1 EXHIBIT 10.2 TECHNOLOGY OWNERSHIP, TECHNICAL ASSISTANCE AND TECHNOLOGY LICENSE AGREEMENT This Agreement, effective as of April 1, 1998, is by and among Philip Morris Incorporated (PMUSA), Philip Morris Products Inc. (PMPI) and Schweitzer-Mauduit International Inc. (SWM), for itself and as agent for and on behalf of the SWM Affiliates. WHEREAS, pursuant to the Joint Development Agreement PMUSA and SWM undertook to develop the [******] Technology; WHEREAS, pursuant to the Implementation Agreement PMUSA and SWM have undertaken to implement the [******] Technology at the Mill for use in the manufacture of [******]; WHEREAS, the Parties desire to set forth their ownership rights in, and respective rights to exploit, the [******] Technology and the [******]; [******]; WHEREAS, SWM is willing to provide PMUSA and PMPI with the [******] to assist the PM Affiliates in the exploitation of the [******] Technology and the [******] and to provide certain Technical Assistance to PMUSA, PMPI and Third Party Licensees of [******] Technology and the [******] in accordance with the terms and conditions set forth herein, if and as requested by PMUSA or PMPI and in return for certain compensation as described herein; and WHEREAS, PMUSA and PMPI are willing to grant SWM certain rights to exploit the [******] Technology and the [******] in accordance with the terms and conditions set forth in this Agreement, and SWM is willing to accept and exercise such rights in accordance with and subject to the limitations of the terms and conditions set forth in this Agreement. NOW THEREFORE, in consideration of the foregoing recitals, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 1. Definitions. The following terms shall have the specified meanings when used in this Agreement. (a) [******] (b) [******] CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. 2 (c) Confidential Information: means (i) all information (including documents, data, samples, schematics and other tangibles or intangibles) that relates to the [******] Technology or any [******] Technology development efforts between the Parties under the JDA, the Implementation Agreement or related PMUSA purchase orders, (ii) any information related to SWM paper manufacturing facilities or processes, (iii) any information related to the business plans, production facilities or technology of any PM Affiliate, including but not limited to all production planning information, and (iv) any other information disclosed by one Party to another pursuant to this Agreement, either orally, in writing or by observation, including but not limited to, the contents of this Agreement and the JDA. (d) Fine Papers: Cigarette Paper, plug wrap and tipping paper to be used in the manufacture of cigarettes or cigarette components. (e) Full Commercial Production Date: means the last day of the sixth full calendar month following the date on which [******] at the Mill that [******] pursuant to the Implementation Agreement [******]. (f) Implementation Agreement: means that certain addendum to the SSA between PMUSA and SWM, dated April 1, 1998, respecting the [******] and respecting the sale and purchase of [******] by SWM and PMUSA, respectively. (g) Joint Development Agreement or JDA: means that certain agreement between PMUSA and SWM, [******], respecting the development of equipment, processes and know-how required to manufacture [******]. (h) Mill: means [******]. (i) [******] the Joint Development Agreement, the Implementation Agreement or PMUSA purchase orders issued to SWM for [******], including but not limited to information contained in the [******]. [******] Technology does not include technology, expertise and know-how that (i) was possessed by SWM as of [******] or (ii) was developed thereafter by SWM other than pursuant to the JDA, Implementation Agreement, or PMUSA purchase orders issued to SWM for [******] development (collectively "SWM Know-how") but does include any new technology, expertise and know-how developed from SWM Know-how that have applications in the manufacture of [******] or that may have applications in the manufacture of other products other than Fine Papers. (j) Other Cigarette Manufacturers: means cigarette manufacturers other than the PM Affiliates and PM Contract Manufacturers. (k) Parties: means PMUSA, PMPI and SWM. CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -2- 3 (l) Party: means PMUSA, PMPI or SWM. (m) PMPI: means Philip Morris Products Inc., a Virginia corporation. (n) PMUSA: means Philip Morris Incorporated, a Virginia corporation. (o) PMI: means Philip Morris International, Inc. a Delaware Corporation and the parent company of PMPI. (p) PM Affiliates: means the PMUSA Affiliates and the PMI Affiliates. (q) PMI Affiliates: means PMI and those entities, whether presently existing or as may be created in the future, that are or become owned by PMI or that PMI now or in the future controls, directly or indirectly, individually or jointly, through the power to vote more than thirty percent of the voting stock or voting rights of such entities. An entity that is today or that may become in the future a PMI Affiliate shall cease to be a PMI Affiliate when it ceases to be owned or controlled by PMI. (r) PMUSA Affiliates: means PMUSA and those entities, whether presently existing or as may be created in the future, that are or become owned by PMUSA or that PMUSA now or in the future controls, directly or indirectly, individually or jointly, through the power to vote more than thirty percent of the voting stock or voting rights of such entities. An entity that is today or that may become in the future a PMUSA Affiliate shall cease to be a PMUSA Affiliate when it ceases to be owned or controlled by PMUSA. (s) PM Brand: means any of those brands of cigarettes that are subject to trademarks owned by or licensed to a PM Affiliate. (t) PM Contract Manufacturers: means persons or entities taking delivery of [******] for incorporation in cigarettes manufactured by them under contract for a PM Affiliate or pursuant to a licensee manufacturing agreement with a PM Affiliate covering a PM Brand. (u) [******] (v) SSA: means that certain amended and restated agreement between SWM and PMUSA, effective April 1, 1998, under which PMUSA has agreed to purchase, accept and pay for, and SWM has agreed to manufacture, sell and deliver Fine Papers. (w) [******] CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -3- 4 (x) SWM: means Schweitzer-Mauduit International Inc., a Delaware corporation. (y) SWM Affiliates: means those entities, whether presently existing or as may be created in the future, that are or become owned by SWM or that SWM now or in the future controls, directly or indirectly, individually or jointly, through the power to vote more than fifty percent of the voting stock or voting rights of such entities; provided, however, as used herein, the term shall not include any entity engaged in the manufacture or sale of cigarettes, nor shall it include any entity that shall acquire, by purchase or otherwise, the right to vote or control the vote of any or all of the voting stock of SWM. An entity that is today or that may become in the future a SWM Affiliate shall cease to be a SWM Affiliate when it ceases to be owned or controlled by SWM. Nothing contained herein shall prevent SWM from restructuring its businesses or result in the loss of any rights hereunder following any restructuring; provided, that the composition of the majority of the SWM Board of Directors preceding any restructuring shall be the same as the composition of the majority of the Board of Directors of any entity that becomes the ultimate parent entity of the SWM group of businesses after such restructuring. (z) SWM Patents: means issued patents and patents for which the applications are filed, including any later filed continuation or divisional applications thereof, throughout the world, of whatever type, (i) owned or controlled by SWM or SWM Affiliates and (ii) related to (a) the manufacture, utilization or sale of [******], (b) the manufacture, utilization or sale of products incorporating [******] or (c) the properties, structures or raw and finished components of [******] or cigarettes incorporating [******]; provided, however, the SWM Patents shall be limited to (i) those patents already issued or for which the applications are filed, including any later filed continuation or divisional applications thereof, as of the Full Commercial Production Date and (ii) patents issued to SWM or patents for which the applications are filed, including any later filed continuation or divisional applications thereof, pursuant to applications filed pursuant to Section 3(d) below; and provided further that if the Implementation Agreement shall be terminated prior to the Full Commercial Production Date, by either Party, the SWM Patents will be limited to those patents described above that are already issued or for which applications are filed, including any later filed continuation or divisional applications thereof, as of the effective date of such termination. (aa) [******]. (ab) [******]. (ac) Third Party Licensees: means Fine Papers suppliers, other than SWM and the SWM Affiliates, that may be licensed by PMUSA or PMPI pursuant to Section 5(b) hereof to exploit the [******] and the [******] Technology through the manufacture and sale of [******]. CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -4- 5 2. Relationship to the Joint Development Agreement and the Implementation Agreement. The Joint Development Agreement addressed the [******] resulting from their efforts to develop the [******] [******] necessary to manufacture [******] on a commercial basis. The Implementation Agreement addresses the agreement of PMUSA and SWM to implement that [******] [******] at the Mill. This Agreement replaces the provisions of the Joint Development Agreement relating to [******] arising from their joint and individual development efforts related to the manufacture of [******] during the period beginning [******] and continuing through the Full Commercial Production Date. Specifically, the provisions of the Joint Development Agreement relating to the [******]. 3. Ownership of the [******] Technology and Patents. (a) Technology and Patents Pre-dating the Joint Development Agreement: PMUSA and SWM each shall retain ownership of their respective patents and technology, expertise and know-how [******]. (b) [******] Technology: PMUSA and PMPI are the sole owners of the [******] Technology and, subject to Section 3(d) below, have the exclusive right to file patent applications in the United States and elsewhere on any [******] Technology and on any applications thereof or products derived therefrom. This right includes the right to file patent applications respecting applications of [******] Technology and products derived therefrom that are unrelated to [******]. To the extent PMUSA or PMPI may be granted patents on any [******] Technology, applications thereof or products derived therefrom, PMUSA and PMPI shall have the right (i) to exploit such patents and to practice and license the rights thereunder and (ii) to license other PM Affiliates to exploit such patents and to practice the rights thereunder. [******]. PMUSA's and PMPI's ownership of the [******] Technology shall not create any right, implied or otherwise, for any PM Affiliate or licensee to require the disclosure by SWM to any PM Affiliate or licensee of any document or information respecting the manufacture of [******], including [******], that has not already been disclosed to PMUSA or PMPI, or that is not disclosed to PMUSA or PMPI in the future, voluntarily or as required by, or in the course of performance of, any agreement between SWM and PMUSA or PMPI. (c) PMUSA and PMPI Patent Applications: If PMUSA or PMPI elects to exercise its option to file a patent application respecting any patentable [******] Technology, applications thereof or products derived therefrom, SWM shall cause all SWM employees determined to be inventors to assign their right, title and interest in such technology to PMUSA or PMPI and SWM shall assist in prosecuting the patent application by furnishing information or data as reasonably requested. PMUSA or PMPI, as the case may be, shall reimburse SWM for reasonable costs incurred in providing such requested assistance. SWM CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -5- 6 shall have the right to review any such patent application prior to filing and to make recommendations with respect thereto. (d) SWM Patent Applications: If PMUSA and PMPI both decline to exercise their option with regard to the filing of a patent application respecting any patentable [******] Technology, then SWM may, at SWM's expense, file a patent application on such technology and SWM shall own any resulting patent rights; provided, however, SWM's right to file patent applications respecting [******] Technology [******]. In such event, PMUSA and PMPI shall require all PMUSA and PMPI employees determined to be inventors to assign their right, title and interest in said technology to SWM and PMUSA shall, at SWM's expense, assist in prosecuting the patent application by furnishing information or data as reasonably requested. PMUSA shall have the right to review any such SWM patent application prior to filing and to make recommendations with respect thereto. [******]. 4. Preparation and Updating of [******]. (a) Within [******] days after the [******] (as such term is defined in the Implementation Agreement), SWM shall prepare and submit to PMUSA those [******] in Attachment A hereto that are identified with the notation "(SWM)". Within [******] days after the [******] (as such term is defined in the Implementation Agreement), SWM shall update those portions of the [******] at the Mill. (b) SWM's initial delivery of those [******] to be prepared by SWM, and PMUSA's acceptance thereof, not to be unreasonably withheld, shall be a condition of SWM's rights to any payments to be made to SWM by PMUSA or PMPI pursuant to Article 8 hereof. (c) PMUSA and PMPI shall have the right to disclose the [******] to Third Party Licensees, provided such licensees enter into confidentiality agreements comparable to those in Article 11 hereof respecting the use and further disclosure of the information provided in such [******]. PMUSA or PMPI, as the case may be, shall take reasonable measures to enforce any breach of any such confidentiality agreement by one of its Third Party Licensees that shall be brought to its attention. (d) The [******] shall contain a legend stating that SWM does not warrant to any Third Party Licensee the accuracy of the information in such documents or in any way guarantee that a recipient of the [******] will be able to [******]. 5. (a) The PM Affiliates' Right to Manufacture and PMUSA's and PMPI's Right to License the Manufacture of [******]. (b) The PM Affiliates shall have the right, without limitation, to exploit the [******] and the [******] Technology through the manufacture or sale of [******] for CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -6- 7 incorporation into cigarettes manufactured (i) by the PM Affiliates and PM Contract Manufacturers or (ii) by Other Cigarette Manufacturers. Nothing herein shall be interpreted as a grant by SWM to any or all of the PM Affiliates of any license under the SWM Patents to exploit those patents through the manufacture or sale of [******] or cigarettes incorporating [******] manufactured by a PM Affiliate or as a right granted by SWM for any PM Affiliate [******]. (c) PMUSA and PMPI shall have the right, without limitation, to license Fine Papers suppliers to exploit the [******] and the [******] Technology through the manufacture and sale of [******]. (d) PMUSA and PMPI shall have the right to grant licenses to Other Cigarette Manufacturers to exploit the [******] and the [******] Technology through the manufacture and sale of cigarettes incorporating [******]. 6. [******]. [******]. [******]. (c) Notwithstanding Section 6(a) and Section 6(b) above, [******]. (d) Upon request by PMUSA or PMPI, SWM [******]. (e) SWM acknowledges and agrees that [******]. (f) SWM covenants that it will not assign or otherwise transfer, and will not permit or suffer the SWM Affiliates to assign or otherwise transfer, the SWM Patents to any person or entity unless such assignee or transferee (i) [******] shall provide covenants for the benefit of the PM Affiliates, Third Party Licensees and Other Cigarette Manufacturers that are substantially equivalent to those provided by SWM in Section 6(a) and Section 6(b) and (ii) shall agree to be bound by the undertakings and acknowledgements made by SWM in Section 6(d) and Section 6(e) hereof. (g) PMUSA and PMPI each covenants that it will not assign or otherwise transfer any of the [******] to any person or entity unless the document under which such assignment or transfer is made contains a requirement that the assignee or transferee agrees to be bound by covenants for the benefit of SWM that are substantially equivalent to those made in Section 8(a) hereof and shall agree to be bound by the undertakings made by PMUSA and PMPI in Article 8 hereof; provided, however, that the covenant made in this Section 6(g) shall not apply to any assignment or transfer of any or all of the [******] between PMUSA and PMPI or to any assignment by PMUSA to PMPI of the right to file patent applications respecting the [******] Technology as provided in Article 3. Nothing in this Section 6(g) is intended to impose any limitation or restriction on PMUSA and PMPI's right to sublicense the right to exploit the [******] Technology and [******] to any other PM Affiliate. CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -7- 8 7. [******]. [******] 8. SWM Compensation for Role in Developing Technology. (a) PMUSA and PMPI [******]. [******] [******] [******] [******] [******]. [******]. 9. SWM Licenses. (a) Rights Granted to SWM: (i) PMUSA and PMPI each hereby grant to SWM, upon the terms and subject to the conditions and restrictions of this Agreement, [******] (ii) PMUSA and PMPI each hereby grant to SWM, upon the terms and subject to the conditions and restrictions of this Agreement, [******]. (iii) PMUSA and PMPI hereby grant to SWM [******]. (iv) PMUSA and PMPI each hereby grant to SWM [******]. (b) Conditions of Licenses: The rights granted to SWM under Section 9(a)(i) through Section 9(a)(iii) above shall be subject to the following: (i) SWM shall not manufacture [******] for, or sell or deliver [******] to, persons or entities other than a PM Affiliate or a PM Contract Manufacturer that have not received a license from PMUSA or PMPI authorizing such person or entity to make and/or sell cigarettes incorporating [******]. Before first accepting an order for [******] from any such person or entity, SWM shall request and receive confirmation from PMUSA or PMPI that such person or entity is licensed to manufacture and/or sell cigarettes incorporating [******]; (ii) Contemporaneous with every delivery of [******] placed by, on behalf of, or for the benefit of a cigarette manufacturer other than a PM Affiliate or a PM Contract Manufacturer, SWM shall provide notice in a form reasonably acceptable to PM and PMPI to such person or entity that by taking delivery of [******] from SWM no right or license to the [******] or the [******] Technology, express or implied, shall be gained, granted or transferred with regard to the manufacture of cigarettes incorporating such [******]. In addition, prior to acceptance of the first such order, SWM shall require that the person or entity taking delivery of such [******] complete and return a form, approved by PMUSA and PMPI, that evidences acknowledgement of such notice and limitation. SWM CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -8- 9 shall forward copies of all such acknowledgement forms to PMUSA and PMPI on a quarterly basis; and (iii) SWM shall provide PMUSA and PMPI copies of all sublicenses granted pursuant to Section 9(a)(iv). SWM shall thereafter be excused from the requirements of Section 9(b)(i) and Section 9(b)(ii) above if any Third Party Licensee is licensed by PMUSA or PMPI to manufacture [******] pursuant to a license that does not include requirements substantially equivalent to those contained in Section 9(b)(i) and Section 9(b)(ii) above. (c) Conditions of Sublicenses: Any sublicense granted by SWM pursuant to Section 9(a)(iv) shall be subject to the following: [******] [******] [******] [******] [******] [******]. [******]. (d) The grant of licenses to the [******] Technology and the [******] contained herein shall not create any right, implied or otherwise, for SWM to require the disclosure by PMUSA or PMPI to SWM or any SWM Affiliate of any document or information respecting the manufacture of [******] that has not already been disclosed to SWM, or that is not disclosed to SWM in the future, voluntarily or as required by, or in the course of performance of, any agreement between SWM and PMUSA. 10. Protection of Technology and Patents. (a) SWM shall (i) give PMUSA and PMPI prompt notice in writing of any infringement or possible infringement of the [******] Technology or the [******] that may come to its attention; (ii) assign back to PMUSA and PMPI any right SWM may acquire through use or otherwise in or to the [******] Technology or the [******]; (iii) upon termination of this Agreement other than upon expiration, cease to practice the [******]; and (iv) render reasonable assistance, at PMUSA's or PMPI's request and expense, to aid PMUSA or PMPI to stop any infringement of the [******] and the [******] Technology or to otherwise protect the [******] and [******] Technology. (b) SWM shall not acquire nor shall it at any time claim any right, title or interest in or to the [******] Technology or the [******], other than the right to use the same as set forth herein and subject to all the terms and conditions hereof. SWM shall not, and shall cause the SWM Affiliates not to, at any time do or permit to be done any act [******] Technology or the [******] Technology or the [******]; provided, however, nothing herein shall prevent SWM from pursuing development and commercialization of [******] CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -9- 10 manufactured utilizing technology other than [******] Technology. PMUSA or PMPI may, in its sole discretion and at its expense, take such action as may be necessary or desirable to protect or defend the value of the [******] Technology or the [******]. (c) PMUSA and PMPI will maintain the [******] and satisfying any other requirements necessary [******] provided, however, neither PMUSA nor PMPI [******] PMUSA or PMPI, as the case may be [******] PMUSA or PMPI, as the case may be [******]. 11. Confidentiality. (a) Non-Disclosure: PMUSA, PMPI and SWM each shall make use of the Confidential Information of the other Parties solely to carry out the purposes and intent of this Agreement. Except as provided in Section 11(b) below or as required by law, no Party shall directly or indirectly disclose, or permit its employees or agents to disclose, the Confidential Information of any other Party hereto and each Party shall carefully guard and keep secret the Confidential Information of the other Parties with the same degree of care that it uses to protect its own most sensitive proprietary information. Confidential Information of the other Parties shall be disclosed within a Party's organization only on a need-to-know basis. Except in connection with the disclosure of [******] Technology to PM Affiliates pursuant to Section 5(a) and Third Party Licensees who receive licenses pursuant to Section 5(b) hereof, PMUSA and PMPI shall not disclose any [******] Technology for Fine Paper manufacture derived from SWM Know-how (as defined in Section 1(i)) to any other paper manufacturer with respect to the manufacture of Fine Papers. (b) Exceptions to Non-Disclosure: The prohibitions on the disclosure of Confidential Information set forth in this Article 11 shall not apply to any information: (i) which can be demonstrated to have been in a Party's possession lawfully prior to receipt of the same from another Party hereunder; or (ii) which was received from a third party having no obligation to hold the same in confidence; or (iii) which can be demonstrated to have been in the public domain prior to the date of the disclosure; or (iv) which after receipt from another Party hereto becomes public through no fault of the Party receiving the information. CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -10- 11 12. Records and Accounts. SWM shall keep proper and accurate accounts and records of all quantities of [******] sold to persons or entities other than the PM Affiliates and the PM Contract Manufacturers, commencing with the effective date hereof and through the expiration of the [******]. Within 30 days after the end of each calendar month and within 30 days after the termination of this Agreement for any reason, SWM and the SWM Affiliates shall render to PMUSA and PMPI a written statement setting forth the identities of all such purchasers of [******] and the number of bobbins of [******] sold to each in the most recently completed month (or in the period prior to termination, if applicable), such statement to be signed by an authorized representative of SWM or the applicable SWM Affiliate, as the case may be; provided, however, that SWM's and the SWM Affiliates' obligation to provide such written statement with respect to any particular purchaser of [******] shall be conditioned on PMUSA or PMPI, as licensor, as the case may be, providing evidence that such purchaser consents to SWM or the SWM Affiliates, as the case may be, providing such information to PMUSA and PMPI. To the extent allowed by law, PMUSA and PMPI, as the case may be, shall provide SWM with the identities of all licensed Other Cigarette Manufacturers [******] from each and the duration of each license. On request by SWM, but not more often than once per year, PMUSA and PMPI each shall provide SWM with a list of their respective affiliates that manufacture cigarettes and of their respective contractors who are PM Contract Manufacturers. 13. Effective Date; Term; Termination. (a) Effective Date; Term: This Agreement shall be effective as of April 1, 1998, and shall continue in effect through the expiration of the [******], unless earlier terminated pursuant to the provisions of this Agreement. (b) Early Termination for Cause: (i) By PMUSA or PMPI. PMUSA or PMPI may terminate this Agreement immediately in the event that: (1) SWM defaults in the performance of any of the terms of this Agreement or otherwise breaches any material duty or obligation imposed on SWM under this Agreement and such default or breach shall continue uncured for a period of ten days after PMUSA or PMPI gives SWM written notice of such default or breach; (2) PMUSA rightfully cancels the SSA or the [******] as the result of any SWM default or breach thereunder relating to [******]. CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -11- 12 (ii) By SWM. SWM may terminate this Agreement immediately in the event that: (1) As to PMUSA (but not PMPI) if PMUSA defaults in the performance of any of the terms of this Agreement or otherwise breaches any material duty or obligation imposed on PMUSA under this Agreement and such default or breach shall continue uncured for a period of ten days after SWM gives PMUSA written notice of such default or breach; or (2) As to PMPI (but not PMUSA) if PMPI defaults in the performance of any of the terms of this Agreement or otherwise breaches any material duty or obligation imposed on PMPI under this Agreement and such default or breach shall continue uncured for a period of ten days after SWM gives PMPI written notice of such default or breach; or (3) SWM rightfully cancels the SSA or the [******] as the result of any PMUSA default or breach thereunder relating to [******]. (c) Termination Upon Insolvency or Nationalization: This Agreement shall expire and terminate automatically and without notice in the event that: (i) SWM files a petition in bankruptcy, is adjudicated bankrupt or files a petition or otherwise seeks relief under or pursuant to any bankruptcy, insolvency or reorganization statute or proceeding, or if a petition in bankruptcy is filed against it or if it becomes insolvent or makes an assignment for the benefit of its creditors, or a custodian, receiver or trustee is appointed for it or a substantial portion of its business or assets. No assignee for the benefit of creditors, custodian, receiver, trustee in bankruptcy, sheriff, or any other officer of the court or official charged with taking over custody of SWM's assets or business shall have any right to continue or assume this Agreement or to exploit or in any way use the [******] Technology or the [******] if this Agreement terminates pursuant to this paragraph. Nothing contained herein shall be deemed to preclude or impair any rights that PMUSA or PMPI may have as a creditor in any bankruptcy proceeding; or (ii) SWM or its business is nationalized, in whole or in part, or the shares of SWM or control over SWM or over any substantial portion of its assets or over its management is seized by any government or any of its branches, departments or agencies, including, but not limited to, the military. (d) Effect of Termination: Upon the termination of this Agreement by PMUSA or PMPI for cause, all of the rights of the Parties granted hereunder except as expressly reserved in Section 13(e) below and all of the duties and obligations owed to each other by the Parties hereunder shall terminate forthwith; [******]. Upon the termination of this Agreement CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -12- 13 by SWM as to PMUSA for cause, all of the rights of PMUSA granted hereunder except as expressly reserved in Section 13(e) below and all of the duties and obligations owed to PMUSA by SWM hereunder shall terminate forthwith. Upon the termination of this Agreement by SWM as to PMPI for cause, all of the rights of PMPI granted hereunder except as expressly reserved in Section 13(e) below and all of the duties and obligations owed to PMPI by SWM hereunder shall terminate forthwith. Notwithstanding the preceding three sentences, the expiration or termination of this Agreement for any reason shall not release any Party hereto from any liability which, at the time of expiration or termination, had already accrued to another Party or which may accrue thereafter in respect of any act or omission occurring prior to such expiration or termination. Notwithstanding any termination in accordance with this Section, the Parties shall have and hereby reserve all rights and remedies which each may have, or which each may be granted by operation of law, including, but not limited to, the right to be compensated for damages for breach of this Agreement. (e) Survival: The Parties' rights and obligations under Article 3, Article 5, Section 9(a)(iii) and Article 11 shall survive the expiration, cancellation or termination of this Agreement. 14. Notices. All notices, requests, demands, approvals, consents or other communications under this Agreement shall be in writing and delivered in person, by telefax or telex, by overnight courier service or by registered or certified mail, return receipt requested, to the following addresses or such other address or addresses as either party shall designate with respect to its own address: If to PMUSA: Philip Morris Incorporated P.O. Box 26603 Richmond, VA 23261 Telefax: (804) 274-4068 Attention: Manager - Cigarette Components, Direct Materials Purchasing If to PMPI: Philip Morris International 800 Westchester Avenue Rye Brook, NY 10573-1301 Telefax: (914) 335-9374 Attention: Assistant General Counsel CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -13- 14 If to SWM: 100 North Point Center East Suite 600 Alpharetta, Georgia 30022 Telefax: (770) 569-4212 Attention: President, U.S. Operations Copy to: General Counsel 15. Governing Law; Arbitration. (a) Governing Law: The provisions of this Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard for provisions respecting choice of law. (b) Arbitration: It is the intention of the Parties to make a good faith effort to resolve any dispute, controversy, claim or question arising under this Agreement. The Parties each shall use their best efforts to resolve any dispute, whether resolved by negotiation or arbitration, in the most expeditious manner reasonably possible. In the event of a dispute that cannot be promptly resolved by the Parties' regular representatives, any Party may elect to abandon negotiations. Any and all such disputes (other than disputes involving SWM's alleged breach of the covenants in Section 6(a) or 6(b) hereof, or a dispute involving the right of any Party to terminate this Agreement for cause or otherwise) shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce ("ICC Rules of Arbitration") presently in force at the time of the dispute. There shall be three arbitrators who all must be fluent in the English language. PMUSA and PMPI, on the one hand, and SWM on the other, each shall nominate in the Request for Arbitration and the Answer thereto, respectively, one arbitrator for confirmation by the ICC Court of Arbitration. If a Party fails to nominate an arbitrator, the appointment shall be made by the ICC Court of Arbitration. The third arbitrator, who shall serve as chairman of the arbitral tribunal, will be appointed by the first two arbitrators in accordance with Article 2(4) of the ICC Rules of Arbitration. If the two party-appointed arbitrators fail to appoint the third presiding arbitrator, the third arbitrator will be appointed by the Appointing Authority in accordance with Article 2(4) of the ICC Rules of Arbitration. The place of arbitration shall be Richmond, Virginia, and the arbitration shall be conducted in the English language. All documents in another language shall be accompanied by an English language translation. Any award of the arbitrators shall be enforceable by any court of competent jurisdiction. 16. Representations and Warranties. CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -14- 15 In addition to their other representations, warranties and covenants elsewhere herein contained, the Parties represent, each to the other, as follows: (a) PMUSA: PMUSA represents and warrants that it has full right, power and authority to enter into this Agreement and to perform all of its obligations hereunder. (b) PMPI: PMPI represents and warrants that it has full right, power and authority to enter into this Agreement and to perform all of its obligations hereunder. (c) SWM: SWM represents and warrants that it has full right, power and authority to enter into this Agreement and to perform all of its obligations hereunder. 17. Amendment. This Agreement shall not be modified or amended except by an agreement in writing signed by the authorized representatives of each of the Parties hereto. 18. Binding Effect; Assignments. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns, provided that SWM shall not assign this Agreement or any part of its interest herein except with the prior written consent of PMUSA and PMPI. 19. Final Agreement. This Agreement sets forth the entire agreement of the Parties with respect to its subject matter and supersedes any and all prior understandings and agreements with respect to such subject matter. 20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute but one and the same agreement. 21. No Rights of Third Parties. Except as specifically contemplated herein, this Agreement shall not be deemed to confer any rights or benefits on any person or entity not a Party to this Agreement. 22. Partial Invalidity. CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -15- 16 If one or more provisions of this Agreement shall be invalid, illegal or unenforceable in any respect in any jurisdiction or with respect to any Party, such invalidity, illegality or unenforceability in such jurisdiction or with respect to such Party shall not, to the fullest extent permitted by applicable law, invalidate or render illegal or unenforceable such provision in any other jurisdiction or with respect to any other party, or any other provision of this Agreement. To the fullest extent it may effectively do so under applicable law, each of the Parties hereto waives any provision of law which renders any provision hereof invalid or illegal in any respect. 23. No Waiver; Cumulative Remedies. No delay or omission or failure to exercise, or any abandonment or discontinuance of steps to enforce any right or remedy provided for herein shall be deemed to be a waiver thereof or acquiescence in the event giving rise to such right or remedy, but every such right and remedy may be exercised from time to time and so often as may be deemed expedient by the Party exercising such right or remedy. The rights and remedies provided herein are cumulative and not exclusive of any remedies provided at law or in equity. 24. Relationship of the Parties. Except as provided in Article 8, nothing contained herein shall be construed to create a partnership, joint venture or agency relationship between PMUSA and PMPI, on the one hand, and SWM, on the other, and no Party shall become bound by any representation, act or omission of any other. 25. Obligation of PM Affiliates The obligations of each of PMUSA and PMPI hereunder shall be several not joint. Neither PMUSA nor PMPI shall be liable to SWM or any SWM Affiliate for the non-performance or breach hereof by the other, and no act or omission that constitutes a breach hereof by one of PMUSA or PMPI shall be deemed to constitute a breach hereof by the other. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -16- 17 IN WITNESS WHEREOF, the Parties hereto have caused these presents to be signed and their corporate seals to be hereunto affixed as of the day and year first above written. PHILIP MORRIS INCORPORATED (Seal) By: ------------------------------------------ Title: --------------------------------------- PHILIP MORRIS PRODUCTS INC. (Seal) By: ------------------------------------------ Title: --------------------------------------- SCHWEITZER MAUDUIT INTERNATIONAL, INC. (Seal) By: ------------------------------------------ Title: --------------------------------------- CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -17- 18 ATTACHMENT A [******] CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULE 24b-2, PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. -18-