Document:

exv10w2

 

EXHIBIT 10.2

FORM OF

EMPLOYEE MATTERS AGREEMENT

     This Employee Matters Agreement, dated as of    , 2004, is between
Kimberly-Clark Corporation (“Kimberly-Clark”), a Delaware corporation, and
Neenah Paper, Inc. (“Neenah Paper”), a Delaware corporation.

RECITALS

     A. Kimberly-Clark and Neenah Paper have entered into a Distribution
Agreement dated as of    , 2004 (the “Distribution Agreement”) pursuant
to which all of the outstanding shares of Neenah Paper’s common stock will be
distributed on a pro rata basis to the holders of Kimberly-Clark’s common stock
(the “Distribution”).

     B. Pursuant to the Distribution Agreement, Kimberly-Clark will transfer,
or cause its subsidiaries to transfer, to Neenah Paper certain assets and
properties prior to the Distribution in exchange for a cash payment and the
assumption by Neenah Paper of certain liabilities and obligations of
Kimberly-Clark and its subsidiaries.

     C. In connection with the Distribution, Kimberly-Clark and Neenah Paper
desire to enter into this Employee Matters Agreement.

     In consideration of the mutual agreements contained herein and in the
Distribution Agreement, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     As used in this Agreement, the following terms shall have the meanings set
forth below. Capitalized terms used but not defined herein shall have the
meanings set forth in the Distribution Agreement.

     1.01 “Business Employee” means an individual employed at any time on or
prior to the Distribution Date by Kimberly-Clark or any of its subsidiaries or
affiliates who has, as of the Distribution Date, or who, immediately prior to
his or her termination of employment with all of Kimberly-Clark, its
subsidiaries and affiliates, had employment duties primarily related to the
Neenah Business, excluding any individuals with administrative support
functions who are based in one of the Dallas, Knoxville or Neenah
administrative centers.

     1.02 “Canadian Business Employee” means a Business Employee employed in
Canada by Kimberly-Clark, Inc., a Canadian corporation and wholly owned
subsidiary of Kimberly-Clark.

     1.03 “Cessation Time” has the meaning set forth in Section 3.01.

     1.04 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of
1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at section
4980B of the Code.

 

     1.05 “Code” means the U.S. Internal Revenue Code of 1986, as amended.

     1.06 “Domestic Business Employee” means a Business Employee who is not a
Canadian Business Employee.

     1.07 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. §1001, et. seq.

     1.08 “IRS” means the U.S. Internal Revenue Service.

     1.09 “Non-ERISA Benefit Arrangement” means each contract, agreement,
policy, practice, program, plan, trust or arrangement, other than a Pension
Plan or Welfare Plan, providing for benefits, perquisites or compensation of
any nature to any Business Employee, or to any family member, dependent or
beneficiary of any such Business Employee, including, without limitation,
disability, severance, health, dental, life, accidental death and
dismemberment, travel and accident, tuition reimbursement, supplemental
unemployment, vacation, sick, personal or bereavement days, holidays,
retirement, deferred compensation, profit sharing, bonus, stock-based
compensation or other forms of incentive compensation.

     1.10 “Pension Plan” means any pension plan as defined in section 3(2) of
ERISA, without regard to sections 4(b)(4) or 4(b)(5) of ERISA.

     1.11 “Transferred Employee” means a Business Employee described in Section
2.01(a) or 2.01(b) who is employed by Neenah Paper.

     1.12 “Welfare Plan” means any employee welfare plan as defined in section
3(1) of ERISA, without regard to sections 4(b)(4) or 4(b)(5) of ERISA.

ARTICLE II

TRANSFERRED EMPLOYEE MATTERS

     2.01 Employment.

         (a) Union Employees. On or before the Distribution Date, Neenah Paper
shall employ or continue to employ each Business Employee who, as of the day
immediately prior thereto, (i) is employed by Kimberly-Clark or any of its
affiliates or subsidiaries, including any such employee who is then an inactive
employee on approved medical, non-medical or short-term disability, long-term
disability or weekly indemnity leave of absence or absent from active
employment due to occupational illness or injury covered by workers’
compensation, and (ii) is represented by a union certified as the bargaining
agent of such Business Employee. Such employment shall be subject to the terms
and conditions negotiated in the collective bargaining agreement or collective
agreement between such union and Kimberly-Clark or any of its affiliates or
subsidiaries.

         (b) Non-Union Employees. On or before the Distribution Date, Neenah Paper
shall employ or continue to employ each Domestic Business Employee and offer to
employ each Canadian Business Employee who, as of the day immediately prior
thereto (i) is employed by Kimberly-Clark or any of its affiliates or
subsidiaries, including any such employee who is then an inactive employee on
approved medical, non-medical or short-term disability,

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long-term disability or weekly indemnity leave of absence or absent from
active employment due to occupational illness or injury covered by workers’
compensation, and (ii) is not represented by a union certified as the
bargaining agent of such Business Employee, on terms and conditions
substantially similar to the terms and conditions of such Business Employee’s
employment with Kimberly-Clark or any of its affiliates or subsidiaries. The
terms and conditions of employment with Neenah Paper (x) shall be communicated
to each such Business Employee prior to the Distribution Date in a form
mutually satisfactory to Neenah Paper and Kimberly-Clark, (y) shall include
credit, for all purposes, for all years of service credited by Kimberly-Clark
and its subsidiaries and affiliates, and (z) may include a requirement to
execute a confidentiality and non-compete agreement between such Business
Employee and Neenah Paper.

     2.02 Severance. It is not intended that any Transferred Employee will be
eligible for termination or severance payments or benefits from Kimberly-Clark
or its subsidiaries or affiliates as a result of the transfer or change of
employment from Kimberly-Clark to Neenah Paper or their respective subsidiaries
or affiliates. Notwithstanding the preceding sentence, in the event that any
such termination or severance payments or benefits become payable on account of
such transfer, change or the refusal of a Business Employee to accept
employment with Neenah Paper, Neenah Paper shall indemnify Kimberly-Clark, or
its subsidiaries or affiliates, for the amount of such termination or severance
payments or benefits. Neenah Paper shall be liable, and indemnify
Kimberly-Clark, or its subsidiaries or affiliates, for any termination or
severance obligations owed to Business Employees on or after the Distribution
Date, including obligations to Business Employees whose employment ceased prior
to the Distribution Date.

     2.03 Employment Solicitation. For a period of three (3) years following
the Distribution Date, neither Kimberly-Clark nor Neenah Paper may, and will
not permit any of their respective subsidiaries, affiliates or agents to,
solicit or recruit for employment any then current exempt salaried, managerial
or supervisory employees of the other company or its subsidiaries or
affiliates, without the prior written consent of the other company. Nothing in
this Section 2.03 shall be construed so as to (i) prohibit the hiring by either
company or its subsidiaries or affiliates of any exempt salaried, managerial or
supervisory employee of the other company who in good faith is believed to be
actively seeking employment on his/her own initiative without prior contact
initiated by any employee or agent of the company where employment is sought,
or (ii) prohibit the hiring of any person who applied for employment with
either company in response to any public advertising medium.

     2.04 Personnel Records. Subject to applicable law, all information and
records regarding employment and personnel matters of Transferred Employees
will be Transferred Assets and shall be retained after the Distribution Date by
Neenah Paper in accordance with all laws relating to the collection, storage,
retention and disclosure of such records. Access to such records after the
Distribution Date will be provided to Kimberly-Clark in accordance with Article
2 and Section 12.1 of the Distribution Agreement. Notwithstanding the
foregoing, Kimberly-Clark shall retain reasonable access to those records
necessary to Kimberly-Clark’s continued administration of any plans or programs
on behalf of Transferred Employees after the Distribution Date for so long as
said administration continues pursuant to this Agreement. Kimberly-Clark shall
also retain copies of all confidentiality and non-compete agreements with any
Business Employee in which Kimberly-Clark has an interest. Personnel files for
Business Employees who are not Transferred Employees shall be retained by
Kimberly-Clark with

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provision for access by Neenah Paper in accordance with Article 2 and
Section 12.1 of the Distribution Agreement.

ARTICLE III

WELFARE PLANS

     3.01 Cessation of Participation in Kimberly-Clark Welfare Plans. Except
as otherwise provided in this Agreement or as required by the terms of any
Kimberly-Clark Welfare Plan or by COBRA or any comparable state or provincial
law, participation in the Kimberly-Clark Welfare Plans by all Transferred
Employees and all Canadian Business Employees who are not Transferred Employees
will cease as of 11:59 p.m. on the Distribution Date (the “Cessation Time”).

     3.02 Neenah Paper’s Welfare Plans. Effective as of the Cessation Time,
Neenah Paper shall have in place for the benefit of Transferred Employees and
Canadian Business Employees who are not Transferred Employees and their
respective eligible dependents, health (including medical, vision and dental),
post-retirement health, life, post-retirement life, accidental death and
dismemberment, disability and other Welfare Plans substantially similar to the
Welfare Plans maintained by Kimberly-Clark or any of its subsidiaries or
affiliates in which such individuals participate. Transferred Employees and,
as applicable, Canadian Business Employees who are not Transferred Employees
shall be eligible to participate in the Neenah Paper Welfare Plans immediately
following the Cessation Time on the same basis on which they were eligible to
participate in the Kimberly-Clark Welfare Plans immediately prior to the
Cessation Time.

     3.03 Welfare Plan Liabilities.

         (a) Neenah Paper Liabilities. Except as provided in this Agreement, as of
the Cessation Time, Neenah Paper shall assume, and be solely responsible for
(i) all Welfare Plan liabilities incurred by any Transferred Employee after the
Cessation Time and (ii) all post-retirement medical, dental and life plan or
program liabilities incurred by any Canadian Business Employee who is
participating in a Kimberly-Clark-sponsored continuation plan as of the
Cessation Time; provided, that any benefits for claims incurred prior to the
Cessation Time pursuant to the terms of a fully insured plan maintained by
Kimberly-Clark shall be paid pursuant to such plan.

         (b) Kimberly-Clark Liabilities. Kimberly-Clark shall continue to be
responsible after the Cessation Time for employer liabilities under its Welfare
Plans with respect to the following:

            (1) Terminated Domestic Employees. Any Domestic Business Employee
whose employment terminated prior to the Cessation Time for any reason
and who elected or is eligible to elect, pursuant to a
Kimberly-Clark-sponsored continuation plan or rights under COBRA or any
comparable state law, to continue participation in any Welfare Plan in
which he/she was enrolled on the applicable date of termination.

            (2) Dependents. Any dependent of a Domestic Business Employee whose
employment terminated prior to the Cessation Time who elected, or is
eligible to elect pursuant to rights under COBRA or any comparable state
law continuation coverage under Kimberly-Clark’s Welfare Plans as of the
Cessation Time.

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            (3) Retirees. Any Domestic Business Employee whose employment
terminated prior to the Cessation Time due to retirement and who elected
or is eligible to elect, pursuant to a Kimberly-Clark-sponsored
continuation plan or rights under COBRA, or any comparable state law, to
continue participation in any Welfare Plan.

            (4) Disabled Persons. Any Domestic Business Employee who is not on
Kimberly-Clark’s payroll and is receiving long-term disability benefits
as of the Cessation Time who is eligible to elect, pursuant to a
Kimberly-Clark-sponsored continuation plan or rights under COBRA, or any
comparable state law, to continue participation in any Welfare Plan.

            (5) Pre-Distribution Claims. Except as provided in Sections 2.02,
3.04 and 3.08, all claims for welfare benefits incurred by Transferred
Employees prior to the Cessation Time, whether such claims have been paid
or remain unpaid as of such date. Claims for health benefits shall be
considered to be incurred prior to the Cessation Time if the services
related to such claims were provided prior to the Cessation Time. Claims
for all other welfare benefits shall be considered to be incurred prior
to the Cessation Time if the date of loss occurred prior to the Cessation
Time.

     3.04 Flexible Spending Accounts. Effective as of the Cessation Time,
Neenah Paper shall have in place a flexible spending account plan in which
Transferred Employees shall maintain their existing eligibility and
participation status under the flexible spending account plan maintained by
Kimberly-Clark. Salary reduction elections made by Transferred Employees under
the Kimberly-Clark flexible spending account plan shall continue to apply with
respect to the Neenah Paper flexible spending account plan at least through the
end of the 2004 calendar year. As of the Cessation Time, Neenah Paper shall
credit or debit (as applicable) the account of each Transferred Employee under
the Neenah Paper flexible spending account plan with an amount equal to the
positive or negative balance of such Transferred Employee’s flexible spending
accounts under the Kimberly-Clark flexible spending account plan immediately
prior to the Cessation Time. Kimberly-Clark shall pay, or cause to have paid,
to Neenah Paper any net positive balance of the amounts credited to the
flexible spending accounts of Transferred Employees as of the Cessation Time,
and Neenah Paper shall pay, or cause to have paid, to Kimberly-Clark any net
negative balance of the amounts credited to such accounts. Any such payments
shall be made as soon as administratively practicable after the Cessation Time.
Neenah Paper shall assume and be solely responsible for (i) all claims which
have been submitted by Transferred Employees under the Kimberly-Clark flexible
spending account plan but not yet paid as of the Cessation Time, and (ii) all
claims submitted under the Neenah Paper flexible spending account plan after
the Cessation Time. Kimberly-Clark shall provide Neenah Paper with copies of
any records available to Kimberly-Clark to document the claims described in
clause (i) above.

     3.05 Kimberly-Clark Assets. Except as provided in Section 3.04 above,
Kimberly-Clark shall retain all claim reserves, bank accounts, trust funds or
other balances maintained by or on behalf of Kimberly-Clark’s Welfare Plans.

     3.06 Past Service Credit. Neenah Paper shall credit Transferred Employees
and, as applicable, Canadian Business Employees who are not Transferred
Employees with all years of service credited to such individuals by
Kimberly-Clark and its subsidiaries and affiliates for all

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purposes relating to Neenah Paper’s Welfare Plans. Kimberly-Clark shall
provide Neenah Paper with copies of any records available to Kimberly-Clark to
document such service.

     3.07 Past Credit for Amounts Paid. Neenah Paper shall credit Transferred
Employees and, as applicable, Canadian Business Employees who are not
Transferred Employees with any amounts paid under the Kimberly-Clark Welfare
Plans toward satisfaction of applicable deductible amounts and copayments,
coinsurance and out-of-pocket maximums under the corresponding Welfare Plans
maintained by Neenah Paper to the extent such payments would have been taken
into account under the Kimberly-Clark Welfare Plans. Kimberly-Clark shall
provide Neenah Paper with copies of any records available to Kimberly-Clark to
document such payments.

     3.08 Disability.

         (a) Weekly Indemnity/Short-Term Disability Benefits. Neenah Paper shall
be responsible for all claims for weekly indemnity and short-term disability
benefits payable to Business Employees on or after the Distribution Date.
Kimberly-Clark shall continue to be responsible after the Distribution Date for
all claims for weekly indemnity and short-term disability benefits incurred by
a Business Employee prior to the Distribution Date which are payable under an
insured weekly indemnity or short-term disability plan.

         (b) Long-Term Disability Benefits. Kimberly-Clark shall continue to be
responsible after the Cessation Time for all claims for long-term disability
incurred prior to the Cessation Time by any Business Employee who is absent
from active employment due to a total disability, as defined in the
Kimberly-Clark disability plan, on or prior to the Cessation Time to the extent
that such long-term disability benefits are provided under an insured Welfare
Plan. Kimberly-Clark shall also remain responsible for long-term disability
benefits for any Transferred Employee [employed in the U.S.] who is receiving
[weekly indemnity or] short-term disability benefits as of the Cessation Time
and who becomes eligible for long-term disability benefits thereafter, provided
that the total disability relates to the same condition for which [weekly
indemnity or] short-term disability benefits were paid and, provided further,
that such long-term disability benefits are payable under an insured Welfare
Plan. Neenah Paper shall assume and be solely responsible for all other claims
for long-term disability payable after the Cessation Time with respect to any
Business Employee.

ARTICLE IV

COMPENSATION MATTERS

AND NON-ERISA BENEFIT ARRANGEMENTS

     4.01 Cessation of Participation in Kimberly-Clark Non-ERISA Benefit
Arrangements. Except as otherwise provided in this Agreement or as required by
the terms of any Kimberly-Clark Non-ERISA Benefit Arrangement, or by provincial
law, participation in Kimberly-Clark Non-ERISA Benefit Arrangements will cease
for all Transferred Employees and all Canadian Business Employees who are not
Transferred Employees as of the Cessation Time.

     4.02 Assumption of Certain Employee Related Obligations. Effective as of
the Cessation Time, Neenah Paper shall assume, and none of Kimberly-Clark or
any of its subsidiaries or affiliates shall have any further liability for, the
following agreements, obligations

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and liabilities; provided, however, that if any such agreement, obligation
or liability cannot be assumed by Neenah Paper for a reason beyond the control
of the parties hereto, including the refusal of a third party to agree to such
an assumption, then Neenah Paper shall indemnify Kimberly-Clark or its
subsidiaries and affiliates and hold them harmless with respect to such
agreement, obligation or liability, as though it had been assumed by Neenah
Paper.

         (a) Agreements entered into between Kimberly-Clark, its subsidiaries or
affiliates and Transferred Employees.

         (b) Agreements entered into between Kimberly-Clark, its subsidiaries or
affiliates and independent contractors providing services to the Neenah
Business, including independent contractors working at the Effluent Treatment
Plant in Pictou.

         (c) All confidentiality and non-compete agreements between Kimberly-Clark,
its subsidiaries or affiliates and Transferred Employees.

         (d) All collective bargaining agreements and collective agreements entered
into between Kimberly-Clark, its subsidiaries or affiliates and any union
representing a Business Employee.

         (e) All wages, salary, incentive compensation, commissions and bonuses
payable to Business Employees after the Cessation Time except that
Kimberly-Clark shall retain liability for amounts payable to Business Employees
under the Kimberly-Clark Management Achievement Award Program for the portion
of the 2004 calendar year occurring prior to the Cessation Time.

         (f) Any severance payments owed, but not yet paid, to any Business
Employee whose employment terminated prior to the Cessation Time.

         (g) All commitments under the Kimberly-Clark Global Assignment Program
with respect to Business Employees, except those maintained for the benefit of
Sean Erwin, [Keith Johnson,] Bill O’Conner and Dennis Runsten.

         (h) All moving expenses incurred by Transferred Employees in connection
with the Distribution except those listed on Schedule 4.02(h) hereto.

         (i) All immigration-related rights, obligations and liabilities related to
Transferred Employees, including but not limited to, all obligations,
liabilities and undertakings of any labor condition applications filed on
behalf of H-1B employees.

         (j) All liabilities and obligations whatsoever of the Neenah Business with
respect to claims made by or with respect to Business Employees or any other
persons who at any time prior to the Distribution Date had employment duties
primarily related to the Neenah Paper Business relating to Non-ERISA Benefit
Arrangements with respect to the Neenah Business and not otherwise retained or
assumed by Kimberly-Clark pursuant to this Agreement, including such
liabilities relating to actions or omissions of or by Neenah Paper or any
officer, director, employee or agent thereof prior to the Distribution Date.

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     4.03 Equity Compensation Plans.

         (a) Unexercisable Options. As of the Cessation Time, each outstanding
option to purchase Kimberly-Clark common stock, other than an option granted
under the Kimberly-Clark Corporation Global Stock Option Plan, that is held by
a Transferred Employee (an “Option”) shall, to the extent such Option is not
exercisable as of the Cessation Time, be cancelled and replaced with a
substitute option granted by Neenah Paper to purchase from Neenah Paper shares
of Neenah Paper common stock. The exercise price of each such substitute
option shall be equal to the exercise price of the existing Option multiplied
by a fraction, the numerator of which is the closing price of Neenah Paper
common stock as of the Distribution Date and the denominator of which is the
closing price of Kimberly-Clark common stock as of the Distribution Date. The
number of shares of Neenah Paper common stock subject to each such substitute
option shall be equal to the number of shares subject to the existing Option
multiplied by a fraction, the numerator of which is the closing price of
Kimberly-Clark common stock as of the Distribution Date and the denominator of
which is the closing price of Neenah Paper common stock as of the Distribution
Date. Employment or service credited by Kimberly-Clark and its subsidiaries
and affiliates and Neenah Paper shall be taken into account in determining when
such substitute options become exercisable, and when they terminate. Except as
otherwise provided herein, each substitute option shall be exercisable upon the
same terms and conditions as were applicable under the related Option
immediately prior to the Cessation Time.

         (b) Exercisable Options. Prior to the Distribution Date, each Transferred
Employee who holds an Option that is, or is scheduled to be, exercisable as of
the Cessation Time shall be permitted to elect to convert such Option into a
substitute option to purchase Neenah Paper common stock, in the manner set
forth in Section 4.03(a). Such elections shall be made at such time and
pursuant to such procedures as shall be mutually satisfactory to Kimberly-Clark
and Neenah Paper. Any such Option that is not so converted shall remain
exercisable following the Distribution Date, pursuant to its terms, only for
the period during which such Option remains exercisable following the holder’s
termination of employment with Kimberly-Clark, its subsidiaries or affiliates.

         (c) Restricted Stock. In connection with the Distribution, each
outstanding restricted stock award held by a Transferred Employee shall become
vested on a prorated basis based on the number of such Transferred Employee’s
full years of employment with Kimberly-Clark, its subsidiaries and affiliates
during the applicable restriction period in accordance with the terms of the
applicable Kimberly-Clark equity compensation plan and award agreement. With
respect to any partial year of employment completed during the applicable
restriction period by such a holder of an outstanding restricted stock award
prior to the Distribution, Kimberly-Clark shall pay to the holder of such
outstanding restricted stock award a cash payment equal to the prorated value
of the additional shares of restricted stock that would have become vested upon
the completion of such year, but for the Distribution, based on the number of
full months of employment with Kimberly-Clark, its subsidiaries or affiliates
during such year which are completed prior to the Distribution.

         (d) Other Equity Awards. Except as provided in Sections 4.03(a), (b) and
(c), all outstanding equity compensation awards held by Business Employees
under the

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Kimberly-Clark equity compensation plans shall be subject to the terms of
such plans and applicable award agreements.

     4.04 Workers’ Compensation.

         (a) U.S. Employees. Except as provided herein, Neenah Paper shall be
solely responsible for all claims for workers’ compensation reported by a
Transferred Employee employed in the U.S. on or after the Distribution Date.
Kimberly-Clark shall continue to be responsible after the Distribution Date for
administering all claims for workers’ compensation reported by a Domestic
Business Employee prior to the Distribution Date under the terms of any
Kimberly-Clark workers’ compensation policy or plan; however, Neenah Paper
shall reimburse, and shall indemnify Kimberly-Clark, or its subsidiaries or
affiliates, for any amounts payable under such claims. In accordance with
Section 6.05, Kimberly-Clark shall transfer, or cause to have transferred, to
Neenah Paper the amount of any reserves related to such claims which have been
set aside by Kimberly-Clark, its subsidiaries or affiliates prior to the
Distribution Date.

         (b) Canadian Employees. Neenah Paper shall be solely responsible, and
shall indemnify Kimberly-Clark, or its subsidiaries or affiliates, for all
claims for workers’ compensation reported by a Canadian Business Employee
before, on or after the Distribution Date. Any experience refunds which relate
to such claims shall be paid to Neenah Paper, or if received by Kimberly-Clark
or its subsidiaries or affiliates, paid by Kimberly-Clark or its subsidiaries
or affiliates to Neenah Paper. Neenah Paper shall be solely responsible for,
and shall indemnify Kimberly-Clark, or its subsidiaries or affiliates, for any
experience surcharges which relate to such claims.

         4.05 Accrued Vacation Days Off. Neenah Paper shall recognize and assume
all liability for all vacation, holiday, flex days and personal days off,
including banked vacation, accrued by Transferred Employees as of the Cessation
Time and Neenah Paper shall credit each Transferred Employee with such days off
accrual.

         4.06 Leaves of Absence. Neenah Paper shall establish leave of absence
policies which are substantially similar to the leave of absence policies
maintained by Kimberly-Clark and will continue to apply such policies to
inactive Transferred Employees who are on an approved leave of absence as of
the Distribution Date. Transferred Employees shall be eligible for leaves of
absence after the Distribution Date to the same extent they would have been had
they remained employed by Kimberly-Clark, its subsidiaries or affiliates.
Leaves of absence taken by Transferred Employees prior to the Distribution Date
shall be deemed to have been taken as employees of Neenah Paper.

         4.07 Past Service Credit. Neenah Paper shall credit Transferred Employees
with all years of service credited to such Transferred Employees by
Kimberly-Clark and its subsidiaries and affiliates for all purposes relating to
Neenah Paper’s Non-ERISA Benefit Arrangements. Kimberly-Clark shall provide
Neenah Paper with copies of any records available to Kimberly-Clark to document
such service.

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ARTICLE V

PENSION PLANS

     5.01 Canadian Plans.

         (a) Registered Pension Plans. Effective as of the Distribution Date,
Kimberly-Clark shall cause to have assigned and transferred to Neenah Paper all
of the rights, duties, obligations and liabilities of Kimberly-Clark, Inc.
under, and in relation to each of (i) the Pension Plan for Hourly-Paid
Employees of Kimberly-Clark, Inc., at Nova Scotia, (ii) the Pension Plan for
Salaried Employees of Kimberly-Clark, Inc. at Nova Scotia, and (iii) the
Kimberly-Clark Forest Products (Ontario) Retirement Plan as administrator,
sponsor and employer in respect of such plans and Neenah Paper shall accept
such assignment and transfer and shall assume all rights, duties, obligations
and liabilities of Kimberly-Clark, Inc., as the successor administrator,
sponsor and employer in respect of such plans.

         (b) Savings Plan. Effective as of the Distribution Date, Neenah Paper
shall establish a savings plan that is substantially similar to the
Kimberly-Clark, Inc. Employee Savings Plan (the “KCI Savings Plan”) for all
Canadian Business Employees (the “Neenah Paper Canadian Savings Plan”).
Canadian Business Employees will be offered the opportunity to transfer the
account balance of their select investments and self-directed investments in
the RRSP component of the KCI Savings Plan to the Neenah Paper Canadian Savings
Plan and with respect to any spousal or common-law partner RRSP accounts, their
spouses or common-law partners shall be offered the same opportunity.

     5.02 U.S. Defined Contribution Plans.

         (a) Employees’ Incentive Investment Plan.

            (1) Establishment of Neenah Paper 401(k) Plan. Effective as of the
Distribution Date, Neenah Paper shall adopt, establish and maintain a
Pension Plan and trust qualified under section 401(a) and section 501(a)
of the Code (the “Neenah Paper 401(k) Plan”) that is substantially
similar to the Kimberly-Clark Corporation Employees’ Incentive Investment
Plan and trust (the “IIP”). Neenah Paper shall assume and thereafter be
solely responsible for all then existing or future employer liabilities
arising from or related to the Neenah Paper 401(k) Plan and the
administration thereof. As soon as practicable after the adoption of the
Neenah Paper 401(k) Plan, Neenah Paper shall submit an application to the
IRS for a determination regarding the qualification of the Neenah Paper
401(k) Plan and shall take any actions not inconsistent with Neenah
Paper’s other general commitments contained in this Agreement and make
any amendments necessary to receive a favorable determination letter.

            (2) Transfer of Account Balances. As soon as administratively
practicable after the Distribution Date, there shall be transferred to
the Neenah Paper 401(k) Plan assets having a value as of the applicable
valuation date that are equal to the value of the account balances of,
and liabilities with respect to, all Transferred Employees with an
account balance under the IIP as of such valuation date, as

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determined by Kimberly-Clark. Such transferred assets shall be in
cash and Kimberly-Clark stock (except for any promissory notes evidencing
outstanding loan balances of Transferred Employees), and shall be in
accordance with section 414(l) of the Code. Liabilities under any
qualified domestic relations orders (as defined in section 414(p) of the
Code) received with respect to any assets transferred to the Neenah Paper
401(k) Plan shall be transferred to Neenah Paper at the time such assets
are transferred.

         (b) Retirement Contribution Plan.

            (1) Establishment of Neenah Paper Retirement Contribution Plan.
Effective as of the Distribution Date, Neenah Paper shall adopt,
establish and maintain a Pension Plan and trust qualified under section
401(a) and section 501(a) of the Code (the “Neenah Paper RCP”) that is
substantially similar to the Kimberly-Clark Corporation Retirement
Contribution Plan and trust (the “RCP”). Neenah Paper shall assume and
thereafter be solely responsible for all then existing or future employer
liabilities arising from or related to the Neenah Paper RCP and the
administration thereof. As soon as practicable after the adoption of the
Neenah Paper RCP, Neenah Paper shall submit an application to the IRS for
a determination regarding the qualification of the Neenah Paper RCP and
shall take any actions not inconsistent with Neenah Paper’s other general
commitments contained in this Agreement and make any amendments necessary
to receive a favorable determination letter.

            (2) Transfer of Account Balances. As soon as administratively
practicable after the Distribution Date, there shall be transferred to
the Neenah Paper RCP assets having a value as of the applicable valuation
date that are equal to the value of the account balances of, and
liabilities with respect to, all Transferred Employees with an account
balance under the RCP as of such valuation date, as determined by
Kimberly-Clark. Such transferred assets shall be in cash and
Kimberly-Clark stock, and shall be in accordance with section 414(l) of
the Code. Liabilities under any qualified domestic relations orders (as
defined in section 414(p) of the Code) received with respect to any
assets transferred to the Neenah Paper RCP shall be transferred to Neenah
Paper at the time such assets are transferred.

     5.03 U.S. Pension Plan.

         (a) Adoption of Neenah Paper Pension Plan. Effective as of the
Distribution Date, Neenah Paper shall adopt, establish and maintain a Pension
Plan and trust qualified under section 401(a) and section 501(a) of the Code
(the “Neenah Paper Pension Plan”) that is substantially similar to the
Kimberly-Clark Corporation Pension Plan and trust (the “Kimberly-Clark Pension
Plan”).

         (b) Determination Letter. As soon as practicable after the adoption of
the Neenah Paper Pension Plan, Neenah Paper shall submit an application to the
IRS for a determination regarding the qualification of the Neenah Paper Pension
Plan and shall take any actions not inconsistent with Neenah Paper’s other
general commitments contained in this Agreement and make any amendments
necessary to receive a favorable determination letter.

11

 

         (c) Transfer of Assets and Liabilities.

            (1)
Within [thirty (30) days] after the Distribution Date, the
actuary engaged by the Kimberly-Clark Pension Plan shall determine the
present value of accumulated benefits, as of the Distribution Date, for
Transferred Employees with an accrued benefit under the Kimberly-Clark
Pension Plan in accordance with section 414(l) of the Code and the de
minimis rule set forth in Treasury Regulations section 1.414(l)-1(n)(2)
based on an alternative set of reasonable termination basis actuarial
assumptions as determined by such actuary (the “Transfer Amount”). In
determining the Transfer Amount, the actuary engaged by the
Kimberly-Clark Pension Plan shall use a methodology substantially as set
forth in the letter from Mr. L. Robert Frazier of Kimberly-Clark to Mr.
Andreas Wilkinson of the Pension Benefit Guaranty Corporation (the
“PBGC”) dated [July 15, 2004], subject to any modifications discussed and
agreed to by and between Kimberly-Clark and the PBGC.

            (2)
Within [fifteen (15) days] after the later to occur of (i) the
date the actuary engaged by the Kimberly-Clark Pension Plan determines
the Transfer Amount, or (ii) the expiration of the thirty (30) day
waiting period prescribed by section 6058(b) of the Code (which Neenah
Paper and Kimberly-Clark shall take all action to commence promptly),
Kimberly-Clark shall direct the trustee of the Kimberly-Clark Pension
Plan to deliver the Transfer Amount in immediately available funds to the
trustee of the Neenah Paper Pension Plan.

            (3) From the Distribution Date to the actual date of delivery of the
Transfer Amount (the “Transfer Date”), the trustee of the Kimberly-Clark
Pension Plan shall hold the Transfer Amount under the Neenah Paper
Pension Plan and the Transfer Amount shall be credited with earnings,
from the Distribution Date to the Transfer Date, at a rate equal to the
rate of return on four-week Treasury Bills for the weekly period that
includes the Distribution Date.

            (4) The Transfer Amount shall be reduced (A) as necessary to reflect
benefit payments made (if any) from the Kimberly-Clark Pension Plan on
behalf of any Transferred Employees who retire after the Distribution
Date and whose benefits commence under the Neenah Paper Pension Plan
prior to the Transfer Date and (B) by the pro-rata portion of monthly
investment expenses incurred by the Kimberly-Clark Pension Plan
attributable to the Transfer Amount for the period beginning on the
Distribution Date and ending on the Transfer Date. Such expenses shall
equal .025% of the Transfer Amount per calendar month (partial calendar
months shall be prorated based on the number of days in such month).

            (5) As of the Cessation Time, the Neenah Paper Pension Plan shall
assume all liabilities with respect to Transferred Employees under the
Kimberly-Clark Pension Plan. Neither Kimberly-Clark, its subsidiaries or
affiliates nor the Kimberly-Clark Pension Plan shall retain any such
liabilities.

 

            (6) In connection with the transfer of assets and liabilities from
the Kimberly-Clark Pension Plan to the Neenah Paper Pension Plan:

            (i) Kimberly-Clark and Neenah Paper each warrant to the other
that they will comply with the requirements of ERISA, the Code and
Rev. Rul. 86-48 and that the accrued benefits for each participant
under the Neenah Paper Pension Plan immediately after the effective
date of such transfer of assets shall not be less than such
participant’s accrued benefits under the Kimberly-Clark Pension
Plan immediately prior to the effective date of such transfer,
based on reasonable actuarial assumptions determined by the actuary
engaged by the Kimberly-Clark Pension Plan in good faith;

            (ii) Neenah Paper and Kimberly-Clark shall, in connection with
such transfer, cooperate in making all appropriate filings required
under the Code or ERISA, and the regulations thereunder; and

            (iii) Liabilities under any qualified domestic relations
orders (as defined in section 414(p) of the Code) received with
respect to any assets transferred to the Neenah Paper Pension Plan
shall be transferred to Neenah Paper at the time such assets are
transferred.

     5.04 Past Service Credit. With respect to all Business Employees, Neenah
Paper shall recognize all service, plan participation and membership recognized
under the KCI Savings Plan, the IIP, the RCP and the Kimberly-Clark Pension
Plan for purposes of determining benefit eligibility, participation, vesting,
and calculation of benefits under Neenah Paper’s retirement plans and programs
including the Neenah Paper Canadian Savings Plan, the Neenah Paper 401(k) Plan,
the Neenah Paper RCP, the Neenah Paper Pension Plan, and non-pension fringe
benefit plans. Kimberly-Clark will provide to Neenah Paper copies of any
records available to Kimberly-Clark to document such service, plan
participation and membership and cooperate with Neenah Paper to resolve any
discrepancies or obtain any missing data for purposes of determining benefit
eligibility, participation, vesting and calculation of benefits with respect to
such Business Employees.

     5.05 Other Retirement Benefit Plans.

         (a) Domestic Employees. Effective as of the Distribution Date, Neenah
Paper shall adopt, establish and maintain a new supplemental executive
retirement plan that is substantially similar to the Kimberly-Clark
supplemental executive retirement plan in which Transferred Employees employed
in the U.S. participate. Neenah Paper shall assume and be solely responsible
for any liabilities arising from or in connection with the Transferred
Employees employed in the U.S. under such plan.

         (b) Canadian Employees. Effective as of the Distribution Date, Neenah
Paper shall establish supplemental employee retirement plans or other pension
plans which are not registered that are substantially similar to the
Kimberly-Clark supplemental employee retirement plans in which Canadian
Business Employees participate, including but not limited to any monthly
retirement income arrangements payable pursuant to the settlement of union
grievances and any special retirement packages applicable to Canadian Business
Employees

13

 

employed at the Terrace Bay or Longlac facilities of the Neenah Business.
Neenah Paper shall assume and be solely responsible for any liabilities arising
from or in connection with all such Canadian Business Employees under such
plans.

     5.06 Further Cooperation. The parties shall provide each other such
records and information as may be necessary or appropriate to carry out their
obligations under this Article V or for the purposes of administering the
Neenah Paper plans described herein, and they will cooperate in the filing of
documents required by the transfer of assets and liabilities described herein.

ARTICLE VI

GENERAL PROVISIONS

     6.01 Miscellaneous. All “Miscellaneous Matters” contained in Article 13
of the Distribution Agreement are fully applicable hereto and are incorporated
herein by reference.

     6.02 Preservation of Rights to Amend. The rights of Kimberly-Clark or
Neenah Paper to amend or terminate any plan referred to herein shall not be
limited in any way by this Employee Matters Agreement.

     6.03 Applicability to Neenah Paper Subsidiaries. The obligations of
Neenah Paper in this Agreement shall also be applicable to any subsidiary or
affiliate of Neenah Paper, and Neenah Paper shall cause its subsidiaries or
affiliates to comply with such obligations.

     6.04 Administrative Complaints/Litigation. As of and after the
Distribution Date, Neenah Paper shall assume, and be solely liable for, the
handling, administration, investigation, and defense of actions, including,
without limitation, ERISA, occupational safety and health, employment
standards, union grievances, wrongful dismissal, discrimination or human rights
and unemployment compensation claims, asserted at any time against
Kimberly-Clark or Neenah Paper by any Business Employee or any other person
arising out of or relating to employment with the Neenah Business or Neenah
Paper. Any Losses arising from such actions shall be deemed Assumed
Liabilities under the Distribution Agreement. Kimberly-Clark reserves the
right to participate in the investigation, defense or settlement of any matter
to the extent it deems reasonably necessary.

     6.05 Reimbursement and Indemnification. The parties hereto agree to
reimburse each other, within 30 days of receipt from the other party of
appropriate verification, for all costs and expenses which each may incur on
behalf of the other as a result of any of the Welfare Plans, Pension Plans and
Non-ERISA Benefit Arrangements and, as contemplated by Section 2.02, any
termination or severance payments or benefits. All liabilities retained,
assumed or indemnified against by Neenah Paper pursuant to this Agreement shall
be deemed Assumed Liabilities, and all liabilities retained, assumed or
indemnified against by Kimberly-Clark pursuant to this Agreement shall be
deemed Retained Liabilities, and in each case shall be subject to the
indemnification provisions of Article 10 of the Distribution Agreement.

     6.06 No Third Party Beneficiaries. No Transferred Employee or other
current or former employee of Kimberly-Clark or Neenah Paper or any subsidiary
or affiliate of either (or his/her spouse, dependent or beneficiary), or any
other person not a party to this Agreement, shall be entitled to assert any
claim hereunder. This Agreement shall be binding upon and inure

14

 

to the benefit only of the parties hereto and their respective successors.
Notwithstanding any other provisions to the contrary except with respect to
such successors, this Agreement is not intended and shall not be construed for
the benefit of any third party or any person not a signatory hereto. In no
event shall this Agreement constitute a third party beneficiary contract.

15

 

     IN WITNESS WHEREOF, the parties have caused this agreement to be executed
in their names by a duly authorized officer as of the date first written above.

	 	 
	 	KIMBERLY-CLARK CORPORATION

	 
	 
	 	By:   

Name:

Title:
	 
	 
	 
	 
	 	NEENAH PAPER, INC
	 
	 
	 	By:   

Name:

Title: Chief Executive Officer

16

 

Schedule 4.02(h)

Moving Expenses Retained by Kimberly-Clark

17exv10w3

 

EXHIBIT 10.3

FORM OF
CORPORATE SERVICES AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

     6. Limitation on Liability.

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

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

     (c) In no event will Kimberly-Clark’s liability, whether based on
contract, tort (including without limitation, negligence), warranty or any
other legal or equitable grounds,

2

 

exceed in the aggregate the amount of fees paid to Kimberly-Clark under this
Agreement.

     7. Termination. This Agreement shall terminate on    , 200_, but
may be terminated earlier in accordance with the following:

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

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

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

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

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

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

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

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

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

     11. Ownership of Information. Any information owned by one party or any
of its subsidiaries that is provided to the other party or any of its
subsidiaries pursuant to this Agreement shall remain the property of the
providing party. Unless specifically set forth herein, nothing contained in
this Agreement shall be construed as granting or conferring rights of license
or otherwise in any such information.

3

 

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

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

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

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

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

	 	 	 	 	 
	

	 	If to Kimberly-Clark:
	 	Kimberly-Clark Corporation
	

	 	 	 	351 Phelps Drive
	

	 	 	 	Irving, Texas 75038
	

	 	 	 	Attn: General Counsel
	

	 	 	 	Facsimile: (214) 281-1492
	 
	 	 	 	 
	

	 	If to Neenah:
	 	Neenah Paper, Inc.
	

	 	 	 	3460 Preston Ridge Road
	

	 	 	 	Alpharetta, Georgia 50005
	

	 	 	 	Attn: General Counsel
	

	 	 	 	Phone: (678) 566-6500
	

	 	 	 	Fax: (678)                     

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

4

 

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

	 	 	 	 	 
	 
	 	KIMBERLY-CLARK CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 
	 	NEENAH PAPER, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:
	 	Sean Erwin
	

	 	Title:
	 	Chief Executive Officer

5

 

EXHIBIT A

SERVICES TO BE RENDERED BY KIMBERLY-CLARK

Management Information Services

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

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

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

     Business Systems Project Charges

	 	 	 	 	 
	Fine Paper	 	$/Month
	PIMS Maintenance
	 	 	2,800	 
	PIMS O/A
	 	 	1,500	 
	Payroll/Benefit Support
	 	 	10,400	 
	Training & Doc Consulting
	 	 	1,000	 
	Legacy Systems Support
	 	 	9,900	 
	Purchasing/Stores Support
	 	 	3,800	 
	Legacy Stores Operating Assistance
	 	 	100	 
	Technical Paper
	 	 	 	 
	General Mfg and Order Entry Support
	 	 	13,600	 
	PIMS Support & Identified Projects
	 	 	4,500	 
	General Maintenance and Staff Support
	 	 	2,100	 
	General O/A
	 	 	3,900	 
	Payroll/Benefit Support
	 	 	8,000	 
	Training & Doc Consulting
	 	 	600	 
	Legacy Systems Support
	 	 	6,500	 
	Purchasing/Stores Support
	 	 	1,900	 
	Legacy Stores Operating Assistance
	 	 	100	 

 

 

	 	 	 	 	 
	Computer Services Support Charges
	 	 	 	 
	Desktop Services and Messaging
	 	 	97,400	 
	Connectivity Services
	 	 	67,500	 
	Voice
	 	 	49,500	 
	SAP R/3
	 	 	30,400	 
	SAP B/W
	 	 	13,000	 
	Mainframe Services
	 	 	52,400	 
	UNIX Services
	 	 	23,000	 
	Windows Services
	 	 	43,100	 
	AS/400 Services
	 	 	25,900	 
	e-Business
	 	 	11,900	 

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

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

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

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

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

 

 

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

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

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

Employee Benefits Administration and Payroll Services

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

 

 

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

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

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

To the extent Kimberly-Clark agrees, in its sole discretion, to continue
providing such services during 2005, such services shall be provided at a cost
to Neenah of $125.00 per hour. If Kimberly-Clark determines not to provide
these services to Neenah in 2005, Kimberly-Clark agrees to provide Neenah
advance notice on or before    , 2004.

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

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

Canadian Pension Plans. Neenah will pay Kimberly-Clark from its assets, and
not out of any pension plan assets, a fee in the amount of $1,500 per month for
services to be provided by Kimberly-Clark relating to the management of the
investment structure for the Canadian pension plans for the period beginning
with the Distribution and ending on the date the assets

 

 

and liabilities are transferred to the trustee of the corresponding pension
plan established by Neenah (the “Transfer Date”).

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

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

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

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

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

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

 

 

Transportation Services

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

Environment and Energy Services

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

	 	•	 	Boiler and related equipment inspections and operational advice;

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

	 	•	 	Fuel and energy cost and consumption report data management;

	 	•	 	Thermographic electric surveys;

	 	•	 	Performance of Corporate Environmental Inspections at Neenah mills;

	 	•	 	Environmental regulatory/technical advice and assistance

	 	•	 	Forestry audits and certification advice and assistance; and

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

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

Treasurer’s Office Services

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

Purchasing Services

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

	 	 	 	 	 
	Purchasing materials and services for Fine Papers
	 	$6,100 per month
	Purchasing materials and services for Technical Papers
	 	$6,100 per month
	Transaction processing for Purchasing System
	 	$6,100 per month
	Systems support for Purchasing System
	 	$2,000 per month

 

 

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

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

Risk Management

Kimberly-Clark’s Risk Management Department will provide advice as requested on
whether Neenah’s insurance brokers are properly following through on and
assisting with administration of Neenah insurance coverages. The cost of such
services will be $200 per month. Such services will be available for two (2)
months after the Distribution Date.

Tax Services

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

Activities required by the Tax Sharing Agreement are specifically excluded from
this hourly charge and will be provided free of charge under the terms set for
the in the Tax Sharing Agreement.

Accounting Services

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

	 	 	 	 	 
	Service
	 	Cost per Month
	
 
	 	 	
 	 
	Centralized Mill Accounting — Fine Paper
	 	$	11,900	 
	Centralized Mill Accounting — Technical Paper
	 	$	4,700	 
	Cost Accounting
	 	$	7,300	 
	Knoxville AP
	 	$	10,700	 
	SYZYGY
	 	$	16,500	 
	Property Accounting
	 	$	4,000	 
	Accounts Receivable/Credit
	 	$	12,900	*
	Financial Reporting
	 	$	10,900	 

*Accounts Receivable/Credit billing amount will be reduced by $5,000 when
Neenah no longer requires Credit support from KC. K-C will also bill for the
cost of a temporary employee if required to handle manual accounts receivable
transactions for the first 90 days after the Distribution Date.

 

 

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

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

Patent Services

Kimberly-Clark will provide patent support services to Neenah consistent with
the services provided prior to the Distribution Date. Such services of
Kimberly-Clark attorneys and paralegals as requested by Neenah and agreed to by
Kimberly-Clark will be provided until December 31, 2004 at $250 per hour for
attorney time and $150 per hour for paralegal time. All costs of maintaining
patents and patent applications, as requested by Neenah, anywhere in the world,
will be charged directly to Neenah.

Trademark Services

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

Roswell Technical Support

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

Tenancy

Neenah will be provided a month-to-month tenancy in the space which is occupied
by the Business, as of the date hereof, at Kimberly-Clark’s Roswell, Georgia
Operations Headquarters complex. Rent and related tenancy charges for the
space occupied by the Technical Papers research team will be $13,600 per month.
Neenah will provide Kimberly-Clark with at least thirty (30) days’ prior
written notice of the specific day in such month that Neenah will vacate such
premises. The related tenancy charges include charges for all taxes,
utilities, and tenant services that are currently being provided by K-C or
third parties on behalf of K-C (primarily Site Administration and the Health
Center), including, but are not limited to, electricity, maintenance, security,
groundskeeping, mail service, warehouse service and access to cafeteria and
health services. Neenah will make a good faith effort to vacate such premises
and terminate the tenancy no later than December 31, 2005.

 

 

Corporate Security

KC will provide corporate security services to Neenah consistent with those
services provided prior to the distribution date. The cost of such services
will be $5,000 per month plus direct expenses associated with special
investigations.

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