Document:

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          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         superseded herein, the terms and conditions of the Agreement shall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.

                                 R E C I T A L S

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 [*****] in accordance with the terms of
         this Addendum [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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         [*****] of Banded Cigarette Papers and other Cigarette Papers
         from SWM.

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.

         N O W  T H E R E F O R E, the Parties agree as follows:

ARTICLE 1 - DEFINITIONS

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

         1.1      [*****]

         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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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                  Banded Cigarette Papers production hereunder will be qualified
                  to produce Banded Cigarette Papers.

         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     [*****]

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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                  [*****]

         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) [*****] after the day on which the [*****] 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.

         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.

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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         1.20     [*****]

         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.

         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

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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                  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     [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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         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.

         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     [*****]

         1.48     [*****]

         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.

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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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
                           [*****] 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.

                  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

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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                           Schedule. [*****] 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    [*****]

                  2.3.3    If the engineering and project management contractor
                           currently engaged by SWM is demobilized [*****], 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 [*****], 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.

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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         2.5      PHILIP MORRIS REVIEW AND APPROVAL

                  2.5.1    Philip Morris shall have the opportunity to [*****]

                  2.5.2    Philip Morris shall have the opportunity [*****].

                  2.5.3    The Philip Morris Project Representative shall have
                           [*****]

         2.6      CHANGES TO PROJECT AND SUSPENSION OF WORK

                  [*****]  SWM shall not authorize or permit any departure from
                           or change to the scope of the Work unless [*****]
                           shall be authorized to grant written approval of such
                           departures or changes and to act on [*****] Project

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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                           Representative that are recorded in writing and
                           signed by [*****].

                  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; [*****].

                  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 [*****] 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 [*****] 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; [*****].

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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         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 [*****]

                  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, [*****].

                  2.7.3    Notwithstanding Article 2.7.2, Philip Morris shall
                           [*****] (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

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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                           Work by Philip Morris as permitted by Article 2.6.3,
                           Philip Morris shall [*****] in accordance with
                           Article [*****] 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 [*****], Philip
                           Morris shall [*****] as the result of such
                           suspension, but only for the period any of the
                           [*****], such [*****] in the manner set forth in
                           Article [*****] by Philip Morris pursuant to [*****]
                           Article [*****] are hereinafter referred to as
                           [*****].

                  2.7.4    SWM's right to an equitable adjustment in the
                           Schedule or [*****] pursuant to Article 2.7.1 or
                           Article 2.7.2 and/or any [*****] pursuant to Article
                           [*****] is expressly conditioned on SWM providing
                           Philip Morris notice of its intent to request such
                           adjustment (a) within [*****] after SWM receives
                           Philip Morris's notice of change, (b) within [*****]
                           of the event relied upon by SWM as giving rise to any
                           constructive change or (c) within [*****] after
                           Philip Morris directs SWM to resume the Work
                           following a suspension. Within [*****] 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 [*****],
                           which shall detail SWM's justification for any
                           proposed equitable adjustment [*****]. The Parties
                           shall attempt to resolve any request by SWM for an
                           equitable adjustment within [*****]. Philip Morris
                           shall [*****] any [*****] in accordance with Article
                           [*****] within [*****] after receipt of such formal
                           request for [*****].

                  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 [*****]
                           Article 2.7.2 and/or (b) any [*****] requested
                           pursuant to Article [*****] and shall not halt or
                           delay performance because of any failure to so agree
                           to any such equitable adjustment [*****].

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

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         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 [*****] compared to the
                           [*****] 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 [*****], and continuing through the calendar
                           quarter in which the Final Completion Date occurs,
                           SWM shall provide Philip Morris [*****] 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.

         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.

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       14
<PAGE>   15

         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
                           [*****].

                  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 [*****], 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 [*****], SWM
                           shall determine the [*****] but in doing so shall
                           seek to minimize the [*****].

                  2.10.3   Philip Morris and its representatives shall [*****]
                           during trial runs on the converted Paper Machines for
                           [*****].

         2.11     PROJECT [*****]
                  Within [*****] after the Final Completion Date, SWM shall
                  provide Philip Morris with [*****]. Such [*****] shall be in
                  sufficient detail for Philip Morris to verify, to Philip
                  Morris's reasonable satisfaction, the [*****] and [*****]
                  specified in Exhibit D hereto.

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       15
<PAGE>   16

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    [*****]

                  3.2.3    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       16
<PAGE>   17

                  3.2.4    [*****]

                  3.2.5    [*****]

                  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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       17
<PAGE>   18

                           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 [*****]

                  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.

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       18
<PAGE>   19

                  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  [*****]

                           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 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       19
<PAGE>   20

                                    [*****]

                           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    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       20
<PAGE>   21

                  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 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       21
<PAGE>   22

                                    [*****]

                           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:

                           3.5.2.1  [*****]

                           3.5.2.2  [*****]

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       22
<PAGE>   23

                                    [*****]

                           3.5.2.3  [*****]

                           3.5.2.4  CONSUMER PRICE INDEX -- the Consumer Price
                                    Index for [*****]

                           3.5.2.5  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       23
<PAGE>   24

                                    [*****]

                           3.5.2.6  [*****]

                                         [*****]

                                         [*****]

                                         [*****]

                           3.5.2.7  [*****]

                                         [*****]

                                         [*****]

                                         [*****]

                           3.5.2.8  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       24
<PAGE>   25

                                         [*****]

                                         [*****]

                                         [*****]

                           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.

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       25
<PAGE>   26

                           3.5.2.15 PRODUCER PRICE INDEX -- the [*****]

                           3.5.2.16 [*****]

                           3.5.2.17 [*****]

                           3.5.2.18 [*****]

                           3.5.2.19 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       26
<PAGE>   27

                                    [*****]

                           3.5.2.20 [*****]

                           3.5.2.21 [*****]

                  3.5.3    DETERMINATION OF PRICE FOR ALL TIMES OTHER THAN
                           [*****]
                                [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       27
<PAGE>   28

                                [*****]

                           3.5.3.1  [*****]

                                    3.5.3.1.1 [*****]

                                    3.5.3.1.2 [*****]

                                    [*****]

                                    UGC(2)=     [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       28
<PAGE>   29

                                              [*****]

                                    UGC(1)=   [*****]

                                    I(2)=     [*****]

                                    I(1)=     [*****]

                                                     [*****]

                                              [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       29
<PAGE>   30

                           3.5.3.2  [*****]

                           3.5.3.3  [*****]

                                    3.5.3.3.1 [*****]

                                    3.5.3.3.2 [*****]

                                    3.5.3.3.3 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       30
<PAGE>   31

                                              [*****]

                                    [*****]

                           3.5.3.4  [*****]

                           3.5.3.5  [*****]

                           3.5.3.6  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       31
<PAGE>   32

                                    [*****]

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       32
<PAGE>   33

                                    [*****]

                           3.5.3.7  [*****]

         3.5.4    [*****]
                  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       33
<PAGE>   34

         3.5.4.1  [*****]

                  [*****]

                          [*****]
                          [*****]
                          [*****]
                          [*****]
                          [*****]

                  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       34
<PAGE>   35

                  [*****]

         3.5.4.2  [*****]

         3.5.4.3  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       35
<PAGE>   36

         3.5.5    [*****]

                  3.5.5.1  [*****]

                  3.5.5.2  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       36
<PAGE>   37

                  3.5.5.3  [*****]

         3.5.6    [*****]

                  3.5.6.1  [*****]

                  3.5.6.2  [*****]

                           3.5.6.2.1 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       37
<PAGE>   38

                           3.5.6.2.2 [*****]

                           3.5.6.2.3 [*****]

                           3.5.6.2.4 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       38
<PAGE>   39

                  3.5.6.3  [*****]

                  3.5.6.4  [*****]

                  3.5.6.5  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       39
<PAGE>   40

                           [*****]

         3.5.7    [*****]

                  3.5.7.1  [*****]

                  3.5.7.2  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       40
<PAGE>   41

3.5.8    [*****]

         [*****]

3.5.9    [*****]

         [*****]

3.5.10   [*****]

         [*****]

3.5.11   [*****]

         3.5.11.1 [*****]

         3.5.11.2 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       41
<PAGE>   42

                  [*****]

         3.5.11.3 [*****]

         3.5.11.4 [*****]

         3.5.11.5 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       42
<PAGE>   43

         3.5.11.6 [*****]

3.6      [*****]

         3.6.1    [*****]

         3.6.2    [*****]

         3.6.3    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       43
<PAGE>   44

                  [*****]

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.

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 [*****] in 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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       44
<PAGE>   45

         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
         reconsider 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      [*****]

         [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       45
<PAGE>   46

            [*****]

ARTICLE 4 - [*****] PAYMENTS OF INVOICE PRICE

         4.1      [*****] 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 "[*****] Payment," and
                           collectively the "[*****] Payments").

                  4.1.2    The [*****]. Subsequent [*****] Payments shall be
                           made via wire transfer (to the account designated in
                           writing by SWM) on the [*****]).

                  4.1.3    The amounts of such [*****] Payments shall [*****].
                           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
                           [*****].

         4.2      ADJUSTMENTS TO [*****] PAYMENTS

                  4.2.1    Not later than [*****] Thereafter, Exhibit N shall be
                           amended to reflect [*****].

                  4.2.2    At least 30 days prior to the date the last [*****]
                           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 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       46
<PAGE>   47
                  [*****]

4.3      PURPOSE OF [*****] PAYMENTS

         4.3.1    [*****]

         4.3.2    [*****]

         4.3.3    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       47
<PAGE>   48

                  [*****]

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.

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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       48
<PAGE>   49

                  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 Article 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.

         5.3.2    TERMINATION CHARGES

                  5.3.2.1  TERMINATION OF ADDENDUM BY SWM
                           [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       49
<PAGE>   50

                           [*****]

                  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 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       50
<PAGE>   51

                                     [*****]

                           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 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       51
<PAGE>   52
                                    [*****]

                          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 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       52
<PAGE>   53
                                    [*****]

                              5.3.2.5.2.1  [*****]

                              5.3.2.5.2.2  [*****]

                                           [*****]

         5.4      TRANSFER [*****]

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

                  5.4.1    [*****]

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       53
<PAGE>   54
                           [*****]

                  5.4.2    [*****]

                  5.4.3    [*****]

                  5.4.4    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       54

<PAGE>   55

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.

         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,

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       55

<PAGE>   56

                           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:

         7.1      BY PHILIP MORRIS

                  7.1.1    Failure to [*****];

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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       56

<PAGE>   57

         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
                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       57

<PAGE>   58
                                    [*****]

                           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 [*****].

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       58

<PAGE>   59

                  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 [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       59

<PAGE>   60

                           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
                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       60
<PAGE>   61

                           7.3.2.2  [*****].

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       61

<PAGE>   62

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:

                  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:

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       62

<PAGE>   63

                           [*****]
                           [*****]
                           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.

         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.

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       63
<PAGE>   64

         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.

                  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]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       64

<PAGE>   65

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
                                 --------------------------------

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                       65
<PAGE>   66

EXHIBIT A                                                      TRADE SECRET

                  ADDENDUM TO [*****] ENGINEERING DESIGN REPORT
                           SCOPE OF WORK AND [*****]

                                  May 10, 1998

         [*****]

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      A-1
<PAGE>   67
                             BANDED PAPERS PROJECT
                             Adjustment to [*****]

                                  May 10, 1998

[*****]                                                           [*****]

-------------------------
[*****] for Philip Morris

-------------------------
[*****] for SWM

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      A-2
<PAGE>   68
EXHIBIT B

                               MILESTONE SCHEDULE

                                    [*****]

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 B-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

<PAGE>   69

EXHIBIT C

                         ASSET CLASSIFICATION NOTEBOOK
                             DATED JANUARY 16, 1998
                               COPIES PROVIDED TO

                         PHILIP MORRIS PROJECT MANAGER
                              SWM PROJECT MANAGER
                             SPOTSWOOD MILL MANAGER
         MANAGER - CIGARETTE COMPONENTS, PHILIP MORRIS DIRECT MATERIALS
                                   PURCHASING

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

<PAGE>   70
                              ASSET CLASSIFICATION

                                JANUARY 16, 1998

                               BASED UPON [*****]

                                  TRADE SECRET

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
<PAGE>   71
EXHIBIT D

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      D-1

<PAGE>   72
                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24B-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      D-2

<PAGE>   73
                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24B-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      D-3

<PAGE>   74
                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
RULE 24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      D-4
<PAGE>   75

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.

<TABLE>
<CAPTION>
         ITEM               MINIMUM               MAXIMUM
         ----               -------               -------
<S>                         <C>                   <C>
[*****]                     [*****]               [*****]

</TABLE>

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      E-1

<PAGE>   76

EXHIBIT F

                              CONVERSION SCHEDULE

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 B-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

<PAGE>   77
                                   EXHIBIT G

                               REIMBURSABLE COSTS

                                    [*****]

     CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
RULE 24 B-2. PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

<PAGE>   78
EXHIBIT H

                                    [*****]

     CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
RULE 24 b-2. PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      H-1
<PAGE>   79
                                   EXHIBIT I

                                    [*****]

Confidential Material Appearing in this Document has been omitted and filed
separately with the Securities and Exchange Commission in Accordance with Rule
24 b-2. Promulgated under the Securities Exchange Act of 1934, as Amended.
Omitted information has been replaced with asterisks.
<PAGE>   80
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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      J-1
<PAGE>   81
PROCESS OPERATING AND MAINTENANCE PROCEDURES

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

[*****] systems

         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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      J-2
<PAGE>   82
EXHIBIT K

                                 BUDGET FORMAT

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
<PAGE>   83
EXHIBIT L

                        MONTHLY PRODUCTION [*****] FORMS

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
<PAGE>   84

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 Change(1)        [*****]               [*****]

[*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
RULE 24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      M-1

<PAGE>   85

OUTPUT DATA

QUANTITY                     UNIT                     PRECISION
--------                     ----                     ---------

PRICES                       [*****]                  [*****]

[*****]                      [*****]                  [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH
RULE 24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      M-2
<PAGE>   86
EXHIBIT N

                                    [*****]

[*****]
                                             Payment Amount
                                             --------------

[*****]                                      [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 B-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.

                                      N-1

<PAGE>   87
EXHIBIT O

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

MACHINE NUMBER                  CAPACITY IN STANDARD BOBBINS
   [*****]                                [*****]

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

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.
<PAGE>   88
EXHIBIT P

                         POST COMPLETION PROJECT REPORT

                                    [*****]

CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE
24 B-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS.<PAGE>   1
                                                                    EXHIBIT 4.12

                 VOTING AND STOCK TRANSFER RESTRICTION AGREEMENT

         This VOTING AND STOCK TRANSFER RESTRICTION AGREEMENT, dated as of
________ __, 2000 (this "Agreement"), is made and entered into among
Communication TeleSystems International d/b/a WORLDxCHANGE Communications, a
California corporation ("CTI"), and the parties listed on Exhibit A attached
hereto (each, a "WAXS Stockholder" and collectively, the "WAXS Stockholders").

         WHEREAS, World Access, Inc., a Delaware corporation ("WAXS"), and CTI
have entered into an Agreement and Plan of Merger, dated February 11, 2000 and
amended May 23, 2000 (as the same may be amended or supplemented, the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), providing for the merger of CTI
with and into a wholly-owned subsidiary of WAXS (the "Transaction"), upon the
terms and subject to the conditions set forth in the Merger Agreement;

         WHEREAS, each WAXS Stockholder owns, of record or beneficially, the
number of shares of WAXS Common Stock or other capital stock of WAXS (such
shares of WAXS Common Stock and other capital stock of WAXS being referred to as
"WAXS Capital Stock") set forth opposite such WAXS Stockholder's name on Exhibit
A attached hereto (such shares of WAXS Capital Stock, together with any other
shares of WAXS Capital Stock of which such WAXS Stockholder acquires beneficial
ownership after the date hereof and during the term of this Agreement, whether
upon the exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of purchase, dividend,
distribution or otherwise, being collectively referred to herein as the "Subject
Shares"); and

         WHEREAS, in connection with the further amendment of the Merger
Agreement, CTI has requested that the WAXS Stockholders enter into this
Agreement.

         NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties agree
as follows:

         1.       Representations and Warranties of the WAXS Stockholders.
Except as set forth on Exhibit A attached hereto, each WAXS Stockholder hereby
represents and warrants to CTI as to itself as follows:

                  (a)      Authority; No Conflicts. Such WAXS Stockholder has
         the legal capacity and all requisite power and authority to enter into
         this Agreement, to perform its obligations hereunder and to consummate
         the transactions contemplated hereby. This Agreement has been duly
         authorized, executed and delivered by such WAXS Stockholder and
         constitutes a valid and binding obligation of such WAXS Stockholder
         enforceable in accordance with its terms. No filing with, and no
         permit, authorization, consent or approval of, any governmental
         authority or any other person is necessary for the execution of this
         Agreement by such WAXS Stockholder and the consummation by such WAXS
         Stockholder of the transactions contemplated hereby and none of the

<PAGE>   2
         execution and delivery of this Agreement by such WAXS Stockholder, the
         consummation of the transactions contemplated hereby or compliance with
         the terms hereof by such WAXS Stockholder will conflict with, or result
         in any violation of, or default (with or without notice or lapse of
         time or both) under any provision of, as applicable, the certificate of
         incorporation, bylaws or analogous documents of such WAXS Stockholder
         or any agreement to which such WAXS Stockholder is a party, including
         any voting agreement, stockholders agreement, voting trust, trust
         agreement, pledge agreement, loan or credit agreement, note, bond,
         mortgage, indenture, lease or other agreement, instrument, permit,
         concession, franchise or license or violate any judgment, order,
         notice, decree, statute, law, ordinance, rule or regulation applicable
         to such WAXS Stockholder or to its property or assets except (i) where
         the failure to make such filings or obtain such permits,
         authorizations, consents or approvals would not prevent or delay the
         performance by such WAXS Stockholder of its obligations under this
         Agreement or (ii) for any such conflicts, violations, defaults or other
         occurrences that would not prevent or delay the performance by such
         WAXS Stockholder of its obligations under this Agreement.

                  (b)      Subject Shares. Such WAXS Stockholder is the record
         and beneficial owner of, and has good and marketable title to, the
         number of Subject Shares set forth opposite such WAXS Stockholder's
         name on Exhibit A hereto, free and clear of any encumbrances,
         agreements, adverse claims, liens or other arrangements with respect to
         the ownership of or the right to vote or dispose of such Subject
         Shares. Other than such Subject Shares, such WAXS Stockholder does not
         beneficially or of record own any shares of WAXS Capital Stock or
         securities convertible into or exchangeable for shares of WAXS Capital
         Stock. Such WAXS Stockholder has the sole right and power to vote and
         dispose of such Subject Shares. None of such Subject Shares are subject
         to any voting trust or other agreement, arrangement or restriction with
         respect to the voting or transfer of any of the Subject Shares, except
         as contemplated by this Agreement.

         2.       Voting and Transfer of Subject Shares.

                  (a)      Until the termination of this Agreement in accordance
         with Section 5 hereof, each WAXS Stockholder agrees as to itself that
         at any meeting of stockholders of WAXS or at any adjournment thereof or
         in any other circumstance upon which the WAXS Stockholders' vote,
         consent or other approval (including by written consent) is sought,
         such WAXS Stockholder shall vote all of the Subject Shares then
         beneficially owned by such WAXS Stockholder (i) in favor of the
         Transaction and the adoption and the approval of the Merger Agreement
         and each of the other transactions contemplated by the Merger Agreement
         and (ii) against any action or agreement that would result in a
         material breach of any covenant, representation or warranty or any
         other obligation or agreement of WAXS under the Merger Agreement. No
         WAXS Stockholder shall hereafter, unless and until this Agreement
         terminates pursuant to Section 5 hereof, purport to grant any proxy or
         power of attorney with respect to any of the Subject Shares set forth
         opposite such WAXS Stockholder's name on Exhibit A, deposit any of such
         Subject Shares into a voting trust or enter into any agreement (other
         than this

                                       2
<PAGE>   3

         Agreement), arrangement or understanding with any person, directly or
         indirectly, to vote, grant any proxy or give instructions with respect
         to the voting of any of such Subject Shares, in each case only to the
         extent it relates to the matters referred to in the first sentence of
         this Section 2(a). Each WAXS Stockholder further agrees not to commit
         or agree to take any action inconsistent with the foregoing.

                  (b)      Prior to the termination of this Agreement in
         accordance with Section 5 hereof, each WAXS Stockholder agrees not to
         sell, hypothecate, transfer, pledge, encumber, assign or otherwise
         dispose of (including by gift) (collectively, "Transfer") any of the
         Subject Shares or WAXS Stock Options held by such WAXS Stockholder
         (beneficially or of record) except Transfers pursuant to bona fide
         transactions with unaffiliated persons or entities.

         3.       No Ownership Interest. Except as set forth in Section 2,
nothing contained in this Agreement shall be deemed to vest in anyone other than
the WAXS Stockholders any direct or indirect ownership or incidents of ownership
of or with respect to any of the Subject Shares or WAXS Stock Options. All
rights, ownership and economic benefits of and relating to the Subject Shares
and the WAXS Stock Options shall remain and belong to the WAXS Stockholders, and
no one shall have any authority to manage, direct, restrict, govern or
administer any of the policies or operations of WAXS or exercise any power or
authority to direct the voting of any of the Subject Shares as a result of this
Agreement, except to the extent set forth in Section 2(a).

         4.       Assignment. Except as otherwise specifically provided herein,
neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by any of the parties hereto without the prior written consent
of the other parties hereto.

         5.       Termination. This Agreement shall terminate, and no party
hereto shall have any rights or obligations hereunder, upon the first to occur
of (i) the termination of the Merger Agreement pursuant to Article IX thereof,
(ii) the Effective Time and (iii) December 31, 2000.

         6.       General Provisions.

                  (a)      Amendments. This Agreement may not be amended except
         by an instrument in writing signed by each of the parties hereto.

                  (b)      Notices. All notices, requests, claims, demands and
         other communications hereunder shall be in writing and shall be given
         (and shall be deemed to have been duly given upon receipt) by delivery
         in person, by telecopy or by registered or certified mail (postage
         prepared, return receipt requested) to the respective parties at the
         following addresses (or at such other address for a party as shall be
         specified by like notice):

                  if to a WAXS Stockholder, to the address set forth beside such
         WAXS Stockholder's name on Exhibit A hereto.

                                       3
<PAGE>   4

                  with a copy to:

                  Long Aldridge & Norman LLP
                  303 Peachtree Street, Suite 5300
                  Atlanta, Georgia 30308
                  Attention:  H. Franklin Layson, Esq.
                  Facsimile:  (404) 527-4198

                  if to CTI, to:

                  WORLDxCHANGE Communications
                  9999 Willow Creek Road
                  San Diego, California 92131
                  Attention:  Eric Lipoff, Esq.
                  Facsimile:  (858) 452-3780

                  with a copy to:

                  O'Melveny & Myers LLP
                  610 Newport Center Drive
                  17th Floor
                  Newport Beach, California 92660
                  Attention:  Terrence Allen, Esq.
                  Facsimile:  (949) 823-6994

                  (c)      Interpretation. When a reference is made in this
         Agreement to Sections, such reference shall be to a Section of this
         Agreement unless otherwise indicated. The headings contained in this
         Agreement are for reference purposes only and shall not affect in any
         way the meaning or interpretation of this Agreement. Wherever the words
         "include", "includes" or "including" are used in this Agreement, they
         shall be deemed to be followed by the words "without limitation".

                  (d)      Counterparts. This Agreement may be executed in two
         or more counterparts, all of which shall be considered one and the same
         agreement, and shall become effective when one or more of the
         counterparts have been signed by each of the parties and delivered to
         the other party, it being understood that each party need not sign the
         same counterpart.

                  (e)      Governing Law. This Agreement shall be governed by,
         and construed in accordance with, the laws of the State of Delaware
         regardless of the laws that might otherwise govern under applicable
         principles of conflicts or law.

                  (f)      Severability. If any term or other provision of this
         Agreement is invalid, illegal or incapable of being enforced by any
         rule or law, or public policy, all other

                                       4
<PAGE>   5
         conditions and provisions of this Agreement shall nevertheless remain
         in full force and effect so long as the economic or legal substance of
         the transactions contemplated hereby is not affected in any manner
         materially adverse to any party. Upon any determination that any term
         or other provision is invalid, illegal or incapable of being enforced,
         the parties hereto shall negotiate in good faith to modify this
         Agreement so as to effect the original intent of the parties as closely
         as possible in an acceptable manner to the end that transactions
         contemplated hereby are fulfilled to the extent possible.

         7.       Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that, in addition to any other remedy to which it may be
entitled, at law or in equity, the parties shall be entitled to the remedy of
specific performance of the covenants and agreements contained herein and
injunctive and other equitable relief.

         8.       Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto. Except as provided in the
preceding sentence, nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any rights, benefits or remedies or any
nature whatsoever under or by reason of this Agreement.

                     [SIGNATURES ON THE FOLLOWING TWO PAGES]

                                       5
<PAGE>   6

         IN WITNESS WHEREOF, the WAXS Stockholders and CTI have caused this
Agreement to be duly and validly executed as of the date first written above.

                                      By:
                                         --------------------------------------
                                               Name:
                                               Title:

                                      By:
                                         --------------------------------------
                                               Name:
                                               Title:

                                      By:
                                         --------------------------------------
                                               Name:
                                               Title:

                                      COMMUNICATION TELESYTEMS
                                      INTERNATIONAL D/B/A WORLDxCHANGE
                                      COMMUNICATIONS

                                      By:
                                         --------------------------------------
                                               Name:
                                               Title:

                                      6
<PAGE>   7

                                    EXHIBIT A

WAXS Stockholder (including address)                            Subject Shares

                                      7

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