

            	
              7.3.1.2

            	
              If
      the Agreement is canceled by Philip Morris as a result of a default by SWM
      with respect to the performance under the Agreement, including this
      Addendum, respecting the delivery or supply of Cigarette Papers or Banded
      Cigarette Papers and such cancellation is effective (a) after the [*****]
      and prior to the expiration of the [*****] (b) after the [*****] but
      anytime after a [*****], then in addition to such remedies as are
      specified in Article XXIII of the Agreement, SWM shall be liable to Philip
      Morris for the positive difference, if any, [*****]; provided, however,
      that if such cancellation by Philip Morris results from a willful breach
      of the Agreement by SWM or is as the result of a default occurring
      [*****], SWM shall be liable to Philip Morris for  [*****] In
      addition, without regard to whether the cancellation resulted from a
      willful breach of the Agreement by SWM or from a default occurring [*****]
      if requested by Philip Morris, SWM shall
  [*****].

            

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              7.3.2

            	
              By
      SWM

            

    

     

    
      	
               
      

            	
              7.3.2.1

            	
              Cancellation Prior to
      [*****]— If the Agreement is canceled by SWM effective prior to
      [*****], then in addition to such remedies as are specified in Article
      XXIII of the Agreement, within 30 days after SWM provides Philip Morris
      [*****], Philip Morris shall
[*****].

            

    

     

    
      	
               
      

            	
              7.3.2.2

            	
              Cancellation after
      [*****]– If SWM cancels the Addendum effective after the [*****],
      in addition to SWM's remedies under Article XXIII of the Agreement, Philip
      Morris shall [*****].

            

    

     

    ARTICLE 8 - GENERAL
PROVISIONS

     

    
      	
               
      

            	
              8.1

            	
              Confidentiality

            

    

    
      	
               
      

            	
              All
      information exchanged between the Parties pursuant to the Joint
      Development Agreement, the Agreement or otherwise pertaining to the
      manufacture of Banded Cigarette Papers, Cigarettes incorporating Banded
      Cigarette Papers and the process of applying integrated cellulosic bands
      to Cigarette Paper using a moving orifice device shall be considered
      Confidential Information subject to Article XVIII of the
      Agreement.

            

    

     

    
      	
               
      

            	
              8.2

            	
              Order
      of Precedence

            

    

    
      	
               
      

            	
              In
      the event of a conflict between the provisions contained in this Addendum,
      the Project Documents and/or the Agreement, the conflict shall be resolved
      by giving priority to the documents as
follows:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      Addendum,

            

    

    
      	
               
      

            	
              (b)

            	
              the
      Project Documents,

            

    

    
      	
               
      

            	
              (c)

            	
              the
      Agreement

            

    

     

    
      	
               
      

            	
              8.3

            	
              Representatives

            

    

    
      	
               
      

            	
              The
      representatives designated below shall be the Parties' principal contacts
      for all questions and problems of administration that may arise during the
      performance of this Addendum.

            

    

     

    
      	
               
      

            	
              Philip
      Morris's representatives:

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              With
      respect to the Mill Upgrade Project (the "Philip Morris Project
      Representative")

            

    

     

    
      	
               
      

            	
              [*****]

            

    

    
      	
               
      

            	
              Philip
      Morris U.S.A.

            

    

    
      	
               
      

            	
              Box
      26603

            

    

    
      	
               
      

            	
              Richmond,
      Virginia 23261

            

    

     

    
      	
               
      

            	
              With
      respect to purchase and sale of Banded Cigarette
  Papers

            

    

     

    [*****]

    Philip Morris U.S.A.

    Box
26603

    Richmond, Virginia 23261

     

    
      	
               
      

            	
              SWM's
      representative:

            

    

     

    With
respect to the Mill Upgrade Project:

     

    [*****]

    Schweitzer-Mauduit International,
Inc.

    100 North Point Center
East

    Suite 600

    Alpharetta,
Georgia  30022

     

    
      	
               
      

            	
              With
      respect to purchase and sale of Banded Cigarette
  Papers:

            

    

     

    [*****]

    Schweitzer-Mauduit
International, Inc.

    100 North Point Center
East

    Suite 600

    Alpharetta,
Georgia  30022

     

    
      	
               
      

            	
              Either
      Party may change any representative identified above by providing notice
      to the other Party.

            

    

     

    
      	
               
      

            	
              8.4

            	
              Notices

            

    

    
      	
               
      

            	
              All
      certificates and notices required or permitted under this Addendum
      respecting the Mill Upgrade Project shall be given in writing and
      addressed or delivered to the appropriate Philip Morris or SWM
      representative specified in Article 8.3 above.  All other
      notices shall be given in accordance with Article XXV of the
      Agreement.  Any notice or communication shall be given by hand;
      courier service; registered, certified, express or first class mail
      (postage prepaid); telex or facsimile ("fax").  The date of
      receipt of any notice shall be the date the notice shall be deemed to have
      been given.

            

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              8.5

            	
              Assignment

            

    

    
      	
               
      

            	
              Neither
      Party shall assign or transfer any of its rights or obligations hereunder
      without the prior written consent of the other Party, which consent shall
      not be unreasonably withheld.

            

    

     

    
      	
               
      

            	
              8.6

            	
              Nonwaiver

            

    

    
      	
               

            	
              The
      failure by either Party to demand strict performance of the terms hereof
      or to exercise any right conferred hereby shall not be construed as a
      waiver or relinquishment of its right to assert or rely on any such term
      or right in the future.

            

    

     

    
      	
               
      

            	
              8.7

            	
              Survival
      of Obligations

            

    

    
      	
               
      

            	
              All
      warranties, indemnities, licenses and confidentiality rights and
      obligations provided herein shall survive the expiration, termination, or
      cancellation of this Addendum or the Agreement, except as otherwise
      expressly provided herein.

            

    

     

    
      	
               
      

            	
              8.8

            	
              Amendments

            

    

    
      	
               
      

            	
              No
      amendment, modification or waiver of any term hereof shall be effective
      unless set forth in writing and signed by both
  Parties.

            

    

     

    
      	
               
      

            	
              8.9

            	
              Severability

            

    

    
      	
               
      

            	
              The
      remainder hereto shall not be voided or otherwise affected by the
      invalidity of one or more of the terms
herein.

            

    

     

    
      	
               
      

            	
              8.10

            	
              Tax
      Consequences

            

    

    
      	
               
      

            	
              Each
      Party hereto has sought and received independent advice respecting the
      federal and state tax treatment to be afforded the transactions to be
      conducted hereunder.  The obligations of the Parties hereunder
      are in no way conditioned on either Party receiving any particular tax
      treatment in connection with such transactions.  Neither Party
      shall have any liability to the other if the tax treatment afforded such
      transactions is different than the treatment
  assumed.

            

    

     

    
      	
               
      

            	
              8.11

            	
              Independent
      Contractor

            

    

    
      	
               
      

            	
              SWM
      is an independent contractor for all purposes hereof.  This
      contract is not one of hiring under the provisions of any workers'
      compensation or other laws and shall not be so
      construed.  Nothing herein shall be deemed to constitute a
      partnership or joint venture between the Parties
  hereto.

            

    

     

    
      	
               
      

            	
              8.12

            	
              Interpretation

            

    

     

    
      	
               
      

            	
              8.12.1

            	
              This
      Addendum, and any contract entered into pursuant to this Addendum, shall
      be governed by and interpreted in accordance with the laws of the
      Commonwealth of Virginia, without regard to conflicts of law
      principles.

            

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              8.12.2

            	
              Titles
      and section headings are for convenience of reference only and shall not
      be considered in interpreting the text of this
  Addendum.

            

    

     

    
      	
               
      

            	
              8.12.3

            	
              References
      in the singular shall include the plural if the context so
      requires.

            

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              IN
      WITNESS WHEREOF, the Parties hereto have executed this Addendum, in one or
      more duplicate originals, as of the date and year first above
      written.

            

    

     

    
      
        
          
            
              	
                      PHILIP
      MORRIS INCORPORATED

                    
	 
      
	
                      By:

                    	 
      
	 
      	 
      
	
                      Name:

                    	
                      Henry P. Long, Jr.

                    
	 
      	 
      
	
                      Title:

                    	
                      Vice President of
  Purchasing

                    
	 
      	 
      
	
                      SCHWEITZER-MAUDUIT
      INTERNATIONAL, INC.

                    
	 
      
	
                      By:

                    	 
      
	 
      	 
      
	
                      Name:

                    	
                      Peter J. Thompson

                    
	 
      	 
      
	
                      Title:

                    	
                      President U.S.
  Operations

                    

            

          

        

      

    
 

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    

    
      	
              EXHIBIT
      A

            	
              TRADE
      SECRET

            

    

    

    ADDENDUM
TO [*****] ENGINEERING DESIGN REPORT

    Scope
of Work and [*****]

    

    May 10,
1998

    

    [*****]

     

    [*****]

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    

    BANDED
PAPERS PROJECT

    Adjustment
to [*****]

    

    May 10,
1998

    

    [*****]

    

    
      
        	
                  

              
	
                [*****]
      for
      Philip Morris

              

      

    

    

    
      
        	
                  

              
	
                 [*****]
      for SWM

              

      

    

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    MILESTONE
SCHEDULE

    [*****]

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

    EXHIBIT
C

    

    [*****]

    
      
         

      

      
        C-1

        
          

        

      

      
         

      

    

    EXHIBIT
D

    

    PROJECT
COSTS

    

    The Project Costs include those amounts
to be paid to SWM's contractors and those internal costs incurred by SWM in
connection with the performance of the Work described by the Project
Documents.  The following is an exclusive list of the categories of
Project Costs:

    

    Y = costs to be incurred for this
category

    
      N = no
costs to be incurred for this category

    

    

    
      	
              Contractor Costs
      —

            	
              all
      contractor costs will be at actual cost to SWM (without
      markup)

            

    

    

    
      
        
          
            
              
                	 
      	 
      	
                        Equipment

                      	 
      	
                        Material

                      	 
      	
                        Labor

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Engineering,
      Contstruction Mgmt

                      	 
      	
                        Y

                      	 
      	
                        Y

                      	 
      	
                        Y

                      
	
                        and
      Project Mgmt.

                      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Pulpers

                      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Equipment
      (incl.

                      	 
      	
                        Y

                      	 
      	
                        N

                      	 
      	
                        N

                      
	
                        equipment,
      freight

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        taxes
      and manf. assist.)

                      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Equip.
      Installation

                      	 
      	
                        N

                      	 
      	
                        Y

                      	 
      	
                        Y

                      
	
                        (incl.
      erection labor,

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        foundations,
      piling,

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        paint/insulation,
      misc.

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        and
      demo/relocation)

                      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Building
      (incl. Elect. room,

                      	 
      	
                        Y

                      	 
      	
                        Y

                      	 
      	
                        Y

                      
	
                        buildings,
      structures,

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        utility
      bridges and

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        demo)

                      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Piping
      (incl. process

                      	 
      	
                        Y

                      	 
      	
                        Y

                      	 
      	
                        Y

                      
	
                        piping,
      paint/insulation,

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        demo/reloc.
      and

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        fire
      protection/misc.)

                      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Instrumentation

                      	 
      	
                        Y

                      	 
      	
                        Y

                      	 
      	
                        Y

                      
	
                        (incl.
      DCS/PLC equip.,

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        control
      panels, field

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        instrumentation,
      inst.

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        tubing
      & wiring and

                      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        instrument
      demo/roloc.)

                      	
                          

                      	 
      	
                          

                      	 
      	
                          

                      	 
      

              

            

          

        

      

    

    
      
         

      

      
        D-1

        
          

        

      

      
         

      

    

    

    
      
        	 
      	 
      	
                Equipment

              	 
      	
                Material

              	 
      	
                Labor

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Electrical
      (incl. control

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	
                equipment,
      power wiring,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                substation
      and switch

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                gear,
      grounding and demo/

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                reloc.)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Site
      Prep & Service

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	
                (incl.
      sitework,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                underground
      utilities,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                roads
      & paving, earthwork)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Refining

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Equipment
      (including

              	 
      	
                Y

              	 
      	
                N

              	 
      	
                N

              
	
                equipment,
      freight

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                taxes
      and manf. assist.)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Equipment
      installation

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	
                (incl.
      erection labor,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                foundations,
      piling,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                paint/insulation,
      misc.,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                and
      demo/relocation)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Building

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	
                (incl.
      building lighting

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                buildings,
      structures,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                utility
      bridges and

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                demo)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Piping
      (incl. process

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	
                piping,
      paint/insulation,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                demo/reloc.
      and

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                fire
      protection/misc.)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Instrumentation

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	
                (incl.
      DCS/PLC equip.,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                control
      panels, field

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                instrumentation,
      inst.

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                tubing
      & wiring and

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                instrument
      demo/roloc.

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                and
      rewire existing)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Electrical
      (incl. control

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	
                equipment,
      power wiring,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                substation
      and switch

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                gear,
      grounding and demo/

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                reloc.)

              	 
      	 
      	 
      	 
      	 
      	 
      

      

    

     

    
      
        
        

      

      
        D-2

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	 
      	
                Equipment

              	 
      	
                Material

              	 
      	
                Labor

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Paper
      Machines

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Equipment  (incl.

              	 
      	
                Y

              	 
      	
                N

              	 
      	
                N

              
	
                equipment,
      freight

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                taxes
      and manf. assist.)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Building
      (incl. rooms,

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	
                building
      modifications,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                structures,
      utility bridges

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                and
      building demo)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Piping
      (incl. process

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	
                piping,
      paint/insulation,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                demo/reloc.
      and

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                fire
      protection/misc.)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Instrumentation

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	
                (incl.
      DCS/PLC equip.,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                control
      panels, field

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                instrumentation,
      inst.

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                tubing
      & wiring and

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                instrument
      demo/roloc.

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                and
      rewire existing)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Electrical
      (incl. control

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	
                equipment,
      power wiring,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                substation
      and switch

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                gear,
      grounding and demo/

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                reloc.)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Services

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Equipment
      (incl.

              	 
      	
                Y

              	 
      	
                N

              	 
      	
                N

              
	
                equipment,
      freight

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                taxes
      and manf. assist.)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Building
      (incl. concrete and fencing)

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Instrumentation
      (incl. transformers,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                steam
      line and meters)

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Electrical
      (incl. control

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	
                equipment,
      power wiring,

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                substation
      and switch

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                gear,
      grounding, demo/

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                reloc.
      and heat tracing)

              	 
      	 
      	 
      	 
      	 
      	 
      

      

    

     

    
      
        
        

      

      
        D-3

        
          

        

      

      
        
        

      

    

     

    
      	
              SWM Costs
    –

            	
              Project
      Costs include the following SWM costs to the extent incurred in connection
      with the performance of the Work.

            

    

    

    
      
        	 
      	 
      	
                Equipment

              	 
      	
                Material

              	 
      	
                Labor

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Engineering

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Construction
      Mgmt.

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Project
      Mgmt.

              	 
      	
                Y

              	 
      	
                Y

              	 
      	
                Y

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Operations
      Support

              	 
      	
                N

              	 
      	
                Y

              	 
      	
                Y

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Spare
      Parts

              	
                  

              	
                Y

              	
                  

              	
                N

              	
                  

              	
                N

              

      

    

    

    SWM personnel may charge
time to the Project that shall be included in the Project Costs at the rates
actually capitalized on SWM's books.  Travel and living
expenses for SWM personnel travelling more than 50 miles from their normal
place of business
will be allowed as an adder at actual cost, without markup.

    
      
         

      

      
        D-4

        
          

        

      

      
         

      

    

    EXHIBIT
E

    

    PROCESS
SPECIFICATION RANGES FOR BANDED CIGARETTE PAPERS

    

    Note:  Specification
Ranges may be adjusted if Philip Morris and SWM agree that broader ranges have
been demonstrated to be technically feasible

    

    
      
        	
                Item

              	 
      	
                Minimum

              	 
      	
                Maximum

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****]

              	 
      	
                 

              	 
      	
                [*****]

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****]

              	
                  

              	
                 

              	
                  

              	
                [*****]

              
	 
      	 
      	 
      	 
      	 
      
	
                [*****].

              	 
      	 
      	 
      	 
      

      

    

    
      
         

      

      
        E-1

        
          

        

      

      
         

      

    

    EXHIBIT
F

    

    CONVERSION
SCHEDULE

    

    [*****]

    
      
         

      

      
        F-1

        
          

        

      

      
         

      

    

    EXHIBIT
G

    

    REIMBURSABLE
COSTS

    

    [*****]

    
      
         

      

      
        
          G-1

        

        
          

        

      

      
         

      

    

    EXHIBIT
H

    

    [*****]

    
      
         

      

      
        H-1

        
          

        

      

      
         

      

    

    EXHIBIT
I

    

    [*****]

    
      
         

      

      
        I-1

        
          

        

      

      
         

      

    

    
      	
              EXHIBIT
      J

            	
              TRADE
      SECRET

            

    

    

    PROJECT
DOCUMENTS

     

    EDR

     

    April 1997 Engineering Design
Report

     

    May 10, 1998 addendum to EDR modifying
scope and [*****]

     

    Future change orders pursuant to
Article 2 of the Addendum

    

    Final
Engineering Designs

     

    Piping and instrumentation
drawings

     

    Construction drawings

     

    Detailed equipment design drawings of
MOD components

    

    Bid
Documents

     

    Final specifications that are the basis
of [*****]

    

    Purchase
Orders and Contracts

     

    Scopes of work in all SWM purchase
orders and contracts respecting the Project

    

    Process
operating and maintenance procedures

     

    Procedures (manuals) to operate,
maintain the  [*****], MOD control, & [*****]
systems

    
      
         

      

      
        J-1

        
          

        

      

      
         

      

    

    

    Operating procedures for
[*****]

    

    Process
operations checkout list

     

    All equipment and process check out
procedure lists used in connection with Project

    

    Project
Correspondence

     

    All pertinent correspondence
documenting agreements and commitments of the Parties

    
      
         

      

      
        J-2

        
          

        

      

      
         

      

    

    EXHIBIT
K

     

    BUDGET
FORMAT

     

    [*****]

    
      
         

      

      
        K-1

        
          

        

      

      
         

      

    

    EXHIBIT
L

     

    MONTHLY
PRODUCTION [*****] FORMS

    
      
         

      

      
        L-1

        
          

        

      

      
         

      

    

    EXHIBIT
M

    

    PRECISION
OF CALCULATIONS

     

    INPUT
DATA

     

    
      
        
          
            
              
                
                  	
                          QUANTITY

                        	 
      	
                          UNIT

                        	 
      	
                          PRECISION

                        
	 	 	 	 	 
	
                          Bobbin
      Length

                        	 
      	
                          [*****]

                        	 
      	
                          [*****]

                        
	
                          Bobbin
      Width

                        	 
      	
                          [*****]

                        	 
      	
                          [*****]

                        
	
                          Invoice
      Price

                        	 
      	
                          [*****]

                        	 
      	
                          [*****]

                        
	
                          Volume

                        	 
      	
                          [*****]

                        	 
      	
                          [*****]

                        
	
                          [*****]

                        	 
      	
                          [*****]

                        	 
      	
                          [*****]

                        
	
                          [*****]

                        	 
      	
                          [*****]

                        	 
      	
                          [*****]

                        
	
                          [*****]

                        	 
      	
                          [*****]

                        	 
      	
                          [*****]

                        
	
                          CALCULATED
      DATA

                           

                        	 
      	 
      	 
      	 
      
	
                          QUANTITY

                        	 
      	 
      	 
      	
                          PRECISION

                        
	 	 	 	 	 
	
                          All
      calculated values

                        	 
      	 
      	 
      	
                          [*****]

                        
	 	 	 	 	 
	
                          COMPARATIVE
      VALUES

                        	 
      	 
      	 
      	 
      
	 	 	 	 	 
	
                          QUANTITY

                        	 
      	
                          UNIT

                        	 
      	
                          PRECISION

                        
	 	 	 	 	 
	
                          Percentage
      Change1

                        	
                            

                        	
                          [*****]

                        	
                            

                        	
                          [*****]

                        

                

              

            

          

        

      

    

     

    
      
        

      

      1
[*****]

    

    
      
         

      

      
        M-1

        
          

        

      

      
         

      

    

    

    
      
        	
                OUTPUT
      DATA

                 

              	 
      	 
      	 
      	 
      
	
                QUANTITY

              	 
      	
                UNIT

              	 
      	
                PRECISION

              
	 
      	 
      	 
      	 
      	 
      
	
                Prices

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              	 
      	
                [*****]

              

      

    

    
      
         

      

      
        M-2

        
          

        

      

      
         

      

    

    EXHIBIT
N

    

    ADVANCED
PAYMENT AMOUNTS & DATES

     

    
      
        
          
            	
                    Months
      from

                    Notice
      to Proceed

                  	 	
                    Advanced

                    Payment Amount

                  	 
	 
      	 	 	 
	
                    Upon
      execution of Addendum

                  	 	$	2,000,000	 
	
                    By
      September 1, 2000

                  	 	$	1,000,000	 
	
                    5

                  	 	$	4,000,000	 
	
                    7

                  	 	$	4,000,000	 
	
                    9

                  	 	$	4,000,000	 
	
                    11

                  	 	$	4,000,000	 
	
                    13

                  	 	$	4,000,000	 
	
                    15

                  	 	$	4,000,000	 
	
                    17

                  	 	$	4,000,000	 
	
                    19

                  	 	$	4,000,000	 
	
                    21

                  	 	$	4,000,000	 
	
                    29

                  	 	$	3,000,000	 

          

        

      

    

    
      
         

      

      
        N-1

        
          

        

      

      
         

      

    

    EXHIBIT
O

    

    [*****] SPOTSWOOD
MILL[*****]

    

    
      
        	
                Machine Number

              	  	
                Capacity in Standard Bobbins

              
	  	 
      	 
      
	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	 
      	
                [*****]

              
	
                [*****]

              	
                  

              	
                [*****]

              

      

    

    

    *Reflects [*****]
if SWM  [*****], i.e., no
consideration in this case for [*****] used for [*****].

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
P

      

      [*****]a6382557ex10-1.htm

 

Exhibit 10.1

 

 

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (this “Agreement”) is made as of this 1st day of August 2010, by and between BE Aerospace, Inc., a Delaware corporation (the “Company”) and Werner Lieberherr (the “Executive”).

 

RECITALS

 

WHEREAS, the Executive and the Company entered into an Amended and Restated Employment Agreement dated as of December 9, 2008 (the “Employment Agreement”); and

 

WHEREAS, the Company wishes to make secure for itself the experience, abilities and services of the Executive and to prevent the loss of such experience, services and abilities; and

 

WHEREAS, the Executive and the Company wish to amend and restate the Employment Agreement in its entirety in the manner set forth herein;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto, each intending to be legally bound, do hereby agree as follows:

 

1.          Reference to Employment Agreement.  The Employment Agreement is hereby restated, superseded and replaced in its entirety by this Agreement.

 

2.   Employment.  Unless otherwise terminated pursuant to the provisions of Section 5 hereof, Executive shall provide to the Company services hereunder during the term of his employment under this Agreement, which shall be the period ending three (3) years from any date as of which the term is being determined (the “Employment Term”).  The date on which the Employment Term ends, including any extensions thereof, is sometimes hereinafter referred to as the “Expiration Date.”

 

3.   Position and Duties.  The Executive shall serve the Company in the capacity of Vice President and General Manager, Commercial Aircraft Segment, and shall be accountable to, and shall have such other powers, duties and responsibilities, consistent with this capacity, as may from time to time be prescribed by the President and Chief Operating Officer of the Company, or his designee.  The Executive shall perform and discharge, faithfully, diligently and to the best of his ability, such powers, duties and responsibilities.  The Executive shall devote all of his working time and efforts to the business and affairs of the Company.

 

4.   Compensation.

 

(a)   Salary.  During the Employment Term, the Executive shall receive a salary (the “Salary”) payable at the rate of $460,000 per annum.  Such rate shall be subject to adjustment from time to time by the Compensation Committee of the Board of Directors (the “Compensation Committee”); provided, however, that it shall at no time be adjusted below the Salary then in effect.  The Salary shall be payable biweekly or in accordance with the Company’s current payroll practices, less all required deductions.  The Salary shall be pro-rated for any period of service less than a full year.

 

  

  

  

 

(b)   Incentive Bonus.  During the Employment Term, the Executive may receive an incentive performance bonus in accordance with the Company’s executive bonus plan then in effect, as determined by the Compensation Committee in its sole discretion.  The incentive bonus shall be paid in accordance with Company policy, but in no event later than March 15th of the year following the year in which it is earned.

 

(c)   Expenses.  During the Employment Term, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by him on behalf of the Company in accordance with the Company’s policies in effect from time to time.

 

(d)   Benefits.  During the Employment Term, the Executive shall be entitled to participate in or receive benefits under any life or disability insurance, health, pension, retirement, accident, and other employee benefit plans, programs and arrangements made generally available by the Company to its employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements in effect from time to time.  In accordance with the Company’s policies in effect from time to time, the Executive shall also be entitled to paid vacation in any fiscal year during the Employment Term as well as all paid holidays given by the Company to its employees.

 

(e)   Automobile.  During the Employment Term, the Executive shall receive an automobile allowance (the “Automobile Allowance”) of $1,100 per month less applicable taxes, payable in accordance with Company policy, but in no event later than March 15th of the year following the year in which the Automobile Allowance will accrue.

 

5.   Termination and Compensation Thereon.

 

(a)   Termination.  Subject to the terms and conditions of this Agreement, the Executive’s employment pursuant to this Agreement may be terminated either by the Executive or the Company at any time and for any reason.  The term “Termination Date” shall mean if the Executive’s employment is terminated (i) by his death, the date of his death or (ii) for any other reason, the date on which the Executive incurs a Separation from Service, (as defined below).

 

(b)   Death.  The Executive’s employment hereunder shall terminate upon his death.  In such event, the Company shall, within thirty (30) days following the date of death, pay to such person as the Executive shall have designated in a notice filed with the Company, or, if no such person shall have been designated, to his estate, a lump sum amount equal to the Salary and Automobile Allowance (at the rate in effect as of the Termination Date) payable during the period from the Termination Date through the Expiration Date.

 

(c)   Incapacity.  If, in the reasonable judgment of the President and Chief Operating Officer, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from his full-time duties as described hereunder for the entire period of six (6) consecutive months (“Incapacity”), the Executive’s employment shall terminate at the end of the six (6)-month period.  In such event, upon the Termination Date, the Company shall pay to the Executive a lump sum payment equal to the Salary and Automobile Allowance (at the rate in effect as of the Termination Date) payable during the period from the Termination Date through the Expiration Date.  The lump sum payment shall be made within sixty (60) days following the Termination Date, provided that prior to the payment date the Executive signs a waiver and release agreement in the form provided by the Company and such waiver and release becomes effective and irrevocable in its entirety prior to such date. If the waiver and release does not become effective and irrevocable on or prior to the payment date set forth in the preceding sentence, the Company shall have no further obligations pursuant to Sections 5(c) or 5(g).  Any dispute between the President and Chief Operating Officer and the Executive with respect to the Executive’s Incapacity shall be settled by reference to a competent medical authority mutually agreed to by the President and Chief Operating Officer and the Executive, whose decision shall be binding on all parties.

 

  

2

  

 

(d)   Termination by the Company for Cause; Resignation by the Executive.

 

(i) If the Company terminates the Executive’s employment for Cause or the Executive resigns his employment for any reason (other than pursuant to Section 5(f)), the Company shall have no further obligations to the Executive hereunder after the Termination Date, except for unpaid Salary and benefits accrued through the Termination Date.

 

(ii) For purposes of this Agreement, “Cause” shall mean (i) the Executive’s material failure, refusal or neglect to perform and discharge his powers, duties and responsibilities hereunder (including duties prescribed by the President and Chief Operating Officer pursuant to Section 3 above), other material breach of the terms hereof, or breach of any fiduciary duties Executive may have because of any position Executive holds with the Company or any subsidiary or affiliate thereof; or (ii) a felony conviction or a conviction for any crime involving the Executive’s personal dishonesty or moral turpitude.

 

(e)   Termination Without Cause.  The Company may terminate the Executive’s employment hereunder at any time without Cause.  In such event, the Company shall pay to the Executive a lump sum payment equal to:

 

(i)  the Salary payable during the period from the Termination Date through the Expiration Date; and

 

(ii)   one (1) times the Salary in effect as of the Termination Date.

 

The lump sum payment shall be made within sixty (60) days following the Termination Date provided that, prior to the payment date, the Executive signs a waiver and release agreement in the form provided by the Company and such waiver and release becomes effective and irrevocable in its entirety prior to such date. If the waiver and release does not become effective and irrevocable on or prior to the payment date set forth in the preceding sentence, the Company shall have no further obligations pursuant to Sections 5(e) or 5(g).

 

(f)   Change of Control.

 

(i) If a “Change of Control” occurs during the Employment Period and following, or in connection with such Change of Control, the Executive’s employment is terminated by the Company for any reason (other than Cause), or the Executive resigns his employment because any of the Executive’s position, location, powers, duties or responsibilities under Section 3 above are materially reduced/changed without his agreement, any compensation or benefit payable or otherwise extended to the Executive hereunder (including without limitation Salary, incentive bonus and fringe benefits as set forth in Section 4 above) is eliminated or materially reduced, the Company or its successor in interest shall give prompt notice to the Executive of any such elimination or reduction and pay to the Executive a lump sum amount equal to:

 

  

3

  

 

	
(x)  

	
 the Executive’s Salary (at the rate in effect as of the Termination Date), payable during the period from the Termination Date through the Expiration Date; and

 

	
(y)  

	
one (1) times the Salary (at the rate in effect as of the date of the Change of Control).

 

The lump sum payment shall be made within thirty (30) days following the Termination Date.

 

(ii) For purposes of this Agreement, a “Change of Control” shall mean a “change in control event” within the meaning of the default rules under Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (the “Code”).  The obligations of the Company pursuant to this Section 5(f) shall survive any termination of this Agreement or the Executive’s employment or any resignation of such employment by the Executive pursuant to this Section 5(f).

 

(g)   Benefit Continuation.  If the Executive's employment is terminated pursuant to Sections 5(c), 5(e) or 5(f), the Company shall provide the Executive and his eligible dependents with continued participation in medical, dental and health benefit plans available to the Company’s executive officers on similar terms and conditions as active executives, from the Termination Date until the earlier of (i) the Expiration Date and (ii) the date the Executive becomes eligible for comparable benefits provided by a third party; provided, however, that the continuation of such benefits shall be subject to the respective terms of the applicable plan, in effect from time to time, and the timely payment by the Executive of his applicable share of the applicable premiums in effect from time to time.  To the extent that reimbursable medical and dental care expenses constitute deferred compensation for purposes of Section 409A, the Company shall reimburse the medical and dental care expenses as soon as practicable consistent with the Company’s practice, but in no event later than the last day of the calendar year next following the calendar year in which such expenses are incurred.

 

6.   Amendments.  No amendment to this Agreement or any schedule hereto shall be effective unless it shall be in writing and signed by each party hereto.

 

7.   Notices.  All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally or sent by telecopy or three days after being 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):

 

  

4

  

 

	 	
If to the Company, to it at:

	 	 
	 	  	
BE Aerospace, Inc.

	 	  	
1455 Fairchild Road

	 	  	
Winston Salem, NC 27105

	 	  	
Attention:  President and Chief Operating Officer

	 	  	  
	 	  	
with a copy to:

	 	  	  
	 	  	
BE Aerospace, Inc.

	 	  	
1400 Corporate Center Way

	 	  	
Wellington, FL 33414

	 	  	
Attention:  General Counsel

	 	  	  
	 	
If to the Executive, to him at:

	 	  	  
	 	  	
Werner Lieberherr

	 	  	
255 Belleford Court

	 	  	
Lewisville NC 27023

 

8.    Entire Agreement.  This Agreement and the Proprietary Rights Agreement attached hereto as Exhibit A constitute the entire agreement among the parties hereto pertaining to the subject matter hereof and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties.

 

9.    Headings.  The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof.

 

10.  Counterparts.  This Agreement may be executed in any number of counterparts which together shall constitute one instrument.

 

11.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws (other than the conflict of laws rules) of the State of Florida.

 

12.  Withholding.  All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.

 

13.  Section 409A.

 

(a) If any amounts that become due under Section 5 of this Agreement constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code  (“Section 409A”), payment of such amounts shall not commence until the Executive incurs a “Separation from Service” (as defined below) if and only if necessary to avoid accelerated taxation or tax penalties in respect of such amounts.

 

 

  

5

  

 

(b)   Notwithstanding any provision of this Agreement to the contrary, if Executive is a “Specified Employee” (as defined below) he shall not be entitled to any payments upon a Separation from Service until the earlier of (i) the date which is the first (1st) business day following the date that is six (1) months after the Executive’s Separation from Service for any reason other than death or (ii) the Executive’s date of death.  The provisions of this Section 13(b) shall only apply if required to comply with Section 409A.

 

(c)   For purposes of this Agreement, “Separation from Service” shall have the meaning set forth in Section 409A(a)(2)(A)(i) and determined in accordance with the default rules under Section 409A.  “Specified Employee” shall have the meaning set forth in Section 409A(a)(2)(B)(i), as determined in accordance with the uniform methodology and procedures adopted by the Company and then in effect.

 

(d)   It is intended that the terms and conditions of this Agreement comply with Section 409A.  If any provision of this Agreement contravenes any regulations or Treasury guidance promulgated under Section 409A, or could cause any amounts or benefits hereunder to be subject to taxes, interest and penalties under Section 409A, the Company may, in its sole discretion and without the Executive’s consent, modify the Agreement to:  (i) comply with, or avoid being subject to, Section 409A, (ii) avoid the imposition of taxes, interest and penalties under Section 409A, and/or (iii) maintain, to the maximum extent practicable, the original intent of the applicable provision without contravening the provisions of Section 409A. This Section 13(d) does not create an obligation on the part of the Company to modify this Agreement and does not guarantee that the amounts or benefits owed under this Agreement will not be subject to interest and penalties under Section 409A.

 

(e)   Anything in this Agreement to the contrary notwithstanding, no reimbursement payable to the Executive pursuant to any provisions of this Agreement or pursuant to any plan or arrangement of the Company Group covered by this Agreement shall be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred, except to the extent that the right to reimbursement does not provide for a “deferral of compensation” within the meaning of Section 409A.  No amount reimbursed during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year.

 

14.   Enforceability; Waiver.  The invalidity and unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof.  The Executive’s or the Company’s failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right that the Executive or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.  Similarly, the waiver by any party hereto of a breach of any provision of this Agreement by the other party will not operate or be construed as a waiver of any other or subsequent breach by such other party.

 

15.   Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.  This Agreement may be assigned by the Company.  The Executive may not assign or delegate his duties under this Agreement without the Company’s prior written approval.

 

  

6

  

 

16.   Survival.  The entitlement of the Executive and the obligations of the Company pursuant to Section 5 hereof shall each survive any termination or expiration of this Agreement, or any termination or resignation of the Executive’s employment, as the case may be.

 

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

 

	  	
EXECUTIVE

	 
	 	 	 
	 	 	 
	  	
/s/ Werner Lieberherr

	 
	  	
Werner Lieberherr

	 
	 	 	 
	 	 	 
	  	
BE AEROSPACE, INC.

	 
	 	 	 
	 	 	 
	  	
/s/ Thomas P. McCaffrey

	 
	  	
Thomas P. McCaffrey

	 
	  	
Senior Vice President and Chief Financial Officer

 

 

 

  

7

  

 

 

Exhibit A

 

Proprietary Rights Agreement

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