Document:

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                                 EXHIBIT 10(S)

                          SUPPLY AND SERVICE AGREEMENT

          This Agreement is made as of August 1, 2001, between Purico GmbH, a
German corporation (the "Buyer"), Purico (IOM) Limited, a company organized
under the laws of the Isle of Man ("Guarantor"), and Papierfabrik Schoeller &
Hoesch GmbH & Co. KG, a German limited partnership (the "Seller").

          WHEREAS, Seller is engaged, among other things, in the manufacture
and sale of cigarette paper and other paper products and Seller's parent has
determined to sell its cigarette paper businesses;

          WHEREAS, Buyer, in order to ensure a steady and reliable source of
supply of the Products desires to purchase from Seller, and Seller is able and
willing to manufacture and supply exclusively to Buyer for a period of three
(3) years (subject to extension), the Products on the terms and conditions
described in this Agreement;

          WHEREAS, in conjunction with such supply arrangements, Seller agrees
to provide certain services to Buyer to facilitate the transition of Seller's
cigarette paper business to Buyer; and

          WHEREAS, Buyer and Seller have agreed on a three (3) year period for
supply of the Products (subject to extension) in order to provide Buyer a
sufficient period of time to create alternative capacity to produce the
Products and to provide Seller a sufficient period to transition out of
producing the Products;

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the Parties agree as follows:

     1.  DEFINITIONS.

          "Acquisition Agreement" shall mean the Agreement for purchase of
certain assets and assumption of certain liabilities of the Ecusta business of
P.H. Glatfelter Company by and among Seller's parent, P.H. Glatfelter Company,
Guarantor and certain affiliates thereof.

          "Customer" shall mean a cigarette manufacturer which is a customer
for the Products of Seller as of the date hereof and any customer of Buyer
after the date hereof for Products supplied by Seller.

          "Effective Date" shall mean the date first written above.

          "First Contract Year" shall mean the twelve (12) month period
beginning on the Effective Date.

          "Monthly Target" shall be as defined in Section 7.2.

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          "Party" or "Parties" shall mean Buyer, Guarantor and/or Seller.

          "Products" shall mean the grades of the tobacco paper products set
forth on Exhibit A, to be manufactured by Seller exclusively for Buyer in
accordance with the terms of this Agreement. The term "Products" shall also
include any and all improvements and modifications to the Products which Buyer
and Seller may make by mutual agreement during the term of this Agreement.

          "Sales Agents" shall mean those currently under contract with Seller
as of the date hereof to provide sales and distribution services for the
Products.

          "Second Contract Year" shall mean the twelve (12) month period
beginning on the first anniversary of the Effective Date.

          "Third Contract Year" shall mean the twelve (12) month period
beginning on the second anniversary of the Effective Date.

     2.  AGREEMENT TO SUPPLY.

          Seller shall sell exclusively to Buyer, and Buyer shall purchase, the
Products in the quantities set forth in Section 7 of this Agreement. The
Products shall be produced in accordance with each Customer's specifications as
further provided in accordance with Section 3 of this Agreement, incorporating
only such changes to the Product specifications used by Seller as of the date
hereof in producing Products for Customers as of the date hereof and such
improvements and modifications to the Products as Buyer and Seller may mutually
determine and agree upon from time to time. Inspection and packaging of the
Products shall at all times be conducted by Seller in its own manufacturing
facilities. Buyer shall not place Seller's brand on any of its products other
than those Products sold under this Agreement. Seller shall place its brand
(and trademarks) on the Products and consistent with past practice Buyer shall
be entitled to sell the Products using such brand and trademarks. In no event
shall Buyer acquire any rights under this Agreement to any trademark, service
mark or other intellectual property right of Seller. Seller agrees to provide
Buyer with the specifications and technical manufacturing information specific
to the Products which are necessary to manufacture the Products.

     3.  ORDER PROCESSING.

          For each order for Products to be sold under this Agreement, Buyer
shall deliver to Seller a purchase order consistent with past practice at least
thirty (30) days prior to the anticipated shipping date. Each purchase order
shall provide the volume ordered and all specifications for each Product by
grade in sufficient detail for the production of the Products, which
specifications shall include packaging and converting information, the quality
of the materials to be used and the performance standards of each of the
Products. Where no specification for packaging is provided, Seller shall
package the Product consistent with past practice. Each purchase order shall
also set forth the customers' names or customer's name, the date of delivery to
Buyer, the date of delivery to Buyer's customer, shipping information, invoice
information and all other information which is necessary to produce invoices
(in the form currently provided, by Seller unless otherwise notified to Seller
by Buyer), ship the Products and produce documents necessary to procure a
Letter of Credit (if applicable). The Products covered

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by a purchase order shall have been previously qualified and approved by the
customer. Seller shall supply the Products in accordance with the
specifications, and shall not materially deviate from these specifications
without the prior express written consent of Buyer. Subject to the Monthly
Targets set forth in Section 7, Seller guarantees fulfillment of each order for
Products which is delivered to Seller at least 30 days prior to shipping and
which sets forth the information required under this Section, provided that
each month 5% of the Monthly Target may be ordered up to but not less than five
days prior to shipping.

     4.  PURCHASE PRICE.

          4.1  UNIT PRICE. The unit price for each of the Products is set forth
on the Exhibit A, which prices shall be subject to adjustment in accordance
with the provisions of Sections 4.2 and 4.3 of this Agreement. The unit price
for each of the Products for the Third Contract Year shall increase by the
amounts set forth in Exhibit A in addition to the other price adjustments
described herein.

          4.2  PULP PRICE ADJUSTMENTS. The unit price of each of the Products
as provided on Exhibit A shall be adjusted on January 1, 2002 and every six
months thereafter during the term of this Agreement to reflect changes in the
prices of pulp over the immediately preceding six-month period (each, a "Pulp
Price Adjustment"). The Pulp Price Adjustment for each of the Products shall be
determined in the following way:

                    (i)  PULP PRICE CHANGES. The change in price for each fiber
     type (the "Pulp Price Changes") shall be determined by dividing the DM or
     Euro equivalent of the six-month average prices for such fiber type by the
     base price for such fiber types as defined on Exhibit E. The initial
     six-month average prices shall be based on the prices for the six months
     beginning July 1, 2001 as announced on the first day of each such month
     (i.e., July 1, August 1, September 1, etc.) The six-month average price
     shall then become the base price for the subsequent six-month period. The
     six-month average prices shall be determined by averaging the month
     beginning prices for such fiber types for each of the six months following
     the Effective Date, and for every six months thereafter. Such monthly
     prices shall be provided for each six-month period based on Seller's cost
     for such fiber types as of that date, and as adjusted to DM equivalent as
     appropriate.

                    (ii)  PRODUCT PRICE CHANGES. The Pulp Price Adjustment shall
     be determined by multiplying (a) the percentage for each fiber type set
     forth on Exhibit E for each Product by (b) the applicable Pulp Price
     Change minus one. The new Product Prices shall then be determined by
     multiplying (x) the Pulp Price Adjustment for each Product plus one by (y)
     the base Product prices. The resulting prices shall become the applicable
     prices for the following six-month period. Additionally, the resulting
     fiber type percentages shall be adjusted to reflect the Pulp Price Changes
     for the previous six months.

                    (iii)  PRICING EXAMPLE. Exhibit F provides an illustration
     of this Pulp Price Adjustment mechanism.

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                    (iv)  NOTICE. Seller shall provide Buyer with a schedule for
     the calculation of the Pulp Price Adjustment for each Product fifteen days
     prior to the beginning of each new six-month period.

                    (v)  BAT. In the event British American Tobacco p.l.c.
     ("BAT") ceases to purchase all of the Products from Buyer during the First
     Contract Year, the base prices set forth on Exhibit E will be modified by
     the mutual consent of the Parties to reflect the loss of this volume and
     its impact on base pulp price levels.

          4.3  AGREEMENT EXTENSION PRICE ADJUSTMENT. In the event this
Agreement does not terminate on the third anniversary of the Effective Date,
the Parties shall negotiate in good faith annual adjustments to the prices set
forth on Exhibit A to reflect changes in material and manufacturing costs of
Seller in producing the Products. Such price adjustments shall take effect on
the third anniversary of the Effective Date and each anniversary thereafter and
shall be in addition to any Pulp Price Adjustments.

          4.4  PAYMENT TERMS. Buyer shall remit to Seller the invoice amount of
the Products sold to Buyer on payment terms of net forty-five (45) days. Any
amount due and payable under this Agreement which remains unpaid when due shall
bear interest until paid at the annual rate of LIBOR for Euros plus 2%. Unless
otherwise agreed, the payment shall be made in the same currency as indicated
on the invoice.

          4.5  VAT. All prices quoted in this Agreement and any Exhibit thereto
are net prices without value-added tax and shall be paid together with
value-added tax (where applicable) at its statutory rate prevailing from time
to time.

     5.  EXCLUSIVITY.

          The Products shall be manufactured and sold by Seller solely and
exclusively to Buyer. In addition, Seller shall not manufacture or sell tipping
paper and standard plug wrap except to Buyer. For the purposes of this
Agreement, "tipping paper" means: papers manufactured for wrapping cigarette
filters; and "standard plug wrap" means: low porosity papers (below 2000
coresta units) used for combining a cigarette column with a cigarette filter.
The exclusivity obligations set forth in this Section 5 shall survive for a
period ending five (5) years from the Effective Date; provided that in the
event of termination of this Agreement by Seller pursuant to Section 13, Seller
shall be permitted to sell the Product for a period of six months or, if
longer, the remainder of the initial term of this Agreement, in order to sell
its inventory and transition its business to other products. Notwithstanding
the foregoing, this Section 5 shall not restrict Seller from rendering
consulting or other services to manufacturers of porous plug wrap manufacturing
equipment. For purposes of this Agreement, "porous plug wrap" means: papers
with a porosity above 2000 coresta units used for combining a cigarette column
with a cigarette filter.

     6.  DELIVERY AND ACCEPTANCE.

          6.1  DELIVERY. Unless otherwise specified in the purchase order, all
Products purchased under this Agreement shall be delivered F.O.B. Seller's
Gernsbach plant per the date of delivery specified by the Buyer on the purchase
order, subject to the provisions of Section 3.

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Title to the Products shall pass from Seller to Buyer when the Products are
delivered to Seller's warehouse to be held on behalf of Buyer or, if the
Products are not delivered to Seller's warehouse, when the Products leave
Seller's premises. Risk of loss to the Products shall pass from Seller to Buyer
when the Products leave Seller's premises. Upon delivery of each order for
Product, Seller shall provide all documentation reasonably necessary for
transportation, quality control documentation (as required by the Customer),
customs and any letter of credit for such order.Seller shall arrange for all
necessary transportation of Products to Buyer's customers or to Buyer, at
Buyer's sole expense. Buyer agrees that it will accept all of the Products
meeting the specifications established pursuant to Section 3 of this Agreement,
subject to the other terms and conditions that are specified in this Agreement.
Seller agrees to provide technical consulting services to help Buyer convert
one of its paper machines to manufacture Porous Plug Wrap, provided that the
Parties agrees in advance on the fees for such services.

          6.2  RETURNS. All complaints about or returns of the Products shall
be made using the following procedures:

                    (i)  Complaints of defects shall be made to Seller in
     writing. Samples are considered as proof only when they have been taken in
     accordance with these procedures and in the presence of an agent
     instructed by Seller. Seller shall make such agents available within a
     reasonable period of time after the request of Buyer.

                    (ii)  Upon receipt of any complaint from the Customer
     regarding the Products, Buyer shall immediately give written notice of any
     form of defects which are obviously different from those stipulated,
     including but not limited to delivery of different Products or quantities.
     Notice of hidden defects of any kind and the delivery of the Products or
     quantities which are not obviously different from those stipulated shall
     be given promptly upon their discovery but no later than sixty (60) days
     from delivery to Customer, unless such defect could not have reasonably
     been discovered within such sixty (60) day period. The Products shall be
     deemed to be approved if no complaint is made within sixty (60) days from
     delivery. The Products shall be deemed to be approved if the Customer
     mixes the Products with other suppliers' goods or with other substances or
     arranges for them to be modified except under normal manufacturing and/or
     testing processes.

                    (iii)  In the event of a defect for which Seller is
     responsible in accordance with the foregoing paragraphs, Buyer may request
     a refund for the purchase price of the Products. In the event Seller
     rejects in writing Buyer's notification of defect, Buyer's warranty claims
     shall expire two months after Seller has rejected in writing the
     notification of defect unless Buyer objects within two months of Seller's
     objection. Buyer may make no claims for damages against Seller except as
     set forth under this Section or Section 15.

                    (iv)  Buyer or Seller may not offset against any form of
     counter-claim unless the counter-claim to be offset has been recognized by
     Seller or Buyer, as applicable, or legally established; provided that this
     restriction shall not apply to outstanding claims in excess of 10% of the
     Monthly Target for such Product.

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     7.  QUANTITIES.

          7.1  GENERAL. Seller shall sell Products in such quantities as
ordered by Buyer up to the Monthly Targets provided below for each Product.
Buyer shall purchase Products in quantities no less than the monthly minimum
volumes provided below for each Product. Calculation of fulfillment of all
Monthly Targets and monthly minimums shall be based upon Product purchased by
Buyer; for this purpose a purchase of Product shall be deemed to occur when the
Product is shipped by Seller to Buyer.

          7.2  PURCHASE REQUIREMENTS. The Monthly Targets and monthly minimum
amounts for the First Contract Year shall be as follows:

<TABLE>
<CAPTION>
------------------------------------------------------
                       First 6 Months  Second 6 Months
                       --------------  ---------------
------------------------------------------------------
<S>                    <C>             <C>
Cigarette papers
(aggregate sales of
 100% woodpulp and
 mixed pulp)
------------------------------------------------------
     Monthly Target    958 tons        833 tons
------------------------------------------------------
     Monthly Minimum   750 tons        750 tons
------------------------------------------------------
High porous plug wrap
------------------------------------------------------
     Monthly Target    225 tons        183 tons
------------------------------------------------------
     Monthly Minimum   135 tons        165 tons
------------------------------------------------------
</TABLE>

          In the event BAT ceases to purchase the Products from Buyer during
the First Contract Year, at the option of Buyer the Monthly Target and monthly
minimum amounts above may be reduced by one hundred ninety two (192) tons for
cigarette papers and fifty-three (53) tons for high porous plug wrap. The
Monthly Targets and monthly minimum amounts shall also be reduced in the event
that a Customer ceases to purchase one or more Products due to Seller's
material failure to deliver such Products meeting the specifications set forth
in the applicable purchase orders and/or a material failure to deliver the
Products on the applicable delivery dates. The amount of such reductions in
Monthly Targets and monthly minimum amounts shall be equal to the average
monthly purchases of the applicable Products by such Customer for the three (3)
full months immediately preceding such termination by the Customer.

          The Monthly Target and monthly minimum amounts for the Second
Contract Year and the Third Contract Year shall be negotiated by Seller and
Buyer in good faith and established at least one hundred twenty (120) days
prior to the first anniversary of the Effective Date and the second anniversary
of the Effective Date, respectively. The Second Contract Year Monthly Target
amounts for cigarette papers in the aggregate shall be no more than eight
hundred thirty three (833) tons and no less than six hundred sixty six (666)
tons and the Monthly Target amount for high porous plug wrap shall be no more
than one hundred fifty (150) tons,

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provided that Buyer may permanently reduce the Monthly Target for high porous
plug wrap below 150 tons by giving Seller four (4) months prior written notice.
The Third Contract Year Monthly Target amounts for cigarette papers in the
aggregate shall be no more than two hundred sixty-seven (267) tons and the
Monthly Target amount for high porous plug wrap shall be no more than one
hundred fifty (150) tons, provided that Buyer may permanently reduce the
Monthly Target for cigarette papers below two hundred sixty seven (267) tons
and may permanently reduce the Monthly Target for high porous plug wrap below
one hundred fifty (150) tons in either case by giving Seller six (6) months
prior written notice; and provided further that if Buyer reduces the Monthly
Target for high porous plug wrap below 150 tons pursuant to the previous
sentence, the Monthly Target shall not exceed such lesser amount for the Third
Contract Year. The monthly minimum amounts for each Product for the Second
Contract Year and the Third Contract Year shall be 90% of the Monthly Targets.
The Monthly Targets and monthly minimum amounts for each Product for any period
after the Third Contract Year shall be negotiated in good faith by the Parties.

          7.3  MONTHLY PURCHASE REQUIREMENTS. Each month Buyer shall purchase
at least the monthly minimum amounts and no more than 110% of the Monthly
Target for each Product. Each month Seller shall sell to Buyer the Products
ordered by Buyer provided that Seller shall have no obligation to sell more
than 110% of the Monthly Target for a Product during any month unless otherwise
agreed.

          7.4  VOLUME FORECASTS. Buyer shall provide Seller with a good faith
written estimate of Buyer's requirements for the next three months for each
Product by grade at least fifteen (15) days prior to the start of each month
(the "Rolling Forecast"). Such Rolling Forecasts are solely for production
planning purposes and are not intended, nor should such reports be interpreted,
as actual purchase orders.

          7.5  FAILURE TO MEET VOLUME REQUIREMENTS. In the event that Buyer
fails to purchase the monthly minimum for any Product for any such month, in
order to reimburse Seller for a portion of the damages sustained by Seller due
to such shortfall, Buyer shall pay to Seller within thirty (30) days of the end
of such month a Shortfall Payment. Each Shortfall Payment shall be an amount
calculated for such Product as follows:

               (i)  for each kilogram which is not purchased by Buyer below the
                    monthly minimum but at or above 50% of the Monthly Target,
                    Buyer shall pay 0.2 DM ([EURO]0.102) to Seller; and

               (ii) for each kilogram which is not purchased by Buyer below 50%
                    of the Monthly Target, Buyer shall pay 0.4 DM ([EURO]0.205)
                    to Seller.

For the avoidance of doubt, for the amount which is not purchased by Buyer
between the monthly minimum and 100% of the Monthly Target, Buyer shall pay
nothing.

An example of a calculation of a Shortfall Payment is set forth on Exhibit B.

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     8.  SERVICES.

          8.1  GENERAL. Seller shall provide to Buyer the services set forth
below at the costs to Buyer set forth on Exhibit C. Buyer shall pay for such
services monthly within thirty (30) days of the end of each month. Either Party
may terminate any such services on one hundred eighty (180) days advance
written notice to the other Party.

          8.2  INVOICING. Seller shall produce and mail invoices for all
Products delivered by Buyer to its customers based upon the terms and
conditions of such sale, and shall provide copies of such invoices to Buyer.
Such invoices shall be in a form substantially similar to the invoices
delivered by Seller to Buyer with each shipment of Product to Buyer, provided
that such invoices shall use Buyer's logo, heading and payment terms.

          8.3  SHIPPING. Seller shall make all arrangements on behalf
(including customary unloading and/or loading) of Buyer for transportation of
the Products to Buyer's customers per the due date specified on the purchase
order or any new due date that has been agreed, provided that all third party
expenses related to transportation of the Products shall be paid by Buyer.

          8.4  TECHNICAL. Seller shall provide laboratory and technical support
for Product applications upon the reasonable request of Buyer.

          8.5  INFORMATION TECHNOLOGY. Seller shall provide information
technology services necessary to create and print order confirmations using
Buyer's logo to be sent to Customers with the same design and format as
Seller's current order confirmation. Seller will continue to provide electronic
data information (EDI) communication with Customers with capabilities
consistent with the EDI capabilities of Seller as of the date hereof. Seller
will also produce printed information for sales by Customer and Product group
as currently defined, finished goods inventory and accounts receivable by
Customer. These services will be provided starting within ninety (90) days of
the Effective Date and will continue for the term of this Agreement, subject to
Section 8.1.

          8.6  WAREHOUSE. Seller shall provide warehouse space and warehouse
management for storage of 650 tons of Products by Buyer free of cost to Buyer.
The warehouse space shall be an undesignated portion of the warehouse space
owned or leased by Seller, provided that such space will store 650 tons of
Product. Buyer shall have access to such warehouse for purposes of inspecting
its Products at reasonable business hours and pursuant to such reasonable
guidelines as Seller shall establish in good faith, taking into account the
reasonable business needs of Buyer. Notwithstanding anything else herein,
Seller shall continue to provide such warehouse space for storage of 650 tons
of Products for a period of up to ninety (90) days after termination of this
Agreement, provided that Buyer shall pay a reasonable fee to Seller for
administrative services related to such warehouse storage of Product for such
period.

          8.7  LIMITATION OF LIABILITY. The limit of Seller's liability
(whether in contract, tort, negligence, strict liability in tort or by statute
or otherwise) to Buyer or to any third party concerning performance or
non-performance by Seller of the services provided under Section 8 of this
Agreement (other than Section 8.6), for any and all claims other than claims
for

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Seller's willful misconduct, shall not in the aggregate exceed the fees paid by
Buyer to Seller hereunder for such services. Buyer's exclusive remedy for any
claim arising out of a breach regarding the services provided under Section 8
of this Agreement (except Section 8.6), other than a claim covered by Section
15.2 hereof, shall be for Seller, upon receipt of written notice, to use
commercially reasonable efforts to cure the breach at its expense, and failing
that, the return of total fees paid to Seller for the services provided under
Section 8 of this Agreement up to the amount of damages suffered by Buyer.

     9.  PERSONNEL AND SALES AGENTS.

          9.1  PERSONNEL. Buyer intends to hire the following cigarette product
related personnel of Seller ("Buyer Intended Hires"):

                    Thomas Interthal
                    Thomas Rheinschmidt (Sales Manager)
                    Rene Kaeschner (Customer Service Representative)
                    Thomas Fritzsching

Seller shall use commercially reasonable efforts to assign to Buyer each
employment agreement currently in force between a Buyer Intended Hire and
Seller, subject to any restrictions on such assignment under such agreement and
applicable law. In the event one or more employment agreements may not be
assigned but the Buyer Intended Hires are willing to enter into new employment
agreements with Buyer, Seller shall cooperate with Buyer to facilitate the
negotiation of new employment agreements between Buyer and such Buyer Intended
Hires. In the event one or more Buyer Intended Hires in the marketing function
decline to be hired by Buyer after good faith negotiations by Buyer, Seller and
Buyer shall negotiate in good faith to amend this Agreement to expand the
services rendered by Seller to include sales and customer service support. The
services to be rendered by Seller to Buyer shall be equivalent to the work
performed by such Buyer Intended Hires who remain as employees of Seller
("Retained Employees") and shall be provided by Seller until the earlier of
termination of this Agreement or termination of any such Retained Employee's
employment with Seller. Buyer shall pay to Seller a fee for such additional
services equal to the fully burdened cost to Seller of continuing to employ
such the Retained Employees for so long as such services are provided to Buyer.
Buyer shall defend, indemnify and hold harmless Seller and its directors,
officers and employees from and against any and all claims, judgments, damages,
penalties, fines, costs, costs of defense and attorneys' fees arising out of
actions of Retained Employees after the Effective Date.

          9.2  SALES AGENTS. For those Sales Agents who only sell the Products
for the Seller , Seller shall use commercially reasonable efforts to assign to
Buyer each contract it has with such Sales Agent, subject to any restrictions
on such assignment under applicable law or the applicable agreement. As to any
Sales Agent whose contract is not assigned to Buyer, Seller shall cooperate
with Buyer in Buyer's negotiation of a contract with such Sales Agent for sale
or distribution of Products. Buyer shall cooperate with Seller in Seller's
negotiation of contracts with Sales Agents for sale of products other than
Products. Each Party shall inform the other of the terms of any such new
contracts with Sales Agents.

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          9.3  REIMBURSEMENT. Seller shall reimburse Buyer for all amounts paid
by Buyer to any court or governmental authority or attorney's fees as a result
of actions taken by Thomas Interthal prior to the Effective Date in the scope
of his employment with Seller prior to the Effective Date, and for all amounts
paid by Buyer to Thomas Interthal to reimburse him for such payments, to the
extent such payments are made pursuant to the Employment Agreement dated
December 22, 2000 between Seller and Thomas Interthal, provided that any
settlement of such action shall be subject to the consent of Seller not to be
unreasonably withheld.

     10.  TERM AND TERMINATION.

          This Agreement shall take effect upon the Effective Date and shall
continue in full force and effect until three (3) years from such date unless
terminated pursuant to Section 13. If, however, neither party gives written
notice of termination six months prior to the expiration date or any extension
of it, the term of this Agreement shall automatically be extended for
successive periods of six (6) months from the date of expiration then in
effect; provided, however, that in the event the Parties are unable to agree in
writing on the price and maximum and minimum volumes for each Product for any
one year extension by the date which is 120 days prior to the beginning of such
extension, this Agreement shall terminate upon expiration of the current
Contract Year, provided that in no event shall this Agreement continue for more
than five years. The rights and obligations set forth in Sections 5, 12 and 21
of this Agreement shall survive the termination for the periods indicated
therein.

     11.  PURCHASE OF EQUIPMENT, INVENTORY AND ACCOUNTS RECEIVABLE.

          11.1  EQUIPMENT. On August 9, 2001 (the "Transfer Date"), title to the
converting and lab equipment listed on Exhibit D, including all spare parts
(the "Equipment") shall transfer to Buyer at no additional cost under this
Agreement. Seller represents and warrants that it has good and marketable title
to the Equipment, free and clear of all liens, claims, charges, security
interests and encumbrances. The equipment shall be transferred by Seller to
Buyer in its condition on the Transfer Date, as is, with all faults, if any,
with the express understanding of Buyer that except as provided in the
foregoing sentence Seller makes no representations or warranties of any kind,
directly or indirectly, express or implied, as to the Equipment, including its
quality, condition or fitness for any particular purpose, on the Transfer Date
or at the end of the lease period described in Section 11.3.

          11.2  INVENTORY. Upon expiration of this Agreement, Seller shall sell
and Buyer shall purchase all of Seller's finished goods inventory of the
Products at a price to be negotiated by the Parties.

          11.3  LEASE-BACK OF EQUIPMENT. Buyer hereby leases to Seller the
Equipment as of the Transfer Date until the termination of this Agreement, at
no cost to Seller other than as set forth in this Section 11.3. Title to the
Equipment shall remain with Buyer at all times after the Transfer Date and
Seller shall have no right, title or interest to the Equipment except as set
forth herein. The Equipment shall at all times be personal property
notwithstanding that any such Equipment may now or hereafter be affixed to
realty. The Equipment shall not be removed from Seller's principal place except
in the following manner: (1) #6 Slitter shall be relocated on the later of (i)
one hundred eighty (180) days after the Effective Date and (ii) the date on
which

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the Monthly Target for cigarette papers is reduced below 950 tons; (2) #3 and
#7 Slitters shall be relocated at the termination of this Agreement or any
extended period provided for in Section 10; and (3) any other Slitters may be
relocated prior to the termination of this Agreement only by mutual agreement
of the Parties based on the Targets under this Agreement in order for Buyer to
maintain its supply of the finished paper products for its Customers. Seller
shall use the Equipment in the manner for which it was intended, solely for
Seller's business purposes, and in compliance with all applicable laws and
regulations. Seller shall keep the Equipment in good working order, ordinary
wear and tear excepted, and shall furnish all parts, maintenance and servicing
for the Equipment at its own expense as required for normal operation of the
Equipment and consistent with past practice. Seller shall be responsible for
all other costs related to the operation of such equipment during the lease
period, including the cost of providing and maintaining insurance for such
equipment.

          11.4  INSURANCE FOR EQUIPMENT. For so long as any item of equipment
remains on Seller's Property, Seller shall keep the Equipment insured against
theft and all risks of loss or damage from every cause whatsoever for not less
than the replacement cost of the Equipment. Seller shall pay the premiums for
such insurance and be responsible for all deductible portions thereof. In the
event of loss or damage of all or a portion of the Equipment, Seller shall
replace the Equipment with comparable equipment with the same or more capacity
and in similar operating condition as the Equipment for the duration of the
lease.

          11.5  TRANSPORTATION. Buyer shall pay all costs related to the
disassembly and removal of the Equipment and shall pay all transportation costs
for shipment of the Equipment and inventory to Buyer or its designee pursuant
to this Section 11.

          11.6  ACCOUNTS RECEIVABLE. On the Transfer Date, Seller shall sell,
transfer and assign and Buyer shall purchase all of the accounts receivable
related to the Seller's cigarette paper business on the books of Seller as of
the close of business on the day before the Transfer Date (the "Accounts
Receivable"). The purchase price for the Accounts Receivable shall be part of
the aggregate purchase price paid by Purico and its affiliates to P.H.
Glatfelter Company under the Acquisition Agreement. In the event that after one
hundred twenty days (120 days) the amount of Accounts Receivables which Buyer
and its affiliates collect is less than DM 8,875,600, Seller shall promptly
reimburse Buyer for the difference; in the event that Buyer collects Accounts
Receivable which are greater than DM 8,875,600, Buyer shall promptly reimburse
Seller for the difference. Any Account Receivable received by Buyer more than
one hundred twenty (120) days after the Transfer Date shall be promptly
remitted by Buyer to Seller.

          11.7  AUDIT. Buyer shall keep and maintain complete and accurate
records and books of account documenting all Accounts Receivable collected by
Buyer or its affiliates. Buyer and any relevant affiliates shall permit
independent accountants retained by Seller, upon reasonable prior written
notice, to have access to Buyer's and its affiliates' records and books and
premises for the sole purpose of determining the amount of Accounts Receivable
collected pursuant to Section 11.6. Such examination shall be conducted during
regular business hours and at the Seller's own expense. If such examination
reveals that such costs or payments have been misstated, any adjustment shall
be promptly refunded or paid, as appropriate. The Seller shall pay the fees and
expenses of the accountant engaged to perform the audit, unless such audit
reveals a discrepancy of five percent (5%) or more for the period examined
which is to the

                                       11

<PAGE>

disadvantage of the Seller, in which case the Buyer shall pay all reasonable
costs and expenses incurred by the Seller in the course of making such
determination, including the fees and expenses of the accountant.

     12.  CONFIDENTIAL INFORMATION.

          Buyer and Seller acknowledge that during the course of performance of
this Agreement, each may learn confidential and proprietary information
regarding the other's business, costs, products, practices, procedures,
operations or plans (collectively "Confidential Information"). Confidential
Information shall not be deemed to include information which (i) is already
rightfully and lawfully known to the Party prior to disclosure, (ii) is already
public information or otherwise generally available, (iii) is subsequently
disclosed to the receiving Party by a third person not under any obligations of
confidentiality as to such information, or (iv) is subsequently developed
independently by the receiving Party. All other information exchanged is deemed
to be Confidential Information. Except as required by legal process, law,
statute or regulation, no Party will disclose Confidential Information to any
third person or entity, or use Confidential Information for any purpose other
than performance of its obligations under this Agreement without prior written
consent having been obtained from the Party to whom the Confidential
Information belongs. Each Party shall be liable to the other for any breach of
this Section 12 by such Party's directors, officers, employees, agents and
representatives.

     13.  BREACHES AND REMEDIES.

          13.1  VOLUNTARY TERMINATION. Either Party may terminate this Agreement
by giving written notice of termination to the other Party, at any time, upon
or after the filing by the other Party of a petition in bankruptcy or
insolvency, or upon the commencement of any other voluntary proceeding or
action whether by or against the Party under the relevant law on insolvency or
bankruptcy, or upon the expiration of sixty (60) days following the
commencement of any involuntary proceeding if after such sixty (60) days such
proceeding has not been dismissed or withdrawn, or after the making by the
other Party of any assignment or attempt of assignment for the benefit of
creditors, or upon or after the institution of any proceedings for the
liquidation or winding up of the other Party's business, or for the termination
of its corporate charter. In the event of the giving of such notice, this
Agreement shall terminate immediately upon the receipt of that notice by the
notified Party. Upon the occurrence of any of the events enumerated in this
Section, any pending purchase orders may be cancelled at the option of the
terminating party.

          13.2  TERMINATION FOR BREACH. If a Party (the "Defaulting Party")
fails to comply with any material term or condition of this Agreement, other
than a failure by Buyer to order the minimum amounts of each Product set forth
in Section 7, the other Party (the "Non-Defaulting Party") may provide written
notice to the Defaulting Party stating the nature of such failure (the "Default
Notice"). If the Default Notice relates to (i) a failure by the Defaulting
Party to pay any amount due and payable to the Non-Defaulting Party and the
Defaulting Party fails to pay such sum within fifteen (15) days after receipt
of the Default Notice or (ii) a failure by Seller to deliver Product on the
delivery date meeting the specifications set forth in the applicable purchase
order and the Seller fails to deliver Product meeting the specifications set
forth in the applicable purchase order within seven (7) days after receipt of
the Default Notice or

                                       12

<PAGE>

(iii) a failure by Defaulting Party to comply with any other material term or
condition of this Agreement and such failure is not cured within thirty (30)
days after the Defaulting Party's receipt of the Default Notice, or in the
event of a cure which requires in excess of thirty (30) days to complete, if
the Defaulting Party has not substantively commenced such cure within such
thirty (30) day period and thereafter does not promptly and diligently
prosecute the cure to completion, the Non-Defaulting Party in any such case
shall be entitled to either suspend or terminate this Agreement and pursue any
other remedies it may have under this Agreement.

          13.3  EFFECT OF WAIVER. Any waiver by either Party of a breach of any
term or condition of this Agreement shall not constitute a waiver of any
subsequent breach of the same or any other term or condition of this Agreement.

     14.  ASSIGNABILITY.

          This Agreement or any rights or obligations hereunder may not be
assigned by any of the Parties to any third party without the prior written
consent of the other Party, provided that Buyer or Seller may assign this
Agreement to an affiliate, in which event the transferee shall agree in writing
that this Agreement and all of its provisions shall be binding upon that
transferee as if the transferee were an original signatory to this Agreement.
Notwithstanding any assignment permitted by this Section 14, the Guaranty in
Section 20 hereof shall remain in effect.

     15.  INDEMNIFICATION.

          15.1  BUYER. Buyer shall defend, indemnify and hold harmless Seller
and its directors, officers and employees from and against any and all claims,
judgments, damages, losses, penalties, fines and costs of defense (including
attorneys' fees) asserted by third Parties arising out of Buyer's negligence,
or willful misconduct or acts or omissions in its use or sale of Products
provided by Seller, other than claims arising from Seller's negligence, willful
misconduct or failure to manufacture the Products in accordance with Customer's
specifications.

          15.2  SELLER. Seller shall defend, indemnify and hold harmless Buyer
and its directors, officers and employees from and against any and all claims,
judgments, damages, losses, penalties, fines and costs of defense (including
attorneys' fees) asserted by third Parties arising out of Seller's negligence,
willful misconduct or failure to manufacture the Products in accordance with
Buyer's or customer's specifications, other than those claims arising from
Buyer's negligence, willful misconduct or acts or omissions in its use or sale
of Products provided by Seller.

          15.3  NO CONSEQUENTIAL DAMAGES. In no event shall Seller or Buyer be
liable to the other for any special or consequential damages arising out of or
in connection with this Agreement, except for the damage suffered by Buyer as a
result of a claim by a Customer which arises from the Seller's material failure
to perform under the terms of this Agreement, provided that Buyer and Seller
agree in good faith, such agreement not to be unreasonably withheld by Seller,
that payment of such damages is necessary to preserve relations with the
Customer.

          15.4  NOTICE. To receive the foregoing indemnities, the party seeking
indemnification must promptly notify the other in writing of a claim or suit
and provide

                                       13

<PAGE>

reasonable cooperation (at the indemnifying party's expense) and full authority
to defend or settle the claim or suit. The indemnifying party shall have no
obligation to indemnify the indemnified party under any settlement made without
the indemnifying party's written consent.

     16.  INDEPENDENT CONTRACTORS.

          The relationship of the Parties is that of independent contractors,
and neither Party will incur any debts or make any commitments for the other
party except to the extent expressly provided in this Agreement. Nothing in
this Agreement is intended to create or will be construed as creating between
the Parties the relationship of joint venturers, co-partners, employer/
employee or principal and agent.

     17.  REPRESENTATIONS AND WARRANTIES.

          17.1  ORGANIZATION, AUTHORITY AND AUTHORIZATION OF SELLER. Seller is
a partnership duly formed and in good standing under the laws of Germany and
has full power and authority as a partnership to execute and deliver this
Agreement and any documents contemplated hereby, effect the transactions
contemplated hereby and thereby and has duly authorized the execution, delivery
and performance of this Agreement and any document contemplated hereby by all
necessary partnership action. Seller has full power and authority as a
partnership necessary to carry on its business as now conducted, to own or
lease and operate its properties as and in places where such business is now
conducted and such properties are now owned, leased or operated. This Agreement
has been duly executed and delivered by Seller and constitutes the valid and
legally binding obligations of Seller, enforceable against it in accordance
with its terms.

          17.2  NO VIOLATIONS BY SELLER. The execution, delivery and performance
of this Agreement by Seller and the performance of the transactions
contemplated hereby and thereby do not and will not  result in a breach or
violation of any provision of the governance document of Seller or in a
material violation of any statute, rule, regulation governmental permit or
ordinance applicable to Seller or violate or result in a breach of or
constitute an event of default (or an event which might, upon the passage of
time or the giving of notice, or both, constitute an event of default) under
any provision of, result in acceleration or cancellation of any obligation
under, or give rise to a right by any party to terminate or amend its
obligations under, any mortgage, deed of trust, conveyance to secure debt,
note, loan, indenture, lien, material lease, agreement, instrument, order,
judgment, decree or other material arrangement or commitment to which Seller is
a party or by which its assets or properties are bound, or violate any order,
judgment, decree, rule or regulation of any court or any governmental agency or
body having jurisdiction over Seller or any of its assets or properties, except
for such consents, approvals, orders or authorizations, registrations,
declarations or filings where failure of compliance would not, individually or
in the aggregate, have a material adverse effect on the ability of Seller to
consummate the transactions contemplated hereby. No consent, approval, order or
authorization of or registration, declaration or filing with, any person is
required by Seller in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby or
thereby, except for such consents, approvals, orders or authorizations,
registrations, declarations or filings where failure of compliance would not,

                                       14

<PAGE>

individually or in the aggregate, have a material adverse effect on the ability
of Seller to consummate the transactions contemplated hereby.

          17.3  ORGANIZATION, AUTHORITY AND AUTHORIZATION OF BUYER. Buyer is a
corporation duly formed and in good standing under the laws of Germany and has
full power and authority as a corporation to execute and deliver this Agreement
and any documents contemplated hereby, effect the transactions contemplated
hereby and thereby and has duly authorized the execution, delivery and
performance of this Agreement and any document contemplated hereby by all
necessary partnership action. Buyer has full power and authority as a
corporation necessary to carry on its business as now conducted, to own or
lease and operate its properties as and in places where such business is now
conducted and such properties are now owned, leased or operated. This Agreement
has been duly executed and delivered by Buyer and constitutes the valid and
legally binding obligations of Buyer, enforceable against it in accordance with
its terms.

          17.4  NO VIOLATIONS BY BUYER. The execution, delivery and performance
of this Agreement by Buyer and the performance of the transactions contemplated
hereby and thereby do not and will not  result in a breach or violation of any
provision of the governance document of Buyer or in a material violation of any
statute, rule, regulation governmental permit or ordinance applicable to Buyer
or violate or result in a breach of or constitute an event of default (or an
event which might, upon the passage of time or the giving of notice, or both,
constitute an event of default) under any provision of, result in acceleration
or cancellation of any obligation under, or give rise to a right by any party
to terminate or amend its obligations under, any mortgage, deed of trust,
conveyance to secure debt, note, loan, indenture, lien, material lease,
agreement, instrument, order, judgment, decree or other material arrangement or
commitment to which Buyer is a party or by which its assets or properties are
bound, or violate any order, judgment, decree, rule or regulation of any court
or any governmental agency or body having jurisdiction over Buyer or any of its
assets or properties, except for such consents, approvals, orders or
authorizations, registrations, declarations or filings where failure of
compliance would not, individually or in the aggregate, have a material adverse
effect on the ability of Buyer to consummate the transactions contemplated
hereby. No consent, approval, order or authorization of or registration,
declaration or filing with, any person is required by Buyer in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or thereby, except for such consents,
approvals, orders or authorizations, registrations, declarations or filings
where failure of compliance would not, individually or in the aggregate, have a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby.

     18.  ENTIRE AGREEMENT; AMENDMENT.

          This Agreement, together with the Acquisition Agreement and the
letter agreement pertaining to this Agreement entered into as of the Effective
Date, is the entire understanding between the Parties with respect to the
subject matter hereof and supersedes any contracts, agreements or
understandings (oral or written) of the Parties with respect to the subject
matter hereof. No part of this Agreement may be amended, altered or otherwise
modified unless done so in a writing duly executed by the Parties to this
Agreement.

                                       15

<PAGE>

     19.  FORCE MAJEURE.

          If the performance of any part of this Agreement by Seller or Buyer
is prevented, hindered or delayed by reason of any cause or causes beyond the
control of Seller or Buyer, as the case may be, and which cannot be overcome by
due diligence, including, but not limited to, acts of God, floods, storms,
earthquakes, hurricanes, tornadoes, or other severe weather or climatic
conditions, acts of public enemy, war, blockades, insurrection, vandalism or
sabotage, fire, accident, wreck, explosion, strike or labor dispute, embargoes
or governmental laws, orders, or regulations which cause interruption in
production or delivery of Product at or from Seller's plant, the party affected
shall be excused from such performance to the extent that it is necessarily
prevented, hindered or delayed during the continuance of any such happening or
event, and this Agreement shall be suspended so long as and to the extent that
any such cause prevents or delays its performance.

     20.  GUARANTEE.

          In consideration for the payment of $1.8 million from Seller or its
affiliate to Guarantor by wire transfer in immediately available funds on the
Transfer Date and to induce Seller to enter into this Agreement, Guarantor
hereby irrevocably and unconditionally guarantees to Seller and becomes surety
to Seller for the punctual and full payment of all amounts due from Buyer to
Seller and the performance of all other obligations of Buyer, whether now
existing or hereafter arising, pursuant to this Agreement. Seller may enforce
this guarantee directly again the Guarantor, and the Guarantor shall waive any
right or remedy to require that any action be brought against Buyer or any
other person or entity before proceeding against the Guarantor. Seller may
pursue its rights and remedies under this Agreement in whatever order, or
collectively. Without limiting the generality of the foregoing, the obligations
of Guarantor hereunder shall remain in full force and effect without regard to,
and shall not be released, discharged or in any way affected by:

               (a)  any amendment, modification or supplement to this
     Agreement provided such amendment, modification or supplement has been
     agreed by Guarantor;

               (b)  any exercise or nonexercise of or delay in exercising any
     right, remedy, power or privilege under or in respect of this Agreement,
     or any waiver, consent, indulgence or other action or inaction in respect
     thereof;

               (c)  any bankruptcy, insolvency, arrangement, composition,
     assignment for the benefit of creditors or similar proceeding commenced
     by or against Buyer;

               (d)  any extension of time for payment or performance of any of
     the obligations under this Agreement;

               (e)  the genuineness, validity or enforceability of this
     Agreement;

               (f)  the release of Buyer from performance or observance of
     any of the agreements, covenants, terms or conditions contained in this
     Agreement by operation of law;

                                       16

<PAGE>

               (g)  the failure of Seller to keep Guarantor advised of Buyer's
     financial condition, regardless of the existence of any duty to do so; or

               (h)  any other circumstances which might otherwise constitute a
     legal or equitable discharge of a guaranty or surety.

     21.  GOVERNING LAW; JURISDICTION.

          This Agreement shall be construed and interpreted in accordance
with, and the rights and obligations of the Parties shall be determined by, the
laws of the Federal Republic of Germany. The Parties consent to the exclusive
jurisdiction of the courts in Frankfurt, a.M. for all matters arising out of or
relating to this Agreement; provided, however, that Seller shall have the right
to bring legal action against the Guarantor before any other court having
jurisdiction over the Guarantor or its assets.

     22.  NOTICES.

          Unless otherwise indicated differently, all notices, requests,
information or demands which any party may desire or may be required to give to
any other party under this Agreement, shall be in writing and shall be
personally delivered or sent via e-mail, telegram, telex, telecopy, or first
class certified registered mail, postage prepaid return receipt requested, and
sent to the party at its address appearing below or such other address as
either party shall subsequently inform the other party by written notice given
as described above; provided, however, that notices from Buyer providing
purchase order information need not be sent by certified mail:

<TABLE>
<S>              <C>                       <C>
If to Buyer:     John Scott
                 Analyst House
                 20-26 Peel Rd
                 Douglas, Isle of Man
                 IM99 1AP, United Kingdom

With a copy to:  Nat Puri                  Christopher Karras
                 6 Union Road              Dechert
                 Nottingham, NG3 1FH       4000 Bell Atlantic Tower
                 United Kingdom            1717 Arch Street
                                           Philadelphia, PA 19103
                                           215-994-4000

If to Seller:    Werner Ruckenbrod
                 Managing Director
                 Hordener Landstrasse 3-7
                 76593 Gernsbach, Germany
                 49-7224-66471 (fax)
</TABLE>

                                       17

<PAGE>

<TABLE>
<S>              <C>
with a copy to:  Markus Mueller
                 Corporate Counsel and Secretary
                 96 South George Street
                 Suite 500
                 York, Pennsylvania 17401
                 001-717-846-2419 (fax)
</TABLE>

All notices, requests, information or demands so given shall be deemed
effective upon receipt or, if mailed, upon receipt or the expiration of the
third day following the date of mailing, whichever occurs first, except that
any notice of change in address shall be effective only upon receipt by the
party to whom the notice is addressed.

     23.  SEVERABILITY.

          In the event any provision of this Agreement conflicts with the
law under which this Agreement is to be construed, such provision shall be
deleted from the Agreement, and the Agreement shall be construed to give effect
to the remaining provisions thereof.

     24.  COUNTERPARTS.

          This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and
the same agreement.

                                       18

<PAGE>

          In witness, the Parties, intending to be legally bound, have
caused this Agreement to be executed in their corporate names by their duly
authorized officers as of the Effective Date.

                               PAPIERFABRIK SCHOELLER &
                               HOESCH GmbH & CO. KG

                               /S/ WERNER RUCKENBROD
                               ---------------------
                               Name:
                               Title:

                               PURICO GmbH

                               /S/ N.R. PURI
                               -------------
                               Name:
                               Title:

                               PURICO (IOM) LIMITED

                               /S/ UPENDRA PURI
                               ----------------
                               Name:
                               Title:<PAGE>
                                  EXHIBIT 10(t)

January 16, 2001

Mr. George H. Glatfelter II
Chairman, President and Chief Executive Officer
P. H. Glatfelter Company
96 South George St
Suite 500
York, PA 17401

Dear George:

We appreciate the opportunity to assist the P. H. Glatfelter Company ("P. H.
Glatfelter") with the execution of the detailed design and implementation
phases of its Project IMPACT ("IMPACT"). This letter ("Arrangement Letter")
with an effective date of October 3, 2000 documents the parties mutual
understanding as to how Accenture LLP ("Accenture"), formerly known as Andersen
Consulting, with an office located at 161 N. Clark Street, Chicago, IL 60601,
will assist P. H. Glatfelter with the Project as further described below (the
"Project"). The Project Workplan, to be mutually amended in writing by the
parties from time to time (the "Workplan") is attached hereto as Exhibit 1 and
is incorporated into this Arrangement Letter by this reference.

Please note that on January 1, 2001, Andersen Consulting's name changed to
Accenture With this name change, all provisions in this Arrangement Letter will
remain in full force and effect.

BACKGROUND
During the planning phase of IMPACT, Accenture supported the P. H. Glatfelter
Project team in its recommendation of an information technology solution
together with changes in business organization and processes to help support
the realization of P. H. Glatfelter's vision. As a result of these
recommendations, Accenture has been contracted to aid in the detailed design
and implementation of the technology solution, organization and process changes.

2.  PROJECT OBJECTIVES
P. H. Glatfelter's Project objectives are as follows:
-    Design and implement an organization below the Vice President level that
     aligns the new processes with the vision and strategy
-    Develop the detailed processes and organization designs required to
     implement the New Product Development business process
-    Prototype components of the Finance, Requisition-to-Payment, and
     Order-to-Cash processes with the Enterprise Resource Planning (ERP)
     Application of choice using an Accenture -solution center
-    Develop and implement the business processes, change management, and
     technology architecture designs to support the implementation of an ERP
     solution for the business processes of Finance, Requisition-to-Payment,
     and Order-to-Cash
-    Implement a customer-direct web site for the book publishing business of
     P. H. Glatfelter and implement an ongoing approach for hosting the site
     (likely using 3rd party hosting services to be determined by P. H.
     Glatfelter )

3.  PROJECT SCOPE

3.1  ORGANIZATION DESIGN

Building on the work previously completed by Accenture, the scope of this
effort will provide a detailed organization design below the Vice President
level and a transition plan for the new organization. This effort will focus on
the Corporate Headquarters, Spring Grove, Ecusta, Neenah, Gernsbach, and P.D.C.
locations. P. H. Glatfelter will assume responsibility for assigning
individuals to their new jobs.

<PAGE>

Specifically excluded from the scope of organizational design are Compensation
Design and Compilation, Recruiting, and Career Development References to a
detailed scope document entitled 'Organization Design Scope', to be mutually
amended in writing by the parties from time to time is incorporated herein by
this reference.

3.2  SALES AND OPERATIONS PLANNING PROCESS REENGINEERING (S&OP)

This step will focus on the Sales and Operations Planning process. The effort
will establish enhanced processes, create new, Microsoft Excel based tool
(decision support management report), performance measurement tracking and an
implementation plan. This effort will also coordinate with the organizational
design step.

Excluded from the scope will be any automated tool support for planning and
scheduling beyond the use of the spreadsheet decision tool.

References to a detailed scope document, 'Sales and Operations Planning Scope',
to be mutually amended in writing by the parties from time to time is
incorporated herein by reference.

3.3  ERP PROTOTYPE (JUMPSTART)

This step will yield a prototype of a subset of the Finance, Order to Cash and
Requisition to Payment business processes, using representative P. H.
Glatfelter data. The prototype will be used as an input to the ERP detailed
design work and will not be a production ready tool.

References to a detailed scope document, 'ERP Jumpstart Scope', to be mutually
amended in writing by the parties from time to time is incorporated herein by
reference.

The jumpstart technical environment for the ERP software will be hosted out of
the Accenture data center in Cincinnati.

3.4  ERP IMPLEMENTATION

The scope for this phase will consist of the following (to be detailed in a
separate document entitled, 'ERP Implementation Scope', to be mutually amended
in writing by the parties from time to time and is incorporated by reference
herein):
3.4.1  Business processes:

-    Requisition to Payment
     -    Manage Master Data
     -    Manage Supply Sourcing
     -    Manage Purchasing
     -    Manage Raw Materials
     -    Manage Accounts Payable

-    Finance
     -    Manage General Ledger
     -    Manage Assets
     -    Close
     -    Manage and Report Costs
     -    Manage and Report Finance

-    Order to Cash
     -    Plan Sales & Operations
     -    Manage Sales Orders
     -    Manage Finished Goods Inventory
     -    Manage Accounts Receivable

<PAGE>

3.4.2  PROGRAMMED ELEMENTS:
It is assumed that a number of reports, interfaces, conversions, extensions and
forms will be designed and implemented during this phase. The quantities of
these programmed elements can be found in the table below:

<TABLE>
<CAPTION>
----------------------------------------------------
   ERP Global Estimating Model Estimate   Number
----------------------------------------------------
<S>                                        <C>
Number of Reports                           20
----------------------------------------------------
Number of Interfaces - ERP to Non-ERP       30
----------------------------------------------------
Number of Interfaces - Non-ERP to ERP       28
----------------------------------------------------
Number of Conversions                       70
----------------------------------------------------
Number of EDI Interfaces                     8
----------------------------------------------------
Number of Forms                             25
----------------------------------------------------

----------------------------------------------------
Total                                      550
----------------------------------------------------
</TABLE>

The development environment will continue to be hosted within the Accenture
data center in Cincinnati for a period of 9 months.

3.5  CUSTOMER DIRECT WEB-SITE

A web site will be developed, which allows P. H. Glatfelter's customers to
transact business directly with P. H. Glatfelter. This web site will use a
channel management application from Click Commerce and will initially be
interfaced with existing systems within P. H. Glatfelter; once the Order to
Cash process is automated using ERP, then the web site will be interfaced with
the ERP application. The web site will be hosted by a 3rd party to be
determined and contracted by P. H. Glatfelter. It will support the book
publishing business within the Glatfelter division only.

Based on prior discussions with P. H. Glatfelter team members, the Project has
been broken down into three separate phases. The scope of these phases are
detailed in a separate scope document which is incorporated herein by reference.

3.6  GENERAL SCOPE CONSIDERATIONS
3.6.1  Locations
P. H. Glatfelter operating locations included in the scope of the Project are
as follows:

-    Corporate Headquarters in York, PA
-    Spring Grove, PA Mill
-    Ecusta, NC Mill
-    Neenah, WI Mill
-    Gernsbach, Germany
-    Papiers de Cascadec, France

Excluded from the scope of the Project is the P. H. Glatfelter Timberlands
(other than the integration of raw material purchasing ).

3.6.2     Processes
Excluded from scope are the following processes:

-    Payroll / Human Resources
-    eProcurement
-    Advanced Planning and Scheduling (APS)
-    Customer Relationship Management (CRM)
-    Manufacturing Execution System (MES) other than for order entry as required
-    Data Warehousing

<PAGE>

-    T&E (travel and entertainment)
-    Time & Attendance

3.7  PROJECT SCOPE CONTROL PROCESS

We recognize that scope management is a critical success factor of this
Project. The following process will be followed to manage any scope request
changes.

-  Request for change is made to the Program Management team
-  Program Management reviews the request for change and discusses with the
appropriate teams involved during a weekly scope review meeting.
-  Teams review request, assess impact to scope, cost, and timeline.
-  If such change is approved by both parties, it will be documented in writing
and signed by both parties, thereby modifying the relevant scope document.

4.  PROJECT APPROACH

4.1  ORGANIZATION DESIGN

Deliverable creation will follow a phased approach that incorporates interim
workshops and decision points where the P. H. Glatfelter Steering Committee is
actively involved in evaluating progress, sanctioning subsequent activities and
redirecting resources in an attempt to achieve our mutually agreed upon
objectives. The phases of the organization design are as follows:

-  Process Refinement
-  Role, Function, and Structure Development
-  Detailed Organization Development
-  Transition Plan

4.2  SALES AND OPERATIONS PLANNING

The decision support management report (Microsoft Excel spreadsheet) will
provide an integrated link between Sales and Marketing, and Manufacturing.
Creation of the decision support management report will follow an iterative
approach that incorporates interim releases of this report. The S&OP sponsor
team (COO, CFO, VP Supply Chain Management, VP Marketing and Sales, ) is
actively involved in evaluating progress, sanctioning subsequent activities and
redirecting resources in an attempt to achieve the mutually agreed upon
objectives. For each iteration, the following activities will take place:

     -  Define content requirements
     -  Data collection
     -  Build and/or enhance features in the S&OP decision support
        management reports

Concurrent with the development of S&OP decision support management reports,
the S&OP team will work closely with P. H. Glatfelter personnel at various
levels to set up the processes for report generation, and report review
meetings.

4.3  ERP PROTOTYPE (JUMPSTART)

The ERP prototype will be executed primarily out of an Accenture solution
center using Accenture development resources. Requirements will initially be
gathered from key users (to be determined by P. H. Glatfelter) through
workshops. Progress on construction of the prototype will be reviewed with the
users at least once every two weeks. Development will be iterative based on the
feedback from these review sessions. P. H. Glatfelter staff will be able to
access the jumpstart system directly from the corporate offices in York (PA).

<PAGE>

Once completed, the prototype may be used as a basis for detailed ERP design,
and as a communication vehicle within P. H. Glatfelter.

4.4  ERP IMPLEMENTATION

The overall approach will be accomplished in several segments of work, all of
which will be documented within a common tool set (the 'Method Delivery
Manager', ("MDM"), to be provided by Accenture to P. H. Glatfelter).

-    Global Design - representatives from each P. H. Glatfelter division
     will work together in York (PA) to make ERP design decisions which are
     common to each division and geography. The design will be translated into
     ERP configuration where the ERP application can directly support the
     design. In the case that ERP cannot directly support the design
     programming specifications will be written (e.g. interfaces, forms,
     reports). This design phase will be run on a workshop basis and it is
     anticipated that much of the ERP configuration will be done remotely at
     an Accenture solution center.
-    Region-Specific Design - this will incorporate those elements of the
     design which are not common across the divisions and / or regions. It is
     anticipated that this work may happen in both the US and Europe.
-    Development and Programming - all development for reports, interfaces,
     conversions, extensions and forms will follow a very structured path
     including functional and technical specifications, programming, unit and
     acceptance testing.
-    System Testing - a four pass approach to system testing will be
     undertaken. The first pass will consist of the configuration done within
     the ERP application. The second and third passes will consist of the
     programmed elements. The final pass will constitute a user acceptance
     test to be signed off by key users.
-    Training - the approach to training will primarily be 'train the
     trainer'. Training materials will be specified and developed throughout
     the Project and initial classes will focus on business users from within
     P. H. Glatfelter who will then in turn train others within the business.
     The training materials will include classroom based aids, together with
     on-line exercises.
-    Data Conversion - a 3rd party consultancy will be retained by P. H.
     Glatfelter to manage and facilitate much of the data cleanup,
     reconciliation and conversion tasks associated with materials, vendors
     and customers. They will work directly with users to get the existing
     legacy data to a stage where it can be transferred automatically into the
     ERP application using conversion programs developed in the programming
     phase. Conversion itself will be a multi-pass approach where business
     users review the data after each pass in a temporary environment to
     ensure that final production data is of the appropriate quality.
-    Rollout - will be mill by mill in a sequence to be agreed upon by both
     parties.

4.5  CUSTOMER DIRECT WEB SITE

The following six key work streams make up the approach necessary to implement
the Customer Direct Web site.

-    Project kickoff. Conduct business interviews and technical interviews.
     Design the customer direct web site.
-    Build and Unit Test. Sign off on the design.
-    Complete assembly and staging test.
-    Complete & sign off acceptance test. Go live with customer direct web
     site.
-    Post "go live" support.

P. H. Glatfelter acknowledges that production support activities will be
required after the software release. Seven months of production support for
customer direct website by Accenture are included in this Arrangement Letter.
The parties currently contemplate that these production support activities will
consist of addressing production data issues, supporting users, supporting
training activities, developing minor enhancements to the application, applying
vendor software updates, and performance tuning the application, database,
server operating systems, and network. Accenture will work with P. H.
Glatfelter to develop a mutually agreeable approach and plan for supporting the
application after launch.

4.6  GENERAL APPROACH CONSIDERATIONS

<PAGE>

A Program Management team will manage the projects using issue management,
scope management, status reporting and resource management processes with a
consistent set of tools.

5.   PROJECT TIMING

5.1  ORGANIZATION DESIGN

The duration of this step will be approximately 4 months and will end with an
implementation of the deliverables developed during that period currently
estimated to be implemented by January 31st 2001.

5.2  S&OP

The duration of this step will be approximately 4 months and will end with an
implementation of the deliverables developed during that period, curently
estimated to be implemented by January 31st 2001.

5.3  ERP PROTOTYPE

The duration of this step will be approximately 4 months and will end with an
implementation of the deliverables developed during that period, currently
estimated to be implemented by January 31st 2001.

5.4  ERP IMPLEMENTATION

Global design will commence in February 2001, following the January 15th
milestone. It is anticipated that the rollouts will be completed by September
30th, 2002.

5.5  CUSTOMER DIRECT WEB SITE

Work is scheduled to complete by August 2001 for the version of the web site
which is interfaced to the legacy systems; the final version will coincide with
the ERP rollouts for the Glatfelter division.

5.6  PROJECT TIMING - GENERAL

The Program Management team will meet with the P. H. Glatfelter Steering
Committee during the course of this Project as outlined in the Workplan to
review:

-    Progress towards milestones
-    Resource needs for the next stage
-    Scope changes
-    Business condition changes which would impact the Project
-    Key milestones as listed below
     -    January 15, 2001  Organization Design /ERP Readiness Review
     -    June 15, 2001         ERP Build Readiness Review
     -    November 16, 2001     First Mill Rollout Readiness Reviews
     -    January 18, 2002  Second Mill Rollout Readiness Review
     -    May 17, 2002          Third Mill Rollout Review
     -    July 12, 2002         Fourth Mill Rollout Readiness Review

Upon completion of each of these milestones P. H. Glatfelter will approve and
sign-off the completion of the Project to date. The Workplan describes
activities related to the delivery of these milestones.

6.  PROJECT DELIVERABLES

6.1  ORGANIZATION DESIGN

<PAGE>

The activities will yield the following deliverables that will align the
organization around the business processes required to realize P. H.
Glatfelter's vision:

     -    Detailed organization structure below the Vice President level
          -    Roles and responsibilities
          -    Governance guidelines
          -    Job Descriptions
          -    Key Performance Indicators to align the structure
          -    Organization Chart

     -    Transition plan to the new organization
          -    Training Gap Analysis
          -    Training Plan
          -    Recruiting Plan
          -    Implementation Plan
          -    Communication Plan

In building these deliverables, Accenture is responsible for creating and
facilitating workshops, defining approach, methodology and templates and
providing management of consulting resources.
P. H. Glatfelter is responsible for approving the interim and final
deliverables, participating in workshops, providing business content,
presenting results to the steering committee. Furthermore, it is responsible
for compensation design and compilation, recruiting, career development and
assigning individuals to positions in the new organization.

6.2       SALES AND OPERATIONS PLANNING

     -    The following deliverables will result from the implementation of the
          Sales & Operations Planning process: Detailed process flow diagrams
          with activities and responsibilities
     -    Decision support management reports (Microsoft Excel Spreadsheet)
          for the 30, 60, and 90 day plan
     -    Data interface from legacy systems
     -    Identification of organizational impact resulting from process
          changes and incorporation into the organization design project
     -    Key Performance Indicators for process measurement and continuous
          improvement
     -    Implementation Plan

In building these deliverables, Accenture is responsible for creating and
facilitating workshops, defining approach, methodology and templates, building
the decision support management tool and providing management of consulting
resources.

P. H. Glatfelter is responsible for the data interface from legacy systems,
participating in workshops, providing business content, approving the interim
and final deliverables and presenting results to the steering committee.

Accenture and P. H. Glatfelter will be jointly responsible for the creation of
all other deliverables.

6.3  ERP PROTOTYPE

The following deliverables will result from the implementation of the ERP
prototype:
     -    Draft of ERP Organizational Elements
     -    Draft of Master Data Key Mapping
     -    Prototype of ERP core business transactions within Finance, Order
            to Cash, Requisition to Pay with supporting configuration and
            business process documentation
     -    Recommendation on level of support for order entry and
            manufacturing within ERP (i.e. define the interface point with the
            MES)

<PAGE>

In building these deliverables, Accenture is responsible for creating and
facilitating workshops, defining approach, methodology and templates, drafting
the ERP organization elements and master data key mapping, building the SAP
prototype and providing management of consulting resources. Furthermore,
Accenture will be responsible for hosting the ERP technical environment from
its Cincinnati data center.

P. H. Glatfelter is responsible for participating in workshops, providing
business content, approving the interim and final deliverables and presenting
results to the steering committee.

Accenture and P. H. Glatfelter will be jointly responsible for the
recommendation on the order entry decision, together with ensuring connectivity
between Accenture and P. H. Glatfelter offices.

6.4  ERP IMPLEMENTATION

The following deliverables will result from the ERP implementation:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                     AC Responsibility  PHG Responsibility
-----------------------------------------------------------------------------------------------------------
 <S>                                                                 <C>                <C>
 Detailed workplan and methodology                                   Primary            Secondary
-----------------------------------------------------------------------------------------------------------
 Business process documentation                                      Secondary          Primary
-----------------------------------------------------------------------------------------------------------
 ERP configuration rationales                                        Primary            Secondary
-----------------------------------------------------------------------------------------------------------
 Functional design specifications                                    Primary (ERP)      Primary (Legacy)
-----------------------------------------------------------------------------------------------------------
 Technical design specifications                                     Primary (ERP)      Primary (Legacy)
-----------------------------------------------------------------------------------------------------------
 Code for reports, interfaces, conversions, enhancements, and forms  Primary (ERP)      Primary (Legacy)
-----------------------------------------------------------------------------------------------------------
 Test plan and testing supporting documentation                      Secondary          Primary
-----------------------------------------------------------------------------------------------------------
 Data cleansing and conversion                                       Secondary          Primary
-----------------------------------------------------------------------------------------------------------
 Training plan and end user training materials                       Primary            Secondary
-----------------------------------------------------------------------------------------------------------
 Communication plan and communication materials                      Secondary          Primary
-----------------------------------------------------------------------------------------------------------
 Final ERP configured solution                                       Primary            Secondary
-----------------------------------------------------------------------------------------------------------
</TABLE>

Generally, in building these deliverables, Accenture is responsible for
creating and facilitating workshops, defining approach, methodology and
templates, providing the MDM documentation tool and providing management of
consulting resources.

Also, P. H. Glatfelter is responsible for participating in workshops, providing
business content, approving the interim and final deliverables and presenting
results to the steering committee.

Note that the parties agree that any ABAP development which requires the
participation of SAP America, Inc. ("SAP") resources will be jointly agreed to
in writing by the parties prior to SAP resources participating in any such
development work.

6.5  CUSTOMER DIRECT WEB SITE

The following deliverables will result from the Customer Web Site development:
     -    Functional Design
     -    Site Map
     -    Technical Architecture
     -    Unit Test Plans
     -    System Test Approach & Scripts
     -    Web Site

There is a joint responsibility for the creation of the functional design and
system test scripts.

<PAGE>

Andersen Consulting has primary responsibility for the creation of all other
deliverables.

P. H. Glatfelter will be responsible for the review and approval of the
deliverables.

6.6  OTHER DELIVERABLES

6.6.1  IT sourcing alternatives

Accenture will provide P. H. Glatfelter executives with IT capability sourcing
alternatives for consideration during appropriate phases of the ERP
implementation and on-going technical support of ERP and related systems. Such
alternatives may include, but will not be limited to, use of solution centers,
strategic alliances, and building local third-party relationships. Alternative
services may include, but are not limited to, implementation, testing, data
conversion, conversion support, post-conversion stabilization support, problem
management, user support, maintenance and development. P.H. Glatfelter will be
solely responsible for the selection and negotiation of all strategic and third
party relationships that it determines are appropriate.

6.6.2  Knowledge transfer

Development of key resources within P. H. Glatfelter is recognized as a success
factor for Project IMPACT. Accenture will, where both parties agree are
appropriate, provide opportunity for key P. H. Glatfelter personnel to learn
new and additional skills relating to business processes and technical
components of the ERP implementation. The P. H. Glatfelter IT Project Manager
will, with input and assistance from the Accenture Program Manager, design,
implement and track a reasonable and acceptable knowledge transfer program. The
Program Management Team will be responsible for measuring the execution of this
program by milestones. It is the sole responsibility of P. H. Glatfelter
personnel in this program to absorb, retain and demonstrate proficiency of
these new and additional skills.

7.  PROJECT ASSUMPTIONS

The following assumptions have been used to develop this Arrangement Letter and
should be considered an integral part of this Arrangement Letter. If any of
these assumptions prove to be invalid and Accenture is aware thereof, Accenture
will provide notice to P.H. Glatfelter to correct and both parties will agree
to the impact on the fees, schedule, and staffing prior to continuation of the
Project.

7.1  ERP IMPLEMENTATION

-    P. H. Glatfelter will have established their own on-site internal
     technical environment (in Spring Grove, PA) by June 1, 2001 or will have
     sourced the technical environment from alternative source. Hardware and
     tools acquisition will also be completed by this time. Costs for hardware
     / tools will be the responsibility of P. H. Glatfelter.
-    Data conversion services provider will be selected by P. H. Glatfelter
     by January 1st 2001 in order to meet catalog and data conversion
     requirements for the next phase. P. H. Glatfelter will cause the third
     party to be involved during the design process to insure that conversion
     requirements are appropriately addressed.
-    Project team training on the ERP software will be provided by the ERP
     vendor and conducted by P. H. Glatfelter. P. H. Glatfelter team members
     will attend the appropriate training for their respective roles.
-    Estimated effort for ERP assumes a common global design across all
     sites. Specific requirements for each location will be minor and limited
     to specific business requirements to local regulations and/or customer
     differences.
-    Any changes to the requirements after confirmation will go through the
     change control process as noted above. If the implementation of
     particular features of the software are not possible due to either
     limitations in the base software package, the effort involved to
     customize the software, or if implementing the selected features would
     jeopardize achieving the overall objectives of the Project, Accenture
     will discuss implementation alternatives with P. H. Glatfelter. These
     alternatives may include manual process work-arounds, delaying certain
     functions

<PAGE>

     and features of the application until a future software release, or
     utilizing other software packages for some functionality.

7.2  CUSTOMER DIRECT WEBSITE

-    P. H. Glatfelter shall be solely responsible for the compliance of the
     Click Commerce software and any associated portal activity and internet
     service with any applicable laws, rules or regulations relating to such
     activity imposed by relevant governmental authorities, including but not
     limited to the following topics as they apply to use of the Click
     Commerce software and any associated services on the internet: (a) data
     privacy (b) trademark and unfair competition laws, (c) advertising , (d)
     currency translation, (e) transaction reporting, (f) censorship, (g)
     import/export, and (h) taxation.
-    P. H. Glatfelter shall be solely responsible for obtaining all
     authorizations and/or licenses necessary from third parties to enable and
     support all content, framing and/or linking functions associated with any
     eCommerce or portal development and activity associated with the Project.
-    P. H. Glatfelter shall be solely responsible for performing all legal
     searches, and for bearing all costs and expenses associated with such
     search(es), to ensure that any names, icons, or other symbols used in the
     P. H. Glatfelter internet service offering, whether provided by
     Accenture, P. H. Glatfelter, or any other party ("Symbols"), do not
     infringe upon any copyrights, service marks, trademarks, registered names
     or intellectual property rights. P. H. Glatfelter shall be solely
     responsible for determining whether or not any such Symbol infringes any
     such rights.
-    P. H. Glatfelter has completed the evaluation of Click Commerce
     software and has determined that it meets all its requirements.

7.3  GENERAL ASSUMPTIONS

-    The Project will be a joint team effort of Accenture and P. H.
     Glatfelter resources (the "Project Team")
-    The Project team will continue to use Accenture's MDM for the
     completion of the work. Accenture will provide to the P. H. Glatfelter
     team access and usage of the MDM to support the documentation of key
     business decisions and for the overall management of the Project.
-    P. H. Glatfelter will provide adequate numbers of licenses of project
     management software to facilitate project and budget control reporting.

-    P. H. Glatfelter will continue to provide adequate facilities,
     equipment, systems connectivity and work space for all Project personnel.

-    P. H. Glatfelter will identify change agents for each of the operating
     facilities and will work with the teams to confirm key process designs
     and begin taking ownership of process related activities at the mill.
     Process Owners will be identified to facilitate design of processes
     across mills / functional units and to work with the Change Agent
     Network, Sponsors, Steering Committee and Project team to ensure process
     outcomes are defined and realized.

-    P. H. Glatfelter will be responsible for insuring that all P. H.
     Glatfelter staffing of personnel is completed consistent with the Project
     work plans.

-    P. H. Glatfelter shall have the option of acquiring hardware and
     software required for the Project through Accenture's affiliated entity,
     Proquire LLC, subject to a separate agreement, as long as the price or
     license fee for such third party products is the same as or lower than
     the price at which P. H. Glatfelter can obtain such third party hardware
     or software. Accenture, as agent for Proquire, may invoice, collect, and
     receive from P. H. Glatfelter all sums that are or become due to
     Proquire, including taxes and shipping charges, as applicable.

-    If Accenture personnel perform services pursuant to this Arrangement
     Letter outside the city, state, province, or country in which such
     personnel are based, P. H. Glatfelter shall reimburse Accenture for
     increased tax and reasonable compliance costs incurred by Accenture
     personnel as a result of providing such services ("Compensatory Taxes").

<PAGE>

-    As the Project is a long term Project, the parties recognize that
     various aspects of the scope are currently unknown; may need to be
     further defined; and may change throughout the course of the Project. The
     formal change control process will be followed by the Project Team.
     Changes to design decisions and scope will have an impact on resources,
     fees and timeline, and will be reviewed and approved in advance according
     to the agreed upon process (see Section 3.7).

-    As of the date of this Arrangement Letter, the Project has been
     estimated at a total of 11,964 days of Accenture activities, on which the
     fees have been estimated.

-    P. H. Glatfelter will negotiate with all third party software
     licensors, including but no limited, to Click Commerce and the ERP
     vendors, and will be responsible for procuring the required software
     licenses, documentation, and support contracts on or before December 4,
     2000.

-    P. H. Glatfelter will be responsible for obtaining any consents
     necessary for Accenture's access in order to perform its obligations
     under this Arrangement Letter. Accenture will work with P. H. Glatfelter
     to identify where the consents are required for Accenture to conduct its
     work. Accenture will use its best endeavors to fulfill any reasonable
     requirements on its part for P. H. Glatfelter to obtain such consent.

-    Accenture is not responsible for delays that are imposed by P. H.
     Glatfelter or other entities, including Click Commerce and the ERP vendor
     or any other consulting groups or vendors. As these systems are dependent
     upon other P. H. Glatfelter applications, appropriate, timely assistance
     from the responsible P. H. Glatfelter organizations and third party
     groups will be required.

-    P. H. Glatfelter shall be responsible for its operation and use of the
     deliverables. P. H. Glatfelter understands and agrees that it will be
     responsible for determining whether the services and deliverables
     provided by Accenture hereunder, including any revised business processes
     implemented pursuant to this Arrangement Letter, (i) meet P. H.
     Glatfelter's business requirements, (ii) comply with all federal, state
     and local laws, ordinances, codes, regulations and policies applicable to
     P. H. Glatfelter, and (iii) comply with P. H. Glatfelter's applicable
     internal guidelines, long-term goals and any related third party
     agreements.

-    P. H. Glatfelter shall provide Accenture with access to client
     personnel and facilities sufficient for Accenture to fulfill its
     obligations hereunder. Accenture will provide P. H. Glatfelter with prior
     notice of problems that it is encountering related to access to client
     personnel and facilities.

-    To assist the Project team, background information will need to be made
     available by P. H. Glatfelter for discussions with people in key areas.
     This material would include: organization/staffing, standards, procedure
     and process documentation (i.e., change management, problem management,
     fault management), operations architecture, application profiles, web
     hosting service descriptions, operations management products,
     service/operational level agreements, etc. Any information requested by
     Accenture and not available to the Project Team or inaccurately provided
     to the Project Team may result in additional costs, delays, or
     limitations in functionality.

-    Accenture will provide a software selection process to support P. H.
     Glatfelter's selection of the software. P. H. Glatfelter will be solely
     responsible for selecting all Project software vendors.

-    P. H. Glatfelter is solely responsible for the adoption, successful
     operation and appropriate staffing for these software selection
     processes, which will need to be in place and fully operational prior to
     the first ERP conversion date as specified in the workplan.

8.  TESTING AND ACCEPTANCE OF DELIVERABLES

8.1  DELIVERABLES ASSOCIATED WITH SYSTEM DEVELOPMENT

Accenture will provide example test plans and criteria from previous projects
of similar complexity; P. H. Glatfelter will provide Company-specific data and
test scenarios. From these, the parties agree to develop mutually agreeable

<PAGE>

test procedures consisting of multiple passes. Each pass is designed to
progressively designate and fix high, medium and low level errors. The final
pass shall be a 'user acceptance' pass, whereby the system shall be deemed to
have been 'accepted' by P. H. Glatfelter if no high priority errors are
generated. (High priority is defined as of sufficient concern to either party
such that the 'go-live' of the system shall be postponed).

Following the go-live, Accenture will continue to provide support to the P. H.
Glatfelter team with the aim of handing over support completely to P. H.
Glatfelter within a period of 3 months. For this to happen it is assumed that
P. H. Glatfelter will identify reasonably sufficient personnel by the start of
the system testing phase to staff the support organization, and that Accenture
will supply reasonably sufficient training to these personnel.

The only basis for rejection of deliverables will be failure of the
deliverables to substantially conform to the acceptance criteria, in accordance
with the acceptance procedures. If Accenture does not receive written notice of
material nonconformance with the specifications within 30 days of delivery to
P.H. Glatfelter for testing, all deliverables will be deemed accepted in full.

8.2  NON-SYSTEMS RELATED WORK

The deliverables are subject to frequent management review and mutual
agreement. Each deliverable can only be rejected for failure to comply with the
scope as outlined in the attached scope documents, and / or reasonable quality.

Procedures to ensure review of the of the Project by P. H. Glatfelter Steering
Committee members have been outlined under Project Timing.

9.  PROJECT TEAM STAFFING

9.1  ACCENTURE STAFFING

Barry Jennings, the client partner responsible for the consulting relationship
with P. H. Glatfelter, will have overall responsibility for Accenture service
to P. H. Glatfelter on this Project.

Don Berkemeyer, a senior partner from the Accenture Natural Resources practice,
will perform the role of the Accenture Quality Assurance partner.

John Poisson will be the Accenture program manager. John's program
responsibilities will include managing the integration efforts among the work
modules and between Accenture and P.H. Glatfelter teams.

Nigel Blower will be the engagement partner responsible for the day to day
delivery of Accenture's ERP prototype and ERP implementation.

Alan O'Rear will be responsible for senior executive coaching, advising on
technology issues and direction, and assisting P. H. Glatfelter in the
identification, screening and training of a CIO. Alan will assist P. H.
Glatfelter IT Management in the development of basic operating processes to
support the ERP implementation during development as well as post
implementation.-P. H. Glatfelter may choose to eliminate or replace Alan's
services upon notice in writing (30 day notice) with no further financial
obligation. Such replacement is subject to availability.

<PAGE>

Accenture will provide an appropriate mix of personnel to fill the Project team
positions. These team members will collectively be sufficiently proficient in
ERP, process, change management, and technology across each of the Project
areas. The personnel time requirements for the completion of the Project
deliverables as set forth herein is estimated to be as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------
    Resource Requirements     P. H. Glatfelter  Accenture
                                   (days)         (days)
---------------------------------------------------------
<S>                          <C>               <C>
Program Management                 2,088         1,580
---------------------------------------------------------
Alan O'Rear                          0            260
---------------------------------------------------------
Technology / Infrastructure        2,840         1,040
---------------------------------------------------------
Jumpstart                           184           480
---------------------------------------------------------
ERP Global Design                  1,910          990
---------------------------------------------------------
ERP Implementation                 8,030         6,010
---------------------------------------------------------
Organization Design & NPD          1,106          530
---------------------------------------------------------
S&OP                                230           250
---------------------------------------------------------
Customer Direct                     550           824
---------------------------------------------------------
Total                             16,938         11,964
---------------------------------------------------------
</TABLE>

9.2  P. H. GLATFELTER STAFFING

P. H. Glatfelter participation will include sponsorship through the steering
committee. The steering committee will be composed of the CEO, CFO, COO, CIO,
and CSO. The steering committee will meet on a periodic basis and provide
direction and overall confirmation of Project deliverables.

Robert Newcomer will be the P. H. Glatfelter program manager. He will provide
direction to the Project on a day to day basis. He will be assisted by a P.H.
Glatfelter subject matter expert and approximately 40 full-time P. H.
Glatfelter personnel as described in the Project Resource list (See above). P.
H. Glatfelter will provide staffing for the Project office. Additional P. H.
Glatfelter subject matter experts will be involved part-time to review key
Project deliverables and provide insight into P. H. Glatfelter business events.

10.  PROJECT FEES

Based on the current understanding of the scope, Accenture's fees are estimated
to be $25,028,832, plus actual out-of-pocket expenses for items such as travel,
lodging, per diem, PCs, engagement control, and report preparation. We estimate
expenses will be about $3,800,000. In addition, monthly operating and support
expenses for the development of an environment in our Solution Center network
will be approximately $70,000 per month (12 months) for total estimated
expenses of $840,000. As these are estimated amounts, actual fees may differ.
Accenture's compensation will be based on services performed and expenses
incurred. Applicable taxes related to this Arrangement Letter , if any, will be
additional. Invoices will be generated on a monthly basis based on estimated
fees and reconciled the following month.

The parties agree that if the Project and deliverables as identified in this
Arrangement Letter without Change Orders i) are be completed on or before
September 30th, 2002 and ii) within the estimated fee amounts reflected in
this Arrangement Letter, P. H. Glatfelter shall pay Accenture a bonus payment
of $500,000. The parties further agree that if the Project is not completed by
September 30th, 2002 for reasons that are predominantly attributable to
Accenture and as agreed to by the parties, the final monthly payment will be
withheld until the Project is completed. The parties acknowledge that Change
Orders executed throughout the course of the Project may affect the September
30th, 2002 completion date and agree that any such orders to revise the
Project will also include amended completion dates which accurately reflect any
Project revisions due to Change Orders.

The Project will be governed by the terms and conditions set forth in
Attachment A, which is incorporated into this Arrangement Letter by this
reference.

                                    * * * * *

<PAGE>

We appreciate very much this opportunity to continue working with P. H.
Glatfelter. We are excited to help you develop this design.

If you have any questions regarding this material, please contact Barry
Jennings at (312) 693-4740 or Nigel Blower at (215) 587-7956.

Very truly yours,

ACCENTURE LLP

By /S/ Barry D. Jennings
   ---------------------
Barry D. Jennings, Partner

Agreed and Accepted:

P. H. Glatfelter COMPANY

By /s/ George Glatfelter II
   ------------------------
George Glatfelter II, Chief Executive Officer

Date: January 16, 2001
      ----------------

<PAGE>

                                  ATTACHMENT A
TERMS AND CONDITIONS

1.   Payment. Accenture will bill P. H. Glatfelter monthly as noted
above. P. H. Glatfelter will pay Accenture within thirty days after the invoice
is received. Should any invoice remain unpaid for more than thirty days (other
than payments withheld as set forth in Section 10 above), interest shall be
paid by P. H. Glatfelter at a rate of 1.5% per month. Any taxes arising out of
this Arrangement Letter other than those on Accenture's net income and
employment and agent related taxes (excluding Compensatory Taxes) shall be P.
H. Glatfelter's responsibility. In the event of any good faith dispute with
regard to a portion of an invoice, the undisputed portion shall be paid as
provided herein. Upon resolution of the disputed portion, any amounts owed to
Accenture shall be paid with interest at the rate set forth above accruing from
the date such amounts were originally due.

2.   Confidential Information. In connection with the Project, each
party will have access to confidential information made available by the other
party; each party shall protect such confidential information in the same
manner as it protects its own confidential information of like kind, but in no
event shall either party exercise less than reasonable care in protecting such
confidential information. Access to the confidential information shall be
restricted to Accenture and P. H. Glatfelter personnel engaged in a use
permitted hereby or unless forced by legal authority, in which event the party
receiving a subpoena or other validly issued administrative or judicial process
requesting confidential information of the other party shall provide prompt
notice to the other of such receipt sufficient to give the other party time to
consent to such disclosure. Unless the disclosing party notifies the other
party that any such subpoena is quashed, the party receiving the subpoena shall
thereafter be entitled to comply with such subpoena or other process to that
extent permitted by law. The confidential information of the discloser may be
used by the receiver only in connection with this Project and may not be copied
or reproduced without the discloser's prior written consent. Nothing in this
Arrangement Letter shall prohibit or limit either party's use of information
(including, but not limited to, ideas, concepts, know-how, techniques, and
methodologies) (i) previously known to it without obligation of confidence,
(ii) independently developed by or for it, (iii) acquired by it from a third
party which is not, to its knowledge, under an obligation of confidence with
respect to such information, or (iv) which is or becomes publicly available
through no breach of this Arrangement Letter. All confidential information made
available hereunder, including copies thereof, shall be returned or destroyed
upon the first to occur of (a) completion of the services or (b) request by the
discloser, unless the receiver is otherwise allowed to retain such confidential
information. Accenture may retain, subject to the terms of this Section, one
copy of P. H. Glatfelter's confidential information required for compliance
with its record keeping or quality assurance requirements.

3.   Ownership. Subject to payment in full of the fees related to the
Deliverables specified herein, notwithstanding any withholding payment as set
forth in Section 10 above, and except for those Accenture preexisting
materials, ideas, tools, processes, methodologies, approaches, concepts,
techniques, and any modifications or enhancements thereto (collectively, the
"Accenture Materials") which P. H. Glatfelter acknowledges and agrees are
solely owned by Accenture, the copyright to all original tangible materials
(excluding modifications to the SAP base software which rights will be mutually
agreed to in an amendment to this Arrangement Letter) , including any written
materials, originated and prepared for P. H. Glatfelter by Accenture personnel
pursuant to this Arrangement Letter (the "Deliverables") shall belong
exclusively to P. H. Glatfelter. Accenture retains all other intellectual
property rights in and to the Deliverables. Accenture agrees that any patent it
receives related to its intellectual property rights in the Deliverables will
not diminish the rights granted to P.H. Glatfelter hereunder. P. H. Glatfelter
hereby grants to Accenture, subject to the confidentiality provisions herein, a
nonexclusive, irrevocable, perpetual, fully paid up royalty free, worldwide
right and license to use, sublicense, copy, modify and prepare derivative works
of the Deliverables for use throughout the course of its consulting services.

P. H. Glatfelter acknowledges that Accenture and SAP are currently negotiating
ownership and reuse rights for i) the software deliverables that are originally
developed by joint Accenture and SAP resources pursuant to this Arrangement
Letter, and ii) the software deliverables consisting of modifications and
extensions to the SAP base software (hereinafter referred to as the "Secondary
Deliverables"). Accenture and P. H. Glatfelter currently contemplate that based
on the outcome of the Accenture and SAP negotiations, P. H. Glatfelter shall
have, upon delivery, a license to use, copy, modify and prepare derivative
works of such Secondary Deliverables, and P. H.

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Glatfelter agrees to amend this Arrangement Letter upon conclusion of the
Accenture and SAP negotiations to address such rights.

(b)  To the extent that Accenture has incorporated any Accenture Materials into
the Deliverables or Secondary Deliverables, P. H. Glatfelter shall have, upon
delivery, an irrevocable, perpetual, nonexclusive, paid-up, world-wide right
and license to use, copy, modify and prepare derivative works of the Accenture
Materials to the extent necessary to use the Deliverables and Secondary
Deliverables in question.

4.   Residual Knowledge. Subject to the confidentiality obligations
herein and provided that Accenture does not infringe the rights granted in
Section 3 above, in no event shall Accenture be precluded from developing for
itself, or for others, materials which are competitive with the Deliverables
and Secondary Deliverables, irrespective of their similarity to the
Deliverables and Secondary Deliverables. In addition, both parties shall be
free to use its general knowledge, skills and experience, and any ideas,
concepts, know-how and techniques that are used in the course of the Project.

5.   Employees. To allow Accenture to be able to manage its participation in
the Project most effectively, Accenture reserves the right to determine the
personnel to perform the work although Accenture will attempt to honor P. H.
Glatfelter's requests for specific individuals. Accenture and P. H.  Glatfelter
agree to establish a quality review process that will address employee
performance deficiencies and the potential replacement on the Project.

6.   Limitation of Liability. Each party's liability under this Arrangement
Letter shall not exceed, in the case of Accenture's liability, the fees for
services rendered by Accenture for that segment of work giving rise to the
liability or, in the case of P. H. Glatfelter, the fees payable to Accenture
for that segment of work giving rise to the liability. In no event shall either
party be liable to the other for any indirect, special, incidental,
consequential, exemplary or punitive damages or for any form of damages other
than direct damages. Any action by either party must be brought within two (2)
years after the cause of action arose and was identified within 30 days after
the work causing rise to the action was performed. The parties agree that they
will look only to the assets of the other party in connection with any
liabilities hereunder and in no event shall they have any claim against any
shareholder, partner, or holder of an ownership interest in the other party in
connection with this Arrangement Letter.

7.   Indemnification.
(a) Each party shall indemnify, defend and hold harmless the other, its
employees, principals (partners, shareholders or holders of an ownership
interest, as the case may be) and agents, from and against any third party
claims, demands, loss, damage or expense relating to bodily injury or death of
any person or damage to real and/or tangible personal property directly caused
by the negligence or willful misconduct of the indemnifying party, its
personnel or agents in connection with the performance of the Services
hereunder.

(b) P. H. Glatfelter shall defend, indemnify and hold harmless Accenture and
its partners and employees from and against any loss, claim, damage or
liabilities (or actions in respect thereof that may be asserted by any third
party) that may result from any third party claims arising out of or relating
to Accenture's service or any use by P. H. Glatfelter of any Deliverable and
will reimburse Accenture for all reasonable expenses (including counsel fees)
as incurred by Accenture in connection with any such action or claim, except to
the extent any such claim is covered by the indemnity obligation of Accenture
set forth in paragraph (c) below.

(c)  If P. H. Glatfelter promptly notifies Accenture in writing of a third party
claim against P. H. Glatfelter that any Deliverable or Secondary Deliverable
developed by Accenture hereunder infringes a copyright, trademark or a trade
secret of any third party, Accenture will defend such claim at its expense
(including P.H. Glatfelter legal counsel expenses and fees) and will pay any
costs or damages that may be finally awarded against P. H. Glatfelter.
Accenture will not indemnify P. H. Glatfelter, however, if the claim of
infringement is caused by (1) P. H. Glatfelter's misuse or modification of the
Deliverable or the Secondary Deliverable; (2) P. H. Glatfelter's failure to use
corrections or enhancements made available by Accenture; (3) P. H. Glatfelter's
use of the Deliverable or the Secondary Deliverable in combination with any
product or information not owned or developed by Accenture, other than products
or information developed by SAP resources; (4) P. H. Glatfelter's distribution,
marketing or use for the benefit of third parties of the Deliverable or the
Secondary Deliverable or (5) information, direction, specification or materials
provided by P. H. Glatfelter or any third party, other than SAP resources. If
any Deliverable is or Secondary Deliverables, or in Accenture's opinion is
likely to be, held to be infringing, Accenture shall at its

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expense and option either (i) procure the right for P. H. Glatfelter to
continue using it, (ii) replace it with a non-infringing equivalent, (iii)
modify it to make it non-infringing or (iv) direct the return of the
Deliverable or the Secondary Deliverable and refund to P. H. Glatfelter the
fees paid for such Deliverable or Secondary Deliverable less a reasonable
amount for P. H. Glatfelter's use of the Deliverable or Secondary Deliverable
up to the time of return. The foregoing remedies constitute P. H. Glatfelter's
sole and exclusive remedies and Accenture's entire liability with respect to
infringement.

8.   Use of Name. Neither party shall use the other party's name
outside its organization in connection with its use of the Deliverables or
otherwise without the express written consent, which may be withheld by either
party in its sole discretion.

9.   Force Majeure. Neither party shall be liable for any delays or
failures in performance (other than payment obligations hereunder) due to
circumstances beyond its reasonable control.

10.  Independent Contractor. In connection with this Arrangement
Letter, each party is an independent contractor and as such will not have any
authority to bind or commit the other. Nothing herein shall be deemed or
construed to create a joint venture, partnership, fiduciary or agency
relationship between the parties for any purpose.

11.  Warranty. Accenture warrants that (i) its services will be
performed in a workmanlike manner and (ii) the delivered items developed by
Accenture for P. H. Glatfelter under this Arrangement Letter shall
substantially conform to the agreed to specifications. Accenture shall, at no
cost to P. H. Glatfelter, reperform any work not in compliance with this
warranty brought to its attention within ninety (90) days after that work is
performed. P. H. Glatfelter's exclusive remedy for a breach of this warranty
shall be for Accenture, upon receipt of written notice, to use commercially
reasonable efforts to cure the breach at its expense, and failing that, the
return of fees paid to Accenture for the work related to the breach.

THE PRECEDING IS ACCENTURE'S ONLY WARRANTY CONCERNING THE SERVICES AND ANY WORK
PRODUCT, AND IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES AND
REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR OTHERWISE.

12.  Disputes. The parties agree that in the event of a dispute
under this Arrangement Letter, they will work together in good faith first, to
resolve the matter internally by escalating it to higher levels of management
and, then if necessary, to use a mutually agreed alternative dispute resolution
technique prior to resorting to litigation. This provision shall not apply to
disputes involving confidentiality or infringement of intellectual property
rights (in which case either party shall be free to seek available remedies in
any forum).

13.  Non-Solicitation of Employees. Each party agrees not to solicit, offer
work to, employ or contract with any of the other party's personnel during the
term of that individual's involvement on the Project and for a period of twelve
(12) months following that individual's participation on the Project without
first obtaining the written consent of the other party.

14.  Termination. This Arrangement Letter may be terminated by either party
upon written notice if the other party breaches any material term or condition
herein and such breach remains uncorrected for thirty (30) days following
written notice from the other party specifying the breach. P. H.  Glatfelter
may at any time and without cause terminate this Arrangement Letter by giving
Accenture (30) days' prior written notice of termination. Upon such
termination, P. H. Glatfelter shall pay Accenture for all services rendered and
reasonable, documented expenses incurred by Accenture prior to the date of
termination, and any demobilization or other costs resulting from such early
termination. In the event of termination by P. H. Glatfelter without cause or
termination by Accenture due to a breach by P. H. Glatfelter, P. H. Glatfelter
shall also pay Accenture for those nonrefundable costs committed to by
Accenture, and other reasonable and documented demobilization costs incurred by
Accenture as a result of such early termination with respect to the Project.

15.  Scope Changes. Changes to the scope of the services shall be made only in
a writing executed by authorized representatives of both parties.  Accenture
shall have no obligation to commence work and P. H.

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Glatfelter will have no liability to pay in connection with any future scope
change until the fee and/or schedule impact of the change is agreed upon by the
parties in writing.

16.  This Arrangement Letter and attachments constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all other communications, whether written or oral. This Arrangement
Letter may be modified or amended only by a writing signed by both parties. P.
H. Glatfelter acknowledges that it is entering into this Arrangement Letter
solely on the basis of the agreements and representations contained herein, and
for its own purposes and not for the benefit of any third party.

17.  This Arrangement Letter shall be governed by and construed in accordance
with the laws of Illinois, without giving effect to conflict of law rules. The
parties agree that any legal proceedings in connection with this Arrangement
Letter shall be filed in the courts in the City of New York.

18.  Accenture shall have no responsibility, obligation or liability to a
licensee of P. H. Glatfelter with respect to P. H. Glatfelter's licensed
products.

19.  This Arrangement Letter shall not be assignable by either party without
the prior written consent of the other.

20.  Any notice or other communication given pursuant to this Arrangement
Letter shall be in writing and shall be effective either when delivered
personally to the party for whom intended, or five (5) days following deposit
of the same into the United States mail (certified mail, return receipt
requested, or first class postage prepaid), facsimile (with confirmation of
delivery) or overnight delivery services ( with confirmation of delivery),
addressed to such party at the address set forth on the initial page of this
Arrangement Letter. Either party may designate a different address by notice to
the other given in accordance herewith.

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