10-K

STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2009
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from      to      

Commission file number 001-32240

NEENAH PAPER, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-1308307
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3460 Preston Ridge Road Alpharetta, Georgia	30005
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (678) 566-6500

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock—$0.01 Par Value Preferred Stock Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes o  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o  No x

The aggregate market value of the registrant’s common stock held by non-affiliates on June 30, 2009 (based on the closing stock price on the New York Stock Exchange) on such date was $130 million.

As of February 26, 2010, there were 14,705,596 shares of the Company’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information contained in the definitive proxy statement for the Company’s Annual Meeting of Stockholders to be held on May 19, 2010 is incorporated by reference into Part III hereof.

TABLE OF CONTENTS

		Page
Part 1
Item 1.	Business	2
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	17
Item 4.	(Removed and Reserved)	17
Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 8.	Financial Statements and Supplementary Data	38
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	38
Item 9A.	Controls and Procedures	38
Item 9B.	Other Information	39
Part III
Item 10.	Directors and Executive Officers of the Registrant	40
Item 11.	Executive Compensation	40
Item 12.	Security Ownership of Certain Beneficial Owners and Management	40
Item 13.	Certain Relationships and Related Transactions and Director Independence	40
Item 14.	Principal Accountant Fees and Services	40
Part IV
Item 15.	Exhibits and Financial Statement Schedule	41
Signatures		46

PART I

In this report, unless the context requires otherwise, references to “we,” “us,” “our,” “Neenah” or the “Company” are intended to mean Neenah Paper, Inc. and its consolidated subsidiaries.

Item 1.Business

Overview

We are a leading producer of premium fine papers and technical products. We have two primary operations: our fine paper business and our technical products business. We also own approximately 475,000 acres of timberlands in Nova Scotia, Canada.

Our fine paper business is a leading producer of premium writing, text, cover and specialty papers used in corporate identity packages, corporate annual reports, invitations, personal stationery and high-end packaging for point of purchase advertising. Our products include some of the most recognized and preferred papers in North America, where we enjoy leading market positions in many of our product categories. We sell our products primarily to authorized paper distributors, converters and specialty businesses. Our fine paper manufacturing facilities are located in Appleton, Neenah and Whiting, Wisconsin.

Our technical products business is a leading international producer of transportation and other filter media, durable, saturated and coated substrates for a variety of end uses; and nonwoven wall coverings. Our technical products business is organized into five global strategic business units (“SBUs”) which sell into 17 product categories. We focus on categories where we believe we are a market leader or have a competitive advantage, which include, among others, transportation and other filter media, specialty tape, label, abrasive, medical packaging, nonwoven wall coverings and image transfer technical products markets. We are also a global supplier of materials used for customer-specific applications in furniture, book covers and original equipment manufacturers’ products. Our customers are located in more than 35 countries. Our technical products manufacturing facilities are located in Munising, Michigan and near Munich and Frankfurt, Germany.

Company Structure

Our corporate structure consists of Neenah Paper, Inc., and five wholly owned subsidiaries.

Neenah Paper, Inc. is a Delaware corporation that holds our trademarks and patents related to all of our U.S. businesses (except Fox River), all of our U.S. inventory, the real estate, mills and manufacturing assets associated with our fine paper operations in Neenah and Whiting, Wisconsin, and all of the equity in our subsidiaries listed below. The common stock of Neenah is publicly traded on the New York Stock Exchange under the symbol “NP.”

Neenah Paper Michigan, Inc. is a Delaware corporation and a wholly owned subsidiary of Neenah Paper, Inc. that owns the real estate, the mill and the manufacturing assets associated with our U.S. technical products business.

NPCC Holding Company LLC. is a Delaware limited liability company and wholly owned subsidiary of Neenah Paper, Inc. It owns all of the equity of Neenah Paper Company of Canada.  Neenah Paper Company of Canada is a Nova Scotia unlimited liability corporation that owns approximately 475,000 acres of timberlands in Nova Scotia, Canada.

Neenah Paper FVC, Inc. is a Delaware corporation and wholly owned subsidiary of Neenah Paper, Inc., that owns all of the equity of Neenah Paper FR, LLC.  Neenah Paper FR, LLC is a Delaware limited liability company that owns the real estate, mills and manufacturing assets associated with our operation in Appleton, Wisconsin.

Neenah Paper International Holding Company, LLC. is a Delaware limited liability company and wholly owned subsidiary of Neenah Paper Inc. that owns all of the equity of Neenah Paper International, LLC.  Neenah Paper International, LLC is a Delaware limited liability company that owns all of the equity of Neenah Germany GmbH and in conjunction with Neenah Germany GmbH all of the equity of Neenah Services GmbH & Co. KG.

Neenah Paper International Finance Company BV is a private company with limited liability organized under the laws of the Netherlands and a wholly owned subsidiary of Neenah Paper, Inc.

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History of the Businesses

Neenah was incorporated in April 2004 in contemplation of the spin-off by Kimberly-Clark Corporation (“Kimberly-Clark”) of its fine paper and technical products businesses in the United States and its Canadian pulp business (collectively, the “Pulp and Paper Business”). We had no material assets or activities until Kimberly-Clark’s transfer to us of the Pulp and Paper business on November 30, 2004. On that date, Kimberly-Clark completed the distribution of all of the shares of our common stock to the stockholders of Kimberly-Clark (the “Spin-Off”). Following the Spin-Off, we are an independent public company and Kimberly-Clark has no ownership interest in us.

Fine Paper.  The fine paper business was incorporated in 1885 as Neenah Paper Company, which initially operated a single paper mill in Neenah, Wisconsin. Kimberly-Clark acquired the mill in 1956. In 1981, Kimberly-Clark purchased an additional mill located in Whiting, Wisconsin to increase the production capacity of the fine paper business. In the late 1980s and early 1990s, Kimberly-Clark expanded the capacity of the fine paper business in response to increased demand by building two new paper machines at the Whiting mill, rebuilding two existing paper machines at the Whiting mill and completing a major expansion of the Neenah facility with the installation of a new paper machine, a new finishing center, a new customer service center and a distribution center expansion. As a result of decreased demand, in the 2000s the Neenah mill retired two of its older paper machines. In March 2007, we acquired Fox Valley Corporation (now named Neenah Paper FVC, Inc.), which owned Fox River Paper Company, LLC (“Fox River”, now named Neenah Paper FR, LLC).  The Fox River assets acquired consisted of four U.S. paper mills and various related assets, producing premium fine papers with well-known brands including STARWHITE®, SUNDANCE®, ESSE® and OXFORD®.

As part of our plan to integrate the operations of Fox River with those of our existing fine paper mills, we closed the Housatonic mill, located near Great Barrington, Massachusetts in May 2007. During the second quarter of 2008, we closed the former Fox River fine paper mill located in Urbana, Ohio. In May 2009, we closed the former Fox River fine paper mill located in Ripon, California.  We have deposed of the Housatonic and Urbana mills and are in the process of selling the remaining assets of the Ripon mill. The Company’s other premium fine paper mills have absorbed the production previously made at these facilities. See Note 3 of Notes to Consolidated Financial Statements, “Closure of the Ripon Mill.”

Technical Products. In 1952, Kimberly-Clark purchased the Munising mill, located in Munising, Michigan. Subsequent to the purchase, Kimberly-Clark converted the mill to produce durable, saturated and coated papers for sale and use in a variety of industrial applications for its technical products business. In October 2006, we purchased the outstanding interests of FiberMark Services GmbH & Co. KG and the outstanding interests of FiberMark Beteiligungs GmbH (collectively “Neenah Germany”). The Neenah Germany assets consist of two mills located near Munich, Germany and a third mill near Frankfurt, Germany, that produce a wide range of products, including transportation and other filter media, nonwoven wall coverings, masking and other tapes, abrasive backings, and specialized printing and coating substrates.

Pulp. At the Spin-Off, our pulp operations consisted of pulp mills located in Terrace Bay, Ontario and Pictou, Nova Scotia and approximately 1,000,000 acres of owned timberlands in Nova Scotia, Canada. In August 2006, we transferred our Terrace Bay mill and related woodlands operations to certain affiliates of Buchanan Forest Products Ltd. (“Buchanan”). See Note 5 of Notes to Consolidated Financial Statements, “Discontinued Operations — Transfer of the Terrace Bay Mill.” In June 2006, we sold approximately 500,000 acres of woodlands in Nova Scotia. In June 2008, we sold the Pictou Mill, which was the last pulp mill we owned, to Northern Pulp Nova Scotia Corporation (“Northern Pulp”). See Note 5 of Notes to Consolidated Financial Statements, “Discontinued Operations — Sale of the Pictou Mill and the Woodlands.”

Assets Held for Sale — Discontinued Operations. In the first quarter of 2007, we engaged a nationally known investment banking firm to identify buyers interested in acquiring the Pictou Mill and/or approximately 475,000 acres of timberlands in Nova Scotia, Canada (the “Woodlands”).  In February 2008, we committed to a plan to sell the Pictou Mill (which was sold in June 2008) and to separately pursue purchasers of the Woodlands. On March 1, 2010, we announced that Neenah Canada had signed a definitive agreement to sell the Woodlands for C$82.5 million ($78.6 million). See Note 17 of Notes to Consolidated Financial Statements, “Subsequent Event.”

Business Strategy

Increase the Size of our Paper Businesses. Following the Spin-Off, we sought to increase the size of our successful specialty and premium paper businesses.  Growth in our paper businesses was pursued organically and through acquisitions, such as Neenah Germany and Fox River. Ultimately, we decided to exit the pulp business, where our scale and cost position was determined to be sub-optimal for this global commodity and our pulp mills were eventually divested.

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Deliver Consistent Profitable Growth. We believe that our fine paper and technical products production assets provide us with a flexible and effective platform for growth.  Our experienced team of employees and management are pursuing business strategies designed to take advantage of existing strengths in these businesses—including our strong market positions, well recognized brands, high-quality products and efficient manufacturing operations—while responding to the challenges faced by each unit. We expect our fine paper business to continue to deliver significant cash flows as we gain share in a declining market and seek additional growth opportunities, and grow in Technical Products markets, both organically and through acquisitions.

Provide Investors with Attractive Returns. We believe that the successful execution of our strategies and our continued use of return on capital as an important metric to evaluate decisions and allocate capital to our core business will result in positive returns for investors. We also expect to provide returns to investors by paying dividends in line with peer companies.

Products

Fine Paper. The fine paper business manufactures and sells world-class branded premium writing, text, cover and specialty papers used in corporate identity packages, corporate annual reports, invitations, personal stationery and high-end packaging for point of purchase advertising. Our fine paper business had net sales of approximately $256 million, $336 million and $367 million in 2009, 2008 and 2007, respectively.

Premium writing papers are used for business and personal stationery, corporate identity packages, envelopes and similar end-use applications. Market leading writing papers are sold by the fine paper business under the CLASSIC®, ENVIRONMENT®, NEENAH®, CAPITOL BOND® and NEUTECH® trademarks, which are denoted by a brand watermark in each sheet of writing paper. The fine paper business also sells private watermarked paper and other specialty writing papers.

Text and cover papers are used in applications such as corporate brochures, pocket folders, corporate annual reports, advertising inserts, direct mail, business cards, hang tags, scrapbooks, and a variety of other uses where colors, textured finishes or heavier weight papers are desired. Our brands in this category include CLASSIC®, CLASSIC CREST®, STARWHITE®, SUNDANCE®, ESSE® and ENVIRONMENT®. We also sell a variety of custom colors, paper finishes, and duplex/laminated papers.

The fine paper business produces and sells other specialty papers, including translucent papers, art papers, papers for optical scanning and other specialized applications, under the UV/ULTRA® II translucent paper trademark and other brands.

In 2009, we signed an exclusive licensing agreement with Crane & Co. Inc. (“Crane”) for Neenah to manufacture, market and distribute Crane’s business paper brands.

Technical Products.   The technical products business is a leading producer of filtration media and durable, saturated and coated substrates for a variety of end uses, including tapes, premask, abrasives, labels, medical packaging, decorative components, wall covering, and image transfer papers. Our technical products business had net sales of approximately $318 million, $397 million and $401 million in 2009, 2008 and 2007, respectively. JET-PRO®, SofStretch™, KIMDURA®, MUNISING LP®, PREVAIL™, NEENAH®, Gessner® and varitess® are brands of our technical products business.

In general, the products of our technical products business are sold to other manufacturers as key components for their finished products. The technical products business is organized into five SBUs: Filtration; Tape; Component Materials, which includes our abrasives business; Graphics and Identification; and Wall Covering to sell its products into major market segments. Several of the key market segments served, including tape and abrasives, are global in scope.

The Filtration SBU produces filtration media for induction air, fuel, oil, and cabin air applications in automotive transportation and for vacuum cleaner bags and filters.  Transportation filtration media are sold to suppliers of automotive companies as original equipment on new cars and trucks as well as to the automotive aftermarket.  This business is primarily in Europe.

The Tape SBU produces both saturated and unsaturated crepe and flat papers and sells them to manufacturers to produce finished pressure sensitive products for sale in automotive, automotive aftermarket, transportation, manufacturing and building construction, and industrial general purpose applications.

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The Component Materials SBU is a leading producer of latex saturated and coated papers for use by a wide variety of manufacturers. Finished lightweight sandpaper is sold in the automotive, automotive aftermarket, construction, metal and woodworking industries for both waterproof and dry sanding applications.  Premask paper is used as a protective over wrap for products during the manufacturing process and for applying signs, labeling and other finished products.  Medical packaging paper is a polymer impregnated base sheet that provides a breathable sterilization barrier. When sealed together with film, this paper becomes a medical packaging material that allows sterilization from steam, ethylene oxide, or gamma radiation and at the same time provides unique barrier properties.  The Component Materials SBU also produces a line of release papers and furniture backers.

The Graphics and Identification SBU produces label and tag products from saturated (latex impregnated) base label stock and purchased synthetic base label stock. Top coatings are applied to the base label stock to allow for high quality variable and digital printing. The synthetic label stock is recognized as a high quality, UV (ultra-violet) stable product used for outdoor applications. The business sells its label and tag stock to pressure sensitive coaters, who in turn sell the coated label and tag stock to the label printing community. Image transfer papers are used to transfer an image from paper to tee shirts, hats, coffee mugs, and other surfaces. The Graphics and Identification SBU produces and applies a proprietary imaging coating to its image transfer papers for use in digital printing applications. Image transfer papers are primarily sold through large retail outlets and through master distributors.  Decorative components papers are made from light and medium weight latex saturated papers which can then be coated for printability. Decorative components papers are primarily sold to coater converters, distributors, publishers and printers for use in book covers, stationery and fancy packaging.  The Graphics and Identification SBU also produces and sells clean room papers and durable printing papers into their respective markets.

The Wall Covering SBU produces a line of substrates made from saturated and coated wet-laid nonwovens and markets to converters serving primarily European commercial and do-it-yourself markets.

Markets and Customers

Fine Paper. Premium writing, text and cover papers represent approximately three percent of the North American uncoated free sheet market. The uncoated free sheet market has been declining two to four percent annually due to the increasing use of electronic media for communication. For 2009, the American Forestry and Paper Associations (the “AF&PA”) reported a 27 percent year-over-year industry decline in the premium writing, text and cover uncoated free sheet paper category. Lower industry volume reflected a sharp decline in consumption for a number of key end use market segments, including advertising, financial institutions and transportation. The stationery segment of the uncoated free sheet market is divided into cotton and sulfite grades. The text and cover paper segment of the market, used in corporate identification applications, is split between smooth papers and textured papers. Text papers have traditionally been utilized for special, high end collateral material such as corporate brochures, annual reports and special edition books. Cover papers are primarily used for business cards, pocket folders, brochures and report covers including corporate annual reports.

The fine paper business sells its products through our sales and marketing organizations primarily in three channels: authorized paper distributors, converters and direct sales. Sales to distributors, including distributor owned paper stores, account for approximately 70 percent of revenue in the fine paper business. Less than five percent of the sales of our fine paper business are exported to international distributors.

Sales to the fine paper business’s two largest customers (both of which are distributors) represented approximately 30 percent of its total sales in 2009. We practice limited distribution to improve our ability to control the marketing of our products. Although a complete loss of either of these customers would cause a temporary decline in the business’s sales volume, the decline could be partially offset by expanding sales to existing distributors, and further offset over a several month period with the addition of new distributors.

Technical Products. The technical products business relies on five SBUs to sell its products globally into 17 product categories. Such categories, broadly defined as polymer impregnated and synthetic paper, include papers used as raw materials in the following applications: filtration, tape, component materials for manufactured products, graphics and identification, and wall covering.

Several products (filtration media, wall coverings, abrasives, tapes, labels) are used in markets that are directly affected by economic business cycles. Other market segments such as image transfer papers used in small/home office and consumer applications are relatively stable. Price competition is common in most of the segments served by the technical products business and has increased due to a trend of using film and other lower cost substrates instead of paper in some applications.

The technical products business relies on a team of direct sales representatives and customer service representatives to market and sell approximately 95 percent of its sales volume directly to customers and converters. Less than five percent of the sales of the technical products business are sold through industrial distributors.

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The technical products business has over 500 customers worldwide. The distribution of sales in 2009 was approximately 55 percent in Europe, 25 percent in North America and 20 percent in Latin America and Asia. Customers typically convert and transform base papers and film into finished rolls and sheets by adding adhesives, coatings, and finishes. These transformed products are then sold to end-users.

Concentration.  For the years ended December 31, 2009, 2008 and 2007, no customer accounted for more than 10 percent of our consolidated net sales.

The following tables present further information about our businesses by geographic area (dollars in millions):

	Year Ended December 31,
	2009		2008		2007
Net sales
United States	$	360.9	$	467.3	$	502.9
Europe	213.0		265.0		264.4
Intergeographic items	—		—		(0.3		)
Consolidated	$	573.9	$	732.3	$	767.0

	December 31,
	2009		2008		2007
Total Assets
United States	$	330.9	$	371.8	$	337.5
Canada	5.4		3.3		201.6
Europe	301.2		314.9		398.7
Total	$	637.5	$	690.0	$	937.8

Net sales and total assets are attributed to geographic areas based on the physical location of the selling entities and the physical location of the assets. See Note 14 of Notes to Consolidated Financial Statements “Business Segment and Geographic Information” for information with respect to net sales, profits (losses) and total assets by business segment.

Raw Materials

Fine Paper. Hardwood pulp is the primary fiber used to produce products of the fine paper business. Our fine paper business consumed approximately 55,000 metric tons, 65,000 metric tons and 80,000 metric tons of hardwood pulp in 2009, 2008 and 2007, respectively. Other significant raw material inputs in the production of fine paper products include softwood pulp, cotton fiber, recycled fiber, dyes and fillers. An interruption in our supply of pulp or cotton could adversely affect our fine paper sales. The fine paper business purchases all of its raw materials externally.

Technical Products. The technical products business purchases latex, a primary raw material used to produce its products, from various suppliers. Softwood pulp, including certain specialty pulp, is the other main raw material consumed. The technical products business purchases substantially all of its raw material requirements externally. We believe that all of the raw materials for our technical products operations, except for certain specialty latex grades and specialty softwood pulp, are readily available from several sources and that the loss of a single supplier would not cause a shutdown of our manufacturing operations. An interruption in the supply of certain latex specialty grades or specialty softwood pulp, however, could disrupt and eventually cause a shutdown of production of certain technical products.

Concentration.  Except for certain specialty latex grades and specialty softwood pulp used by our technical products business, we are not aware of any significant concentration of business transacted with a particular supplier that could, if suddenly eliminated, have a material adverse affect on our operations. While we believe that alternative sources of critical supplies would be available, disruption of our primary sources could create a temporary, adverse effect on product shipments. An interruption in the supply of a latex specialty grade or of specialty softwood pulp to our technical products business, each of which is currently obtained from a single source, could disrupt and eventually cause a shutdown of production of certain technical products.

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Energy and Water

The equipment used in the manufacture of the products of our fine paper and technical products businesses uses significant amounts of energy, primarily electricity, natural gas, oil and coal. We generate substantially all of our electrical energy at the Munising mill and approximately 20 percent of the electrical energy at our mills in Bruckmühl, Germany and Appleton, Wisconsin. We also purchase electrical energy from external sources, including electricity generated from renewable sources.

Availability of energy is not expected to be a problem in the foreseeable future, but the purchase price of such energy can and likely will fluctuate significantly based on changes in demand and other factors.

An adequate supply of water is needed to manufacture our products. We believe that there is an adequate supply of water for this purpose at each of our manufacturing locations.

Working Capital

Fine Paper. The fine paper business maintains approximately 10 days of raw material inventories to support its paper making operations and about 50 days to 55 days of finished goods inventory to fill customer orders. Fine Paper sales terms range between 20 and 30 days for customer payments, with 20-day terms used most often. Supplier invoices are typically paid within 30 days.

Technical Products. Our U.S. technical products business maintains approximately 25 days to 30 days of raw materials and supplies inventories to support its manufacturing operations and approximately 25 days to 30 days of finished goods inventory to support customer orders for its products. Sales terms in the technical products business vary depending on the type of product sold and customer category. Extended credit terms of up to 120 days are offered to customers located in certain international markets. Sales are collected in approximately 45 days to 50 days and supplier invoices are generally paid within 30 days.  Our German technical products business maintains approximately 20 days of raw materials and supplies inventories to support its manufacturing operations and approximately 30 days of finished goods inventory to support customer orders for its products. Sales terms in the technical products business vary depending on the type of product sold and customer category. Extended credit terms of up to 120 days are offered to customers located in certain international markets. Sales are collected in approximately 55 to 60 days and supplier invoices are generally paid within 20 days.

Competition

Fine Paper. We believe our fine paper business is a leading supplier of premium writing, text, cover and specialty papers in North America. The fine paper business competes directly in this market with Mohawk Fine Papers Inc., Wausau Paper Corp. and other smaller companies. We believe the primary bases of competition for premium writing, text and cover papers are brand recognition, product quality, customer service, product availability, promotional support and variety of colors and textures.  Price also can be a factor particularly versus lower quality opaque and offset papers. We have and will continue to invest in advertising and other programs aimed at graphic designers, printers and corporate end-users in order to communicate the advantages of using our products.

Technical Products. Our technical products business competes in global markets with a number of large multinational competitors, including ArjoWiggins S.A.S. and Ahlstrom Corporation. It also competes in some, but not all, of these segments with smaller regional manufacturers, such as Monadnock Paper Mills, Inc., Fortress Paper, Ltd., Potsdam Specialty Paper, Inc. and Paper Line S.p.A. We believe the bases of competition in most of these segments are the ability to design and develop customized product features to meet customer specifications while maintaining quality, customer service and price. We believe our research and development program gives us an advantage in customizing base papers to meet customer needs.

Research and Development

Our domestic technical products business maintains research and development laboratories in the U.S. in Roswell, Georgia and Munising, Michigan to support its strategy of developing new products and technologies, and to support growth in its existing product lines and other strategically important markets. Our German technical products business maintains laboratory and research and development staff at each of its manufacturing locations and dedicated application engineers for key accounts to support product development and process improvements.  Our German technical products business also has a nano fiber pilot plant for the testing of advanced filter media applications.  We have continually invested in product research and development with spending of $5.5 million in 2009, $6.5 million in 2008 and $6.4 million in 2007.

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Intellectual Property

We own more than 50 trademarks with registrations in approximately 50 countries. Our business has built its market leading reputation on trademarked brands that date back as far as 1908. The CLASSIC® family of brands is one of the most well known and respected trademarks in the printing and writing industry. The CLASSIC® family includes CLASSIC CREST®, CLASSIC® Laid, CLASSIC® Linen, CLASSIC COLUMNS® and CLASSIC COTTON® papers. Our branded products, which also include the ENVIRONMENT® brand and brands such as STARWHITE®, SUNDANCE® and ESSE®, have played an important role in the marketing of the product lines of the fine paper business, which are recognized as an industry leader for quality, consistency and printing applications. In the fourth quarter of 2009, our fine paper business entered into an exclusive licensing agreement to market and distribute Crane & Co.’s CRANE’S CREST®, CRANE’S BOND®, CRANE’S LETTRA®, CRANE’S PALETTE™ and CRANE’S® Choice Papers branded fine papers.  In the fourth quarter of 2008, our fine paper business acquired the trademarks for the Classic brand in certain key international markets.  This investment continues to build on our long term strategy to consolidate the writing, text and cover (WT&C) categories in the US and continue to grow our strongest brands by increasing our international market penetration.

The KIMDURA® and MUNISING LP® trademarks have made a significant contribution to the marketing of synthetic film and clean room papers of the technical products business.  The Gessner® and varitess® trademarks have played an important role in the marketing of Neenah Germany product lines.

We own more than 40 patents and have multiple pending patent applications in the United States, Canada, Western Europe and certain other countries covering image transfer paper, abrasives and medical packaging. We believe our image transfer patents have contributed to establishing the technical products business as a leading supplier of image transfer papers.

Backlog and Seasonality

Fine Paper. The fine paper business has historically experienced a steady flow of orders with marginally higher sales in the first quarter due to annual report production and a slight reduction in the third quarter due to scheduled maintenance downtime. Orders for stock products are typically shipped within two days, while custom orders are shipped within two to three weeks of receipt. Raw material purchases and manufacturing schedules are planned based on a combination of historical trends, customer forecasts and current market conditions. The order backlogs in the fine paper business on December 31, 2009 and December 31, 2008 were $6.1 million and $10.8 million, respectively, which represent approximately 8 days and 11 days, respectively, of sales. The order backlogs from December 31, 2009 and 2008 were filled in the respective following years.

Technical Products. In general, sales and profits for the technical products business have been relatively stronger in the first half of the year with reductions in the third quarter due to reduced customer converting schedules and in the fourth quarter due to a reduction in inventory levels by our customers. During 2009, the technical products business showed sequential growth in quarterly sales and earnings as the overall economic environment improved.  The order flow for the technical products business is subject to seasonal peaks for several of its products, such as the larger volume grades of tape, abrasives, premask, and label stock used primarily in the downstream finished goods manufacturing process. To assure timely shipments during these seasonal peaks, the technical products business has agreements with certain customers to manufacture orders and hold them in inventory for later shipment. The technical products business also manages these peaks by providing certain customers with finished goods inventory on consignment. Such consignment sales represent less than five percent of the technical products business’s annual sales. Orders are typically shipped within six to eight weeks of receipt of the order. However, the technical products business periodically experiences periods where order entry levels surge, and order backlogs can increase substantially. Raw materials are purchased and manufacturing schedules are planned based on customer forecasts, current market conditions and individual orders for custom products. The order backlog in the technical products business on December 31, 2009 was approximately $67 million and represented approximately 20 percent of prior year sales. The order backlogs in the technical products business on December 31, 2008 were approximately $56 million and represented approximately 15 percent of prior year sales. We have previously filled the order backlog from December 31, 2008 and expect to fill the order backlog from December 31, 2009 within the current fiscal year.

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Employee and Labor Relations

As of December 31, 2009, the Company had approximately 1,700 regular full-time employees of whom 675 hourly and 325 salaried employees were located in the United States and 450 hourly and 250 salaried employees were located in Germany.

Hourly employees at the Whiting, Neenah, Munising and Appleton paper mills are represented by the United Steelworkers Union (the “USW”). The collective bargaining agreement for the Munising paper mill expired on July 14, 2009. The Company is currently negotiating a new labor agreement for the mill with the USW. In December 2009, the Company and the USW signed a new collective bargaining agreement for the Whiting paper mill that is effective through January 31, 2013. In October 2009, the Company and the USW signed a new collective bargaining agreement for the Neenah paper mill that is effective through June 30, 2013. The collective bargaining agreement for the Appleton paper mill expires on May 31, 2010. Separately, the Neenah, Whiting and Munising paper mills have bargained jointly with the union on pension matters. The agreement on pension matters will remain in effect through 2019.

Approximately 50 percent of salaried employees and 80 percent of hourly employees of Neenah Germany are eligible to be represented by the Mining, Chemicals and Energy Trade Union, Industriegewerkschaft Bergbau, Chemie and Energie (the “IG BCE”).  The collective bargaining agreement covering union employees of Neenah Germany is negotiated by the IG BCE and a national trade association representing all employers in the industry.  Union membership is voluntary and under German law does not need to be disclosed to the Company. As a result, the number of employees covered by the collective bargaining agreement that expires in August 2010 cannot be determined.

Environmental, Health and Safety Matters

Our operations are subject to federal, state and local laws, regulations and ordinances relating to various environmental, health and safety matters. Our operations are in compliance with, or we are taking actions designed to ensure compliance with, these laws, regulations and ordinances. However, the nature of our operations exposes us to the risk of claims concerning non-compliance with environmental, health and safety laws or standards, and there can be no assurance that material costs or liabilities will not be incurred in connection with those claims. Except for certain orders issued by environmental, health and safety regulatory agencies with which we believe we are in compliance and which we believe are immaterial to our financial condition, results of operations and liquidity, we are not currently named as a party in any judicial or administrative proceeding relating to environmental, health and safety matters.

Greenhouse gas (“GHG”) emissions have increasingly become the subject of political and regulatory focus. Concern over potential climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting GHG emissions. For example, legislators in the United States are considering laws that would create a “cap-and-trade” regime that would establish a limit (or cap) on overall GHG emissions and create a market for the purchase and sale of emissions permits or “allowances.”  All the states in which we operate are currently considering GHG legislation or regulations, either individually and/or as part of regional initiatives, that are independent of any federal proposals. While not all are likely to become law it is reasonably possible that additional climate change related mandates will be forthcoming, and it is expected that they may adversely impact our costs by increasing energy costs and raw material prices, requiring operational or equipments modifications to reduce emissions, requiring the purchase of carbon offsets and creating costs to comply with regulations or to mitigate the financial consequences of a “cap and trade” regime.

While we have incurred in the past several years, and will continue to incur, capital and operating expenditures in order to comply with environmental, health and safety laws, regulations and ordinances, we believe that our future cost of compliance with environmental, health and safety laws, regulations and ordinances, and our exposure to liability for environmental, health and safety claims will not have a material adverse effect on our financial condition, results of operations or liquidity. However, future events, such as changes in existing laws and regulations, new legislation to limit GHG emissions or contamination of sites owned, operated or used for waste disposal by us (including currently unknown contamination and contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs which could have a material adverse effect on our financial condition, results of operations or liquidity.

We have planned capital expenditures to comply with environmental, health and safety laws, regulations and ordinances during the period 2010 through 2012 of approximately $1 million to $2 million annually.  Our anticipated capital expenditures for environmental projects are not expected to have a material adverse effect on our financial condition, results of operations or liquidity.

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AVAILABLE INFORMATION

We are subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934. As such, we file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public over the Internet at the SEC’s web site at www.sec.gov. You may also read and copy any document we file at the SEC’s public reference room in Washington, D.C., 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our common stock is traded on the New York Stock Exchange under the symbol NP. You may inspect the reports, proxy statements and other information concerning us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

Our web site is www.neenah.com. Our reports on Form 10-K, Form 10-Q and Form 8-K, as well as amendments to those reports, are and will be available free of charge on our web site as soon as reasonably practicable after we file or furnish such reports with the SEC. In addition, you may request a copy of any of these reports (excluding exhibits) at no cost upon written request to us at: Investor Relations, Neenah Paper, Inc., 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005.

Item 1A.Risk Factors

You should carefully consider each of the following risks and all of the other information contained in this Annual Report on Form 10-K. Some of the risks described below relate principally to our business and the industry in which we operate, while others relate principally to our indebtedness. The remaining risks relate principally to the securities markets generally and ownership of our common stock.

Our business, financial condition, results of operations or liquidity could be materially adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline. The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.

Risks Related to Our Business and Industry

Our business will suffer if we are unable to effectively respond to decreased demand for some of our products due to current conditions in the global economy.

We have experienced and may continue to experience decreased demand for some of our products due to slowing or negative global economic growth, uncertainty in credit markets, declining consumer and business confidence, fluctuating commodity prices, increased unemployment and other challenges affecting the global economy.  In addition, our customers may experience deterioration of their businesses, cash flow shortages, and difficulty obtaining financing. If we are unable to implement business strategies to effectively respond to decreased demand for our products, our financial position, cash flows and results of operations would be adversely affected.

We face many competitors, several of which have greater financial and other resources.

We face competition in each of our business segments from companies that produce the same type of products that we produce or that produce lower priced alternative products that customers may use instead of our products. Some of our competitors have greater financial, sales and marketing, or research and development resources than we do. Greater financial resources and product development capabilities may also allow our competitors to respond more quickly to new opportunities or changes in customer requirements.

Our operating results are likely to fluctuate.

Our operating results are subject to substantial quarterly and annual fluctuations due to a number of factors, many of which are beyond our control. Results could be adversely affected by general economic conditions causing a downturn in the market for paper products.  Additional factors that could affect our results include, among others, the relative strength of the Euro versus the U.S. dollar, changes in the market price of pulp, the effects of competitive pricing pressures, changes in average selling prices of our products, production capacity levels and manufacturing yields, availability and cost of products from our suppliers, the gain or loss of significant customers, our ability to develop, introduce and market new products and technologies on a timely basis, changes in the mix of products produced and sold, seasonal customer demand,  increasing interest rates and environmental costs. The timing and effect of the foregoing factors are difficult to predict, and these or other factors could materially adversely affect our quarterly or annual operating results.

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The availability of and prices for raw materials and energy will significantly impact our business.

We purchase a substantial portion of the raw materials and energy necessary to produce our products on the open market, and, as a result, the price and other terms of those purchases are subject to change based on factors such as worldwide supply and demand and government regulation. We do not have significant influence over our raw material or energy prices and our ability to pass increases in those prices along to purchasers of our products may be challenged, unless those increases coincide with increased demand for the product. Therefore, raw material or energy prices could increase at the same time that prices for our products are steady or decreasing. In addition, we may not be able to recoup other cost increases we may experience, such as those resulting from inflation or from increases in wages or salaries or increases in health care, pension or other employee benefits costs, insurance costs or other costs.

An interruption in supply of either a latex specialty grade or of specialty softwood pulp to our technical products business, each of which we currently obtain from a single source, could disrupt and eventually cause a shutdown of production of certain technical products.

We cannot be certain that our net operating losses (“NOLs”) will continue to be available to offset our tax liability and other tax planning strategies may not be effective.

As of December 31, 2009, we had approximately $65.3 million of U.S. Federal and $75.4 million of U.S. State tax NOLs which may be used to offset taxable income in the future. In order to utilize the NOLs, we must generate consolidated taxable income. The NOLs will expire in various amounts, if not used, between 2024 and 2029. The availability of NOLs to offset taxable income could also be substantially reduced if we were to undergo an “ownership change” within the meaning of Section 382(g)(1) of the Internal Revenue Code. We will be treated as having had an “ownership change” if there is more than a 50% increase in stock ownership during a three-year “testing period” by “5% stockholders.” The availability of our NOLs to offset taxable income following an “ownership change” would be based on the market value of our common stock multiplied by the Internal Revenue Code long-term tax exempt rate.

In accordance with Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (“ASC Topic 740”), as of December 31, 2009, we have recorded a liability of $9.5 million for uncertain tax positions where we believe it is “more likely than not” that the benefit reported on our income tax return will not be realized. There can be no assurance, however, that the actual amount of unrealized deductions will not exceed the amounts we have recognized for uncertain tax positions.

We derive substantial tax benefits from our corporate structure.  Such benefits are subject to challenge upon audit by taxing authorities in the jurisdictions in which we operate.  There can be no assurance that the tax benefits of our tax structure would survive a challenge by these tax authorities.  If the tax benefits of our corporate structure are not realized, it could have a material adverse effect on our results of operations, cash flows and financial position.

We have significant obligations for pension and other postretirement benefits.

We have significant obligations for pension and other postretirement benefits which could require future funding beyond that which we have funded in the past or which we currently anticipate. At December 31, 2009, our projected pension benefit obligations were $234.7 million and exceeded the fair value of pension plan assets by approximately $66.5 million. In 2009, total contributions to our pension trusts were $10.2 million. At December 31, 2009, our projected other postretirement benefit obligations were $37.9 million.  No assets have been set aside to satisfy our other postretirement benefit obligations.  In 2009, we made payments for postretirement benefits other than pensions of $2.7 million. A material increase in funding requirements or benefit payments could have a material adverse effect on our cash flows.

The outcome of legal actions and claims may adversely affect us.

We are involved in legal actions and claims arising in the ordinary course of our business. The outcome of such legal actions and claims against us cannot be predicted with certainty. The legal actions and claims against us could have a material adverse effect on our financial condition, results of operations and liquidity.

Labor interruptions would adversely affect our business.

Substantially all of our hourly paid employees are unionized. In addition, some of our key customers and suppliers are also unionized.  As of December 31, 2009, we have approximately 300 hourly employees covered by collective bargaining agreements that have expired or will expire within the next 12-months.  Strikes, lockouts or other work stoppages or slow downs involving our unionized employees could have a material adverse effect on us.

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Future dividends on our common stock may be restricted or eliminated.

For the year ended December 31, 2009, we paid cash dividends of $0.40 per common share or approximately $5.9 million. Dividends are declared at the discretion of our board of directors, and future dividends will depend on our future earnings, cash flow, financial requirements and other factors.  Our ability to pay cash dividends on our common stock is limited under the terms of both our bank credit agreement and the indenture for our $225 million of ten-year senior notes due November 2014 (the “Senior Notes”).  As of December 31, 2009, under the most restrictive terms of these agreements, our ability to pay cash dividends on our common stock is limited to a total of $8 million in a 12-month period. There can be no assurance that we will continue to pay dividends in the future.

Changes in international conditions could adversely affect our business and results of operations.

Our operating results and business prospects could be adversely affected by risks related to the countries outside the United States in which we have manufacturing facilities or sell our products, including Germany, Canada, China, Brazil and elsewhere.  Downturns in economic activity, adverse tax consequences, fluctuations in the value of local currency versus the U.S. dollar, or any change in social, political or labor conditions in any of these countries or regions could negatively affect our financial results.

If we have a catastrophic loss or unforeseen or recurring operational problems at any of our facilities, we could suffer significant lost production and/or cost increases.

Our fine paper and technical products businesses may suffer catastrophic loss due to fire, flood, terrorism, mechanical failure, or other natural or man-made events.  If any of our facilities were to experience a catastrophic loss, it could disrupt our operations, delay production, delay or reduce shipments, reduce revenue, and result in significant expenses to repair or replace the facility.  These expenses and losses may not be adequately covered by property or business interruption insurance.  Even if covered by insurance, our inability to deliver our products to customers, even on a short-term basis, may cause us to lose market share on a more permanent basis.

Fluctuations in currency exchange rates could adversely affect our results.

Exchange rate fluctuations for the Euro do not have a material effect on the operations or cash flows of our German technical products business.  Our German technical products business incurs most of its costs and sells most of its production in Europe and, therefore, its operations and cash flows are not materially affected by changes in the exchange rate of the Euro relative to the U.S. dollar. Changes in the Euro exchange rate relative to the U.S. dollar will, however, have an effect on our reported results of operations.

In addition, because we transact business in other foreign countries, some of our revenues and expenses are denominated in a currency other than the local currency of our operations. As a result, changes in exchange rates between the currency in which the transaction is denominated and the local currency of our operations into which the transaction is being recorded can impact the amount of local currency recorded for such transaction. This can result in more or less local currency revenues or costs related to such transaction, and thus have an effect on our reported income before income taxes.

Our activities are subject to extensive government regulation, which could increase our costs, cause us to incur liabilities and adversely affect the manufacturing and marketing of our products.

Our operations are subject to federal, state and local laws, regulations and ordinances in the United States and Germany relating to various environmental, health and safety matters. The nature of our operations requires that we invest capital and incur operating costs to comply with those laws, regulations and ordinances and exposes us to the risk of claims concerning non-compliance with environmental, health and safety laws or standards. We cannot assure that significant additional expenditures will not be required to maintain compliance with, or satisfy potential claims arising from, such laws, regulations and ordinances. Future events, such as changes in existing laws and regulations or contamination of sites owned, operated or used for waste disposal by us (including currently unknown contamination and contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs that could require significantly higher capital expenditures and operating costs, which would reduce the funds otherwise available for operations, capital expenditures, future business opportunities or other purposes.

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We are subject to risks associated with possible climate change legislation and various cost and manufacturing issues associated with such legislation.

Greenhouse gas (GHG) emissions have increasingly become the subject of political and regulatory focus. Concern over potential climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting GHG emissions. For example, legislators in the United States are considering laws that would create a “cap-and-trade” regime that would establish a limit (or cap) on overall GHG emissions and create a market for the purchase and sale of emissions permits or “allowances.”  All the states in which we operate are currently considering GHG legislation or regulations, either individually and/or as part of regional initiatives, that are independent of any federal proposals. While not all are likely to become law it is reasonably possible that additional climate change related mandates will be forthcoming, and it is expected that they may adversely impact our costs by increasing energy costs and raw material prices, requiring operational or equipment modifications to reduce emissions, requiring the purchase of carbon offsets and creating costs to comply with regulations or to mitigate the financial consequences of a “cap and trade” regime.

Risks Relating to Our Indebtedness

We may not be able to fund our future capital requirements internally or obtain third-party financing.

We may be required or choose to obtain additional debt or equity financing to meet our future working capital requirements, as well as to fund capital expenditures and acquisitions. To the extent we must obtain financing from external sources to fund our capital requirements, we cannot guarantee financing will be available on favorable terms, if at all.  As of December 31, 2009, we have required debt payments of $29.7 million and $226.8 million during the years ended December 31, 2013 and 2014, respectively.  Such required debt payments include approximately $26.2 million in November 2013 upon termination of our bank credit agreement and $225 million on the Senior Notes in November 2014.

We may not be able to generate a sufficient amount of cash flow to meet our debt obligations, including the Senior Notes.

Our ability to make scheduled payments or to refinance our obligations with respect to the Senior Notes, our other debt and our other liabilities will depend on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and to certain financial, business and other factors beyond our control. If our cash flow and capital resources are insufficient to fund our debt obligations and other liabilities, we could face substantial liquidity problems and may be forced to reduce or delay scheduled expansions and capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. We cannot assure that our operating performance, cash flow and capital resources will be sufficient to repay our debt in the future. In the event that we are required to dispose of material assets or operations or restructure our debt to meet our debt and other obligations, we can make no assurances as to the terms of any such transaction or how quickly any such transaction could be completed.

If we cannot make scheduled payments on our debt, we will be in default and, as a result:

·our debt holders could declare all outstanding principal and interest to be due and payable;

·our senior secured lenders could terminate their commitments and commence foreclosure proceedings against our assets; and

·we could be forced into bankruptcy or liquidation.

If our operating performance declines in the future or we breach our covenants under the revolving credit facility, we may need to obtain waivers from the required lenders under our revolving credit facility to avoid being in default. We may not be able to obtain these waivers. If this occurs, we would be in default under the revolving credit facility.

We have significant indebtedness which subjects us to restrictive covenants relating to the operation of our business.

As of December 31, 2009, we had $225 million of Senior Notes, a term loan of $40.0 million, $12.9 million in German revolving line of credit borrowings and $12.5 million of project financing outstanding. In addition, our borrowing base under our bank credit agreement was approximately $90 million and $27.9 million of senior secured revolver borrowings were outstanding. Our leverage could have important consequences. For example, it could:

·make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the Senior Notes and our other indebtedness;

·place us at a disadvantage to our competitors;

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·require us to dedicate a substantial portion of our cash flow from operations to service payments on our indebtedness, thereby reducing funds available for other purposes;

·increase our vulnerability to a downturn in general economic conditions or the industry in which we operate;

·limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate and other purposes; and

·limit our ability to plan for and react to changes in our business and the industry in which we operate.

The terms of our indebtedness, including our bank credit agreement and the indenture governing the Senior Notes, contain covenants restricting our ability to, among other things, incur certain additional debt, make specified restricted payments and capital expenditures, pay dividends, authorize or issue capital stock, enter into transactions with our affiliates, consolidate or merge with or acquire another business, sell certain of our assets or liquidate, dissolve or wind-up our company. At December 31, 2009, under the most restrictive terms of these agreements, our ability to pay cash dividends on our common stock is limited to a total of $8 million in a 12-month period. In addition, the terms of our bank credit agreement require us to achieve and maintain compliance with a fixed charge coverage ratio if availability under the bank credit agreement is less than $20 million. These restrictions may limit our ability to engage in activities which could expand our business, including obtaining future financing, making needed capital expenditures or taking advantage of business opportunities such as strategic acquisitions and dispositions.

Our revolving credit facility accrues interest at variable rates. As of December 31, 2009, we had $27.9 million of senior secured revolver borrowings outstanding, $1.6 million in outstanding letters of credit and $60.6 million of remaining availability. We may reduce our exposure to rising interest rates by entering into interest rate hedging arrangements, although those arrangements may result in us incurring higher interest expenses than we would incur without the arrangements. If interest rates increase in the absence of such arrangements, we will need to dedicate more of our cash flow from operations to make payments on our debt. For more information on our liquidity, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Our failure to comply with the covenants contained in our revolving credit facility or the indenture governing the Senior Notes could result in an event of default that could cause acceleration of our indebtedness.

Our failure to comply with the covenants and other requirements contained in the indenture governing the Senior Notes, our revolving credit facility or our other debt instruments could cause an event of default under the relevant debt instrument. The occurrence of an event of default could trigger a default under our other debt instruments, prohibit us from accessing additional borrowings and permit the holders of the defaulted debt to declare amounts outstanding with respect to that debt to be immediately due and payable. Our assets or cash flows may not be sufficient to fully repay borrowings under our outstanding debt instruments, and we may be unable to refinance or restructure the payments on indebtedness on favorable terms, or at all.

Despite our indebtedness levels, we and our subsidiaries may be able to incur substantially more indebtedness, which may increase the risks created by our substantial indebtedness.

Because the terms of our bank credit agreement and the indenture governing the Senior Notes do not fully prohibit us or our subsidiaries from incurring additional indebtedness, we and our subsidiaries may be able to incur substantial additional indebtedness in the future, some of which may be secured. If we or any of our subsidiaries incur additional indebtedness, the related risks that we and they now face may intensify.

Our bank credit agreement is secured by a majority of our North American assets.

Our bank credit agreement, as amended, is secured by a majority of our North American assets, including the capital stock of our subsidiaries and is guaranteed by Neenah Paper Company of Canada, a wholly owned subsidiary (“Neenah Canada”).  Neenah Germany is not a borrower or guarantor with respect to the bank credit agreement.  However, we have pledged 65 percent of our equity interest in Neenah Germany as security for our obligations under the bank credit agreement.

Availability under our bank credit agreement will fluctuate over time depending on the value of our inventory, receivables and various capital assets. An extended work stoppage or decline in sales volumes would result in a decrease in the value of the assets securing the bank credit agreement. A reduction in availability under the bank credit agreement could have a material adverse effect on our liquidity.

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Changes in credit ratings issued by nationally recognized statistical rating organizations could adversely affect our cost of financing and have an adverse effect on the market price of our securities.

A downgrade of our credit ratings below current levels (Moody’s Investors Service — B1, Standard & Poor’s — B+) may reduce our access to the capital markets, have an adverse effect on the market price of our securities and increase our cost of borrowing.

We depend on our subsidiaries to generate cash flow to meet our debt service obligations, including payments on the Senior Notes.

We conduct a substantial portion of our business through our subsidiaries. Consequently, our cash flow and ability to service our debt obligations, including the Senior Notes, depend upon the earnings of our subsidiaries and the distribution of those earnings to us, or upon loans, advances or other payments made by these entities to us. The ability of these entities to pay dividends or make other payments or advances to us will be subject to applicable laws and contractual restrictions contained in the instruments governing their debt, including our revolving credit facility and the indenture governing the Senior Notes. These limitations are also subject to important exceptions and qualifications.

The ability of our subsidiaries to generate sufficient cash flow from operations to allow us to make scheduled payments on our debt, including the Senior Notes, will depend upon their future financial performance, which will be affected by a range of economic, competitive and business factors, many of which are outside of our control. If our subsidiaries do not generate sufficient cash flow from operations to help us satisfy our debt obligations, including payments on the Senior Notes, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital expenditures or seeking to raise additional capital. Refinancing may not be possible, and any assets may not be saleable, or, if sold, we may not realize sufficient amounts from those sales. Additional financing may not be available on acceptable terms, if at all, or we may be prohibited from incurring it, if available, under the terms of our various debt instruments then in effect.  Our inability to generate sufficient cash flow to satisfy our debt obligations or to refinance our obligations on commercially reasonable terms would have an adverse effect on our business, financial condition and results of operations, as well as on our ability to satisfy our obligations on the Senior Notes. The amount of earnings that our operating subsidiaries are able to distribute to us as dividends, or otherwise, may not be adequate for us to service our debt obligations.

FORWARD-LOOKING STATEMENTS

Certain statements in Annual Report on Form 10-K may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), or in releases made by the SEC, all as may be amended from time to time. Statements contained in this annual report that are not historical facts may be forward-looking statements within the meaning of the PSLRA. Any such forward-looking statements reflect our beliefs and assumptions and are based on information currently available to us. Forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. The Company cautions investors that any forward-looking statements we make are not guarantees or indicative of future performance. For additional information regarding factors that may cause our results of operations to differ materially from those presented herein, please see “Risk Factors” contained in this Annual Report on Form 10-K and as are detailed from time to time in other reports we file with the SEC.

You can identify forward-looking statements as those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “contemplate,” “estimate,” “believe,” “plan,” “project,” “predict,” “potential” or “continue,” or the negative of these, or similar terms. In evaluating these forward-looking statements, you should consider the following factors, as well as others contained in our public filings from time to time, which may cause our actual results to differ materially from any forward-looking statement:

·fluctuations in global equity and fixed-income markets;

·capital and credit market volatility, which have reached unprecedented levels in 2008 and 2009;

·the competitive environment;

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·fluctuations in (i) commodity prices, (particularly for pulp, energy and latex), (ii) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and (iii) interest rates;

·the ability to realize anticipated cost savings in our business;

·the cost or availability of raw materials and energy;

·unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;

·our ability to control costs and implement measures designed to enhance operating efficiencies;

·the loss of current customers or the inability to obtain new customers;

·increases in the funding requirements for our pension and postretirement liabilities;

·changes in asset valuations including write-downs of assets including fixed assets, inventory, accounts receivable, deferred tax assets or other assets for impairment or other reasons;

·our existing and future indebtedness;

·strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;

·other risks that are detailed from time to time in reports we file with the SEC; and

·other factors described under “Risk Factors”.

You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this information statement.

Item 1B.Unresolved Staff Comments

None.

Item 2.Properties

Our principal executive offices are located in the Atlanta, Georgia suburb of Alpharetta, Georgia, and we operate a research and development laboratory in the nearby suburb of Roswell, Georgia. We own and operate four paper mills in the United States that produce printing and writing, text, cover, durable saturated and coated substrates and other specialty papers for a variety of end uses. We own and operate three paper mills in Germany that produce transportation and other filter media, wall coverings and durable and saturated substrates. We lease a Fine Paper distribution center which is operated for us by a third party logistics firm.  We also own the Woodlands.  On March 1, 2010, we announced that Neenah Canada had signed a definitive agreement to sell the Woodlands for C$82.5 million ($78.6 million). See Note 17 of Notes to Consolidated Financial Statements, “Subsequent Event.”

We believe that each of these facilities is adequately maintained and is suitable for conducting our operations and business.  We manage machine operating schedules at our manufacturing locations to fulfill customer orders in a timely manner and control inventory levels.

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As of December 31, 2009, following are the locations of our principal facilities and operating equipment and the products produced at each location. All the facilities are owned by us, except as otherwise noted:

Location	Equipment/Resources	Products
Fine Paper business:
Appleton Mill Appleton, Wisconsin	Two paper machines; paper finishing equipment	Printing and writing, text, cover and other specialty papers
Converting Center Neenah, Wisconsin	Paper finishing equipment	Printing and writing, text, cover and other specialty papers
Neenah Mill Neenah, Wisconsin	Two paper machines; paper finishing equipment	Printing and writing, text, cover and other specialty papers
Whiting Mill Whiting, Wisconsin	Four paper machines; paper finishing equipment	Printing and writing, text, cover and other specialty papers
Technical Products business:
Munising Mill Munising, Michigan	Two paper machines; two off line saturators; three off line coaters; specialty finishing equipment	Tapes, abrasives, premask, medical packaging and other durable, saturated and coated substrates
Bruckmühl Mill Bruckmühl, Germany	One paper machine; two saturators; one laminator; finishing equipment	Masking tape backings and abrasive backings
Lahnstein Mill Lahnstein, Germany	One paper machine; three impregnating and coating machines; two calendars; finishing equipment	Printing media, nonwoven wall coverings and durable substrates
Weidach Mill Feldkirchen-Westerham, Germany	Two paper machines; three saturators; one meltblowing machine; specialty finishing equipment	Vacuum cleaner, industrial and transportation filter media

See Note 7 “Debt” of Notes to Consolidated Financial Statements for a description of the material encumbrances attached to the properties described in the table above.  In May 2009, we permanently closed our fine paper mill located in Ripon, California (the “Ripon Mill”).  As of December 31, 2009, we have disposed of substantially all of the Ripon Mill’s manufacturing equipment and are actively marketing the land and building. See Note 3 “Closure of the Ripon Mill” of Notes to Consolidated Financial Statements.

As of December 31, 2009, following are the locations of our owned and leased office and laboratory space and the functions performed at each location.

Administrative Location	Office/Other Space	Function
Alpharetta, Georgia	Leased Office Space	Corporate Headquarters and Administration and Sales
Roswell, Georgia	Leased Laboratory Space	Research and Development for our paper businesses
Appleton, Wisconsin (1)	Leased Office Space	Administration and Sales
Neenah, Wisconsin	Owned Office Space	Administration and Sales

(1)The lease on the Appleton, Wisconsin location expired on January 1, 2010 and was not renewed.

Item 3.Legal Proceedings

We are involved in certain legal actions and claims arising in the ordinary course of business. While the outcome of those legal actions and claims cannot be predicted with certainty, we believe that the outcome of any such claim which is pending or threatened, either individually or on a combined basis, will not have a material adverse effect on our financial condition, results of operations or liquidity.

Item 4.(Removed and Reserved)

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PART II

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Neenah common stock is listed on the New York Stock Exchange and is traded under the ticker symbol NP. Trading, as reported on the New York Stock Exchange, Inc. Composite Transactions Tape, and dividend information follows:

	Common StockMarket Price				Dividends
	High		Low		Declared
2009
Fourth quarter	$	15.50	$	9.32	$	0.10
Third quarter	$	12.62	$	6.56	$	0.10
Second quarter	$	10.63	$	3.33	$	0.10
First quarter	$	9.51	$	3.26	$	0.10
2008
Fourth quarter	$	20.04	$	4.90	$	0.10
Third quarter	$	23.70	$	14.28	$	0.10
Second quarter	$	27.41	$	16.33	$	0.10
First quarter	$	29.62	$	22.95	$	0.10

Dividends are declared at the discretion of the board of directors, and future dividends will depend on our future earnings, cash flow, financial requirements and other factors. Our ability to pay cash dividends on our common stock is limited under the terms of both our bank credit agreement and our Senior Notes. As of December 31, 2009, under the most restrictive terms of these agreements, our ability to pay cash dividends on our common stock is limited to a total of $8 million in a 12-month period. For the year ended December 31, 2009, we paid cash dividends of $0.40 per common share or approximately $5.9 million. For the year ended December 31, 2008, we paid cash dividends of $0.40 per common share or approximately $6.0 million.

As of February 26, 2010, Neenah had approximately 2,300 holders of record of its common stock.  The closing price of Neenah’s common stock on February 26, 2010 was $14.17.

Purchases of Equity Securities:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs
October 2009	—	$	—	—	—
November 2009(a)	833	$	10.55	—	—
December 2009 (a)	3,745	$	13.99	—	—

(a)Transactions represent the purchase of vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of stock-based awards. None of these transactions were made in the open market. The average price paid is based upon the closing sales price on the New York Stock Exchange on the date of the transaction.  Such purchases are held as treasury shares.

Equity Compensation Plans

The following table provides information about our equity compensation plans as of December 31, 2009:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	2,269,848	$	23.60	1,960,000
Equity compensation plans not approved by security holders	—	—		—
Total	2,269,848	$	23.60	1,960,000

For further information regarding our equity compensation plans, refer to Note 9, “Stock Compensation Plans” of Notes to Consolidated Financial Statements.

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Item 6.Selected Financial Data

The following table sets forth our selected historical financial and other data. You should read the information set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements and the notes to those consolidated financial statements included elsewhere in this Annual Report. The statement of operations data for the years ended December 31, 2009, 2008 and 2007 and the balance sheet data as of December 31, 2009 and 2008 set forth below are derived from our audited historical consolidated financial statements included elsewhere in this Annual Report. The balance sheet data as of December 31, 2007, 2006 and 2005 and the statement of operations data for the years ended December 31, 2006 and 2005 set forth below are derived from our historical consolidated financial statements not included in this Annual Report.

During the three months ended September 30, 2009, we identified and restated the December 31, 2008, 2007, 2006 and 2005 consolidated balance sheet data for the following errors: (i) an overstatement of Canadian deferred tax assets and unrealized foreign currency translation gains within stockholders’ equity and (ii) an understatement of the liability for uncertain tax positions and deferred tax assets as a result of errors identified in prior year income tax returns.  Interest associated with the uncertain tax positions noted above was immaterial for all historical years.  We believe the effects of these prior year corrections individually and in the aggregate are immaterial to any prior year consolidated financial statements.  The net effect of these corrections on the consolidated balance sheet data is presented in the following table. See Note 1 of Notes to Consolidated Financial Statements, “Background and Basis of Presentation — Prior Year Adjustments.”

	As of December 31,
	2009		2008			2007			2006			2005
	(Dollars in millions)
Consolidated Balance Sheet Data
Working capital	$	—	$	(0.6	)	$	0.2		$	—		$	—
Total assets	—		5.4			5.0			(2.2		)	(2.2		)
Total liabilities	—		12.7			12.3			—			—
Total stockholders’ equity	—		(7.3		)	(7.3		)	(2.2		)	(2.2		)

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	Year Ended December 31,
	2009			2008			2007 (e)			2006 (f)			2005
	(Dollars in millions, except per share data)
Consolidated Statement of Operations Data
Net sales	$	573.9		$	732.3		$	767.0		$	405.0		$	352.8
Cost of products sold	472.3			633.2			635.5			305.4			250.0
Gross profit	101.6			99.1			131.5			99.6			102.8
Selling, general and administrative expenses	69.1			75.2			79.3			54.4			40.9
Other (income) expense - net	(1.0		)	(11.3		)	(1.7		)	(0.5		)	0.1
Restructuring costs (a)	17.1			—			—			—			—
Goodwill and other intangible asset impairment charge (b)	—			54.5			—			—			—
Operating income (loss)	16.4			(19.3		)	53.9			45.7			61.8
Interest expense - net	23.2			25.0			25.4			16.9			18.4
Income (loss) from continuing operations before income taxes	(6.8		)	(44.3		)	28.5			28.8			43.4
Provision (benefit) for income taxes	(5.0		)	3.0			(3.7		)	9.4			16.3
Income (loss) from continuing operations	(1.8		)	(47.3		)	32.2			19.4			27.1
Income (loss) from discontinued operations (c) (d) (i)	0.6			(111.2		)	(22.0		)	43.1			(56.8		)
Net income (loss)	$	(1.2	)	$	(158.5	)	$	10.2		$	62.5		$	(29.7	)
Earnings from continuing operations per basic share	$	(0.12	)	$	(3.23	)	$	2.17		$	1.31		$	1.32
Earnings from continuing operations per diluted share	$	(0.12	)	$	(3.23	)	$	2.13		$	1.31		$	1.31
Cash dividends per common share	$	0.40		$	0.40		$	0.40		$	0.40		$	0.40
Other Financial Data
Net cash flow provided by (used for):
Operating activities	$	64.9		$	13.1		$	69.5		$	65.8		$	22.8
Capital expenditures	(8.4		)	(30.0		)	(58.3		)	(25.1		)	(25.7		)
Other investing activities (c) (e) (f)	0.1			(0.4		)	(55.1		)	(102.6		)	(0.1		)
Financing activities (e) (f)	(54.2		)	18.2			43.8			50.8			(3.6		)
Ratio of earnings to fixed charges (g) (h)	—			—			2.1		x	2.5		x	3.3		x

	As of December 31,
	2009		2008		2007 (e)		2006 (f)		2005
	(Dollars in millions)
Consolidated Balance Sheet Data
Working capital	$	96.0	$	144.3	$	120.5	$	92.9	$	123.9
Total assets	637.5		690.0		937.8		742.5		534.8
Long-term debt	263.6		340.5		321.2		282.3		226.3
Total liabilities	529.8		586.9		657.1		559.8		371.7
Total stockholders’ equity	107.7		103.1		280.7		182.7		163.1

(a)In May 2009, we permanently closed the Ripon Mill.  The closure resulted in a pre-tax charge of $17.1 million comprised of approximately $5.8 million in non-cash charges primarily for losses related to the carrying value of property, plant and equipment, a curtailment loss of $0.8 million related to postretirement benefit plans in which employees of the Ripon Mill participated and cash payments for contract terminations, severances and other employee costs of approximately $10.5 million.

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(b)For the year ended December 31, 2008, we recognized a pre-tax loss of $52.7 million (we did not recognize a tax benefit related to the non tax deductible loss) to write-off the excess of the carrying value of goodwill assigned to Neenah Germany over the estimated fair value of goodwill. In addition, for the year ended December 31, 2008, we recognized a non-cash pre-tax charge of approximately $1.8 million for the impairment of certain trade names and customer based intangible assets acquired in the Neenah Germany acquisition.

(c)In February 2008, we committed to a plan to sell our pulp mill in Pictou, Nova Scotia (the “Pictou Mill”) and approximately 475,000 acres of woodland assets in Nova Scotia (the “Woodlands”).  In June 2008, Neenah Canada sold the Pictou Mill to Northern Pulp. Neenah Canada made a payment of approximately $10.3 million to Northern Pulp in connection with the sale of the Pictou Mill. In addition, we paid approximately $3.3 million of transaction costs. In August 2006, we transferred our Terrace Bay mill and related woodlands operations to Buchanan in exchange for a payment of approximately $18.6 million.

(d)For the year ended December 31, 2009 and 2008, the results of operations of the Pictou Mill and the Woodlands and the loss on disposal of the Pictou Mill are reported as discontinued operations in the Consolidated Statement of Operations Data. The consolidated results of operations for all other periods presented have been restated to reflect the results of operations of the Terrace Bay mill, the Pictou Mill and the Woodlands and the loss on transfer of the Terrace Bay mill as discontinued operations.

(e)In March 2007, we acquired the stock of Fox Valley Corporation and its subsidiary, Fox River for approximately $54.7 million in cash. We financed the acquisition through a combination of cash and debt drawn against our existing revolving credit facility. The results of Fox River are being reported as part of our Fine Paper segment and have been included in our consolidated financial results since the acquisition date.

(f)In October 2006, we purchased the outstanding interests of Neenah Germany from FiberMark, Inc. and FiberMark International Holdings LLC for approximately $220.1 million in cash. We financed the acquisition through a combination of cash and debt drawn against our existing revolving credit facility. The results of Neenah Germany are being reported as part of our Technical Products segment and have been included in our consolidated financial results since the acquisition date.

(g)For purposes of determining the ratio of earnings to fixed charges, earnings consist of income before income taxes (less interest) plus fixed charges. Fixed charges consist of interest expense, including amortization of debt issuance costs, and the estimated interest portion of rental expense.

(h)For the years ended December 31, 2009 and 2008, the deficit of earnings to fixed charges was $6.8 and $44.3 million, respectively.

(i)The following table presents the results of discontinued operations:

	Year Ended December 31,
	2009			2008			2007			2006			2005
	(Dollars in millions)
Discontinued operations:
Income (loss) from operations (1) (3) (4) (5) (6)	$	2.8		$	(97.8	)	$	(31.6	)	$	76.3		$	(92.4	)
Income (loss) on disposal - Terrace Bay Mill	—			—			—			(6.5		)	—
Income (loss) on disposal - Pictou Mill (1)	(0.3		)	(29.4		)	—			—			—
Loss on settlement of post-employment benefit plans (2)	—			(53.7		)	—			—			—
Loss on disposal	(0.3		)	(83.1		)	—			(6.5		)	—
Income (loss) before income taxes	2.5			(180.9		)	(31.6		)	69.8			(92.4		)
(Provision) benefit for income taxes	(1.9		)	69.7			9.6			(26.7		)	35.6
Income (loss) from discontinued operations, net of income taxes	$	0.6		$	(111.2	)	$	(22.0	)	$	43.1		$	(56.8	)

(1)During the first quarter of 2008, we determined that the estimated value we would receive from a sale of the Pictou Mill indicated that we would not recover the carrying value of the mill’s long-lived assets. As a result, for the year ended December 31, 2008, we recognized aggregate non-cash, pre-tax impairment charges of $91.2 million to write-off the carrying value of the Pictou Mill’s long-lived assets. In addition, for the year ended December 31, 2008, we recorded a pre-tax loss of $29.4 million to recognize the loss on disposal of the Pictou Mill.

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(2)In conjunction with the sale of the Pictou Mill, Northern Pulp assumed responsibility for all pension and other postretirement benefit obligations for active and retired employees of the mill. We accounted for the transfer of the Nova Scotia, Canada defined benefit pension plan (the “Nova Scotia Plan”) to Northern Pulp as a settlement of postretirement benefit obligations pursuant to ASC Topic 715, Compensation—Retirement Benefits (“ASC Topic 715”).  For the year ended December 31, 2008, we recognized a non-cash, pre-tax settlement loss of $53.7 million for the reclassification of deferred pension and other postretirement benefit adjustments related to the Nova Scotia Plan from accumulated other comprehensive income to the loss on disposal of the Pictou Mill.

(3)In December 2007, the Ontario Plan was terminated and all outstanding pension obligations for active employees were settled through the purchase of annuity contracts or lump-sum payments pursuant to participant elections. For the year ended December 31, 2008, Neenah Canada recognized a non-cash pre-tax settlement loss of $38.7 million upon termination of the Ontario Plan.

(4)In August 2006, Neenah Canada made a payment to the pension trust of approximately $10.8 million for the purchase of annuity contracts to settle its pension liability for current retirees. As a result, Neenah Canada recognized a pension curtailment and settlement loss of approximately $26.4 million in the year ended December 31, 2006.

(5)In June 2006, Neenah Canada sold approximately 500,000 acres of woodlands in Nova Scotia for gross proceeds of $139.1 million. The transaction resulted in a net pre-tax gain of $131.7 million. Neenah Canada immediately recognized approximately $122.6 million of such gain and deferred approximately $9.1 million which was recognized in income pro-rata through December 2007. For the years ended December 31, 2007and 2006, Neenah Canada recognized $6.2 million and $2.9 million, respectively, of such deferred gain in income.

(6)In 2005, we recorded a $53.7 million non-cash pre-tax impairment loss to write-off the carrying value of the Terrace Bay facility’s tangible long-lived assets. In addition, we recorded a $6.1 million pre-tax charge for exit costs in connection with the closure of the smaller of the two single-line pulp mills at our Terrace Bay facility.

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents the factors that had a material effect on our results of operations during the years ended December 31, 2009, 2008 and 2007. Also discussed is our financial position as of the end of those periods. You should read this discussion in conjunction with our consolidated financial statements and the notes to those consolidated financial statements included elsewhere in this Annual Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations are intended to provide investors with an understanding of the historical performance of our business, its financial condition and its prospects. We will discuss and provide our analysis of the following:

·Overview of Business;

·Business Segments;

·Results of Operations and Related Information;

·Liquidity and Capital Resources;

·Adoption of New Accounting Pronouncements; and

·Critical Accounting Policies and Use of Estimates.

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Overview of Business

We are a leading producer of premium fine papers and technical products. We have two primary operations: our fine paper business and our technical products business. We also own approximately 475,000 acres of timberlands in Nova Scotia, Canada (the “Woodlands”). On March 1, 2010, we announced that Neenah Canada had signed a definitive agreement to sell the Woodlands for C$82.5 million ($78.6 million). See Note 17 of Notes to Consolidated Financial Statements, “Subsequent Event.”

In managing our businesses, we believe that achieving and maintaining a leadership position in our markets, responding effectively to competitive challenges, employing capital optimally, controlling costs and managing risks are important to long-term success. Changes in input costs and general economic conditions also impact our results. In this discussion and analysis, we will refer to these factors.

·Market Leadership. Achieving and maintaining market leadership through strong brands, product quality and performance, innovation and supply chain management is an important factor in our results. Our fine paper business, with its well-known brands, has long been recognized as a leading manufacturer of world-class premium writing, text and cover papers used in corporate identity packages, corporate annual reports, invitations, personal stationery and high-end packaging. Our technical products business is also recognized as a leading international supplier in the tape, filtration, component materials, graphics and identification and wall covering markets with products that meet unique and exacting customer requirements.

·Competitive Environment. Our past results have been and our future prospects will be significantly affected by the competitive environment in which we operate. In most of our markets, our businesses compete directly with well-known competitors, some of which are larger and more diversified. Our businesses also face competitive pressures from lower value products.

·Economic Condition and Input Costs. The markets for all of our products are affected to a significant degree by economic conditions, including fluctuations in exchange rates, particularly for the Euro. Rapid changes in input costs, particularly for pulp, latex and natural gas, also affect our results.

Business Segments

Our fine paper business is a leading producer of premium writing, text, cover and specialty papers used in corporate identity packages, corporate annual reports, invitations, personal stationery and high-end packaging. Our products include some of the most recognized and preferred papers in North America, where we enjoy leading market positions in many of our product categories. We sell our products primarily to authorized paper distributors, converters and specialty businesses, with sales to distributors and distributor-owned paper stores accounting for more than two-thirds of sales. We believe that our fine paper manufacturing facilities located in Appleton, Neenah and Whiting, Wisconsin are among the most efficient in their markets and make us one of the lowest cost producers in the product categories in which we compete.

Our technical products business is a leading international producer of transportation and other filter media; durable, saturated and coated base papers for a variety of end uses and nonwoven wall coverings. We sell our technical products globally in 17 product categories through five SBUs. We focus on categories where we believe we are, or can be, a market leader, which include, among others, the tape, abrasive, transportation and other filtration media, nonwoven wall coverings, medical packaging and image transfer technical products markets. We are also a global supplier of materials used for customer-specific applications in furniture, book covers and original equipment manufacturers’ products. Our customers are located in more than 35 countries. Our technical products manufacturing facilities are located in Munising, Michigan and near Munich and Frankfurt, Germany.

Results of Operations and Related Information

In this section, we discuss and analyze our net sales, income before interest and income taxes (which we refer to as “operating income” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations) and other information relevant to an understanding of our results of operations.

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Executive Summary

Strategic Initiatives

Since the Spin-Off in 2004, we have completed several initiatives that have allowed us to succeed in our strategy to transform the Company into a more focused and larger premium fine paper and technical products company.  In 2006, we divested our Terrace Bay pulp operations, acquired the German technical and specialty paper business of FiberMark, Inc. and sold 500,000 acres of woodlands in Nova Scotia. In 2007, we purchased Fox Valley Corporation and its subsidiary, Fox River Paper Company, LLC (collectively, “Fox River”) to expand our fine paper business. In June 2008, Neenah Canada sold our remaining pulp mill located in Pictou, Nova Scotia to Northern Pulp, which assumed responsibility for all of the assets and liabilities associated with operation of the mill.

We currently own approximately 475,000 acres of woodlands in Nova Scotia, Canada (the “Woodlands”).  On March 1, 2010, we announced that Neenah Canada had signed a definitive agreement to sell the Woodlands. See Note 17, “Subsequent Event” of Notes to Consolidated Financial Statements. We expect the sale of the Woodlands to result in a substantial gain. The Woodlands operation currently generates revenue through a stumpage agreement (the “Stumpage Agreement”) with Northern Pulp which allows them to harvest an average of approximately 400,000 metric tons of softwood timber annually from the Woodlands at market prices.  The Stumpage Agreement will be terminated in conjunction with the sale of the Woodlands.  For the years ended December 31, 2009, 2008 and 2007, the results of the Pictou Mill and the Woodlands are reported as discontinued operations.

Results of Continuing Operations

For the year ended December 31, 2009, consolidated net sales decreased approximately 22 percent from the prior year to $573.9 million. The decrease was primarily due to lower volume in both businesses as a result of sharply reduced market demand following severe global economic weakness, particularly in the first half of 2009.  The effect on demand of the global economic contraction was exacerbated in the first half of 2009 by a sharp decline in consumption for a number of key end use market segments, including advertising, financial institutions and the transportation and real estate segments and inventory destocking by our direct customers.

Despite the lower volumes, consolidated operating income of $16.4 million for the year ended December 31, 2009 increased $35.7 million from the prior year.  Operating results for the year ended December 31, 2009 include costs of $17.1 million related to the closure of the Ripon Mill in May 2009.  Operating results for the year ended December 31, 2008, include a charge of $54.5 million related to the impairment of goodwill and other intangible assets, and gains of approximately $6.3 million from the sale of certain Fox River assets and $4.3 million from the settlement of certain Terrace Bay postretirement benefits. Excluding such items, consolidated operating income as adjusted in 2009 increased $8.9 million from the prior year primarily due to reduced spending as a result of initiatives implemented to control operating costs and also lower manufacturing input costs. These favorable factors were only partially offset by the effects of lower volume and reduced paper mill operating schedules.

Results of Discontinued Operations

For the year ended December 31, 2009, timber sales to Northern Pulp pursuant to the Stumpage Agreement resulted in net sales from discontinued operations of $3.7 million.  Net sales of discontinued operations for the year ended December 31, 2008 were $101.9 million primarily from pulp sales at the Pictou Mill in the first six months of 2008. For the year ended December 31, 2009, pre-tax income from discontinued operations was $2.5 million.  For the year ended December 31, 2008, we recorded a pre-tax loss from discontinued operations of $180.9 million.  The pre-tax loss in 2008 included non-cash charges of $91.2 million to write-off the long-lived assets of the Pictou Mill and a loss of $83.1 million on disposal of the Pictou Mill.

Income Taxes

In general, our effective tax rate differs from the U.S. statutory tax rate of 35 percent primarily due to the benefits of our corporate tax structure and the proportion of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate.  For the year ended December 31, 2009, we recorded an income tax benefit related to continuing operations of $5.0 million which resulted in an effective income tax (benefit) rate of approximately (74) percent.  For the year ended December 31, 2008, we recorded an income tax provision related to continuing operations of $3.0 million which resulted in an effective income tax rate of approximately 7 percent.  Our effective tax rate for the year ended December 31, 2008 was also significantly affected by the non tax deductible nature of the goodwill impairment charge and an increase in the limitation on available tax benefits acquired in the Fox River acquisition.  Excluding such items, our effective income tax rate for the year ended December 31, 2008 was approximately 36 percent.

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For the year ended December 31, 2007, our effective tax rate was approximately 13 percent.  Our effective tax rate for the year ended December 31, 2007 was significantly affected by a reduction in German statutory income tax rates effective as of January 1, 2008. Application of the new rates to our existing deferred tax assets and liabilities reduced our net deferred tax liabilities at December 31, 2007. The reduction in our net deferred tax liabilities due to the benefit of the tax rate change resulted in an income tax benefit of $8.8 million for the year ended December 31, 2007 in accordance with ASC Topic 740. Excluding the impact of the German tax law amendment on our deferred tax liabilities and other tax adjustments, our effective tax rate for the year ended December 31, 2007 was approximately 17 percent.

Analysis of Net Sales—Years Ended December 31, 2009, 2008 and 2007

The following table presents net sales by segment, expressed as a percentage of total net sales before intersegment eliminations:

	Year Ended December 31,
	2009		2008		2007
Fine Paper	45	%	46	%	48	%
Technical Products	55	%	54	%	52	%
Total	100	%	100	%	100	%

The following table presents our net sales by segment for the periods indicated:

	Years Ended December 31,
	2009		2008		2007
Net sales
Fine Paper	$	255.6	$	335.5	$	366.5
Technical Products	318.3		396.8		400.8
Intersegment sales	—		—		(0.3		)
Consolidated	$	573.9	$	732.3	$	767.0

Commentary:

Year 2009 versus 2008

	For the Year Ended				Change in Net Sales Compared to the Prior Year
	December 31,							Change Due To
	2009		2008		Total Change			Volume			Average Net Price			Currency
Fine Paper	$	255.6	$	335.5	$	(79.9	)	$	(84.4	)	$	4.5		$	—
Technical Products	318.3		396.8		(78.5		)	(64.5		)	(3.0		)	(11.0		)
Consolidated	$	573.9	$	732.3	$	(158.4	)	$	(148.9	)	$	1.5		$	(11.0	)

Consolidated net sales of $573.9 million for the year ended December 31, 2009 were $158.4 million lower than the prior year primarily due to lower volumes. In addition, results reflected unfavorable currency translation effects due to the weakening of the Euro versus the U.S. dollar.

·Net sales in our fine paper business of $255.6 million decreased $79.9 million or 24 percent primarily due to a 25 percent decrease in shipments.  We believe that we were able to improve our market share position based on the AF&PA report of a 27 percent year-over-year industry decline in the premium writing, text and cover uncoated free sheet paper category. Lower sales volume reflected a sharp decline in consumption for a number of key end use market segments, including advertising, financial institutions and the transportation and real estate segments. Market demand began to decline in late 2008 and continued throughout 2009. The increase in average net price reflected the realization of price increases on branded and non-branded products that were implemented in 2008.  Price increases of approximately three percent on branded products announced late in 2009 will not meaningfully impact results until 2010.

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·Net sales in our technical products business of $318.3 million decreased $78.5 million or 20 percent, primarily due to a 16 percent decrease in shipments.  Lower sales volume reflected decreased demand in most markets due to weaker economic conditions and inventory destocking by our direct customers, particularly in the first half of 2009.  Sales were also lower as a result of unfavorable currency translation effects due to average Euro/U.S. dollar exchange rates that were five percent lower in 2009 than in the prior year.  Net sales were also adversely affected by lower selling prices for certain products in our European business, particularly Tape and Wall Cover, which were influenced by currency factors for export prices and additional market capacity, respectively.

Year 2008 versus 2007

	For the Year Ended					Change in Net Sales Compared to the Prior Year
	December 31,								Change Due To
	2008		2007			Total Change			Volume			Average Net Price		Currency
Fine Paper	$	335.5	$	366.5		$	(31.0	)	$	(31.6	)	$	0.6	$	—
Technical Products	396.8		400.8			(4.0		)	(40.9		)	16.3		20.6
Intersegment sales	—		(0.3		)	0.3			0.3			—		—
Consolidated	$	732.3	$	767.0		$	(34.7	)	$	(72.2	)	$	16.9	$	20.6

Consolidated net sales of $732.3 million in the year ended December 31, 2008 were $34.7 million lower than the prior year primarily due to lower volumes and a less favorable product mix in our fine paper business, partially offset by the realization of price increases and favorable currency translation effects due to the strengthening of the Euro versus the U.S. dollar.

·Net sales in our fine paper business of $335.5 million decreased $31.0 million or 8 percent primarily due to a 9 percent decrease in shipments. The lower volume was primarily due to an unusually large market decline in 2008 for premium uncoated free sheet papers as a result of weaker economic conditions, partially offset by incremental sales related to the acquisition of Fox River in March 2007. The increase in average net price reflected higher selling prices for most products that were partially offset by a less favorable mix. The less favorable mix was primarily due to the dilutive nature of the relatively lower priced grades acquired with Fox River.

·Net sales in our technical products business of $396.8 million decreased $4.0 million or 1 percent, primarily due to lower volumes for certain products that were partially offset by favorable currency effects and higher net prices. Average net prices increased approximately 4.1 percent due to a more favorable mix and higher selling prices. The mix improvement reflected an increased proportion of sales of higher priced products such as filtration and abrasives.  Volumes declined primarily due to weaker economic conditions and lower export tape sales from Germany as a result of the strengthening of the Euro.

The following table sets forth line items from our consolidated statements of operations as a percentage of net sales for the periods indicated and is intended to provide a perspective of trends in our historical results:

	Year Ended December 31,
	2009		2008		2007
Net sales	100.0	%	100.0	%	100.0	%
Cost of products sold	82.3		86.5		82.9
Gross profit	17.7		13.5		17.1
Selling, general and administrative expenses	12.0		10.3		10.3
Other income - net	(0.1	)	(1.6	)	(0.2	)
Restructuring costs	3.0		—		—
Goodwill and other intangible asset impairment charge	—		7.4		—
Operating income (loss)	2.8		(2.6	)	7.0
Interest expense-net	4.0		3.4		3.3
Income (loss) from continuing operations before income taxes	(1.2	)	(6.0	)	3.7
Provision (benefit) for income taxes	(0.9	)	0.5		(0.5	)
Income (loss) from continuing operations	(0.3	)%	(6.5	)%	4.2	%

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Analysis of Operating Income — Years Ended December 31, 2009, 2008 and 2007

The following table sets forth our operating income (loss) by segment for the periods indicated:

	Year Ended December 31,
	2009			2008			2007
Operating income (loss)
Fine Paper	$	17.5		$	34.0		$	46.6
Technical Products	14.4			(42.3		)	24.7
Unallocated corporate costs	(15.5		)	(11.0		)	(17.4		)
Consolidated Operating Income as Reported	16.4			(19.3		)	53.9
Adjustments for Unusual Items
Fine Paper adjustments
Closure of the Ripon Mill	17.1			—			—
Gain on sale of Fox River Assets	—			(6.3		)	—
Fox River integration costs	—			—			5.2
Total	17.1			(6.3		)	5.2
Technical Products adjustment
Goodwill impairment charge	—			54.5			—
Unallocated corporate costs adjustment
Settlement of Terrace Bay retiree litigation	—			(4.3		)	5.2
Total Adjustments	17.1			43.9			10.4
Consolidated Operating Income as Adjusted	$	33.5		$	24.6		$	64.3

In accordance with generally accepted accounting principles in the United States (“GAAP”), consolidated operating income (loss) includes the pre-tax effects of unusual items.  We believe that by adjusting reported operating income (loss) to exclude the effects of these items, the resulting adjusted operating income are on a basis that reflects the results of our ongoing operations.  We believe that investors gain additional perspective of underlying business trends and results by providing a measure of operating results that exclude certain gains and losses that are not expected to affect future consolidated or segment operating performance.  Adjusted operating income is not a recognized term under GAAP and should not be considered in isolation or as a substitute for operating income derived in accordance with GAAP.  Other companies may use different methodologies for calculating their non-GAAP financial measures and, accordingly, our non-GAAP financial measures may not be comparable to their measures.

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Commentary:

Year 2009 versus 2008

							Change in Operating Income (Loss) Compared to the Prior Year
	For the Year Ended									Change Due To
	December 31,						Total						Net Price			Material
	2009			2008			Change			Volume			(a)			Costs (b)		Currency			Other (c)
Fine Paper (d)	$	17.5		$	34.0		$	(16.5	)	$	(23.4	)	$	5.4		$	13.3	$	—		$	(11.8	)
Technical Products (e)	14.4			(42.3		)	56.7			(23.2		)	(6.3		)	12.6		(0.1		)	73.7
Unallocated corporate costs (f)	(15.5		)	(11.0		)	(4.5		)	—			—			—		—			(4.5		)
Consolidated	$	16.4		$	(19.3	)	$	35.7		$	(46.6	)	$	(0.9	)	$	25.9	$	(0.1	)	$	57.4

(a)Includes price changes, net of changes in product mix.

(b)Includes price changes for raw materials and energy.

(c)Includes $30.7 million of improvements from reductions in other manufacturing costs, distribution, selling, general and administrative expenses and net improvements of $26.8 million related to items described in notes (d), (e) and (f).

(d)For the year ended December 31, 2009, results for the Fine Paper segment include a pre-tax charge of $17.1 million related to the closure of the Ripon Mill. For the year ended December 31, 2008 results include gains of $6.3 million from the sale of certain Fox River assets.

(e)For the year ended December 31, 2008, results for the Technical Products segment include a non-cash pre-tax goodwill and other intangible asset impairment charge of $54.5 million.

(f)For the year ended December 31, 2008, unallocated corporate costs include a gain of $4.3 million for a settlement of certain benefits earned by Terrace Bay retirees.

Consolidated operating income of $16.4 million for the year ended December 31, 2009 increased $35.7 million compared to the prior year.  Operating results for the year ended December 31, 2009 include costs of $17.1 million related to the closure of the Ripon Mill in May 2009.  Operating results for the year ended December 31, 2008, include a charge of $54.5 million related to the impairment of goodwill and other intangible assets, and gains of approximately $6.3 million from the sale of certain Fox River assets and $4.3 million the settlement of certain Terrace Bay postretirement benefits.  Excluding such items, consolidated operating income as adjusted for the year ended December 31, 2009 increased $8.9 million from the prior year due to actions taken across all businesses to reduce costs and control spending and from lower manufacturing input costs, particularly for pulp and latex. These favorable factors were only partially offset by lower volume and reductions in paper machine operating schedules.

·Operating income for our fine paper business of $17.5 million decreased $16.5 million compared to the prior year. Excluding costs of $17.1 million associated with closing the Ripon Mill and the gain of approximately $6.3 million in 2008 from assets sales, operating income for our fine paper business increased $6.9 million primarily due to lower manufacturing input costs, principally for hardwood pulp, lower operating and administrative spending due to cost reduction initiatives, including closing the Ripon Mill, and higher average net selling prices due to the realization of price increases implemented in 2008.  These favorable factors were partially offset by the effects of lower volume and reductions in paper machine operating schedules.

·Operating income for our technical products business of $14.4 million increased $56.7 million compared to the prior year.   Excluding the asset impairment charge, operating income for our technical products business increased $2.2 million from the prior year primarily due to lower spending resulting from the implementation of cost reduction initiatives and from lower manufacturing input costs, principally for pulp and latex.  These favorable factors were partially offset by lower volume, reduced paper machine operating schedules and, to a lesser extent, lower average net selling prices.

·Unallocated corporate expenses increased $4.5 million compared to the prior year. Unallocated corporate expense for the year ended December 31, 2008 included a non-cash gain of approximately $4.3 million related to the settlement of certain postretirement benefits we retained following the sale of our Terrace Bay pulp mill. Excluding this gain, unallocated corporate expenses were essentially unchanged from the prior year.

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Year 2008 versus 2007

							Change in Operating Income (Loss) Compared to the Prior Year
	For the Year Ended									Change Due To
	December 31,						Total						Net Price			Material
	2008			2007			Change			Volume			(a)			Costs (b)			Currency		Other (c)
Fine Paper (d)	$	34.0		$	46.6		$	(12.6	)	$	(4.1	)	$	(0.7	)	$	(12.2	)	$	—	$	4.4
Technical Products (e)	(42.3		)	24.7			(67.0		)	(7.3		)	8.1			(13.7		)	1.9		(56.0		)
Unallocated corporate costs (f)	(11.0		)	(17.4		)	6.4			—			—			—			—		6.4
Consolidated	$	(19.3	)	$	53.9		$	(73.2	)	$	(11.4	)	$	7.4		$	(25.9	)	$	1.9	$	(45.2	)

(a)Includes price changes, net of changes in product mix.

(b)Includes price changes for raw materials and energy.

(c)Includes other manufacturing costs, distribution, selling, general and administrative expenses and gains and losses on asset sales.

(d)For the year ended December 31, 2008, results for the Fine Paper segment include gains of $6.3 million from the sale of certain Fox River assets.  For the year ended December 31, 2007, results for Fine Paper segment includes costs of approximately $5.2 million related to the integration of the Fox River acquisition.

(e)For the year ended December 31, 2008, results for the Technical Products segment include a non-cash pre-tax goodwill and other intangible asset impairment charge of $54.5 million.

(f)For the year ended December 31, 2008, unallocated corporate costs include a gain of $4.3 million for a settlement of certain benefits earned by Terrace Bay retirees.  For the year ended December 31, 2007, unallocated corporate costs include a loss of approximately $5.2 million related to the settlement of Terrace Bay retiree litigation.

For the year ended December 31, 2008, we incurred a consolidated operating loss of $19.3 million primarily due to a non-cash pre-tax goodwill and other intangible asset impairment charge of $54.5 million.  In addition, consolidated operating results for the year ended December 31, 2008 included gains of approximately $6.3 million from the sale of certain Fox River assets and $4.3 million the settlement of certain Terrace Bay postretirement benefits.  Operating results for the year ended December 31, 2007 include approximately $5.2 million for costs related to the integration of the Fox River acquisition and  $5.2 related to the settlement of Terrace Bay retiree litigation. Excluding these items, consolidated operating income as adjusted for the year ended December 31, 2008 decreased $39.7 million compared to 2007 primarily due to increased manufacturing input costs that exceeded selling price increases in both businesses, lower volumes and a less favorable mix of products in our fine paper business.  These unfavorable factors more than offset benefits related to improved manufacturing operations and lower administrative costs.

·Operating income for our fine paper business of $34.0 million decreased $12.6 million primarily due to higher manufacturing input costs, principally for hardwood pulp and energy, a less favorable product mix due to the dilutive effect of selling relatively lower priced grades acquired in the Fox River acquisition and lower volumes. These unfavorable factors were only partially offset by gains on asset sales of approximately $6.3 million, higher selling prices, improved manufacturing efficiencies and incremental volume related to the acquisition of Fox River.

·Our technical products business incurred an operating loss of $42.3 million for the current year due to a non-cash pre-tax goodwill and other intangible asset impairment charge of $54.5 million.   Excluding the asset impairment charge in 2008, operating income for our technical products business of $12.2 million decreased $12.5 million from the prior year primarily due to higher manufacturing input costs and lower volume.  The increase in manufacturing costs primarily reflected higher input prices for energy, pulp and latex and increased costs in Germany following the start-up of new and rebuilt assets.  These unfavorable factors were partially offset by improved pricing and mix, improved manufacturing operations and the favorable translation impact from a stronger Euro relative to the U.S. dollar.

·Unallocated corporate expenses decreased $6.4 million primarily due to the favorable settlement of certain employee benefit liabilities that we retained following the sale of our Terrace Bay pulp mill and due to decreased spending for other corporate expenses

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Additional Statement of Operations Commentary:

·For the years ended December 31, 2009, 2008 and 2007, we incurred $23.4 million, $25.0 million and $25.5 million, respectively, of interest expense.  The decrease in interest expense for 2009 as compared to 2008 was due to lower average borrowings and lower average interest rates.  In addition, during the fourth quarter of 2009, we recognized additional interest expense of approximately $1.4 million for costs incurred in conjunction with amending and restating our bank credit agreement and to write-off deferred financing costs associated with our previous bank credit agreement.  The decrease in net interest expense in 2008 versus 2007 was primarily due to lower average interest rates, partially offset by higher average borrowings.

·In general, our effective tax rate differs from the U.S. statutory tax rate of 35 percent primarily due to the benefits of our corporate tax structure and the proportion of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate.  For the year ended December 31, 2009, we recorded an income tax benefit related to continuing operations of $5.0 million which resulted in an effective income tax (benefit) rate of approximately (74) percent.  For the year ended December 31, 2008, we recorded an income tax provision related to continuing operations of $3.0 million which resulted in an effective income tax rate of approximately 7 percent.  Our effective tax rate for the year ended December 31, 2008 was also significantly affected by the non tax deductible nature of the goodwill impairment charge and an increase in the limitation on available tax benefits acquired in the Fox River acquisition.  Excluding such items, our effective income tax rate for the year ended December 31, 2008 was approximately 36 percent.

·For the year ended December 31, 2007, our effective tax rate was approximately 13 percent.  Our effective tax rate for the year ended December 31, 2007 was significantly affected by a reduction in German statutory income tax rates effective as of January 1, 2008. Application of the new rates to our existing deferred tax assets and liabilities reduced our net deferred tax liabilities at December 31, 2007. The reduction in our net deferred tax liabilities due to the benefit of the tax rate change resulted in an income tax benefit of $8.8 million for the year ended December 31, 2007 in accordance with ASC Topic 740. Excluding the impact of the German tax law amendment on our deferred tax liabilities and other tax adjustments, our effective tax rate for the year ended December 31, 2007 was approximately 17 percent..  See “Executive Summary—Income Taxes.” See Note 6 “Income Taxes” of Notes to Consolidated Financial Statements for a reconciliation of our annual effective tax rates.

Liquidity and Capital Resources

	Year Ended December 31,
	2009			2008			2007
Net cash flow provided by (used in):
Operating activities	$	64.9		$	13.1		$	69.5
Investing activities
Capital expenditures	(8.4		)	(30.0		)	(58.3		)
Other investing activities	0.1			(0.4		)	(55.1		)
Total	(8.3		)	(30.4		)	(113.4		)
Financing activities	(54.2		)	18.2			43.8

Operating Cash Flow Commentary

·Cash provided by operating activities of $64.9 million for the year ended December 31, 2009 was $51.8 million favorable to cash provided by operating activities of $13.1 million in the prior year. The favorable comparison to the prior year was due to cash provided by decreased investments in working capital of $27.4 million, including the receipt of a refund of U.S. income taxes.  For the year ended December 31, 2008, cash used for increased investments in working capital was $21.1 million.

·For the year ended December 31, 2009, we received approximately $10.9 million in refunds of U.S. income taxes.  As of December 31, 2009, we had approximately $65.3 million of U.S. Federal and $75.4 million of U.S. State NOLs that may be carried forward to offset future taxable income through 2029.

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·Cash provided by operating activities of $13.1 million for the year ended December 31, 2008 was $56.4 million lower than cash provided by operating activities in the prior year. The unfavorable comparison to the prior year was primarily due to an increase in cash used by operating activities of our discontinued pulp operations of approximately $33.4 million, lower earnings (excluding the effects of non-cash items) and increased investments in working capital in 2008.

Investing Commentary:

·For the year ended December 31, 2009, cash used in investing activities was $8.3 million, a decrease of $22.1 million versus the prior year due to a reduction of $21.6 million in capital spending.

·For the year ended December 31, 2008, cash used in investing activities includes payments by Neenah Canada of approximately $10.3 million to Northern Pulp in connection with the transfer of the Pictou Mill. In addition, we paid approximately $3.3 million in transaction costs.  Such payments were more than offset by proceeds of $13.8 million, primarily from the sale of certain Fox River assets.

·We have aggregate planned capital expenditures for 2010 of approximately $15 million.  We believe that the level of our capital spending for 2010 is consistent with current economic conditions and will allow us to maintain the efficiency and cost effectiveness of our manufacturing assets.

·For the year ended December 31, 2008, cash used in investing activities was $30.4 million, a decrease of $83.0 million versus the prior year.  The decrease in cash used was primarily due to spending of $54.7 million for the acquisition of Fox River in 2007.  Capital spending for the year ended December 31, 2008 was $30.0 million compared to spending of $58.3 million in the 2007.  The reduction in capital spending is primarily due to expenditures in 2007 for major projects to increase capacity and improve efficiency at Neenah Germany and for capital spending related to our enterprise resource planning system.

Financing Commentary:

In November 2009, we renewed and modified our bank credit agreement by entering into an amended and restated credit agreement (the “Restated Credit Agreement”).  The Restated Credit Agreement consists of a $100 million senior secured revolving credit facility (the “New Revolver”) and a $40 million senior secured term loan (the “New Term Loan”).  The Restated Credit Agreement matures in November 2013.  Under certain conditions, the Company has the ability to increase the size of the New Revolver by up to $50 million.  The total amount outstanding under the Restated Credit Agreement cannot exceed $150 million.

Our liquidity requirements are provided by cash generated from operations, short- and long-term borrowings and proceeds from asset sales. Availability under the New Revolver varies over time depending on the value of our inventory, receivables and various capital assets. As of December 31, 2009, we had $27.9 million outstanding under the New Revolver, outstanding letters of credit of $1.0 million and $60.6 million of available credit. In addition, we have €6.0 million ($8.6 million, based on exchange rates at December 31, 2009) of available credit under a secured €15 million revolving line of credit at Neenah Germany (the “German Line of Credit”).

·For the year ended December 31, 2009, net repayments on our New Revolver and the German Line of Credit were $73.2 million and $4.1 million, respectively. We repaid $7.2 million on a previous term loan, including amounts repaid with proceeds from the New Term Loan. In addition, we repaid $1.8 million on a €10 million construction financing agreement (the “German Loan Agreement”).

·We paid aggregate annual cash dividends of $0.40 per share or approximately $5.9 million, $6.0 million and $6.0 million for the years ended December 31, 2009, 2008 and 2007, respectively.

·For the year ended December 31, 2009, cash and cash equivalents increased $2.3 million.

·For the year ended December 31, 2008, we paid approximately $9.4 million to purchase shares of common stock in connection with a reverse/forward split of issued and outstanding shares of common stock.

·Our required debt payments through December 31, 2010 are $55.6 million.  Such payments include $40 million to prepay the New Term Loan with proceeds from the sale of the Woodlands, required amortization payments on the German Loan Agreement of approximately $1.8 million and $12.9 million on our German Line of Credit which we expect to renew in November 2010.

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·On March 1, 2010, we announced that Neenah Canada had signed a definitive agreement to sell the Woodlands for C$82.5 million ($78.6 million). Proceeds from the sale will be used to repay the $40 million New Term Loan in full and reduce the balance of revolving loans outstanding under our Restated Credit Agreement to zero. In addition, approximately $3.1 million in contract termination payments related to the closure of the Ripon Mill will become due and payable upon the sale of the Woodlands.  Our ability to use proceeds in excess of amounts outstanding under the Restated Credit Agreement is restricted to “permitted uses” as defined in the indenture for the Senior Notes. The transaction is not expected to generate a cash tax liability because the tax basis for the Woodlands is approximately equal to the sale price. Fees and other costs associated with the transaction are minimal.

Management believes that our ability to generate cash from operations and our borrowing capacity are adequate to fund working capital, capital spending and other cash needs for the next 12 months. Our ability to generate adequate cash from operations beyond 2010 will depend on, among other things, our ability to successfully implement our business strategies, control costs in line with market conditions and manage the impact of changes in input prices and currencies. We can give no assurance we will be able to successfully implement these items.

Contractual Obligations

The following table presents the total contractual obligations for which cash flows are fixed or determinable as of December 31, 2009:

											Beyond
(In millions)	2010		2011		2012		2013		2014		2014		Total
Minimum purchase commitments (a)	$	4.4	$	0.4	$	0.4	$	0.4	$	0.4	$	1.8	$	7.8
Long-term debt payments	55.6		1.8		1.7		29.7		226.8		3.6		319.2
Interest payments on long-term debt (b)	19.6		18.1		18.2		18.0		16.1		0.1		90.1
Other post-employment benefit obligations (c)	2.5		1.7		2.0		2.4		2.7		18.5		29.8
Operating leases	3.0		2.6		2.0		0.8		0.5		1.2		10.1
Open purchase orders (d)	59.2		—		—		—		—		—		59.2
Contributions to pension trusts	11.4		3.4		3.3		3.3		3.3		—		24.7
Liability for uncertain tax positions	9.5		—		—		—		—		—		9.5
Total contractual obligations	$	165.2	$	28.0	$	27.6	$	54.6	$	249.8	$	25.2	$	550.4

(a)The minimum purchase commitments in 2010 are primarily for natural gas contracts. Although we are primarily liable for payments on the above operating leases and minimum purchase commitments, based on historical operating performance and forecasted future cash flows, we believe our exposure to losses, if any, under these arrangements is not material.

(b)Interest payments on long-term debt includes interest on variable rate debt at December 31, 2009 weighted average interest rates.

(c)The above table includes future payments that we will make for postretirement benefits other than pensions. Those amounts are estimated using actuarial assumptions, including expected future service, to project the future obligations.

(d)The open purchase orders displayed in the table represent amounts we anticipate will become payable within the next 12 months for goods and services that we have negotiated for delivery.

Adoption of New Accounting Pronouncements

On July 1, 2009, we adopted Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162 (“SFAS No. 168”).  SFAS No. 168 established the ASC as the source of authoritative U.S. GAAP to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS No. 168 supersedes all existing non-SEC accounting and reporting standards.  All non-SEC accounting literature not included in the ASC is non authoritative. The Company’s adoption of SFAS No. 168 did not have an effect on its financial position, results of operation or cash flows.

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As of January 1, 2009, we adopted the enhanced required annual disclosures about plan assets in an employer’s defined benefit pension or other postretirement plan  in ASC Topic 715. Such enhanced disclosures include, but are not limited to, investment allocation decisions, the inputs and valuation techniques used to measure the fair value of plan assets and significant concentrations of risk within plan assets.  See Note 8 “Pension and Other Postretirement Benefits—Plan Assets” of Notes to Consolidated Financial Statements.

On December 15, 2009, we adopted the disclosure requirements of Accounting Standards Update No. 2009-12 which amends ASC sub-topic 820-10, Fair Value Measurements and Disclosures (“ASU No. 2009-12”). ASU No. 2009-12 permits a reporting entity, as a practical expedient, to estimate the fair value of an investment using the net asset value per share (or its equivalent) of the investment, if the net asset value per share of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of ASC Topic 946, Financial Services—Investment Companies as of the reporting entity’s measurement date.  The adoption of ASU No. 2009-12 did not have an effect on our results of operations, financial position or cash flows.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States requires estimates and assumptions that affect the reported amounts and related disclosures of assets and liabilities at the date of the financial statements and net sales and expenses during the reporting period. Actual results could differ from these estimates, and changes in these estimates are recorded when known. The critical accounting policies used in the preparation of the consolidated financial statements are those that are important both to the presentation of financial condition and results of operations and require significant judgments with regard to estimates used. These critical judgments relate to the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses.

The following summary provides further information about the critical accounting policies and should be read in conjunction with the notes to the Consolidated Financial Statements. We believe that the consistent application of our policies provides readers of our financial statements with useful and reliable information about our operating results and financial condition.

We have discussed the application of these critical accounting policies with our Board of Directors and Audit Committee.

Revenue Recognition

We recognize sales revenue when all of the following have occurred: (1) delivery has occurred, (2) persuasive evidence of an agreement exists, (3) pricing is fixed or determinable, and (4) collection is reasonably assured. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership. The timing of revenue recognition is largely dependent on shipping terms. In general, our shipments are designated free on board shipping point and we recognize revenue at the time of shipment. Sales are reported net of allowable discounts and estimated returns. Reserves for cash discounts, trade allowances and sales returns are estimated using historical experience.

Inventories

We value U.S. inventories at the lower of cost, using the Last-In, First-Out (“LIFO”) method for financial reporting purposes, or market. German inventories are valued at the lower of cost, using a weighted-average cost method, or market. The First-In, First-Out value of U.S. inventories valued on the LIFO method was $58.2 million and $66.5 million at December 31, 2009 and 2008, respectively and exceeded such LIFO value by $8.7 million and $8.2 million, respectively.  Cost includes labor, materials and production overhead.

Income Taxes

As of December 31, 2009, we have recorded aggregate deferred income tax assets of $100.6 million related to temporary differences, and have established a valuation allowance against these deferred income tax assets of $1.5 million. As of December 31, 2008, our aggregate deferred income tax assets were $100.7 million. In determining the need for valuation allowances, we consider many factors, including specific taxing jurisdictions, sources of taxable income, income tax strategies and forecasted earnings for the entities in each jurisdiction. A valuation allowance would be recognized if, based on the weight of available evidence, we conclude that it is more likely than not that some portion or all of the deferred income tax assets will not be realized.

As of December 31, 2009 and 2008, our liability for uncertain income taxes positions was $9.5 million and $12.9 million, respectively.  In evaluating and estimating tax positions and tax benefits, we consider many factors which may result in periodic adjustments and which may not accurately anticipate actual outcomes.

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Pension Benefits

Substantially all active employees of our U.S. paper operations participate in defined benefit pension plans and/or defined contribution retirement plans. In July 2007, the Financial Services Commission of Ontario approved our request to settle our pension obligations for active employees and terminate the Ontario, Canada defined benefit pension plan (the “Ontario Plan”). In December 2007, the Ontario Plan was terminated and all outstanding pension obligations were settled through the purchase of annuity contracts or lump-sum payments pursuant to participant elections. In conjunction with the sale of the Pictou Mill, Northern Pulp assumed responsibility for the Nova Scotia, Canada defined benefit pension plan (the “Nova Scotia Plan”) and other postretirement benefit obligations for active and retired employees of the mill. The Company accounted for the transfer of these liabilities as a settlement of postretirement benefit obligations pursuant to ASC Topic 715. Substantially all of Neenah Germany’s employees participate in defined benefit plans designed to provide a monthly pension benefit upon retirement. There is no legal or governmental obligation to fund Neenah Germany’s benefit plans and as such the plans are currently unfunded.

Our funding policy for qualified defined benefit plans is to contribute assets to fully fund the accumulated benefit obligation, as required by the Pension Protection Act of 2006. Subject to regulatory and tax deductibility limits, any funding shortfall is to be eliminated over a reasonable number of years. Nonqualified plans providing pension benefits in excess of limitations imposed by the taxing authorities are not funded.

Consolidated pension expense for defined benefit pension plans was $9.2 million, $7.8 million and $49.5 million for the years ended December 31, 2009, 2008 and 2007, respectively. Pension expense for the year ended December 31, 2008, excludes a non-cash, pre-tax settlement loss of $53.7 million due to the reclassification of deferred pension and other postretirement benefit adjustments related to the transfer of the Nova Scotia Plan to Northern Pulp from accumulated other comprehensive income to loss from discontinued operations in the consolidated statement of operations.  Pension expense for the year ended December 31, 2007, includes $38.7 million for losses related to the settlement of pension obligations for active employees in the Ontario Plan. In addition, we recognized a reduction in pension expense of $1.2 million related to an amendment to the Fox River defined benefit pension plan to freeze the vested pension benefit for salaried employees born after December 31, 1957. Pension expense is calculated based upon a number of actuarial assumptions applied to each of the defined benefit plans.

The weighted-average expected long-term rate of return on pension fund assets used to calculate pension expense was 7.92 percent, 8.02 percent and 7.90 percent for the years ended December 31, 2009, 2008 and 2007, respectively. The expected long-term rate of return on pension fund assets held by our pension trusts was determined based on several factors, including input from pension investment consultants and projected long-term returns of broad equity and bond indices. We also considered the plans’ historical 10-year and 15-year compounded annual returns. We anticipate that, on average, actively managed U.S. pension plan assets will generate annual long-term rates of return of at least 8 percent. Our expected long-term rate of return on the assets in the plans is based on an asset allocation assumption of about 60 percent with equity managers, with expected long-term rates of return of approximately 10 percent, and 40 percent with fixed income managers, with an expected long-term rate of return of about 6 percent. The actual asset allocation is regularly reviewed and periodically rebalanced to the targeted allocation when considered appropriate. We evaluate our investment strategy and long-term rate of return on pension asset assumptions at least annually.

Pension expense is estimated based on the fair value of assets rather than a market-related value that averages gains and losses over a period of years. Investment gains or losses represent the difference between the expected return calculated using the fair value of the assets and the actual return based on the fair value of assets. The variance between the actual and the expected gains and losses on pension assets is recognized in pension expense more rapidly than it would be if a market-related value for plan assets was used. As of December 31, 2009, our pension plans had cumulative unrecognized investment losses and other actuarial losses of approximately $28.9 million. These unrecognized net losses may increase our future pension expense if not offset by (i) actual investment returns that exceed the assumed investment returns, (ii) other factors, including reduced pension liabilities arising from higher discount rates used to calculate our pension obligations or (iii) other actuarial gains, including whether such accumulated actuarial losses at each measurement date exceed the “corridor” determined under ASC Topic 715.

The discount (or settlement) rate that is utilized for determining the present value of future pension obligations in the U.S. is generally based on the yield for a theoretical basket of AA-rated corporate bonds currently available in the market place, whose duration matches the timing of expected pension benefit payments. The discount (or settlement) rate that is utilized for determining the present value of future pension obligations in Germany is generally based on the IBOXX index of AA-rated corporate bonds adjusted to match the timing of expected pension benefit payments.  The weighted average discount rate utilized to determine the present value of future pension obligations at December 31, 2009 and 2008 was 6.17 percent and 6.80 percent, respectively.

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Our consolidated pension expense in 2009 is based on the expected weighted-average long-term rate of return on assets and the weighted-average discount rate described above and various other assumptions. Pension expense beyond 2009 will depend on future investment performance, our contributions to the pension trusts, changes in discount rates and various other factors related to the covered employees in the plans.

The fair value of the assets in our defined benefit plans at December 31, 2009 of approximately $168 million increased approximately $25 million from the fair value of about $143 million at December 31, 2008, as investment gains and employer contributions exceeded benefit payments.  At December 31, 2009, the projected benefit obligations of our defined benefit plans exceeded the fair value of plan assets by approximately $66 million which was approximately $5 million smaller than the $71 million deficit at December 31, 2008. The accumulated benefit obligation exceeded the fair value of plan assets by approximately $51.3 million and $52.8 million at December 31, 2009 and 2008, respectively. Contributions to pension trusts for the year ended December 31, 2009 were $10.2 million compared with $7.5 million for the year ended December 31, 2008. In addition, we made direct benefit payments for unfunded supplemental retirement benefits of approximately $2.3 million and $2.5 million for the years ended December 31, 2009 and 2008, respectively.

Impairment of Long-Lived Assets

Property, Plant and Equipment

Property, plant and equipment are tested for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment (“ASC Topic 360”), whenever events or changes in circumstances indicate that the carrying amounts of such —long-lived assets may not be recoverable from future net pre-tax cash flows. Impairment testing requires significant management judgment including estimating the future success of product lines, future sales volumes, growth rates for selling prices and costs, alternative uses for the assets and estimated proceeds from disposal of the assets. Impairment testing is conducted at the lowest level where cash flows can be measured and are independent of cash flows of other assets. An asset impairment would be indicated if the sum of the expected future net pre-tax cash flows from the use of the asset (undiscounted and without interest charges) is less than the carrying amount of the asset. An impairment loss would be measured based on the difference between the fair value of the asset and its carrying amount. We determine fair value based on an expected present value technique using multiple cash flow scenarios that reflect a range of possible outcomes and a risk free rate of interest are used to estimate fair value.

The estimates and assumptions used in the impairment analysis are consistent with the business plans and estimates we use to manage our business operations. The use of different assumptions would increase or decrease the estimated fair value of the asset and would increase or decrease the impairment charge. Actual outcomes may differ from the estimates.

Goodwill and Other Intangible Assets with Indefinite Lives

Goodwill arising from a business combination is recorded as the excess of purchase price and related costs over the fair value of identifiable assets acquired and liabilities assumed in accordance with ASC Topic 805, Business Combinations.  All of our goodwill was acquired in conjunction with the acquisition of Neenah Germany in October 2006.

Under ASC Topic 350, Intangibles — Goodwill and Other (“ASC Topic 350”), goodwill is subject to impairment testing at least annually. A fair-value-based test is applied at the reporting unit level, which is generally one level below the segment level. The test compares the fair value of an entity’s reporting units to the carrying value of those reporting units. This test requires various judgments and estimates. We estimate the fair value of the reporting unit using a market approach in combination with a probability-weighted discounted operating cash flow approach for a number of scenarios representing differing operating and economic assumptions. We record an adjustment to goodwill for any goodwill that is determined to be impaired.

Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized assets and liabilities of the reporting unit. We test goodwill for impairment at least annually on November 30 in conjunction with preparation of our annual business plan, or more frequently if events or circumstances indicate it might be impaired.

Certain trade names are estimated to have indefinite useful lives and as such are not amortized.  Intangible assets with indefinite lives are annually reviewed for impairment in accordance with ASC Topic 350.

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Other Intangible Assets with Finite Lives

Acquired intangible assets with finite useful lives are amortized on a straight-line basis over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360. Intangible assets consist primarily of customer relationships, trade names and acquired intellectual property. Such intangible assets are amortized using the straight-line method over estimated useful lives of between 10 and 15 years.

Impairment of Goodwill and Other Intangible Assets

Our annual test of goodwill for impairment at November 30, 2009, indicated that the carrying amount of goodwill assigned to Neenah Germany was considered recoverable.  Significant assumptions used in developing the discounted operating cash flow approach were revenue growth rates and pricing, costs for manufacturing inputs, levels of capital investment and estimated cost of capital for high, medium and low growth environments.

Our annual test of goodwill for impairment at November 30, 2008, indicated that the carrying value of Neenah Germany exceeded its estimated fair value.  For the year ended December 31, 2008, we recognized a non-cash pre-tax loss of $52.7 million (we did not recognize a tax benefit related to the non tax deductible loss) for the excess of the carrying value of goodwill assigned to Neenah Germany over the estimated fair value of goodwill.  The impairment loss was primarily due to a substantial increase in the estimated cost of capital we used to calculate the present value of Neenah Germany’s estimated future cash flows which resulted in a substantially lower estimated fair value. The higher estimated cost of capital reflected market/financial conditions at the time the annual impairment test was performed which indicated higher risk premiums for debt and equity.

As of December 31, 2009, a one percentage point increase in the estimate for our cost of capital used in the impairment test would result in an approximately $25 million change in the estimated fair value of the Neenah Germany and a corresponding reduction in the implied value of goodwill but would not result in an impairment of goodwill.

Our annual test of other intangible assets for impairment at November 30, 2009, indicated that the carrying amount of such assets was recoverable.  During our annual test of other intangible assets for impairment, we determined that certain trade names and customer based intangible assets were also impaired at December 31, 2008.  For the year ended December 31, 2008, we recognized a non-cash pre-tax charge of approximately $1.8 million for the impairment of such assets.

Stock-Based Compensation

We account for stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation—Stock Compensation (“ASC Topic 718”). The amount of stock-based compensation cost recognized is based on the fair value of grants that are ultimately expected to vest and is recognized pro-rata over the requisite service period for the entire award.  ASC Topic 718 also requires the reporting of excess tax benefits related to the exercise or vesting of stock-based awards as cash provided by financing activities.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

As a multinational enterprise, we are exposed to risks such as changes in commodity prices, foreign currency exchange rates, interest rates and environmental regulation. A variety of practices are employed to manage these risks, including operating and financing activities and, where deemed appropriate, the use of derivative instruments. Derivative instruments are used only for risk management purposes and not for speculation or trading.

Presented below is a description of our most significant risks.

Foreign Currency Risk

Our reported operating results are affected by changes in the exchange rates of the Euro relative to the U.S. dollar. For the year ended December 31, 2009, a hypothetical 10 percent decrease in the exchange rates of the Euro relative to the U.S dollar would have decreased our income before income taxes by approximately $0.7 million.  We do not hedge our exposure to such exchange risk on reported operating results.

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Currency transactional exposures are sensitive to changes in the exchange rate of the U.S. dollar against the Euro. We performed a sensitivity test to quantify the effects that possible changes in the exchange rate of the U.S. dollar would have on pre-tax comprehensive income based on the transactional exposure at December 31, 2009. The effect is calculated by multiplying our net monetary asset or liability position by a 10 percent change in the exchange rate of the Euro versus the U.S. dollar. The results of this sensitivity test are as follows.  As of December 31, 2009, a 10 percent unfavorable change in the exchange rate of the U.S. dollar against the Euro involving balance sheet transactional exposures would have resulted in net pre-tax losses of approximately $11 million.

Finally, the translation of the balance sheets of our German operations from Euros into U.S. dollars also is sensitive to changes in the exchange rate of the U.S. dollar against the Euro. Consequently, we performed a sensitivity test to determine if changes in the exchange rate would have a significant effect on the translation of the balance sheets of our German operations into U.S. dollars. These translation gains or losses are recorded as unrealized translation adjustments (“UTA”, a component of comprehensive income) within stockholders’ equity. The hypothetical change in UTA is calculated by multiplying the net assets of our German operations by a 10 percent change in the U.S.$/Euro exchange rates. As of December 31, 2009, a 10 percent unfavorable change in the exchange rate of the U.S. dollar against the Euro would have decreased our stockholders’ equity by approximately $27 million. The hypothetical decrease in UTA is based on the difference between the December 31, 2009 exchange rate and the assumed exchange rate.

Commodity Risk

Pulp

We purchase the wood pulp used to produce our products on the open market, and, as a result, the price and other terms of those purchases are subject to change based on factors such as worldwide supply and demand and government regulation. We do not have significant influence over the price paid for our wood pulp purchases. Therefore, an increase in wood pulp prices could occur at the same time that prices for our products are decreasing and have an adverse effect on our results of operations, financial position and cash flows.

Based on 2009 pulp purchases, a 10 percent increase in the average market price for pulp (approximately $65 per ton) would have increased our annual costs for pulp purchases by approximately $15 million.

Other Manufacturing Inputs

We purchase a substantial portion of the other manufacturing inputs necessary to produce our products on the open market, and, as a result, the price and other terms of those purchases are subject to change based on factors such as worldwide supply and demand and government regulation. We do not have significant influence over our costs for such manufacturing inputs. Therefore, an increase in other manufacturing inputs could occur at the same time that prices for our products are decreasing and have an adverse effect on our results of operations, financial position and cash flows.

While we believe that alternative sources of critical supplies would be available, an interruption in supply of either single source specialty grade latex or specialty softwood pulp to our technical products business could disrupt and eventually cause a shutdown of production of certain technical products.

We generate substantially all of the electrical energy used by our Munising mill and approximately 20 percent of the electrical energy at our Bruckmühl and Appleton mills. Availability of energy is not expected to be a problem in the foreseeable future, but the purchase price of such energy can and likely will fluctuate significantly based on fluctuations in demand and other factors. There is no assurance that that we will be able to obtain electricity or natural gas purchases on favorable terms in the future.

Interest Rate Risk

We are exposed to interest rate risk on our fixed rate debt and our variable rate bank debt.  At December 31, 2009, we had $238.4 million of fixed rate debt outstanding and $80.8 million of variable rate borrowings outstanding. We are exposed to fluctuations in the fair value of our fixed rate long-term debt resulting from changes in market interest rates, but not to fluctuations in our earnings or cash flows. At December 31, 2009, the fair market value of our fixed rate debt was $221.5 million based upon the quoted market price of the Senior Notes or rates currently available to us for debt of the same remaining maturities. A 100 basis point increase in interest rates would increase our annual interest expense on outstanding variable rate borrowings by approximately $0.6 million.

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We could in the future, reduce our exposure to interest rate fluctuations on our variable rate debt by entering into interest rate hedging arrangements, although those arrangements could result in us incurring higher costs than we would incur without the arrangements.

Environmental Regulation/Climate Change Legislation

Our manufacturing operations are subject to extensive regulation primarily by U.S., Germany and other international authorities. We have made significant capital expenditures to comply with environmental laws, rules and regulations. Due to changes in environmental laws and regulations, including potential future legislation to limit GHG emissions, the application of such regulations and changes in environmental control technology, we are not able to predict with certainty the amount of future capital spending to be incurred for environmental purposes. Taking these uncertainties into account, we have planned capital expenditures for environmental projects during the period 2010 through 2012 of approximately $1 million to $2 million annually.

We believe these risks can be managed and will not have a material adverse effect on our business or our consolidated financial position, results of operations or cash flows.

Item 8.Financial Statements and Supplementary Data

The information required in Item 8 is contained in and incorporated herein by reference from pages F-1 through F-52 of this Annual Report on Form 10-K.

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) or 15a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009. The scope of management’s assessment of the effectiveness of internal control over financial reporting includes all of the Company’s businesses.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.  Based upon its assessment, management believes that as of December 31, 2009, the Company’s internal controls over financial reporting were effective.

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A material weakness is a significant control deficiency, or a combination of significant control deficiencies, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Controls Over Income Tax Accounting: As discussed in our Annual Report on Form 10-K for the year ended December 31, 2008, as of December 31, 2008 and 2007 the Company did not maintain effective controls over the determination and reporting of the provision for income taxes and related income tax balances. At December 31, 2008, there were certain auditor identified misstatements in our December 31, 2008 deferred tax balances.  These misstatements were the result of a failure in the operating effectiveness of our underlying control activities related to the preparation and review of the provision for income taxes and related income tax balances.

Remediation and Changes in Internal Controls

During 2009, the following remedial actions were implemented to address our material weakness:

·we improved communications between a major public accounting firm engaged to prepare and analyze our income tax provision and our management personnel responsible for reviewing and approving our income tax provision;

·the major public accounting firm is utilizing additional quality control procedures and resources in the preparation and analysis of our income tax provision and income tax accounts;

·we reviewed prior year tax returns to determine if additional accruals were required for uncertain tax positions;

·we expanded the number of management personnel utilized to test and review the tax strategies and assumptions supporting our income tax provision and income tax accounts; and

·The Audit Committee of our Board of Directors is meeting regularly with management personnel to monitor the progress of our remediation efforts.

As a result of the implementation of these processes, management believes that the consolidated financial statements are fairly stated in all material respects as of and for the year ended December 31, 2009.  Management has concluded that the design and operation of our internal controls over financial reporting as it relates to accounting for income taxes were effective at December 31, 2009 and that the material weakness in accounting for income taxes has been remediated.

The effectiveness of internal control over financial reporting as of December 31, 2009, has been audited by Deloitte & Touche LLP, the independent registered public accounting firm who also audited the Company’s consolidated financial statements. Deloitte & Touche’s attestation report on the Company’s internal control over financial reporting is included herein. See “Item 15 — Exhibits and Financial Statement Schedules.”

Neenah Paper, Inc

March 10, 2010

Changes in Internal Control Over Financial Reporting

Changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting have been described in Remediation and Changes in Internal Controls above.

Item 9B.Other Information

None.

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PART III

Item 10.Directors and Executive Officers of the Registrant

Information relating to nominees for director of Neenah and compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth under the captions “Election of Directors,” “Meetings and Committees of the Board of Directors,” “Corporate Governance” and “Section 16(a) Beneficial Ownership Reporting Compliance,” respectively, in the Proxy Statement for the Annual Meeting of Stockholders to be held on May 19, 2010. Such information is incorporated herein by reference. The definitive Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2009. Information relating to the executive officers of Neenah, pursuant to Instruction 3 of Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K, is set forth at Part I, Item 4A of this report under the caption “Executive Officers of the Registrant.” Such information is incorporated herein by reference.

Code of Ethics

The Neenah Paper, Inc. Code of Business Conduct and Ethics, applies to all directors, officers and employees of Neenah. The Code of Business Conduct and Ethics meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K, and applies to our Chief Executive Officer, Chief Financial Officer (our principal financial officer) and Vice President — Controller (our principal accounting officer), as well as all other employees, as indicated above. The Code of Business Conduct and Ethics also meets the requirements of a code of conduct under New York Stock Exchange listing standards. The Code of Business Conduct and Ethics is posted on our web site at www.neenah.com under the links “Investor Relations—Corporate Governance— Code of Ethics” and print copies are available upon request without charge. You can request print copies by contacting our General Counsel in writing at Neenah Paper, Inc., 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005 or by telephone at 678-566-6500. The Company intends to disclose any amendments to the Code of Business Conduct and Ethics, as well as any waivers for executive officers or directors, on our web site at www.neenah.com.

Item 11.Executive Compensation

Information required by this Item 11 relating to executive compensation and other matters is set forth under the captions “Compensation, Discussion and Analysis,” “Additional Executive Compensation,” “Director Compensation,” and “Compensation Committee Report” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.

Item 12.Security Ownership of Certain Beneficial Owners and Management

Information relating to ownership of common stock of Neenah by certain persons is set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference. Information regarding securities authorized for issuance under equity compensation plans of Neenah is set forth under the caption “Equity Compensation Plan Information” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.

Item 13.Certain Relationships and Related Transactions and Director Independence.

Information relating to existing or proposed relationships or transactions between Neenah and any affiliate of Neenah is set forth under the caption “Certain Relationships and Related Transactions” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.

Item 14.Principal Accountant Fees and Services

Information relating to Neenah’s principal accounting fees and services is set forth under the caption “Independent Registered Public Accounting Firm Fees and Services” in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.

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PART IV

Item 15.Exhibits and Financial Statement Schedule

(a)Documents filed as part of this report:

1.Consolidated Financial Statements

The following reports and financial statements are filed herewith on the pages indicated:

	Page
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	F-2
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Statements of Operations	F-4
Consolidated Balance Sheets	F-5
Consolidated Statements of Changes in Stockholders’ Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

2.Financial Statement schedule

The following schedule is filed herewith:

Schedule II—Valuation and Qualifying Accounts F-52

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

3.Exhibits

See (b) below

(b) Exhibits

The following exhibits are filed with or incorporated by reference in this report. Where such filing is made by incorporation by reference to a previously filed registration statement or report, such registration statement or report is identified in parentheses. We will furnish any exhibit at no cost upon written request to us at: Investor Relations, Neenah Paper, Inc., 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005.

Exhibit
Number		Exhibit
	2	Distribution Agreement dated as of November 20, 2004 between Kimberly-Clark Corporation and Neenah Paper, Inc. (filed as Exhibit 2.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
	2.1	Sale and Purchase Agreement dated as of August 9, 2006 by and between FiberMark, Inc., FiberMark International Holdings LLC, and Neenah Paper, Inc. (filed as Exhibit 2.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed October 11, 2006 and incorporated herein by reference).
	2.2	Assignment of Sale and Purchase Agreement Rights dated October 11, 2006 by and between Neenah Paper, Inc. and Neenah Paper International, LLC (filed as Exhibit 2.2 to the Neenah Paper, Inc. Current Report on Form 8-K filed October 11, 2006 and incorporated herein by reference).
	2.3	Asset Purchase Agreement dated as of August 4, 2006 by and among Neenah Paper Company of Canada, NPCC Holding Company, LLC and Eagle Logging Inc. (filed as Exhibit 2.3 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q filed November 9, 2006 and incorporated herein by reference).
	2.4	Asset Purchase Agreement dated as of August 4, 2006 by and among Neenah Paper Company of Canada, NPCC Holding Company, LLC and Terrace Bay Pulp Inc. (filed as Exhibit 2.4 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q filed November 9, 2006 and incorporated herein by reference).

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2.5	Agreement and Plan of Merger, among Neenah Paper, Inc., and Fox Valley Corporation, Fox River Paper Company, LLC and AF/CPS Holding Corporation, dated as of February 5, 2007 (filed as Exhibit 2.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed March 1, 2007 and incorporated herein by reference).
3.1	Amended and Restated Certificate of Incorporation of Neenah Paper, Inc. (filed as Exhibit 3.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
3.2	Amended and Restated Bylaws of Neenah Paper, Inc. (filed as Exhibit 3.2 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
4.1	Indenture dated as of November 30, 2004 between Neenah Paper, Inc., the Subsidiary Guarantors named therein and The Bank of New York Trust Company, N.A., as Trustee, including Form of 73/8 Senior Note due 2014 (filed as Exhibit 10.8 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
4.2	Rights Agreement between Neenah Paper, Inc. and EquiServe Trust Company, N.A., as Rights Agent (filed as Exhibit 4.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 19, 2004 and incorporated herein by reference.
4.3	Form of Subsidiary Guarantee (included as Exhibit E to Exhibit 4.1).
4.4	Form of 73/8% Exchange Senior Notes (filed as Exhibit 4.5 to the Neenah Paper, Inc. Registration Statement on Form S-4 filed May 23, 2005 and incorporated herein by reference).
10.1	Corporate Services Agreement dated as of November 30, 2004 by and between Kimberly-Clark Corporation and Neenah Paper, Inc. (filed as Exhibit 10.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
10.2	Tax Sharing Agreement dated as of November 30, 2004 by and between Kimberly-Clark Corporation and Neenah Paper, Inc. (filed as Exhibit 10.2 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
10.3	Lease Agreement dated June 29, 2004 between Neenah Paper, Inc. and Germania Property Investors XXXIV, L.P. (filed as Exhibit 10.3 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
10.4	Industrial Lease Agreement dated October 8, 2004 by and between Neenah Paper, Inc. and Duke Realty Limited Partnership (filed as Exhibit 10.4 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
10.5*	Neenah Paper Inc. Supplemental Pension Plan (filed as Exhibit 10.5 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2004, filed March 31, 2005 and incorporated herein by reference).
10.6*	Neenah Paper Inc. Supplemental Retirement Contribution Plan (filed as Exhibit 10.6 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2004, filed March 31, 2005 and incorporated herein by reference).
10.7*	Neenah Paper Inc. Executive Severance Plan (filed as Exhibit 10.7 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2004, filed March 31, 2005 and incorporated herein by reference).
10.8*	Neenah Paper, Inc. Severance Pay Plan (filed as Exhibit 10.8 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2006, filed March 16, 2007 and incorporated herein by reference).
10.9	Form of Pulp Supply Agreement by and between Kimberly-Clark Global Sales and Neenah Paper, Inc. (filed as Exhibit 10.4 to the Neenah Paper, Inc. Registration Statement on Form 10, as amended, filed August 26, 2004 and incorporated herein by reference).
10.10	Amendment to Pulp Supply Agreement between Neenah Paper, Inc. and Kimberly-Clark Global Sales, Inc. dated as of January 17, 2006 (filed as Exhibit 10.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed January 20, 2006 and incorporated herein by reference).

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10.11	Amended and Restated Pulp Supply Agreement dated August 29, 2006 between Neenah Paper, Inc. and Kimberly-Clark Global Sales, Inc. (filed as Exhibit 10.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed September 5, 2006 and incorporated herein by reference).
10.12	Form of Employee Matters Agreement by and between Kimberly-Clark Corporation and Neenah Paper, Inc. (filed as Exhibit 10.2 to the Neenah Paper, Inc. Registration Statement on Form 10, as amended, filed August 26, 2004 and incorporated herein by reference).
10.13	Credit Agreement dated as of November 30, 2004, by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 10.10 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2004, filed March 31, 2005 and incorporated herein by reference).
10.14	First Amendment and Waiver, dated as of January 31, 2005 to the Credit Agreement dated as of November 30, 2004, by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 10.11 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2004, filed March 31, 2005 and incorporated herein by reference).
10.15	Second Amendment and Waiver, dated as of May 9, 2006 to the Credit Agreement dated as of November 30, 2004, by and among, Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank N.A., as agent for the Lenders (filed as Exhibit 10.1 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2006, filed August 9, 2006 and incorporated herein by reference).
10.16	Third Amendment, dated as of October 3, 2006, to Credit Agreement dated as of November 30, 2004, by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 10.16 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2006, filed March 16, 2007 and incorporated herein by reference).
10.17	Fourth Amendment, dated as of March 1, 2007 to Credit Agreement dated as of November 30, 2004, by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 10.17 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2006, filed March 16, 2007 and incorporated herein by reference).
10.18	Fifth Amendment, dated as of October 24, 2007 to the Credit Agreement dated as of November 30, 2004, by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 10.1 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended September 30, 2007, filed November 8, 2007 and incorporated herein by reference).
10.19	Sixth Amendment, dated as of May 15, 2008 to the Credit Agreement dated as of November 30, 2004, by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 10.1 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 200, filed August 11, 2008 and incorporated herein by reference).
10.20*	Neenah Paper, Inc. 2004 Omnibus Stock and Incentive Compensation Plan (filed as Exhibit 10.12 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2004, filed March 31, 2005 and incorporated herein by reference).
10.21*	Neenah Paper Deferred Compensation Plan approved on December 11, 2006 (filed as Exhibit 10.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed December 15, 2006 and incorporated herein by reference).
10.22*	Neenah Paper Directors’ Deferred Compensation Plan approved on December 11, 2006. (filed as Exhibit 99.1 to the Neenah Paper, Inc. Registration Statement on Form S-8 filed December 21, 2006 and incorporated herein by reference).
10.23	Timberland Purchase and Sale Agreement, dated as of May 5, 2006, by and between Neenah Paper Company of Canada and Wagner Forest Management, LTD. (filed as Exhibit 10.2 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2006, filed August 9, 2006 and incorporated herein by reference).

43

10.24	Stumpage Agreement dated as of June 29, 2006, by and among Neenah Paper Company of Canada, Atlantic Star Forestry LTD. and Nova Star Forestry LTD. (filed as Exhibit 10.3 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2006, filed August 9, 2006 and incorporated herein by reference).
10.25	First Amendment to Purchase and Sale Agreement, dated as of June 29, 2006, by and between Neenah Paper Company of Canada and Wagner Forest Management, LTD. (filed as Exhibit 10.4 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2006, filed August 9, 2006 and incorporated herein by reference).
10.26	Assignment and Assumption of Timberland Purchase and Sale Agreement, dated as of June 29, 2006, by and among Neenah Paper Company of Canada, Wagner Forest Management, LTD. and Nova Star Forestry LTD. (filed as Exhibit 10.5 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2006, filed August 9, 2006 and incorporated herein by reference).
10.27	Assignment and Assumption of Timberland Purchase and Sale Agreement, dated as of June 29, 2006, by and among Neenah Paper Company of Canada, Wagner Forest Management, LTD. and Atlantic Star Forestry LTD. (filed as Exhibit 10.6 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2006, filed August 9, 2006 and incorporated herein by reference).
10.28	Amended and Restated Share Purchase Agreement dated as of June 24, 2008, by and among Neenah Paper Company of Canada, NPCC Holding Company, LLC, Neenah Paper, Inc., Azure Mountain Capital Holdings LP, Northern Pulp NS LP, and Azure Mountain Capital Financial LP (filed as Exhibit 10.2 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 200, filed August 11, 2008 and incorporated herein by reference).
10.29	Asset Purchase Agreement dated as of June 24, 2008, by and between Neenah Paper Company of Canada and Azure Mountain Financial Corporation (filed as Exhibit 10.3 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 200, filed August 11, 2008 and incorporated herein by reference).
10.30	Asset Purchase Agreement dated as of June 24, 2008, by and between Neenah Paper Company of Canada and Northern Pulp Nova Scotia Corporation (filed as Exhibit 10.4 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 200, filed August 11, 2008 and incorporated herein by reference).
10.31	Stumpage Agreement, dated as of June 24, 2008, by and between Neenah Paper Company of Canada, and Northern Pulp Nova Scotia Corporation (filed as Exhibit 10.5 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 200, filed August 11, 2008 and incorporated herein by reference).
10.32	Subscription Agreement, dated as of June 24, 2008, by and between Neenah Paper Company of Canada, and Azure Mountain Capital Financial Corporation (filed as Exhibit 10.6 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 200, filed August 11, 2008 and incorporated herein by reference).
10.33	Consent and Guarantee Agreement Concerning Amended and Restated Pulp Supply Agreement, dated as of June 19, 2008, by and between Neenah Paper, Inc. and Kimberly-Clark Global Sales, LLC (filed as Exhibit 10.7 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2009, filed August 11, 2008 and incorporated herein by reference).
10.34	Amended and Restated Credit Agreement dated as of November 5, 2009 by and among by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders, (filed herewith).
11	Statement Regarding Computation of Earnings per Share (filed herewith)
12	Statement Regarding Computation of Ratio of Earnings to Fixed Charges (filed herewith)
21	List of Subsidiaries of Neenah Paper, Inc. (filed herewith).

44

23	Consent of Deloitte & Touche LLP (filed herewith)
24	Power of Attorney (filed herewith)
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (filed herewith).
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act (filed herewith).
32.1	Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code (filed herewith).

*Indicates management contract or compensatory plan or arrangement.

(c)Financial Statement Schedule

See Item 15(a) (2) above

45

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NEENAH PAPER, INC.
By:	/s/ SEAN T. ERWIN
	Name:	Sean T. Erwin
	Title:	Chairman of the Board, President and Chief Executive Officer (in his capacity as a duly authorized officer of the Registrant and in his capacity as Chief Executive Officer)
	Date:	March 10, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ SEAN T. ERWIN		Chairman of the Board, President and
Sean T. Erwin		Chief Executive Officer	March 10, 2010
/s/ BONNIE C. LIND		Senior Vice President, Chief Financial
Bonnie C. Lind		Officer and Treasurer (Principal Financial Officer)	March 10, 2010
/s/ LARRY N. BROWNLEE		Vice President — Controller (Principal
Larry N. Brownlee		Accounting Officer)	March 10, 2010
/s/ EDWARD GRZEDZINSKI*		Director	March 10, 2010
Edward Grzedzinski
/s/ MARY ANN LEEPER*		Director	March 10, 2010
Mary Ann Leeper
/s/ TIMOTHY S. LUCAS		Director	March 10, 2010
Timothy S. Lucas
/s/ JOHN F. MCGOVERN*		Director	March 10, 2010
John F. McGovern
/s/ PHILIP C. MOORE*		Director	March 10, 2010
Philip C. Moore
/s/ STEPHEN M. WOOD		Director	March 10, 2010
Stephen M. Wood
*By:	/s/ STEVEN S. HEINRICHS
	Steven S. Heinrichs
	Senior Vice President, General
	Counsel and Secretary
	Attorney-in-fact

46

TABLE OF CONTENTS

	Page
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	F-2
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Statements of Operations	F-4
Consolidated Balance Sheets	F-5
Consolidated Statements of Changes in Stockholders’ Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8
Schedule II—Valuation and Qualifying Accounts	F-52

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders of
Neenah Paper, Inc.
Alpharetta, Georgia

We have audited the internal control over financial reporting of Neenah Paper, Inc. and subsidiaries (the “Company”) as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control over financial reporting based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2009 of the Company and our report dated March 10, 2010 expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

March 10, 2010

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Neenah Paper, Inc.
Alpharetta, Georgia

We have audited the accompanying consolidated balance sheets of Neenah Paper, Inc. and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Neenah Paper, Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2010 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

Atlanta, Georgia
March 10, 2010

F-3

NEENAH PAPER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

	Year Ended December 31,
	2009			2008			2007
Net sales	$	573.9		$	732.3		$	767.0
Cost of products sold	472.3			633.2			635.5
Gross profit	101.6			99.1			131.5
Selling, general and administrative expenses	69.1			75.2			79.3
Other income - net	(1.0		)	(11.3		)	(1.7		)
Restructuring costs	17.1			—			—
Goodwill and other intangible asset impairment charge	—			54.5			—
Operating income (loss)	16.4			(19.3		)	53.9
Interest expense	23.4			25.0			25.5
Interest income	(0.2		)	—			(0.1		)
Income (loss) from continuing operations before income taxes	(6.8		)	(44.3		)	28.5
Provision (benefit) for income taxes	(5.0		)	3.0			(3.7		)
Income (loss) from continuing operations	(1.8		)	(47.3		)	32.2
Income (loss) from discontinued operations, net of taxes (Note 5)	0.6			(111.2		)	(22.0		)
Net income (loss)	$	(1.2	)	$	(158.5	)	$	10.2
Earnings (Loss) Per Common Share
Basic
Continuing operations	$	(0.12	)	$	(3.24	)	$	2.15
Discontinued operations	0.04				(7.59	)	(1.48		)
	$	(0.08	)	$	(10.83	)	$	0.67
Diluted
Continuing operations	$	(0.12	)	$	(3.24	)	$	2.11
Discontinued operations	0.04				(7.59	)	(1.46		)
	$	(0.08	)	$	(10.83	)	$	0.65
Weighted Average Common Shares Outstanding (in thousands)
Basic	14,655			14,642			14,874
Diluted	14,655			14,642			15,141

See Notes to Consolidated Financial Statements

F-4

NEENAH PAPER, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)

	December 31,
	2009			2008
ASSETS
Current Assets
Cash and cash equivalents	$	5.6		$	3.3
Accounts receivable, net	67.7			63.2
Inventories	70.7			88.6
Income taxes receivable	0.8			11.2
Deferred income taxes	61.7			65.4
Prepaid and other current assets	13.7			19.0
Assets held for sale (Note 3 and Note 5)	10.0			3.3
Total Current Assets	230.2			254.0
Property, Plant and Equipment — net	284.4			316.2
Deferred Income Taxes	37.4			35.3
Goodwill (Note 4)	44.9			43.8
Intangible assets — net (Note 4)	27.5			28.7
Other Assets	13.1			12.0
TOTAL ASSETS	$	637.5		$	690.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Debt payable within one year	$	55.6		$	24.1
Accounts payable	30.0			35.3
Accrued expenses	48.6			50.3
Total Current Liabilities	134.2			109.7
Long-term Debt	263.6			340.5
Deferred Income Taxes	23.7			25.4
Noncurrent Employee Benefits and Other Obligations	108.3			111.3
TOTAL LIABILITIES	529.8			586.9
Commitments and Contingencies (Notes 11 and 12)
Stockholders’ Equity
Common stock, par value $0.01 — authorized: 100,000,000 shares; issued and outstanding: 15,085,709 shares and 15,054,852 shares	0.1			0.1
Treasury stock, at cost: 410,654 shares and 405,744 shares	(10.2		)	(10.1		)
Additional paid-in capital	243.4			238.7
Accumulated deficit	(217.1		)	(210.0		)
Accumulated other comprehensive income	91.5			84.4
Total Stockholders’ Equity	107.7			103.1
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	637.5		$	690.0

See Notes to Consolidated Financial Statements

F-5

NEENAH PAPER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions, shares in thousands)

													Accumulated
							Additional						Other
	Common Stock			Treasury			Paid-In			Accumulated			Comprehensive			Comprehensive
	Shares	Amount		Stock			Capital			Deficit			Income			Income/(Loss)
Balance, December 31, 2006	14,812	$	0.1	$	(0.1	)	$	224.7		$	(49.7	)	$	9.9
Net income										10.2						$	10.2
Other comprehensive income (loss)
Unrealized foreign currency translation													58.0			58.0
Minimum pension liability													30.7			30.7
Loss on cash flow hedges													(0.1		)	(0.1		)
Dividends declared										(6.0		)				$	98.8
Excess tax benefits from stock-based compensation							0.5
Stock options exercised	124						3.7
Restricted stock vesting (Note 10)	33			(0.3		)
Stock-based compensation							6.4
Balance, December 31, 2007	14,969	0.1		(0.4		)	235.3			(45.5		)	98.5
Net income										(158.5		)				$	(158.5	)
Other comprehensive income (loss)
Unrealized foreign currency translation													(30.1		)	(30.1		)
Adjustment to pension and other benefit liabilities													16.3			16.3
Loss on cash flow hedges													(0.3		)	(0.3		)
Dividends declared										(6.0		)				$	(172.6	)
Excess tax provision from stock-based compensation							(0.6		)
Share purchases				(9.4		)
Restricted stock vesting (Note 10)	86			(0.3		)
Stock-based compensation							4.0
Balance, December 31, 2008	15,055	0.1		(10.1		)	238.7			(210.0		)	84.4
Net loss										(1.2		)				$	(1.2	)
Other comprehensive income (loss)
Unrealized foreign currency translation													4.1			4.1
Adjustment to pension and other benefit liabilities													3.0			3.0
Dividends declared										(5.9		)				$	5.9
Restricted stock vesting (Note 10)	31			(0.1		)
Stock-based compensation							4.7
Balance, December 31, 2009	15,086	$	0.1	$	(10.2	)	$	243.4		$	(217.1	)	$	91.5

See Notes to Consolidated Financial Statements

F-6

NEENAH PAPER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Year Ended December 31,
	2009			2008			2007
OPERATING ACTIVITIES
Net income (loss)	$	(1.2	)	$	(158.5	)	$	10.2
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	34.5			38.6			45.3
Stock-based compensation	4.7			4.0			6.4
Deferred income tax provision (benefit)	(9.4		)	(56.1		)	(32.7		)
Goodwill and other intangible asset impairment charge (Note 4)	—			54.5			—
Asset impairment loss	—			91.2			—
Loss on disposal - transfer of the Pictou Mill	—			29.4			—
Amortization of deferred revenue - transfer of the Pictou Mill	—			(2.8		)	—
Loss on disposal - transfer of the Pictou Mill post-employment benefit plans	—			53.7			—
Ripon Mill non-cash charges	6.3			—			—
Gain on curtailment of post employment benefit plan	—			(4.3		)	—
Gain on sale of woodlands (Note 5)	—			—			(6.2		)
(Gain) loss on other asset dispositions	0.2			(6.3		)	(0.8		)
Net cash provided by (used in) changes in operating working capital, net of effects of acquisitions (Note 15)	27.4			(21.1		)	5.9
Pension and other post-employment benefits	2.4			(7.6		)	4.1
Loss on curtailment and settlement of pension plan (Note 5)	—			—			38.7
Other	—			(1.6		)	(1.4		)
NET CASH PROVIDED BY OPERATING ACTIVITIES	64.9			13.1			69.5
INVESTING ACTIVITIES
Capital expenditures	(8.4		)	(30.0		)	(58.3		)
Acquisition of Fox River, net of cash acquired	—			—			(54.7		)
Payments in conjunction with the transfer of the Pictou Mill	—			(13.6		)	—
Proceeds from asset sales	0.8			13.8			—
Other	(0.7		)	(0.6		)	(0.4		)
NET CASH USED IN INVESTING ACTIVITIES	(8.3		)	(30.4		)	(113.4		)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	45.5			53.7			77.0
Debt issuance costs	(2.9		)	—			—
Repayments of long-term debt	(87.6		)	(34.6		)	(34.1		)
Short-term borrowings	12.2			18.7			8.0
Repayments of short-term borrowings	(15.4		)	(3.3		)	(5.0		)
Cash dividends paid	(5.9		)	(6.0		)	(6.0		)
Shares purchases (Note 10)	—			(9.4		)	—
Proceeds from exercise of stock options	—			—			3.7
Other	(0.1		)	(0.9		)	0.2
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(54.2		)	18.2			43.8
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(0.1		)	—			0.9
NET INCREASE IN CASH AND CASH EQUIVALENTS	2.3			0.9			0.8
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	3.3			2.4			1.6
CASH AND CASH EQUIVALENTS, END OF YEAR	$	5.6		$	3.3		$	2.4

See Notes to Consolidated Financial Statements

F-7

NEENAH PAPER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except as noted)

Note 1. Background and Basis of Presentation

Background

Neenah Paper, Inc. (“Neenah” or the “Company”), a Delaware corporation, was incorporated in April 2004 in contemplation of the spin-off by Kimberly-Clark Corporation (“Kimberly-Clark”) of its fine paper and technical products businesses in the United States and its pulp business in Canada (collectively, the “Pulp and Paper Business”). In November 2004, Kimberly-Clark completed the distribution of all of the shares of Neenah’s common stock to the stockholders of Kimberly-Clark (the “Spin-Off”). As a result of the Spin-Off, Kimberly-Clark transferred all of the assets and liabilities of the Pulp and Paper Business to Neenah. Following the Spin-Off, management began executing a strategy to exit the pulp business and transform the Company into a manufacturer of specialty papers.

The fine paper business is a leading producer of premium writing, text, cover and specialty papers used in corporate identity packages, corporate annual reports, invitations, personal stationery and high-end packaging for point of sale advertising. The technical products business is a leading international producer of transportation and other filter media; durable, saturated and coated substrates for a variety of end uses; and nonwoven wall coverings.

In August 2006, Neenah Canada transferred the Terrace Bay, Ontario pulp mill and related woodlands operations (“Terrace Bay”) to certain affiliates of Buchanan Forest Products Ltd. (“Buchanan”). Buchanan acquired substantially all of the assets of Terrace Bay and assumed responsibility for substantially all of the liabilities related to its future operation.  The results of operations of Terrace Bay are reported as discontinued operations on the consolidated statements of operations for all years presented.  See Note 5, “Discontinued Operations — Transfer of the Terrace Bay Mill.”

In March 2007, the Company acquired the stock of Fox Valley Corporation and its subsidiary, Fox River Paper Company, LLC (collectively, “Fox River”). The Company financed the acquisition through a combination of cash and debt drawn against its existing revolving credit facility. At the time of the acquisition, the Fox River assets consisted of four U.S. paper mills and various related assets. The results of Fox River are reported as part of the Company’s Fine Paper segment and have been included in the Company’s consolidated financial results since the acquisition date.

In February 2008, the Company committed to a plan to sell its pulp mill in Pictou, Nova Scotia (the “Pictou Mill”) and approximately 475,000 acres of woodland assets in Nova Scotia (the “Woodlands”). In June 2008, the Company’s wholly owned subsidiary, Neenah Paper Company of Canada (“Neenah Canada”) sold the Pictou Mill to Northern Pulp Nova Scotia Corporation (“Northern Pulp”), a new operating company jointly owned by Atlas Holdings LLC (“Atlas”) and Blue Wolf Capital Management LLC (“Blue Wolf”).  Pursuant to the terms of the transaction, Northern Pulp assumed all of the assets and liabilities associated with the Pictou Mill, as well as existing customer contracts, supply agreements, labor agreements and pension obligations. The sale did not include the Woodlands.

Management believes it is probable that the sale of the Woodlands will be completed within 12 months.  As of December 31, 2009, the assets and liabilities of the Woodlands are reported as assets held for sale—discontinued operations on the consolidated balance sheet.  On March 1, 2010, the Company announced that Neenah Canada had signed a definitive agreement to sell the Woodlands to Northern Timber Nova Scotia Corporation, a new operating company jointly owned by Atlas and Blue Wolf, for C$82.5 million ($78.6 million). See Note 17, “Subsequent Event.” For the years ended December 31, 2009 and 2008, the results of operations of the Pictou Mill and the Woodlands and the loss on disposal of the Pictou Mill are reported as discontinued operations in the consolidated statements of operations.  For the year ended December 31, 2007, the consolidated results of operations have been restated to reflect the results of operations of the Pictou Mill and the Woodlands as discontinued operations.  See Note 5, “Discontinued Operations — Sale of the Pictou Mill and the Woodlands.”

Basis of Presentation

The consolidated financial statements include the financial statements of the Company and its wholly owned and majority owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

F-8

Prior Year Adjustments

During the three months ended September 30, 2009, the Company identified and restated the accompanying December 31, 2008 consolidated balance sheet for the following errors: (i) a $7.3 million overstatement of Canadian deferred tax assets and unrealized foreign currency translation gains within stockholders’ equity and (ii) a $12.7 million understatement of the liability for uncertain tax positions and deferred tax assets as a result of errors identified in prior year income tax returns.  The net effect of these corrections on the consolidated balance sheet as of December 31, 2008 is an increase in current deferred tax assets of $12.1 million, a decrease in long-term deferred tax assets of $6.7 million, an increase of $12.7 million in accrued expenses and a decrease of $7.3 million in stockholders’ equity.  Interest associated with the uncertain tax positions noted above was immaterial for all historical years.  In addition, the Company reclassified $5.3 million from accounts payable to accrued expenses in the accompanying December 31, 2008 consolidated balance sheet to provide consistency in the reporting of certain liabilities between its U.S. and German operations and to conform to the current year presentation.  The net effect of these corrections on the consolidated statements of cash flows for the years ended December 31, 2008 and 2007 was to decrease the deferred tax benefit by $0.4 million and $5.9 million, respectively, and increase net cash provided by (used in) operating working capital.  The Company believes the effects of these prior year corrections individually and in the aggregate are immaterial to any prior year consolidated financial statements.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Actual results could differ from these estimates, and changes in these estimates are recorded when known. Significant management judgment is required in determining the accounting for, among other things, pension and postretirement benefits, retained insurable risks, allowances for doubtful accounts and reserves for sales returns and cash discounts, purchase price allocations, useful lives for depreciation, depletion and amortization, future cash flows associated with impairment testing for tangible and intangible long-lived assets, income taxes, contingencies, inventory obsolescence and market reserves and valuation of stock-based compensation.

Revenue Recognition

The Company recognizes sales revenue when all of the following have occurred: (1) delivery has occurred, (2) persuasive evidence of an agreement exists, (3) pricing is fixed or determinable, and (4) collection is reasonably assured. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership. The timing of revenue recognition is largely dependent on shipping terms. In general, the Company’s shipments are designated free on board shipping point and revenue is recognized at the time of shipment. Sales are reported net of allowable discounts and estimated returns. Reserves for cash discounts, trade allowances and sales returns are estimated using historical experience.

Earnings per Share (“EPS”)

The Company computes basic earnings (loss) per share (“EPS”) in accordance with Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share (“ASC Topic 260”).  In accordance with ASC Topic 260, share-based awards with non-forfeitable dividends are classified as participating securities. In calculating basic earnings per share, this method requires net income to be reduced by the amount of dividends declared in the current period for each participating security and by the contractual amount of dividends or other participation payments that are paid or accumulated for the current period. Undistributed earnings for the period are allocated to participating securities based on the contractual participation rights of the security to share in those current earnings assuming all earnings for the period are distributed. Holders of restricted stock, restricted stock units (“RSUs”) and RSUs with performance conditions have contractual participation rights that are equivalent to those of common stockholders. Therefore, the Company allocates undistributed earnings to restricted stock, RSUs and common stockholders based on their respective ownership percentage, as of the end of the period.

ASC Topic 260 also requires companies with participating securities to calculate diluted earnings per share using the “Two Class” method. The “Two Class” method requires the denominator to include the weighted average participating securities along with the additional share equivalents from the assumed conversion of stock options calculated using the “Treasury Stock” method, subject to the anti-dilution provisions of ASC Topic 260.  The Company adopted the “Two-Class” method on January 1, 2009.  For the years ended December 31, 2008 and 2007, EPS has been restated to reflect the retroactive application of the “Two Class” method.

F-9

Diluted EPS was calculated to give effect to all potentially dilutive common shares using the “Treasury Stock” method. Outstanding stock options, stock appreciation rights (“SARs”) and certain RSUs with performance conditions represent the only potentially dilutive non-participating security effects on the Company’s weighted-average shares.  For the years ended December 31, 2009, 2008 and 2007, approximately 1,700,000, 1,510,000 and 335,000 potentially dilutive options, respectively, were excluded from the computation of dilutive common shares because the exercise price of such options exceeded the average market price of the Company’s common stock for the period the options were outstanding. In addition, as a result of the loss from continuing operations for the years ended December 31, 2009 and 2008, approximately 160,000 and 130,000 incremental shares resulting from the assumed exercise or vesting of potentially dilutive securities were excluded from the diluted earnings per share calculation, as the effect would have been anti-dilutive.

The following table presents the computation of basic and diluted shares of common stock used in the calculation of EPS (amounts in millions, except share and per share amounts):

		Year Ended December 31,
		2009			2008			2007
Income (loss) from continuing operations		$	(1.8	)	$	(47.3	)	$	32.2
Less: Distributed and undistributed amounts allocated to participating securities (a)		—			0.1			0.3
Income (loss) from continuing operations available to common stockholders		(1.8		)	(47.4		)	31.9
Income (loss) from discontinued operations, net of income taxes		0.6			(111.2		)	(22.0		)
Net income (loss) available to common stockholders		$	(1.2	)	$	(158.6	)	$	9.9
Weighted-average basic shares outstanding		14,655			14,642			14,874
Add:	Assumed incremental shares under stock compensation plans	—			—			267
Assuming dilution		14,655			14,642			15,141
Earnings (Loss) Per Common Share
Basic
Continuing operations		$	(0.12	)	$	(3.24	)	$	2.15
Discontinued operations		0.04			(7.59		)	(1.48		)
		$	(0.08	)	$	(10.83	)	$	0.67
Diluted
Continuing operations		$	(0.12	)	$	(3.24	)	$	2.11
Discontinued operations		0.04			(7.59		)	(1.46		)
		$	(0.08	)	$	(10.83	)	$	0.65

(a)In accordance with ASC Topic 260, for the years ended December 31, 2009 and 2008 undistributed losses have been entirely allocated to common stockholders due to the fact that the holders of participating securities are not contractually obligated to share in the losses of the Company.

Financial Instruments

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less. The Company places its temporary cash investments with high credit quality financial institutions.

Inventories

U.S. inventories are valued at the lower of cost, using the Last-In, First-Out (LIFO) method for financial reporting purposes, or market. German inventories are valued at the lower of cost, using a weighted-average cost method, or market. The FIFO value of inventories valued on the LIFO method was $58.2 million and $66.5 million at December 31, 2009 and 2008, respectively.  Cost includes labor, materials and production overhead. For the years ended December 31, 2009 and 2008, the Company recognized income (expense) of approximately $0.1 million and $(0.1) million, respectively, due to the liquidation of LIFO inventories.

F-10

Foreign Currency

Balance sheet accounts of Neenah Germany and Neenah Canada are translated from Euros and Canadian dollars, respectively, into U.S. dollars at period-end exchange rates, and income and expense accounts are translated at average exchange rates during the period. Translation gains or losses related to net assets located in Germany and Canada are recorded as unrealized foreign currency translation adjustments within accumulated other comprehensive income (loss) in stockholders’ equity. Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity’s functional currency) are included in Other income—net in the consolidated statements of operations.

Property and Depreciation

Property, plant and equipment are stated at cost, less accumulated depreciation. Certain costs of software developed or obtained for internal use are capitalized. When property, plant and equipment is sold or retired, the costs and the related accumulated depreciation are removed from the accounts, and the gains or losses are recorded in other (income) expense—net. For financial reporting purposes, depreciation is principally computed on the straight-line method over the estimated useful asset lives. Weighted average useful lives are approximately 33 years for buildings, 9 years for land improvements and 17 years for machinery and equipment. For income tax purposes, accelerated methods of depreciation are used.

Estimated useful lives are periodically reviewed and, when warranted, changes are made to them. On January 1, 2009, the Company changed the estimated useful life of its Enterprise Resource Planning software from five years to eight years to more accurately reflect its expected future utilization of the software.  The change in the estimated useful life reduced depreciation expense for the year ended December 31, 2009 by $1.9 million or $0.08 per diluted share.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their cost may not be recoverable. An impairment loss would be recognized when estimated undiscounted future pre-tax cash flows from the use of the asset are less than its carrying amount. Measurement of an impairment loss is based on the excess of the carrying amount of the asset over its fair value. Fair value is generally measured using discounted cash flows. See Note 5 “Discontinued Operations — Sale of the Pictou Mill and the Woodlands” for a discussion of asset impairment losses recorded for the year ended December 31, 2008 related to the Pictou Mill’s long-lived assets.

The costs of major rebuilds and replacements of plant and equipment are capitalized, and the cost of maintenance performed on manufacturing facilities, composed of labor, materials and other incremental costs, is charged to operations as incurred. Start-up costs for new or expanded facilities are expensed as incurred.

Woodlands

As of December 31, 2009 and 2008, the Company had $3.8 million and $3.3 million, respectively, in woodland assets reported at their historical book value on the Consolidated Balance Sheet as assets held for sale. Woodland assets are stated at cost, less the accumulated cost of timber previously harvested. In accordance with ASC Topic 360, Property, Plant and Equipment (“ASC Topic 360”) the Company does not recognize depletion expense for woodland assets recorded as assets held for sale. See Note 17, “Subsequent Event.”

Goodwill and Other Intangible Assets

The Company follows the guidance of ASC Topic 805, Business Combinations (“ASC Topic 805”), in recording goodwill arising from a business combination as the excess of purchase price and related costs over the fair value of identifiable assets acquired and liabilities assumed.  All of the Company’s goodwill was acquired in conjunction with the acquisition of the stock of FiberMark Services GmbH & Co. KG and the stock of FiberMark Beteiligungs GmbH (collectively, “Neenah Germany”) in October 2006.

F-11

Under ASC Topic 350, Intangibles - Goodwill and Other (“ASC Topic 350”), goodwill is subject to impairment testing at least annually. A fair-value-based test is applied at the reporting unit level, which is generally one level below the segment level. The test compares the fair value of an entity’s reporting units to the carrying value of those reporting units. This test requires various judgments and estimates. The Company estimates the fair value of the reporting unit using a market approach in combination with a probability-weighted discounted operating cash flow approach for a number of scenarios representing differing operating and economic assumptions. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit. An adjustment to goodwill will be recorded for any goodwill that is determined to be impaired. The Company tests goodwill for impairment at least annually on November 30 in conjunction with preparation of its annual business plan, or more frequently if events or circumstances indicate it might be impaired. The Company last tested goodwill for impairment as of November 30, 2009 and no impairment was indicated.  An impairment of goodwill was indicated in the Company’s test of goodwill for impairment as of November 30, 2008. See Note 4, “Goodwill and Other Intangible Assets.”

Intangible assets with finite useful lives are amortized on a straight-line basis over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360. Intangible assets consist primarily of customer relationships, trade names and acquired intellectual property. Such intangible assets are amortized using the straight-line method over estimated useful lives of between 10 and 15 years.  Certain trade names are estimated to have indefinite useful lives and as such are not amortized.  Intangible assets with indefinite lives are reviewed for impairment annually in accordance with ASC Topic 350. See Note 4, “Goodwill and Other Intangible Assets.”

Research Expense

Research and development costs are charged to expense as incurred and are recorded in “Selling, general and administrative expenses” on the consolidated statement of operations.  See Note 15, “Supplemental Data — Supplemental Statement of Operations Data.”

Fair Value of Financial Instruments

The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities. The fair value of short and long-term debt is estimated using current market prices for the Company’s publicly traded debt or rates currently available to the Company for debt of the same remaining maturities. The following table presents the carrying value and the fair value of the Company’s debt at December 31, 2009 and 2008.

	December 31, 2009				December 31, 2008
	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior Notes (7.375% fixed rate)	$	225.0	$	208.6	$	225.0	$	126.5
Neenah Germany project financing (3.8% fixed rate)	12.5		12.0		14.0		13.3
Revolving bank credit facility (variable rates)	27.9		27.9		101.1		101.1
Term Loan (variable rates)	40.0		40.0		7.2		7.2
Neenah Germany revolving line of credit (variable rates)	12.9		12.9		17.3		17.3
Other debt (2.9% fixed rate)	0.9		0.9		—		—
Long-term debt	$	319.2	$	302.3	$	364.6	$	265.4

Other Comprehensive Income (Loss)

Comprehensive income (loss) includes, in addition to net income (loss), gains and losses recorded directly into stockholders’ equity on the consolidated balance sheet. These gains and losses are referred to as other comprehensive income items. Accumulated other comprehensive income (loss) consists of foreign currency translation gains and (losses), deferred gains and (losses) on cash flow hedges, and adjustments related to pensions and other post-retirement benefits. Income taxes are not provided for foreign currency translation adjustments related to indefinite investments in Neenah Germany. The Company also does not provide income taxes for foreign currency translation adjustments for its Canadian operations.  For the years ended December 31, 2009 and 2008, the Company did not record deferred taxes related to future funds expected to be repatriated upon the sale of the Woodlands because there are no expected tax consequences considering the anticipated proceeds from the disposal of the Woodlands.

F-12

Changes in the components of other comprehensive income (loss) are as follows:

	Year Ended December 31,
	2009							2008									2007
	Pretax Amount		Tax Effect			Net Amount		Pretax Amount			Tax Effect			Net Amount			Pretax Amount			Tax Effect			Net Amount
Foreign currency translation	$	4.1	$	—		$	4.1	$	(30.1	)	$	—		$	(30.1	)	$	58.0		$	—		$	58.0
Adjustment to pension and other benefit liabilities	4.6		(1.6		)	3.0		26.4			(10.1		)	16.3			48.2			(17.5		)	30.7
Deferred loss on cash flow hedges	—		—			—		(0.5		)	0.2			(0.3		)	(0.1		)	—			(0.1		)
Other comprehensive income (loss)	$	8.7	$	(1.6	)	$	7.1	$	(4.2	)	$	(9.9	)	$	(14.1	)	$	106.1		$	(17.5	)	$	88.6

The components of accumulated other comprehensive income (loss), net of applicable income taxes are as follows:

	December 31,
	2009			2008
Foreign currency translation	$	112.8		$	108.7
Adjustment to pension and other benefit liabilities (net of income tax benefits of $14.0 million and $15.6 million, respectively)	(21.3		)	(24.3		)
Accumulated other comprehensive income	$	91.5		$	84.4

Accounting Standards Changes

On July 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162 (“SFAS No. 168”).  SFAS No. 168 established the ASC as the source of authoritative U.S. GAAP to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS No. 168 supersedes all existing non-SEC accounting and reporting standards.  All non-SEC accounting literature not included in the ASC is non authoritative. The Company’s adoption of SFAS No. 168 did not have an effect on its financial position, results of operations or cash flows.

As of January 1, 2009, the Company adopted the enhanced required annual disclosures about plan assets in an employer’s defined benefit pension or other postretirement plan  in ASC Topic 715, “Compensation—Retirement Benefits.” Such enhanced disclosures include, but are not limited to, investment allocation decisions, the inputs and valuation techniques used to measure the fair value of plan assets and significant concentrations of risk within plan assets.  See Note 8, “Pension and Other Postretirement Benefits—Plan Assets.”

On December 15, 2009, the Company adopted the disclosure requirements of Accounting Standards Update No. 2009-12 which amends ASC sub-topic 820-10, Fair Value Measurements and Disclosures (“ASU No. 2009-12”). ASU No. 2009-12 permits a reporting entity, as a practical expedient, to estimate the fair value of an investment using the net asset value per share (or its equivalent) of the investment, if the net asset value per share of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of ASC Topic 946, Financial Services—Investment Companies as of the reporting entity’s measurement date.  The Company’s adoption of ASU No. 2009-12 did not have an effect on its results of operations, financial position or cash flows.

As of December 31, 2009, no amendments to the ASC had been issued but not adopted by the Company that will have or are reasonably likely to have a material effect on its results of operations, financial position or cash flows.

F-13

Note 3.  Closure of the Ripon Mill

In May 2009, the Company permanently closed the Ripon Mill.  The closure resulted in a pre-tax charge of $17.1 million for the year ended December 31, 2009.  The charge was comprised of approximately $5.8 million in non-cash charges primarily for losses related to the carrying value of property, plant and equipment, a curtailment loss of $0.8 million related to postretirement benefit plans in which employees of the Ripon Mill participated (see Note 8) and cash payments for contract terminations and severance and other employee costs of approximately $10.5 million.  The Company paid approximately $6.5 million of such costs in 2009, with the remaining payments in 2010 and beyond.

As of December 31, 2009, the remaining long-lived assets of the Ripon Mill, primarily composed of land and buildings, are classified as Prepaid and other current assets on the consolidated balance sheet.  The Company believes that the sale of such assets will be completed within 12 months. Assets held for sale are valued at the lower of cost or fair value less cost to sell. The assets of the Ripon Mill are reported at their aggregate cost of $6.2 million.

The Company accounted for the costs associated with the closure of the Ripon Mill in accordance with ASC Topic 420, Exit or Disposal Cost Obligations.  As of December 31, 2009, approximately $1.7 million in severance benefits had been paid to 96 former employees of the Ripon Mill and severance benefits of approximately $0.1 million due to one former employee of the Ripon Mill remained unpaid. The following table presents the status of such closure costs as of and for the year ended December 31, 2009:

	Severance benefits			Contract termination and other costs			Total
Amounts accrued during the year ended December 31, 2009	$	1.8		$	8.7		$	10.5
Payments for the year ended December 31, 2009	(1.7		)	(4.8		)	(6.5		)
Accrued exit costs at December 31, 2009	$	0.1		$	3.9		$	4.0

Note 4. Goodwill and Other Intangible Assets

As of December 31, 2009, the Company had goodwill of $44.9 million which is not amortized.  The following table presents changes in goodwill (all of which relates to the Company’s Technical Products segment) for the years ended December 31, 2009, 2008 and 2007:

	Gross Amount			Accumulated Impairment Losses			Net
Balance at December 31, 2006	$	92.0		$	—		$	92.0
Finalization of Neenah Germany purchase price allocation	4.0			—			4.0
Foreign currency translation	10.6			—			10.6
Balance at December 31, 2007	106.6			—			106.6
Goodwill impairment charge	—			(52.7		)	(52.7		)
Foreign currency translation	(10.1		)	—			(10.1		)
Balance at December 31, 2008	96.5			(52.7		)	43.8
Foreign currency translation	2.4			(1.3		)	1.1
Balance at December 31, 2009	$	98.9		$	(54.0	)	$	44.9

F-14

Impairment

The Company’s annual test of goodwill for impairment at November 30, 2008, indicated that the carrying value of Neenah Germany exceeded its estimated fair value.  The Company estimated fair value using a market approach in combination with a probability-weighted discounted operating cash flow approach for a number of scenarios representing differing operating and economic assumptions.  Significant assumptions used in developing the discounted operating cash flow approach were revenue growth rates and pricing, costs for manufacturing inputs, levels of capital investment and estimated cost of capital for high, medium and low growth environments. The Company measured the estimated fair value of goodwill as the excess of the carrying amount of Neenah Germany over the fair values of recognized assets and liabilities of the reporting unit.  The Company recorded an impairment adjustment to goodwill for the excess of the carrying value of goodwill assigned to Neenah Germany over the estimated fair value of goodwill.  For the year ended December 31, 2008, the Company recognized a pre-tax loss of $52.7 million (the Company did not recognize a tax benefit related to the non tax deductible loss) for the impairment of goodwill assigned to Neenah Germany. The impairment loss was primarily due to a substantial increase in the estimated cost of capital the Company used to calculate the present value of Neenah Germany’s estimated future cash flows which resulted in a substantially lower estimated fair value. The higher estimated cost of capital reflected market/financial conditions at the time the annual impairment test was performed which indicated higher risk premiums for debt and equity.

As of December 31, 2009, the carrying amount of goodwill assigned to Neenah Germany was considered recoverable.  As of December 31, 2009, a one percentage point increase in the Company’s estimate for its cost of capital used in the impairment test would result in an approximately $25 million change in the estimated fair value of Neenah Germany and a corresponding reduction in the implied value of goodwill but would not result in an impairment of goodwill.

F-15

Other Intangible Assets

As of December 31, 2009, the Company had net identifiable intangible assets of $27.5 million. All such intangible assets were acquired in the Neenah Germany and Fox River acquisitions. The following table details amounts related to those assets.

	Trade names			Customer based intangibles			Trade names and Trademarks			Acquired Technology			Total Intangible Assets
Cost
Balance at December 31, 2006	$	7.2		$	16.2		$	5.3		$	1.1		$	29.8
Amounts acquired in the acquisition of Fox River	2.6			—			0.3			—			2.9
Foreign currency translation	0.2			1.7			1.3			0.1			3.3
Balance at December 31, 2007	$	10.0		$	17.9		$	6.9		$	1.2		$	36.0
Less : Accumulated amortization
Balance at December 31, 2006	$	—		$	(0.2	)	$	(0.1	)	$	—		$	(0.3	)
Amortization	—			(1.2		)	(0.6		)	(0.1		)	(1.9		)
Foreign currency translation	—			(0.1		)	—			(0.1		)	(0.2		)
Balance at December 31, 2007	$	—		$	(1.5	)	$	(0.7	)	$	(0.2	)	$	(2.4	)
Intangible assets-net at December 31, 2007	$	10.0		$	16.4		$	6.2		$	1.0		$	33.6
Cost
Balance at December 31, 2007	$	10.0		$	17.9		$	6.9		$	1.2		$	36.0
Purchased intangibles	—			—			0.2			—			0.2
Impairment charge	—			(1.9		)	(0.3		)	—			(2.2		)
Foreign currency translation	(0.3		)	(0.8		)	(0.3		)	(0.1		)	(1.5		)
Balance at December 31, 2008	$	9.7		$	15.2		$	6.5		$	1.1		$	32.5
Less : Accumulated amortization
Balance at December 31, 2007	$	—		$	(1.5	)	$	(0.7	)	$	(0.2	)	$	(2.4	)
Amortization	—			(1.2		)	(0.6		)	(0.1		)	(1.9		)
Impairment charge	—			0.4			—			—			0.4
Foreign currency translation	—			—			—			0.1			0.1
Balance at December 31, 2008	$	—		$	(2.3	)	$	(1.3	)	$	(0.2	)	$	(3.8	)
Intangible assets-net at December 31, 2008	$	9.7		$	12.9		$	5.2		$	0.9		$	28.7
Cost
Balance at December 31, 2008	$	9.7		$	15.2		$	6.5		$	1.1		$	32.5
Foreign currency translation	0.2			0.3			0.1			0.1			0.7
Balance at December 31, 2009	$	9.9		$	15.5		$	6.6		$	1.2		$	33.2
Less : Accumulated amortization
Balance at December 31, 2008	$	—		$	(2.3	)	$	(1.3	)	$	(0.2	)	$	(3.8	)
Amortization	—			(1.0		)	(0.6		)	(0.2		)	(1.8		)
Foreign currency translation	—			(0.1		)	—			—			(0.1		)
Balance at December 31, 2009	$	—		$	(3.4	)	$	(1.9	)	$	(0.4	)	$	(5.7	)
Intangible assets-net at December 31, 2009	$	9.9		$	12.1		$	4.7		$	0.8		$	27.5
Weighted Average Amortization Period (Years)	Not amortized			15			10			10			10

F-16

The intangible assets acquired in the Fox River acquisition are reported within the Fine Paper segment.  See Note 14, “Business Segment and Geographic Information.”  Aggregate amortization expense of acquired intangible assets for the years ended December 31, 2009, 2008 and 2007 was $1.8 million, $1.9 million and $1.9 million, respectively.  Estimated annual amortization expense for each of the next five years is approximately $1.8 million.

The Company’s annual test of other intangible assets for impairment at November 30, 2009, indicated that the carrying amount of such intangible assets was recoverable. The Company determined during its annual test of intangible assets for impairment at November 30, 2008 that certain trade names and customer based intangible assets acquired in the Neenah Germany acquisition were impaired at December 31, 2008.  For the year ended December 31, 2008, the Company recognized a non-cash pre-tax charge of approximately $1.8 million for the impairment of such intangible assets.

Note 5. Discontinued Operations

Sale of the Pictou Mill and the Woodlands

As of December 31, 2006, the Company’s pulp operations consisted of the Pictou Mill and the Woodlands. The Company considered its pulp operations as non-strategic assets and sought opportunities to reduce its exposure to the cyclical commodity pulp business. In the first quarter of 2007, the Company engaged a nationally known investment banking firm to identify buyers interested in acquiring the Pictou Mill and/or the Woodlands. Throughout 2007, the Company actively pursued opportunities to maximize the value of these assets through a sale or divesture, however, as of December 31, 2007, the Company did not believe it was probable that the assets could be sold within 12 months.

In February 2008, Atlas was identified as a party interested in acquiring the Pictou Mill. The transaction with Atlas did not include the Woodlands. At that time, the Company committed to a plan to sell the Pictou Mill to Atlas and to separately pursue purchasers of the Woodlands. In June 2008, Neenah Canada completed the sale of the Pictou Mill to Northern Pulp, a new operating company jointly owned by Atlas Holdings LLC and Blue Wolf Capital Management LLC.  In connection with the transfer of the Pictou Mill, Neenah Canada made payments of approximately $10.3 million to Northern Pulp. In addition, the Company incurred transaction costs of approximately $3.3 million. Pursuant to the terms of the transaction, Northern Pulp assumed all of the assets and liabilities associated with the Pictou Mill, as well as existing customer contracts, supply agreements (including a pulp supply agreement with Kimberly-Clark), labor agreements and pension obligations.

In conjunction with the sale of the Pictou Mill, the Company entered into a stumpage agreement (the “Stumpage Agreement”) which allows Northern Pulp to harvest an average of approximately 400,000 metric tons of softwood timber annually from the Woodlands. The Stumpage Agreement is for a term of ten years and Northern Pulp has the option to extend the agreement for an additional three years.  For calendar year 2008, Northern Pulp paid a nominal amount for approximately 236,000 metric tons of softwood timber harvested under the Stumpage Agreement.  As a result, the Company recorded $2.8 million in deferred revenue for the estimated fair value of the timber to be harvested by Northern Pulp in calendar 2008.  For the year ended December 31, 2008, the Company recognized all of such deferred revenue. For timber purchases during calendar year 2009, Northern Pulp paid the stumpage rate charged by the Nova Scotia provincial government for harvesting on government licensed lands. The price paid for timber purchases during the remainder of the Stumpage Agreement will be based on an agreed upon formula for estimating market prices. The Company believes the Stumpage Agreement prices for calendar year 2009 and beyond represent market rates.  Northern Pulp has agreed to pay substantially all costs associated with maintaining the Woodlands and harvesting the timber.  The Stumpage Agreement will be terminated in conjunction with the sale of the Woodlands.

During the first quarter of 2008, the Company determined that the estimated value it would receive from a sale of the Pictou Mill indicated that it would not recover the carrying value of the mill’s long-lived assets. As a result, the Company recognized aggregate non-cash, pre-tax impairment charges of $91.2 million to write-off the carrying value of the Pictou Mill’s long-lived assets. In addition, for the year ended December 31, 2008, the Company recorded a pre-tax loss of $29.4 million to recognize the loss on disposal of the Pictou Mill.

In conjunction with the sale of the Pictou Mill, Northern Pulp assumed responsibility for all pension and other postretirement benefit obligations for active and retired employees of the mill. The Company accounted for the transfer of the Nova Scotia, Canada defined benefit pension plan (the  “Nova Scotia Plan”) as a settlement of postretirement benefit obligations pursuant to ASC Topic 715. For the year ended December 31, 2008, the Company recognized a non-cash, pre-tax settlement loss of $53.7 million for the reclassification of deferred pension and other postretirement benefit adjustments related to the Nova Scotia Plan from accumulated other comprehensive income to loss from discontinued operations in the consolidated statement of operations.

F-17

On March 1, 2010, the Company announced that Neenah Canada had signed a definitive agreement to sell the Woodlands.  See Note 17, “Subsequent Event.”  As of December 31, 2009 and 2008, the Woodlands are reported as assets held for sale on the consolidated balance sheet. The results of operations of the Pictou Mill and the Woodlands and the loss on disposal of the Pictou Mill are reported as discontinued operations in the consolidated statements of operations for all years presented. Assets held for sale are valued at the lower of cost or fair value less cost to sell. As of December 31, 2009 and 2008, the assets of the Woodlands are reported at their historical book cost of $3.8 million and $3.3 million, respectively.

Transfer of the Terrace Bay Mill

In August 2006, Neenah Canada transferred Terrace Bay to Buchanan, which assumed responsibility for substantially all liabilities related to the future operation of Terrace Bay.  At closing, Neenah Canada retained certain working capital amounts and pension and long-term disability obligations for current and former mill employees and postretirement medical and life insurance obligations for current retirees.

As a closing condition of the agreement to transfer Terrace Bay to Buchanan, Neenah Canada initiated plans to curtail and settle its Ontario, Canada defined benefit pension plan (the “Ontario Plan”). In December 2007, the Ontario Plan was terminated and all outstanding pension obligations for active employees were settled through the purchase of annuity contracts or lump-sum payments pursuant to participant elections. For the year ended December 31, 2007, Neenah Canada recognized a non-cash pre-tax settlement loss of $38.7 million upon termination of the Ontario Plan.

During the first quarter of 2008, Neenah Canada paid approximately $5.0 million to settle litigation related to the reduction and/or elimination of certain retiree benefits following the transfer of Terrace Bay to Buchanan.  In conjunction with the settlement, Neenah Canada agreed to continue certain retiree life insurance benefits at a reduced rate in the future.  As a result of the settlement, for the year ended December 31, 2008, Neenah Canada recorded a curtailment gain of approximately $4.3 million which is recorded in other income-net on the consolidated statement of operations.  For all years presented, the results of operations of Terrace Bay are reflected as discontinued operations in the consolidated statements of operations.

The following table presents the results of discontinued operations:

	Year Ended December 31,
	2009			2008			2007
Net sales, net of intersegment sales (a)	$	3.7		$	101.9		$	223.5
Discontinued operations:
Income (loss) from operations
Pictou Mill and the Woodlands (b)	$	2.8		$	(97.8	)	$	13.3
Terrace Bay (c)	—			—			(44.9		)
Income (loss) from operations	2.8			(97.8		)	(31.6		)
Loss on disposal - Pictou Mill	(0.3		)	(29.4		)	—
Loss on settlement of post-employment benefit plans	—			(53.7		)	—
Loss on disposal	(0.3		)	(83.1		)	—
Income (loss) before income taxes	2.5			(180.9		)	(31.6		)
(Provision) benefit for income taxes	(1.9		)	69.7			9.6
Income (loss) from discontinued operations, net of income taxes	$	0.6		$	(111.2	)	$	(22.0	)

(a)For the years ended December 31, 2009 and 2008, represent net sales of the Pictou Mill and the Woodlands only.

(b)For the year ended December 31, 2008, the loss from operations includes aggregate non-cash, pre-tax impairment charges of $91.2 million to write-off the carrying value of the Pictou Mill’s long-lived assets.

(c)For the year ended December 31, 2007, the loss from operations includes a loss of $38.7 million related to the settlement of the Ontario Plan.

F-18

Note 6. Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC Topic 740”).  Income tax expense (benefit) represented (73.5) percent, 6.8 percent and (13.0) percent of income (loss) from continuing operations before income taxes for the years ended December 31, 2009, 2008 and 2007, respectively. The following table presents the principal reasons for the difference between the effective income tax provision (benefit) rate and the U.S. federal statutory income tax provision (benefit) rate:

	Year Ended December 31,
	2009					2008					2007
U.S. federal statutory income tax provision (benefit)	(35.0	)%	$	(2.4	)	(35.0	)%	$	(15.5	)	35.0	%	$	10.0
U.S. state income taxes, net of federal income tax effect	(3.3	)%	(0.2		)	0.5	%	0.2			0.8	%	0.2
Uncertain income tax positions	39.1	%	2.7			—		—			—		—
Nondeductible goodwill and other intangible asset impairment charge	—		—			33.0	%	14.6			—		—
Limitation on tax benefits available to Fox River	—		—			8.8	%	3.9			—		—
Enacted German tax law changes	—		—			—					(30.7	)%	(8.8		)
Foreign tax rate differences	(47.2	)%	(3.2		)	1.0	%	0.4			(10.6	)%	(3.0		)
Other differences—net	(27.1	)%	(1.9		)	(1.5	)%	(0.6		)	(7.5	)%	(2.1		)
Effective income tax provision (benefit)	(73.5	)%	$	(5.0	)	6.8	%	$	3.0		(13.0	)%	$	(3.7	)

The Company’s effective income tax (benefit) rate can be affected by many factors, including but not limited to, changes in the mix of earnings in taxing jurisdictions with differing statutory rates, changes in corporate structure as a result of business acquisitions and dispositions, changes in the valuation of deferred tax assets and liabilities, the results of audit examinations of previously filed tax returns and changes in tax laws. During the year ended December 31, 2007, German tax laws were amended to reduce statutory income tax rates effective as of January 1, 2008. Application of the new rates to the Company’s existing deferred tax assets and liabilities reduced the Company’s net deferred tax liabilities at December 31, 2007. The reduction in the Company’s net deferred tax liabilities due to the benefit of the enacted tax rate change resulted in an income tax benefit of $8.8 million for the year ended December 31, 2007 in accordance with ASC Topic 740.

The following table presents the U.S. and foreign components of income (loss) from continuing operations before income taxes:

	Year Ended December 31,
	2009			2008			2007
Income (loss) from continuing operations before income taxes:
U.S.	$	(13.3	)	$	3.1		$	6.6
Foreign	6.5			(47.4		)	21.9
Total	$	(6.8	)	$	(44.3	)	$	28.5

F-19

The following table presents the components of the provision (benefit) for income taxes:

	Year Ended December 31,
	2009			2008			2007
Provision (benefit) for income texes:
Current:
Federal	$	2.5		$	0.9		$	9.9
State	1.0			(0.4		)	1.1
Foreign	1.9			1.2			6.1
Total current tax provision	5.4			1.7			17.1
Deferred:
Federal	(7.5		)	3.9			(9.8		)
State	(0.6		)	1.3			(0.9		)
Foreign	(2.3		)	(3.9		)	(10.1		)
Total deferred tax provision (benefit)	(10.4		)	1.3			(20.8		)
Total provision (benefit) for income taxes	$	(5.0	)	$	3.0		$	(3.7	)

The Company has elected to treat its Canadian operations as a branch for U.S. income tax purposes. Therefore, the amount of income (loss) before income taxes from Canadian operations are included in the Company’s consolidated U.S. income tax returns and such amounts are subject to U.S. income taxes.

F-20

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The components of deferred tax assets and liabilities are as follows:

	December 31,
	2009			2008
Net current deferred income tax assets
Canadian timberlands	$	28.2		$	28.2
Intangible assets	20.1			19.9
Net operating losses	7.7			10.9
Accrued liabilities	3.9			4.5
Employee benefits	1.3			2.2
Inventory	(0.1		)	(1.2		)
Other	1.3			0.9
Net current deferred income tax assets before valuation allowance	62.4			65.4
Valuation allowance	(0.7		)	—
Net current deferred income tax assets	61.7			65.4
Net noncurrent deferred income tax assets
Employee benefits	32.3			24.7
Net operating losses and tax credits	28.0			35.9
Other long-term obligations	0.6			0.8
Accumulated depreciation	(22.7		)	(23.9		)
Other	—			(2.2		)
Net noncurrent deferred income tax assets before valuation allowance	38.2			35.3
Valuation allowance	(0.8		)	—
Net noncurrent deferred income tax assets	37.4			35.3
Total deferred income tax assets	$	99.1		$	100.7
Net noncurrent deferred income tax liability
Accumulated depreciation	$	22.8		$	21.0
Intangibles	6.2			6.8
Interest limitation	(3.2		)	(1.7		)
Employee benefits	(1.7		)	0.5
Other	(0.4		)	(1.2		)
Net noncurrent deferred income tax liabilities	$	23.7		$	25.4

As of December 31, 2009, a valuation allowance of $1.5 million has been provided on deferred income tax assets. In determining the need for valuation allowances, the Company considers many factors, including specific taxing jurisdictions, sources of taxable income, income tax strategies and forecasted earnings for the entities in each jurisdiction. A valuation allowance is recognized if, based on the weight of available evidence, the Company concludes that it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

As of December 31, 2009, the Company had $65.3 million of U.S. Federal and $75.4 million of U.S. State net operating losses, substantially all of which may be carried forward to offset future taxable income through 2029. The Company also has preacquisition and recognized built-in carryovers of approximately $16.1 million, net of expected limitations. In addition, the Company has $2.8 million of AMT carryovers, which can be carried forward indefinitely.

No provision for U.S. income taxes has been made for undistributed earnings of certain of the Company’s foreign subsidiaries which have been indefinitely reinvested. The Company is unable to estimate the amount of U.S. income taxes that would be payable if such undistributed foreign earnings were repatriated.

F-21

The following is a tabular reconciliation of the total amounts of uncertain tax positions as of and for the years ended December 31, 2009, 2008 and 2007:

	For the Years Ended December 31,
	2009			2008			2007
Balance at January 1,	$	12.9		$	13.3		$	—
Initial adoption	—			—			12.9
Increase in prior period tax positions	4.2			0.2			—
Decrease in prior period tax positions	(0.1		)	(1.0		)	(5.5		)
Increase in current period tax positions	0.5			0.4			5.9
Decrease due to settlements with tax authorities	(8.0		)	—			—
Balance at December 31,	$	9.5		$	12.9		$	13.3

If recognized, approximately $2.1 million of the benefit for uncertain tax positions at December 31, 2009 would favorably affect the Company’s effective tax rate in future periods. The Company does not anticipate that the expiration of the statute of limitations or the settlement of audits in the next 12 months will result in liabilities for uncertain income tax positions that are materially different than the amounts accrued as of December 31, 2009.

Tax years 2004 through 2008 are subject to examination by federal and state tax authorities in the United States, federal and provincial tax authorities in Canada and federal and municipal tax authorities in Germany. During 2009, the Company settled Internal Revenue Service (the “IRS”) examinations of the 2004, 2005 and 2006 tax years.  As of December 31, 2009, the 2007 and 2008 tax years are being audited by the IRS; the 2005, 2006 and 2007 tax years are being audited by German tax authorities and the 2004, 2005, 2006 and 2007 tax years are being audited by Canadian tax authorities.

The Company recognizes accrued interest and penalties related to uncertain income tax positions in the Provision (benefit) for income taxes on the consolidated statements of operations. As of December 31, 2009 and 2008, the Company had $0.7 million and $0.1 million, respectively, accrued for interest related to uncertain income tax positions.

Note 7. Debt

Long-term debt consisted of the following:

	December 31,
	2009		2008
Senior Notes (7.375% fixed rate) due 2014	$	225.0	$	225.0
Revolving bank credit facility (variable rates), due 2013	27.9		101.1
Term Loan (variable rates), due 2013	40.0		7.2
Neenah Germany project financing (3.8% fixed rate) due in 16 equal semi-annual installments beginning June 2009	12.5		14.0
Neenah Germany revolving line of credit (variable rates)	12.9		17.3
Other debt (2.9% fixed rate) due in November 2010	0.9		—
Total Debt	319.2		364.6
Less: Debt payable within one year	55.6		24.1
Long-term debt	$	263.6	$	340.5

Senior Unsecured Notes

On November 30, 2004, the Company completed an underwritten offering of ten-year senior unsecured notes (the “Senior Notes”) at an aggregate face amount of $225 million. Interest on the Senior Notes is payable May 15 and November 15 of each year. The Senior Notes are fully and unconditionally guaranteed by substantially all of the Company’s subsidiaries, with the exception of Neenah Germany.

F-22

Amended and Restated Secured Revolving Credit Facility

On November 5, 2009, the Company renewed and modified its Bank Credit Agreement by entering into an amended and restated credit agreement (as amended and restated, the “Restated Credit Agreement”) by and among the Company, certain of its subsidiaries as co-borrowers, Neenah Canada, as guarantor, the lenders listed in the Restated Credit Agreement and JPMorgan Chase Bank, N.A., as agent for the lenders.  The Restated Credit Agreement consists of a $100 million senior, secured revolving credit facility (the “New Revolver”) and (ii) a $40 million senior secured term loan (the “New Term Loan”).  The Company’s ability to borrow under the New Revolver is limited to the lowest of (a) $100 million; (b) the Company’s borrowing base (as determined in accordance with the Restated Credit Agreement) and (c) the applicable cap on the amount of “credit facilities” under the indenture for the Senior Notes.  In addition, under certain conditions, the Company has the ability to increase the size of the New Revolver by up to $50 million. The total commitment under the Restated Credit Agreement cannot exceed $150 million. The Restated Credit Agreement terminates on November 30, 2013.

The New Revolver bears interest at either (1) a prime rate-based index plus a percentage ranging from 2.00% to 2.50%, or (2) LIBOR plus a percentage ranging from 3.50% to 4.00%, depending upon the amount of availability under the New Revolver.  Upon the sale of the Woodlands, these percentages will each be reduced by 0.25%.  See Note 17, “Subsequent Event.” The sale of the Ripon Mill will reduce such percentages by an additional 0.25%. The New Term Loan will bear interest at either (A) a prime rate-based index plus 2.75%, or (B) LIBOR plus 4.25%.  Interest is computed based on actual days elapsed in a 360-day year, payable monthly in arrears for prime-rate based loans, or payable monthly in arrears and at the end of the applicable interest period for LIBOR loans.  The Company is also required to pay a monthly facility fee on the unused amount of the New Revolver commitment, calculated at the per annum rate of 0.50% while the New Term Loan remains outstanding, and after the New Term Loan has been repaid in full, at a per annum rate ranging between 0.50% and 0.75%, depending upon usage under the New Revolver.

The Restated Credit Agreement is secured by substantially all of the assets of the Company and the subsidiary borrowers, including the capital stock of such subsidiaries, and is guaranteed by Neenah Canada.  Neenah Canada’s guaranty is secured by substantially all of that subsidiary’s assets.  Neenah Germany is not obligated with respect to the Restated Credit Agreement, either as a borrower or a guarantor; however, the Company has directly or indirectly pledged 65% of its equity interest in Neenah Germany as security for the obligations of the Company and its subsidiaries under the Restated Credit Agreement.

The weighted-average interest rate on outstanding New Revolver borrowings as of December 31, 2009 was 4.6 percent per annum. Interest on amounts borrowed under the New Revolver is paid monthly. Amounts outstanding under the New Revolver may be repaid, in whole or in part, at any time without premium or penalty except for specified make-whole payments on LIBOR-based loans.  All principal amounts outstanding under the New Revolver are due and payable on the date of termination of the Restated Credit Agreement. Borrowing availability under the New Revolver is reduced by outstanding letters of credit and reserves for certain other items as defined in the Restated Credit Agreement. Availability under the Restated Credit Agreement will fluctuate over time depending on the value of the Company’s inventory, receivables and various capital assets. As of December 31, 2009, the Company had approximately $2.0 million of letters of credit and other items outstanding which reduced availability and $60.6 million of borrowing availability under the New Revolver.  The Company’s borrowing base will be reduced by approximately $9.1 million upon the sale of the remaining assets of the Ripon Mill and its ability to use proceeds from the sale is restricted to “permitted uses” as defined in the indenture for the Senior Notes.

The weighted-average interest rate on outstanding New Term Loan borrowings as of December 31, 2009 was 4.5 percent per annum.  Commencing April 30, 2010, the Company will be required to make quarterly principal payments on the New Term Loan of $1.25 million per quarter with a final payment of $21.25 million in November 2013. The Company is required to use proceeds from the sale of the Woodlands to prepay the New Term Loan.  On March 1, 2010, the Company announced that Neenah Canada had signed a definitive agreement to sell the Woodlands and therefore has classified the New Term Loan as Debt payable within one year on the consolidated balance sheet as of December 31, 2009.  See Note 17, “Subsequent Event.” The Company used a portion of the New Term Loan proceeds to repay the Term Loan (see below) in full.

The Restated Credit Agreement contains events of default customary for financings of this type, including failure to pay principal or interest, materially false representations or warranties, failure to observe covenants and other terms of the Restated Credit Agreement, cross-defaults to certain other indebtedness, bankruptcy, insolvency, various ERISA violations, the incurrence of material judgments and changes in control.

F-23

The Restated Credit Agreement contains covenants with which the Company must comply during the term of the agreement.  Among other things, such covenants restrict the Company’s ability to incur certain additional debt, make specified restricted payments and capital expenditures, authorize or issue capital stock, enter into transactions with affiliates, consolidate or merge with or acquire another business, sell certain of its assets, or dissolve or wind up.  In addition, the terms of the Restated Credit Agreement require the Company to achieve and maintain compliance with a fixed charge coverage ratio if availability under the Restated Credit Agreement is less than $20 million. At December 31, 2009, the Company was in compliance with all covenants.

The Company’s ability to pay cash dividends on its common stock is limited under the terms of both the Restated Credit Agreement and the Senior Notes. At December 31, 2009, under the most restrictive terms of these agreements, the Company’s ability to pay cash dividends on its common stock is limited to a total of $8 million in a 12-month period.

Previous Secured Revolving Credit Facility

On November 30, 2004, the Company entered into a Credit Agreement by and among the Company, certain of its subsidiaries and the lenders listed in the Credit Agreement (the “Credit Agreement”). Under the Credit Agreement, the Company had a secured revolving credit facility (the “Revolver”) that provided for borrowings of up to $150 million. The Credit Agreement was secured by substantially all of the Company’s assets, including the capital stock of its subsidiaries and was guaranteed by Neenah Canada. The Credit Agreement was originally scheduled to terminate on November 30, 2008.

Following several amendments, as of December 31, 2008, the Credit Agreement (as amended, the “Amended Credit Agreement”) provided for a secured revolving credit facility (the “Amended Revolver”) that provided for borrowings of up to $210 million. The Company’s ability to borrow under the Amended Revolver was limited to the lowest of (a) $210 million, (b) the Company’s borrowing base (as determined in accordance with the Amended Credit Agreement), and (c) the applicable cap on the amount of “credit facilities” under the indenture for the Senior Notes. The termination date of the Amended Credit Agreement was extended to November 30, 2010.

As of December 31, 2008, the interest rate applicable to borrowings under the Amended Revolver was either (1) the Prime Rate plus a percentage ranging from 0 percent to 2.00 percent or (2) LIBOR plus a percentage ranging from 1.25 percent to 3.50 percent. Interest was computed based on actual days elapsed in a 360-day year, payable monthly in arrears for base rate loans, or payable monthly in arrears and at the end of the applicable interest period for LIBOR loans. The commitment was subject to an annual facility fee of 0.25 percent on the average daily unused amount of the commitment.  The weighted-average interest rate on outstanding Revolver borrowings as of December 31, 2008 was 3.6 percent per annum.

The Amended Credit Agreement was secured by substantially all of the assets of the Company and the subsidiary borrowers, including the capital stock of such subsidiaries, and was guaranteed by Neenah Canada. Neenah Canada’s guarantee was secured by substantially all of that subsidiary’s assets.  Neenah Germany was not a borrower or guarantor with respect to the Amended Revolver.  However, the Company pledged 65 percent of its equity interest in Neenah Germany as security for the obligations of the Company and its subsidiaries under the Amended Credit Agreement.

Previous Term Loan

In March 2007, the Company entered into an agreement by and among the Company, certain of its subsidiaries and JP Morgan Chase Bank, N.A. (the “Term Loan Agreement”) to borrow up to $25 million (the “Term Loan”). As of December 31, 2008, the weighted-average interest rate on outstanding Term Loan borrowings was 3.6 percent per annum. For the year ended December 31, 2008, the Company used proceeds from the sale of Fox River assets to prepay approximately $9.5 million in Term Loan borrowings.  In June 2008, the Company entered into the First Amendment (the “First Amendment”) to the Term Loan.  The First Amendment reduced required amortization payments to $1.25 million per quarter.  The Term Loan was repaid in November 2009 with proceeds from the New Term Loan.

The Company accounted for the modification of the Amended Credit Agreement and the termination of the Term Loan Agreement as an extinguishment of debt in accordance with ASC Topic 470, “Debt.” As a result, for the year ended December 31, 2009, the Company recognized within interest expense approximately $1.4 million for costs incurred in conjunction with modifying the Amended Credit Agreement and for the loss on extinguishment of the Term Loan Agreement.  The Company capitalized approximately $2.3 million of debt issuance costs associated with the Restated Credit Agreement.  Such costs will be amortized over the term of the Restated Credit Agreement.

F-24

Other Debt

In December 2006, Neenah Germany entered into an agreement with HypoVereinsbank and IKB Deutsche Industriebank AG to provide €10.0 million of project financing with a term of 10 years for the construction of a saturator.  Principal outstanding under the agreement may be repaid at any time without penalty.  Interest on amounts outstanding is based on actual days elapsed in a 360-day year and is payable semi-annually. As of December 31, 2009, €8.8 million ($12.5 million) was outstanding under this agreement.

Neenah Germany has a revolving line of credit (the “German Line of Credit”) with HypoVereinsbank that provides for borrowings of up to €15 million for general corporate purposes. The German Line of Credit is secured by the domestic accounts receivable of Neenah Germany. As of December 31, 2009 and 2008, the weighted-average interest rate on outstanding Line of Credit borrowings was 4.1 percent per annum and 5.7 percent per annum, respectively.  In November 2009, Neenah Germany extended the termination date for the German Line of Credit to November 30, 2010.  Neenah Germany has the ability to borrow in either Euros or U.S. dollars.  Interest is computed on U.S. dollars loans at the rate of 8.5 percent per annum and on Euro loans at EURIBOR plus a margin of 1.5 percent.  Interest is payable quarterly and principal may be repaid at any time without penalty.  As of December 31, 2009, €8.9 million ($12.9 million, based on exchange rates at December 31, 2009) was outstanding under the Line of Credit and €6.0 million ($8.6 million, based on exchange rates at December 31, 2009) of credit was available. Neenah Germany’s ability to pay dividends or transfer funds to the Company is limited under the terms of the German Line of Credit, to not exceed certain limits defined in the agreement without lender approval or repayment of the amount outstanding under the line, which was $€8.9 million ($12.9 million, based on exchange rates at December 31, 2009) at December 31, 2009.  In addition, the terms of the German Line of Credit require Neenah Germany to maintain a ratio of stockholder’s equity to total assets equal to or greater than 45 percent.  The Company was in compliance with all provisions of the agreement as of December 31, 2009.

Principal Payments

The following table presents the Company’s required debt payments:

	2010(a)		2011		2012		2013(b)		2014(c)		Thereafter		Total
Debt payments	$	55.6	$	1.8	$	1.7	$	29.7	$	226.8	$	3.6	$	319.2

(a)   Includes New Term Loan prepayment of $40.0 million.

(b)   Includes principal payments on the Company’s revolving bank credit facility of $26.2 million.

(c)   Includes principal payments on the Senior Notes of $225.0 million.

Note 8. Pension and Other Postretirement Benefits

Pension Plans

Substantially all active employees of the Company’s U.S. paper operations participate in defined benefit pension plans and/or defined contribution retirement plans. Neenah Germany has defined benefit plans designed to provide a monthly pension upon retirement for substantially all its employees in Germany.  In addition, the Company maintains a supplemental retirement contribution plan (the “SERP”) which is a non-qualified defined benefit plan. The Company provides benefits under the SERP to the extent necessary to fulfill the intent of its defined benefit retirement plans without regard to the limitations set by the Internal Revenue Code on qualified defined benefit plans. The Company has no legal or governmental obligation to fund the SERP and as such the plan is currently unfunded.

The closure of the Ripon Mill (See Note 3, “Closure of the Ripon Mill”) resulted in the elimination of expected years of future service for mill employees eligible to participate in the Company’s defined benefit pension plans and postretirement medical plan.  In accordance with ASC Topic 715, the Company measured the assets and liabilities of the affected postretirement plans as of May 31, 2009 and recognized an aggregate curtailment loss of approximately $0.8 million for the year ended December 31, 2009.

In conjunction with the transfer of Terrace Bay to Buchanan, Neenah Canada initiated plans to curtail and settle the Ontario Plan.  In December 2007, the Company terminated the Ontario Plan and settled all outstanding pension obligations for active employees through the purchase of annuity contracts or lump-sum payments pursuant to participant elections. For the year ended December 31, 2007, Neenah Canada recognized a non-cash pre-tax settlement loss of $38.7 million upon termination of the Ontario Plan. No additional funding was required to settle the Ontario Plan. See Note 5, “Discontinued Operations — Transfer of the Terrace Bay Mill.”

F-25

In November 2007, the Company amended the Fox River defined benefit pension plan to freeze the vested pension benefit for salaried employees born after December 31, 1957.  The affected employees were transferred to the Company’s defined contribution retirement plan. The pension benefit for salaried employees of Fox River born on or before December 31, 1957 was unaffected.  For the year ended December 31, 2007, the Company recognized a reduction in pension expense of approximately $1.2 million related to the amendment.

The Company’s funding policy for qualified defined benefit plans for its U.S. paper operations is to contribute assets to fully fund the accumulated benefit obligation. Subject to regulatory and tax deductibility limits, any funding shortfall is to be eliminated over a reasonable number of years. Nonqualified plans providing pension benefits in excess of limitations imposed by taxing authorities are not funded. There is no legal or governmental obligation to fund Neenah Germany’s benefit plans and as such the Neenah Germany defined benefit plans are currently unfunded.

The Company uses the fair value of pension plan assets to determine pension expense, rather than averaging gains and losses over a period of years. Investment gains or losses represent the difference between the expected return calculated using the fair value of the assets and the actual return based on the fair value of assets. The Company’s pension obligations are measured annually as of December 31. As of December 31, 2009, the Company’s pension plans had cumulative unrecognized investment losses and other actuarial losses of approximately $28.9 million recorded in accumulated other comprehensive income.

Other Postretirement Benefit Plans

The Company provides contributory health care and life insurance benefit plans to active employees of the Company and certain former employees.  U.S. employees who are eligible to retire and continue coverage in retirement are offered contributory postretirement health and life insurance benefits. The Company also offers retiree life insurance coverage on a contributory basis to certain Terrace Bay Mill retirees. In conjunction with the sale of the Pictou Mill, Northern Pulp assumed responsibility for all health care and life insurance benefit plans for active and retired employees of the mill.

In the fourth quarter of 2007, Neenah Canada settled a class action lawsuit brought by certain retired employees of Neenah Canada by agreeing to pay the plaintiffs approximately 5.5 million Canadian Dollars for a full and complete dismissal of all claims for retiree health and medical benefits against Neenah Canada and the Company.  Neenah Canada also agreed to continue certain retiree life insurance benefits at a reduced rate in the future.  For the year ended December 31, 2007, Neenah Canada recorded a charge related to the litigation settlement of $5.2 million.

The Company’s obligations for postretirement benefits other than pensions are measured annually as of December 31. At December 31, 2009, the assumed inflationary pre-65 and post-65 health care cost trend rates used to determine year-end obligations and costs for the year ended December 31, 2010 were 8.7 percent gradually decreasing to an ultimate rate of 4.5 percent in 2027. The assumed inflationary pre-65 and post-65 health care cost trend rates used to determine obligations at December 31, 2008 and cost for the year ended December 31, 2009 were 9.0 percent gradually decreasing to an ultimate rate of 5.0 percent in 2023.

F-26

The following table reconciles the benefit obligations, plan assets, funded status and net liability information of the Company’s pension and other benefit plans.

	Pension Benefits						Postretirement Benefits Other than Pensions
	Year Ended December 31,
	2009			2008			2009			2008
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	214.2		$	407.4		$	36.8		$	55.2
Service cost	4.5			6.8			1.9			2.2
Interest cost	14.3			18.5			2.5			2.5
Currency	0.9			(14.6		)	0.5			(1.6		)
Actuarial loss (gain)	11.9			(13.8		)	(1.5		)	(1.3		)
Benefit payments from plans	(10.6		)	(15.0		)	(2.7		)	(8.9		)
Curtailments	(0.5		)	—			0.4			—
Divestitures	—			(175.1		)	—			(11.3		)
Benefit obligation at end of year	$	234.7		$	214.2		$	37.9		$	36.8
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	142.9		$	343.6		$	—		$	—
Actual gain (loss) on plan assets	23.3			(20.4		)	—			—
Employer contributions	10.2			7.5			—			—
Currency	—			(11.7		)	—			—
Benefit payments	(8.2		)	(12.6		)	—			—
Divestitures	—			(160.6		)	—			—
Other	—			(2.9		)	—			—
Fair value of plan assets at end of year	$	168.2		$	142.9		$	—		$	—
Reconciliation of Funded Status
Fair value of plan assets	$	168.2		$	142.9		$	—		$	—
Projected benefit obligation	234.7			214.2			37.9			36.8
Net liability recognized in statement of financial position	$	(66.5	)	$	(71.3	)	$	(37.9	)	$	(36.8	)
Amounts recognized in statement of financial position consist of:
Current liabilities	$	(2.2	)	$	(2.6	)	$	(2.6	)	$	(2.5	)
Noncurrent liabilities	(64.3		)	(68.7		)	(35.3		)	(34.3		)
Net amount recognized	$	(66.5	)	$	(71.3	)	$	(37.9	)	$	(36.8	)

Amounts recognized in accumulated other comprehensive income consist of:

	Pension Benefits				Postretirement Benefits Other than Pensions
	December 31,
	2009		2008		2009		2008
Accumulated actuarial loss	$	28.3	$	30.9	$	3.3	$	5.0
Prior service cost	0.6		0.9		2.4		3.1
Total recognized in accumulated other comprehensive income	$	28.9	$	31.8	$	5.7	$	8.1

F-27

Summary disaggregated information about the pension plans follows:

	December 31,
	Assets Exceed ABO				ABO Exceed Assets				Total
	2009		2008		2009		2008		2009		2008
Projected benefit obligation	$	94.6	$	104.6	$	140.1	$	109.6	$	234.7	$	214.2
Accumulated benefit obligation	82.0		90.8		137.5		104.9		219.5		195.7
Fair value of plan assets	82.9		91.4		85.3		51.5		168.2		142.9

Components of Net Periodic Benefit Cost

	Pension Benefits									Postretirement Benefits Other than Pensions
	Year Ended December 31,
	2009			2008			2007			2009		2008			2007
Service cost	$	4.5		$	6.8		$	9.2		$	1.9	$	2.2		$	2.4
Interest cost	14.3			18.5			28.1			2.5		2.5			2.5
Expected return on plan assets(a)	(11.3		)	(19.8		)	(32.0		)	—		—			—
Recognized net actuarial loss	1.4			1.4			(0.2		)	0.3		1.3			—
Amortization of unrecognized transition asset	—			(0.1		)	1.8			—		—			(6.7		)
Amortization of prior service cost	0.1			1.0			5.0			0.4		(5.0		)	3.8
Cost of contractual termination benefits	—			—			0.1			—		—			—
Amount of curtailment (gain) loss recognized	0.2			—			(1.2		)	0.6		—			—
Amount of settlement loss recognized	—			—			38.7			—		—			5.0
Net periodic benefit cost (credit)	9.2			7.8			49.5			5.7		1.0			7.0
Less: Cost related to discontinued operations (b)(c)	—			1.9			46.0			—		0.6			1.1
Net periodic benefit cost related to continuing operations	$	9.2		$	5.9		$	3.5		$	5.7	$	0.4		$	5.9

(a)The expected return on plan assets is determined by multiplying the fair value of plan assets at the prior year-end (adjusted for estimated current year cash benefit payments and contributions) by the expected long-term rate of return.

(b)In conjunction with the transfer of the Terrace Bay mill to Buchanan and as a closing condition of the agreement, the Company initiated plans to curtail and settle the Ontario Plan.  The pension cost related to the operations of the Terrace Bay mill has been classified as Loss from discontinued operations on the consolidated statements of operations.  Pension expense for the year ended December 31, 2007 includes settlement/curtailment losses related to the Ontario Plan of $38.7 million.

(c)Pursuant to the terms of the transfer agreement, Buchanan assumed responsibility for postretirement medical and life insurance benefits for active employees at the Terrace Bay mill.

F-28

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

	Pension Benefits						Postretirement Benefits Other than Pensions
	Year Ended December 31,
	2009			2008			2009			2008
Net periodic benefit expense	$	9.2		$	7.8		$	5.7		$	1.0
Accumulated actuarial gain	(2.6		)	(14.5		)	(1.7		)	(7.6		)
Prior service cost (credit)	(0.3		)	(9.6		)	(0.7		)	5.3
Transition asset	—			0.1			—			—
Total recognized in other comprehensive income	(2.9		)	(24.0		)	(2.4		)	(2.3		)
Total recognized in net periodic benefit cost and other comprehensive income	$	6.3		$	(16.2	)	$	3.3		$	(1.3	)

The estimated net actuarial loss and  prior service cost for the defined benefit pension plans expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $1.1 million and $0.1 million, respectively. The estimated prior service cost for postretirement benefits other than pension expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $0.4 million.

Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31

	Pension Benefits				Postretirement Benefits Other than Pensions
	2009		2008		2009		2008
Discount rate	6.17	%	6.80	%	5.92	%	6.82	%
Rate of compensation increase	3.91	%	3.42	%	—		—

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31

	Pension Benefits						Postretirement Benefits Other than Pensions
	Year Ended December 31,
	2009		2008		2007		2009		2008		2007
Discount rate	6.80	%	6.10	%	5.25	%	6.00	%	6.00	%	5.66	%
Expected long-term return on plan assets	7.92	%	8.02	%	7.90	%	—		—		—
Rate of compensation increase	3.43	%	3.30	%	3.29	%	—		—		—

Expected Long-Term Rate of Return and Investment Strategies

The expected long-term rate of return on pension fund assets held by the Company’s pension trusts was determined based on several factors, including input from pension investment consultants and projected long-term returns of broad equity and bond indices. Also considered were the plans’ historical 10-year and 15-year compounded annual returns. It is anticipated that, on average, actively managed U.S. pension plan assets will generate annual long-term rates of return of at least 8 percent. The expected long-term rate of return on the assets in the plans was based on an asset allocation assumption of about 60 percent with equity managers, with expected long-term rates of return of approximately 10 percent, and 40 percent with fixed income managers, with an expected long-term rate of return of about 6 percent. The actual asset allocation is regularly reviewed and periodically rebalanced to the targeted allocation when considered appropriate.

F-29

Plan Assets — Fair Value Measurements

The Company measures the fair value of pension plan assets in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) which establishes a framework for measuring fair value.  ASC Topic 820 provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC Topic 820 are described below:

Level 1	Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access.
Level 2	Inputs to the valuation methodology include:
	·      Quoted prices for similar assets or liabilities in active markets;
	·      Quoted prices for identical or similar assets or liabilities in inactive markets;
	·      Inputs other than quoted prices that are observable for the asset or liability;
	·Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques attempt to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following table sets forth by level, within the fair value hierarchy, the fair value of the Company’s pension plan assets as of December 31, 2009:

	Assets at Fair Value as of December 31, 2009
	Level 1		Level 2		Level 3		Total
Equity securities:
Domestic	$	—	$	69.3	$	—	$	69.3
International	—		30.1		—		30.1
Fixed income securities	—		62.1		—		62.1
Cash and equivalents	6.7		—		—		6.7
Total assets at fair value	$	6.7	$	161.5	$	—	$	168.2

Pension plan asset allocations are as follows:

	Percentage of Plan Assets At December 31,
	2009		2008		2007
Asset Category
Equity securities	59	%	55	%	61	%
Debt securities	37	%	44	%	35	%
Cash and money-market funds	4	%	1	%	4	%
Total	100	%	100	%	100	%

F-30

The Company’s investment objectives for pension plan assets is to ensure, over the long-term life of the pension plans, an adequate pool of assets to support the benefit obligations to participants, retirees, and beneficiaries.  Specifically, these objectives include the desire to: (a) invest assets in a manner such that future assets are available to fund liabilities, (b) maintain liquidity sufficient to pay current benefits when due and (c) diversify, over time, among asset classes so assets earn a return reasonable with acceptable risk of capital.

The target investment allocation and permissible allocation range for plan assets by category are as follows:

Asset Category	Strategic Target		Permitted Range
Equity securities	65	%	60-70	%
Debt securities / Fixed Income	35	%	30-40	%

As of December 31, 2009, no company or group of companies in a single industry represented more than five percent of plan assets.

The Company’s investments assumptions are established by an investment committee composed of members of senior management and are validated periodically against actual investment returns.  As of December 31, 2009, the Company’s investment assumptions are as follows:

(a)the plan should be substantially fully invested at all times because substantial cash holdings will reduce long-term rates of return;

(b)equity investments will provide greater long-term returns than fixed income investments, although with greater short-term volatility;

(c)it is prudent to diversify the plan investment across major asset classes;

(d)allocating a portion of plan assets to foreign equities will increase portfolio diversification, decrease portfolio risk and provide the potential for long-term returns;

(e)investment managers with active mandates can reduce portfolio risk below market risk and potentially add value through security selection strategies, and that a substantial portion of plan assets should be allocated to such active mandates;

(f)a component of  passive, indexed management can benefit the plans through greater diversification and lower cost, and that a portion of the plan assets should be allocated to such passive mandates, and

(g)it is appropriate to retain more than one investment manager, given the size of the plans, provided that such managers offer asset class or style diversification.

For the years ended December 31, 2009, 2008 and 2007, no plan assets were invested in the Company’s securities.

Cash Flows

At December 31, 2009, the Company expects to make aggregate contributions to pension trusts and payments of pension benefits for unfunded pension plans of approximately $14 million (based on exchange rates at December 31, 2010).

Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

	Pension Plans		Postretirement Benefits Other than Pensions
2010	$	11.4	$	2.5
2011	11.8		1.7
2012	12.4		2.0
2013	13.8		2.4
2014	13.8		2.7
Years 2015 — 2019	82.3		18.5

F-31

Health Care Cost Trends

Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One Percentage-Point
	Increase		Decrease
Effect on total of service and interest cost components	$	—	$	—
Effect on post-retirement benefit obligation	0.4		(0.5		)

Defined Contribution Retirement Plans

The Company’s contributions to its defined contribution retirement plans are primarily based on the age and compensation of covered employees.  Contributions to these plans, all of which were charged to expense, were $1.4 million in 2009, $1.6 million in 2008 and $1.2 million in 2007. In addition, the Company maintains a supplemental retirement contribution plan (the “SRCP”) which is a non-qualified, unfunded defined contribution plan. The Company provides benefits under the SRCP to the extent necessary to fulfill the intent of its defined contribution retirement plans without regard to the limitations set by the Internal Revenue Code on qualified defined contribution plans.  For each of the years ended December 31, 2009, 2008 and 2007, the Company recognized expense related to the SRCP of less than $0.1 million.

Investment Plans

The Company provides voluntary contribution investment plans to substantially all North American employees. Under the plans, the Company matches a portion of employee contributions. For the years ended December 31, 2009, 2008 and 2007, costs charged to expense for company matching contributions under these plans were $1.5 million, $1.8 million and $1.7 million, respectively.

Note 9. Stock Compensation Plans

The Company established the 2004 Omnibus Stock and Incentive Plan (the “Omnibus Plan”) in December 2004 and reserved 3,500,000 shares of $0.01 par value common stock (“Common Stock”) for issuance under the Omnibus Plan. Pursuant to the terms of the Omnibus Plan, the compensation committee of the Company’s board of directors may grant various types of equity-based compensation awards, including incentive and nonqualified stock options, SARs, restricted stock, RSUs, RSUs with performance conditions (“Performance Shares”) and performance units, in addition to certain cash-based awards. All grants under the Omnibus Plan will be made at fair market value and no grant may be repriced. In general, the options expire ten years from the date of grant and vest over a three-year service period. As of December 31, 2009, approximately 1,960,000 shares of Common Stock were reserved for future issuance under the Omnibus Plan. As of December 31, 2009, the number of shares available for future issuance was not reduced by outstanding SARs because the closing market price for the Company’s common stock was less than the exercise price of all outstanding SARs. The Company accounts for stock-based compensation pursuant to the fair value recognition provisions of ASC Topic 718, Compensation—Stock Compensation (“ASC Topic 718”).

ASC Topic 718 requires the reporting of excess tax benefits related to the exercise or vesting of stock-based awards as cash provided by financing activities. For the years ended December 31, 2009, 2008 and 2007, the Company recognized excess tax benefits (costs) related to the exercise or vesting of stock-based awards of approximately $(0.2) million, $(0.7) million and $0.5 million, respectively.

Valuation and Expense Information Under ASC Topic 718

Substantially all stock-based compensation expense has been recorded in selling, general and administrative expenses.  The following table summarizes stock-based compensation costs and related income tax benefits.

	Year Ended December 31,
	2009			2008			2007
Stock-based compensation expense	$	4.7		$	4.0		$	6.4
Income tax benefit	(1.8		)	(1.5		)	(2.5		)
Stock-based compensation, net of income tax benefit	$	2.9		$	2.5		$	3.9

F-32

The following table summarizes total compensation costs related to the Company’s equity awards and amounts recognized in the year ended December 31, 2009.

	Stock Options		Restricted Stock
Unrecognized compensation cost — December 31, 2008	$	1.5	$	1.6
Add: Grant date fair value current year grants	1.8		2.6
Less: Compensation expense recognized	1.9		2.8
Unrecognized compensation cost — December 31, 2009	$	1.4	$	1.4
Expected amortization period (in years)	1.9		1.7

Stock Options

For the year ended December 31, 2009, the Company awarded nonqualified stock options to Long-Term Incentive Plan (the “LTIP”) participants to purchase approximately 698,000 shares of common stock (subject to forfeiture due to termination of employment and other conditions).  In addition, the Company awarded to non-employee members of its board of directors nonqualified stock options to purchase 32,000 shares of common stock. For the year ended December 31, 2009, the weighted-average exercise price of such nonqualified stock option awards was $8.19 per share. The exercise price of the options was equal to the market price of the Company’s common stock on the date of grant.  Options awarded to LTIP participants expire in ten years and one-third vest on each of the first three anniversaries of the date of grant.  Options awarded to non-employee members of the board of directors expire in ten years and vest on the first anniversary of the date of grant. The weighted-average grant date fair value for stock options granted for the years ended December 31, 2009 and 2008 was $2.67 per share and $6.30 per share, respectively, and was estimated using the Black-Scholes option valuation model with the following assumptions:

	Year Ended December 31,
	2009		2008
Expected life in years	5.9		5.9
Interest rate	2.4	%	3.4	%
Volatility	51.6	%	31.5	%
Dividend yield	4.9	%	1.9	%

For stock option awards granted in 2009, expected volatility was based on the Company’s historical stock price performance.   For stock option awards granted in 2008, expected volatility was estimated by reference to the historical stock price performance of a peer group of companies. The expected term was estimated based upon historical data for Kimberly-Clark stock option awards. The risk-free interest rate was based on the yield on U.S. Treasury bonds with a remaining term approximately equivalent to the expected term of the stock option award. Forfeitures were estimated at the date of grant.

The following table summarizes stock option activity under the Omnibus Plan for the year ended December 31, 2009:

		Number of Stock Options	Weighted-Average Exercise Price
Options outstanding — December 31, 2008		1,622,045	$	30.81
Add:	Options granted	730,150	$	8.19
Less:	Options forfeited/cancelled	82,347	$	29.04
Options outstanding — December 31, 2009		2,269,848	$	23.60

F-33

The status of outstanding and exercisable stock options as of December 31, 2009, summarized by exercise price follows:

	Options Vested or Expected to Vest						Options Exercisable
Exercise Price	Number of Options	Weighted-Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Aggregate Intrinsic Value(a)		Number of Options	Weighted- Average Exercise Price		Aggregate Intrinsic Value(a)
$7.41 - $21.13	845,564	9.2	$	9.82	$	4.1	83,110	$	15.72	$	0.1
$24.01 - $29.43	383,500	5.5	$	26.50	—		308,307	$	26.69	—
$30.15 - $34.61.	689,180	4.4	$	32.71	—		685,847	$	32.71	—
$35.92 - $42.24	331,193	4.3	$	37.34	—		286,533	$	37.40	—
	2,249,437	6.4	$	23.73	$	4.1	1,363,797	$	31.30	$	0.1

(a)Represents the total pre-tax intrinsic value as of December 31, 2009 that option holders would have received had they exercised their options as of such date.  The pre-tax intrinsic value is based on the closing market price for the Company’s common stock of $13.95 on December 31, 2009.

No stock options were exercised for the years ended December 31, 2009 and 2008.  The aggregate pre-tax intrinsic value of stock options exercised for the year ended December 31, 2007 was $1.5 million.

The following table summarizes the status of the Company’s unvested stock options as of December 31, 2009 and activity for the year then ended:

	Number of Stock Options	Weighted-Average Grant Date Fair Value
Outstanding — December 31, 2008	414,828	$	6.98
Add: Options granted	730,150	$	2.67
Less: Options vested	228,210	$	5.54
Less: Options forfeited/cancelled	10,717	$	8.43
Outstanding — December 31, 2009	906,051	$	3.85

As of December 31, 2009, certain participants met age and service requirements that allowed their options to qualify for accelerated vesting upon retirement. As of December 31, 2009, there were approximately 261,500 stock options subject to accelerated vesting that such participants would have been eligible to exercise if they had retired as of such date. The aggregate grant date fair value of options subject to accelerated vesting was $1.0 million. For the year ended December 31, 2009, stock-based compensation expense for such options was $0.6 million. For the year ended December 31, 2009, the aggregate grant date fair value of options vested, including options subject to accelerated vesting, was $2.3 million.  Stock options that reflect accelerated vesting for expense recognition become exercisable according to the contract terms of the stock option grant.

In January 2009, the Compensation Committee of the Board of Directors approved the conversion of approximately 1,105,000 outstanding non-qualified stock options with an exercise price in excess of $25.00 per share to an equal number of SARs.  Upon exercise, the holder of an SAR will receive common shares equal to the number of SARs exercised multiplied by a fraction where the numerator is equal to the market price at the time of exercise minus the exercise price of the SAR and the denominator is equal to the market price at the time of exercise.  The SARs can only be settled for shares of Common Stock and the Company will not receive any cash proceeds upon exercise.  All other contractual terms of the SARs are unchanged from those of the stock options converted.  At the date of conversion the fair value of the SARs was equal to the fair value of the stock options exchanged.  As a result, the Company did not recognize any additional compensation expense due to the conversion.

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Performance Shares

For the year ended December 31, 2009, the Company granted target awards of 216,400 Performance Shares to LTIP participants. The measurement period for the Performance Shares is January 1, 2009 through December 31, 2011. Common Stock equal to between 30 percent and 250 percent of the performance share target will be awarded based on the Company’s growth in earnings before interest, taxes, depreciation and amortization (“EBITDA”) minus a capital charge and total return to shareholders relative to a peer group of companies and the Russell 2000® Value small cap index. The weighted-average grant date fair value for the Performance Shares was $10.59 per share (which represents the grant date market price of the Company’s Common Stock of $7.41 per share multiplied by the probability weighted expected payout of approximately 1.43 shares of Common Stock for each Performance Share) and was estimated using a “Monte Carlo” simulation technique. Compensation cost is recognized pro rata over the vesting period.

RSUs

For the year ended December 31, 2009, the Company awarded 17,920 RSUs to non-employee members of the Company’s board of directors (“Director Awards”).  The weighted average grant date fair value of such awards was $8.04 per share.  Director Awards vest one year from the date of grant. During the vesting period, the holders of Director Awards are entitled to dividends, but the shares do not have voting rights and are forfeited in the event the holder is no longer a member of the board of directors. In addition, the Company issued 742 RSUs in lieu of dividends on RSUs held by non U.S employees and a non-U.S. member of the board of directors.

The following table summarizes the activity of the Company’s unvested stock-based awards (other than stock options) for the year ended December 31, 2009:

	Restricted Stock	Weighted-Average Grant Date Fair Value		Performance Shares/RSUs	Weighted-Average Grant Date Fair Value
Outstanding — December 31, 2008	574	$	34.28	152,811	$	27.69
Add: Shares granted(a)	—	—		235,062	$	10.39
Less: Shares vested	574	$	34.28	30,857	$	30.80
Less: Shares expired or cancelled	—	—		14,802	$	22.32
Outstanding — December 31, 2009(b)	—		—	342,214	$	15.76

(a)Includes the grant of 742 RSUs to non-U.S. employees and directors in lieu of cash dividends.  Such dividends-in-kind vest concurrently with the underlying RSU.

(b)The aggregate pre-tax intrinsic value of RSUs and Performance Shares as of December 31, 2009 was $0.9 million and $1.7 million, respectively.  The aggregate pre-tax intrinsic value of Performance Shares was calculated on the shares that would be issued based on the Company’s achievement of performance targets if the performance period ended at December 31, 2009.

The aggregate pre-tax intrinsic value of restricted stock and RSUs that vested for the years ended December 31, 2009, 2008 and 2007 was $0.4 million, $1.1 million and $1.3 million, respectively.

Note 10. Stockholders’ Equity

Common Stock

The Company has authorized 100 million shares of Common Stock. Holders of the Company’s Common Stock are entitled to one vote per share.

For the years ended December 31, 2009, 2008 and 2007, the Company acquired 4,910 shares, 31,652 shares and 11,445 shares of Common Stock, respectively, at a cost of approximately $0.1 million, $0.3 million and $0.3 million, respectively, for shares surrendered by employees to pay taxes due on vested restricted stock awards.  In addition, in connection with the acquisition of Fox River, the Company acquired 100 shares of Common Stock with a fair market value of approximately four thousand dollars.

F-35

On March 12, 2008, the Company’s shareholders approved a reverse/forward split of the issued and outstanding shares of Common Stock.  The reverse/forward split consisted of a 1-for-50 reverse split of Common Stock followed immediately by a 50-for-1 forward split of Common Stock. Holdings of stockholders with fewer than 50 shares of Common Stock prior to the split were converted into fractional shares.  Such fractional shares were purchased by the Company for $24.99 per share. The Company purchased 360,548 shares of Common Stock at a total cost of approximately $9.4 million including transaction costs.  The reverse/forward split resulted in a significant reduction in shareholder record keeping and mailing expenses and provided holders of fewer than 50 shares with a cost-effective way to efficiently dispose of their investment.

Each share of Common Stock contains a preferred stock purchase right that is associated with the share.  These preferred stock purchase rights are transferred only with shares of Common Stock.  The preferred stock purchase rights become exercisable and separately certificated only upon a “Rights Distribution Date” as that term is defined in the stockholder rights agreement adopted by the Company at the time of the Spin-Off.  In general, a Rights Distribution Date occurs ten business days following either of these events: (i) a person or group has acquired or obtained the right to acquire beneficial ownership of 15 percent or more of the outstanding shares of our Common Stock then outstanding or (ii) a tender offer or exchange offer is commenced that would result in a person or group acquiring 15 percent or more of the outstanding shares of our Common Stock then outstanding.

Preferred Stock

The Company has authorized 20 million shares of $0.01 par value preferred stock. The preferred stock may be issued in one or more series and with such designations and preferences for each series as shall be stated in the resolutions providing for the designation and issue of each such series adopted by the board of directors of the Company. The board of directors is authorized by the Company’s articles of incorporation to determine the voting, dividend, redemption and liquidation preferences pertaining to each such series. No shares of preferred stock have been issued by the Company.

Note 11. Commitments

Leases

The future minimum obligations under operating leases having a noncancelable term in excess of one year as of December 31, 2009, are as follows:

2010	$	3.0
2011	2.6
2012	2.0
2013	0.8
2014	0.5
Thereafter	1.2
Future minimum lease obligations	$	10.1

The following table presents the Company’s rent expense under operating leases for the years ended December 31, 2009, 2008 and 2007:

	Year Ended December 31,
	2009		2008		2007
Rent expense	$	2.5	$	3.3	$	3.0
Less: Amounts related to discontinued operations	—		0.5		1.0
Rent expense related to continuing operations	$	2.5	$	2.8	$	2.0

Purchase Commitments

The Company has certain minimum purchase commitments, none of which are individually material, that extend beyond December 31, 2009. Commitments under these contracts are approximately $4.4 million in 2010, $0.4 million in 2011, $0.4 million in 2012, $0.4 million in 2013 and $0.4 million in 2014.

Although the Company is primarily liable for payments on the above-mentioned leases and purchase commitments, management believes exposure to losses, if any, under these arrangements is not material.

F-36

Note 12.  Contingencies and Legal Matters

Litigation

The Company is involved in certain legal actions and claims arising in the ordinary course of business. While the outcome of these legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such claim which is pending or threatened, either individually or on a combined basis, will not have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company.

Indemnifications

Pursuant to a Distribution Agreement, an Employee Matters Agreement and a Tax Sharing Agreement, the Company has agreed to indemnify Kimberly-Clark for certain liabilities or risks related to the Spin-Off. Many of the potential indemnification liabilities under these agreements are unknown, remote or highly contingent. Furthermore, even in the event that an indemnification claim is asserted, liability for indemnification is subject to determination under the terms of the applicable agreement. For these reasons, the Company is unable to estimate the maximum potential amount of the possible future liability under the indemnity provisions of these agreements. However, the Company accrues for any potentially indemnifiable liability or risk under these agreements for which it believes a future payment is probable and a range of loss can be reasonably estimated. As of December, 2009, management believes the Company’s liability under such indemnification obligations was not material to the consolidated financial statements.

Environmental, Health and Safety Matters

The Company is subject to federal, state and local laws, regulations and ordinances relating to various environmental, health and safety matters. The Company is in compliance with, or is taking actions designed to ensure compliance with, these laws, regulations and ordinances. However, the nature of the Company’s business exposes it to the risk of claims with respect to environmental, health and safety matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. Except for certain orders issued by environmental, health and safety regulatory agencies, with which management believes the Company is in compliance and which management believes are immaterial to the results of operations of the Company’s business, Neenah is not currently named as a party in any judicial or administrative proceeding relating to environmental, health and safety matters.

While the Company has incurred in the past several years, and will continue to incur, capital and operating expenditures in order to comply with environmental, health and safety laws, regulations and ordinances, management believes that the Company’s future cost of compliance with environmental, health and safety laws, regulations and ordinances, and its exposure to liability for environmental, health and safety claims will not have a material adverse effect on its financial condition, results of operations or liquidity. However, future events, such as changes in existing laws and regulations or contamination of sites owned, operated or used for waste disposal by the Company (including currently unknown contamination and contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs which could have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

The Company incurs capital expenditures necessary to meet legal requirements and otherwise relating to the protection of the environment at its facilities in the United States and internationally. For these purposes, the Company has planned capital expenditures for environmental projects during the period 2010 through 2012 of approximately $1 million to $2 million annually. The Company’s anticipated capital expenditures for environmental projects are not expected to have a material adverse effect on our financial condition, results of operations or liquidity.

Employees and Labor Relations

As of December 31, 2009, the Company had approximately 1,700 regular full-time employees of whom 675 hourly and 325 salaried employees were located in the United States and 450 hourly and 250 salaried employees were located in Germany.  As of December 31, 2009, the Company has approximately 300 hourly employees covered by collective bargaining agreements that have expired or will expire within the next 12-months.  The Company believes it has satisfactory relations with its employees covered by such collective bargaining agreements and does not expect the negotiation of new collective bargaining agreements to have a material effect on its results of operations or cash flows.

F-37

Hourly employees at the Whiting, Neenah, Munising and Appleton paper mills are represented by the United Steelworkers Union (the “USW”). The collective bargaining agreement for the Munising paper mill expired on July 14, 2009. The Company is currently negotiating a new labor agreement for the mill with the USW. In December 2009, the Company and the USW signed a new collective bargaining agreement for the Whiting paper mill that is effective through January 31, 2013. In October 2009, the Company and the USW signed a new collective bargaining agreement for the Neenah paper mill that is effective through June 30, 2013. The collective bargaining agreement for the Appleton paper mill expires on May 31, 2010. Separately, the Neenah, Whiting and Munising paper mills have bargained jointly with the union on pension matters. The agreement on pension matters will remain in effect through 2019.

Approximately 50 percent of salaried employees and 80 percent of hourly employees of Neenah Germany are eligible to be represented by the Mining, Chemicals and Energy Trade Union, Industriegewerkschaft Bergbau, Chemie and Energie (the “IG BCE”).  The collective bargaining agreement covering union employees of Neenah Germany is negotiated by the IG BCE and a national trade association representing all employers in the industry.  Union membership is voluntary and under German law does not need to be disclosed to the Company. As a result, the number of employees covered by the collective bargaining agreement that expires in August 2010 cannot be determined.

Note 13. Transactions with Kimberly-Clark

For the years ended December 31, 2008 and 2007, the Company sold softwood and hardwood pulp to Kimberly-Clark from the Pictou pulp mill. Net sales for the pulp sold to Kimberly-Clark for the years ended December 31, 2008 and 2007 was $37 million and $115 million, respectively.  All such revenue is reported as results of discontinued operations on the consolidated statements of operations.

Pulp Supply Agreement

In conjunction with the sale of the Pictou Mill, Northern Pulp assumed responsibility for pulp sales to Kimberly-Clark pursuant to a pulp supply agreement (the “Pulp Supply Agreement”). The Company guaranteed certain obligations under the Pulp Supply Agreement; however, in the event that Northern Pulp and Kimberly-Clark entered into an amended agreement or made other material changes to the Pulp Supply Agreement, the Company’s guarantee obligations cease.  In January 2009, Northern Pulp and Kimberly-Clark entered into a new pulp supply agreement thereby terminating the Company’s guarantee obligations.

Other Agreements with Kimberly-Clark

The Company also entered into a (i) Distribution Agreement, (ii) Employee Matters Agreement, (iii) Corporate Services Agreement and (iv) Tax Sharing Agreement with Kimberly-Clark in connection with the Spin-Off.  These agreements provided for, among other things, (i) the principal corporate transactions required to effect the separation of the Pulp and Paper Business from Kimberly-Clark, cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of the Pulp and Paper Business with the Company and financial responsibility for the obligations and liabilities of Kimberly-Clark’s retained businesses with Kimberly-Clark, (ii) employee liability transfers to the Company and retention of certain employment liabilities by Kimberly-Clark, (iii) various transitional corporate support services and (iv) the Company’s and Kimberly-Clark’s respective rights, responsibilities and obligations after the Spin-Off with respect to taxes attributable to the Company’s business, as well as any taxes incurred by Kimberly-Clark as a result of the failure of the Spin-Off to qualify for tax-free treatment under Section 355 of the Code.

The descriptions above are summaries of the principal provisions of the various agreements and are qualified in their entirety by the respective agreements.

Note 14. Business Segment and Geographic Information

The Company reports its operations in two segments: Fine Paper and Technical Products. The fine paper business is a leading producer of premium writing, text, cover and specialty papers. The technical products business is a leading international producer of filtration media, durable, saturated and coated substrates for a variety of end uses; and nonwoven wall coverings.  Each segment employs different technologies and marketing strategies.  Disclosure of segment information is on the same basis that management uses internally for evaluating segment performance and allocating resources.  Transactions between segments are executed at market prices and such transactions are eliminated in consolidation. The costs of shared services, and other administrative functions managed on a common basis, are allocated to the segments based on usage, where possible, or other factors based on the nature of the activity.  General corporate expenses that do not directly support the operations of the business segments are shown as Unallocated corporate costs. The accounting policies of the reportable operating segments are the same as those described in Note 2, “Summary of Significant Accounting Policies.”

F-38

Business Segments

	Year Ended December 31,
	2009		2008		2007
Net sales
Fine Paper	$	255.6	$	335.5	$	366.5
Technical Products	318.3		396.8		400.8
Intersegment sales	—		—		(0.3		)
Consolidated	$	573.9	$	732.3	$	767.0

	Year Ended December 31,
	2009			2008			2007
Operating income (loss)
Fine Paper (a)	$	17.5		$	34.0		$	46.6
Technical Products (b)	14.4			(42.3		)	24.7
Unallocated corporate costs (c)	(15.5		)	(11.0		)	(17.4		)
Consolidated	$	16.4		$	(19.3	)	$	53.9

(a)Operating earnings for the year ended December 31, 2009 include costs related to the closure of the Ripon Mill of $17.1 million.

(b)The operating loss for the year ended December 31, 2008 includes a non-cash pre-tax goodwill and other intangible asset impairment charge of $54.5 million.

(c)Unallocated corporate costs for the year ended December 31, 2008 include a gain of approximately $4.3 million related to the settlement certain post-employment obligations for Terrace Bay retirees.

	Year Ended December 31,
	2009		2008		2007
Depreciation and amortization
Fine Paper	$	10.7	$	11.4	$	11.3
Technical Products	17.8		18.9		17.2
Pulp	—		1.9		10.7
Corporate	6.0		6.4		6.1
Total	34.5		38.6		45.3
Less: Discontinued operations	—		1.9		10.7
Total Continuing Operations	$	34.5	$	36.7	$	34.6

	Year Ended December 31,
	2009		2008		2007
Capital expenditures
Fine Paper	$	4.0	$	8.9	$	9.5
Technical Products	4.3		15.0		39.5
Pulp	—		1.4		5.4
Corporate	0.1		4.7		3.9
Total	8.4		30.0		58.3
Less: Discontinued operations	—		1.4		5.4
Total Continuing Operations	$	8.4	$	28.6	$	52.9

F-39

	December 31,
	2009		2008
Total Assets
Fine Paper	$	166.3	$	190.7
Technical Products	353.4		366.6
Assets held for sale	10.0		3.3
Corporate and other	107.8		129.4
Total	$	637.5	$	690.0

Geographic Information

	Year Ended December 31,
	2009		2008		2007
Net sales
United States	$	360.9	$	467.3	$	502.9
Europe	213.0		265.0		264.4
Intergeographic items	—		—		(0.3		)
Consolidated	$	573.9	$	732.3	$	767.0

	December 31,
	2009		2008
Total Assets
United States	$	330.9	$	371.8
Canada	5.4		3.3
Europe	301.2		314.9
Total	$	637.5	$	690.0

Net sales are attributed to geographic areas based on the physical location of the entities. Segment identifiable assets are those that are directly used in the segments operations. Corporate assets are primarily cash, deferred income taxes and deferred financing costs.

Concentrations

For the years ended December 31, 2009, 2008 and 2007, sales to the fine paper business’s two largest customers (both of which are distributors) represented approximately 30 percent of its total sales. For the years ended December 31, 2009, 2008 and 2007, no single customer accounted for more than 10 percent of the Company’s consolidated revenue. Except for certain specialty latex grades and specialty softwood pulp used by Technical Products, management is not aware of any significant concentration of business transacted with a particular supplier that could, if suddenly eliminated, have a material adverse affect on its operations. An interruption in supply of a latex specialty grade or of specialty softwood pulp could disrupt and eventually cause a shutdown of production of certain technical products.

Note 15. Supplemental Data

Supplemental Statement of Operations Data

	Year Ended December 31,
	2009		2008		2007
Summary of Advertising and Research Expenses
Advertising expense	$	6.5	$	8.7	$	10.3
Research expense	5.5		6.5		6.4

F-40

	Year Ended December 31,
	2009			2008			2007
Summary of Other (Income) Expense - net
(Gain) loss on property disposals	$	0.2		$	(6.3	)	$	0.4
Net gain from risk management activities	(0.1		)	(0.7		)	(4.4		)
Litigation settlement	—			—			5.2
Terrace Bay employee benefits	0.7			(4.4		)	(3.4		)
Other income - net	(1.0		)	(1.4		)	(2.3		)
Total other income - net	(0.2		)	(12.8		)	(4.5		)
Less: (Income) expense related to discontinued operations	0.8			(1.5		)	(2.8		)
Other income - net related to continuing operations	$	(1.0	)	$	(11.3	)	$	(1.7	)

Supplemental Balance Sheet Data

	December 31,
	2009			2008
Summary of Accounts Receivable— net
Accounts Receivable:
From customers	$	69.4		$	64.7
Other	0.2			0.2
Less allowance for doubtful accounts and sales discounts	(1.9		)	(1.7		)
Total	$	67.7		$	63.2

	December 31,
	2009			2008
Summary of Inventories
Inventories by Major Class:
Raw materials	$	16.6		$	21.8
Work in progress	11.7			13.0
Finished goods	49.4			59.0
Supplies and other	1.7			3.0
	79.4			96.8
Excess of FIFO over LIFO cost	(8.7		)	(8.2		)
Total	$	70.7		$	88.6

	December 31,
	2009		2008
Summary of Prepaid and Other Current Assets
Prepaid and other current assets	$	7.6	$	11.8
Spare parts	5.5		6.6
Receivable from FiberMark for German taxes	0.6		0.6
Total	$	13.7	$	19.0

	December 31,
	2009		2008
Assets Held for Sale
The Woodlands (Note 5)	$	3.8	$	3.3
Ripon Mill property, plant and equipment - net (Note 3)	6.2		—
Total	$	10.0	$	3.3

F-41

	December 31,
	2009		2008
Summary of Property, Plant and Equipment — Net
Land and land improvements	$	21.9	$	23.9
Buildings	97.8		99.9
Machinery and equipment	445.1		439.1
Construction in progress	4.8		12.5
	569.6		575.4
Less accumulated depreciation and depletion	285.2		259.2
Net Property, Plant and Equipment	$	284.4	$	316.2

Depreciation expense for the years ended December 31, 2009, 2008 and 2007 was $30.1 million, $34.7 million and $41.6 million, respectively. For the year ended December 31, 2009, less than $0.1 million in interest expense was capitalized as part of the cost of capital projects.  Interest expense capitalized as part of the costs of capital projects was $0.5 million and $0.3 million for the years ended December 31, 2008 and 2007, respectively.

	December 31,
	2009		2008
Summary of Accrued Expenses
Accrued salaries and employee benefits	$	18.2	$	19.0
Liability for uncertain income tax positions	9.5		12.9
Accrued interest	2.1		2.1
Accrued restructuring costs (Note 3)	4.0		1.7
Accrued income taxes	0.4		1.3
Other	14.4		13.3
Total	$	48.6	$	50.3

	December 31,
	2009		2008
Summary of Noncurrent Employee Benefits and Other Obligations
Pension benefits	$	64.3	$	68.7
Post-employment benefits other than pensions (a)	40.7		39.1
Other	3.3		3.5
Total	$	108.3	$	111.3

(a)Includes $5.4 million and $4.8 million in long-term disability benefits due to Terrace Bay retirees as of December 31, 2009 and 2008, respectively.

F-42

Supplemental Cash Flow Data

	Year Ended December 31,
	2009			2008			2007
Net cash provided by (used in) changes in working capital, net of effects of acquisitions
Accounts receivable	$	(4.5	)	$	48.7		$	(14.3	)
Inventories	17.7			(2.4		)	(1.1		)
Income taxes receivable	9.8			(10.6		)	—
Prepaid and other current assets	1.4			2.6			(3.3		)
Accounts payable	(4.5		)	(33.3		)	2.8
Accrued expenses	6.6			(23.6		)	13.1
Foreign currency effects on working capital	0.9			(2.5		)	8.7
Total	$	27.4		$	(21.1	)	$	5.9

	Year Ended December 31,
	2009			2008		2007
Cash paid during the year for interest, net of interest expense capitalized	$	20.2		$	23.0	$	23.7
Cash paid (received) during the year for income taxes, net of refunds	(7.7		)	6.6		6.2
Non-cash investing activities:
Liability for equipment acquired	1.8			2.7		3.9

Note 16. Condensed Consolidating Financial Information

Neenah Paper Company of Canada, Neenah Paper Michigan, Inc. and Neenah Paper Sales, Inc. (the “Guarantor Subsidiaries”) guarantee the Company’s Senior Notes. The Guarantor Subsidiaries are 100 percent owned by the Company and all guarantees are full and unconditional.  The following condensed consolidating financial information is presented in lieu of consolidated financial statements for the Guarantor Subsidiaries as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007.

F-43

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2009

	Neenah Paper, Inc			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
Net sales	$	248.2		$	112.4		$	213.3		$	—		$	573.9
Cost of products sold	186.2			92.6			193.5			—			472.3
Gross profit	62.0			19.8			19.8			—			101.6
Selling, general and administrative expenses	45.4			10.0			13.7			—			69.1
Restructuring costs	(0.4		)	17.1			0.4			—			17.1
Other (income) expense - net	0.1			0.9			(2.0		)	—			(1.0		)
Operating income (loss)	16.9			(8.2		)	7.7			—			16.4
Equity in earnings of subsidiaries	(2.5		)	—			—			2.5			—
Interest expense-net	21.4			0.8			1.0			—			23.2
Income (loss) from continuing operations before income taxes	(2.0		)	(9.0		)	6.7			(2.5		)	(6.8		)
Benefit for income taxes	(0.8		)	(4.0		)	(0.2		)	—			(5.0		)
Income (loss) from continuing operations	(1.2		)	(5.0		)	6.9			(2.5		)	(1.8		)
Income from discontinued operations, net of income tax provision	—			0.6			—			—			0.6
Net income (loss)	$	(1.2	)	$	(4.4	)	$	6.9		$	(2.5	)	$	(1.2	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2008

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
Net sales	$	284.2		$	183.1		$	265.0		$	—		$	732.3
Cost of products sold	230.1			161.1			242.0			—			633.2
Gross profit	54.1			22.0			23.0			—			99.1
Selling, general and administrative expenses	47.6			12.3			15.3			—			75.2
Goodwill and other intangible asset impairment charge	—			—			54.5			—			54.5
Other income (expense) - net	0.6			(10.9		)	(1.0		)	—			(11.3		)
Operating income (loss)	5.9			20.6			(45.8		)	—			(19.3		)
Equity in losses of subsidiaries	146.7			—			—			(146.7		)	—
Interest expense-net	21.6			1.9			1.5			—			25.0
Income (loss) from continuing operations before income taxes	(162.4		)	18.7			(47.3		)	146.7			(44.3		)
Provision (benefit) for income taxes	(3.9		)	9.5			(2.6		)	—			3.0
Income (loss) from continuing operations	(158.5		)	9.2			(44.7		)	146.7			(47.3		)
Loss from discontinued operations, net of income tax benefit	—			(111.2		)	—			—			(111.2		)
Net income (loss)	$	(158.5	)	$	(102.0	)	$	(44.7	)	$	146.7		$	(158.5	)

F-44

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2007

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
Net sales	$	222.8		$	280.2		$	264.3		$	(0.3	)	$	767.0
Cost of products sold	157.0			251.2			227.6			(0.3		)	635.5
Gross profit	65.8			29.0			36.7			—			131.5
Selling, general and administrative expenses	42.0			21.9			15.4			—			79.3
Other income - net	(0.1		)	(1.0		)	(0.6		)	—			(1.7		)
Operating income	23.9			8.1			21.9			—			53.9
Equity in earnings of subsidiaries	(9.2		)	—			—			9.2			—
Interest expense-net	22.6			2.8			—			—			25.4
Income from continuing operations before income taxes	10.5			5.3			21.9			(9.2		)	28.5
Provision (benefit) for income taxes	0.3			—			(4.0		)	—			(3.7		)
Income from continuing operations	10.2			5.3			25.9			(9.2		)	32.2
Loss from discontinued operations, net of income tax benefit	—			(22.0		)	—			—			(22.0		)
Net income (loss)	$	10.2		$	(16.7	)	$	25.9		$	(9.2	)	$	10.2

F-45

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2009

	Neenah Paper, Inc		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Consolidating Adjustments			Consolidated Amounts
ASSETS
Current assets
Cash and cash equivalents	$	2.1	$	2.0	$	1.5	$	—		$	5.6
Accounts receivable - net	23.8		16.1		27.8		—			67.7
Inventories	38.1		8.9		23.7		—			70.7
Income taxes receivable	0.3		0.5		—		—			0.8
Deferred income taxes	4.7		57.0		—		—			61.7
Intercompany amounts receivable	68.7		49.4		—		(118.1		)	—
Prepaid and other current assets	5.2		1.7		6.8		—			13.7
Assets held for sale	—		10.0		—		—			10.0
Total current assets	142.9		145.6		59.8		(118.1		)	230.2
Property, plant and equipment at cost	262.2		99.5		207.9		—			569.6
Less accumulated depreciation	180.3		62.9		42.0		—			285.2
Property, plant and equipment — net	81.9		36.6		165.9		—			284.4
Investments in subsidiaries	280.5		—		—		(280.5		)	—
Deferred Income Taxes	10.9		26.5		—		—			37.4
Goodwill	—		—		44.9		—			44.9
Intangible assets	2.9		—		24.6		—			27.5
Other Assets	6.5		0.1		6.5		—			13.1
TOTAL ASSETS	$	525.6	$	208.8	$	301.7	$	(398.6	)	$	637.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Debt payable within one year	$	40.9	$	—	$	14.7	$	—		$	55.6
Accounts payable	16.3		5.3		8.4		—			30.0
Intercompany amounts payable	49.4		68.7		—		(118.1		)	—
Accrued expenses	23.6		14.8		10.2		—			48.6
Total current liabilities	130.2		88.8		33.3		(118.1		)	134.2
Long-term Debt	252.9		—		10.7		—			263.6
Deferred Income Taxes	—		—		23.7		—			23.7
Noncurrent Employee Benefits and Other Obligations	34.8		38.7		34.8		—			108.3
TOTAL LIABILITIES	417.9		127.5		102.5		(118.1		)	529.8
STOCKHOLDERS’ EQUITY	107.7		81.3		199.2		(280.5		)	107.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	525.6	$	208.8	$	301.7	$	(398.6	)	$	637.5

F-46

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2008

	Neenah Paper, Inc.		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Consolidating Adjustments			Consolidated Amounts
ASSETS
Current assets
Cash and cash equivalents	$	1.9	$	1.1	$	0.3	$	—		$	3.3
Accounts receivable, net	22.4		12.9		27.9		—			63.2
Inventories	45.8		11.2		31.6		—			88.6
Income taxes receivable	11.2		—		—		—			11.2
Deferred income taxes	3.5		61.9		—		—			65.4
Intercompany amounts receivable	69.6		55.6		—		(125.2		)	—
Prepaid and other current assets	5.5		5.4		8.1		—			19.0
Assets held for sale—discontinued operations	—		3.3		—		—			3.3
Total current assets	159.9		151.4		67.9		(125.2		)	254.0
Property, plant and equipment, at cost	261.7		113.4		200.3		—			575.4
Less accumulated depreciation	169.1		62.1		28.0		—			259.2
Property, plant and equipment — net	92.6		51.3		172.3		—			316.2
Investments In Subsidiaries	292.9		—		—		(292.9		)	—
Deferred Income Taxes	9.6		25.6		0.1		—			35.3
Goodwill	—		—		43.8		—			43.8
Intangible Assets—net	3.0		—		25.7		—			28.7
Other Assets	6.8		0.1		5.1		—			12.0
TOTAL ASSETS	$	564.8	$	228.4	$	314.9	$	(418.1	)	$	690.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Debt payable within one year	$	5.0	$	—	$	19.1	$	—		$	24.1
Accounts payable	17.4		3.2		14.7		—			35.3
Intercompany amounts payable	55.6		69.6		—		(125.2		)	—
Accrued expenses	21.8		17.1		11.4		—			50.3
Total current liabilities	99.8		89.9		45.2		(125.2		)	109.7
Long-term Debt	328.3		—		12.2		—			340.5
Deferred Income Taxes	—		—		25.4		—			25.4
Noncurrent Employee Benefits and Other Obligations	33.6		44.3		33.4		—			111.3
TOTAL LIABILITIES	461.7		134.2		116.2		(125.2		)	586.9
STOCKHOLDERS’ EQUITY	103.1		94.2		198.7		(292.9		)	103.1
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	564.8	$	228.4	$	314.9	$	(418.1	)	$	690.0

F-47

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2009

	Neenah Paper, Inc			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
OPERATING ACTIVITIES
Net income (loss)	$	(1.2	)	$	(4.4	)	$	6.9		$	(2.5	)	$	(1.2	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization	15.2			4.6			14.7			—			34.5
Stock-based compensation	4.7			—			—			—			4.7
Deferred income tax benefit	(2.8		)	(4.4		)	(2.2		)	—			(9.4		)
Ripon Mill non-cash charges	—			6.3			—			—			6.3
(Gain) loss on other asset dispositions	0.2			—			—			—			0.2
Net cash provided by changes in operating working capital	19.9			4.7			2.8			—			27.4
Equity in earnings of subsidiaries	(2.5		)	—			—			2.5			—
Pension and other post-employment benefits	4.5			(2.9		)	0.8			—			2.4
Other	(0.9		)	1.0			(0.1		)	—			—
NET CASH PROVIDED BY OPERATING ACTIVITIES	37.1			4.9			22.9			—			64.9
INVESTING ACTIVITIES
Capital expenditures	(3.4		)	(1.4		)	(3.6		)	—			(8.4		)
Proceeds from asset sales	—			0.8			—			—			0.8
Other	0.8			(0.3		)	(1.2		)	—			(0.7		)
NET CASH USED IN INVESTING ACTIVITIES	(2.6		)	(0.9		)	(4.8		)	—			(8.3		)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	42.6			—			—			—			42.6
Repayments of long-term debt	(85.8		)	—			(1.8		)	—			(87.6		)
Short-term borrowings	0.9			—			11.3			—			12.2
Repayments of short-term borrowings	—			—			(15.4		)	—			(15.4		)
Cash dividends paid	(5.9		)	—			—			—			(5.9		)
Other	(0.1		)	—			—			—			(0.1		)
Intercompany transfers - net	14.0			(3.1		)	(10.9		)	—			—
NET CASH USED IN FINANCING ACTIVITIES	(34.3		)	(3.1		)	(16.8		)	—			(54.2		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			(0.1		)	—			(0.1		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	0.2			0.9			1.2			—			2.3
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	1.9			1.1			0.3			—			3.3
CASH AND CASH EQUIVALENTS, END OF YEAR	$	2.1		$	2.0		$	1.5		$	—		$	5.6

F-48

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2008

	Neenah Paper,  Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
OPERATING ACTIVITIES
Net income (loss)	$	(158.5	)	$	(102.0	)	$	(44.7	)	$	146.7		$	(158.5	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	15.4			7.4			15.8			—			38.6
Stock-based compensation	4.0			—			—			—			4.0
Deferred income tax provision (benefit)	3.1			(55.2		)	(4.0		)	—			(56.1		)
Goodwill and other intangible asset impairment charge	—			—			54.5			—			54.5
Asset impairment loss	—			91.2			—			—			91.2
Loss on disposal - transfer of the Pictou Mill	—			29.4			—			—			29.4
Amortization of deferred revenue - transfer of the Pictou Mill	—			(2.8		)	—			—			(2.8		)
Loss on disposal - transfer of the Pictou Mill postretirement benefit plans	—			53.7			—			—			53.7
Gain on curtailment of postretirement benefit plan	—			(4.3		)	—			—			(4.3		)
(Gain) loss on other asset dispositions	0.4			(6.7		)	—			—			(6.3		)
Increase (decrease) in working capital	(20.2		)	7.9			(8.8		)	—			(21.1		)
Equity in losses of subsidiaries	146.7			—			—			(146.7		)	—
Pension and other postretirement benefits	(3.8		)	(4.6		)	0.8			—			(7.6		)
Other	(0.4		)	(1.1		)	(0.1		)	—			(1.6		)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(13.3		)	12.9			13.5			—			13.1
INVESTING ACTIVITIES
Capital expenditures	(11.2		)	(7.4		)	(11.4		)	—			(30.0		)
Payments in conjunction with transfer of the Pictou Mill	—			(13.6		)	—			—			(13.6		)
Proceeds from asset sales	—			13.8			—			—			13.8
Other	(1.3		)	0.8			(0.1		)	—			(0.6		)
NET CASH USED IN INVESTING ACTIVITIES	(12.5		)	(6.4		)	(11.5		)	—			(30.4		)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	53.7			—			—			—			53.7
Repayments of long-term debt	(34.6		)	—			—			—			(34.6		)
Short-term borrowings	—			—			18.7			—			18.7
Repayments of short-term debt	—			—			(3.3		)	—			(3.3		)
Cash dividends paid	(6.0		)	—			—			—			(6.0		)
Share purchases	(9.4		)	—			—			—			(9.4		)
Other	(0.3		)	(0.6		)	—			—			(0.9		)
Intercompany transfers - net	25.2			(7.6		)	(17.6		)	—			—
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	28.6			(8.2		)	(2.2		)	—			18.2
NET CHANGE IN CASH AND CASH EQUIVALENTS	2.8			(1.7		)	(0.2		)	—			0.9
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	(0.9		)	2.8			0.5			—			2.4
CASH AND CASH EQUIVALENTS, END OF YEAR	$	1.9		$	1.1		$	0.3		$	—		$	3.3

F-49

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2007

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
OPERATING ACTIVITIES
Net income (loss)	$	10.2		$	(16.7	)	$	25.9		$	(9.2	)	$	10.2
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	15.1			16.2			14.0			—			45.3
Stock-based compensation	5.8			0.3			0.3			—			6.4
Deferred income tax provision (benefit)	(4.8		)	(17.8		)	(10.1		)	—			(32.7		)
Gain on sale of woodlands	—			(6.2		)	—			—			(6.2		)
(Gain) loss on other asset dispositions	0.2			(1.0		)	—			—			(0.8		)
Net cash provided by (used in) changes in operating working capital, net of effects of acquisition	2.5			5.3			(1.9		)	—			5.9
Equity in earnings of subsidiaries	(9.2		)	—			—			9.2			—
Pension and other postretirement benefits	2.9			(0.8		)	2.0			—			4.1
Loss on curtailment and settlement of pension plan	—			38.7			—			—			38.7
Other	0.1			(0.1		)	(1.4		)	—			(1.4		)
NET CASH PROVIDED BY OPERATING ACTIVITIES	22.8			17.9			28.8			—			69.5
INVESTING ACTIVITIES
Capital expenditures	(12.9		)	(10.0		)	(35.4		)	—			(58.3		)
Acquisition of Fox River, net of cash acquired	(54.7		)	—			—			—			(54.7		)
Acquisition of Neenah Germany, net of cash acquired	(1.5		)	—			—			—			(1.5		)
Other	0.1			0.5			0.5			—			1.1
NET CASH USED IN INVESTING ACTIVITIES	(69.0		)	(9.5		)	(34.9		)	—			(113.4		)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	63.6			—			13.4			—			77.0
Repayments of long-term debt	(34.1		)	—			—			—			(34.1		)
Short-term borrowings	—			—			8.0			—			8.0
Repayments of short-term borrowings	—			—			(5.0		)	—			(5.0		)
Cash dividends paid	(6.0		)	—			—			—			(6.0		)
Proceeds from exercise of stock options	3.7			—			—			—			3.7
Other	0.2			—			—			—			0.2
Intercompany transfers - net	17.8			(6.4		)	(11.4		)	—			—
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	45.2			(6.4		)	5.0			—			43.8
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			0.3			0.6			—			0.9
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(1.0		)	2.3			(0.5		)	—			0.8
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	0.1			0.5			1.0			—			1.6
CASH AND CASH EQUIVALENTS, END OF YEAR	$	(0.9	)	$	2.8		$	0.5		$	—		$	2.4

F-50

Note 17. Subsequent Event

On March 1, 2010, the Company announced that Neenah Canada had signed a definitive agreement to sell the Woodlands to Northern Timber Nova Scotia Corporation, a new operating company jointly owned by Atlas and Blue Wolf, for C$82.5 million ($78.6 million).  The Company will receive the proceeds at the time of closing, which is expected to occur before March 31, 2010. Proceeds from the sale will be used to repay the $40 million New Term Loan in full and reduce the balance of revolving loans outstanding under our Restated Credit Agreement to zero. In addition, approximately $3.1 million in contract termination payments related to the closure of the Ripon Mill will become due and payable upon the sale of the Woodlands.  The Company’s ability to use proceeds in excess of amounts outstanding under the Restated Credit Agreement is restricted to “permitted uses” as defined in the indenture for the Senior Notes. The transaction is expected to result in a pre-tax gain of approximately $75 million which will be recognized at the time of closing. The transaction is not expected to generate a cash tax liability because the tax basis for the Woodlands is approximately equal to the sale price. The sale will result in the Company’s substantially complete liquidation of its Canadian operations. In accordance with ASC Topic 830, Foreign Currency Matters, the gain on sale will also include the reclassification from accumulated other comprehensive income of $88 million in deferred foreign currency translation gains.  Fees and other costs associated with the transaction are minimal.

Note 18. Unaudited Quarterly Data

	2009 Quarters
	First			Second (a)			Third		Fourth		Year (a)
Net Sales	$	134.1		$	135.2		$	150.1	$	154.5	$	573.9
Gross Profit	20.5			24.2			28.3		28.6		101.6
Operating Income (Loss)	4.9			(10.5		)	10.7		11.3		16.4
Income (Loss) From Continuing Operations	(0.7		)	(8.6		)	3.4		4.1		(1.8		)
Earnings (Loss) Per Common Share From Continuing Operations:
Basic	$	(0.05	)	$	(0.58	)	$	0.23	$	0.28	$	(0.12	)
Diluted	$	(0.05	)	$	(0.58	)	$	0.23	$	0.28	$	(0.12	)

	2008 Quarters
	First		Second		Third		Fourth (b)			Year (b)
Net Sales	$	205.6	$	194.5	$	185.6	$	146.6		$	732.3
Gross Profit	34.2		28.9		25.0		11.0			99.1
Operating Income (Loss)	17.9		14.2		12.3		(63.7		)	(19.3		)
Income (Loss) From Continuing Operations	8.5		6.2		5.0		(67.0		)	(47.3		)
Earnings (Loss) Per Common Share From Continuing Operations:
Basic	$	0.58	$	0.43	$	0.34	$	(4.58	)	$	(3.24	)
Diluted	$	0.57	$	0.42	$	0.34	$	(4.58	)	$	(3.24	)

(a)Includes costs related to the closure of the Ripon Mill of $17.1 million.

(b)Includes non-cash pre-tax goodwill and other intangible asset impairment charge of $54.5 million.

F-51

SCHEDULE II

NEENAH PAPER, INC. AND SUBSIDIARIES

SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

(Dollars in millions)

Description	Balance at Beginning of Period		Charged to Costs and Expenses			Charged to Other Accounts			Write-offs and Reclassifications			Balance at End of Period
December 31, 2009
Allowances deducted from assets to which they apply
Allowance for doubtful accounts	$	1.1	$	0.3		$	—		$	(0.2	)(a)	$	1.2
Allowances for sales discounts	0.6		0.1			—			—			0.7
Deferred income tax valuation allowance	—		1.5			—			—			1.5
December 31, 2008
Allowances deducted from assets to which they apply
Allowance for doubtful accounts	$	1.1	$	0.4		$	(0.1	)	$	(0.3	)(a)	$	1.1
Allowances for sales discounts	1.0		(0.5		)	0.1			—			0.6
December 31, 2007
Allowances deducted from assets to which they apply
Allowance for doubtful accounts	$	3.6	$	0.1		$	—		$	(2.6	)(a)	$	1.1
Allowances for sales discounts	0.8		0.2			—			—			1.0

(a)Principally uncollectible receivables written off

F-52

EX-10.34

Exhibit 10.34

AMENDED AND RESTATED CREDIT AGREEMENT

made and entered into
as of November 5, 2009
by and among

NEENAH PAPER, INC.,
CERTAIN SUBSIDIARIES OF NEENAH PAPER, INC.,as joint and several borrowers,

CERTAIN SUBSIDIARIES OF NEENAH PAPER, INC.,as guarantors,

EACH OF THE FINANCIAL INSTITUTIONS WHICH IS
A SIGNATORY HERETO OR
WHICH MAY FROM TIME TO TIME
BECOME A PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,as Agent for such Financial Institutions

JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,as Canadian Collateral Agent for such Financial Institutions

BANK OF AMERICA, N.A.,
as Syndication Agent

and

J.P. MORGAN SECURITIES INC. and BANC OF AMERICA SECURITIES LLC,as Joint Lead Arrangers and Joint Bookrunners

INDEX TO CREDIT AGREEMENT

			Page No.
1.	Definitions		2
	1.1	Certain Defined Terms	2
	1.2	Accounting Terms and Determinations	42
	1.3	UCC Changes	43
	1.4	Joint and Several Obligations; Borrowers’ Agent	43
2.	Loans; Letters of Credit; Notes; Payments; Prepayments; Interest Rates		43
	2.1	Commitments	43
	2.2	Loans	44
	2.3	Commitment Fees	46
	2.4	Termination and Reductions of Revolving Commitments	47
	2.5	Mandatory and Voluntary Prepayments	47
	2.6	Notes; Payments; Accounts	49
	2.7	Application of Payments and Prepayments	50
	2.8	Interest Rates for Loans	52
	2.9	Special Provisions Applicable to LIBOR Borrowings	54
	2.10	Letters of Credit	57
	2.11	Swingline Loans	62
	2.12	Pro-Rata Treatment	65
	2.13	Sharing of Payments, Etc.	66
	2.14	Recapture	66
	2.15	Increase of Revolving Commitments	67
	2.16	Defaulting Lenders	68
3.	Collateral		69
	3.1	Security Documents	69
	3.2	Filing and Recording	69
	3.3	Special Cash Collateral Account	70
4.	Conditions		70
	4.1	All Loans	70
	4.2	First Loan or Letter of Credit	71
	4.3	Post-Closing Deliveries	75
5.	Representations and Warranties		76
	5.1	Organization	76
	5.2	Financial Statements	76
	5.3	Enforceable Obligations; Authorization	76
	5.4	Other Debt	77
	5.5	Litigation	77
	5.6	Taxes	77
	5.7	No Material Misstatements; Full Disclosure	78
	5.8	Subsidiaries and Offshore Entities	78

i

	5.9	Representations by Others	78
	5.10	Permits, Licenses, Etc.	78
	5.11	ERISA	79
	5.12	Title to Properties; Possession Under Leases	79
	5.13	Assumed Names	80
	5.14	Investment Company Act	80
	5.15	Public Utility Holding Company Act	80
	5.16	Agreements	80
	5.17	Environmental Matters	80
	5.18	No Change in Credit Criteria or Collection Policies	81
	5.19	Solvency	82
	5.20	Status of Receivables and Other Collateral	83
	5.21	Transactions with Related Parties	83
	5.22	Intellectual Property	83
	5.23	[RESERVED]	84
	5.24	Canadian Pension and Benefit Plan Matters	84
	5.25	Related Businesses	84
	5.26	Material Leasehold Properties	84
	5.27	Security Interests	84
	5.28	[RESERVED]	85
	5.29	Deposit Accounts	85
6.	Affirmative Covenants		85
	6.1	Businesses and Properties	85
	6.2	Taxes	86
	6.3	Financial Statements and Information	86
	6.4	Inspections; Field Examinations; Inventory Appraisals and Physical Counts	88
	6.5	Further Assurances	90
	6.6	Books and Records	90
	6.7	Insurance	90
	6.8	ERISA	91
	6.9	Use of Proceeds	92
	6.10	Borrowers; Guarantors; Joinder Agreements	92
	6.11	Notice of Events	93
	6.12	Environmental Matters	94
	6.13	End of Fiscal Year	94
	6.14	Pay Obligations and Perform Other Covenants	94
	6.15	Collection of Receivables; Application of Receivables Proceeds	95
	6.16	Receivables and Other Collateral Matters	96
	6.17	Agreements	97
	6.18	Hedging Strategy	97
	6.19	Canadian Pension Plans; Canadian Benefit Plans	97
	6.20	Conforming Leasehold Interests; Matters Relating to Additional Real Property Collateral	98

ii

7.	Negative Covenants		100
	7.1	Indebtedness	100
	7.2	Liens	103
	7.3	Contingent Liabilities	105
	7.4	Mergers, Consolidations and Dispositions and Acquisitions of Assets	105
	7.5	Nature of Business	109
	7.6	Transactions with Related Parties	109
	7.7	Investments, Loans	110
	7.8	ERISA Compliance	110
	7.9	Trade Credit Extensions	111
	7.10	Change in Accounting Method	111
	7.11	Redemption, Dividends, Stock Issuance, Distributions and Payments	111
	7.12	Fixed Charge Coverage Ratio	112
	7.13	Sale of Receivables	112
	7.14	Sale and Lease-Back Transactions	112
	7.15	Change of Name or Place of Business	113
	7.16	Restrictive Agreements	113
	7.17	Tax Classification	113
	7.18	Deposit Accounts	113
	7.19	Organizational Documents; Tax Sharing Agreements	114
	7.20	Limitation on Indebtedness of Offshore Entities	114
8.	Events of Default and Remedies		114
	8.1	Events of Default	114
	8.2	Remedies Cumulative	117
9.	The Agent; the Canadian Collateral Agent		117
	9.1	Appointment, Powers and Immunities	117
	9.2	Reliance	118
	9.3	Defaults	119
	9.4	Rights as a Lender	119
	9.5	Indemnification	119
	9.6	Non-Reliance on Agent and Other Lenders	120
	9.7	Failure to Act	120
	9.8	Resignation or Removal of Agent	120
	9.9	Syndication Agent; Joint Lead Arrangers; Joint Bookrunners	121
10.	Miscellaneous		121
	10.1	No Waiver	121
	10.2	Notices	121
	10.3	Governing Law	122
	10.4	Survival; Parties Bound	122
	10.5	Counterparts	122
	10.6	Limitation of Interest	122
	10.7	Survival	123
	10.8	Captions	123
	10.9	Expenses, Etc.	123

iii

10.10	Indemnification	123
10.11	Amendments, Waivers, Etc.	124
10.12	Successors and Assigns	125
10.13	Entire Agreement	129
10.14	Severability	129
10.15	Disclosures	129
10.16	Capital Adequacy	129
10.17	Taxes	131
10.18	Waiver of Claim	134
10.19	Right of Setoff	134
10.20	Waiver of Right to Jury Trial	134
10.21	Additional Provisions Regarding Collection of Receivables and other Collateral	135
10.22	Bank Product Obligations	137
10.23	Construction	140
10.24	Joint and Several Obligations	140
10.25	USA Patriot Act	140
10.26	Judgment	140
10.27	Jurisdiction; Service of Process	141
10.28	Confidentiality	141
10.29	No Fiduciary Duty/Conflicts	142

LIST OF EXHIBITS AND SCHEDULES

Exhibit A	-	Form of Revolving Credit Note
Exhibit B	-	Form of Swingline Note
Exhibit C	-	Form of Term Note
Exhibit D	-	Form of Compliance Certificate
Exhibit E	-	Form of Request for Extension of Credit
Exhibit F	-	Form of Rate of Section Notice
Exhibit G	-	Form of Borrowing Base Compliance Certificate
Exhibit H	-	Form of Receivables Report
Exhibit I	-	Form of Inventory Designation Report
Exhibit J	-	Form of Solvency Certificate
Exhibit K	-	Form of Canadian Guaranty
Exhibit L	-	Form of Perfection Certificate
Exhibit M	-	Form of US Patent Security Agreement
Exhibit N	-	Form of US Trademark Security Agreement
Exhibit O	-	Form of US Copyright Security Agreement
Exhibit P	-	Form of Assignment And Acceptance
Exhibit Q	-	Form of Commitment Increase Agreement
Exhibit R	-	Form of New Lender Agreement
Schedule 1.1A	-	Revolving Credit Commitments
Schedule 1.1B	-	Material Leasehold Properties
Schedule 1.1C	-	Equipment Component

iv

Schedule 1.1D	-	Quarterly Equipment Component Amortization Amount
Schedule 1.1E	-	Quarterly Real Estate Component Amortization Amount
Schedule 1.1F	-	Real Estate Component
Schedule 1.4	-	Responsible Officers of Neenah
Schedule 2.10(a)	-	Existing Letters of Credit
Schedule 4.2(n)	-	Access Agreement and Waivers, Subordinations or Landlord and Warehouse Waivers
Schedule 4.2(r)-1	-	List of Closing Date Mortgaged Properties
Schedule 4.2(r)-2	-	List of Endorsements
Schedule 5.3	-	Governmental Authorization
Schedule 5.5	-	Material Litigation
Schedule 5.8	-	Subsidiaries, Jurisdictions of Foreign Qualification; Capitalization
Schedule 5.10	-	Permits, Licenses, Etc.
Schedule 5.12(b)	-	Real Property Leases
Schedule 5.13	-	Assumed Names
Schedule 5.16	-	Indebtedness
Schedule 5.17	-	Environmental Matters
Schedule 5.22	-	Intellectual Property
Schedule 5.27	-	Financing Statements
Schedule 5.29	-	Deposit Accounts
Schedule 7.2	-	Liens
Schedule 7.6	-	Permitted Affiliated Transactions

v

LIST OF DEFINED TERMS

	Page No.
$	42
10 percent shareholder	133
Act	140
Additional Mortgage	98
Additional Mortgage Policies	99
Additional Mortgaged Property	98
Additional Mortgages	98
Additional Senior Indenture	2
Additional Senior Note Documents	2
Additional Senior Notes	2
Adjusted LIBOR Rate	2
Affiliate	2
Agent	1
Agreement	1
Alternate Base Rate	3
Alternate Base Rate Borrowing	3
Annual Audited Financial Statements	3
Annualized Basis	4
Applicable Commitment Fee Percentage	4
Applicable Lending Office	4
Applicable Margin	4
Applications	5
Approved Fund	5
Assignment and Acceptance	127
Availability	5
bank	133
Bank Product Amount	6
Bank Products	6
Borrower	1
Borrowers	1
Borrowers’ Agent	7
Borrowing Base	7
Borrowing Base Compliance Certificate	7
Borrowing Base Deficiency	7
Business Day	7
Business Entity	7
Canadian Benefit Plans	8
Canadian Collateral Agent	8
Canadian Dollars	8
Canadian Licenses	8
Canadian Pension Plans	8
Canadian Subsidiary	8
Capital Expenditures	8

vi

Capital Lease Obligations	8
Cash Dividends	8
Cash Officer	8
Cdn.$	8
Change of Control	8
Closing Date	9
Closing Date Mortgage	73
Closing Date Mortgage Policy	73
Closing Date Mortgaged Property	73
Closing Date Mortgages	73
Code	9
Collateral	9
Collection Account	9
Commitment	10
Commitment Fee	46
Commitment Increase Agreement	10
Commitment Percentage	10
Compliance Certificate	10
Concentration Limit	10
Consequential Loss	10
Consolidated	11
Contingent Obligation	11
Contribution Agreement	11
Controlled Account	11
controlled foreign corporation	133
Copyrights	24
Credit Parties	11
Current Sum	11
Default	16
Default Rate	11
Defaulting Lender	12
Designated Timber Agent	137
Disbursement/Pass-Through Account	113
Discontinued Operations	12
Disposition	12
Dollar	12
dollars	42
Domestic Lending Office	12
Domestic Subsidiary	12
Dominion Event	95
Dominion Termination Event	95
EBITDA	13
Eligible Assignee	13
Eligible Equipment	13
Eligible Inventory	14
Eligible Real Estate	14

vii

Eligible Receivables	14
Environmental Claim	15
Environmental Law	15
Environmental Liabilities	15
Environmental Permit	16
Equipment	16
Equipment Component	16
ERISA	16
ERISA Affiliate	16
Event of Default	16
Excess Interest Amount	16
Excluded Foreign Subsidiary	16
Existing Credit Agreement	1
Existing Indebtedness	1
Existing Lenders	1
Existing Letters of Credit	16
Extended Facility Letter of Credit	62
Federal Funds Effective Rate	17
Financial Officer	17
FinCo	17
Fixed Charge Coverage Ratio	17
Flood Hazard Property	18
Foreign Lender	18
GAAP	18
Governmental Authority	18
Grantor	18
guarantor	11
Guarantors	18
Guaranty	18
Hazardous Substance	19
Hedging Obligation Amount	19
Hedging Obligations	19
Hedging Obligations Aggregate Amount	19
Highest Lawful Rate	19
Indebtedness	19
Indemnifiable Tax	131
Indenture Cap	20
Ineligible Inventory	20
Ineligible Receivables	22
Initial Pledged Inter-Company Loan	24
Intellectual Property	24
Intellectual Property Security Agreements	84
interest	122
Interest Expense	25
Interest Option	52
Interest Options	52

viii

Interest Payment Dates	25
Interest Period	25
Inventory	25
Investment	26
IRS	26
Issuing Bank	26
ITA	26
Joinder Agreement	26
JPMorgan	1
Judgment Currency	140
Kimberly-Clark	26
LC Collateral Account	62
Leasehold Property	26
Legal Requirement	26
Lender	1
Lender or Lenders	26
Lender Party	26
Lenders	1
Letter of Credit Advances	27
Letter of Credit Exposure Amount	27
Letters of Credit	26
LIBOR Borrowing	27
LIBOR Lending Office	27
LIBOR Rate	27
Lien	27
Loan Documents	28
Loans	28
Material Adverse Effect	28
Material Lease	28
Material Leasehold Property	28
Mill Properties	28
Monthly Unaudited Financial Statements	28
Mortgage	29
Mortgaged Property	29
Mortgages	29
Neenah Germany	29
Net Income	29
Net Recovery Value Percentage	30
New Lender	68
New Lender Agreement	30
Non-Reporting Lender Party	6
Notes	30
Notice of Default	119
Nova Scotia Woodlands	30
NP International	30
NP International HoldCo	30

ix

Obligation Currency	140
Obligations	30
Obligees	137
Offshore Entities	31
Organizational Documents	31
Original Closing Date	1
Other Tax	131
Parent	1
Parties	31
Patents	24
PBGC	31
Perfection Certificate	32
Permitted Affiliate Transactions	32
Permitted Investment Securities	32
Permitted Overadvances	46
Person	33
Plan	33
Pledged Cash	33
Pledged Inter-Company Loan	33
Pledged Inter-Company Note	33
PPSA (Nova Scotia)	33
primary obligations	11
primary obligor	11
Prime Rate	33
Principal Office	34
Prior Term Loan Agreement	34
Prohibited Transaction	34
Proper Form	34
Property	34
PUHCA	80
purpose credit	92
Quarterly Equipment Component Amortization Amount	34
Quarterly Real Estate Component Amortization Amount	34
Quarterly Unaudited Financial Statements	34
Rate Selection Date	34
Rate Selection Notice	52
Reaffirmation Agreement	35
Real Estate Component	35
Real Property Asset	35
Receivables	35
Refinancing Indebtedness	35
Reg U	92
Register	128
Regulation D	36
Regulatory Change	36
Related Obligations	137

x

Reportable Event	36
Request for Extension of Credit	36
Required Lenders	36
Requirements of Environmental Law	36
Reserves	36
Responsible Officer	36
Revolving Commitment	36
Revolving Commitment Increase Notice	67
Revolving Credit Alternate Base Rate Borrowing	37
Revolving Credit LIBOR Borrowing	37
Revolving Credit Notes	37
Revolving Exposure	37
Revolving Loans	37
Scheduled Principal Payments	37
Security Agreements	37
Security Documents	38
Senior Note Documents	38
Senior Note Indenture	38
Senior Notes	38
Settlement	64
Settlement Date	64
Special Cash Collateral Account	39
Standby Letters of Credit	39
Statutory Reserves	39
Stock	39
Subordinated Indebtedness	39
Subsidiary	39
Swingline Exposure	39
Swingline Lender	40
Swingline Loan	62
Swingline Loans	40
Swingline Note	40
Synthetic Lease	40
Tax	131
Term Lenders	40
Term Loan Alternate Base Rate Borrowing	40
Term Loan Commitment	40
Term Loans	40
Term Notes	40
Termination Date	40
Timberland Properties	41
Title Company	41
Total Commitment	41
Total Revolving Commitment	41
Trade Letters of Credit	41
Trademarks	24

xi

Tri-Party Agreements	41
UCC	41
Unpledged Inter-Company Loan	41
Unused Commitment	41

xii

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT (together with all amendments, modifications and supplements hereto and restatements hereof, this “Agreement”) is made and entered into effective as of November 5, 2009, by and among Neenah Paper, Inc., a Delaware corporation (“Parent”), each subsidiary of Parent listed as a “Borrower” on the signature pages hereto (together with Parent, each a “Borrower” and collectively, the “Borrowers”), each subsidiary of Parent listed as a “Guarantor” on the signature pages hereto, each of the financial institutions which is a signatory hereto or which may from time to time become a party hereto (individually, a “Lender” and collectively, the “Lenders”), JPMorgan Chase Bank, N.A. (“JPMorgan”), as agent for the Lenders (in such capacity, together with its successors in such capacity, the “Agent”), and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian collateral agent for the Lenders.

W I T N E S S E T H:

WHEREAS, the Borrowers, Neenah Paper Company of Canada, the Agent, the Canadian Collateral Agent and each of the financial institutions a party thereto as lenders (“Existing Lenders”), are parties to that certain Credit Agreement dated as of November 30, 2004 (the “Original Closing Date”), pursuant to which Existing Lenders provided certain loans and extensions of credit to the Borrowers (such Credit Agreement, as heretofore amended, the “Existing Credit Agreement” and all Indebtedness arising pursuant to the Existing Credit Agreement, the “Existing Indebtedness”); and

WHEREAS, subject to the conditions precedent set forth herein, the parties hereto desire to amend and restate the Existing Credit Agreement in its entirety in the form of this Agreement, and Borrowers desire to obtain Loans (a) to refinance the Existing Indebtedness, and (b) for other purposes permitted herein; and

WHEREAS, after giving effect to the amendment and restatement of the Existing Credit Agreement pursuant to the terms hereof, the Commitment Percentage of each Lender hereunder will be as set forth on Schedule 1.1A hereto; and

NOW, THEREFORE, in consideration of the premises, the representations, warranties, covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and subject to the satisfaction of each condition precedent contained in Section 4.2 hereof, the Existing Credit Agreement shall be amended and restated as of the Closing Date in the form of this Agreement.  It is the intention of the Borrowers, Guarantors, the Agent, the Canadian Collateral Agent and Lenders, and such parties hereby agree, that this Agreement supersedes and replaces the Existing Credit Agreement in its entirety, and that (a) such amendment and restatement shall operate to renew, amend and modify certain of the rights and obligations of the parties under the Existing Credit Agreement as provided herein, but shall not act as a novation thereof, and (b) the Liens securing the “Obligations” under and as defined in the Existing Credit Agreement shall not be extinguished, but shall be carried forward and shall secure such obligations and Indebtedness as renewed, amended, restated and modified hereby.  The parties hereto further agree as follows:

1

1.             Definitions

1.1           Certain Defined Terms.  Unless a particular word or phrase is defined therein or the context otherwise requires, capitalized words and phrases used in the other Loan Documents have the meanings provided below.  As used in this Agreement, the following terms shall have the following meanings:

“Additional Mortgage” shall have the meaning specified for such term in Section 6.20(b)(A).

“Additional Mortgage Policies” shall have the meaning specified for such term in Section 6.20(b)(F).

“Additional Mortgaged Property” shall have the meaning specified for such term in Section 6.20(b).

“Additional Senior Indenture” shall mean a trust indenture between the Parent and a financial institution serving as trustee thereunder, having covenants (but not necessarily economic terms) substantially consistent with those in the Senior Note Indenture (and if relating to senior subordinated Additional Senior Notes, having subordination provisions customary for similar financings and satisfactory to the Agent and its counsel).

“Additional Senior Note Documents” shall mean any and all agreements, instruments and other documents pursuant to which the Additional Senior Notes have been or will be issued or otherwise setting forth the terms of the Additional Senior Notes, the Additional Senior Indenture and the obligations with respect thereto, including any guaranty agreements, bank product agreements or hedging agreements related thereto, all ancillary agreements as to which any agent, trustee or lender is a party or a beneficiary and all other agreements, instruments, documents and certificates executed in connection with any of the foregoing, in each case as such agreement, instrument or other document may be amended, restated, supplemented, refunded, replaced or otherwise modified from time to time in accordance with the terms thereof.

“Additional Senior Notes” shall mean any senior unsecured or senior subordinated unsecured Indebtedness issued by the Parent as permitted pursuant to Section 7.1(m) pursuant to an Additional Senior Indenture.

“Adjusted LIBOR Rate” shall mean, with respect to any LIBOR Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the sum of (a) the product of (i) the LIBOR Rate in effect for such Interest Period and (ii) Statutory Reserves and (b) the Applicable Margin.

“Affiliate” of any Person shall mean any other Person which controls or is controlled by or under common control with such Person.  For purposes of this definition, “control” (including “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person through the ownership of securities or by contract.  Without limiting the generality of the foregoing, control of the right to vote of ten percent (10%) or more of all voting securities of a Person or beneficial ownership of ten percent (10%) of the outstanding equity interests in such

2

Person shall be deemed to be control for purposes of compliance with the provisions of Section 7.6 hereof.  The Credit Parties and Kimberly-Clark shall not be deemed to be under common control for purposes hereof solely due to the fact that Parent and Kimberly-Clark have common shareholders.

“Agent” shall have the meaning specified in the preamble to this Agreement.

“Alternate Base Rate” shall mean, for any day, a rate per annum (rounded upwards to the nearest 1/16 of 1%) equal to the sum of (a) the greatest of (i) the Prime Rate (computed on the basis of the actual number of days elapsed over a 360-day year) in effect on such day, (ii) the Federal Funds Effective Rate (computed on the basis of the actual number of days elapsed over a 360-day year) in effect for such day plus ½ of 1%, and (iii) the Adjusted LIBOR Rate (determined without regard to clause (b) in the definition thereof) for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 2.50%, and (b) the Applicable Margin.  For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Prime Rate, Federal Funds Effective Rate or the Adjusted LIBOR Rate shall be effective on the effective date of such change in the Prime Rate, Federal Funds Effective Rate or the Adjusted LIBOR Rate, respectively.  If for any reason the Agent shall have determined (which determination shall be conclusive and binding, absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate or the Adjusted LIBOR Rate for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (a)(i) and/or (a)(iii), as applicable, until the circumstances giving rise to such inability no longer exist.

“Alternate Base Rate Borrowing” shall mean, as of any date, that portion of the principal balance of the Loans bearing interest at the Alternate Base Rate as of such date.

“Annual Audited Financial Statements” shall mean (a) the annual financial statements of the Parent and its Subsidiaries, including all notes thereto, which statements shall include, on a Consolidated basis, a balance sheet as of the end of such fiscal year and a statement of operations, a retained earnings statement and a statement of cash flows for such fiscal year, all setting forth in comparative form the corresponding figures from the previous fiscal year and accompanied by a report and opinion of independent certified public accountants with Deloitte & Touche LLP or an accounting firm of national standing reasonably acceptable to the Agent, which report shall not contain any qualification (and be without comment as to the accountants’ opinion whether such Person is a “going concern” or can continue to be a “going concern”), except that such report may contain qualification with respect to new accounting principles mandated by the Financial Accounting Standards Board (or its successor organization), and shall state that such financial statements, in the opinion of such accountants, present fairly, in all material respects, the financial position of such Person as of the date thereof and the results of its operations and cash flows for the period covered thereby in conformity with GAAP and (b) annual consolidating financial statements of the Credit Parties and their Subsidiaries containing a balance sheet as of the end of such fiscal year and a statement of operations for such fiscal year prepared in reasonable detail.  Such statements shall be accompanied by a certificate of such accountants that in making the appropriate audit and/or investigation in connection with such report and opinion, such accountants did not become aware of any Default or Event of Default

3

with respect to a breach of Section 7.12, or if in the opinion of such accountant any such Default or Event of Default exists with respect to a breach of Section 7.12, a description of the nature and status thereof.

“Annualized Basis” shall mean, with respect to the components of the Fixed Charge Coverage Ratio for the first fiscal quarter ending following the Closing Date (the first such fiscal quarter being the fiscal quarter in which the Closing Date occurs), each such component of the Fixed Charge Coverage Ratio during the three fiscal quarters ending December 31, 2009, divided by 0.75;

provided, that the cash Interest Expense paid on the Senior Notes shall be $4,148,437.50 during the first fiscal quarter ending December 31, 2009 (regardless of when such expense is actually paid); provided, further, that the Borrowers shall provide the Agent with the calculation of the Annualized Basis in form and substance reasonably satisfactory to the Agent.

“Applicable Commitment Fee Percentage” shall mean, with respect to any Commitment Fee, a rate per annum of (a) 0.50% at all times while the Term Loan is outstanding, and (b) at all times after the Term Loan has been paid in full in cash, (1) 0.75% if the aggregate amount of the Lenders’ average Unused Commitments for the calculation period is greater than fifty percent (50%) of the Total Revolving Commitment, and (2) 0.50% if the aggregate amount of the Lenders’ average Unused Commitments for the calculation period is less than or equal to fifty percent (50%) of the Total Revolving Commitment.

“Applicable Lending Office” shall mean, with respect to each Lender, such Lender’s Domestic Lending Office in the case of an Alternate Base Rate Borrowing and such Lender’s LIBOR Lending Office in the case of a LIBOR Borrowing.

“Applicable Margin” shall mean, (a) with respect to any Term Loans bearing interest at the Adjusted LIBOR Rate, 4.25% and for any Term Loans bearing interest at the Alternate Base Rate, 2.75%, and (b) with respect to any Revolving Loan, the applicable rate per annum determined in accordance with the remainder of this definition.  As of the end of each fiscal quarter of the Credit Parties, commencing with the quarter ending December 31, 2009, the Applicable Margin for Revolving Loans shall be adjusted upward or downward, as applicable, to the respective percentages shown in the schedule below based on Availability, tested on an average daily basis for the most recently completed fiscal quarter of the Credit Parties. For purposes hereof, any such adjustment in the respective amounts of the Applicable Margin, whether upward or downward, shall be effective ten (10) Business Days after the Borrowing Base Compliance Certificate of the Credit Parties and their Subsidiaries with respect to the final month of such fiscal quarter has been delivered to and received by the Agent in accordance with the terms of Section 6.3(i) hereof; provided, however, if any such Borrowing Base Compliance Certificate is not delivered in a timely manner as required under the terms of Section 6.3(i) hereof, the Applicable Margin for Revolving Loans from the date such Borrowing Base Compliance Certificate was due until ten (10) Business Days after Agent and Lenders receive the same will be the applicable rate per annum set forth below in Category 1; provided further, that the Applicable Margin from and after the Closing Date and continuing until the first upward or downward adjustment of the Applicable Margin for Revolving Loans, as hereinabove provided, shall be at least the applicable rate per annum set forth below in Category 2; provided further,

4

that upon the sale or other disposition of (i) Neenah Paper FR, LLC’s facility located in Ripon, California the Applicable Margin for Revolving Loans set forth in the grid below will be reduced by 0.25% and (ii) all of the Nova Scotia Woodlands the Applicable Margin for Revolving Loans set forth in the grid below will be reduced by 0.25%.

Availability	Per Annum Percentage for Revolving Credit LIBOR Borrowings		Per Annum Percentage for Revolving Credit Alternate Base Rate Borrowings
Category 1: Less than $25,000,000	4.00	%	2.50	%
Category 2: Less than $70,000,000, but greater than or equal to $25,000,000	3.75	%	2.25	%
Category 3: Greater than or equal to $70,000,000	3.50	%	2.00	%

“Applications” shall mean all applications and agreements for Letters of Credit, or similar instruments or agreements, in Proper Form, now or hereafter executed by any Person in connection with any Letter of Credit now or hereafter issued or to be issued under the terms hereof at the request of the Borrower’s Agent.

“Approved Fund” shall mean any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignment and Acceptance” shall have the meaning specified in Section 10.12(c) hereof.

“Availability” shall mean at any time (a) the lesser at such time of (i) the Total Revolving Commitment (as such amount may have been reduced or increased in accordance with the provisions of this Agreement) and (ii) (A) the Borrowing Base as of such time, less (B) all applicable Reserves, less (b) the sum of the following:

(i)            the aggregate amount of each Lender’s Current Sum at such time;

(ii)           the aggregate amount of due and payable interest outstanding under the Loans at such time; and

(iii)          all other outstanding Obligations hereunder or any other Loan Documents which are past due and payable at such time, including without limitation, Commitment Fees, fees related to any Letters of Credit, and legal fees and other amounts payable under Section 10.9 hereof.

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“Bank Product Amount” shall mean, with respect to any Bank Product at any time, the applicable Credit Party’s or Subsidiary’s net payment obligation with respect to such Bank Product as of the end of the preceding calendar month (or other period as provided herein), as determined utilizing the methodology agreed to with respect to such Bank Product between the applicable Lender Party and Credit Party and reported to the Agent pursuant to the terms hereof.  In the event that no Bank Product Amount is reported as provided herein for any Bank Product for any period, the Agent may use the most recently reported Bank Product Amount for such Bank Product, as adjusted in the Agent’s reasonable credit judgment.

“Bank Products” shall mean any of the following a Lender Party provides to, or enters into with, a Credit Party or Subsidiary of a Credit Party:

(a)           any arrangement with respect to Hedging Obligations (other than any arrangement with respect to Hedging Obligations secured by a Lien pursuant to Section 7.2(m));

(b)           any deposit, lockbox or other cash management arrangement; or

(c)           any other commercial bank product, service or agreement pursuant to which a Credit Party or Subsidiary of a Credit Party may be indebted or owe obligations to a Lender or one of its Affiliates, including, without limitation, credit cards for commercial customers (including, without limitation, “commercial credit cards”, E-Payables and purchasing cards), stored value cards and treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, returned items, overdrafts and interstate depository network services);

provided that for any of the foregoing to be included as a “Bank Product” hereunder:  (a) except in the case of Bank Products provided by or owing to JPMorgan Chase Bank, N.A. or any of its Affiliates, the applicable Lender Party and Borrowers’ Agent must have provided the Agent written notice of:  (i) the existence of such Bank Product and (ii) the methodology agreed upon by the Lender Party and the applicable Credit Party or Subsidiary to determine, from time to time, the Bank Product Amount and, with respect to Bank Products constituting Hedging Obligations, the Hedging Obligation Amount, (b) the applicable Credit Party must otherwise be permitted to enter into such arrangement under this Agreement or must not be restricted from entering into such arrangement under this Agreement (including in each case Section 7.1 hereof), and (c) the applicable Lender Party must remain a Lender Party; provided further, that each Lender Party other than JPMorgan Chase Bank, N.A. and its Affiliates shall notify the Agent in writing, as soon as available and in any event within fifteen (15) days after the end of each calendar month (or at more frequent intervals, and with such reporting dates, as the Agent may require in its discretion), of the Bank Product Amount and, with respect to Bank Products constituting Hedging Obligations, the Hedging Obligation Amount, in respect of its Bank Products as of the end of such calendar month (or other interval), and any Lender Party that fails to make such notification by the last day of the month in which due (or, with respect to any interval more frequent than monthly, within 10 Business Days of the date when due) and any Affiliate thereof (each, a “Non-Reporting Lender Party”) shall be subject to the provisions of Section 2.7(d) with respect to Bank Products owed to Non-Reporting Lender Parties.

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“Borrower” or “Borrowers” shall have the respective meanings specified in the preamble of this Agreement.

“Borrowers’ Agent” shall mean Neenah Paper, Inc., in its capacity as agent for the Borrowers and the other Credit Parties, as more fully described in Section 1.4(b).

“Borrowing Base” shall mean, as of any date, the amount of the then most recent computation of the Borrowing Base, determined by calculating the amount equal to the following:

(a)           85% of Eligible Receivables; plus

(b)           the lesser of (i) 75% of the value of Eligible Inventory (valued at the lower of cost or fair market value), and (ii) 85% of the applicable Net Recovery Value Percentage of Eligible Inventory; plus

(c)           the Equipment Component; plus

(d)           the Real Estate Component; plus

(e)           the Pledged Cash (if any) held in the Special Cash Collateral Account.

The Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Compliance Certificate delivered to the Agent pursuant to Section 6.3(i) subject to immediate adjustment as a result of (i) reductions in the Equipment Component, including those resulting from the Quarterly Equipment Component Amortization Amount, (ii) reductions in the Real Estate Component, including those resulting from the Quarterly Real Estate Component Amortization Amount, and (iii) reductions in the amount of Pledged Cash held in the Special Cash Collateral Account based on the amount specified as Pledged Cash in the most recently delivered Borrowing Base Compliance Certificate.

“Borrowing Base Compliance Certificate” shall mean a certificate completed in the form of Exhibit G attached hereto and signed by a Responsible Officer of the Borrowers’ Agent.

“Borrowing Base Deficiency” occurs if at any time the total Revolving Exposure exceeds the Borrowing Base then in effect.

“Business Day” shall mean a day when the principal office in New York City of the Agent is open for business and the Lenders’ Applicable Lending Offices are generally open for business; provided, however, that with respect to LIBOR Borrowings, Business Day shall mean a Business Day on which transactions in dollar deposits between lenders may be carried on in the London eurodollar interbank market.

“Business Entity” shall mean corporations, partnerships, joint ventures, joint stock associations, business trusts, limited liability companies, unlimited liability companies, and other business entities.

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“Canadian Benefit Plans” shall mean all material employee benefit plans of any nature or kind whatsoever that are not Canadian Pension Plans and are maintained or contributed to by any Credit Party having employees in Canada.

“Canadian Collateral Agent” shall mean JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as Canadian collateral agent for, and on behalf of, the Lenders hereunder, and any successor in such capacity.

“Canadian Dollars” and the sign “Cdn.$” shall mean lawful currency of Canada.

“Canadian Licenses” shall have the meaning specified for such term in Section 5.10.

“Canadian Pension Plans” shall mean each plan which is considered to be a pension plan for the purposes of any applicable pension benefits standards statute and/or regulation in Canada or a registered pension plan under the ITA established, maintained or contributed to by any Credit Party for its employees or former employees, but shall not mean the Canadian Pension Plan that is maintained by the Government of Canada or the Quebec Pension Plan that is maintained by the Government of Quebec.

“Canadian Subsidiary” shall mean any Subsidiary of a Credit Party that is created or organized under the laws of Canada or a province or territory of Canada.

“Capital Expenditures” shall mean, with respect to any Person for any period, all capital expenditures of such Person, on a Consolidated basis, for such period (including without limitation, the aggregate amount of Capital Lease Obligations incurred during such period which are required to be capitalized and reported as a liability on the consolidated balance sheet of such Person), determined in accordance with GAAP, consistently applied.

“Capital Lease Obligations” shall mean the obligations of a Person to pay that portion of rent or other amounts constituting payments of principal under a lease of (or other agreement conveying the right to use) real and/or personal Property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board, as amended), provided that for purposes of this Agreement, the amount of such obligations shall be only the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13).

“Cash Dividends” shall mean, with respect to any Person for any period, all cash dividend payments actually made on any Stock of such Person for such period.

“Cash Officer” shall mean, with respect to any Person, any person holding the title of “cash manager”, “cash officer” or any like title of such Person.

“Change of Control” shall mean (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date of this Agreement), of Stock representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding Stock of the Parent; (b) occupation of a

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majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were neither (i) nominated by the board of directors of the Parent nor (ii) appointed by directors so nominated; (c) the Parent shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 100% of the aggregate voting power of the Stock of each other Credit Party, free and clear of all Liens (other than any Liens granted under the Loan Documents and Liens permitted under Section 7.2), except to the extent resulting from a transaction specifically permitted under Section 7.4; (d) (i) any Credit Party consolidates or amalgamates with or merges into another entity or conveys, transfers or leases all or substantially all of its property and assets to another Person except in a transaction specifically permitted under Section 7.4, or (ii) any entity consolidates or amalgamates with or merges into any Credit Party in a transaction pursuant to which the outstanding voting Stock of such Credit Party is reclassified or changed into or exchanged for cash, securities or other property, other than any such transaction described in this clause (ii) in which either (A) in the case of any such transaction involving the Parent, no Person or group (within the meaning of Section 13(d)(3) of the Exchange Act) has, directly or indirectly, acquired beneficial ownership of more than 30% of the aggregate outstanding ordinary voting Stock of the Parent, or (B) in the case of any such transaction involving a Credit Party other than the Parent, the Parent has beneficial ownership, directly or indirectly, of 100% of the aggregate voting power of all Stock of the resulting, surviving or transferee entity; (e) any “Change of Control” (or any similar term) as set forth in the Senior Note Indenture or any Additional Senior Indenture; or (f) the Parent shall cease to have the beneficial ownership, directly or indirectly, of 100% of the Stock of FinCo, free and clear of all Liens (other than any Liens granted under the Loan Documents and Liens permitted under Section 7.2).

“Closing Date” shall mean the date on which the conditions specified in Section 4.2 are satisfied (or waived in accordance with Section 10.11).

“Closing Date Mortgage Policy” shall have the meaning specified for such term in Section 4.2(r).

“Closing Date Mortgaged Property” shall have the meaning specified for such term in Section 4.2(r).

“Closing Date Mortgages” shall have the meaning specified for such term in Section 4.2(r).

“Code” shall mean the Internal Revenue Code of 1986, as amended, as now or hereafter in effect, together with all regulations, rulings and interpretations thereof or thereunder by the Internal Revenue Service.

“Collateral” shall mean all collateral and security as described in the Security Documents.

“Collection Account” shall mean a deposit account of a Credit Party or any of its Subsidiaries into which payments on account of Receivables of the Credit Parties are received, including through (a) associated lockbox addresses and (b) accounts related to foreign exchange conversion and similar purposes pursuant to arrangements acceptable to the Agent.

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“Commitment” shall mean, as to any Lender, the obligation of such Lender subject to the terms and conditions of this Agreement to make Term Loans in a principal amount not exceeding such Lender’s Term Loan Commitment, and to make Revolving Loans and incur liability for the Letter of Credit Exposure Amount and the Swingline Loans in an aggregate principal amount at any one time outstanding up to, but not exceeding, the amount set forth as such Lender’s Revolving Commitment.  The initial amount of each Lender’s Commitment is set forth on Schedule 1.1A attached hereto, as each may be adjusted from time to time pursuant to other provisions of this Agreement, and Commitments shall mean all such Commitments of the Lenders, as so adjusted.

“Commitment Fee”, with respect to any Revolving Lender, shall have the meaning assigned to it in Section 2.3.

“Commitment Increase Agreement” shall mean a Commitment Increase Agreement entered into by a Revolving Lender in accordance with Section 2.15(c) and accepted by the Agent in the form of Exhibit Q attached hereto, or any other form approved by the Agent.

“Commitment Percentage” shall mean, with respect to any Lender, (a) with respect to Revolving Loans, Letter of Credit Exposure Amount or Swingline Exposure, (i) prior to the termination of the Total Revolving Commitment, the ratio, expressed as a percentage, of such Lender’s Revolving Commitment to the Total Revolving Commitment, and (ii) after the termination of the Total Revolving Commitment, the ratio, expressed as a percentage, of the amount of such Revolving Lender’s outstanding Revolving Loans and its portion of the Letter of Credit Exposure Amount and the Swingline Exposure to the aggregate amount of all outstanding Revolving Loans and the total Letter of Credit Exposure Amount and the Swingline Exposure, and (b) with respect to the Term Loans, a percentage equal to a fraction of the numerator of which is such Term Lender’s outstanding principal amount of the Term Loans and the denominator of which is the aggregate outstanding amount of the Term Loans of all Term Lenders; provided that when a Defaulting Lender shall exist, any such Defaulting Lender’s Commitment shall be disregarded in the calculation in both clauses (a) and (b) hereof, subject to Section 10.11 hereof.

“Compliance Certificate” shall mean a certificate substantially in the form of Exhibit D attached hereto.

“Concentration Limit” shall mean, with respect to any account debtor owing any Receivables to any Credit Party, the maximum amount of Receivables from such account debtor which may be included as Eligible Receivables, expressed as a percentage of the total amount of Receivables owing to the Credit Parties by all account debtors, which percentage shall be (a) seventeen and one-half percent (17.5%), or (b) such other percentage for the applicable account debtor as determined by the Agent from time to time in the Agent’s reasonable credit judgment.

“Consequential Loss” shall mean, with respect to (a) the Borrowers’ payment of principal of or interest on a LIBOR Borrowing on a day prior to the last day of the applicable Interest Period, (b) the Borrowers’ failure to borrow or convert a LIBOR Borrowing on the date specified by the Borrowers’ Agent for any reason, or (c) any cessation of the Adjusted LIBOR Rate to apply to the Loans or any part thereof pursuant to Section 2.9 hereof, in each case

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whether voluntary or involuntary, any loss, expense, penalty, premium or liability incurred by any of the Lenders, the Canadian Collateral Agent or the Agent as a result thereof, including without limitation any loss of anticipated profit or any interest paid by any of the Lenders to lenders of funds borrowed by it to make or carry the Loans and any other costs and expenses sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain the Loans.

“Consolidated” shall mean, for any Person, as applied to any financial or accounting term, such term determined on a consolidated basis in accordance with GAAP (except as otherwise required herein) for such Person and all Subsidiaries thereof.

“Contingent Obligation” shall mean, as to any Person (the “guarantor”), any obligation of such guarantor guaranteeing the payment or performance of any Indebtedness, leases, dividends or other obligations (collectively “primary obligations”) of any other Person (the “primary obligor”), whether directly or indirectly, including without limitation any obligation of such guarantor (a) to purchase any such primary obligation or other property constituting direct or indirect security therefor, (b) assume or contingently agree to become or be secondarily liable in respect of any such primary obligation, (c) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital for the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (d) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (e) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligation” shall not include endorsements of checks or other negotiable instruments in the ordinary course of business.

“Contribution Agreement” shall mean any Contribution Agreement executed by and among the Credit Parties and their Subsidiaries, as the same may be amended, modified, supplemented, restated and joined in pursuant to a Joinder Agreement, from time to time.

“Controlled Account” shall mean a deposit account (including a Collection Account) of any Credit Party that is subject to a Tri-Party Agreement.

“Copyrights” shall have the meaning specified for such term in the definition of “Intellectual Property.”

“Credit Parties” shall mean the Borrowers and the Guarantors.

“Current Sum” shall mean on any day, as to a particular Revolving Lender, the sum of (a) the outstanding principal balance of such Revolving Lender’s Revolving Credit Note on such day plus (b) the product of (i) such Revolving Lender’s Commitment Percentage times (ii) the sum of the Letter of Credit Exposure Amount and the Swingline Exposure on such day.

“Default Rate” shall mean, on any day, as follows:  (a) with respect to principal which is outstanding under any Note, the sum of the Interest Option otherwise applicable thereto on such day plus two percent per annum (it being understood by the Borrowers that if any such applicable Interest Option is based on the Adjusted LIBOR Rate, the Default Rate with respect to

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the applicable principal amount shall only be calculated with reference to the applicable Adjusted LIBOR Rate until the Interest Period applicable thereto expires, and upon the expiration of such applicable Interest Period, the Default Rate for such applicable principal amount shall be computed on the basis of the Alternate Base Rate for such day plus two percent per annum), and (b) with respect to accrued interest, fees and other Obligations (other than past due principal outstanding under any Note), the sum of the Alternate Base Rate for such day plus two percent per annum.

“Defaulting Lender” means any Lender, as determined by the Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit or Swingline Loans within three Business Days of the date required to be funded by it hereunder, (b) notified the Borrowers, the Agent, the Swingline Lender or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three Business Days after request by the Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans, (d) otherwise failed to pay over to the Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

“Discontinued Operations” shall mean, as of any day, operations of any Credit Party or any of their Subsidiaries which have been discontinued, and which, as of such day, have been fully terminated, disposed of or liquidated.

“Disposition” shall mean the sale, transfer, lease or other disposition (including pursuant to a merger resulting in the subject Property no longer being owned by a Credit Party) of any Property.

“Dollar” and the sign “$” shall mean lawful money of the United States of America.

“Domestic Lending Office” shall mean, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on the signature pages hereof, or such other office of such Lender as such Lender may from time to time specify in writing to the Borrowers’ Agent and the Agent.

“Domestic Subsidiary” shall mean any Subsidiary of any Borrower that is organized and domiciled in the United States of America.

“Dominion Event” shall have the meaning assigned to such term in Section 6.15(a).

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“Dominion Termination Event” shall have the meaning assigned to such term in Section 6.15(a).

“EBITDA” shall mean, with respect to any Person for any period, the sum of (a) Net Income, (b) Interest Expense, (c) depreciation and amortization expense (excluding depreciation and amortization applicable to Discontinued Operations as of such period), and (d) federal, state and local income or franchise taxes, in each case of such Person for such period, computed and calculated, without duplication, on a Consolidated basis and in accordance with GAAP, consistently applied.

“Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, or (d) any other commercial lender, finance company, insurance company, financial institution or fund reasonably acceptable to the Agent and the Borrowers’ Agent; provided, however, that if an Event of Default has occurred which has not been waived or cured, such approval by the Borrowers’ Agent shall not be required.

“Eligible Equipment” shall mean Equipment of a Credit Party which meets all of the following specifications; provided that such specifications may be revised from time to time by the Agent to account for events, conditions, contingencies and risks that the Agent becomes actually aware of after the Closing Date that, in the Agent’s reasonable credit judgment, could adversely affect any Equipment or the Agent’s (or the Canadian Collateral Agent’s, as applicable) interest therein:

(a)           one of the Credit Parties has good title to such Equipment;

(b)           such Credit Party has the right to subject such Equipment to a Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable); such Equipment is subject to a first priority perfected Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender Parties and is free and clear of all other Liens of any nature whatsoever (except for Liens permitted under Section 7.2(e) other than contested Liens);

(c)           the full purchase price for such Equipment has been paid by the Credit Parties;

(d)           such Equipment is located on premises (i) owned by one of the Credit Parties, which premises are subject to a first priority perfected Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable), or (ii) leased by one of the Credit Parties with respect to which the Agent (or the Canadian Collateral Agent, as applicable) has received an executed landlord’s waiver or subordination agreement from the owner of such leased facility pursuant to which such owner waives or subordinates any Lien it may claim against such Equipment pursuant to a written waiver or subordination and access agreement acceptable to the Agent (or the Canadian Collateral Agent, as applicable) acting reasonably in all respects;

(e)           such Equipment is in good working order and condition (ordinary wear and tear excepted) and is used or held for use by the Credit Parties in the ordinary course of business of the Credit Parties;

(f)            such Equipment is not subject to any agreement which restricts the ability of the Credit Parties to use, sell, transport or dispose of such Equipment or which restricts the Agent’s

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(or the Canadian Collateral Agent’s, as applicable) ability to take possession of, sell or otherwise dispose of such Equipment; and

(g)           such Equipment does not constitute “fixtures” under the applicable laws of the jurisdiction in which such Equipment is located.

“Eligible Inventory” shall mean all raw materials, rolled and uncut or sheeted paper, or finished goods Inventory of the Credit Parties which complies with all of the following requirements:  (a) such Inventory is owned by and recorded on the books and records of the applicable Credit Party in the ordinary course of business; (b) such Inventory is valued in accordance with GAAP at the lower of fair market value or cost; and (c) such Inventory does not otherwise constitute Ineligible Inventory.  Standards of eligibility and Reserves for Eligible Inventory may be fixed and revised from time to time by the Agent in its reasonable credit judgment based on events, conditions or other circumstances that the Agent becomes actually aware of after the Original Closing Date that, in the Agent’s reasonable credit judgment, adversely affect or could reasonably be expected to adversely affect Eligible Inventory.

“Eligible Real Estate” shall mean Real Property Assets which meet all of the following specifications; provided that such specifications may be revised from time to time by the Agent in its reasonable credit judgment to account for events, contingencies and risks that the Agent becomes actually aware of after the Closing Date that, in the Agent’s reasonable credit judgment, could adversely affect the Real Property Asset or the Agent’s (or the Canadian Collateral Agent, as applicable) interest therein:

(a)           one of the Credit Parties is the record owner of and has good fee title to such Real Property Asset;

(b)           such Credit Party has the right to subject such Real Property Asset to a Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender Parties; such Real Property Asset is subject to a first priority perfected Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender Parties and is free and clear of all other Liens of any nature whatsoever (except for Liens permitted under Section 7.2(e) other than contested Liens, and Liens permitted under Section 7.2(f), Section 7.2(j), Section 7.2(o), Section 7.2(p) and Section 7.2(q));

(c)           such Real Property Asset is not subject to any agreement or condition which could restrict or otherwise adversely effect the Agent’s (or the Canadian Collateral Agent, as applicable) ability to sell or otherwise dispose of such Real Property Asset; and

(d)           such parcel of real property shall comply with all the requirements for a Closing Date Mortgaged Property set forth in Section 4.2(s).

“Eligible Receivables” shall mean, as at any date of determination thereof, all Receivables of the Credit Parties which comply with all of the following requirements:  (a) all payments due on the Receivable have been billed and invoiced in a timely fashion and in the normal course of business; (b) no payment is outstanding on the Receivable for more than one hundred (100) days after the date of invoice (except for Receivables fully insured or backed by a letter of credit in all respects acceptable to the Agent in its reasonable discretion) or more than

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sixty (60) days past due; and (c) the Receivables do not otherwise constitute Ineligible Receivables.  Standards of eligibility and Reserves for Eligible Receivables may be fixed and revised from time to time by the Agent in its reasonable credit judgment based on events, conditions or other circumstances that the Agent becomes actually aware of after the Original Closing Date that, in the Agent’s reasonable credit judgment, adversely affect or could reasonably be expected to adversely affect the Eligible Receivables.  Additionally, in calculating Eligible Receivables, each of the following shall be excluded (to the extent the same are otherwise included in Eligible Receivables):  (i) unpaid sales, excise or similar taxes owed by any of the Credit Parties (to the extent the same are included in Receivables); and (ii) returns, discounts, claims, credits and allowances of any nature asserted or taken by account debtors of any of the Credit Parties.

“Environmental Claim” shall mean any third party (including any Governmental Authority) action, lawsuit, claim or proceeding (including claims or proceedings at common law) which seeks to impose or alleges any liability for (a) pollution or contamination by, or releases or threatened releases of, Hazardous Substances into the air, surface water, ground water or land or the clean-up, abatement, removal, remediation or monitoring of such pollution, contamination or Hazardous Substances; (b) generation, recycling, reclamation, handling, treatment, storage, disposal or transportation of Hazardous Substances; (c) exposure to Hazardous Substances; (d) the safety or health of employees or other Persons in connection with any of the activities specified in any other subclause of this definition; or (e) the manufacture, processing, distribution in commerce, presence or use of Hazardous Substances.  An “Environmental Claim” includes a common law action, as well as a proceeding to issue, modify or terminate an Environmental Permit to the extent that such a proceeding attempts to redress violations of the applicable permit, license, or regulation as alleged by any Governmental Authority.

“Environmental Law” shall mean all requirements imposed by any law (including The Resource Conservation and Recovery Act, The Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Clean Air Act, any state analogues of any of the foregoing, and any comparable Canadian federal or provincial law), rule, regulation, or order of any Governmental Authority now or hereafter in effect that relate to (a) pollution, protection or clean-up of the air, surface water, ground water or land; (b) solid, liquid or gaseous waste or Hazardous Substance generation, recycling, reclamation, release, threatened release, treatment, storage, disposal or transportation; (c) exposure of Persons or property to Hazardous Substances; (d) the manufacture, presence, processing, distribution in commerce, use, discharge, releases, threatened releases, or emissions of Hazardous Substances into the environment; (e) the storage of any Hazardous Substances; or (f) occupational health and safety

“Environmental Liabilities” shall mean all liabilities arising from any Environmental Claim, Environmental Permit or Requirements of Environmental Law, at law or in equity, and whether based on negligence, strict liability or otherwise, including:  remedial, removal, response, abatement, restoration (including natural resources), investigative, or monitoring liabilities, personal injury and damage to property, natural resources or injuries to persons, and any other related costs, expenses, losses, damages, penalties, fines, liabilities and obligations, and all costs and expenses necessary to cause the issuance, reissuance or renewal of any Environmental Permit reasonably necessary for the conduct of any material aspect of the

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business of any Credit Party or any of their Subsidiaries, including attorney’s fees and court costs.  Environmental Liability shall mean any one of them.

“Environmental Permit” shall mean any permit, license, approval or other authorization under any applicable law, regulation and other requirement of any Governmental Authority relating to pollution or protection of health or the environment, including laws, regulations or other requirements relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, Hazardous Substances or toxic materials or wastes into ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, recycling, presence, use, treatment, storage, disposal, transport, or handling of wastes, pollutants, contaminants or Hazardous Substances.

“Equipment” shall mean (a) any machinery or equipment and (b) any other Property classified as “equipment” under the UCC.

“Equipment Component” shall have the meaning specified for such term on Schedule 1.1C.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) which together with any Credit Party or any Subsidiary of any Credit Party would be treated as a single employer under the provisions of Title I or Title IV of ERISA following the Closing Date.

“Event of Default” shall mean any of the events specified in Section 8.1 hereof, provided there has been satisfied any requirement in connection with any such event for the giving of notice or the lapse of time, or both, and “Default” shall mean any of such events, whether or not any such requirement for the giving of notice, or the lapse of any applicable grace or curative period (if any), or both, has been satisfied.

“Excess Interest Amount” shall have the meaning attributed to such term in Section 2.14 hereof.

“Excluded Foreign Subsidiary” has the meaning assigned to such term in Section 6.10.

“Existing Credit Agreement” shall have the meaning specified in the recitals of this Agreement.

“Existing Indebtedness” shall have the meaning specified in the recitals of this Agreement.

“Existing Lenders” shall have the meaning specified in the recitals of this Agreement.

“Existing Letters of Credit” shall mean the letters of credit issued under the Existing Credit Agreement that are outstanding on the Closing Date.

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“Extended Facility Letter of Credit” shall have the meaning attributed to such term in Section 2.10(j) hereof.

“Federal Funds Effective Rate” shall mean, for any day, a rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

“Financial Officer” shall mean, with respect to any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person.

“FinCo” shall mean Neenah Paper International Finance Company B.V., a company formed under the laws of the Netherlands, all of whose issued and outstanding Stock is owned by the Parent or another Credit Party.

“Fixed Charge Coverage Ratio” shall mean, with respect to any Person and without duplication, the ratio of (i) EBITDA less (A) Capital Expenditures not funded by Indebtedness permitted by Section 7.1(c) or Section 7.1(m); less (B) loans, advances and Investments (other than the Pledged Inter-Company Loans so long as an Unpledged Inter-Company Loan in an equal amount is made substantially contemporaneously therewith) made to Persons that are not Credit Parties, less (C) cash payments of federal, state, provincial and local income or franchise taxes, plus (D) principal and interest payments paid in cash on the Pledged Inter-Company Note, plus (E) Cash Dividends and other distributions with respect to Stock held by a Credit Party to the extent received in cash by a Credit Party from any Person that is not a Credit Party, to (ii) the sum of (A) cash Interest Expense, plus (B) Scheduled Principal Payments, plus (C) Cash Dividends, plus (D) the Quarterly Equipment Component Amortization Amount per three calendar month period in respect of scheduled reductions, if any, of the Equipment Component as set forth in clause (a) of the definition of Equipment Component, plus (E) the Quarterly Real Estate Component Amortization Amount per three calendar month period in respect of scheduled reductions, if any, of the Real Estate Component as set forth in clause (a) of the definition of Real Estate Component.

All components of the Fixed Charge Coverage Ratio shall be determined for the applicable Person on a Consolidated basis, without duplication and for the four (4) most recent consecutive fiscal quarters of the applicable Person ending on or prior to the date of determination; provided, that (1) the results of operation of the Offshore Entities and their subsidiaries, including, without limitation, Neenah Germany and its subsidiaries, shall be excluded in the calculation of Fixed Charge Coverage Ratio (except as provided in clause (i)(B) above), (2) for the first four (4) fiscal quarters ended following the Closing Date (the first such fiscal quarter being the fiscal quarter in which the Closing Date occurs), the Scheduled Principal Payments shall be calculated on a pro forma basis as if principal payments on the Term Loans commenced on April 30, 2009 and continued at the end of each third calendar month thereafter, and any Scheduled Principal Payments made under the Prior Term Loan Agreement shall be excluded, (3) for the first four (4) fiscal quarters ended following the Closing Date (the first such fiscal quarter being the fiscal quarter in which the Closing Date occurs), the Quarterly

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Equipment Component Amortization Amount and the Quarterly Real Estate Component Amortization Amount shall be calculated on a pro forma basis as if such amortization commenced on April 30, 2009 and continued at the end of each third calendar month thereafter, and (4) for the first fiscal quarter ended following the Closing Date (the first such fiscal quarter being the fiscal quarter in which the Closing Date occurs), the Fixed Charge Coverage Ratio shall be determined on an Annualized Basis.

“Flood Hazard Property” shall mean a Mortgaged Property the improvements on which are located in an area designated by the Federal Emergency Management Agency (or any Canadian equivalent, as applicable) as having special flood or mud slide hazards and requiring either the Credit Party or Agent (or the Canadian Collateral Agent, as applicable) to purchase special flood insurance.

“Foreign Lender” shall mean, as to a particular Credit Party, any Agent or any Lender that is organized under the laws of a jurisdiction other than the jurisdiction in which such Credit Party is located.  For purposes of this definition, the United States of America, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“GAAP” shall mean, as to a particular Person, those principles and practices (a) which are recognized as such by the Financial Accounting Standards Board or successor organization, and (b) which are consistently applied (or with respect to which any change in principles and practice mandated by the Financial Accounting Standards Board or successor organization are disclosed in writing to the Agent) for all periods after the date of this Agreement in a manner consistent with the manner in which such principles and practices were applied to the most recent audited financial statements of the relevant Person furnished to the Agent and the Lenders prior to the Closing Date (or with respect to which any change in principles and practice mandated by the Financial Accounting Standards Board or successor organization are disclosed in writing to the Agent).

“Governmental Authority” shall mean the United States of America, Canada, any state of the United States or province of Canada, and any political subdivision of any of the foregoing, any foreign governmental or supranational authority, and any agency, instrumentality, department, commission, board, bureau, central bank, authority, court or other tribunal, in each case whether executive, legislative, judicial, regulatory or administrative, having jurisdiction over the Agent, the Canadian Collateral Agent, any of the Lenders, any Credit Party, any Subsidiary of any Credit Party, or their respective Property.

“Grantor” shall mean any Grantor, Assignor, Pledgor or Debtor, as such terms are defined in any of the Security Documents.

“Guarantors” shall mean Neenah Paper Company of Canada and each Subsidiary added as a guarantor pursuant to Section 6.10.

“Guaranty” shall mean each and every guaranty of the Obligations from time to time executed and delivered to the Canadian Collateral Agent by any Guarantor, as amended, supplemented, modified, joined in pursuant to a Joinder Agreement and restated from time to

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time, each substantially in the form of Exhibit K (with appropriate changes based upon the local law of the applicable province).

“Hazardous Substance” shall mean any hazardous or toxic waste, substance or product or material defined as or regulated as “hazardous” or “toxic” from time to time by any Requirements of Environmental Law, including solid waste (as defined under The Resource Conservation and Recovery Act or its regulations, as amended from time to time), petroleum and any constituent thereof, and any radioactive materials and waste; provided, however, the words “Hazardous Substance” shall not mean or include any such Hazardous Substance used, generated, manufactured, stored, disposed of or otherwise handled in normal quantities in the ordinary course of business in compliance with all applicable Environmental Laws, or such that may be naturally occurring in any ambient air, surface water, ground water, land surface or subsurface strata.

“Hedging Obligations” shall mean, with respect to any Person, any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party’s assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collateral protection agreements, forward rate currency or interest rate options, puts and warrants, commodity (including pulp) futures, forwards, swaps and options, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any of the foregoing.

“Hedging Obligation Amount” shall mean, with respect to any Hedging Obligation, the “derivative risk equivalent” (or equivalent figure) for such Hedging Obligation as of the end of the preceding calendar month (or other period as provided herein), being a figure calculated to provide an exposure measure for derivative obligations comparable with that of loans, in each case calculated based upon a methodology reported to the Agent in accordance with the terms hereof and acceptable to the Agent in its reasonable credit judgment.  In the event that no Hedging Obligation Amount is reported as provided herein for any Hedging Obligation for any period, the Agent may use the most recently reported Hedging Obligation Amount for such Hedging Obligation, as adjusted in the Agent’s reasonable credit judgment.

“Hedging Obligations Aggregate Amount” shall mean at any time, with respect to Hedging Obligations constituting Bank Products hereunder, an amount equal to the sum at such time of all Hedging Obligation Amounts associated with all such Hedging Obligations.

“Highest Lawful Rate” shall mean, with respect to the Agent or any Lender, the maximum nonusurious rate of interest permitted to be charged by, as applicable, the Agent or such Lender under applicable laws (if any) of the United States or any state from time to time in effect.

“Indebtedness” shall mean, as to any Person, without duplication:  (a) all indebtedness of such Person for borrowed money; (b) any other indebtedness which is evidenced by a bond,

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debenture or similar instrument or upon which interest charges are traditionally paid; (c) all Capital Lease Obligations of such Person; (d) all obligations of such Person for the deferred purchase price of Property or services (except current trade accounts payable arising in the ordinary course of business and current accrued expenses, not the result of borrowing, arising in the ordinary course of business); (e) all reimbursement obligations of such Person in respect of outstanding letters of credit, acceptances and similar obligations created for the account of such Person; (f) all indebtedness, liabilities, and obligations secured by any Lien on any Property owned by such Person even though such Person has not assumed or has not otherwise become liable for the payment of any such indebtedness, liabilities or obligations secured by such Lien, but only to the extent of the value of the Property subject to such Lien (or, if less, the amount of the underlying indebtedness, liability or obligation); (g) net liabilities of such Person in respect of Hedging Obligations (calculated on a basis satisfactory to the Agent and in accordance with accepted practice); (h) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person; (i) all obligations of such Person to pay rent or other amounts under any Synthetic Lease; (j) all Indebtedness of another entity to the extent such Person is liable therefor (including any partnership in which such Person is a general partner and including any unlimited liability corporation) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor; and (k) all Contingent Obligations of such Person with respect to Indebtedness of others; provided, that such term shall not mean or include (i) any Indebtedness in respect of which monies sufficient to pay and discharge the same in full (either on the expressed date of maturity thereof or on such earlier date as such Indebtedness may be duly called for redemption and payment) shall be deposited with a depository, agency or trustee acceptable to the Agent in trust for the payment thereof, or (ii) any operating leases entered into in the ordinary course of business (to the extent such operating leases do not constitute Capital Lease Obligations or Synthetic Leases).

“Indemnifiable Tax” shall have the meaning attributed to such term in Section 10.17(a)(i) hereof.

“Indenture Cap” shall mean the maximum aggregate principal amount of Indebtedness permitted under Credit Facilities (as defined in the Senior Note Indenture and any Additional Senior Indenture) pursuant to any limitation or restriction set forth in the Senior Indenture, any other Senior Note Document or any Additional Senior Note Documents, as the same may be amended, restated, waived or otherwise modified from time to time; provided, that Parent may characterize its Indebtedness under the covenants set forth under the Senior Indenture, any other Senior Note Document or any Additional Senior Note Documents which limit Indebtedness in any manner permitted thereunder, as applicable, which may maximize the amount of the Indenture Cap.

“Ineligible Inventory” shall mean, as at any date of determination thereof, any Inventory of any Credit Party which does not comply with all of the following requirements:

(a)           such Inventory is Collateral hereunder and is subject to a first priority perfected Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the ratable

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benefit of the Lender Parties and is free and clear of all other Liens of any nature whatsoever (except for Liens permitted under Section 7.2(e) other than contested Liens);

(b)           such Inventory meets all applicable laws and standards imposed by any Governmental Authority having regulatory authority over it;

(c)           such Inventory is in good condition, is not returned, shopworn, defective, damaged, obsolete, or broke inventory, and is currently usable or saleable in the normal course of business of the applicable Credit Party;

(d)           such Inventory is not “slow moving”;

(e)           such Inventory is not work-in-process Inventory (other than rolled and uncut or sheeted paper), is not scrap or remnants Inventory, is not stores and is not packaging or shipping supplies or materials;

(f)            such Inventory must not be in transit and must be housed or stored in the United States or Canada at either (i) a real Property location either owned or leased by a Credit Party; so long as such leased facility is covered by a landlord’s waiver or subordination agreement received by the Agent (or the Canadian Collateral Agent, as applicable) from the owner of such leased facility pursuant to which such owner waives or subordinates any Lien it may claim against such Inventory, whether contractual or statutory, to the Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) against such Inventory pursuant to a written waiver or subordination and access agreement acceptable to the Agent (or the Canadian Collateral Agent, as applicable) in all respects, or (ii) a public warehouse facility utilized by a Credit Party, so long as such warehouse facility is covered by a warehousemen’s waiver or subordination and access agreement received by the Agent (or the Canadian Collateral Agent, as applicable) from the operator of such warehouse facility pursuant to which such operator waives or subordinates any Lien it may claim against such Inventory, whether contractual or statutory, to the Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) against such Inventory and acknowledges that it holds and controls such Inventory for the benefit of the Agent (or the Canadian Collateral Agent, as applicable) for purposes of perfecting the Agent’s (or the Canadian Collateral Agent’s, as applicable) Lien therein pursuant to a written waiver or subordination agreement reasonably acceptable to the Agent (or the Canadian Collateral Agent, as applicable) in all respects;

(g)           such Inventory is not in the possession of or control of any bailee (other than a warehouseman as described above) or any agent or processor for or customer of any Credit Party or any of their Subsidiaries, unless such bailee, agent or processor has executed and delivered to the Agent (or the Canadian Collateral Agent, as applicable) an access/subordination agreement in form and substance reasonably acceptable to the Agent (or the Canadian Collateral Agent, as applicable) subordinating any Lien it may claim in such Inventory and acknowledging that it holds and controls such Inventory for the benefit of the Agent (or the Canadian Collateral Agent, as applicable) for purposes of perfecting the Agent’s (or the Canadian Collateral Agent’s, as applicable) Lien therein;

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(h)           such Inventory must be adequately insured to the reasonable satisfaction of the Agent (or the Canadian Collateral Agent, as applicable) pursuant to insurance coverage required by this Agreement and the Security Documents;

(i)            such Inventory must not be on consignment;

(j)            such Inventory is not letterhead, watermarked, or styled in a manner for a particular purchaser, unless covered by a purchase order under which the purchaser has unconditionally agreed to take delivery;

(k)           such Inventory does not constitute seedlings;

(l)            such Inventory has neither been sold nor is subject to a Lien, claim or right of any person other than the Credit Parties or the Agent (or the Canadian Collateral Agent, as applicable) (except for Liens permitted under Section 7.2(e) other than contested Liens); and

(m)          the Agent has not deemed such Inventory ineligible because the Agent in its reasonable credit judgment considers such Inventory to be unmarketable or the value thereof to be impaired or its ability to realize such value to be insecure.

Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, no Inventory purchased or otherwise acquired through any acquisition or other investment permitted hereunder after the Closing Date shall be included within the Borrowing Base for purposes hereof unless and until the Agent shall have conducted a field examination (which shall be conducted within a reasonable time (in the Agent’s judgment) after Borrower’s request at the Borrowers’ cost and expense) of the applicable books, records and operations for the assets or Subsidiary so acquired in order to reasonably satisfy the Agent that the Inventory so acquired generally satisfies the above-described standards of eligibility.

“Ineligible Receivables” shall mean, as at any date of determination thereof, any Receivables of any Credit Party which do not comply with all of the following requirements:

(a)           the Receivable has been created by the applicable Credit Party in the ordinary course of business from a completed, outright and lawful sale of goods, pursuant to which ownership has passed to the applicable account debtor on an absolute sales basis, or from the rendering of services by or on behalf of the applicable Credit Party and is deemed “earned” under the applicable service contract or other agreement or arrangement between the applicable Credit Party and the applicable account debtor;

(b)           the Receivable is Collateral hereunder and is subject to a first priority perfected Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender Parties and is free and clear of all other Liens of any nature whatsoever (except for Liens permitted under Section 7.2(e) other than contested Liens);

(c)           the payments due on 50% or more of all billed Receivables owing to the applicable Credit Party by the applicable account debtor are less than 100 days past the date of invoice (except for Receivables fully insured or backed by a letter of credit in all respects

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acceptable to the Agent in its reasonable discretion) and less than 60 days from the due date thereof;

(d)           the Receivable constitutes an “account” within the meaning of the UCC;

(e)           the Receivable does not arise out of a bill and hold, ship-in-place, guaranteed sale, sale-and-return, consignment, progress billing, promotional (including samples), C.O.D. or cash in advance arrangement;

(f)            the Receivable is not subject to any setoff, contra, offset, deduction, dispute, charge back, credit, counterclaim or other defense arising out of the transactions represented by the Receivable or independently thereof; provided, however, that in each case regarding an undisputed liquidated sum, such Receivable is an Ineligible Receivable only to the extent of such undisputed liquidated sum, and in each case regarding a disputed sum or claim, such Receivable is an Ineligible Receivable only to the extent of the sum or amount claimed by the party adverse to the applicable Credit Parties);

(g)           the applicable account debtor has finally accepted the goods or services from the sale out of which the Receivable arose and has not (i) objected to such account debtor’s liability thereon, (ii) rejected any of such services or goods or (iii) returned or repossessed any of such goods, except for goods returned in the ordinary course of business for which, in the case of goods returned, goods of equal or greater value have been shipped in return;

(h)           the applicable account debtor is not any Governmental Authority, unless such account debtor is the United States of America or Canada (or any agency, instrumentality, department or other political subdivision thereof) and there has been compliance satisfactory to the Agent in all respects with the U.S. Federal Assignment of Claims Act or, as applicable, the Canadian Financial Administration Act or any applicable provincial legislation;

(i)            the applicable account debtor is not an Affiliate of any Credit Party or any of their Subsidiaries;

(j)            the applicable account debtor must have its principal place of business located within the United States or Canada, except for Receivables fully insured or backed by a letter of credit in all respects acceptable to the Agent in its reasonable discretion;

(k)           the Receivable is not evidenced by a promissory note or other instrument or by chattel paper;

(l)            the Receivable complies with all material Legal Requirements (including without limitation, all usury laws, fair credit reporting and billing laws, fair debt collection practices and rules, and regulations relating to truth in lending and other similar matters);

(m)          the Receivable is in full force and effect and constitutes a legal, valid and binding obligation of the applicable account debtor enforceable in accordance with the terms thereof;

(n)           the Receivable is denominated in and provides for payment by the applicable account debtor in U.S. dollars or Canadian dollars, except for Receivables fully insured or

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backed by a letter of credit denominated in U.S. dollars or Canadian dollars and in all other respects acceptable to the Agent in its reasonable discretion;

(o)           the Receivable has not been and is not required to be charged or written off as uncollectible in accordance with GAAP;

(p)           the Receivable is not due from an account debtor located in a jurisdiction (e.g., New Jersey, Minnesota and West Virginia or any Canadian province) which requires such Credit Party, as a precondition to commencing or maintaining an action in the courts of that jurisdiction, either to (i) receive a certificate of authority to do business and be in good standing in such jurisdiction; or (ii) file a notice of business activities report or similar report with such jurisdiction’s taxing authority, unless (x) such Credit Party has taken one of the actions described in clauses (i) or (ii); or (y) the failure to take one of the actions described in either clause (i) or (ii) may be cured retroactively by such Credit Party at its election; and

(q)           the credit standing of the applicable account debtor in relation to the amount of credit extended has not become unsatisfactory to the Agent in its reasonable discretion, except for Receivables fully insured or backed by a letter of credit in all respects acceptable to the Agent in its reasonable discretion.

In addition to the forgoing, the total amount of Receivables owing to the Credit Parties by an account debtor in excess of such account debtor’s Concentration Limit of the total amount of Receivables owing to the Credit Parties by all account debtors shall also constitute “Ineligible Receivables” for purposes hereof, unless such Receivables exceeding such account debtor’s Concentration Limit are fully backed or secured by a letter of credit acceptable to the Agent in its reasonable discretion.  Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, no Receivables purchased or otherwise acquired through any acquisition or other investment permitted hereunder after the Closing Date shall be deemed to constitute Eligible Receivables for purposes hereof unless and until the Agent shall have conducted a field examination (which shall be conducted within a reasonable time (in the Agent’s judgment) after Borrower’s request at the Borrowers’ cost and expense) of the applicable books, records and operations for the assets or Subsidiary so acquired in order to satisfy the Agent that the Receivables so acquired generally satisfy the above-described standards of eligibility.

“Initial Pledged Inter-Company Loan” shall mean that certain loan advance in the amount of $135,000,000 made by NP International HoldCo to FinCo, which loan advance to FinCo is evidenced by the Pledged Inter-Company Note.

“Intellectual Property” shall mean all U.S. and foreign (a) patents, patent applications, patent disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof (“Patents”), (b) trademarks, service marks, trade names, domain names, logos, slogans, trade dress, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (“Trademarks”), (c) copyrights and copyrightable subject matter (“Copyrights”), (d) rights of publicity, (e) moral rights and rights of attribution and integrity, (f) computer programs (whether in source code, object code, or other form), databases, compilations and data, technology supporting the

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foregoing, and all documentation, including user manuals and training materials, related to any of the foregoing, (g) trade secrets and all confidential information, know-how, inventions, proprietary processes, formulae, models, and methodologies, (h) all rights in the foregoing and in other similar intangible assets, (i) all applications and registrations for the foregoing, and (j) all rights and remedies against infringement, misappropriation, or other violation thereof.

“Intellectual Property Security Agreement” shall have the meaning attributed to such term in Section 5.27 hereof.

“Interest Expense” shall mean, with respect to any Person for any period, the interest expense of such Person, on a Consolidated basis, during such period determined in accordance with GAAP, consistently applied, and shall in any event include, without limitation, (a) the amortization or write-off of debt discounts, (b) the amortization of all debt issuance costs, commissions and other fees payable in connection with the incurrence of Indebtedness to the extent included in interest expense, and (c) the portion of payments under Capital Lease Obligation allocable to interest expense.

“Interest Option” shall have the meaning specified in Section 2.8(a) hereof.

“Interest Payment Dates” shall mean (a) for Alternate Base Rate Borrowings (other than Swingline Loans), (i) the last Business Day of each calendar month prior to the Termination Date, and (ii) the Termination Date; (b) for LIBOR Borrowings, (i) last Business Day of each calendar month prior to the end of the applicable Interest Period and (ii) at the end of the applicable Interest Period; and (c) for Swingline Loans, (i) the last Business Day of each calendar month prior to the earlier to occur of the Termination Date or the date such Swingline Loans are required to be paid with proceeds of Revolving Loans in accordance with Section 2.11(c), and (ii) the earlier to occur of the Termination Date or the date such Swingline Loans are required to be paid with proceeds of Revolving Loans in accordance with Section 2.11(c).

“Interest Period” shall mean the period commencing on the date of the applicable LIBOR Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is one (1), two (2) or three (3) months thereafter, as the Borrower’s Agent may elect in accordance herewith; provided, however, that (a) if an Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) no Interest Period shall end later than the Termination Date, and (c) interest shall accrue from and including the first day of an Interest Period to, but excluding, the last day of such Interest Period.

“Inventory” shall mean all inventory, goods and merchandise now owned and hereafter acquired by any Credit Party, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, other materials and supplies of any kind, nature or description which are or will be used or consumed in the business of any Credit Party or any of their Subsidiaries or used in connection with the packing, shipping, advertising, selling

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or finishing of such goods, merchandise and such other personal property, and all documents of title or other documents representing any of them.

“Investment” shall mean the purchase or other acquisition of any securities or Indebtedness of, or the making of any loan, advance, extension of credit or capital contribution to (or the transfer of Property having the effect of any of the foregoing), or the incurring of any Contingent Obligation in respect of the Indebtedness of, any Person (in each case other than accounts receivable arising in the ordinary course of business).

“IRS” shall mean the United States Internal Revenue Service.

“Issuing Bank” shall mean the Agent, in its capacity as the issuer of any Letter of Credit pursuant to this Agreement.  The terms “Agent” and “Issuing Bank” may be used interchangeably for such purpose.

“ITA” shall mean the Income Tax Act (Canada), as the same may, from time to time, be in effect.

“Joinder Agreement” shall mean any agreement, in Proper Form, executed by a Subsidiary of a Credit Party from time to time in accordance with Section 6.10 hereof, pursuant to which such Subsidiary joins in the execution and delivery of (a) this Agreement or a Guaranty, (b) the Contribution Agreement, or (c) any other Loan Document.

“JPMorgan” shall mean JPMorgan Chase Bank, N.A., together with its successors and assigns.

“Kimberly-Clark” shall mean Kimberly-Clark Corporation, a Delaware corporation.

“LC Collateral Account” shall have the meaning specified for such term in Section 2.10(k).

“Leasehold Property” shall mean any leasehold interest of any Credit Party as lessee under any lease of a Real Property Asset.

“Legal Requirement” shall mean any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority.

“Lender or Lenders” shall have the meaning specified in the preamble of this Agreement.  Unless the context otherwise requires, the term “Lenders” shall include the Swingline Lender.

“Lender Party” shall mean the Agent, the Canadian Collateral Agent, any Lender, or any of their respective Affiliates or branches.

“Letters of Credit” shall mean Standby Letters of Credit and Trade Letters of Credit.  Letter of Credit shall mean any one of the Standby Letters of Credit or Trade Letters of Credit and shall include the Existing Letters of Credit.

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“Letter of Credit Advances” shall mean all sums which may from time to time be paid by any and all of the Revolving Lenders pursuant to any and all of the Letters of Credit, together with all other sums, fees, reimbursements or other obligations which may be due to the Agent or any of the Revolving Lenders pursuant to any of the Letters of Credit.

“Letter of Credit Exposure Amount” shall mean at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time plus (b) the aggregate amount of all Letter of Credit Advances for which the Revolving Lenders have not been reimbursed and which remain unpaid at such time.  The Letter of Credit Exposure Amount of any Revolving Lender at any time shall be its Commitment Percentage of the aggregate Letter of Credit Exposure Amount at such time.

“LIBOR Borrowing” shall mean, as of any date, that portion of the principal balance of the Loans bearing interest at the Adjusted LIBOR Rate as of such date and having the same Interest Period.

“LIBOR Lending Office” shall mean, with respect to any Lender, the office of such Lender specified as its “LIBOR Lending Office” opposite or below its name on the signature pages hereof, or (if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower’s Agent and the Agent.

“LIBOR Rate” shall mean, with respect to any LIBOR Borrowing for any Interest Period, an interest rate per annum equal to the rate appearing on Reuters Screen LIBOR01 Page (or, if no such page exists, on any successor or substitute page providing rate quotations comparable to those currently provided on such page of the Reuters Service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days before the commencement of such Interest Period as the composite offered rate for dollar deposits approximately equal in principal amount to the Agent’s portion of such LIBOR Borrowing and for a maturity equal to the applicable Interest Period.  In the event that such rate is not available at such time for any reason, then the “LIBOR Rate” with respect to such LIBOR Borrowing for such Interest Period shall be the average interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits approximately equal in principal amount to the Agent’s portion of such LIBOR Borrowing and for a maturity equal to the applicable Interest Period are offered to the Agent in the London interbank market at approximately 11:00 a.m., London time, two Business Days before the commencement of such Interest Period.

“Lien” shall mean, with respect to any asset of any Person, (a) any mortgage, pledge, debenture, charge, encumbrance, security interest, collateral assignment or other lien or restriction of any kind on such asset, whether based on common law, constitutional provision, statute or contract, (b) the interest of any vendor or a lessor under any conditional sale agreement, title retention agreement or capital lease relating to such asset, (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, or (d) any other right of or arrangement with any creditor to have such creditor’s claim

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satisfied out of such assets, or the proceeds therefrom, prior to the general creditors of such Person owning such assets.

“Loan Documents” shall mean this Agreement, the Notes, the Applications, the Security Documents, the Guaranties, the Contribution Agreement, the Joinder Agreements, the Letters of Credit, all instruments, certificates and agreements now or hereafter executed and delivered to the Agent, the Canadian Collateral Agent and/or the Lenders in connection with or pursuant to any of the foregoing (including without limitation, any fee letter between the Agent, JPMorgan and/or any of its Affiliates and any Borrower relating to the transactions contemplated by this Agreement), and all amendments, modifications, renewals, extensions, increases and rearrangements of, and substitutions for, any of the foregoing.

“Loans” shall mean the Term Loans, the Revolving Loans and the Swingline Loans.  Loan shall mean any one of the Term Loans, Revolving Loans or the Swingline Loans.

“Material Adverse Effect” shall mean a material adverse effect on (a) the business, assets, prospects, operations, financial or other condition of the Credit Parties and their Subsidiaries taken as a whole, (b) the ability of the Credit Parties, taken as a whole, to perform their obligations under the Loan Documents, (c) the validity or enforceability of this Agreement, any of the Notes or any other Loan Documents or the rights or remedies of the Agent, the Canadian Collateral Agent or the Lenders hereunder or thereunder, or (d) the validity or enforceability of the Agent’s Lien (or the Canadian Collateral Agent’s Lien, as applicable) on any material portion of the Collateral or the priority of such Lien.

“Material Lease” shall mean any lease agreement with respect to a Material Leasehold Property.

“Material Leasehold Property” shall mean (a) the Leasehold Properties listed on Schedule 1.1B and (b) a Leasehold Property of material value as Collateral or of material importance to the operations of the Credit Parties.

“Mill Properties” shall mean those Mortgaged Properties in respect of which paper mill operations are conducted or where structures are located that are integral to such operations.  Mill Property shall mean one of such Mill Properties.

“Monthly Unaudited Financial Statements” shall mean the financial statements of the Credit Parties and their Subsidiaries, including all notes thereto, which statements shall include (a) a balance sheet as of the end of the respective calendar month, (b) a statement of operations for such respective calendar month and for the fiscal year to date, subject to normal year-end adjustments, all setting forth in comparative form the corresponding figures for the corresponding period of the preceding fiscal year and (c) a statement of cash flows for the fiscal year to date, subject to normal year-end adjustments, setting forth in comparative form the corresponding figures in the corresponding period of the preceding fiscal year, all prepared in reasonable detail and in accordance with GAAP and certified by a Responsible Officer of Borrower’s Agent as fairly and accurately presenting in all material respects the financial condition and results of operations of the Credit Parties and their Subsidiaries, on a Consolidated basis, at the dates and for the periods indicated therein subject to normal year-end adjustments.

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The Monthly Unaudited Financial Statements for the Credit Parties and their Subsidiaries shall be prepared on a Consolidated and consolidating basis, the parties recognizing that such consolidating statements will be prepared in accordance with GAAP only to the extent normal and customary.

“Mortgage” shall mean (a) a security instrument (whether designated as a deed of trust, an equitable mortgage, a debenture, a deed to secure debt, a mortgage, a leasehold mortgage, a leasehold deed of trust, a leasehold deed to secure debt, an assignment of leases and rents or by any similar title) executed and delivered by any Credit Party in such form as may be approved by the Agent (or the Canadian Collateral Agent, as applicable), in each case with such changes thereto as may be recommended by the Agent’s (or the Canadian Collateral Agent’s, as applicable) local counsel based on local laws or customary local practices, and (b) at the Agent’s (or the Canadian Collateral Agent, as applicable) option, in the case of an Additional Mortgaged Property, an amendment to an existing Mortgage, in form satisfactory to the Agent (or the Canadian Collateral Agent, as applicable), adding such Additional Mortgaged Property to the Real Property Assets encumbered by such existing Mortgage, in either case as such security instrument or amendment may be amended, supplemented or otherwise modified from time to time.  “Mortgages” means all such instruments, including the Closing Date Mortgages and any Additional Mortgages.

“Mortgaged Property” shall mean a Closing Date Mortgaged Property or an Additional Mortgaged Property, as the case may be.

“Neenah Germany” shall mean Neenah Germany GmbH (formerly known as FiberMark Beteiligungs GmbH) and Neenah Services GmbH & Co. KG. (formerly known as FiberMark Services GmbH & Co. KG.), collectively.

“Net Income” shall mean, with respect to any Person for any period, net income of such Person for the applicable calculation period determined in accordance with GAAP; provided, that there shall not be included in such calculation of net income (without duplication) (a) any extraordinary gains or losses (including in connection with the sale or write-up of assets), (b) any nonrecurring gains or losses, (c) any gains or losses from dispositions of property or assets, other than dispositions of Inventory and Equipment in the ordinary course of business, and the tax consequences thereof, (d) the net income or loss of any other Person that is not a Subsidiary of such Person for whom net income is being calculated (or is accounted for by such Person by the equity method of accounting), (e) the net income (or loss) of any other Person acquired by, or merged with, such Person for whom net income is being calculated or any of its Subsidiaries for any period prior to the date of such acquisition, (f) the net income of any Subsidiary of such Person for whom net income is being calculated to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such net income is not at the time permitted by operation of the terms of its charter, certificate of incorporation or formation or other constituent document or any agreement or instrument or Legal Requirement applicable to such Subsidiary, all as determined in accordance with GAAP, (g) any non-cash non-recurring impairment charges with respect to a writedown of the carrying amount of the Consolidated assets of the Credit Parties acquired after the Closing Date (either through direct asset purchase or as part of the acquisition of all or substantially all of the Stock of another Person) based on the impairment of such assets, pursuant to the provisions of Section 7.4(f) and any benefits

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(including tax benefits) resulting from such writedown, (h) any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees, provided that such shares, options or other rights can be redeemed at the option of the holder only for capital stock of such Person, (i) with respect to the Credit Parties, to the extent deducted in the calculation of Net Income, any non-recurring charges or other expenses (determined in accordance with GAAP and as reflected in the Company’s financial statements produced from time to time pursuant to Sections 6.3(a) and 6.3(b)) related to the restructuring, permanent closure or Disposition of Neenah Paper FR, LLC’s facility in Ripon, California, which non-recurring charges or other expenses, for purposes of this definition, shall not exceed $18,000,000 in the aggregate ($10,900,000 of such amount being cash charges or expenses and $7,100,000 of such amount being non-cash charges or expenses) during the term of this Agreement; and (j) amounts actually paid in cash to the IRS by the Credit Parties during such period as a result of the Credit Parties’ repayment of tax refunds received by the Credit Parties in connection to their 2005 tax return, which amount shall not exceed $7,000,000 during the term of this Agreement.

“Net Recovery Value Percentage” shall mean the “net recovery value percentage” under an orderly liquidation scenario for the Inventory, Equipment, or Real Property Assets of any Credit Party, as specifically set forth and described in the most recent appraisal of the Inventory, Equipment, or Real Property Assets of the applicable Credit Party received by the Agent pursuant to the provisions of Section 6.4 hereof (or with regard to work-in-process Inventory, gross recovery value percentage as set forth in such an appraisal and as discounted by the Agent in its reasonable credit judgment).

“New Lender” has the meaning assigned to such term in Section 2.15(d).

“New Lender Agreement” means a New Lender Agreement entered into by a New Lender in accordance with Section 2.15(d) and accepted by the Agent in the form of Exhibit R attached hereto, or any other form approved by the Agent.

“Non-Reporting Lender Party” shall have the meaning specified for such term in the definition of “Bank Products”.

“Notes” shall mean the Revolving Credit Notes, the Term Notes and the Swingline Note.  Note shall mean any one of such promissory notes.

“Nova Scotia Woodlands” shall mean the Timberland Properties located in Nova Scotia, Canada, comprising approximately 500,000 acres.

“NP International” shall mean Neenah Paper International, LLC, a Delaware limited liability company and a wholly owned Subsidiary of NP International HoldCo.

“NP International HoldCo” shall mean Neenah Paper International Holding Company, LLC, a Delaware limited liability company and a wholly owned Subsidiary of the Parent.

“Obligations” shall mean, without duplication, all obligations, liabilities and Indebtedness of the Credit Parties with respect to (a) the Security Documents and all other Loan Documents, including without limitation, (i) the principal of and interest on the Loans and (ii)

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the payment or performance of all other obligations, liabilities and Indebtedness of the Credit Parties to the Agent, the Canadian Collateral Agent and the Lenders hereunder, under the Notes, under the Letters of Credit, under the Applications or under any one or more of the other Loan Documents, including all fees, costs, expenses and indemnity obligations hereunder and thereunder, and (b) all obligations and liabilities of the Credit Parties and/or any of their Subsidiaries now or hereafter owing to JPMorgan Chase Bank, N.A. or any other Lender Party under any Bank Product.  The Obligations include interest (including interest that accrues or that would accrue but for the filing of a bankruptcy case by a Credit Party or any of its Subsidiaries, whether or not such interest would be an allowable claim under any applicable bankruptcy or other similar proceeding) and other obligations accruing or arising after (a) commencement of any case under any bankruptcy or similar laws by or against any Credit Party or any of their Subsidiaries (or that would accrue or arise but for the commencement of any such case) or (b) the personal liability of the Credit Parties or any of their Subsidiaries for the Obligations shall be discharged or otherwise cease to exist by operation of law or for any other reason.

“Obligee” and “Obligees” shall have the meanings assigned to such terms in Section 10.22.

“Offshore Entities” shall mean FinCo, Neenah Germany, each direct or indirect subsidiary of Neenah Germany and their respective successors and assigns.

“Organizational Documents” shall mean, with respect to a corporation, the certificate of incorporation, articles of incorporation and bylaws of such corporation; with respect to a limited partnership, the limited partnership agreement and certificate of limited partnership of such limited partnership; with respect to a joint venture, the joint venture agreement establishing such joint venture; with respect to a limited liability company, the articles of organization or certificate of formation and regulations or limited liability company agreement of such limited liability company;  with respect to an unlimited liability company, the memorandum of association and articles of association and the certificate of incorporation of such company; and with respect to a trust, the instrument establishing such trust; in each case including any and all modifications thereof as of the date of the Loan Document referring to such Organizational Document and any and all future modifications thereof.

“Original Closing Date” shall have the meaning specified in the recitals of this Agreement.

“Other Tax” shall have the meaning attributed to such term in Section 10.17(a)(ii) hereof.

“Parent” shall have the meaning specified in the preamble to this Agreement.

“Parties” shall mean all Persons other than the Agent, the Canadian Collateral Agent and any Lender executing any Loan Documents.

“Patents” shall have the meaning specified for such term in the definition of “Intellectual Property.”

“PBGC” shall mean the Pension Benefit Guaranty Corporation.

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“Perfection Certificate” shall mean a certificate in the form of Exhibit L attached hereto or any other form approved by the Agent, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by each Credit Party.

“Permitted Affiliate Transactions” shall mean any of the following:  (a) transactions between Credit Parties; (b) transactions between Offshore Entities, (c) customary directors’ fees, customary directors’ indemnifications and similar arrangements for officers and directors of the Credit Parties and the Offshore Entities entered into in the ordinary course of business, together with any payments made under any such indemnification arrangements; provided, that any of the foregoing owed to directors and officers of the Offshore Entities are only payable and paid by the Offshore Entities; (d) customary and reasonable loans, advances and reimbursements to officers, directors and employees of the Credit Parties and Offshore Entities for travel, entertainment, moving and other relocation expenses, in each case made in the ordinary course of business provided, that any of the foregoing owed to officers, directors and employees of the Offshore Entities are only payable and paid by the Offshore Entities; (e) the incurrence of intercompany Indebtedness permitted pursuant to Sections 7.1(f) and 7.1(n) hereof and Contingent Obligations permitted pursuant to Section 7.1(g) hereof, (f) employment agreements and arrangements entered into with directors, officers and employees of the Credit Parties or the Offshore Entitles in the ordinary course of business; provided, that any obligations under any of the foregoing owed to directors, officers and employees of the Offshore Entities are only obligations of the Offshore Entities and are only paid by the Offshore Entities; and (g) other transactions, contracts or agreements existing on the Closing Date and which are set forth on Schedule 7.6 attached hereto, together with any renewals and extensions of such existing transactions, contracts or agreements, so long as such renewals and extensions are upon terms and conditions substantially identical to the terms and conditions set forth in such existing transactions, contracts and agreements (or otherwise no less favorable to the Credit Parties, as applicable), and such other transactions, contracts or agreements with respect to the Offshore Entities entered into after the Closing Date, which (i) either (A) contain terms and conditions substantially similar to those transactions, contracts and agreements listed on Schedule 7.6 attached hereto or (B) are transactions, contracts or agreements customarily entered into by public companies for the provision of administrative services to their related companies (including, without limitation, legal, accounting, treasury, tax, human resources, billing and collection, accounts payable, risk management, compliance and other similar administrative services), and (ii) have been approved by the Agent in its reasonable discretion.  Where any costs, expenses, fees or other payments to directors, officers or employees described herein are required to be made by, or to be obligations solely of, Offshore Entities, such amounts may be either paid directly by the Offshore Entities, or paid by any Credit Party and reimbursed in cash by Offshore Entities in the ordinary course of business which, in any event, shall not be longer than 60 days after such payment is made.  In the event such costs, expenses, fees or other payments relate both to the Credit Parties and to one or more Offshore Entities, the Parent shall be entitled to make a reasonable, good faith allocation of such amounts as between the affected Credit Parties, on the one hand, and the affected Offshore Entities on the other.

“Permitted Investment Securities” shall mean each of the following, to the extent the same is pledged as additional Collateral hereunder and is subject to a first priority perfected Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender Parties:  (a) readily marketable, direct obligations of the United States of America or

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Canada or any agency or wholly-owned corporation thereof which are backed by the full faith and credit of the United States or Canada, maturing within one (1) year after the date of acquisition thereof, (b) certificates of deposit, commercial paper (if rated no lower than A-1/P-1) or other short-term direct obligations of (i) JPMorgan or (ii) any other domestic financial institution having capital and surplus in excess of $5,000,000,000, maturing within six months after the date of acquisition thereof, (c) money market mutual funds having aggregate assets in excess of $5,000,000,000, and (d) other Investments mutually agreed to in writing by the Borrowers’ Agent and the Agent.

“Permitted Overadvance” shall have the meaning specified in Section 2.2(h) hereof.

“Person” shall mean any individual, corporation, business trust, unincorporated organization or association, partnership, joint venture, limited liability company, unlimited liability company, Governmental Authority or any other form of entity.

“Plan” shall mean any plan subject to Title IV of ERISA and maintained by any Credit Party for employees of any Credit Party or of any member of a “controlled group of corporations”, as such term is defined in the Code, of which the Borrower, any of its Subsidiaries or any ERISA Affiliate it may acquire from time to time is a part, or any such plan to which the Borrower, any of its Subsidiaries or any ERISA Affiliate is required to contribute on behalf of its employees.

“Pledged Cash” shall mean, on any date, the aggregate amount of cash on deposit in the Special Cash Collateral Account on such date.

“Pledged Inter-Company Loan” shall mean, collectively, the Initial Pledged Inter-Company Loan and subsequent advances under the inter-company revolving line of credit from NP International HoldCo to FinCo, evidenced by the Pledged Inter-Company Note, which line of credit shall be used to provide FinCo with funds to finance, by means of Unpledged Inter-Company Loans, the activities of NP International and, to the extent permitted under this Agreement, any non-U.S., non-Canadian subsidiaries of NP International from time to time.

“Pledged Inter-Company Note” shall mean that certain promissory note, dated as of October 3, 2006, by FinCo to NP International HoldCo, and which evidences the Pledged Inter-Company Loan.

“PPSA (Nova Scotia)” shall mean the Personal Property Security Act (Nova Scotia), as amended from time to time.

“Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan, or its successor financial institution, if any, at its principal office in New York City as its prime rate in effect at such time.  Without notice to any Credit Party or any other Person, the Prime Rate shall change automatically from time to time as and in the amount by which said prime rate shall fluctuate, with each such change to be effective as of the date of each change in such prime rate.  THE PRIME RATE IS A REFERENCE RATE AND DOES NOT NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED BY JPMORGAN OR SUCH SUCCESSOR FINANCIAL INSTITUTION TO ANY OF ITS CUSTOMERS.  JPMORGAN OR SUCH SUCCESSOR FINANCIAL INSTITUTION MAY

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MAKE COMMERCIAL LOANS OR OTHER LOANS AT RATES OF INTEREST AT, ABOVE AND BELOW THE PRIME RATE.

“Principal Office” shall mean the principal office in New York City of the Agent, or such other place as the Agent may from time to time by notice to the Borrowers’ Agent designate.

“Prior Term Loan Agreement” shall mean that certain Term Loan Agreement dated March 30, 2007, as amended, among Parent, certain subsidiaries of Parent and JPMorgan.

“Prohibited Transaction” shall mean any non-exempt transaction set forth in Section 406 of ERISA or Section 4975 of the Code.

“Proper Form” shall mean in form and substance satisfactory to the Agent (or the Canadian Collateral Agent, as applicable) as of the time of delivery and execution.

“Property” shall mean any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

“Quarterly Equipment Component Amortization Amount” shall have the meaning specified for such term on Schedule 1.1D.

“Quarterly Real Estate Component Amortization Amount” shall have the meaning specified for such term on Schedule 1.1E.

“Quarterly Unaudited Financial Statements” shall mean the financial statements of the Credit Parties and their Subsidiaries, including all notes thereto, which statements shall include (a) a balance sheet as of the end of the respective fiscal quarter, as applicable, (b) a statement of operations for such respective fiscal quarter, as applicable, and for the fiscal year to date, subject to normal year-end adjustments, all setting forth in comparative form the corresponding figures for the corresponding period of the preceding fiscal year and (c) a statement of cash flows for the fiscal year to date, subject to normal year-end adjustments, setting forth in comparative form the corresponding figures in the corresponding period of the preceding fiscal year, all prepared in reasonable detail and in accordance with GAAP and certified by a Responsible Officer of Borrower’s Agent as fairly and accurately presenting in all material respects the financial condition and results of operations of the Credit Parties and their Subsidiaries, on a Consolidated basis, at the dates and for the periods indicated therein, subject to normal year-end adjustments.  The Quarterly Unaudited Financial Statements for the Credit Parties and their Subsidiaries shall be prepared on a Consolidated and consolidating basis, the parties recognizing that such consolidating statements will be prepared in accordance with GAAP only to the extent normal and customary.

“Rate Selection Date” shall mean that Business Day which is (a) in the case of an Alternate Base Rate Borrowing, the date of such borrowing, or (b) in the case of a LIBOR Borrowing, the date three (3) Business Days preceding the first day of any proposed Interest Period for such LIBOR Borrowing.

“Rate Selection Notice” shall have the meaning specified in Section 2.8(b)(i) hereof.

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“Reaffirmation Agreements” means the Second Amendment to Security Agreement (Personal Property) and Reaffirmation Agreement entered into by the Credit Parties (other than Guarantor) and the Agent, the First Amendment to Pledge Agreement and Reaffirmation Agreement entered by the Credit Parties (other than Guarantor) and the Agent, the First Amendment to Guaranty and Reaffirmation Agreement entered into by Guarantor, the First Amendment to Patent Security Agreement and Reaffirmation Agreement entered into by the Credit Parties (other than Guarantor) and the Agent, the First Amendment to Trademark Security Agreement and Reaffirmation Agreement entered into by the Credit Parties (other than Guarantor) and the Agent, and the First Amendment to Copyright Security Agreement and Reaffirmation Agreement entered into by the Credit Parties (other than Guarantor) and the Agent, in each case dated as of the date hereof.

“Real Estate Component” shall have the meaning specified for such term on Schedule 1.1F.

“Real Property Asset” shall mean, at any time of determination, any fee ownership or leasehold interest of any Credit Party in or to any real Property.

“Receivables” shall mean and include all of the accounts, instruments, documents, chattel paper and general intangibles of the Credit Parties, whether secured or unsecured, whether now existing or hereafter created or arising, and whether or not specifically assigned to the Agent for the ratable benefit of the Lender Parties.

“Refinancing Indebtedness” shall mean any Indebtedness of the Credit Parties or any of their Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, other Indebtedness of such Person, provided, that:

(a)           the principal amount of such Refinancing Indebtedness does not exceed the sum of (i) the then outstanding principal amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded, and (ii) the reasonable and customary transactional costs and expenses incurred by the Credit Parties in connection with incurring such Refinancing Indebtedness;

(b)           the interest rate or rates to accrue under such Refinancing Indebtedness do not exceed the interest rate or rates then accruing on the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded;

(c)           the maturities, amortization schedules, covenants, defaults, remedies, subordination provisions (with respect to any Subordinated Indebtedness), collateral security provisions (or absence thereof) and other terms of such Refinancing Indebtedness are in each case, as determined by the Agent in its sole discretion, substantially the same as, or more favorable to the applicable Credit Party and/or Subsidiary as those in the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded; and

(d)           no Default or Event of Default has occurred and is continuing or would result from the issuance or origination of such Refinancing Indebtedness.

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“Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulation relating to reserve requirements applicable to member Lenders of the Federal Reserve System.

“Regulatory Change” shall mean, with respect to any Lender, any change on or after the date of this Agreement in any Legal Requirement (including Regulation D) or the adoption or making on or after such date of any Legal Requirement applying to Agent or a class of Lenders including such Person under any Legal Requirement (whether or not having the force of law) by any Governmental Authority charged with the interpretation or administration thereof.

“Related Obligations” shall have the meaning assigned to such term in Section 10.22.

“Reportable Event” shall mean a “reportable event” as defined in Section 4043(c) of ERISA, excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation.

“Request for Extension of Credit” shall mean a written request for extension of credit substantially in the form of Exhibit E attached hereto.

“Required Lenders” shall mean Lenders having greater than 50% of the aggregate amount of the outstanding Term Loans, Revolving Loans, Letter of Credit Exposure Amount, Swingline Exposure and, prior to the termination of the Total Revolving Commitment, Unused Commitment; and provided further, however, if only two (2) Lenders are then parties to this Agreement, Required Lenders shall mean both of such Lenders.  Notwithstanding anything in this Agreement to the contrary, no Defaulting Lender shall be taken into account for any purpose in determining whether the Required Lenders have authorized or taken any action contemplated in this Agreement or any of the other Loan Documents, subject to Section 10.11 hereof.

“Requirements of Environmental Law” shall mean all requirements imposed by any Environmental Law.  Requirement of Environmental Law shall mean any one of them.

“Reserves” shall mean any and all reserves established by the Agent, in its reasonable credit judgment and without duplication, with respect to the Borrowing Base or in accordance with any express provision of this Agreement or any other Loan Document (including, without limitation, such reserves as may be necessary in any jurisdiction with respect to priming liens of any Governmental Authority or any pension authority) for purposes of reducing the Borrowers’ ability to utilize any portion of the Borrowing Base.

“Responsible Officer” shall mean, with respect to any Person, the president, chief financial officer, treasurer, controller, or general counsel of such Person.

“Revolving Commitment” means, with respect to each Revolving Lender, the commitment, if any, of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit, Permitted Overadvances and Swingline Loans hereunder, expressed as an amount representing the maximum possible aggregate amount of such Revolving Lender’s Revolving Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to (a) Sections 2.4 and 2.15 and (b) assignments by or to such Revolving Lender pursuant to Section 10.12.  The initial amount of each Revolving Lender’s Revolving

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Commitment is set forth on Schedule 1.1A hereto, or in the Assignment and Acceptance or New Lender Agreement pursuant to which such Revolving Lender shall have assumed its Revolving Commitment, as applicable.  The initial aggregate amount of the Revolving Lenders’ Revolving Commitments is $100,000,000.00.

“Revolving Commitment Increase Notice” shall have the meaning specified for such term in Section 2.15(a).

“Revolving Credit Alternate Base Rate Borrowing” shall mean, as of any date, that portion of the principal balance of the Revolving Loans bearing interest at the Alternate Base Rate as of such date.

“Revolving Credit LIBOR Borrowing” shall mean, as of any date, that portion of the principal balance of the Revolving Loans bearing interest at the Adjusted LIBOR Rate as of such date.

“Revolving Credit Notes” shall mean the promissory notes, each substantially in the form of Exhibit A attached hereto, of the Borrowers evidencing the Revolving Loans, payable to the order of the respective Revolving Lenders in the amount of said Revolving Lender’s Revolving Commitment, and all renewals, extensions, modifications, rearrangements and replacements thereof and substitutions therefor.  Revolving Credit Note shall mean any of such promissory notes.

“Revolving Exposure” means, with respect to any Revolving Lender at any time, the sum of the outstanding principal amount of such Revolving Lender’s Revolving Loans and its Letter of Credit Exposure Amount and an amount equal to its Commitment Percentage of the aggregate principal amount of Swingline Loans at such time, plus an amount equal to its Commitment Percentage of the aggregate principal amount of Permitted Overadvances outstanding at such time.

“Revolving Lenders” shall mean, as of any date of determination, Lenders having a Revolving Commitment.

“Revolving Loans” shall mean the Revolving Loans made pursuant to Section 2.1 hereof, including any Permitted Overadvances.  Revolving Loan shall mean one of such Revolving Loans.

“Scheduled Principal Payments” shall mean, with respect to any Person for any period, the aggregate amount of regularly scheduled payments of principal, if any, in respect of funded Indebtedness (including the principal component of any payments in respect of Capital Lease Obligations) paid or required to be paid by such Person and its consolidated Subsidiaries during such period, excluding (i) principal payments under the Unpledged Inter-Company Loan, but solely to the extent an equal principal payment is made substantially contemporaneously thereafter by FinCo on a Pledged Inter-Company Loan, and (ii) resulting, substantially contemporaneous payments under the Pledged Inter-Company Loan.

“Security Agreements” shall mean (a) the Security Agreement (Personal Property) dated as of the Original Closing Date, between the Credit Parties (other than the Guarantor) and the

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Agent, for the ratable benefit of the Lender Parties, covering all Receivables, Inventory and all other tangible and intangible personal Property of such Credit Parties more particularly described therein, as the same may thereafter be or have been joined in by a Credit Party pursuant to a Joinder Agreement, (b) the debentures dated as of the Original Closing Date, each granted by the Guarantor in favor of the Canadian Collateral Agent, for the ratable benefit of the Lender Parties, covering the Collateral referred to therein of the Guarantor, in each case as more particularly described therein, as the same may thereafter be or have been joined in by a Credit Party pursuant to a Joinder Agreement, (c) the Pledge Agreement dated as of the Original Closing Date, between the Credit Parties named therein and the Agent, for the ratable benefit of the Lender Parties, covering (i) all issued and outstanding Stock in each of the Borrowers’ Domestic Subsidiaries and, to the extent set forth therein, Canadian Subsidiaries, and (ii) 65% of all issued and outstanding Stock in each of the Borrower’s non-Domestic Subsidiaries (other than Canadian Subsidiaries), (d) the transfer and assignment of insurance dated as of the Original Closing Date, by Neenah Paper Company of Canada in favor of the Canadian Collateral Agent, (e) any and all other security agreements, pledge agreements, collateral assignments (including without limitation assignments of insurance), assignments of contract rights or agreements, assignments or pledges of stock or partnership interests, or other similar documents now or hereafter executed in favor of the Agent (or the Canadian Collateral Agent, as applicable), for the ratable benefit of the Lender Parties, as security for the payment or performance of any and/or all of the Obligations, and (f) any amendment, modification, restatement or supplement of all or any of the above-described agreements and assignments, including, without limitation, the Reaffirmation Agreements.

“Security Documents” shall mean the Security Agreements, all related financing statements and any and all other agreements, Intellectual Property Security Agreements, Mortgages, debentures, deeds of trust, chattel mortgages, Tri-Party Agreements, guaranties, assignments of income, standby agreements, subordination agreements, undertakings and other instruments and financing statements now or hereafter executed and delivered as security for the payment and performance of the Obligations, as any of them may from time to time be amended, modified, restated or supplemented.

“Senior Note Documents” shall mean any and all agreements, instruments and other documents pursuant to which the Senior Notes have been or will be issued or otherwise setting forth the terms of the Senior Notes, the Senior Note Indenture and the obligations with respect thereto, including any guaranty agreements, bank product agreements or hedging agreements related thereto, all ancillary agreements as to which any agent, trustee or lender is a party or a beneficiary and all other agreements, instruments, documents and certificates executed in connection with any of the foregoing, in each case as such agreement, instrument or other document may be amended, restated, supplemented, refunded, replaced or otherwise modified from time to time in accordance with the terms thereof.

“Senior Notes” shall mean the 7-3/8% senior notes of the Parent due 2014, issued pursuant to the Senior Note Indenture.

“Senior Note Indenture” shall mean the Indenture, dated as November 30, 2004, between Parent, the subsidiaries of the Parent party thereto, and The Bank of New York Trust Company, N.A., as Trustee.

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“Settlement” shall have the meaning specified for such term in Section 2.11(f).

“Settlement Date” shall have the meaning specified for such term in Section 2.11(f).

“Special Cash Collateral Account” shall mean that certain deposit account identified as such on Schedule 5.29, established or to be established with JPMorgan Chase Bank, N.A. or one of its Affiliates, into which the Borrowers deposit certain proceeds received by them from the Disposition of Property pursuant to Section 2.7(d); provided that such deposit account is subject to an account control agreement and/or such other Security Documents required by the Agent, each in form and substance satisfactory to the Agent, pursuant to which the Agent has (i) been granted a first priority Lien on and security interest in such account and all cash held from time to time therein and (ii) sole control over the amounts held from time to time therein, and which is otherwise maintained as provided in Section 3.3.

“Standby Letters of Credit” shall mean all standby letters of credit issued by the Agent for the account or liability of any Borrower pursuant to the terms set forth in this Agreement and shall include all standby letters of credit which are Existing Letters of Credit.

“Statutory Reserves” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including without limitation, any marginal, special, emergency or supplemental reserves) expressed as a decimal, established by the Board of Governors of the Federal Reserve System of the United States and any other banking authority to which any Lender is subject with respect to the Adjusted LIBOR Rate for Eurocurrency Liabilities (as defined in Regulation D), including without limitation, those reserve percentages imposed under Regulation D.

“Stock” shall mean as to a Business Entity, all capital stock, partnership interests, membership interests or other indicia of equity rights issued by such Business Entity from time to time.

“Subordinated Indebtedness” shall mean, with respect to any Credit Party or any of their Subsidiaries, Indebtedness subordinated in right of payment to such Credit Party’s or such Subsidiary’s monetary Obligations on terms satisfactory to and approved in writing by the Agent and the Required Lenders, in their reasonable credit judgment, so long as all other terms thereof (including without limitation, regularly scheduled payments and financial and negative covenants) are satisfactory to and approved in writing by the Agent and the Required Lenders, in their reasonable credit judgment.

“Subsidiary” shall mean, as to a particular parent Business Entity, any Business Entity (excluding any Offshore Entity) of which more than fifty percent (50%) of the Stock issued by such Business Entity is at the time directly or indirectly owned by such parent Business Entity or by one or more of its Affiliates (other than an Offshore Entity).

“Swingline Exposure” shall mean, at any time, the aggregate principal amount of all Swing Loans outstanding at such time.

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“Swingline Lender” shall mean JPMorgan or any other Lender that becomes the Agent, in each case in its capacity as the Swingline Lender hereunder.

“Swingline Loans” shall mean the Swingline Loans made pursuant to Section 2.11(a) hereof.  Swingline Loan shall mean any one of such Swingline Loans.

“Swingline Note” shall mean the promissory note, substantially in the form of Exhibit B attached hereto, of the Borrowers evidencing the Swingline Loans, payable to the order of the Swingline Lenders in the original principal amount of $15,000,000, and all renewals, extensions, modifications, rearrangements and replacements thereof and substitutions therefor.

“Synthetic Lease” shall mean any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which lease or other arrangement is required or is permitted to be classified and accounted for as an operating lease under GAAP but which is intended by the parties thereto for tax, bankruptcy, regulatory, commercial law, real estate law and all other purposes as a financing arrangement.

“Tax” shall have the meaning attributed to such term in Section 10.17(a)(iii) hereof.

“Term Lenders” means, as of any date of determination, Lenders having a Term Loan Commitment.

“Term Loan Alternate Base Rate Borrowing” shall mean, as of any date, that portion of the principal balance of the Term Loans bearing interest at the Alternate Base Rate as of such date.

“Term Loan Commitment” means (a) as to any Term Lender, the aggregate commitment of such Term Lender to make Term Loans as set forth in Schedule 1.1A hereto or in the most recent Assignment and Assumption executed by such Term Lender and (b) as to all Term Lenders, the aggregate commitment of all Term Lenders to make Term Loans, which aggregate commitment shall be $40,000,000 on the date of this Agreement.  After advancing the Term Loan, each reference to a Term Lender’s Term Loan Commitment shall refer to that Term Lender’s Commitment Percentage of the Term Loans.

“Term Loans” means the Term Loans extended by the Term Lenders to the Borrowers on the Closing Date pursuant to Section 2.1(2) hereof.

“Term Notes” shall mean the promissory notes, each substantially in the form of Exhibit C attached hereto, of the Borrowers evidencing the Term Loans, payable to the order of the respective Term Lenders in the amount of said Term Lender’s Term Loan Commitment, and all renewals, extensions, modifications, rearrangements and replacements thereof and substitutions therefor.  Term Loan Note shall mean any of such promissory notes.

“Termination Date” shall mean the earliest of (a) November 30, 2013, (b) any date that the Total Commitment is terminated in full by the Borrowers pursuant to Section 2.4 hereof, and (c) any date the Termination Date is accelerated or the Total Commitment is terminated by the Agent pursuant to Section 8.1 hereof.

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“Timberland Properties” shall mean that portion of the Closing Date Mortgaged Properties other than the Mill Properties.

“Title Company” shall mean (a) with respect to the Mortgaged Properties located in the United States, First American Title Insurance Company and (b) with respect to the Mortgaged Properties located in Canada, First Canadian Title Insurance Company, Ltd., or in each case one or more other title insurance companies reasonably satisfactory to the Agent.

“Total Commitment” shall mean, on any day, the aggregate of all of the Lenders’ Commitments on such day.  As of the Closing Date, the Total Commitment is $140,000,000.

“Total Revolving Commitment” shall mean, on any day, the aggregate of all of the Revolving Lenders’ Revolving Commitments on such day.  As of the Closing Date, the Total Revolving Commitment is $100,000,000.

“Trade Letters of Credit” shall mean all trade or documentary letters of credit issued by the Agent for the account or liability of any Borrower pursuant to the terms set forth in this Agreement and shall include all trade or documentary letters of credit which are Existing Letters of Credit.

“Trademarks” shall have the meaning specified for such term in the definition of “Intellectual Property.”

“Tri-Party Agreements” shall collectively mean tri-party agreements, in Proper Form, to be executed and delivered by and among the Agent (or the Canadian Collateral Agent, as applicable), the Credit Parties required by the Agent (or the Canadian Collateral Agent, as applicable) and the applicable financial institutions described in Schedule 5.29 attached hereto, together with all modifications and/or replacements thereof which are approved in writing by the Agent (or the Canadian Collateral Agent, as applicable), for purposes of (a) evidencing control by the Agent (or the Canadian Collateral Agent, as applicable) in one or more deposit accounts (including Collection Accounts) maintained by the applicable Credit Parties with any such specified financial institution, in the case of the Agent, for purposes of perfection of the Agent’s Lien in such deposit accounts for the ratable benefit of the Lender Parties, and (b) with respect to deposit accounts constituting Collection Accounts, facilitating the collection of Receivables in accordance with the terms of Section 6.15 hereof.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

“Unpledged Inter-Company Loan” shall mean the inter-company loans made from time to time by FinCo to NP International for the purpose of financing the 2006 acquisition of Neenah Germany and the activities of NP International and any non-U.S., non-Canadian subsidiaries of NP International from time to time.

“Unused Commitment” shall mean, as to a particular Revolving Lender, the daily difference of such Revolving Lender’s Revolving Commitment on such day less the Current Sum applicable to such Revolving Lender on such day.

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1.2           Accounting Terms and Determinations.  Except where specifically otherwise provided:

(a)           The symbol “$” and the word “dollars” shall mean lawful money of the United States of America, and symbol “Cdn.$” and the words “Canadian Dollars” shall mean lawful money of Canada.

(b)           Any accounting term not otherwise defined shall have the meaning ascribed to it under GAAP.  If any Credit Party is required after the Closing Date to implement any change(s) in its accounting principles and practice as a result of any changes in GAAP mandated by the Financial Accounting Standards Board or successor organization, and if such change(s) result in any material change in the method of calculation of the Fixed Charge Coverage Ratio, then for all periods after the date of implementation of such change(s) until one or more appropriate amendments of this Agreement addressing such change(s) in GAAP are negotiated, executed and delivered by the parties hereto in a form acceptable to all such parties, the Fixed Charge Coverage Ratio shall be calculated hereunder utilizing GAAP as in effect prior to such change(s).

(c)           Unless otherwise expressly provided, any accounting concept and all financial covenants shall be determined on a Consolidated basis, and financial measurements shall be computed without duplication.

(d)           Wherever the term “including” or any of its correlatives appears in the Loan Documents, it shall be read as if it were written “including (by way of example and without limiting the generality of the subject or concept referred to)”.

(e)           Wherever the word “herein” or “hereof” is used in any Loan Document, it is a reference to that entire Loan Document and not just to the subdivision of it in which the word is used.

(f)            References in any Loan Document to Section numbers are references to the Sections of such Loan Document.

(g)           References in any Loan Document to Exhibits, Schedules, Annexes and Appendices are to the Exhibits, Schedules, Annexes and Appendices to such Loan Document, and they shall be deemed incorporated into such Loan Document by reference.

(h)           Any term defined in the Loan Documents which refers to a particular agreement, instrument or document shall also mean, refer to and include all modifications, amendments, supplements, restatements, renewals, extensions and substitutions of the same; provided, that nothing in this subsection shall be construed to authorize any such modification, amendment, supplement, restatement, renewal, extension or substitution except as may be permitted by other provisions of the Loan Documents.

(i)            Unless otherwise expressly stated in any Loan Document, all times of day used in the Loan Documents mean local time in New York, New York.

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(j)            Defined terms may be used in the singular or plural, as the context requires.

1.3           UCC Changes.  All terms used herein which are defined in the UCC shall, unless otherwise defined herein, have the meanings ascribed to them in the UCC both as in effect on the date of this Agreement and as hereafter amended.

1.4           Joint and Several Obligations; Borrowers’ Agent.

(a)           All obligations of the Borrowers hereunder shall be joint and several.  Any notice, request, waiver, consent or other action made, given or taken by any Borrower shall bind all of the Borrowers.

(b)           Each of the Credit Parties hereby authorizes the Parent and each of the Responsible Officers of the Parent listed on Schedule 1.4 hereto or otherwise designated by the Parent from time to time as provided below, to act as agent for all of the Credit Parties, and to execute and deliver on behalf of any Credit Party such notices, requests, waivers, consents, certificates, and other documents, and to take any and all actions, required or permitted to be delivered or taken by the Credit Parties hereunder. The Credit Parties may replace any of the Responsible Officers listed in Schedule 1.4 hereto or add any additional Responsible Officers by the delivery of a written notice by the Parent to the Agent specifying the names of each new Responsible Officer and the offices held by each such Person.  Each Credit Party hereby agrees that any such notices, requests, waivers, consents, certificates and other documents executed, delivered or sent by the Parent or any Responsible Officer of the Parent and any such actions taken by the Parent or any Responsible Officer of the Parent shall bind each Credit Party.

2.             Loans; Letters of Credit; Notes; Payments; Prepayments; Interest Rates.

2.1           Commitments.  Subject to the terms and conditions hereof, each Lender, severally and not jointly, agrees to make (1) Revolving Loans to the Borrowers from time to time on and after the Closing Date until, but not including, the Termination Date, in an aggregate principal amount at any one time outstanding (including such Lender’s Commitment Percentage of the Letter of Credit Exposure Amount and the Swingline Exposure at such time) up to, but not exceeding, such Lender’s Revolving Commitment, and (2) a Term Loan to the Borrowers, on the Closing Date, in an amount equal to such Lender’s Term Loan Commitment by making immediately available funds available to the Agent’s designated account, not later than 10:00 a.m. Chicago time.  Notwithstanding the foregoing, the aggregate principal amount of the Revolving Loans outstanding at any time shall not exceed the lesser of (a) the Indenture Cap, and (b) (i) the lesser at such time of (A) the Total Revolving Commitment and (B) (1) the Borrowing Base as of such time less (2) all applicable Reserves, less (ii) the aggregate Letter of Credit Exposure Amount and Swingline Exposure at such time less (iii) the aggregate amount of the items specified in clauses (b)(ii) and (b)(iii) of the definition of “Availability.”  Subject to the conditions herein, any such Revolving Loan prepaid prior to the Termination Date may be reborrowed as an additional Revolving Loan by the Borrowers pursuant to the terms of this Agreement.  Amounts prepaid or repaid in respect of Term Loans may not be reborrowed.

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2.2           Loans.

(a)           Subject to Sections 4.1 and 4.2 hereof, (i) all Revolving Loans shall be advanced and made ratably by the Revolving Lenders in accordance with the Revolving Lenders’ respective Revolving Commitments; and (ii) the Term Loans shall be made on the Closing Date by the Lenders upon the execution of this Agreement.  The Term Loans shall amortize as set forth in Section 2.6 hereof.

(b)           When requesting a Revolving Loan hereunder, the Borrowers shall give the Agent notice of a request for a Loan in accordance with Section 4.1(a) hereof; provided, however, no notice of a request for a Revolving Loan in accordance with Section 4.1(a) hereof shall be required to be presented by the Borrowers to the Agent if a check, wire transfer request or other item issued by any Borrower shall be presented for payment against any controlled disbursement account maintained with the Agent in connection with the account or accounts established and maintained by the Agent for the purposes of deposits and collections of Receivables in accordance with Section 6.15(a) hereof, and the Agent shall then cause the Lenders (subject to the settlement delay provisions of Section 2.2(f) hereof) to make a Revolving Loan for the purpose of crediting said controlled disbursement account in an amount sufficient to permit such check, wire transfer request or other item to be honored if (i) such Revolving Loan is to be made prior to the Termination Date, (ii) the Availability would be equal to or greater than zero after giving effect to such Revolving Loan, and, if applicable, the resulting payment of any Obligations to be contemporaneously paid with the proceeds of such requested Revolving Loan, and (iii) no Default or Event of Default shall have occurred which is then continuing.  Each such Revolving Loan advanced for the purpose of crediting any such controlled disbursement account shall be deemed to be a Revolving Credit Alternate Base Rate Borrowing until a Rate Selection Notice is otherwise properly presented for such Revolving Credit Alternate Base Rate Borrowing converting such borrowing to a Revolving Credit LIBOR Borrowing.  Notwithstanding anything to the contrary contained in Section 2.11, if any request for a Loan in accordance with Section 4.1(a) hereof requests Revolving Loans in the form of Alternate Base Rate Borrowings, the Agent may make a Swingline Loan available to the Borrowers in an aggregate amount not to exceed the amount of such requested Revolving Loans, and the aggregate amount of the corresponding requested Revolving Loans shall be reduced accordingly by the principal amount of such Swingline Loan.  Except as otherwise provided in the settlement delay provisions of Section 2.2(f) hereof, the Agent shall promptly advise the Lenders of any notice of a request for a Loan (other than a Swingline Loan) given pursuant to Section 4.1(a) or of any such Revolving Loan advanced for purposes of crediting any such controlled disbursement account and of each Lender’s portion of a requested borrowing (based on such Lender’s Commitment Percentage).

(c)           Except as otherwise provided or specified in the settlement delay provisions of Section 2.2(f) below, each Lender shall make its Revolving Loans available on the proposed dates thereof by causing its Applicable Lending Office to pay the amount required to the Agent at the Principal Office in immediately available funds not later than 1:00 p.m., and the Agent shall as soon as practicable, but in no event later than 5:00 p.m. on such date, credit the amount so received to a general deposit account designated and maintained by the applicable Borrower.  If a requested Revolving Loan shall not occur on the Closing Date or any date specified by the Borrowers as set forth in the applicable Request for Extension of Credit, as the case may be, because all of the conditions for such Revolving Loan set forth herein or in any of

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the other Loan Documents shall not have been met, the Agent shall return the amounts so received from the Lenders in respect of such requested Revolving Loan to the applicable Lenders as soon as practicable.

(d)           The obligations of the Lenders hereunder are several and not joint; therefore, notwithstanding anything herein to the contrary:  (i) no Revolving Lender shall be required to make Revolving Loans at any one time outstanding in excess of such Lender’s Revolving Commitment and no Term Lender shall be required to make Term Loans at any time after the Closing Date and in an amount in excess of such Term Lender’s Term Loan Commitment; (ii) if a Revolving Lender fails to make a Revolving Loan as and when required hereunder and the Borrowers subsequently make a repayment on the Revolving Loans, such repayment shall be shared among the non-defaulting Revolving Lenders in accordance with the respective Commitment Percentages until each non-defaulting Revolving Lender has received its Commitment Percentage of all of the outstanding Revolving Loans, after which the balance of such repayment shall be applied against such Defaulting Lender’s Commitment Percentage of the outstanding Revolving Loans; and (iii) the failure of any Revolving Lender to make any Revolving Loan or any payment in respect of its participation in Swingline Loans and Letter of Credit Advances shall not in itself relieve any other Revolving Lender of its obligation to lend hereunder (provided, that no Lender shall be responsible for the failure of any other Lender to make a Loan such other Lender is obligated to make hereunder).

(e)           The Revolving Loans made by the Lenders on any date and the Swing Loans made by the Swingline Lender shall be in integral multiples of $25,000; provided, however, that the LIBOR Borrowings made on any date shall be in minimum aggregate principal amounts of $3,000,000, with any increases over such minimal amount being in integral aggregate multiples of $1,000,000.

(f)            The arrangements between the Agent and the Lenders with respect to making and advancing the Revolving Loans and making payments under Letters of Credit shall be handled on the following basis:  no less than once a week, the Agent will provide each Lender with a statement showing, for the period of time since the date of the most recent of such statements previously provided, the aggregate principal amount of new Revolving Loans made to the Borrowers, the aggregate amount of new Letter of Credit Advances which have not been reimbursed, the aggregate face amount of new Letters of Credit issued for the account of the Borrowers, the aggregate principal amount of new Swingline Loans made to the Borrowers, the amount of remittances and payments actually collected and applied by the Agent to reduce the outstanding principal balance of the Revolving Loans, to reduce the outstanding principal balance of the Swingline Loans and to reimburse Letter of Credit Advances during such period and the outstanding principal balances of the Revolving Loans and the Swingline Loans and the aggregate Letter of Credit Exposure Amount outstanding at the end of such period.  If a Revolving Lender’s pro-rata share (based on such Revolving Lender’s Commitment Percentage) of the Revolving Loans and the unreimbursed Letter of Credit Advances made during such period exceeds such Revolving Lender’s pro-rata share of remittances and payments applied to reduce the Revolving Loans and reimburse Letter of Credit Advances during such period, the difference will be paid and made available in same day funds by such Revolving Lender to the Agent, and if such Revolving Lender’s pro-rata share (based on such Revolving Lender’s Commitment Percentage) of remittances and payments applied to reduce the Revolving Loans

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and reimburse Letter of Credit Advances during such period exceeds such Revolving Lender’s pro-rata share (based on such Revolving Lender’s Commitment Percentage) of the Revolving Loans and the unreimbursed Letter of Credit Advances made during such period, the difference will be paid and made available in same day funds by the Agent to such Revolving Lender.

(g)           The Agent shall render to the Borrowers’ Agent each month a statement of the Borrowers’ account of all transactions of the type described in Section 2.2(f) hereof, and all payments applied to the Term Loans, which shall be deemed to be correct and accepted by and be binding upon the Borrowers unless the Agent receives a written statement of the Borrowers’ exceptions to such account statement within thirty (30) days after such statement was rendered to the Borrowers’ Agent.

(h)           Notwithstanding anything to the contrary set forth in this Section 2.2 or in any other provision of this Agreement, the Agent, on its own initiative and in its sole discretion, but for the ratable benefit of the Lenders, may extend Revolving Loans or issue Letters of Credit in excess of Availability (collectively “Permitted Overadvances”) in an aggregate amount at any one time not exceeding $5,000,000 upon and subject to the following terms:  (i) no Permitted Overadvances shall be in excess of (A) the Total Revolving Commitment, less (B) the aggregate Revolving Loans, Letter of Credit Exposure Amount and Swingline Exposure at such time (excluding such Permitted Overadvances) less (C) the aggregate amount of the items specified in clauses (b)(ii) and (b)(iii) of the definition of “Availability”; (ii) no Permitted Overadvances shall be outstanding for more than thirty (30) consecutive days; and (iii) no more than two (2) Permitted Overadvances can be extended by the Agent during any 180 consecutive day period.  The extension of any Permitted Overadvance shall not operate as a waiver of any Default or Event of Default.

2.3           Commitment Fees.  In consideration of each Revolving Lender’s Revolving Commitment, the Borrowers agree to pay to the Agent for the account of each Revolving Lender a commitment fee (each a “Commitment Fee”) (computed on the basis of the actual number of days elapsed in a year composed of 360 days, subject to the terms of Section 10.6 hereof) in an amount equal to the product of (a) the Applicable Commitment Fee Percentage times (b) such Revolving Lender’s average Unused Commitment for the applicable calculation period; provided, however, that such Revolving Lender’s pro rata share of the Swingline Exposure shall be disregarded for purposes of calculating such Revolving Lender’s Unused Commitment for Commitment Fee purposes, except in respect of the Swingline Lender, whose Unused Commitment for Commitment Fee purposes shall be reduced by the Swingline Exposure.  The Commitment Fee shall be due and payable in arrears (i) on the last Business Day of each month prior to the Termination Date, and (ii) on the Termination Date, with each Commitment Fee to commence to accrue as of the date of this Agreement and to be effective as to any reduction in the Total Revolving Commitment pursuant to Section 2.4(a) below as of the date of any such decrease, and each Commitment Fee shall cease to accrue (except with respect to interest at the Default Rate on any unpaid portion thereof) on the Termination Date.  All past due Commitment Fees shall bear interest at the Default Rate and shall be payable upon demand by the Agent.

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2.4Termination and Reductions of Revolving Commitments.

(a)Upon at least five (5) Business Days’ prior irrevocable written notice to the Agent, the Borrowers may at any time in whole permanently terminate, or from time to time in part permanently reduce (except as noted below), the Total Revolving Commitment ratably among the Revolving Lenders in accordance with the amounts of their Revolving Commitments; provided, however, that the Total Revolving Commitment shall not be reduced at any time to an amount less than the aggregate of each Revolving Lender’s Current Sum outstanding at such time; provided, further, that the Borrowers shall not at any time reduce the Total Revolving Commitment pursuant to this Section 2.4(a) to an amount less than $75,000,000, except pursuant to a permanent termination in whole thereof.  Each partial reduction of the Total Revolving Commitment shall be in a minimum of $5,000,000, or an integral multiple of $1,000,000 in excess thereof.

(b)To effect the payment of any and all Commitment Fees and all other Obligations outstanding and owing hereunder or under any other Loan Documents, subject to the provisions of Sections 2.1 and 4.1 hereof, the Agent may, but shall not be obligated to, cause the Revolving Lenders to make a Revolving Loan or request that the Swingline Lender make a Swingline Loan if (i) such Revolving Loan or Swingline Loan, as applicable, is to be made prior to the Termination Date, (ii) the Availability would be equal to or greater than zero after giving effect to such Revolving Loan or Swingline Loan, as applicable, and the resulting payment of Commitment Fees to be contemporaneously paid with the proceeds of such Loan, and (iii) no Default or Event of Default shall have occurred which is then continuing.  The inability of the Agent to cause the payment of any such Commitment Fees or other Obligations in accordance with the preceding sentence shall not in any way whatsoever affect the Credit Parties’ obligation to otherwise pay such amounts in accordance with the applicable terms hereof or of any other Loan Documents.

2.5Mandatory and Voluntary Prepayments.

(a)If the Current Sum applicable to a Revolving Lender at any time exceeds such Revolving Lender’s Revolving Commitment, the Agent shall notify the Borrowers’ Agent of such excess amount (such notice being permitted to be given orally and need not be in writing) and the Borrowers shall immediately make a prepayment on such Revolving Lender’s Revolving Credit Note or otherwise reimburse such Revolving Lender for Letter of Credit Advances or cause one or more Swingline Loans to be prepaid or one or more Letters of Credit to be canceled and surrendered in an amount sufficient to reduce such Revolving Lender’s Current Sum to an amount no greater than such Revolving Lender’s Revolving Commitment.  Any prepayments required by this subparagraph (a) shall be applied to outstanding Revolving Credit Alternate Base Rate Borrowings up to the full amount thereof before such prepayments are applied to outstanding Revolving Credit LIBOR Borrowings (together with any Consequential Loss resulting from such prepayment).

(b)The Borrowers shall make prepayments of the Revolving Loans and the Swingline Loans from time to time so that the Availability equals or exceeds zero at all times.  Specifically, if the Availability at any time is less than zero (except for the existence of a Permitted Overadvance), the Agent shall notify the Borrowers’ Agent of the deficiency (such

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notice being permitted to be given orally and need not be in writing) and the Borrowers shall immediately make a prepayment on the Revolving Credit Notes or otherwise reimburse the Agent for Letter of Credit Advances or cause one or more Swingline Loans to be prepaid or one or more Letters of Credit to be canceled and surrendered in an amount sufficient to cause the Availability to be at least equal to zero (except for the existence of a Permitted Overadvance).  Any prepayments required by this subparagraph (b) shall be applied to outstanding Revolving Credit Alternate Base Rate Borrowings up to the full amount thereof before such prepayments are applied to outstanding Revolving Credit LIBOR Borrowings (together with any Consequential Loss resulting from such prepayment).  The Borrowers shall make prepayments of the Term Loans with the proceeds from the sale of Nova Scotia Woodlands, which proceeds shall be applied in accordance with Section 2.7(d).

(c)In addition to the mandatory prepayments required by Sections 2.5(a) and 2.5(b) above, the Borrowers shall have the right, at their option, to prepay any of the Loans in whole at any time or in part from time to time, without premium or penalty, except as otherwise provided in this Section 2.5 or of Section 2.9(a), 2.9(b) or 2.9(c) hereof.  Each prepayment of Swingline Loans, Revolving Credit Alternate Base Rate Borrowings or Term Loan Alternate Base Rate Borrowings may be made in any amount, and such prepayments shall be applied against the Revolving Credit Notes, the Swingline Note or the Term Notes, as applicable.  Prepayments under this subparagraph (c) shall be subject to the following additional conditions:

(i)In giving notice of prepayment as hereinafter provided, the Borrowers shall specify, for the purpose of paragraphs (ii) and (iii) immediately following, the manner of application of such prepayment as between Alternate Base Rate Borrowings and LIBOR Borrowings and as between Swingline Loans, Revolving Loans and Term Loans; provided, that in no event shall any LIBOR Borrowing be partially prepaid such that less than $3,000,000 remains outstanding.

(ii)Prepayments applied to any LIBOR Borrowing may be made on any Business Day, provided, that (A) the Borrowers shall have given the Agent at least three (3) Business Days’ prior irrevocable written or telecopied notice of such prepayment (other than automatic payments of Revolving Loans with proceeds from Receivables in accordance with the terms of Section 6.15(b), for which no prior notice of prepayment shall be required), specifying the principal amount of the LIBOR Borrowing to be prepaid, the particular LIBOR Borrowing to which such prepayment is to be applied and the prepayment date; and (B) if such prepayment is made on any day other than the last day of the Interest Period corresponding to the LIBOR Borrowing to be prepaid, the Borrowers shall pay upon demand directly to the Agent for the account of the applicable Lenders the Consequential Loss as a result of such prepayment.

(iii)Prepayments applied to any Alternate Base Rate Borrowing may be made on any Business Day, provided, that with respect thereto (other than automatic payments of Revolving Loans with proceeds from Receivables in accordance with the terms of Section 6.15(b), for which no prior notice of prepayment shall be required), the Borrowers shall have given the Agent prior irrevocable written notice or notice by telephone (which is to be promptly confirmed in writing) of any such prepayment on the

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Business Day of such prepayment, specifying the principal amount of the Alternate Base Rate Borrowing to be prepaid.

(d)If any notice of any prepayment has been given, the principal amount specified in such notice, together with (in the case of any prepayment of a LIBOR Borrowing) interest thereon to the date of prepayment and any resulting Consequential Loss, shall be due and payable on such prepayment date.

2.6Notes; Payments; Accounts.

(a)Subject to the provisions of Section 10.12 hereof relating to replacement and substitution of the Notes, (i) all Revolving Loans made by a Revolving Lender to the Borrowers shall be evidenced by a single Revolving Credit Note dated as of the Closing Date, delivered and payable to such Revolving Lender in a principal amount equal to such Revolving Lender’s Revolving Commitment as of the Closing Date, (ii) all Term Loans made by a Term Lender to the Borrowers shall be evidenced by a single Term Note dated as of the Closing Date, delivered and payable to such Term Lender in a principal amount equal to such Term Lender’s Term Loan Commitment as of the Closing Date, and (iii) all Swingline Loans made by the Swingline Lender to the Borrowers shall be evidenced by a single Swingline Note dated as of the Closing Date, delivered and payable to the Swingline Lender in a principal amount equal to $15,000,000.

(b)The outstanding principal balance of each and every Revolving Loan, as evidenced by the Revolving Credit Notes, shall mature and be fully due and payable on the Termination Date.  The outstanding principal balance of each and every Swingline Loan, as evidenced by the Swingline Note, shall mature and be fully due and payable on the earlier to occur of the Termination Date or the date such Swingline Loans are required to be paid with proceeds of Revolving Loans in accordance with Section 2.11(c).  The Borrowers shall make installment payments of principal on the Term Loans every three months in the principal amount of $1,250,000.00 commencing on April 30, 2010, and continuing on the last Business Day of each July, October, January and April thereafter, until the Term Loans have been paid in full.  To the extent not previously paid, all unpaid Term Loans shall be paid in full in cash by the Borrowers on the Termination Date.

(c)Subject to Section 10.6 hereof, the Borrowers hereby agree to pay accrued interest on the unpaid principal balance of the Loans on the Interest Payment Dates, commencing with the first of such dates to occur after the date of this Agreement.  After the Termination Date, accrued and unpaid interest on the Term Loans, the Revolving Loans and the Swingline Loans shall be payable on demand.

(d)To effect payment of accrued interest owing on the Loans as of the Interest Payment Dates, subject to the provisions of Sections 2.1 and 4.1 hereof, the Agent may, but shall not be obligated to, cause the Revolving Lenders to make a Revolving Loan or request that the Swingline Lender make a Swingline Loan to pay in full the amount of accrued interest owing and payable on the Loans as of the respective Interest Payment Date, if (i) such Revolving Loan or Swingline Loan, as applicable, is to be made prior to the Termination Date, (ii) the Availability would be equal to or greater than zero after giving effect to such Revolving Loan or

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Swingline Loan, as applicable, and the resulting payment of accrued interest to be contemporaneously paid with the proceeds of such Loan, and (iii) no Default or Event of Default shall have occurred which is then continuing.  The inability of the Agent to cause a payment of any accrued interest owing on the Loans on any Interest Payment Date in accordance with the preceding sentence shall not in any way whatsoever effect the Credit Parties’ obligation to otherwise pay such amounts in accordance with the applicable terms hereof or any other Loan Documents.

(e)The Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the type of each Loan made hereunder, and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(f)The entries made in the accounts maintained pursuant to paragraph (e) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of the Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement.

2.7Application of Payments and Prepayments.

(a)Except as otherwise provided in Sections 2.5(a) and 2.5(b) hereof, prepayments on the Revolving Credit Notes shall be applied to payment of the aggregate unpaid principal amounts of the Revolving Credit Notes, with the balance of any such prepayments, if any, being applied to accrued interest.  Payments of accrued interest on each Revolving Credit Note in accordance with Section 2.6(c) hereof shall be applied to the aggregate accrued interest then outstanding under the Revolving Credit Notes, while payment by the Borrowers of the aggregate principal amount outstanding under the Revolving Credit Notes on the Termination Date shall be applied to principal.

(b)Except as otherwise provided in Sections 2.5(a) and 2.5(b) hereof, prepayments on the Term Notes shall be applied to payment of the aggregate unpaid principal amounts of the Term Notes in inverse order of maturity, with the balance of any such prepayments, if any, being applied to accrued interest.  Payments of accrued interest on each Term Note in accordance with Section 2.6(c) hereof shall be applied to the aggregate accrued interest then outstanding under the Term Notes, while payment by the Borrowers of the aggregate principal amount outstanding under the Term Notes on the Termination Date shall be applied to principal.

(c)Except as otherwise provided in Sections 2.5(a) and 2.5(b) hereof, prepayments on the Swingline Note shall be applied to payment of the aggregate unpaid principal amount of the Swingline Note, with the balance of any such prepayments, if any, being applied to accrued interest.  Payments of accrued interest on the Swingline Note in accordance with Section 2.6(c) hereof shall be applied to the aggregate accrued interest then outstanding under the Swingline Note, while payment by the Borrowers of the aggregate principal amount outstanding under the Swingline Note on the Termination Date shall be applied to principal.

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(d)All payments remitted to the Agent and all such payments not relating to principal or interest of specific Loans, or not constituting payment of specific fees or other specific Obligations, and all proceeds of Collateral received by the Agent (or the Canadian Collateral Agent, as applicable), shall be applied, ratably, subject to the provisions of this Agreement, first, to pay any fees, indemnities or expense reimbursements then due to the Agent or the Canadian Collateral Agent from the Borrowers; second, to pay any fees or expense reimbursements then due to the Lenders from the Borrowers; third, to pay interest due in respect of all Swingline Loans; fourth, to pay interest due in respect of all Revolving Loans and Term Loans; fifth, to pay or prepay principal of the Swingline Loans; sixth, to pay or prepay principal of the Revolving Loans, the Term Loans and unpaid reimbursement obligations in respect of Letters of Credit, and thereafter to serve as cash collateral to be held by the Agent to secure the Letter of Credit Exposure Amount; seventh, to the payment of any other Obligation due to the Agent, the Canadian Collateral Agent or any Lender (excluding any amounts relating to Obligations under any Bank Product); eighth, to the payment of any Obligations under any Bank Product (excluding any amounts relating to Obligations under any Bank Product owed to any Non-Reporting Lender Party); and ninth, to the payment of any Obligations under any Bank Product owed to any Non-Reporting Lender Party.  Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrowers, or unless an Event of Default has occurred and is continuing, neither the Agent nor any Lender shall apply any payments which it receives to any LIBOR Borrowing, except (i) on the expiration date of the Interest Period applicable to any such LIBOR Borrowing, or (ii) in the event, and only to the extent, that there are no outstanding Alternate Base Rate Borrowings and the Borrowers have consented to such application.  Notwithstanding anything to the contrary contained in this Agreement, unless an Event of Default has occurred and is continuing, all proceeds from the sale of Nova Scotia Woodlands shall be applied first, to pay or prepay the outstanding principal of the Term Loans and then, to the Special Cash Collateral Account.  Notwithstanding anything to the contrary contained in this Agreement, unless an Event of Default has occurred and is continuing, all proceeds from the sale of Neenah Paper FR, LLC’s facility located in Ripon, California shall be deposited in the Special Cash Collateral Account; provided that, if such sale would result in a Borrowing Base Deficiency, then such proceeds shall be applied, first, to prepay the outstanding principal of the Revolving Loans in an amount sufficient to eliminate such Borrowing Base Deficiency, and second, as otherwise provided in this sentence.

(e)Except for any settlement delay provided or specified in Section 2.2(f) hereof, each payment or prepayment received by the Agent hereunder or under any Note for the account of a Lender shall be paid promptly to such Lender, in immediately available funds.  If the Agent fails to send to any Lender the product of such Lender’s Commitment Percentage, times the aggregate amount of any such payment or prepayment received by the Agent for the account of all the Lenders by the close of business on the date such payment was deemed received by the Agent in accordance with Section 2.7(f) below, the Agent shall pay to such Lender interest on such Lender’s pro-rata portion of such payment timely received by the Agent from such date of receipt by the Agent to the date that such Lender receives its pro-rata portion of such payment, such interest to accrue at the Federal Funds Effective Rate and to be payable upon written request from such Lender.

(f)Other than automatic payments of Obligations with proceeds from Receivables in accordance with the terms of Section 6.15(b), all sums payable by the Borrowers

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to the Agent hereunder or pursuant to the Notes or any of the other Loan Documents for its own account or the account of the Canadian Collateral Agent or the Lenders shall be payable in United States dollars in immediately available funds not later than 1:00 p.m. on the date such payment or prepayment is due and shall be made without set-off, counterclaim or deduction of any kind.  Any such payment or prepayment received and accepted by the Agent after 1:00 p.m. shall be considered for all purposes (including the payment of interest, to the extent permitted by law) as having been made on the next succeeding Business Day.  All such payments or prepayments shall be made at the Principal Office.  If any payment or prepayment becomes due and payable on a day which is not a Business Day, then the date for the payment thereof shall be extended to the next succeeding Business Day and interest shall be payable thereon at the then applicable rate per annum during such extension.

(g)If any Lender shall fail to make any payment required to be made by it hereunder, then the Agent may, in its sole discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Agent for the account of such Lender to satisfy such Lender’s obligations hereunder until all such unsatisfied obligations are fully paid.

2.8Interest Rates for Loans.

(a)Subject to Section 10.6 hereof, the Loans shall bear interest on their respective outstanding principal balances at the Alternate Base Rate; provided, that (i) all principal outstanding, whether then due and payable, after the occurrence of an Event of Default which has not been cured to the satisfaction of the Agent and the Required Lenders or waived in writing by the Agent and the Required Lenders shall bear interest at the Default Rate, which shall be due and payable upon demand, (ii) past due principal and interest shall bear interest at the Default Rate, which shall be payable on demand, and (iii) subject to the provisions hereof, the Borrowers shall have the option of having all or any portion of the principal balances from time to time outstanding under the Loans (other than Swingline Loans) bear interest until their respective maturities at a rate per annum equal to the Adjusted LIBOR Rate (together with the Alternate Base Rate, individually herein called an “Interest Option” and collectively called “Interest Options”).  The records of the Agent, with respect to Interest Options, Interest Periods and the amounts of Loans to which they are applicable shall be binding and conclusive, absent manifest error.  Interest on the Loans shall be calculated at the Alternate Base Rate, except where it is expressly provided pursuant to this Agreement that the Adjusted LIBOR Rate is to apply.

(b)The Borrowers shall have the right to designate or convert their Interest Options in accordance with the provisions hereof.  Provided no Default or Event of Default has occurred and is continuing, and subject to the provisions of the last sentence of Subsection 2.8(a) hereinabove and the provisions of Section 2.9 hereof, the Borrowers may elect to have the Adjusted LIBOR Rate apply or continue to apply to all or any portion of the principal balances of the Loans.  Each change in Interest Options shall be a conversion of the rate of interest applicable to the specified portion of the Loans, but such conversion alone shall not change the outstanding principal balance of the Loans.  The Interest Options shall be designated or converted in the manner provided below:

(i)The Borrowers’ Agent shall give the Agent notice by telephone, promptly confirmed by written notice (the “Rate Selection Notice”) substantially in the

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form of Exhibit F hereto.  Each such telephone and written notice shall specify the amount and type of borrowings which are the subject of the designation; the amount and type of borrowings into which such borrowings are to be converted or for which an Interest Option is designated; the proposed date for the designation or conversion (which, in the case of conversion of LIBOR Borrowings, shall be the last day of the Interest Period applicable thereto) and the Interest Period or Periods, if any, selected by the Borrowers.  Such notice by telephone shall be irrevocable and shall be given to the Agent no later than the applicable Rate Selection Date.  If (A) a new Revolving Loan is to be a Revolving Credit LIBOR Borrowing, (B) an existing Revolving Credit LIBOR Borrowing is maturing at the time that a new Revolving Loan is being requested and the Borrowers are electing to have such existing portion of the outstanding principal balance of the Revolving Loans going forward bear interest at the same Interest Option and for the same Interest Period as the new Revolving Loan, or (C) a portion of a Revolving Credit Alternate Base Rate Borrowing is to be converted so as to bear interest at the same Interest Option and for the same Interest Period as the new Revolving Loan, then the Rate Selection Notice shall be included in the Request for Extension of Credit applicable to the new Revolving Loan, which shall be given to the Agent no later than the applicable Rate Selection Date.

(ii)No more than eight (8) LIBOR Borrowings and corresponding Interest Periods shall be outstanding at any one time.  Each LIBOR Borrowing shall be in a minimum aggregate principal amount of at least $3,000,000, with any increases over such minimum amount being in integral aggregate multiples of $1,000,000.

(iii)Principal included in any borrowing shall not be included in any other borrowing which exists at the same time.

(iv)Each designation or conversion shall occur on a Business Day.

(v)Except as provided in Section 2.9 hereof, no LIBOR Borrowing shall be converted on any day other than the last day of the applicable Interest Period.

(vi)The Agent shall promptly advise the Lenders of any Rate Selection Notice given pursuant to this Section 2.8 and of each Lender’s pro-rata portion of such designation or conversion hereunder.

(c)All interest and fees (including the Commitment Fee, but excluding any prepayment fee owing pursuant to Section 2.4 hereof) will be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.

(d)For the purpose of complying with the Interest Act (Canada), it is expressly stated that:

(i)where interest is calculated pursuant hereto at a rate based on a 360 day or a 365 day period, the yearly rate or percentage of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the year (365 or 366, as the case may be) divided by 360 or 365, as the case may be; and

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(ii)the rates of interest and the Applicable Margin and other rates specified in this Agreement are nominal rates and not effective rates or yields, and the parties hereto acknowledge that there is a material distinction between the nominal and effective rates of interest, that they are capable of making the calculations necessary to compare such rates and that the principle of deemed reinvestment of interest shall not apply to any calculations of interest hereunder.

(e)No Lien under any Loan Document on any Real Property Asset in Canada of any Credit Party shall secure any interest payable at the Default Rate, provided that this Section 2.8(e) shall not affect the Lien on such Canadian Real Property Asset with respect to any other Obligation, nor shall this Section 2.8(e) affect the secured status of interest payable at the Default Rate with respect to any other Collateral.

2.9Special Provisions Applicable to LIBOR Borrowings.

(a)If, after the date of this Agreement, the adoption of any applicable Legal Requirement or any change in any applicable Legal Requirement or in the interpretation or administration thereof by any Governmental Authority or compliance by the Agent or any Lender with any request or directive (whether or not having the force of law) of any Governmental Authority shall at any time make it unlawful or impracticable for any Lender to permit the establishment of or to maintain any LIBOR Borrowing, the commitment of the Lenders to establish or maintain the Adjusted LIBOR Rate affected by such adoption or change shall forthwith be canceled and the Borrowers shall forthwith, upon demand by the Agent to the Borrowers’ Agent, (i) convert the Adjusted LIBOR Rate with respect to which such demand was made to the Alternate Base Rate; (ii) pay all accrued and unpaid interest to date on the amount so converted; and (iii) pay any amounts required to compensate the Agent and the Lenders for any additional cost or expense which the Agent or any Lender may incur as a result of such adoption of or change in such Legal Requirement or in the interpretation or administration thereof and any Consequential Loss which the Agent, the Canadian Collateral Agent or any Lender may incur as a result of such conversion to the Alternate Base Rate.  If, when the Agent so notifies the Borrowers’ Agent, the Borrowers have given a Rate Selection Notice specifying one or more borrowings of the type with respect to which such demand was made but the selected Interest Period or Interest Periods has not yet begun, such Rate Selection Notice shall be deemed to be of no force and effect, as if never made, and the balance of the Loans specified in such Rate Selection Notice shall bear interest at the Alternate Base Rate until a different available Interest Option shall be designated in accordance herewith.

(b)If, after the date of this Agreement, the adoption of any applicable Legal Requirement or any change in any applicable Legal Requirement or in the interpretation or administration thereof by any Governmental Authority or compliance by the Agent or any Lender with any request or directive (whether or not having the force of law) from any Governmental Authority shall at any time as a result of any portion of the principal balance of the Loans being maintained on the basis of the Adjusted LIBOR Rate:

(i)subject any Lender to any tax (including any United States interest equalization tax), levy, impost, duty, charge, fee, or any deduction or withholding for any tax, levy, impost, duty, charge or fee on or from the payment due under any LIBOR

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Borrowing or other amounts due hereunder, other than (A) Indemnifiable Taxes and Other Taxes (as to which Section 10.17 shall govern) or (B) income taxes and franchise taxes in lieu of income taxes imposed on the applicable Lender by the jurisdiction (or any political subdivision thereof) under which such Lender is organized or maintains a lending office; or

(ii)change the basis of taxation of payments due from the Borrowers to the Agent or any Lender under any LIBOR Borrowing (otherwise than by a change in the rate of taxation of the overall net income of the Agent or such Lender); or

(iii)impose, modify, increase or deem applicable any reserve requirement (excluding that portion of any reserve requirement included in the calculation of the Statutory Reserves), special deposit requirement or similar requirement (including state law requirements and Regulation D) imposed, modified, increased or deemed applicable by any Governmental Authority against assets held by the Agent or any Lender, or against deposits or accounts in or for the account of the Agent or any Lender, or against loans made by the Agent or any Lender, or against any other funds, obligations or other Property owned or held by the Agent or any Lender; or

(iv)impose on the Agent or any Lender any other materially restrictive or limiting condition regarding any LIBOR Borrowing;

and the result of any of the foregoing is to increase the cost to any Lender of agreeing to make or of making, renewing or maintaining such borrowing on the basis of the Adjusted LIBOR Rate, or reduce the amount of principal or interest received by any Lender, then, upon demand by such Lender, the Borrowers shall pay to such Lender, from time to time as specified by such Lender, additional amounts which shall compensate such Lender for such increased cost or reduced amount.  Such Lender will promptly notify the Borrowers’ Agent in writing of any event, upon becoming actually aware of it, which will entitle any Lender to additional amounts pursuant to this paragraph.  Such Lender’s determination of the amount of any such increased cost, increased reserve requirement or reduced amount shall be conclusive and binding, absent manifest error, provided that the calculation thereof and reason therefore is certified and is set forth in reasonable detail in such certification by such Lender.

The Borrowers shall have the right, if any Lender issues any notice referred to in the preceding paragraph, upon three (3) Business Days’ notice to the Agent, either (A) to repay in full (but not in part) any borrowing with respect to which such notice was given, together with any accrued interest thereon, or (B) to convert the Adjusted LIBOR Rate in effect with respect to such borrowing from such Lender to the Alternate Base Rate; provided, that any such repayment or conversion shall be accompanied by payment of (x) the amount required to compensate the appropriate Lender or Lenders for the increased cost or reduced amount referred to in the preceding paragraph; (y) all accrued and unpaid interest to date on the amount so repaid or converted; and (z) any Consequential Loss which may be incurred as a result of such repayment or conversion.  Additionally, if any Lender issues any notice referred to in the preceding paragraph, the Borrowers shall also have the corresponding rights in Section 10.16(c).

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(c)If for any reason with respect to any Interest Period the Agent shall have determined (which determination shall be conclusive and binding upon the Borrowers) that:  (i) the Agent is unable through its customary general practices to determine a rate at which the Agent is offered deposits in United States dollars by prime banks in the London interbank market, in the appropriate amount for the appropriate period, or by reason of circumstances affecting the London interbank market generally, the Agent is not being offered deposits for the applicable Interest Period and in an amount equal to the amount of the Agent’s pro-rata portion of any LIBOR Borrowing requested by the Borrowers, or (ii) the Adjusted LIBOR Rate will not adequately and fairly reflect the cost to any Lender of making and maintaining any LIBOR Borrowing hereunder for any proposed Interest Period, then the Agent shall give the Borrowers’ Agent notice thereof explaining in reasonable detail the circumstances giving rise to such notice, and thereupon, (A) any Rate Selection Notice previously given by the Borrowers designating an Adjusted LIBOR Rate which has not commenced as of the date of such notice from the Agent shall be deemed for all purposes hereof to be of no force and effect, as if never given, and (B) until the circumstances giving rise to such notice from the Agent no longer exist, each Rate Selection Notice requesting an Adjusted LIBOR Rate shall be deemed a request for an Alternate Base Rate Borrowing, and each outstanding LIBOR Borrowing then in effect shall be converted, without any notice to or from the Borrowers, upon the termination of the Interest Period then in effect to an Alternate Base Rate Borrowing.

(d)The Borrowers hereby agree (without duplication of any other indemnity obligation hereunder) to indemnify the Agent, the Canadian Collateral Agent and each of the Lenders against and hold each of them harmless from any Consequential Loss which it may incur or sustain as a consequence of (i) any prepayment (mandatory or optional) of any LIBOR Borrowing, (ii) any acceleration of the Loans or exercise of remedies upon an Event of Default that results in the repayment or conversion of any LIBOR Borrowing, or any increase in the cost of maintaining any LIBOR Borrowing, or (iii) any failure by the Borrowers to convert or to borrow any LIBOR Borrowing on the date specified by the Borrowers.  This indemnity shall survive termination of the Commitment and this Agreement.  A certificate as to any additional amounts payable to the Agent, the Canadian Collateral Agent or any Lender pursuant to this paragraph, detailing the basis therefor and submitted by the Agent, the Canadian Collateral Agent or such Lender to the Borrowers’ Agent shall be conclusive and binding upon the Borrowers, absent manifest error, provided the calculation thereof is set forth in reasonable detail in such notice.

(e)If the Borrowers request quotes of the Adjusted LIBOR Rate for different Interest Periods being considered for election by the Borrowers, the Agent will use reasonable efforts to provide such quotes to the Borrowers promptly.  However, all such quotes provided shall be representative only and shall not be binding on the Agent or any Lender, nor shall they be determinative, directly or indirectly, of any Adjusted LIBOR Rate or any component of any such rate, nor will the Borrowers’ failure to receive or the Agent’s failure to provide any requested quote or quotes either (i) excuse or extend the time for performance of any obligation of the Borrowers or for the exercise of any right, option or election of the Borrowers or (ii) impose any duty or liability on the Agent or any Lender.  If the Borrowers request a list of the Business Days in any calendar month, the Agent will use reasonable efforts to provide such list promptly.  However, any such list provided shall be understood to identify only those days which the Agent believes in good faith at the time such list is prepared will be the Business Days for

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such month.  The Agent shall not have any liability for any failure to provide, delay in providing, error or mistake in or omission from, any such quote or list.

(f)With respect to any Lender having a LIBOR Lending Office which differs from its Domestic Lending Office, all Loans advanced by such Lender’s LIBOR Lending Office shall be deemed to have been made by such Lender and the obligation of the Borrowers to repay such Loans shall nevertheless be to such Lender and shall be deemed held by such Lender, to the extent of such portions of the Loan, for the account of such Lender’s LIBOR Lending Office.

(g)Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of the Loans hereunder in any manner it sees fit, it being understood, however, that for the purposes of this Agreement, all determinations hereunder shall be made as if such Lender had actually funded and maintained its portion of each LIBOR Borrowing during each Interest Period for the Loans through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the LIBOR Rate for such Interest Period.

(h)The Borrowers’ obligation to pay increased costs and Consequential Loss with regard to each LIBOR Borrowing as specified in this Section 2.9 hereof shall, in accordance with Section 10.7, survive termination of this Agreement.

2.10Letters of Credit.

(a)Subject to the terms and conditions contained herein, the Borrowers shall have the right to utilize a portion of the Revolving Commitment from time to time prior to the Termination Date to obtain from the Agent one or more Letters of Credit for the account of the Borrowers in such amounts and in favor of such beneficiaries as the Borrowers from time to time shall request; provided, that in no event shall the Agent have any obligation to issue any Letter of Credit if (i) the face amount of such Letter of Credit, plus the Letter of Credit Exposure Amount at such time would exceed $10,000,000, (ii) the face amount of such Letter of Credit would exceed Availability, (iii) such Letter of Credit would have an expiry date beyond the earlier to occur of (A) five (5) Business Days prior to the scheduled Termination Date (subject to Section 2.10(j)), (B) with respect to Standby Letters of Credit, one full year after the issuance date of such Standby Letter of Credit, or (C) with respect to Trade Letters of Credit, one hundred eighty (180) days after the issuance date of such Trade Letter of Credit, (iv) such Letter of Credit is not in a form and does not contain terms satisfactory to the Agent in its reasonable credit judgment, (v) the Borrowers have not executed and delivered such Applications and other instruments and agreements relating to such Letter of Credit as the Agent shall have reasonably requested, (vi) an Default or Event of Default has occurred and is continuing, or (vii) such Letter of Credit is not being issued or has not been issued in connection with transactions occurring in the ordinary course of business of the Credit Parties or any of their Subsidiaries.  Each Letter of Credit may be issued for the account of or used by the Borrowers or any of their Subsidiaries that are Credit Parties, but the Credit Parties shall have full liability for each Letter of Credit.  The Existing Letters of Credit, all of which are identified on Schedule 2.10(a), shall be deemed to have been issued under this Agreement.  The above limitations on the tenor of any Letter of Credit issued (or in the case of Existing Letters of Credit deemed issued) hereunder shall not be deemed to be violated by the inclusion in such Letter of Credit of an “evergreen clause”

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providing for the automatic renewal of such Letter of Credit for successive periods not exceeding one year in each instance, absent notice to the beneficiary and the account party of the Issuing Bank’s election not to renew such Letter of Credit at least thirty (30) days prior to the then effective expiry date of such Letter of Credit.

(b)If requesting the issuance of any Letter of Credit, the Borrowers’ Agent on behalf of the Borrowers shall give at least three (3) Business Days’ prior written notice to the Agent, at its Domestic Lending Office, which written notice shall be the requisite Application for a Letter of Credit on the Agent’s customary form.  In accordance with the provisions of Section 2.2(f) hereof, the Agent shall periodically notify each Lender that a Letter of Credit has been requested in the amount reflected in such Application and inform such Lender of the amount of its pro-rata portion of such proposed Letter of Credit (based upon such Lender’s Commitment Percentage).

(c)Simultaneously with the Agent’s issuance and delivery of any Letter of Credit, the Agent shall be deemed, without further action, to have sold to each Revolving Lender, and each such Revolving Lender shall be deemed, without further action by any party hereto, to have purchased from the Agent, a participation interest (which participation shall be nonrecourse to the Agent) equal to such other Revolving Lender’s Commitment Percentage at such time in such Letter of Credit and all of the Letter of Credit Exposure Amount related to such Letter of Credit.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in each Letter of Credit, as well as its obligation to make the payments specified in this Section 2.10 and the right of the Agent to receive the same in the manner specified herein, are absolute and unconditional and shall not be affected by any circumstance whatsoever, including without limitation, the occurrence and continuance of a Default or Event of Default hereunder, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(d)The Borrowers promise to repay, to the order of the Agent, the amount of all Letter of Credit Advances.  To effect repayment of any such Letter of Credit Advance, the Agent shall automatically satisfy such Letter of Credit Advance (subject to the terms and conditions of Sections 2.1 and 4.1 hereof) by causing the Revolving Lenders to make a Revolving Loan or the Swingline Lender to make a Swingline Loan if (i) such Letter of Credit Advance is (and such Revolving Loan or Swingline Loan, as applicable, is to be) made prior to the Termination Date, (ii) the Availability would be equal to or greater than zero after giving effect to such Revolving Loan or Swingline Loan, as applicable, and the resulting repayment of such Letter of Credit Advance to be contemporaneously paid with the proceeds of such Loan, and (iii) no Default or Event of Default shall have occurred which is then continuing, and any such Revolving Loan or Swingline Loan shall bear interest pursuant to Section 2.8(a) at the Alternate Base Rate.  If any Letter of Credit Advance cannot be so satisfied, such Letter of Credit Advance shall be considered for all purposes as a demand obligation owing by the Borrowers to the Agent, and each such Letter of Credit Advance shall bear interest from the date thereof at the Default Rate, without notice of presentment, demand, protest or other formalities of any kind (said past due interest on such Letter of Credit Advance being payable on demand).  The unavailability of a Revolving Loan or Swingline Loan to effect repayment of any such Letter of Credit Advance in accordance with the second sentence of this Section 2.10(d) shall not in any way whatsoever affect the Borrowers’ obligation to pay each Letter of Credit Advance on

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demand and to pay interest at the Default Rate on the amount of such unreimbursed Letter of Credit Advance.  Except for any settlement delay provided in Section 2.2(f), the Agent will pay to each Revolving Lender such Revolving Lender’s Commitment Percentage of all amounts received from the Borrowers by the Agent, if any, for application, in whole or in part, against the Letter of Credit Advances in respect to any Letter of Credit, but only to the extent such Revolving Lender has made its full pro-rata payment of each drawing under the Letter of Credit to which such Letter of Credit Advance relates.  All rights, powers, benefits and privileges of this Agreement with respect to the Revolving Loans, all security therefor (including the Collateral) and guaranties thereof (including the Guaranties) and all restrictions, provisions for repayment or acceleration and all other covenants, warranties, representations and agreements of the Borrowers contained in this Agreement with respect to the Revolving Loans shall apply to such Letter of Credit Advances.

(e)In consideration of the issuance of each Letter of Credit pursuant to the provisions of this Section 2.10, the Borrowers agree to pay (subject to Section 10.6 hereof) to the Agent for the ratable benefit of the Revolving Lenders a letter of credit fee (computed on the basis of the actual number of days elapsed in a year composed of 360 days) in an amount equal to the product of (i) the Applicable Margin in effect for Revolving Credit LIBOR Borrowings for the applicable period times (ii) the undrawn amount of the applicable Letter of Credit, with each letter of credit fee to commence to accrue as of the date of issuance of such Letter of Credit and to be effective as to any reductions in the undrawn amount of such Letter of Credit as of the date of any such reduction (whether resulting from payments thereunder by the Agent, by agreement of the beneficiary thereunder or automatically by the terms of the Letter of Credit).  Such letter of credit fee shall be due and payable, in arrears, on the last Business Day of each calendar month and on the Termination Date.

(f)The Borrowers hereby agree to pay to the Agent for the Agent’s sole benefit a fronting fee equal to 0.25% on the face amount of each Letter of Credit issued hereunder.  Fronting fees shall be payable to the Agent at its Principal Office in immediately available funds on the date of issuance of such Letter of Credit.  Notwithstanding anything to the contrary contained herein, no fronting fees shall be due and payable with respect to the Existing Letters of Credit. All past due fronting fees shall bear interest at the Default Rate and shall be payable upon demand by the Agent.  The Borrowers also hereby agree to pay to the Agent for the Agent’s sole benefit any and all other issuance, administrative, amendment, negotiation, payment and other normal and customary fees which are charged by the Agent in connection with the issuance or negotiation of any of Letter of Credit and the presentation or payment of any draw under any such Letter of Credit, with all of such amounts being due and payable to the Agent upon demand.

(g)The obligations of the Borrowers under this Agreement in respect of the Letters of Credit and all Letter of Credit Advances are absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including the following circumstances:

(i)any lack of validity or enforceability of this Agreement, any Letter of Credit or any Loan Document;

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(ii)any amendment or waiver of default under or any consent to departure from the terms of this Agreement or any Letter of Credit without the express prior written consent of the Agent;

(iii)the existence of any claim, set-off, defense or other right which any beneficiary or any transferee of any Letter of Credit (or any entities for whom any such beneficiary or any such transferee may be acting), or any Person (other than the Agent or the Lenders) may have, whether in connection with this Agreement, the Letters of Credit, the transactions contemplated hereby or any unrelated transaction;

(iv)any statement, draft, certificate, or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; provided, that the Agent will examine each document presented under each Letter of Credit to ascertain that such document appears on its face to comply with the terms thereof; and

(v)any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

In the event that any restriction or limitation is imposed upon or determined or held to be applicable to the Agent, any Revolving Lender or any Credit Party by, under or pursuant to any Legal Requirement now or hereafter in effect or by reason of any interpretation thereof by any Governmental Authority, which in the respective sole judgment of the Agent or any Revolving Lender would prevent any Revolving Lender from legally incurring liability under a Letter of Credit issued or proposed to be issued hereunder, then the Agent shall give prompt written notice thereof to the Borrowers’ Agent, whereupon the Agent shall have no obligation to issue any additional Letters of Credit then or at any time thereafter.  In addition, if as a result of any Regulatory Change which imposes, modifies or deems applicable (x) any tax, reserve, special deposit or similar requirement against any Letters of Credit issued or participated to by any Revolving Lender; (y) any fee, expense or assessment against the Letters of Credit issued by the Agent or any Lender for deposit insurance, or (z) any other charge, expense or condition which increases the actual cost to the Agent or any Revolving Lender of issuing or maintaining such Letters of Credit, or reduces any amount receivable by the Agent or any Revolving Lender hereunder in respect of any Letter of Credit or any participation therein (which increase in cost, or reduction in amount receivable, shall be the result of the Agent’s or such Revolving Lender’s reasonable allocation of the aggregate of such increases or reductions resulting from such event), then the Borrowers (subject to Section 10.6 hereof) shall pay to the Agent or such Revolving Lender, upon demand and from time to time, amounts sufficient to compensate such Person for each such increase from the effective date of such increase to the date of demand therefor.  Each such demand shall be accompanied by a certificate setting forth in reasonable detail the calculation of the amount then being demanded in accordance with the preceding sentence and each such certificate shall be conclusive absent manifest error.

(h)THE BORROWERS HEREBY INDEMNIFY AND HOLD HARMLESS EACH LENDER, THE AGENT AND THE CANADIAN COLLATERAL AGENT FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES, LIABILITIES,

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COSTS OR EXPENSES WHICH SUCH LENDER, THE AGENT OR THE CANADIAN COLLATERAL AGENT MAY INCUR (OR WHICH MAY BE CLAIMED AGAINST SUCH LENDER, THE AGENT OR THE CANADIAN COLLATERAL AGENT BY ANY PERSON WHATSOEVER) IN CONNECTION WITH THE EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY UNDER ANY LETTER OF CREDIT, INCLUDING ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH THE AGENT, THE CANADIAN COLLATERAL AGENT OR SUCH LENDER, AS THE CASE MAY BE, MAY INCUR (WHETHER INCURRED AS A RESULT OF, ITS OWN NEGLIGENCE OR OTHERWISE) BY REASON OF OR IN CONNECTION WITH THE FAILURE OF ANY OTHER LENDER (WHETHER AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) TO FULFILL OR COMPLY WITH ITS OBLIGATIONS TO THE AGENT, THE CANADIAN COLLATERAL AGENT OR SUCH LENDER, AS THE CASE MAY BE, HEREUNDER (BUT NOTHING HEREIN CONTAINED SHALL AFFECT ANY RIGHTS THE BORROWERS MAY HAVE AGAINST SUCH DEFAULTING LENDER); PROVIDED, THAT THE BORROWERS SHALL NOT BE REQUIRED TO INDEMNIFY ANY LENDER, THE AGENT OR THE CANADIAN COLLATERAL AGENT FOR ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES TO THE EXTENT, BUT ONLY TO THE EXTENT, THAT THE SAME ARE DETERMINED BY A FINAL JUDICIAL DECISION TO HAVE BEEN CAUSED BY (i) THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION OR (ii) SUCH LENDER’S, THE AGENT’S OR THE CANADIAN COLLATERAL AGENT’S (AS THE CASE MAY BE) FAILURE TO PAY UNDER ANY LETTER OF CREDIT AFTER THE PRESENTATION TO IT OF A REQUEST REQUIRED TO BE PAID UNDER APPLICABLE LAW.  NOTHING IN THIS SECTION 2.10(h) IS INTENDED TO LIMIT THE OBLIGATIONS OF THE BORROWERS UNDER ANY OTHER PROVISION OF THIS AGREEMENT.

(i)Subject to the settlement delay procedures of Section 2.2(f), the Agent shall give telephonic or facsimile notice to the Revolving Lenders of the receipt and amount of any draft presented under any Letter of Credit and the date on which payment thereon will be made, and each of the Revolving Lenders shall, by 1:00 p.m. on the date such payment is to be made under such Letter of Credit, pay in immediately available funds, an amount equal to the product of (i) such Revolving Lender’s Commitment Percentage times (ii) the amount of such payment to be made by the Agent to the beneficiary under such Letter of Credit.  Any Revolving Lender failing to timely deliver its requisite portion of any such payment shall deliver the same to the Agent as soon as possible thereafter, together with interest on such amount for each day from the due date for such payment to the date of payment by such Revolving Lender to the Agent of such amount at a rate of interest per annum equal to the Federal Funds Effective Rate for such period.  Each Revolving Lender hereby absolutely and unconditionally assumes, as primary obligor and not as a surety, and agrees to pay and discharge, and to indemnify and hold the Agent harmless from liability and respect of, such Revolving Lender’s pro-rata share (based on such Revolving Lender’s Commitment Percentage) of any amounts owing by such Revolving Lender to the Agent in accordance with the immediately preceding sentence.  Nothing herein shall be deemed to require any Revolving Lender to pay to the Agent any amount as reimbursement for any payment made by the Agent to acquire (discount) for its own account prior to maturity thereof any acceptance created under a Letter of Credit.

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(j)Notwithstanding the contrary provisions of Section 2.10(a)(iii)(A), Letters of Credit may be issued with expiry dates later than the fifth Business Day prior to the scheduled Termination Date upon the terms and conditions set forth in this Section 2.10(j) (any such Letter of Credit, an “Extended Facility Letter of Credit”).  No Extended Facility Letter of Credit shall have an expiry date later than one (1) year after the scheduled Termination Date.  From the date thirty (30) days prior to the scheduled Termination Date and at all times thereafter when any Extended Facility Letters of Credit are outstanding, the Borrower shall maintain cash collateral in a special purpose collateral account in the name of the Borrower, but subject to the sole dominion and control of the Agent, in an amount not less than 110% of the aggregate Letter of Credit Exposure Amount relating to all Extended Facility Letters of Credit then outstanding.

(k)Cash Collateralization.  If any Event of Default shall occur and be continuing, on the Business Day that the Borrowers’ Agent receives notice from the Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with Letter of Credit Exposure Amount representing greater than 50% of the total Letter of Credit Exposure Amount) demanding the deposit of cash collateral pursuant to this paragraph, the Borrowers shall deposit in an account with the Agent, in the name of the Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in cash equal to 110% of the Letter of Credit Exposure Amount as of such date plus accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to any Borrower described in clause (o) or (p) of Section 8.1.  Such deposit shall be held by the Agent as collateral for the payment and performance of the Obligations.  The Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account and the Borrowers hereby grant the Agent a security interest in the LC Collateral Account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Agent and at the Borrowers’ risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Agent to reimburse a Revolving Lender for Letter of Credit Advances for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrowers for the Letter of Credit Exposure Amount at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with Letter of Credit Exposure Amount representing greater than 50% of the total Letter of Credit Exposure Amount), be applied to satisfy other Obligations.  If the Borrowers are required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrowers within three Business Days after all such Events of Default have been cured or waived.

2.11Swingline Loans.

(a)Subject to the terms and conditions hereof, the Swingline Lender may, in its sole discretion, make loans for the Swingline Lender’s own account (each a “Swingline Loan”) to the extent the same would otherwise have been available to the Borrowers under the Revolving Commitment in an aggregate principal amount at any one time outstanding up to, but not exceeding, $15,000,000; provided, however, that at no time shall the Swingline Lender make

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any Swingline Loan to the extent that, after giving effect to such Swingline Loan, the aggregate amount of each Lender’s Current Sum at such time would exceed the Total Revolving Commitment; and provided further, however, that the Swingline Lender shall not make any Swingline Loan if any Event of Default exists of which the Swingline Lender has actual knowledge.  Each Swingline Loan shall be a Revolving Credit Alternate Base Rate Borrowing and shall in any event mature no later than the Termination Date.  Subject to the conditions herein and within the limits set forth in the first sentence of this paragraph, any Swingline Loan prepaid prior to the Termination Date may be reborrowed as an additional Swingline Loan by the Borrowers pursuant to the terms of this Agreement; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan; and provided further that such refinance restriction shall not apply with respect to any “Swingline Loan” under the Existing Credit Agreement outstanding on the Closing Date.

(b)To request a Swingline Loan, the Borrowers’ Agent shall notify the Agent of such request by telephone (confirmed by telecopy), not later than 1:00 p.m., on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan.  The Agent will promptly advise the Swingline Lender of any such notice received from the Borrowers’ Agent, and subject to the terms of this Agreement, the Swingline Lender may make a Swingline Loan available to the Borrowers by means of a credit to the general deposit account of the Borrowers specified in such request with the Swingline Lender by 5:00 p.m. on the requested date of such Swingline Loan.

(c)The Swingline Lender may demand at any time that each Revolving Lender pay to the Agent, for the account of the Swingline Lender, in the manner provided below, such Revolving Lender’s Commitment Percentage of all or a portion of the outstanding Swingline Loans, which demand shall be made through the Agent, shall be in writing and shall specify the outstanding principal amount of Swingline Loans demanded to be paid.  The Agent shall forward notice of each such demand to each Revolving Lender on the day such demand is received by the Agent (except that any such notice or demand received by the Agent after 2:00 p.m. on any Business Day or any such demand received on a day that is not a Business Day shall not be required to be forwarded to the Revolving Lenders by the Agent until the next succeeding Business Day), together with a statement prepared by the Agent specifying the amount of each Revolving Lender’s Commitment Percentage of the aggregate principal amount of the Swingline Loans stated to be outstanding in such notice or demanded to be paid pursuant to such demand, and, notwithstanding whether or not the conditions precedent set forth in Sections 4.1 or 4.2 shall have been satisfied (which conditions precedent the Revolving Lenders hereby irrevocably waive), each Revolving Lender shall, before 11:00 a.m. on the Business Day next succeeding the date of such Revolving Lender’s receipt of such notice, make available to the Agent, in immediately available funds, for the account of the Swingline Lender, the amount specified in such statement.  Upon such payment by a Revolving Lender, such Revolving Lender shall, except as provided in Section 2.11(d) below, be deemed to have made a Revolving Loan to the Borrowers in the amount of such payment.  The Borrowers agree that all such Revolving Loans so deemed made shall be deemed to have been requested by them and direct that all proceeds thereof shall be used to repay the Swingline Loans to the Swingline Lender, and the Agent shall use such funds received from the Revolving Lenders to repay the Swingline Loans to the Swingline Lender.  To the extent that any Revolving Lender fails to make such payment

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available to the Agent for the account of the Swingline Lender, the Borrowers shall repay such Swingline Loan on demand.

(d)Upon the occurrence of any Event of Default described in Sections 8.1(n) through 8.1(s) each Revolving Lender shall acquire, without recourse or warranty, an undivided participation in each Swingline Loan otherwise required to be repaid by such Revolving Lender pursuant to Section 2.11(c) above, which participation shall be in a principal amount equal to such Revolving Lender’s Commitment Percentage of such Swingline Loan, by paying to the Swingline Lender on the date on which such RevolvingLenderwouldotherwisehavebeenrequiredtomakeapaymentinrespectofsuchSwinglineLoanpursuanttoSection2.11(c)above, in immediately available funds, an amount equal to such Revolving Lender’s Commitment Percentage of such Swingline Loan.  If all or part of such amount is not in fact made available by such Revolving Lender to the Swingline Lender on such date, the Swingline Lender shall be entitled to recover any such unpaid amount on demand from such Revolving Lender together with interest accrued from such date at the Federal Funds Effective Rate for the first Business Day after such payment was due and thereafter at the rate of interest then applicable to Alternate Base Rate Borrowings.

(e)From and after the date on which any Revolving Lender (i) is deemed to have made a Revolving Loan pursuant to Section 2.11(c) above with respect to any Swingline Loan or (ii) purchases an undivided participation interest in a Swingline Loan pursuant to Section 2.11(d) above, the Swingline Lender shall promptly distribute to such Revolving Lender such Revolving Lender’s Commitment Percentage of all payments of principal of and interest received by the Swingline Lender on account of such Swingline Loan other than those received from a Revolving Lender pursuant to Sections 2.11(c) or 2.11(d) above.

(f)The Agent, on behalf of the Swingline Lender, shall request settlement (a “Settlement”) with the Revolving Lenders on at least a weekly basis or on any date that the Agent elects, by notifying the Revolving Lenders of such requested Settlement by facsimile, telephone, or e-mail no later than 12:00 noon on the date of such requested Settlement (the “Settlement Date”).  Each Revolving Lender (other than the Swingline Lender, in the case of the Swingline Loans) shall transfer the amount of such Revolving Lender’s Commitment Percentage of the outstanding principal amount of the applicable Swingline Loan with respect to which Settlement is requested to the Agent, to such account of the Agent as the Administrative Agent may designate, not later than 2:00 p.m. on such Settlement Date.  Settlements may occur during the existence of a Default and whether or not the applicable conditions precedent set forth in Section 4.1 have then been satisfied.  Such amounts transferred to the Agent shall be applied against the amounts of the Swingline Lender’s Swingline Loans and, together with Swingline Lender’s Commitment Percentage of such Swingline Loan, shall constitute Revolving Loans of such Revolving Lenders, respectively.  If any such amount is not transferred to the Agent by any Revolving Lender on such Settlement Date, the Swingline Lender shall be entitled to recover such amount on demand from such Revolving Lender together with interest thereon as specified in Section 2.12(b).

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2.12Pro-Rata Treatment.

(a)Except to the extent otherwise provided herein (including without limitation, as specified in Sections 2.2(f), 2.10(b) and 2.12(c) hereof):  (i) each borrowing from the Revolving Lenders under Section 2.1 hereof shall be made, each payment of Commitment Fees shall be made and applied for the account of the Revolving Lenders, and each termination or reduction of the Revolving Commitments of the Revolving Lenders under Section 2.4 hereof shall be applied, pro-rata, according to each Revolving Lender’s Commitment Percentage; (ii) each payment or prepayment by the Borrowers of principal of or interest on Loans (other than Swingline Loans) shall be made to the Agent for the account of the Lenders pro-rata in accordance with the respective unpaid principal amounts of such Loans held by such Lenders, and amounts payable with respect to Swingline Loans shall be paid only to the Swingline Lender; (iii) the Revolving Lenders (other than the Agent in its capacity as a Revolving Lender) shall purchase from the Agent participations in the Letters of Credit to the extent of their respective Commitment Percentages upon issuance by the Agent of each Letter of Credit as otherwise provided for herein, and (iv) the Revolving Lenders (other than the Swingline Lender) shall purchase from the Swingline Lender participations in the Swingline Loans to the extent of their respective Commitment Percentages upon request by the Swingline Lender as otherwise provided for herein.

(b)Except for any settlement delay provided or specified in Section 2.2(f), unless the Agent shall have been notified in writing by any Revolving Lender prior to the date of a proposed Loan that such Revolving Lender will not make the amount that would constitute such Revolving Lender’s Commitment Percentage of such Revolving Loan on such date available to the Agent at the Principal Office, the Agent may assume that such Revolving Lender has made such amount available to the Agent on such date, and the Agent may, in reliance upon such assumption and subject to the terms and conditions of this Agreement, make such amount available to the Borrowers by depositing the same, in immediately available funds, in a general deposit account maintained by the Borrowers and designated by the Borrower’s Agent in the applicable Request for Extension of Credit.  Any Revolving Lender failing to timely deliver its requisite portion of such Revolving Loan shall deliver the same to the Agent as soon as possible thereafter, together with interest on such amount for each day from the due date for such payment to the date of payment by such Revolving Lender to the Agent of such amount at a rate of interest per annum equal to the Federal Funds Effective Rate for such period.  In addition, the Borrowers hereby agree that upon demand by the Agent, the Borrowers shall reimburse the Agent for any such amount which any Revolving Lender has failed to timely deliver to the Agent, but which the Agent may have previously made available to the Borrowers in accordance with the other provisions of this Section 2.12(b).  If a requested Revolving Loan shall not occur on any date specified by the Borrowers as set forth in the applicable Request for Extension of Credit because all of the conditions for such Revolving Loan set forth herein or in any of the other Loan Documents shall have not been met, the Agent shall return the amounts so received from the Revolving Lenders in respect of such requested Revolving Loan to the applicable Revolving Lenders as soon as practicable.

(c)Notwithstanding any provision to the contrary contained in this Section 2.12 or in any other provision hereof, each Revolving Lender shall only receive interest

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upon and a portion of the Commitment Fee paid hereunder based upon the amount of funds actually advanced by such Revolving Lender to Borrowers from time to time.

2.13Sharing of Payments, Etc.  The Credit Parties agree that, in addition to (and without limitation of) any right of set-off, bankers’ lien or counterclaim a Lender may otherwise have, each Lender shall be entitled, at its option, to offset balances held by it for the account of any of the Credit Parties at any of its offices against any principal of or interest on any of such Lender’s Loans to the Borrowers hereunder, such Revolving Lender’s Commitment Percentage of the Letter of Credit Exposure Amounts or the Swingline Exposure, or any other Obligation of the Credit Parties owing to any such Lender under any of the Loan Documents regardless of whether such offset balances are then due to the Credit Parties, in which case it shall promptly notify the Borrowers’ Agent and the Agent thereof, provided, that such Lender’s failure to give such notice shall not affect the validity thereof.  If a Lender shall obtain payment (other than the Swingline Lender obtaining payment of all or any portion of a Swingline Loan) of any principal of or interest on any Loan made by it under this Agreement, any Letter of Credit Exposure Amount, any Swingline Exposure or other obligation then due to such Lender under any Loan Document, through the exercise of any right of set-off (including, without limitation, any right of set-off or lien granted under Section 10.19 hereof), banker’s lien, counterclaim or similar right, or otherwise, it shall promptly purchase from the other Lenders participations in the Loans made by, the Letter of Credit Exposure Amount or the Swingline Exposure of, or the other obligations of the Credit Parties hereunder or thereunder of, the other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable to the end that all the Lenders shall share the benefit of such payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such benefit) pro-rata in accordance with their respective Commitment Percentages.  To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored.  The Credit Parties agree, to the fullest extent they may effectively do so under applicable law, that any Lender so purchasing a participation in the Loans made by, Letter of Credit Exposure Amount or the Swingline Exposure of, or other obligations hereunder of, the other Lenders may exercise all rights of set-off, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of said Loans, Letter of Credit Exposure Amount, Swingline Exposure or other obligations in the amount of such participation.  Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Credit Parties.

2.14Recapture.  If on any Interest Payment Date the Agent does not receive for the account of one or more Lenders payment in full of interest computed at the Alternate Base Rate and/or the Adjusted LIBOR Rate, as applicable (computed without regard to any limitation by the Highest Lawful Rate), because the Alternate Base Rate and/or the Adjusted LIBOR Rate, as applicable (so computed), exceeds or has exceeded the Highest Lawful Rate applicable to such Lenders, the Borrowers shall pay to the Agent for the account of such Lenders, in addition to interest otherwise required, on each Interest Payment Date thereafter, the Excess Interest Amount (calculated as of each such subsequent Interest Payment Date); provided, that in no event shall the Borrowers be required to pay, for any computation period, interest at a rate exceeding the Highest Lawful Rate applicable to such Lenders during such period.  As used herein, the term “Excess Interest Amount” shall mean, on any day, the amount by which (a) the amount of all

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interest which would have accrued prior to such day on the outstanding principal of the Notes of the applicable Lender (had the Alternate Base Rate and/or the Adjusted LIBOR Rate, as applicable, at all times been in effect without limitation by the Highest Lawful Rate applicable to such Lender) exceeds (b) the aggregate amount of interest actually paid to the Agent for the account of such Lender on its Notes on or prior to such day.

2.15Increase of Revolving Commitments.

(a)If no Default or Event of Default or Material Adverse Effect shall have occurred and be continuing, the Borrowers may at any time prior to the Termination Date request one or more increases of the Revolving Commitments by notice to the Agent in writing of the amount of such proposed increase (each such notice, a “Revolving Commitment Increase Notice”); provided, however, that, (i) the Revolving Commitment of any Revolving Lender may not be increased without such Revolving Lender’s consent, (ii) the aggregate amount of the Revolving Commitments as so increased shall not exceed $150,000,000, and (iii) the Revolving Commitments may not be increased without the consent of the Agent (which consent shall not be unreasonably withheld or delayed).  Any such Revolving Commitment Increase Notice delivered with respect to any proposed increase in the Revolving Commitments must offer each Revolving Lender an opportunity to subscribe for its Commitment Percentage (with respect to the existing Revolving Commitments (prior to such increase)) of the increased Revolving Commitments.  The Agent shall, within five (5) Business Days after receipt of a Revolving Commitment Increase Notice, notify each Lender of such request.  Each Revolving Lender desiring to increase its Revolving Commitment shall notify the Agent in writing no later than ten (10) Business Days after receipt of notice from the Agent.  Any Revolving Lender that does not notify the Agent within the time period specified above that it will increase its Revolving Commitment will be deemed to have rejected such offer.  Any agreement by a Lender to increase its Revolving Commitment shall be irrevocable.

(b)If any proposed increase in the Revolving Commitments is not fully subscribed by the existing Revolving Lenders pursuant to the procedure outlined in clause (a) preceding, the Borrowers may, in their sole discretion, but with the consent of the Agent as to any Person that is not at such time a Revolving Lender (which consent shall not be unreasonably withheld or delayed), offer to any existing Revolving Lender or to one or more additional banks or financial institutions the opportunity to participate in all or a portion of such unsubscribed portion of the Revolving Commitments, by notifying the Agent; provided, that the Revolving Commitment of any New Lender shall not be less than $15,000,000 and shall be in an integral multiple of $5,000,000.  Promptly and in any event within five (5) Business Days after receipt of notice from the Borrowers of their desire to offer such unsubscribed commitments to certain existing Revolving Lenders or to the additional banks or financial institutions identified therein, the Agent shall notify such proposed lenders of the opportunity to participate in all or a portion of such unsubscribed portion of the increased Revolving Commitments.

(c)Any existing Revolving Lender that accepts the Borrowers’ offer to increase its Revolving Commitment shall execute a Revolving Commitment Increase Agreement with the Borrowers, the Guarantors and the Agent, whereupon such Lender shall be bound by, and entitled to the benefits of, this Agreement with respect to the full amount of its Revolving Commitment as so increased.

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(d)Any additional bank or financial institution which is not an existing Revolving Lender and which accepts the Borrowers’ offer to participate in the increased Revolving Commitments shall execute and deliver to the Agent, the Borrowers and the Guarantors a New Lender Agreement setting forth its Revolving Commitment (subject to the limitations on the amounts thereof set forth herein), and upon the effectiveness of such New Lender Agreement such bank or financial institution (a “New Lender”) shall become a Revolving Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and the signature pages hereof shall be deemed to be amended to add the name of such New Lender.

(e)Upon any increase in the Revolving Commitments pursuant to this Section 2.15, Schedule 1.1A shall be deemed amended to reflect the Revolving Commitment of each Revolving Lender (including any New Lender) as thereby increased.

2.16Defaulting Lenders.

Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)if any Swingline Exposure or Letter of Credit Exposure Amount exists at the time a Lender becomes a Defaulting Lender then:

(i)all or any part of such Swingline Exposure and Letter of Credit Exposure Amount shall be reallocated among the non-Defaulting Lenders in accordance with their respective Commitment Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’ Revolving Exposures plus such Defaulting Lender’s Swingline Exposure and Letter of Credit Exposure Amount does not exceed the total of all non-Defaulting Lenders’ Commitments and (y) the conditions set forth in Section 4.1 are satisfied at such time; and

(ii)if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrowers shall within one Business Day following notice by the Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize such Defaulting Lender’s Letter of Credit Exposure Amount (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.10(k) for so long as such Letter of Credit Exposure Amount is outstanding; and

(iii)if the Letter of Credit Exposure Amount of the non-Defaulting Lenders is reallocated pursuant to this Section 2.16(a), then the fees payable to the Revolving Lenders pursuant to Section 2.3 and Section 2.9(e) shall be adjusted in accordance with such non-Defaulting Lenders’ Commitment Percentages.

(b)so long as any Revolving Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Agent shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Revolving Commitments of the non-Defaulting Lenders and/or cash

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collateral will be provided by the Borrowers in accordance with Section 2.15(a), and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.15(a)(i) (and Defaulting Lenders shall not participate therein).

(c)In the event that the Agent, the Borrower, and the Swingline Lender each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and Letter of Credit Exposure Amount of the Lenders shall be readjusted to reflect the inclusion of such Revolving Lender’s Revolving Commitment and on such date such Revolving Lender shall purchase at par such of the Revolving Loans of the other Revolving Lenders (other than Swingline Loans) as the Agent shall determine may be necessary in order for such Revolving Lender to hold such Revolving Loans in accordance with its Commitment Percentage.

3.Collateral.

3.1Security Documents.  The Loans and all other Obligations shall be secured by the Collateral and the Agent (or the Canadian Collateral Agent, as applicable) and the Lenders are entitled to the benefits thereof.  The applicable Credit Parties shall duly execute and deliver the Security Documents, all consents of third parties necessary to permit the effective granting of the Liens created thereby (subject only to Liens permitted under Section 7.2 hereof), and other documents, consistent with the terms of this Agreement and the other Loan Documents, as may be reasonably required by the Agent (or the Canadian Collateral Agent, as applicable) to grant to the Agent (or the Canadian Collateral Agent, as applicable), for the ratable benefit of the Lender Parties, a valid, perfected and enforceable first priority Lien on and security interest in the Collateral (subject only to the Liens permitted under Section 7.2 hereof), including without limitation, any and all original stock certificates, stock transfer powers, assignments and other documents and instruments necessary or desirable under the laws of any applicable jurisdiction with regard to the Stock covered by any Security Agreement.

3.2Filing and Recording.  The Credit Parties shall, at their sole cost and expense, cooperate with the Agent (or the Canadian Collateral Agent, as applicable) in causing all financing statements, Intellectual Property Security Agreements and other Security Documents pursuant to this Agreement to be duly recorded and/or filed or otherwise perfected in all places necessary or desirable in the Agent’s (or the Canadian Collateral Agent, as applicable) discretion to perfect the Liens of the Agent (or the Canadian Collateral Agent, as applicable), and the Credit Parties shall take such other actions as the Agent (or the Canadian Collateral Agent, as applicable) may reasonably request, in order to perfect and protect the Liens of the Agent (or the Canadian Collateral Agent, as applicable), for the ratable benefit of the Lender Parties, in the Collateral.  The Credit Parties, to the extent permitted by law, hereby authorize the Agent (and the Canadian Collateral Agent, as applicable) to file any financing statement in respect of any Lien created pursuant to the Security Documents which may at any time be required to perfect such Liens or which, in the reasonable opinion of the Agent (or the Canadian Collateral Agent, as applicable), may at any time be desirable, although the same may have been executed only by the Agent (or the Canadian Collateral Agent, as applicable) or, at the option of the Agent (or the Canadian Collateral Agent, as applicable), to sign such financing statement on behalf of the applicable Credit Parties (to the extent that execution by them is necessary or desirable in the

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Agent’s (or the Canadian Collateral Agent’s, as applicable) discretion), and file the same, and the Credit Parties hereby irrevocably designate each of the Agent and the Canadian Collateral Agent, as applicable, their respective agents, representatives and designees as its agent and attorney-in-fact for this purpose.  In the event that any re-recording or refiling thereof (or the filing of any statements of continuation or assignment of any financing statement) is required to protect and preserve such Lien, the Credit Parties shall, at the Credit Parties’ cost and expense, cause the same to be recorded and/or refiled at the time and in the manner requested by the Agent (or the Canadian Collateral Agent, as applicable).

3.3Special Cash Collateral Account.  All amounts on deposit from time to time in the Special Cash Collateral Account shall constitute part of the Collateral hereunder and shall not constitute payment of the Obligations until applied thereto as hereinafter provided.  Any income received with respect to amounts from time to time on deposit in the Special Cash Collateral Account, including any interest, shall be deposited in the Collection Account.  The Agent shall at all times have control and complete dominion over the Special Cash Collateral Account and all amounts on deposit therein; provided, however, that the Borrowers may, upon the written request of Borrowers’ Agent delivered to the Agent, from time to time withdraw and use the requested funds (a) to pay, prepay or repay Obligations in respect of the Revolving Loans, and (b) and, subject to obtaining the Agent’s prior written consent, for any other purpose not herein prohibited.  The Agent agrees that it will not unreasonably withhold, delay or condition such consent so long as (A) Availability, as determined by the Agent, is not less than $35,000,000 at the time of and immediately after giving effect to such withdrawal and application of funds, and (B) Borrowers have not made a request (that was approved by the Agent) to withdraw Pledged Cash pursuant to clause (b) of this Section within the immediately preceding thirty (30) days.  Any use of Pledged Cash by the Borrowers other than as permitted in the foregoing provisions of this Section shall require the consent of the Required Lenders only.

4.Conditions.

4.1All Loans.  The obligation of each Lender to make any Loan (other than a Swingline Loan, which shall be governed exclusively by the terms of Section 2.11) and the obligation of the Agent to issue any Letter of Credit is subject to the satisfaction of the following conditions:

(a)the Agent shall have received the following, all of which shall be duly executed and in Proper Form:  (i) in the case of a Loan, other than a Revolving Loan for the purposes described in Sections 2.2(b), 2.4(b), 2.6(d) and 2.10(d),

(A)with respect to each Alternate Base Rate Borrowing, Agent shall have received by no later than 1:00 p.m. on the applicable Rate Selection Date, telephonic notice from the Borrowers’ Agent of the proposed date and amount of such Loan, and by no later than 2:00 p.m. on the applicable Rate Selection Date, a Request for Extension of Credit, signed by a Responsible Officer or Cash Officer of the Borrowers’ Agent (or any person designated in writing by a Responsible Officer or Cash Officer of the Borrowers’ Agent), and

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(B)with respect to each LIBOR Borrowing, Agent shall have received by no later than 12:00 noon on the applicable Rate Selection Date, telephonic notice from the Borrowers’ Agent of the proposed date and amount of such Loan, and no later than 1:00 p.m. on the applicable Rate Selection Date, a Request for Extension of Credit, signed by a Responsible Officer or Cash Officer of the Borrowers’ Agent (or any person designated in writing by a Responsible Officer or Cash Officer of the Borrowers’ Agent),

or (ii), in the case of issuance of a Letter of Credit (other than the Existing Letters of Credit), (A) a completed Application (as may be required by the Agent) signed by a Responsible Officer or Cash Officer of the Borrowers’ Agent (or any person designated in writing by a Responsible Officer or Cash Officer of the Borrowers’ Agent) by 12:00 noon three (3) Business Days prior to the proposed date of issuance of such Letter of Credit; (B) payment of the first letter of credit fee as and by the time required in Section 2.10 of this Agreement; and (C) such other Applications, certificates and other documents as the Agent may reasonably require;

along with, in each case, such financial information as the Agent may require to substantiate compliance with all financial covenants contained herein by the Borrowers (or, as applicable, to demonstrate that compliance with any such financial covenant is not then required) if the Agent believes at such time that any of the financial covenants contained herein are then applicable and that the Borrowers are not then in compliance therewith;

(b)all representations and warranties of the Borrowers and any other Person set forth in this Agreement and in any other Loan Document shall be true and correct in all material respects with the same effect as though made on and as of such date, except for (i) those representations and warranties which relate to a specified date, which shall be true and correct as of such date and (ii) those changes in such representations and warranties otherwise permitted by the terms of this Agreement;

(c)there shall have occurred no Material Adverse Effect, after giving effect to the requested Loan(s) or Letter(s) of Credit;

(d)no Default or Event of Default shall have occurred and be continuing;

(e)if requested by the Agent, it shall have received a certificate executed by the Financial Officer or other Responsible Officer of each Credit Party as to the compliance with subparagraphs (b) through (d) above;

(f)the making of such Loan or the issuance of such Letter of Credit, shall not be prohibited by, or subject the Agent, the Canadian Collateral Agent or any Lender to, any penalty or onerous condition under any Legal Requirement; and

(g)the Borrowers shall have paid all legal fees and expenses of the type described in Section 10.9 hereof for which invoices have been presented through the date of such Loan or the issuance of such Letter of Credit.

4.2First Loan or Letter of Credit.  In addition to the matters described in Section 4.1 hereof, the obligation of any Lender to make the Term Loans, the initial Revolving Loan or the

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obligation of the Agent to issue the first Letter of Credit is subject to the receipt by the Agent of each of the following, on or before November 30, 2009 (except as otherwise specifically provided in any Loan Document, including Schedule 4.3), in Proper Form:

(a)the Notes executed by the Borrowers;

(b)the Reaffirmation Agreements executed by the Credit Parties, as applicable;

(c)a certificate of corporate resolutions and incumbency executed by the Secretary or an Assistant Secretary of each Borrower dated as of the date of this Agreement, authorizing (i) each Borrower’s entering into the transactions contemplated hereby and (ii) the delivery by each Borrower of the Loan Documents to be executed and delivered by such Borrower;

(d)a certificate of corporate resolutions and incumbency executed by the Secretary or an Assistant Secretary of the Guarantor, dated as of the date of this Agreement, authorizing the Guarantor to (i) enter into the transactions contemplated hereby and (ii) deliver the Loan Documents to be executed and delivered by the Guarantor;

(e)certified copies of the Organizational Documents of each Credit Party;

(f)certificates from the Secretary of State or other appropriate public official as to the continued existence and good standing of each Credit Party in its applicable jurisdiction of formation, dated within thirty (30) days of the Closing Date, together, if requested by the Agent, with confirmation by telephone or telecopy (where available) on the Closing Date from such official(s) as to such matters;

(g)certificates from the appropriate public officials of those jurisdictions where the nature of each Borrower’s business makes it necessary or desirable to be qualified to do business as a foreign corporation, which jurisdictions are set forth on Schedule 5.8, as to the good standing and qualification as a foreign corporation (as may be appropriate) of the Credit Parties, dated within sixty (60) days of the Closing Date;

(h)the financial statements described in Section 5.2 hereof, together with any management letters, if any, received for such financial statements;

(i)the most recent schedule and aging of Receivables of the Credit Parties (dated within thirty (30) days of the Closing Date);

(j)a copy of the Agent’s field examination of the books and records of the Credit Parties and their Subsidiaries and the results of such field examination;

(k)favorable legal opinions (i) from Bryan Cave LLP, outside counsel for the Credit Parties, (ii) McInnes Cooper, special Nova Scotia counsel to the Credit Parties, (iii) Foley & Lardner LLP, special Michigan and Wisconsin counsel to the Credit Parties, (iv) Bryan Cave LLP, special California counsel to the Credit Parties, (v) Bryan Cave LLP, special German counsel to the Credit Parties in connection with the pledge of certain Stock in Neenah Germany,

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(vi) Houthoff Buruma London B.V., special Dutch counsel to the Credit Parties in connection with the pledge of certain Stock in FinCo, and (vii) internal counsel to the Credit Parties, each dated the Closing Date, each addressed to the Agent, the Canadian Collateral Agent and the Lenders and acceptable in all respects to the Agent in its reasonable credit judgment;

(l)certificates of insurance satisfactory to the Agent in all respects evidencing the existence of all insurance required to be maintained by the Credit Parties pursuant to Section 6.7 of this Agreement and all other terms of the Security Documents;

(m)the applicable Credit Parties, JPMorgan and the applicable financial institutions listed in Schedule 5.29 attached hereto shall have entered into the Tri-Party Agreements;

(n)access agreements and waivers or subordinations of landlord and warehouseman’s liens (whether statutory or contractual) held by any owner of each real property location leased and any operator of each public warehouse location utilized by any Credit Party set forth on Schedule 4.2(n), in each case reasonably satisfactory to the Agent;

(o)evidence satisfactory to the Agent that no Material Adverse Effect shall have occurred since December 31, 2008;

(p)a certificate of a Responsible Officer of the Credit Parties in the form of Exhibit J annexed hereto certifying on behalf of the Credit Parties as to the solvency of the Credit Parties and their Subsidiaries after giving effect to the funding of the Term Loans and any initial Revolving Loans and related matters set forth in Section 5.19;

(q)the Perfection Certificate, dated the Closing Date, substantially in the form of Exhibit L hereto, duly executed by each Credit Party;

(r)(i) a fully executed (and, where required, notarized) Mortgage or amendment to Mortgage (each a “Closing Date Mortgage” and, collectively, the “Closing Date Mortgages”), in proper form for recording in the applicable jurisdiction, encumbering each Real Property Asset owned in fee as of the Closing Date and listed on Schedule 4.2(r)-1 (each such Real Property Asset, a “Closing Date Mortgaged Property”); (ii) with respect to each Closing Date Mortgaged Property located in the United States, such surveys or surveyor or owner certificates as the Agent may reasonably require; (iii) in the case of each Material Leasehold Property existing as of the Closing Date copies of all leases between any Credit Party and any landlord or tenant, and any modifications, supplements or amendments thereto; (iv) (A) evidence reasonably acceptable to the Agent as to whether any Closing Date Mortgaged Property that is a Mill Property owned by the Credit Parties is a Flood Hazard Property, and (B) if there are any such Flood Hazard Properties, evidence that the applicable Credit Party has obtained flood hazard insurance as required by law with respect to each Flood Hazard Property in reasonable amounts approved by the Agent, or evidence reasonably acceptable to the Agent that such insurance is not available; (v) (A) an ALTA loan title insurance policy (or the Canadian equivalent or an endorsement in Proper Form to any existing ALTA loan title insurance policy issued by the Title Company in favor of the Agent) or unconditional commitment therefor (a “Closing Date Mortgage Policy”) issued by the Title Company with respect to each Closing

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Date Mortgaged Property owned by any Credit Party, in an amount not less than the appraised fair market value of such Closing Date Mortgaged Property, insuring fee simple title to the Closing Date Mortgaged Property vested in such Credit Party and assuring the Agent (or the Canadian Collateral Agent, as applicable) that the Closing Date Mortgage creates a valid and enforceable first priority Lien on such Closing Date Mortgaged Property, subject only to any standard or other exceptions as may be reasonably acceptable to the Agent and which appear as exceptions on Schedule B to the applicable Closing Date Mortgage Policy, which Closing Date Mortgage Policy (1) shall include endorsements (to the extent available) for customary matters reasonably requested by the Agent (or the Canadian Collateral Agent, as applicable), including, but not limited to, those endorsements listed on Schedule 4.2(r)-2 and (2) shall provide for affirmative insurance and such reinsurance as may be reasonable and customary and as the Agent may reasonably request, all of the foregoing in form and substance reasonably satisfactory to the Agent; and (B) evidence satisfactory to the Agent that such Credit Party has (1) delivered to the Title Company all certificates and affidavits required by the Title Company in connection with the issuance of the Closing Date Mortgage Policy and (2) paid to the Title Company or to the appropriate Governmental Authorities all expenses and premiums of the Title Company in connection with the issuance of the Closing Date Mortgage Policy and all recording and stamp taxes (including mortgage recording taxes, fees and other charges and intangible taxes) payable in connection with recording the Closing Date Mortgage in the appropriate real estate records; (vi) copies of all recorded documents listed as exceptions to title or otherwise referred to in the Closing Date Mortgage Policy and any other such documents as Agent shall reasonably request; (vii) appraisals, together with reliance letters where applicable, concerning each Closing Date Mortgaged Property owned by the Credit Parties from one or more independent real estate appraisers reasonably satisfactory to the Agent, which appraisals shall set forth the Net Recovery Value Percentage of such Closing Date Mortgaged Property and be in form, scope and substance reasonably satisfactory to the Agent and shall satisfy the requirements of any applicable laws and regulation; and (viii) evidence reasonably satisfactory to the Agent that there are no material taxes, levies, duties, imposts, deductions, charges (including water and sewer charges), withholdings, assessments or impositions of any kind which have been due and payable for more than thirty (30) days with respect to such Closing Date Mortgaged Property (to the extent the same are not addressed by endorsements provided under a Closing Date Mortgage Policy), except those for which extensions have been obtained and except for those which have been disclosed to the Agent and which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained in accordance with GAAP;

(s)a copy of the Credit Parties’ hedging policies for protection against fluctuations in the value of dollars relative to Canadian Dollars, which hedging policies shall be reasonably satisfactory to the Agent;

(t)Availability as of the Closing Date, as determined by the Agent, shall not be less than $35,000,000 after giving effect to the Term Loans and the application of the proceeds thereof, the initial Revolving Loan made or to be made, and the Existing Letters of Credit and after payment of fees and expenses for such transactions; and

(u)all other Loan Documents and any other instruments or documents consistent with the terms of this Agreement and relating to the transactions contemplated hereby

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as the Agent may reasonably request, executed by the applicable Credit Parties or any other Person required by the Agent;

and subject to the further conditions that, at the time of the Term Loan and the initial Revolving Loan, (i) the ownership, corporate structure, solvency and capitalization of the Credit Parties and their Subsidiaries shall be satisfactory to the Lenders in all respects; (ii) the Agent, the Canadian Collateral Agent and the Lenders shall have had the opportunity, if they elect, to examine the books of account and other records and files of the Credit Parties and their Subsidiaries and to make copies thereof, and to conduct a preclosing audit which shall include, without limitation, verification of Eligible Receivables, Eligible Inventory, Eligible Equipment and Eligible Real Estate, verification of satisfactory status of customer and supplier accounts, payment of payroll taxes and accounts payable and formulation of an opening Borrowing Base as of the Closing Date (with the results of such examination and audits to have been satisfactory to the Agent, the Canadian Collateral Agent and the Lenders in all respects); (iii) all such actions as the Agent or the Canadian Collateral Agent shall reasonably require to perfect the Liens created pursuant to the Security Documents shall have been taken, including without limitation, (A) the delivery to the Agent (or the Canadian Collateral Agent, as applicable) of all Property with respect to which possession is necessary or desirable for the purpose of perfecting such Liens, (B) with respect to Collateral covered by the Security Agreements, the filing of appropriately completed and duly executed Uniform Commercial Code, PPSA (Nova Scotia) or other applicable financing statements, (C) with respect to all Collateral constituting Stock in any Credit Party or any of their Subsidiaries, delivery to the Agent (or the Canadian Collateral Agent, as applicable) of original stock certificates and stock transfer powers with regard to all of the applicable Stock, and (D) with respect to all Collateral consisting of Intellectual Property, the recording of appropriate documents in the U.S. Patent and Trademark Office, the U.S. Library of Congress, the United States Copyright Office, the Canadian Intellectual Property Office, and any domain name registry, as applicable; (iv) the Agent (or the Canadian Collateral Agent, as applicable) shall also have received evidence reasonably satisfactory to it that the Liens created by the Security Documents constitute first priority Liens (except for any Liens expressly provided for in Sections 7.2(a), 7.2(c), 7.2(d), 7.2(e) and 7.2(f) below), including without limitation, satisfactory Uniform Commercial Code, PPSA (Nova Scotia) or other applicable search reports and satisfactory authorizations to file releases of Liens or termination statements with respect to any existing prior Liens to be released; (v) the terms, conditions and amount of all Indebtedness of each Credit Party shall be acceptable to the Agent; (vi) the Borrowers shall contemporaneously pay on the Closing Date all fees owed to the Agent, the Canadian Collateral Agent and the Lenders by the Borrowers under this Agreement or under any commitment letters or fee letters entered into between the Borrowers or any of its Affiliates and JPMorgan or any of its Affiliates, including without limitation, reasonable legal fees and expenses described in Section 10.9 or otherwise for which invoices have been presented; and (vii) all other legal matters incident to the transactions herein contemplated shall be reasonably satisfactory to counsel (including Canadian counsel) for the Agent and the Canadian Collateral Agent and respective counsel for each of the Lenders.

4.3Post-Closing Deliveries.  Borrowers shall deliver or cause to be delivered to the Agent each of the items set forth on Schedule 4.3, in each case on or before the date specified in such Schedule for such item or prior to such later date as the Agent may determine and agree to in writing in its sole discretion.  Borrowers’ failure to deliver each such item on or before the

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date specified (as such date may be extended by the Agent in writing in its sole discretion) shall constitute an immediate Event of Default.

5.Representations and Warranties.

To induce the Agent, the Canadian Collateral Agent and the Lenders to enter into this Agreement, the Credit Parties represent and warrant to the Agent, the Canadian Collateral Agent and the Lenders, as of the date of this Agreement and as of the date any Loan is made hereunder or any Letter of Credit is issued hereunder, as follows:

5.1Organization.  Each Credit Party and each of their then existing Subsidiaries are duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation; has all power and authority to own its respective Property and assets and to conduct its respective businesses as presently conducted; and is duly qualified to do business and in good standing in each and every state or provincial jurisdiction where its respective business requires such qualification, except for those jurisdictions in which the failure to qualify and/or be in good standing does not cause a Material Adverse Effect to occur.

5.2Financial Statements.

(a)The Consolidated financial statements of the Credit Parties and their Subsidiaries delivered to the Agent and the Lenders in connection with this Agreement, including without limitation, the monthly unaudited financial statements dated as of August 31, 2009, fairly present, in accordance with GAAP, the Consolidated financial condition and the results of operations of the Credit Parties and their Subsidiaries as of the dates and for the periods indicated, subject to the qualifications with respect to the pro forma financial statements of the Credit Parties and their Subsidiaries set forth therein.  No Material Adverse Effect has occurred since December 31, 2008.

(b)The Credit Parties have heretofore furnished to the Agent, for each month from the projected Closing Date through December 31, 2010, and thereafter for each calendar year through the term of this Agreement, projected income statements, balance sheets and cash flows of the Credit Parties and their Subsidiaries, on a Consolidated basis, together with one or more schedules demonstrating prospective compliance with all financial covenants contained in this Agreement, such projections disclosing all material assumptions made by the Credit Parties in formulating such projections.  The projections are based upon estimates and assumptions which the Credit Parties believe are reasonable in light of the conditions which existed as of the time the projections were made, have been prepared on the basis of the material assumptions stated therein and reflect as of the date of this Agreement and the Closing Date an estimate believed reasonable by the Credit Parties as to the results of operations and other information projected therein.

5.3Enforceable Obligations; Authorization.  The Loan Documents are legal, valid and binding obligations of the Credit Parties to the extent they are party thereto, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and by general equitable principles including remedies of specific performance and injunction.  The

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execution, delivery and performance of the Loan Documents have all been duly authorized by all necessary corporate, and if necessary shareholder or member, action; are within the power and authority of the applicable Credit Parties; do not and will not contravene or violate any material Legal Requirement or the Organizational Documents of any Credit Party; do not and will not result in the breach of, or constitute a default under, any material agreement or instrument by which any Credit Party or any material portion of its Property is bound or affected; and do not and will not result in the creation of any Lien upon any Property of any Credit Party except as expressly contemplated herein or therein, and do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or non-renewal of any permit, license, authorization or approval applicable to the operations or any of the Property of any Credit Party that could reasonably be expected to have a Material Adverse Effect.  Except as otherwise set forth on Schedule 5.3, all necessary consents and approvals of any Governmental Authority and all other requisite material permits, registrations and consents have been obtained for the delivery and performance of the Loan Documents.

5.4Other Debt.  Neither any Credit Party nor any Offshore Entity is in default in the payment of any other Indebtedness or under any agreement, mortgage, deed of trust, security agreement or lease to which it is a party, the result of which has, or could reasonably be expected to have, a Material Adverse Effect.

5.5Litigation.  Except as set forth on Schedule 5.5 attached hereto, there is no litigation, administrative proceeding or investigation pending or, to the knowledge of any Credit Party, threatened against, nor any outstanding judgment, order or decree affecting, any Credit Party or any Offshore Entity before or by any Governmental Authority or arbitral body which individually or in the aggregate have, or could reasonably be expected to have, a Material Adverse Effect.  No Credit Party is knowingly in material default with respect to any material judgment, writ, rule, regulation, order or decree of any Governmental Authority binding on it or its Property.  No Offshore Entity is knowingly in material violation with respect to any material judgment, writ, rule, regulation, order or decree of any Governmental Authority binding on it or its Property, which violation individually or in the aggregate with all other such violations have, or could reasonably be expected to have, a Material Adverse Effect.

5.6Taxes.  Each Credit Party and each Offshore Entity has filed all federal, provincial, state, local or foreign income, franchise and other material tax returns required to have been filed and paid all taxes shown thereon to be due, except those for which extensions have been obtained and except for those which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained in accordance with GAAP.  No federal income tax returns of any Credit Party or Offshore Entity have been audited by the Internal Revenue Service, the Canada Revenue Agency, the Netherlands national tax authority (Belastingdienst) or the German national tax authority (Bundesfinanzhof), the determination under which could reasonably be expected to have a Material Adverse Effect.  No Credit Party or Offshore Entity, as of the Closing Date, requested or been granted any extension of time to file any federal tax return.  No Credit Party or Offshore Entity has, as of the Closing Date, requested or been granted any extension of time to file any state, provincial, local or foreign tax return, other than extensions with respect to tax liabilities where such Credit Party’s or Offshore Entity’s failure to pay such tax liabilities would not have a Material Adverse Effect.  Except for any tax sharing agreement entered into and delivered to the Agent pursuant to the

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terms hereof, no Credit Party or Offshore Entity is a party to, or has any material obligation under, any tax sharing arrangement with any Person.  Each Guarantor is, and has been at all times since its creation or organization, classified as a disregarded entity for United States federal tax purposes.

5.7No Material Misstatements; Full Disclosure.  No report, financial statement, exhibit, schedule or other written information prepared and furnished by or on behalf of any Credit Party to the Agent, the Canadian Collateral Agent or any Lender in connection with this Agreement or any other Loan Documents contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  As of the Closing Date, each Credit Party has disclosed to the Agent all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  There is no contingent liability or fact that could reasonably be expected to have a Material Adverse Effect which has not been specifically set forth in the Parent’s public filings with the Securities and Exchange Commission filed on or prior to the Closing Date, or in a schedule hereto.

5.8Subsidiaries and Offshore Entities.  As of the Closing Date, no Credit Party has any Subsidiaries or any other majority, or material minority ownership interests in any other Person other than as listed on Schedule 5.8 attached hereto.  Except as expressly indicated on Schedule 5.8 attached hereto, as of the Closing Date, each of the Subsidiaries and Offshore Entities listed on Schedule 5.8 is wholly-owned by the Credit Party or other Person indicated on such schedule.  As of the Closing Date, respectively, of Schedule 5.8 set forth (a) the jurisdiction of incorporation or organization of each Subsidiary of any Credit Party and each Offshore Entity, and (b) the percentage of each Credit Party’s, any of its Subsidiaries’ or such other Person’s (as indicated thereon) ownership of the Stock of each Subsidiary of any Credit Party and each Offshore Entity.

5.9Representations by Others.  All representations and warranties made by or on behalf of any Credit Party or any of its Subsidiaries in any Loan Document shall constitute representations and warranties of each Credit Party hereunder.

5.10Permits, Licenses, Etc.  (a) Neenah Paper Company of Canada owns, possesses or has the benefit of all licenses and permits from Governmental Authorities required in order to conduct its business or operations in Canada, the failure of which to have would have a material adverse effect on its ability to conduct such business or operations in Canada (each, a “Canadian License” and collectively, the “Canadian Licenses”), and (b) each Credit Party owns, possesses or has the benefit of all other material permits, licenses (including Intellectual Property licenses) and Intellectual Property rights which are required (i) to conduct its respective business or (ii) for the operation and use of each Real Property Asset owned in fee and each Material Leasehold Property; provided, that if Neenah Paper Company of Canada is not operating or has disposed of (in accordance with the terms of this Agreement) the Property with respect to which a Canadian License was obtained, it shall not be required to own, possess or have the benefit of such Canadian License, nor shall it be required to own, possess or have the benefit of any other permits, licenses and Intellectual Property rights which would otherwise be required to own or operate such facility or other Property; provided, further that the Credit Parties shall be required

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to comply in all material respects with all Legal Requirements (including, without limitation, Environmental Laws) related to the continued ownership (but not the operation) of any Property located in Canada so long as such Property is owned by a Credit Party.  Except as set forth in Schedule 5.10, there are no material permits and licenses or agreements held by or issued to any Credit Party pertaining to or in connection with any part of the business or operations in Canada of such Credit Party; provided that such schedule may be updated by the Credit Parties from time to time to reflect the changes not otherwise prohibited by the Loan Documents, so long as any permit, license or agreement added thereto is subject to the Lien of the Agent (or the Canadian Collateral Agent, as applicable), if such Lien can be obtained using commercially reasonable efforts, pursuant to the Loan Documents.

5.11ERISA.  No Reportable Event has occurred with respect to any Plan which could reasonably be expected to result in any material liability.  Each Plan complies in all material respects with all applicable provisions of ERISA, and each Credit Party or each ERISA Affiliate have filed all reports required by ERISA and the Code to be filed with respect to each Plan.  The Credit Parties do not have any knowledge of any event which could reasonably be expected to result in a liability of any Credit Party or any ERISA Affiliate to the PBGC other than for applicable premiums.  No failure to meet the minimum funding standard (as described in Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists with respect to any Plan.  No event has occurred and no condition exists that could reasonably be expected to constitute grounds for a Plan to be terminated under circumstances which would cause the Lien provided under Section 4068 of ERISA to attach to any Property of any Credit Party or any ERISA Affiliate.  No event has occurred and no condition exists that could reasonably be expected to cause the Lien provided under Section 303 of ERISA or Section 430 of the Code to attach to any Property of any Credit Party or any ERISA Affiliate.

5.12Title to Properties; Possession Under Leases.

(a)The Credit Parties have good and insurable (or, with respect to Real Property Assets owned in fee and located in Canada, marketable) title to or, in the case of the Nova Scotia Woodlands Trust Lands (if any), beneficial title to, or a valid leasehold interest in, all of their respective material Property shown on the balance sheet referred to in Section 5.2(b) for the Credit Parties and their Subsidiaries or, if applicable, the most recent Consolidated balance sheet for the Credit Parties and their Subsidiaries provided under the terms of Section 6.3(a), 6.3(b) or 6.3(c) and all material Property acquired since the date of such respective balance sheets, except for such Property as is no longer used or useful in the conduct of their respective businesses or as have been disposed of in the ordinary course of business or otherwise in accordance with this Agreement, and except for minor defects in title that do not interfere with the ability of any Credit Party or any of their Subsidiaries to conduct their respective businesses as now conducted.  All such assets and Property are free and clear of all Liens other than those permitted by Section 7.2 hereof.

(b)The Credit Parties (and to the knowledge of the Credit Parties, each of the Credit Parties’ predecessors in interest under said leases) have complied in all material respects with all obligations under all Material Leases to which any of them is a party and under which any of them is in occupancy, except where non-compliance does not affect such Credit Party’s use or occupancy thereof, as applicable, and all Material Leases are in full force and effect, and

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each of the Credit Parties, as applicable, enjoy peaceful and undisturbed possession under all such Material Leases.  Schedule 5.12(b) attached hereto sets forth each lease in existence as of the date of this Agreement and the Closing Date of real Property of any Credit Party, and upon the request of the Agent, the Credit Parties will provide the Agent with complete and correct copies of all of such leases of real Property then in effect.  As of the date of this Agreement and the Closing Date, there are no Material Leasehold Properties other than those in clause (a) of the definition thereof.

5.13Assumed Names.  As of the date of this Agreement and the Closing Date, no Credit Party is currently conducting its business under any assumed name or names, except as set forth on Schedule 5.13 attached hereto.

5.14Investment Company Act.  No Credit Party, nor any of its Subsidiaries, is an investment company within the meaning of the Investment Company Act of 1940, as amended, or, directly or indirectly, controlled by or acting on behalf of any Person which is an investment company, within the meaning of said Act.

5.15Public Utility Holding Company Act.  No Credit Party, nor any of its Subsidiaries, is a “public utility company,” or an “affiliate” or a “subsidiary company” of a “public utility company,” or a “holding company,” as such terms are defined in the Public Utility Holding Company Act of 2005, as amended (“PUHCA”).  No Credit Party, nor any of its Subsidiaries, is an “affiliate” or a “subsidiary company” of an unregistered, non-exempt “holding company” as such terms are defined in PUHCA.

5.16Agreements.  Schedule 5.16 attached hereto is a complete and correct list, as of the date of this Agreement and the Closing Date, of (a) other than the Loan Documents, all credit agreements or indentures for borrowed money and capitalized leases to which any Credit Party is a party and all Property of the Credit Parties subject to any Lien securing such Indebtedness or capitalized lease obligation, (b) each letter of credit and guaranty to which any Credit Party is a party, (c) all other material instruments in effect as of the date of this Agreement providing for, evidencing, securing or otherwise relating to any Indebtedness for borrowed money of any Credit Party (other than the Indebtedness hereunder), and (d) all obligations of any Credit Party to issuers of appeal bonds issued for account of any Credit Party, in each case other than the Loan Documents.  The Borrowers shall, upon, request by the Agent, deliver to the Agent and the Lenders a complete and correct copy of all such credit agreements, indentures, capitalized leases, letters of credit, guarantees and other instruments described in Schedule 5.16 or arising after the date of this Agreement, including any modifications or supplements thereto, as in effect on the date of this Agreement.

5.17Environmental Matters.

(a)No material aspect of the business of any Credit Party or any of their Subsidiaries requires any Environmental Permit which has not been obtained and which is not now in full force and effect.

(b)Except as described in Schedule 5.17(b), each Credit Party and each of their Subsidiaries is in material compliance with all limitations, restrictions, conditions,

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standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Requirement of Environmental Law or Environmental Permit reasonably necessary to the conduct of any material aspect of the business of any Credit Party or any of their Subsidiaries.

(c)Each Credit Party and each of their Subsidiaries (i) has obtained and maintained in effect all Environmental Permits, (ii) along with their respective Properties (whether leased or owned) has been and is in material compliance with all applicable Requirements of Environmental Law and Environmental Permits except as described in Schedule 5.17(c)(ii), (iii) along with their respective Properties (whether leased or owned) is not subject to any material (A) Environmental Claims or (B) Environmental Liabilities, in either case direct or contingent arising from or based upon any act, omission, event, condition or circumstance occurring or existing on or prior to the date of this Agreement, except as set forth in any of the environmental assessments or studies described on Schedule 5.17(c)(iii), or as disclosed on Schedule 5.17(c)(iii), and (iv) except as described in Schedule 5.17(c)(iv), has not received individually or collectively any written notice from any Governmental Authority of any material violation or alleged material violation of any Requirements of Environmental Law or Environmental Permit or any written notice of any material Environmental Claim in connection with their respective Properties.

(d)Except as described in Schedule 5.17(d), no Credit Party nor any of their Subsidiaries has actual knowledge of any material violation of any applicable Requirements of Environmental Law and Environmental Permits by, or of any material Environmental Claims or Environmental Liabilities arising against, any of the prior owners or operators and predecessors in interest with respect to any of the Credit Parties’ or any of their Subsidiaries’ respective Property.

(e)Except as described in Schedule 5.17(e), no Credit Party nor any of their Subsidiaries has any actual knowledge of the presence or release of any Hazardous Substance at any of their respective Properties in quantities or under circumstances that under applicable Requirements of Environmental Law could require remedial action having a Material Adverse Effect.

(f)Except as described in Schedule 5.17(f), no Credit Party nor any of their Subsidiaries has any actual knowledge of any facts or circumstances, including proposed or anticipated changes in applicable Requirements of Environmental Law that would materially increase the cost of maintaining compliance or otherwise result in a Material Adverse Effect.

(g)The matters disclosed in Schedule 5.17 (other than those described in Schedule 5.17(f)) could not reasonably be expected to result in a Material Adverse Effect.

5.18No Change in Credit Criteria or Collection Policies.  There has been no material adverse change in credit criteria or collection policies concerning Receivables of any Credit Party since July 31, 2004, which has had or which is likely to have a Material Adverse Effect.

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5.19Solvency.

(a)The value of the assets of each Credit Party (including contribution rights from other Credit Parties), based on a fair valuation thereof, is not less than the amount that will be required to be paid on or in respect of the probable liability on the existing debts and other liabilities (including contingent liabilities) of such Credit Party, as they are expected to become absolute and mature.  The value of the assets of each of the Subsidiaries of the Credit Parties (including contribution rights from other Credit Parties), based on a fair valuation thereof, is not less than the amount that will be required to be paid on or in respect of the probable liability on the existing debts and other liabilities (including contingent liabilities) of each such Subsidiary, as they are expected to become absolute and mature.

(b)The assets of each Credit Party do not constitute unreasonably small capital for such Credit Party to carry out its business as now conducted and as proposed to be conducted including the capital needs of such Credit Party, taking into account (i) the nature of the business conducted by such Credit Party, (ii) the particular capital requirements of the business conducted by such Credit Party, (iii) the anticipated nature of the business to be conducted by such Credit Party in the future, and (iv) the projected capital requirements and capital availability of such current and anticipated business.  The assets of each of the Subsidiaries of each Credit Party do not constitute unreasonably small capital for such Subsidiary to carry out its business as now conducted and as proposed to be conducted, including the capital needs of each such Subsidiary, taking into account (A) the nature of the business conducted by such Subsidiary, (B) the particular capital requirements of the business conducted by such Subsidiary, (C) the anticipated nature of the business to be conducted by such Subsidiary in the future, and (D) the projected capital requirements and capital availability of such current and anticipated business.

(c)No Credit Party, nor any of their Subsidiaries, intends to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be received by each such Credit Party and Subsidiary and the timing and amounts to be payable on or in respect of debt of each such Credit Party and Subsidiary, as applicable).  The cash flow of each such Credit Party and Subsidiary, after taking into account all anticipated uses of the cash of each such Credit Party and Subsidiary, should at all times be sufficient to pay all such amounts on or in respect of debt of each such Credit Party and Subsidiary when such amounts are anticipated to be required to be paid.

(d)The Credit Parties do not believe that final judgments against any of them or any of their Subsidiaries in actions for money damages presently pending, if any, will be rendered at a time when, or in an amount such that, the applicable Credit Party or Subsidiary will be unable to satisfy any such judgments promptly in accordance with their terms (taking into account the maximum reasonable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered).  The cash flow of each such Credit Party and Subsidiary, as applicable, after taking into account all other anticipated uses of the cash of each such Credit Party and Subsidiary, as applicable (including the payments on or in respect of debt referred to in subparagraph (c) of this Section 5.19), should at all times be sufficient to pay all such judgments promptly in accordance with their terms (taking into account the maximum reasonable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered).

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5.20Status of Receivables and Other Collateral.  Each Credit Party represents and warrants that (a) each Credit Party is and shall be the sole owner, free and clear of all Liens except in favor of the Agent (or the Canadian Collateral Agent, as applicable) or otherwise permitted under Section 7.2 hereunder, of and fully authorized to sell, transfer, pledge and/or grant a security interest in all of the Collateral (other than Excluded Collateral, as defined in the applicable Security Documents) owned by such Credit Party, and (b) each Receivable reported by the Credit Parties as an Eligible Receivable meets the requirements of the definition of Eligible Receivable, each item of Inventory reported by the Credit Parties as Eligible Inventory meets the requirements of the definition of Eligible Inventory, each item of Eligible Equipment reported by the Credit Parties as Eligible Equipment meets the requirements of the definition of Eligible Equipment, each Real Property Asset reported by the Credit Parties as Eligible Real Estate meets the requirements of the definition of Eligible Real Estate.

5.21Transactions with Related Parties.  Any and all transactions, contracts, licenses, or other agreements existing on the date of this Agreement and the Closing Date which have been entered into by and among any Credit Party and any Affiliate, officer, or director of any Credit Party (other than Permitted Affiliate Transactions), have been entered into and made upon terms and conditions not less favorable to the applicable Credit Parties than those terms which could have been obtained from wholly independent and unrelated sources.

5.22Intellectual Property.  Schedule 5.22 hereto sets forth a true, accurate and complete listing, as of the date of this Agreement, of all Patents, Trademarks and Copyrights that are the subject of registrations or applications in any state, federal, or foreign Intellectual Property registry or any domain name registry and all Intellectual Property licenses thereof, of the Credit Parties as of the date of this Agreement and the Closing Date, showing as of the date of this Agreement and the Closing Date the owner, the jurisdiction of registry, the registration or application number, and the date of registry thereof.  The Credit Parties are the sole and exclusive owners of (and the current record owners of) all the registrations and applications listed on Schedule 5.22.  Except as set forth on Schedule 5.22, the conduct of the respective businesses (including the products and services) of the Credit Parties as currently conducted does not, in any material respect, infringe, misappropriate, or otherwise violate any person’s Intellectual Property rights, and there has been no such claim asserted or threatened in the past three (3) years against any of the Credit Parties.  To the knowledge of the Credit Parties, no Person is infringing, misappropriating, or otherwise violating any Intellectual Property owned, used, or held for use by the Credit Parties in the conduct of their respective businesses, and no such claims have been asserted or threatened against any Person by the Credit Parties in the past three (3) years.  Except as created or permitted under the Loan Documents, no Lien exists with respect to the interest of any Credit Party in any such Intellectual Property or licenses to Intellectual Property, and no Credit Party has transferred or subordinated any interest it may have in such Intellectual Property or licenses to Intellectual Property.  The Credit Parties shall, from time to time as necessary to keep such schedule updated in all material respects (but no more often than quarterly, except in the event that the Credit Parties acquire material Intellectual Property through the acquisition of, or merger or consolidation with, any Person, or acquisition of material assets of any Person), deliver to the Agent an updated Schedule 5.22 to this Agreement, together with a certificate of an authorized officer of the Borrowers’ Agent certifying that the information set forth on such schedule is true, correct and complete as of such date.  The execution and delivery of this Agreement and the other Loan Documents, and the

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consummation of the transactions contemplated hereby and thereby, will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other person in respect of, the Credit Parties’ rights to own, use, or hold for use any of the Intellectual Property as owned, used, or held for use in the conduct of the business as currently conducted.

5.23[RESERVED]

5.24Canadian Pension and Benefit Plan Matters.  No Credit Party (a) has a Canadian Pension Plan or Canadian Benefit Plan or (b) any material obligations or liabilities under a Canadian Pension Plan or Canadian Benefit Plan.

5.25Related Businesses.  As of the date of this Agreement and the Closing Date, the Credit Parties are engaged in the businesses of producing and selling paper products.  These operations require financing on a basis such that the credit supplied can be made available from time to time to Borrowers, as required for the continued successful operation of Borrowers and the other Credit Parties taken as a whole.  Borrowers have requested the Lenders to make credit available hereunder for the purposes set forth in Section 6.9 and generally for the purposes of financing the operations of Borrowers and the other Credit Parties.  Each Borrower and each other Credit Party expects to derive benefit (and the board of directors of each Borrower and other Credit Party has determined that such Borrower or other Credit Party may reasonably be expected to derive benefit), directly or indirectly, from a portion of the credit extended by Lenders hereunder, both in its separate capacity and as a member of the group of companies, since the successful operation and condition of each Borrower and each other Credit Party is dependent on the continued successful performance of the functions of the group as a whole.  Each Credit Party acknowledges that, but for the agreement of each of the other Credit Parties to execute and deliver this Agreement, the Agent and the Lenders would not have made available the credit facilities established hereby on the terms set forth herein.

5.26Material Leasehold Properties.  No Credit Party is in default in any material respect under any lease with respect to any Material Leasehold Property, and to the knowledge of any Credit Party, no other party thereto is in default under any such lease.

5.27Security Interests.  Each of the Security Documents creates in favor of the Agent (or the Canadian Collateral Agent, as applicable), for the benefit of the Agent (or the Canadian Collateral Agent, as applicable) and the Lenders, a legal, valid and enforceable security interest in the Collateral secured thereby.  Upon the filing of the Uniform Commercial Code financing statements and the other personal property security financing statements described in Schedule 5.27 and, to the extent governed by United States or Canadian federal law, as applicable, upon the recording of a patent security agreement in the form of Exhibit M hereto, a trademark security agreement in the form of Exhibit N hereto and a copyright security agreement in the form of Exhibit O hereto (the “Intellectual Property Security Agreements”), in the United States Patent and Trademark Office, the United States Copyright Office and the Canadian Intellectual Property Office, as applicable, such security interests in and Liens on the Collateral granted thereby that may be perfected by such aforementioned filings or recordings shall be perfected, first priority security interests (subject, as to priority, only to Liens permitted under Section 7.2 that, as a matter of law (including, without limitation, the priority rules of the

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Uniform Commercial Code and the applicable personal property security legislation), would be prior to the Liens of the Collateral Agent (or the Canadian Collateral Agent, as applicable), and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than (a) the filing of continuation statements or financing change statements in accordance with applicable law, (b) the recording of the Intellectual Property Security Agreements in the United States Patent and Trademark Office, the United States Copyright Office and the Canadian Intellectual Property Office, as applicable, with respect to after-acquired U.S. Patent, Trademark and Copyright applications and registrations and (c) the recordation of appropriate evidence of the security interest in the appropriate foreign registry with respect to all foreign Intellectual Property.

5.28[RESERVED]

5.29Deposit Accounts.  Each deposit account of the Credit Parties (including each Collection Account) is listed on Schedule 5.29 attached hereto, and each Collection Account is specified as such on such Schedule; provided that such schedule may be updated by the Credit Parties from time to time when the Credit Parties add or remove deposit accounts in accordance with this Agreement.  Each deposit account of the Credit Parties (including each Collection Account), including each deposit account listed on Schedule 5.29 or established pursuant to Section 7.18, is a Controlled Account (except with respect to the accounts referred to in Section 7.18(c) to the extent provided therein).

6.Affirmative Covenants.

Each Credit Party covenants and agrees with the Agent, the Canadian Collateral Agent and the Lenders that prior to the termination of this Agreement, each Credit Party will perform and observe each and all of the following covenants:

6.1Businesses and Properties.  At all times:  (a) do or cause to be done all things reasonably necessary to obtain, preserve, renew and keep in full force and effect the rights, licenses, permits, franchises, and Intellectual Property material to the conduct of its businesses; (b) maintain and operate such businesses in the same general manner in which they are presently conducted and operated, with such changes as such Credit Party deems prudent or as otherwise permitted by this Agreement; (c) comply in all material respects with all material Legal Requirements applicable to such businesses and the operation thereof, whether now in effect or hereafter enacted (including without limitation, all material Legal Requirements relating to public and employee health and safety and all Environmental Laws); and (d) maintain, preserve and protect all Property material to the conduct of such businesses and keep such Property in good repair, working order and condition, and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto reasonably necessary in order that the business carried on in connection therewith may be properly conducted at all times.  Notwithstanding the foregoing provisions of this Section 6.1, the Credit Parties shall not be required to comply with the requirements of clauses (a), (b) or (d) of this Section 6.1 with respect to any Properties (whether or not Mortgaged Properties) (i) at which operations shall have been permanently discontinued and (ii) to the extent the Board of Directors of the Parent shall have determined that the preservation and maintenance of such Properties and the rights, licenses and permits related to such Properties, as applicable, are no

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longer desirable in the conduct of the business of the Credit Parties and their Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Lenders, or that the preservation or maintenance thereof is not necessary in connection with any transaction permitted under the Loan Documents. With respect to any Properties at which operations are permanently discontinued, the Credit Parties will take customary and prudent steps to secure such Properties from unauthorized Persons and to make or cause to be made repairs and replacements necessary to prevent the development of hazardous safety conditions at such Properties.

6.2Taxes.  Pay and discharge promptly when due all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its Property before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might give rise to Liens upon such Property or any part thereof (except as otherwise permitted by Section 7.2 hereof), unless being diligently contested in good faith by appropriate proceedings and as to which adequate reserves in an amount not less than the aggregate amount secured by such Liens have been established in accordance with GAAP; provided, however, that such contested amounts giving rise to such Liens shall be immediately paid upon commencement of any procedure or proceeding to foreclose any of such Liens unless the same shall be validly stayed by a court of competent jurisdiction or a surety bond, which is satisfactory in all respects to the Agent (or the Canadian Collateral Agent, as applicable), is delivered to the Agent (or the Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender Parties in an amount no less than such contested amounts.  The Guarantors shall make or obtain records or documents that meet the requirement of paragraphs 274(4)(a) to (c) of the ITA with respect to all such transactions and arrangements.

6.3Financial Statements and Information.  Furnish to the Agent each of the following, which may be furnished via electronic means acceptable to the Agent and, in the case of the materials described in clause (h)(ii) of this Section, by first class U.S. mail:

(a)as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Credit Parties, Annual Audited Financial Statements of the Credit Parties and their Subsidiaries;

(b)as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter (that is not also the end of a fiscal year) of the Credit Parties, Quarterly Unaudited Financial Statements of the Credit Parties and their Subsidiaries;

(c)as soon as available and in any event within thirty (30) days after the end of the month, Monthly Unaudited Financial Statements of the Credit Parties and their Subsidiaries;

(d)concurrently with the financial statements provided for in Subsections 6.3(a), 6.3(b) and 6.3(c) hereof, (i) a Compliance Certificate, signed by a Responsible Officer of the Borrowers’ Agent setting forth, among other things, in the case of a Compliance Certificate delivered in connection with Subsections 6.3(a) and 6.3(b), reasonably detailed calculations of the Fixed Charge Coverage Ratio calculated as of the end of such fiscal year or fiscal quarter, as applicable; provided, that if the Fixed Charge Coverage Ratio is not

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being tested as of such fiscal quarter or fiscal year end date pursuant to Section 7.12, such calculation of the Fixed Charge Coverage Ratio shall still be delivered, but may be delivered in a separate certificate, which certificate shall be delivered as soon as available and in any event within fifteen (15) days after the delivery of the Compliance Certificate delivered pursuant to this Subsection 6.3(d) for the end of such fiscal year or fiscal quarter end, and provided, further, that, (A) in no event shall the delivery of a Fixed Change Coverage Ratio calculation be deemed to imply that Section 7.12 is then being tested, such testing to be determined strictly in accordance with the express terms of Section 7.12, and (B) failure to provide a calculation of the Fixed Charge Coverage Ratio at times and for periods when the Fixed Charge Coverage Ratio is not being tested pursuant to Section 7.12 shall not, in and of itself, constitute a Default or an Event of Default, and (ii) a written certificate in Proper Form, identifying each Subsidiary which is otherwise required by the provisions of Section 6.10 hereof to become a Guarantor at the request of the Agent, but which has not yet done so as of the date of such certificate, and providing an explanation of the reasons why each such Subsidiary is not a Guarantor, signed by a Responsible Officer of the Borrowers’ Agent;

(e)as soon as available and in any event within five (5) Business Days after the date of issuance thereof (if any such management letter is ever issued), any management letter prepared by the independent public accountants who reported on the financial statements provided for in Subsection 6.3(a) above, with respect to the internal audit and financial controls of the Credit Parties and their Subsidiaries;

(f)from any date when Availability is less than $25,000,000 (and until such time thereafter when Availability has exceeded $35,000,000 for sixty (60) consecutive days) or upon the occurrence and during the continuation of a Default or Event of Default, within two (2) Business Days after the end of each week, a Receivables report in the form of Exhibit H setting forth the sales, collections and total customer debits and credits for the Credit Parties, on a Consolidated basis, for such week, certified by a Responsible Officer of the Borrowers’ Agent; provided, however, from any date when Availability is less than $25,000,000 (and until such time when Availability has exceeded $35,000,000 for sixty (60) consecutive days) or upon the occurrence and during the continuation of a Default or Event of Default, Agent may, in its discretion, require such reports on a basis more frequently than weekly;

(g)from any date when Availability is less than $25,000,000 (and until such time thereafter when Availability has exceeded $35,000,000 for sixty (60) consecutive days) or upon the occurrence and during the continuation of a Default or Event of Default, within two (2) Business Days after the end of each week, an Inventory designation report in the form of Exhibit I, certified by a Responsible Officer of the Borrowers’ Agent; provided, however, from any date when Availability is less than $25,000,000 (and until such time when Availability has exceeded $35,000,000 for sixty (60) consecutive days) or upon the occurrence and during the continuation of a Default or Event of Default, Agent may, in its discretion, require such reports on a basis more frequently than weekly;

(h)as soon as available, and in any event postmarked (in the case of (ii) below) within fifteen (15) days after the end of each calendar month, (i) Receivable agings and reconciliations, accounts payable agings and reconciliations, lockbox statements and all other schedules, computations and other information, all in reasonable detail, as may be reasonably

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required or requested by the Agent with regard to the Credit Parties and their Subsidiaries, all certified by a Responsible Officer of the Borrowers’ Agent, and (ii) copies of all monthly accounts statements for each deposit account covered by a Tri-Party Agreement;

(i)as soon as available and in any event within fifteen (15) Business Days after the end of each calendar month, (A) a certificate setting forth the calculation of the Indenture Cap as of the end of such calendar month (in form and substance reasonably acceptable to the Agent), and (B) a Borrowing Base Compliance Certificate;

(j)as soon as available and in any event within thirty (30) days prior to the commencement of each fiscal year of the Credit Parties, management-prepared Consolidated and consolidating financial projections of the Credit Parties and their Subsidiaries for the immediately following three (3) fiscal years (setting forth such projections on both an annual basis and on a monthly basis for the upcoming fiscal year and on an annual basis only for the two (2) fiscal years thereafter), such projections to be prepared and submitted in such format and detail as reasonably requested by the Agent; and

(k)such other information relating to the financial condition, operations and business affairs of the Credit Parties or any of their Subsidiaries as from time to time may be reasonably requested by the Agent.

Notwithstanding the delineation of specified time periods above in this Section 6.3 for the applicable information, the Agent reserves the right to require the applicable information be furnished to the Agent, the Canadian Collateral Agent and the Lenders on a more frequent basis, as determined by the Agent in its discretion.  All collateral reports of each Credit Party, including each Guarantor, shall be prepared in a manner compatible with the Borrowers’ reporting procedures.

6.4Inspections; Field Examinations; Inventory Appraisals and Physical Counts.

(a)Upon reasonable notice (which may be telephonic notice), at all reasonable times during (so long as no Default or Event of Default has occurred and is continuing) regular business hours and as often as the Agent (or the Canadian Collateral Agent, as applicable) may reasonably request, permit any authorized representative designated by the Agent (or the Canadian Collateral Agent, as applicable), including, without limitation any consultant engaged by the Agent (or the Canadian Collateral Agent, as applicable), together with any authorized representatives of any Lender desiring to accompany the Agent (or the Canadian Collateral Agent, as applicable), to visit and inspect the Properties and records of the Credit Parties and their Subsidiaries and to make copies of, and extracts from, such records and permit any authorized representative designated by the Agent (or the Canadian Collateral Agent, as applicable) (together with any accompanying representatives of any Lender) to discuss the affairs, finances and condition of the Credit Parties and their Subsidiaries with the appropriate Financial Officer and such other officers as the Credit Parties shall deem appropriate and the Credit Parties’ independent public accountants, as applicable.

(b)The Agent (or the Canadian Collateral Agent, as applicable) and any consultant of the Agent (or the Canadian Collateral Agent, as applicable) shall each have the

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right to examine (and any authorized representatives of any Lender shall have the right to accompany the Agent (or the Canadian Collateral Agent, as applicable) during any such examination), as often as the Agent (or the Canadian Collateral Agent, as applicable) may request, the existence and condition of the Receivables, books and records of the Credit Parties and to review their compliance with the terms and conditions of this Agreement and the other Loan Documents, subject to governmental confidentiality requirements.  The Agent (or the Canadian Collateral Agent, as applicable) shall also have the right to verify with any and all customers of the Credit Parties the existence and condition of the Receivables, as often as the Agent (or the Canadian Collateral Agent, as applicable) may require, without prior notice to or consent of any Credit Party.  Without in any way limiting the foregoing, the Agent (or the Canadian Collateral Agent, as applicable) shall have the right to (i) conduct field examinations of the Credit Parties’ operations at the Borrowers’ expense as often as the Agent (or the Canadian Collateral Agent, as applicable) may request and (ii) to order and obtain an appraisal of the Inventory, Equipment and Real Property Assets of the Credit Parties by an appraisal firm satisfactory to the Agent (or the Canadian Collateral Agent, as applicable) as often as the Agent (or the Canadian Collateral Agent, as applicable) may request (subject to the proviso at the end of this clause (b)).  Without in any way limiting the foregoing, the Credit Parties agree to cooperate and to cause their Subsidiaries to cooperate in all respects with the Agent (or the Canadian Collateral Agent, as applicable) and its representatives and consultants in connection with any and all inspections, examinations and other actions taken by the Agent or any of its representatives or consultants pursuant to this Section 6.4.  The Credit Parties hereby agree to promptly pay, upon demand by the Agent (or the Canadian Collateral Agent, as applicable, or the applicable Lender, if appropriate), any and all reasonable fees and expenses incurred by the Agent (or the Canadian Collateral Agent, as applicable) or, during the continuance of any Default or Event of Default, any Lender, in connection with any inspection, examination or review permitted by the terms of this Section 6.4 (including without limitation the fees of third party appraisers, accountants, attorneys and consultants); provided, however, that so long as no Default or Event of Default is continuing, the Borrowers shall only be obligated to pay for (x) two (2) field examinations per each twelve (12)-month period following the Closing Date, (y) two (2) appraisals of Inventory during each twelve (12)-month period after the Closing Date, and (z) at Agent’s discretion, up to one (1) appraisal of Equipment and Real Property Assets during each twelve (12)-month period after the Closing Date (other than the initial field examinations and appraisals for any Receivables, Inventory, Equipment and/or Real Property Assets acquired through an acquisition or other Investment permitted under the terms of this Agreement, it being agreed that the Borrowers shall be obligated to pay for each such initial field examination and/or appraisal, as applicable, conducted with respect to each such acquisition or Investment).  For avoidance of doubt, the Property inspection rights granted to the Agent and the Lenders in this Section 6.4, do not include the Property of the Offshore Entities.

(c)At the Agent’s (or the Canadian Collateral Agent’s, as applicable) request, not more frequently than once during any consecutive twelve month period if no Default or Event of Default then exists at the time of such request by the Agent (or the Canadian Collateral Agent, as applicable), and as frequently as requested by the Agent (or the Canadian Collateral Agent, as applicable) after the occurrence of any Default or Event of Default which has not been cured or waived in writing by the Agent and the Required Lenders, the Credit Parties shall conduct, at their own expense, a physical count of their Inventory and promptly supply the Agent (or the Canadian Collateral Agent, as applicable) with a copy of such counts accompanied by a

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report of the value (based on the lower of cost or market value) of such Inventory.  Additionally, the Credit Parties shall promptly provide the Agent (or the Canadian Collateral Agent, as applicable) with copies of any other physical counts of the Credit Parties’ Inventory which are conducted by the Credit Parties after the Closing Date.

6.5Further Assurances.  Upon request by the Agent (or the Canadian Collateral Agent, as applicable), promptly execute and deliver any and all other and further agreements and instruments and take such further action as may be reasonably requested by the Agent (or the Canadian Collateral Agent, as applicable) to (a) cure any defect in the execution and delivery of any Loan Document or more fully to describe particular aspects of the Credit Parties’ or any of their Subsidiaries’ agreements set forth in the Loan Documents or so intended to be, (b) to carry out the provisions and purposes of this Agreement and the other Loan Documents, and (c) grant, preserve, protect and perfect the first priority Liens created or intended to be created by the Security Documents in the Collateral.  Upon written request of the Agent, promptly cause a first priority perfected security interest or pledge to be granted to the Canadian Collateral Agent, for the ratable benefit of the Lender Parties, in all of the Stock of Neenah Paper Company of Canada, together with such related certificates, legal opinions and documents as the Agent may reasonably require, each in Proper Form.  Upon written request by the Agent, promptly furnish the Agent with a then current listing of all assumed names that any Credit Party is then utilizing in conducting their respective businesses.  Promptly furnish the Agent with notice of any transfer of Intellectual Property to another Credit Party and promptly execute and deliver any and all other and further agreements and instruments as may be reasonably requested by the Agent in connection therewith.

6.6Books and Records.  Maintain financial records and books in accordance with accepted financial practice and GAAP.

6.7Insurance.

(a)Maintain the insurance required by this Section 6.7 at all times by financially sound and reputable insurers (or, to the extent consistent with prudent business practice, a program of self-insurance approved by the Agent, such approval not to be unreasonably withheld).

(b)Maintain insurance, to such extent, on such of its Properties and against such liabilities, casualties, risks and contingencies, including fire and other risks insured against by extended coverage, employee liability and business interruption, at least as is customary with companies similarly situated and in the same or similar businesses, and subject to deductibles that are no greater than are customary with such companies, provided, however, that such insurance shall insure the Property of the Credit Parties and each of their Subsidiaries against all risk of physical damage, including without limitation, loss by fire, explosion, theft, fraud and such other casualties as may be reasonably satisfactory to the Agent, but in no event at any time in an amount less than the replacement value of the Collateral; provided, further, that from and after the permanent cessation of operations at any of their facilities (whether or not they are Mortgaged Properties) in accordance with Section 6.1, the Credit Parties will not be required to maintain property insurance with respect to the fixed assets comprising such facility unless such facilities are located on Eligible Real Property used in the computation of the Borrowing Base or

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such insurance is required by law, as determined by the Agent (the Credit Parties agreeing to provide not less than five (5) Business Days’ advance notice to Administrative Agent prior to the effective date of any cancellation or non-renewal of such insurance).

(c)Maintain in full force and effect worker’s compensation coverage and public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with its operations and with the use of any Properties owned, occupied or controlled by any Credit Party or any of their Subsidiaries, in such amounts as the Agent shall reasonably deem necessary.

(d)Maintain such other insurance as may be required by applicable law and furnish to the Agent, upon written request, full information as to the insurance carried.

(e)All insurance covering Property subject to a Lien in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the benefit of the Lenders granted pursuant to the Security Documents shall provide that, in the case of each separate loss, the full amount of insurance proceeds shall be payable to the Agent (or the Canadian Collateral Agent, as applicable), and all liability insurance maintained by the Credit Parties shall name the Agent and the Canadian Collateral Agent as additional insured.  All such property and liability insurance shall further provide for at least thirty (30) days’ (ten (10) days’ with respect to cancellation for non-payment of premium or at the request of the insured) prior written notice to the Agent (and/or the Canadian Collateral Agent, as applicable) of the cancellation or substantial modification thereof.  If any Credit Party fails to maintain such insurance, the Agent (or the Canadian Collateral Agent, as applicable) may arrange for such insurance, but at the Borrowers’ expense and without any responsibility on the Agent’s (or the Canadian Collateral Agent’s) part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims.  Upon the occurrence and during the continuance of an Event of Default, the Agent (or the Canadian Collateral Agent, as applicable) shall have the sole right, in the name of the Lenders, any Credit Party and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.  The Credit Parties shall deliver certificates evidencing renewal of the insurance required hereunder and evidence that the premiums have been paid before termination of any insurance policies required hereunder.  Upon request, Debtors shall deliver certificates evidencing the insurance required hereunder and copies of the underlying policies as they are available.

6.8ERISA.  At all times:  (a) make contributions to each Plan in a timely manner and in an amount sufficient to comply with the minimum funding standards requirements of ERISA; (b) immediately upon acquiring knowledge of (i) any Reportable Event in connection with any Plan or (ii) any “prohibited transaction”, as such term is defined in Section 4975 of the Code, in connection with any Plan, that could reasonably be expected to result in the imposition of material damages or a material excise tax on any Credit Party or any Subsidiary thereof, furnish the Agent a statement executed by a Responsible Officer of such Credit Party or Subsidiary setting forth the details thereof and the action which such Credit Party or Subsidiary proposes to take with respect thereto and, when known, any action taken by the Internal Revenue Service or

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Department of Labor with respect thereto; (c) notify the Agent promptly upon receipt by any Credit Party or any Subsidiary thereof of any notice of the institution of any proceedings or other actions which could reasonably be expected to result in the termination of any Plan by the PBGC and furnish the Agent with copies of such notice; (d) pay when due, or within any applicable grace period allowed by the PBGC, all required premium payments to the PBGC; (e) furnish the Agent with copies of the annual report for each Plan filed with the Internal Revenue Service not later than ten (10) days after the Agent requests such report; (f) furnish the Agent with copies of any request for waiver of the funding standards or extension of the amortization periods required by Sections 302 and 304 of ERISA or Sections 412 and 431 of the Code promptly after the request is submitted to the Secretary of the Treasury, the Department of Labor or the Internal Revenue Service, as the case may be; and (g) pay when due all installment contributions required under Section 303 of ERISA or Section 430 of the Code or within 10 days of a failure to make any such required contributions when due furnish the Agent with written notice of such failure.

6.9Use of Proceeds.  Subject to the terms and conditions contained herein, use the proceeds of the Loans (a) to finance ongoing working capital needs of the Credit Parties not otherwise prohibited herein; (b) for the issuance of Letters of Credit for the account of the Credit Parties in accordance with and subject to the terms of this Agreement; and (c) for general corporate purposes of the Credit Parties in the ordinary course of business and to finance acquisitions permitted under Section 7.4; provided, that no proceeds of any Loan shall be used (w) for the purpose of purchasing or carrying directly or indirectly any margin stock as defined in Regulation U (“Reg U”) of the Board of Governors of the Federal Reserve System, (x) for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry any such margin stock, (y) for any other purpose which would cause such Loan to be a “purpose credit” within the meaning of Reg U and (z) for any purpose which would constitute a violation of Reg U or of Regulations T or X of the Board of Governors of the Federal Reserve System or any successor regulation of any thereof or of any other rule, statute or regulation governing margin stock from time to time.  Following this transaction, no more than twenty-five percent (25%) (or such lesser percentage as may be established from time to time under Reg U or any successor statute) of the assets, of Borrowers and their Subsidiaries, subject to any restriction on sale or pledge, will consist of, or be represented by margin stock.

6.10Borrowers; Guarantors; Joinder Agreements.  Promptly inform the Agent of the creation or acquisition of any Subsidiary of any Credit Party after the Closing Date and, within thirty (30) days after the written request of the Agent (or the Required Lenders in the case of clause (b) below) delivered in accordance with Section 10.2 below, cause:

(a)each such Subsidiary (i) that is a Domestic Subsidiary to become a Borrower by execution and delivery to the Agent, for the ratable benefit of the Lender Parties, of a Joinder Agreement, and (ii) that is not a Domestic Subsidiary (other than an Excluded Foreign Subsidiary) to become a Guarantor by execution and delivery to the Agent, for the ratable benefit of the Lender Parties, of a Guaranty and/or a Joinder Agreement, as applicable;

(b)a first priority perfected security interest to be granted to the Agent (or the Canadian Collateral Agent, as applicable), for the ratable benefit of the Lender Parties, in all of the Stock of such Subsidiary owned by the Credit Parties or any of their other Subsidiaries if such newly acquired or created Subsidiary is a Domestic Subsidiary or is treated, for U.S. federal

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tax purposes, as an entity that is disregarded as an entity separate from its owner within the meaning of Treas. Reg. § 301.7701-1, or if such newly acquired or created Subsidiary is a foreign Subsidiary that is not disregarded as an entity separate from its owner within the meaning of Treas. Reg. § 301.7701-1 (an “Excluded Foreign Subsidiary”), then cause not more than sixty-five percent (65%) of all issued and outstanding Stock of such Excluded Subsidiary to be pledged as Collateral pursuant to the foregoing Stock pledge requirement;

(c)each such Subsidiary (other than an Excluded Foreign Subsidiary) to grant to the Agent (or the Canadian Collateral Agent, as applicable), for the ratable benefit of the Lender Parties, a security interest (subject only to (i) Liens permitted under Section 7.2(e) as to Receivables, Inventory and Permitted Investment Securities, and (ii) Liens permitted under Section 7.2 as to all other Collateral existing as of the date of acquisition by any Credit Party or any other Subsidiary thereof of such newly acquired Subsidiary, if applicable) in all accounts, inventory, equipment, furniture, fixtures, chattel paper, documents, instruments, general intangibles and other tangible and intangible personal Property and all real Property owned at any time by such Subsidiary and all products and proceeds thereof (subject to similar exceptions as set forth in the Security Documents); and

(d)cause such Subsidiary to deliver to the Agent (or the Canadian Collateral Agent, as applicable) such other Joinder Agreements, guaranties, contribution and set-off agreements, security agreements, pledge agreements, Tri-Party Agreements and other Loan Documents and such related certificates, Uniform Commercial Code, PPSA (Nova Scotia) and other customary lien search reports, legal opinions and other documents (including Organizational Documents) as the Agent (or the Canadian Collateral Agent, as applicable) may reasonably require, each in form and substance reasonably satisfactory to the Agent (or the Canadian Collateral Agent, as applicable), and to submit to a collateral audit conducted by an independent audit firm designated by Agent (or the Canadian Collateral Agent, as applicable) and satisfactory to the Agent (or the Canadian Collateral Agent, as applicable) in its reasonable discretion;

provided, however, that any such Subsidiary that is an Excluded Foreign Subsidiary shall not be required to become a Guarantor or grant any Liens hereunder; provided, further, that until such Subsidiary becomes a Guarantor or a Borrower pursuant to the terms of this Agreement it shall not become a Credit Party.  To the extent reasonably feasible, all of the foregoing requirements shall be affected by the execution and delivery of a Joinder Agreement.

6.11Notice of Events.  Notify the Agent within two (2) Business Days after any Responsible Officer of any Credit Party or any of their Subsidiaries acquires knowledge of the occurrence of, or if any Credit Party or any of their Subsidiaries causes or intends to cause, as the case may be, any of the following:  (a) the institution of any lawsuit, administrative proceeding or investigation affecting any Credit Party or any of their Subsidiaries, including without limitation any examination or audit by the IRS or the Canada Revenue Agency, the adverse determination under which could reasonably be expected to be material; (b) any development or change in the business or affairs of any Credit Party or any of their Subsidiaries which has had or which is likely to have, in the reasonable judgment of any Responsible Officer of the applicable Credit Parties, a Material Adverse Effect; (c) any Event of Default or Default, together with a reasonably detailed statement by a Responsible Officer on behalf of the Borrowers’ Agent of the

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steps being taken to cure the effect of such Event of Default or Default; (d) the occurrence of a default or event of default by any Credit Party or any of their Subsidiaries under any agreement or series of related agreements to which it is a party, which default or event of default could reasonably be expected to have a Material Adverse Effect; (e) any written notice of any material violation by, or investigation of any Credit Party or any of their Subsidiaries in connection with any actual or alleged material violation of any Legal Requirement imposed by the Environmental Protection Agency, the Occupational Safety Hazard Administration or any other Governmental Authority which has or is likely to have, in the reasonable judgment of any Responsible Officer of the applicable Credit Parties, a Material Adverse Effect; and (f) any significant change in the accuracy of any material representations and warranties of the Credit Parties or any of their Subsidiaries in this Agreement or any other Loan Document (including without limitation, the representations and warranties in Section 5.20(b)).

6.12Environmental Matters.  Without limiting the generality of Section 6.1(c) hereof, (a) comply in all material respects with all material limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Requirement of Environmental Law, or Environmental Permit; (b) obtain and maintain in effect all Environmental Permits necessary to the conduct of its business, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) keep its Property free of any Environmental Claims or Environmental Liabilities that could reasonably be expected to have a Material Adverse Effect.  In the event that any Credit Party or any of their Subsidiaries receives any such written demand or claim from any Person with respect to any such Environmental Liabilities, the Credit Parties agree to promptly take action and thereafter diligently pursue the same to completion in a manner necessary to cause the applicable Environmental Liabilities to be remediated as soon as reasonably possible in accordance with all applicable Requirements of Environmental Law.  EACH OF THE CREDIT PARTIES HEREBY INDEMNIFIES AND AGREES TO HOLD THE AGENT, THE CANADIAN COLLATERAL AGENT AND THE LENDERS HARMLESS FROM AND AGAINST ANY AND ALL LIABILITY, LOSS, DAMAGE, SUIT, ACTION OR PROCEEDING ARISING OUT OF THEIR RESPECTIVE BUSINESSES OR THE BUSINESSES OF ANY OF THE OTHER CREDIT PARTIES OR ANY SUBSIDIARIES OF ANY OF THEM, PERTAINING TO ANY ENVIRONMENTAL LIABILITIES, INCLUDING WITHOUT LIMITATION, CLAIMS OF ANY GOVERNMENTAL AUTHORITY OR ANY OTHER PERSON ARISING UNDER ANY REQUIREMENT OF ENVIRONMENTAL LAW OR UNDER TORT, CONTRACT OR COMMON LAW; PROVIDED, THAT THE FOREGOING INDEMNITY SHALL NOT APPLY TO THE EXTENT, BUT ONLY TO THE EXTENT, THE APPLICABLE LIABILITY, LOSS, DAMAGE, SUIT, ACTION OR PROCEEDING IS DETERMINED BY A FINAL JUDICIAL DECISION TO HAVE BEEN CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION.

6.13End of Fiscal Year.  Cause each of its fiscal years and the fiscal years of each of its Subsidiaries to end on December 31st of the applicable year.

6.14Pay Obligations and Perform Other Covenants.  Make full and timely payment of the Obligations, whether now existing or hereafter arising, as and when due and payable, duly comply, and cause each of its Subsidiaries to duly comply, with all of the terms and covenants

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contained in this Agreement and in each of the other Loan Documents at all times and places and in the manner set forth therein, and except for the filing of continuation and renewal statements and the making of other filings by the Agent (or the Canadian Collateral Agent, as applicable) as secured party or assignee, at all times take all actions necessary to maintain the Liens and security interests provided for under or pursuant to this Agreement and the Security Documents as valid perfected first priority Liens on the Collateral intended to be covered thereby (subject only to other Liens expressly permitted by Section 7.2 hereof) and supply all information to the Agent (or the Canadian Collateral Agent, as applicable) necessary for such maintenance.

6.15Collection of Receivables; Application of Receivables Proceeds.

(a)At all times after (i) Availability is less than $25,000,000, or (ii) the occurrence of a Default or an Event of Default (any such time, until the occurrence of a Dominion Termination Event, a “Dominion Event”), and until such time when Availability has exceeded $35,000,000 for sixty (60) consecutive days and no Default or Event of Default is continuing (a “Dominion Termination Event”), the Borrowers shall cause all payments received by any Borrowers or any of their Subsidiaries (other than any Guarantor, except as provided below) on account of Receivables of the Borrowers (whether in the form of cash, checks, notes, drafts, bills of exchange, money orders or otherwise) to be promptly deposited in the form received (but with any endorsements of the applicable Borrower or Subsidiary necessary for deposit or collection, and if received in funds other than U.S. dollars, with such arrangements for conversion to U.S. dollars as may be acceptable to the Agent) into one or more Collection Accounts of the Borrowers designated by the Agent.  Funds received in a Collection Account of a Borrower shall be subject to daily wire transfer to an account designated by the Agent pursuant to arrangements with the applicable depository that are acceptable to the Agent, and in connection therewith, the Agent (or the Canadian Collateral Agent, as applicable) and JPMorgan are irrevocably authorized to cause all collected funds on all Receivables received by the Agent (or the Canadian Collateral Agent, as applicable) or JPMorgan from whatever means, whether pursuant to any Tri-Party Agreement or otherwise, to be applied by the Agent to reduce the outstanding balance of the Revolving Loans.  Upon the occurrence of a Dominion Event, and from time to time thereafter until a Dominion Termination Event as the Agent may require, funds held in any other deposit account of any Borrower shall be remitted to the Agent, except as the Agent may permit to fund outstanding drafts or transfers or otherwise in its discretion; and until the occurrence of a Dominion Termination Event, funds contained in any account of any Borrower shall be subject to withdrawal by the Agent only, as hereinafter provided, except as otherwise expressly authorized by the Agent.  Upon the occurrence of a Dominion Event, the Borrowers shall, at any time and from time to time upon request of the Agent, liquidate any Permitted Investment Securities held by them and remit the proceeds to the Agent.  Prior to the occurrence of a Default or Event of Default, all remittances and payments that are deposited with the Agent in accordance with this Section 6.15(a) will be applied by the Agent on the same day received (or on the next Business Day in the case of remittances and payments received after 11:00 a.m.) to reduce the outstanding balance of the Revolving Loans, subject to final collection in cash of the item deposited.  After the occurrence of a Default or Event of Default, all remittances and payments that are deposited with the Agent in accordance with this Section 6.15(a) will be applied by the Agent in accordance with Section 2.7.  Upon the occurrence of a Dominion Event, and until the occurrence of a Dominion Termination Event, each Guarantor shall be subject to cash management arrangements (including with respect to

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payments received on account of Receivables, short term investments and intercompany transfers of funds) pursuant to which funds in each such Guarantor’s accounts may be applied to reduce the outstanding balance of the Revolving Loans acceptable to the Agent and the Canadian Collateral Agent, whether or not demand has been made under the relevant Guaranty.  Upon the occurrence of a Dominion Event, if any Credit Party, or any other Person acting for or in concert with the Credit Parties, receives any monies, checks, notes, drafts or other payments relating to or as proceeds of Receivables or other Collateral except as contemplated by this Section 6.15(a), the Credit Parties shall, or shall cause such Person to, receive and hold such items in trust for, and as the sole and exclusive property of, the Agent and the Canadian Collateral Agent (for the benefit of the Lender Parties) and, immediately upon receipt thereof, remit the same (or cause the same to be remitted) in hand to or as directed by the Agent.

(b)Until the occurrence of a Dominion Event, the Credit Parties shall be required, and hereby agree, to promptly deposit Receivable payments when received into any Controlled Account maintained by the Credit Parties pursuant to the terms hereof and designated to the Agent as a Collection Account.  The Agent shall not deliver any “sole control” activation notices under any Tri-Party Agreement until the occurrence of a Dominion Event.  Upon the occurrence of a Dominion Event, all amounts in each Controlled Account shall be subject to the provisions of Section 6.15(a), and none of such Controlled Accounts shall be utilized for disbursement purposes, except as otherwise consented to by the Agent (or the Canadian Collateral Agent, as applicable).

6.16Receivables and Other Collateral Matters.  The Credit Parties shall maintain books and records pertaining to the respective Collateral owned by each of them in detail, form and scope as the Agent shall reasonably require, and concurrently with the delivery by any Credit Party to the Agent (or the Canadian Collateral Agent, as applicable) of any accounts receivable aging or any sales report summary hereunder, the Credit Parties will disclose to the Agent (or the Canadian Collateral Agent, as applicable) which Receivables, if any, arise out of contracts with the United States or Canada or any department, agency or instrumentality thereof, and will, upon request from the Agent (or the Canadian Collateral Agent, as applicable), use commercially reasonable efforts to execute or cause to be executed any instruments and take any steps required by the Agent (or the Canadian Collateral Agent, as applicable) in order that all monies due or to become due under any such contract shall be assigned to the Agent (or the Canadian Collateral Agent, as applicable) and notice thereof given under the Federal Assignment of Claims Act or any equivalent Canadian statute.  The Credit Parties will, promptly after any Responsible Officer of any of them learns thereof, report to the Agent any material loss or destruction of, or substantial damage to, any portion or component of the Collateral with fair market value in excess of $500,000, and any other matters materially affecting the value, enforceability or collectability of any of the Collateral with fair market value in excess of $500,000.  If any amount payable under or in connection with any Receivable is evidenced by a promissory note or other instrument, as such terms are defined in the Uniform Commercial Code (or, where applicable, or the PPSA (Nova Scotia)), such promissory note or instrument shall be promptly pledged, endorsed, assigned and delivered to the Agent (or the Canadian Collateral Agent, as applicable) as additional Collateral.  The Credit Parties shall not redate, nor allow any of their Subsidiaries to redate, any invoice or sale, or without written notice to the Agent, make or allow to be made sales on extended dating beyond that customary in the industry. Finally, neither any

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Credit Party, nor any of their Subsidiaries, shall be entitled to pledge the Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever.

6.17Agreements.  The Credit Parties shall deliver or cause to be delivered to the Agent copies of all tax sharing agreements and all material employment agreements, management fee agreements, loan agreements, notes and other documentation evidencing any Indebtedness of the Borrower or any Subsidiary not delivered or provided prior to the Closing Date.

6.18Hedging Strategy.  The Credit Parties will enter into and maintain Hedging Obligations permitted hereunder in accordance with and as determined by the hedging policies referred to in Section 4.2(s), with such changes thereto as may be reasonably acceptable from time to time to the Agent.

6.19Canadian Pension Plans; Canadian Benefit Plans.

(a)For each existing, or hereafter adopted, Canadian Pension Plan and Canadian Benefit Plan, the Credit Parties shall operate and administer, in all respects, such plans in compliance with applicable laws and the terms of such plans and shall maintain all necessary governmental approvals which are material in respect of the operation of the Canadian Pension Plans or Canadian Benefit Plans and in a timely fashion comply with and perform in all material respects all of their obligations under and in respect of such Canadian Pension Plans or Canadian Benefit Plans, including under any funding agreements and all applicable laws (including any fiduciary, funding, investment and administration obligations).

(b)All employer and employee payments, contributions and premiums required to be remitted, paid to or in respect of each Canadian Pension Plan or Canadian Benefit Plan shall be remitted or paid by the Credit Parties in a timely fashion in accordance with the terms thereof, any funding agreements and all applicable laws.

(c)The Credit Parties shall deliver to the Lenders (i) if requested by the Lenders, copies of each annual return and other return, report or valuation with respect to each Canadian Pension Plan as filed with any applicable Governmental Authority; (ii) promptly after receipt thereof, a copy of any material direction, order, notice, ruling or opinion that the Credit Parties may receive from any applicable Governmental Authority with respect to any Canadian Pension Plan; (iii) notification within thirty (30) days of any increases having a cost to the Credit Parties in excess of $1,000,000 per annum in the aggregate, in the benefits of any existing Canadian Pension Plan or Canadian Benefit Plan, or the commencement of contributions to any such plan to which the Credit Parties were not previously contributing; (iv) promptly after the occurrence thereof, notice of any default or violation under any Canadian Pension Plan or Canadian Benefit Plan or applicable law or any suit, action, claim or proceeding commenced or threatened in respect of any Canadian Pension Plan or Canadian Benefit Plan or the assets of either that might result in any liability, payment or tax, fine or penalty; (v) promptly after the occurrence thereof, notice of any change in the funding or contribution requirements for any Canadian Pension Plan or Canadian Benefit Plan from that disclosed in Schedule 5.24, which could reasonably be expected, whether taken individually or in the aggregate, to have a Material Adverse Effect; and (vi) any notice or proposal to terminate or wind up, in whole or in part, any Canadian Pension Plan that could result in any increase in costs or contributions, liability,

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payment, fine or penalty or which could reasonably be expected to have a Material Adverse Effect.

6.20Conforming Leasehold Interests; Matters Relating to Additional Real Property Collateral.

(a)If any Credit Party acquires any Material Leasehold Property after the Closing Date, the Credit Party shall use commercially reasonable efforts to cause the landlord with respect to such Material Leasehold Property to execute and deliver to the Agent waivers or subordinations of any and all landlord rights (whether statutory or contractual) held by such landlord with respect to any Collateral located on such Material Leasehold Property.

(b)From and after the Closing Date, in the event that (i) any Credit Party acquires any Material Leasehold Property or any fee interest in any Real Property Asset, or (ii) at the time any Person becomes a Subsidiary (other than a Subsidiary that is not required to become a Borrower or Guarantor), such Person owns or holds any fee interest in any Real Property Asset, excluding any such Real Property Asset the encumbering of which requires the consent of any then-existing senior lienholder, where the Credit Parties are unable to obtain such senior lienholder’s consent (any such non-excluded Real Property Asset described in the foregoing clause (i) or (ii) being an “Additional Mortgaged Property”), such Credit Party shall deliver to the Agent (or the Canadian Collateral Agent, as applicable), as soon as reasonably practicable after such Person acquires such Additional Mortgaged Property, the following (subject to Section 6.20(c)):

(A)Additional Mortgages.  A fully executed (and where required, notarized) Mortgage (or, in the discretion of the Agent (or the Canadian Collateral Agent, as applicable), an amendment to an existing Mortgage) (each an “Additional Mortgage” and, collectively, the “Additional Mortgages”), in proper form for recording in the applicable jurisdiction, encumbering the interest of such Credit Party in such Additional Mortgaged Property, and the Agent (or the Canadian Collateral Agent, as applicable) shall have the right in its sole discretion to record such Additional Mortgage;

(B)Surveys.  With respect to each Additional Mortgaged Property located in the United States or constituting a Mill Property, such surveys or surveyor certificates as the Agent may reasonably require;

(C)Deeds.  Copies of all deeds by which such Credit Party received title with respect to each Additional Mortgaged Property that is a fee interest in a Real Property Asset;

(D)Leases.  Copies of all leases between any Credit Party and any landlord or tenant with respect to any Material Leasehold Property, including any and all modifications, supplements, and amendments thereto.

(E)Matters Relating to Flood Hazard Properties.  (1) Evidence as to whether any Additional Mortgaged Property that is located in the United States or is a Mill Property is a Flood Hazard Property and (2) if any such

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Additional Mortgaged Property is a Flood Hazard Property, evidence that the applicable Credit Party has obtained flood insurance as required by law with respect to each such Flood Hazard Property in amounts reasonably approved by the Agent, or evidence reasonably acceptable to the Agent that such insurance is not available;

(F)Title Insurance.  (1) If required by the Agent, ALTA mortgagee title insurance policies (or the Canadian equivalent, as applicable) or unconditional commitments therefor (the “Additional Mortgage Policies”) issued by the Title Company with respect to the Additional Mortgaged Property, in an amount not less than the fair market value of the Additional Mortgaged Property, or such lesser amount as may be reasonably satisfactory to the Agent, insuring fee simple title or leasehold title, as applicable, to each such Additional Mortgaged Property vested in such Credit Party and assuring the Agent that such Additional Mortgage creates a valid and enforceable first priority Lien on such Additional Mortgaged Property, subject only to any standard or other exceptions as may be reasonably acceptable to the Agent and which appear as exceptions on Schedule B to the applicable Additional Mortgage Policy, which Additional Mortgage Policy (a) shall include endorsements (to the extent available) for customary matters reasonably requested by the Agent, including, but not limited to, those endorsements listed on Schedule 4.2(r) and (b) shall provide for affirmative insurance and such reinsurance as may be reasonable and customary and as the Agent may reasonably request, all of the foregoing in form and substance reasonably satisfactory to the Agent; and (2) evidence reasonably satisfactory to the Agent that such Credit Party has (a) delivered to the Title Company all certificates and affidavits required by the Title Company in connection with the issuance of the Additional Mortgage Policy and (b) paid to the Title Company or to the appropriate Governmental Authorities all expenses and premiums of the Title Company in connection with the issuance of the Additional Mortgage Policy and all recording and stamp taxes (including mortgage recording taxes, fees and other charges and intangible taxes) payable in connection with recording the Additional Mortgage in the appropriate real estate records;

(G)Copies of Documents Relating to Title Exceptions.  Copies of all recorded documents listed as exceptions to title or otherwise referred to in each Additional Mortgage Policy;

(H)Opinions of Counsel.  (1) A favorable opinion of counsel (which counsel shall be reasonably satisfactory to the Agent), as to the due authorization, execution and delivery by such Credit Party of such Additional Mortgage and such other matters as the Agent may reasonably request, and (2) an opinion of counsel (which counsel shall be reasonably satisfactory to the Agent) in the state or province in which such Additional Mortgaged Property is located with respect to the enforceability of the form of Additional Mortgages to be recorded in such state or province and such other reasonable and customary matters (including without limitation any matters governed by the laws of such

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state regarding personal property security interests in respect of any Collateral) as the Agent may reasonably request, in each case in form and substance reasonably satisfactory to the Agent;

(I)Environmental Audit.  If required by the Agent, reports and other information in form, scope and substance reasonably satisfactory to the Agent and prepared by environmental consultants reasonably satisfactory to the Agent and accompanied by reliance letters where applicable, concerning any Environmental Claims or Environmental Liabilities to which any Credit Party may be subject with respect to such Additional Mortgaged Property; and

(J)Taxes.  Evidence reasonably satisfactory to the Agent (or the Canadian Collateral Agent, as applicable) that there are no outstanding material taxes, levies, duties, imposts, deductions, charges (including water and sewer charges), withholdings, assessments or impositions of any kind which have been due and payable for more than thirty (30) days with respect to such Additional Mortgaged Property, except to the extent that any such matters are being contested in accordance with the terms of Section 6.2.

(c)In the case of the acquisition in any transaction or series of related transactions by any Credit Party of one or more Additional Mortgaged Properties having an acquisition price of $250,000 or less in the aggregate, the applicable Credit Party shall not be required to deliver the items set forth in Section 6.20(b)(ii)(I) with respect to such Additional Mortgaged Properties, and the remaining items required to be delivered for such Additional Mortgaged Properties pursuant to  Section 6.20(b) shall be delivered quarterly, thirty (30) days after the end of each fiscal quarter for all such Additional Mortgaged Properties acquired during such fiscal quarter; provided, however, that in the event that the Credit Parties acquire (i) any such properties in any quarter having an acquisition price in excess of $2,000,000 in the aggregate, or (ii) any such property that is or is expected to be material to its operations, the applicable Credit Parties shall deliver such remaining items to the Agent (or the Canadian Collateral Agent, as applicable) as soon as reasonably practicable thereafter.

7.Negative Covenants.

The Credit Parties covenant and agree with the Agent and the Lenders that prior to the termination of this Agreement, the Credit Parties will not do any of the following:

7.1Indebtedness.  Create, incur, suffer or permit to exist, or assume or guarantee, directly or indirectly, or become or remain liable with respect to any Indebtedness, whether direct, indirect, absolute, contingent, or otherwise, except the following:

(a)Indebtedness to the Lenders and the Agent pursuant hereto;

(b)Indebtedness secured by Liens permitted by Section 7.2 hereof;

(c)Purchase money Indebtedness (including the amount of any Capital Lease Obligations required to be capitalized and included as a liability on the consolidated balance sheet of the Credit Parties and their Subsidiaries incurred to finance Capital Expenditures)

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including under conditional sales agreements and other title retention arrangements but excluding purchase money Indebtedness incurred in respect of Inventory; provided that the aggregate amount of such purchase money Indebtedness incurred during any fiscal year of the Credit Parties shall not exceed $5,000,000;

(d)Other liabilities existing on the date of this Agreement and set forth on Schedule 5.16 attached hereto, with no renewals, extensions, modifications or increases thereof being permitted, unless the same constitutes Refinancing Indebtedness;

(e)Current accounts payable and unsecured current liabilities (including current accrued expenses), not the result of borrowings, to vendors, suppliers, landlords, lessors and persons providing services, for expenditures on ordinary trade terms for goods and services normally required by the Credit Parties or any of their Subsidiaries in the ordinary course of business;

(f)(i) Indebtedness of any Credit Party to any other Credit Party, and (ii) the Unpledged Inter-Company Loans, but only to the extent that there are corresponding Pledged Inter-Company Loans then outstanding with at least an equal aggregate outstanding balance, provided, that, in case of both clause (i) and (ii), no such Indebtedness may be cancelled, compromised or otherwise discounted in any respect without the written consent of the Required Lenders;

(g)Contingent Obligations of a Credit Party with respect to (i) Indebtedness of another Credit Party that is permitted hereunder or (ii) Indebtedness of an Offshore Entity that is permitted under  Section 7.20;

(h)Current and deferred taxes and other assessments and governmental charges (to the extent permitted by  Section 7.2(e) hereof);

(i)Customary and prudent Hedging Obligations entered into in the ordinary course of business with the Agent, any Lender or any of their respective Affiliates for the sole purpose of protecting the Credit Parties and their Subsidiaries against fluctuations in interest rates, currency exchange rates, commodity (including pulp) prices and similar risks, so long as such Hedging Obligations are not speculative in nature and are incurred in the normal course of business and consistent with industry practices, and, with respect to Hedging Obligations constituting Bank Products;

(j)Refinancing Indebtedness, to the extent the same relates to any Indebtedness permitted by Sections 7.1(c) and 7.1(d) hereof;

(k)Indebtedness incurred in connection with the financing of environmental remediation or Capital Expenditures made to acquire, develop, construct, install, equip or replace existing Equipment, in each case only to the extent (i) such Equipment is primarily intended to establish, maintain or improve the compliance by such Credit Party with applicable Environmental Law (including, as is necessary to maintain certain licenses or permits held by the Credit Parties and required in the conduct of their businesses), (ii) such Indebtedness does not exceed $30,000,000 in the aggregate at any time outstanding, (iii) such Indebtedness (A) is loaned by or guaranteed by a Governmental Authority or government-sponsored entity and is

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interest-free or at a below-market interest rate, (B) is subject to customary intercreditor arrangements acceptable to the Agent in its sole discretion, and (C) is secured only by Liens permitted by Section 7.2(l);

(l)unsecured letters of credit issued by any third party for the account of any Credit Party, provided that at no time shall the sum of the Letter of Credit Exposure Amount plus the outstanding face amount of all letters of credit issued pursuant to this Section 7.1(l) plus the drawn and unreimbursed amount of such letters of credit exceed $20,000,000;

(m)Senior unsecured Indebtedness, and/or senior subordinated unsecured Indebtedness, evidenced by Additional Senior Notes, provided, that (i) the sum of the outstanding principal amount of all Additional Senior Notes and the Senior Notes shall not exceed $375,000,000, and (ii) upon the incurrence of any Additional Senior Notes, the Fixed Charge Coverage Ratio for the Borrowers and their Subsidiaries (after giving effect to the incurrence of the Additional Senior Notes) shall be greater than 1.15 to 1.00 for the most recently completed four quarter period, assuming that for purposes of calculating the Fixed Charge Coverage Ratio for such period (calculated on a pro forma basis in a manner reasonably acceptable to the Agent) such Indebtedness was incurred on the first day of such applicable period;

(n)other Indebtedness in an aggregate amount not to exceed $10,000,000 at any one time outstanding;

provided, however, that notwithstanding the foregoing, in no event shall the Credit Parties enter into any Hedging Obligation constituting Bank Products at any time when the Hedging Obligations Aggregate Amount exceeds $20,000,000, or which would cause the Hedging Obligations Aggregate Amount to exceed $20,000,000 immediately after the incurrence thereof.

The Credit Parties, the Agent, the Canadian Collateral Agent and the Lenders agree that, notwithstanding anything contained in Section 7.1(f) or in any other provision contained in this Agreement which may appear to be to the contrary, any and all Indebtedness permitted by Section 7.1(f) hereof (together with any and all Liens from time to time securing the same as permitted by Section 7.2 hereof) is hereby made and at all times hereafter shall be inferior and subordinate in all respects to the Obligations from time to time owing to the Agent or any Lender pursuant hereto and to any Lien against any Collateral from time to time now or hereafter securing any of such Obligations pursuant to the terms hereof and the Security Documents.  Additionally, the Credit Parties, the Agent, the Canadian Collateral Agent and the Lenders agree that, notwithstanding anything contained in any provision of this Agreement, any and all contractual, statutory or constitutional Liens which may now or hereafter held by any Credit Party against any Property of any other Credit Party or any of their Subsidiaries as a result of any intercompany lease or sublease by such Credit Party to such other Credit Party or Subsidiary of any real Property owned or leased by the lessor or sublessor Credit Party are, and at all times hereafter shall be, inferior and subordinate in all respects to any Lien now or hereafter held by the Agent (or the Canadian Collateral Agent, as applicable), for the ratable benefit of the Lender Parties, against any Collateral as security for any of the Obligations pursuant to the terms hereof and the Security Documents.  The Credit Parties

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agree to execute and deliver on their own behalf, and to cause to be executed and delivered by and on behalf of their Subsidiaries, any and all subordination agreements, in form and content reasonably acceptable to the Agent, which the Agent may hereafter require to further evidence the subordination of the Indebtedness permitted by Section 7.1(f) above, the Liens permitted by Section 7.2 and any such contractual, statutory or constitutional landlord’s Liens held by any Credit Party.

7.2Liens.  Create or suffer to exist any Lien upon any of its Property (including without limitation, real property assets and personal property assets, including Stock in its Subsidiaries) now owned or hereafter acquired, or acquire any Property upon any conditional sale or other title retention device or arrangement or any purchase money security agreement; provided, however, that the Credit Parties may create or suffer to exist:

(a)Liens in effect on the date of this Agreement and which are described on Schedule 7.2 attached hereto, provided, that the Property covered thereby does not increase in scope and such Liens may not be renewed and extended (other than continuation filings or similar filings to maintain the effectiveness of any such Lien), unless such renewal and extension is with respect to Refinancing Indebtedness permitted by Section 7.1(j) above;

(b)Liens against the Collateral in favor of the Agent (or the Canadian Collateral Agent, as applicable) as security for the Obligations;

(c)Liens incurred and pledges and deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance, old-age pensions and other social security benefits (not including any lien described in Section 430(k) of the Code);

(d)Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, processors’ and vendors’ liens and other similar liens, incurred in good faith in the ordinary course of business and securing obligations which are incurred in the ordinary course of business and are not overdue for a period of more than thirty (30) days or which are being contested in good faith by appropriate, diligently pursued proceedings as to which the Credit Parties or any of their Subsidiaries, as the case may be, shall, to the extent required by GAAP, consistently applied, have set aside on its books adequate reserves;

(e)Liens securing the payment of taxes, assessments and governmental charges or levies, that are not delinquent, are permitted by Section 6.2 hereof, or are being diligently contested in good faith by appropriate proceedings and as to which adequate reserves have been established in accordance with GAAP; provided, however, that a Reserve against Availability will be established in an amount equal to the aggregate amount of any and all such federal, state, provincial or local taxes which are being diligently contested;

(f)Zoning restrictions, easements, licenses, reservations, provisions, covenants, conditions, waivers, restrictions on the use of property or minor irregularities of title (and with respect to leasehold interests, mortgages, obligations, liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee) which do not in the

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aggregate materially detract from the value of its property or assets or materially impair the use thereof in the operation of its business;

(g)Liens securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, surety, customs and appeal bonds and other obligations of like nature, incurred as an incident to and in the ordinary course of business, including without limitation security given in the ordinary course of business to a public utility, a municipality, or a governmental or other public authority where required by such utility, municipality or governmental or public authority in connection with the operations of any Credit Party, in each case in an amount not to exceed $5,000,000 and not secured by Inventory or Receivables;

(h)Purchase money Liens securing the Indebtedness permitted by Section 7.1(c) above, provided, as a result of the creation of any such Lien, (i) no Default or Event of Default shall have occurred, (ii) the principal amount of such Lien does not exceed 100% of the purchase price of the asset acquired with such permitted Indebtedness plus accrued interest on such Indebtedness plus protective advances made by the holder of such permitted Indebtedness, and (iii) such Lien shall not apply to any other Property other than the asset acquired with such purchase money Indebtedness;

(i)Liens in favor of any Credit Party securing any Indebtedness permitted pursuant to Section 7.1(f)(i) hereof;

(j)Liens arising from judgments, orders, or other awards not constituting an Event of Default;

(k)Liens upon Property (i) acquired by the Credit Parties after the Closing Date, (ii) purchased in whole or in substantial part (in no event less than 75% of the aggregate purchase price) with proceeds of Indebtedness permitted pursuant to Section 7.1(k) hereof, which Liens secure only such Indebtedness, and (iii) which Property, in the reasonable discretion of the Agent, can be readily removed from the facility on which it is located at a commercially reasonable cost and without any damage (other than de minimus damage) or impairment (other than de minimus impairment) of the use, functionality or value of such facility;

(l)all rights reserved to or vested in any Governmental Authority by the terms of any lease, franchise, grant or permit held by any Credit Party or by any statutory provision to terminate any such lease, license, franchise, grant or permit or to require annual or periodic payments as a condition of the continuation thereof, or to distrain against or to obtain a Lien on any Property of any Credit Party in the event of failure to make such annual or other periodic payments;

(m)Liens upon cash in an amount not to exceed $5,000,000 at any time to secure Hedging Obligations;

(n)rights of tenants, subtenants, licensees or other parties in possession, if any, but only (i) as tenants or licensees or otherwise to the extent of their possessory rights or interests and (ii) so long as such rights do not, in the aggregate, materially detract from the value

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of the Properties of the Credit Parties or materially impair the use thereof in the operation of the business of the Credit Parties;

(o)with respect to any lease of any Leasehold Property entered into in accordance with the terms hereof, the rights of the landlord to such leased property and the terms and conditions contained in the corresponding lease, but only so long as such Credit Party is current with respect to payment of all rent and other amounts due to such landlord under such lease;

(p)any encumbrance for which adequate title insurance is provided against losses that may be suffered by the Agent (or the Canadian Collateral Agent, as applicable) and the Lenders, which insurance is reasonably acceptable to the Agent (or the Canadian Collateral Agent, as applicable); and

(q)other Liens securing the payment of obligations, other than Indebtedness or Hedging Obligations, in an amount not to exceed $5,000,000 at any time outstanding; provided, that such Liens are not upon Inventory, Receivables, Eligible Equipment, Eligible Real Estate, Timberland Properties or Deposit Accounts;

Provided, however, notwithstanding anything contained above in this Section 7.2 to the contrary, if any of the permitted Liens are of the type that are being contested in good faith by appropriate proceedings as to the Credit Parties, the Indebtedness giving rise to such contested Lien(s) must be immediately paid upon commencement of any foreclosure process or proceeding with respect to such Lien(s) unless the same shall be effectively stayed or a surety bond or title insurance with respect thereto (which is reasonably satisfactory in all respects to the Agent), is posted.

7.3Contingent Liabilities.  Create, incur, suffer or permit to exist, directly or indirectly, any Contingent Obligations, other than:

(a)The Obligations of each Guarantor to the Agent, the Canadian Collateral Agent and the Lenders under the terms of any Guaranty;

(b)Any Contingent Obligations of the Credit Parties under any Hedging Obligations permitted by Section 7.1(i) above;

(c)The guarantees by the Credit Parties of any obligations of any other Credit Party that are not prohibited by this Agreement or of any Indebtedness of any other Credit Party if such Indebtedness so guaranteed is permitted under the terms of Section 7.1 above; and

(d)The guarantees by any Credit Party of Indebtedness created, incurred or existing pursuant to the terms of Section 7.20 hereof, provided, that, at all times any such guaranty is in effect the maximum amount of such guaranteed Indebtedness shall be deemed to be an Investment in an Offshore Entity on the date such guaranty is entered into, and any such Investment must be permitted under Section 7.7 hereof (whether through one or a combination of the clauses thereof so long as such amounts aggregate to such maximum amount).

7.4Mergers, Consolidations and Dispositions and Acquisitions of Assets.  In any single transaction or series of related transactions, directly or indirectly:

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(a)Wind up its affairs, liquidate or dissolve;

(b)Be a party to any merger or consolidation;

(c)(i) Sell, convey, lease, transfer or otherwise dispose of all or any portion of the Property (except for the sale of Inventory in the ordinary course of business) of any Credit Party, or agree to take any such action, or (ii) permit any Offshore Entity to sell, convey, lease, transfer or otherwise dispose of all or any substantial portion of the Property (except for the sale of Inventory in the ordinary course of business) of such Offshore Entity, or permit any Offshore Entity to agree to take any such action;

(d)Sell, assign, pledge, transfer or otherwise dispose of, or in any way part with control of, any Stock of any of its Subsidiaries or of any Offshore Entity or any Indebtedness or obligations of any character of any of its Subsidiaries or of any Offshore Entity, or permit any such Subsidiary or Offshore Entity to do so with respect to any Stock of any other subsidiary or any Indebtedness or obligations of any character of any Credit Party, any of their Subsidiaries or any Offshore Entity, or permit any of their Subsidiaries or any of the Offshore Entities to dissolve or liquidate, or to issue any additional Stock other than to the Credit Parties or, solely with respect to Neenah Germany’s subsidiaries, to Neenah Germany or one of its directly or indirectly wholly owned subsidiaries;

(e)Take any board of director or shareholder action with a view toward dissolution, liquidation or termination; or

(f)Purchase or otherwise acquire, directly or indirectly, in a single transaction or a series of related transactions, all or a substantial portion of the assets of any Person or any shares of Stock of, or similar interest in, any Person;

provided, however that notwithstanding the foregoing, any of the following described actions may be undertaken, so long as no Default or Event of Default then exists or would exist immediately after giving effect to the applicable event:

(1)any Subsidiary of any Credit Party may merge or consolidate with any Credit Party or any other Subsidiary of any Credit Party, provided, that if (i) one or more of the entities so merging or consolidating was a Borrower, and if the surviving entity is not yet a Borrower, such surviving entity must be a wholly-owned Domestic Subsidiary and such surviving entity shall simultaneously with such merger, execute and deliver to the Agent a Joinder Agreement with respect to this Agreement, together with all requested Security Documents, as required at such time by the Agent, appropriately completed in Proper Form, and (ii) one or more of the entities so merging or consolidating was a Guarantor (and so long as none of the entities was a Borrower, in which event clause (i) shall apply), and if the surviving entity is not yet a Guarantor, such surviving entity must be a wholly-owned Canadian Subsidiary and such surviving entity shall simultaneously with such merger, execute and deliver to the Agent a Guaranty or a Joinder

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Agreement, together with all requested Security Documents, as required at such time by the Agent, appropriately completed in Proper Form;

(2)any of the Credit Parties’ Subsidiaries may sell, lease, transfer or otherwise dispose of any of its assets to a Credit Party or any other wholly-owned Subsidiary of the Borrower, provided, that if (i) the entity selling, leasing, transferring or otherwise disposing of its assets is a Borrower, and if the entity to whom the sale, lease, transfer or other disposition was made is not a Borrower, such entity must be a wholly-owned Domestic Subsidiary and such entity shall simultaneously with such lease, transfer or disposition, execute and deliver to the Agent a Joinder Agreement, together with all requested Security Documents, as required at such time by the Agent, appropriately completed in Proper Form, and (ii) the entity selling, leasing, transferring or otherwise disposing of its assets is a Guarantor, and if the entity to whom the sale, lease, transfer or other disposition was made is not a Borrower or a Guarantor, such entity must be a wholly-owned Canadian Subsidiary and such entity shall simultaneously with such lease, transfer or disposition, execute and deliver to the Agent a Guaranty or a Joinder Agreement, together with all requested Security Documents, as required at such time by the Agent, appropriately completed in Proper Form;

(3)any Subsidiary may be dissolved or liquidated, so long as such dissolution or liquidation results in all assets of such Subsidiary being owned by a Credit Party or a wholly-owned Subsidiary; provided, that if (i) the entity dissolving or liquidating is a Borrower, and if the entity to whom all assets of such dissolving or liquidating entity are transferred is not yet a Borrower, such entity must be a wholly-owned Domestic Subsidiary and such entity shall simultaneously with such transfer execute and deliver to the Agent a Joinder Agreement, together with all requested Security Documents, as required at such time by the Agent, appropriately completed in Proper Form, and (ii) the entity dissolving or liquidating is a Guarantor, and if the entity to whom all assets of such dissolving or liquidating entity are transferred is not yet a Borrower or a Guarantor, such entity must be a wholly-owned Canadian Subsidiary and such entity shall simultaneously with such transfer execute and deliver to the Agent a Guaranty or a Joinder Agreement, together with all requested Security Documents, as required at such time by the Agent, appropriately completed in Proper Form;

(4)(A) any of the Credit Parties may (ii) sell Inventory in the ordinary course of business, (iii) sell, exchange or otherwise dispose of Permitted Investment Securities in the ordinary course of business; (iv) terminate, surrender or sublease a lease of real Property in the ordinary course of business; (v) sell or otherwise dispose of equipment and fixtures that are obsolete, worn out or no longer needed in the business of the Credit Parties; (vi) sell, exchange, lease, transfer or otherwise dispose of

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(in each case for reasonably equivalent value) Neenah Paper FR, LLC’s facility located in Ripon, California;  (vii) sell, exchange, lease, transfer or otherwise dispose of (in each case for reasonably equivalent value) Nova Scotia Woodlands so long as the net cash proceeds (i.e., gross proceeds net of reasonable and customary out-of-pocket transaction costs and expenses incurred by the Credit Parties in connection with such transaction) received in readily available funds by the Credit Parties upon the consummation of such disposition are not less than $65,000,000; provided, that the net cash proceeds received in connection therewith at any time are contemporaneously applied in accordance with Section 2.7(c); (viii) sell, exchange, lease, transfer or otherwise dispose of (in each case for reasonably equivalent value) real Property having a fair market value not to exceed the sum of (1) $2,000,000 for all such transactions in the aggregate in any calendar year; plus (2) the excess (if any) of $2,000,000 over the amount of dispositions pursuant to this clause (A) (viii) consummated in the immediately preceding calendar year; and (ix) sell or otherwise dispose of, for fair and adequate consideration any other equipment and fixtures having a fair market value not to exceed $1,000,000 in the aggregate during the period from the Closing Date through the Termination Date; provided that, upon the occurrence and during the continuation of a Dominion Event, all net proceeds of any and all of the foregoing shall be paid to the Agent for application in accordance with Section 2.7; and (B) any of the Offshore Entities may (i) sell, exchange or otherwise dispose of marketable investments in which their cash is invested in the ordinary course of business; (ii) terminate, surrender or sublease a lease of real Property in the ordinary course of business; (iii) sell or otherwise dispose of equipment and fixtures that are obsolete, worn out or no longer needed in the business of the Offshore Entities; (iv) in the case of Neenah Germany and its subsidiaries, assign their accounts receivable, or any portion thereof, to secure a line of credit in the maximum principal amount of €15,000,000; and (v) sell or otherwise dispose of, for fair and adequate consideration, any other equipment and fixtures having a fair market value not to exceed €1,500,000 in the aggregate during the period from the Closing Date through the Termination Date;

(5)(i)  to the extent any Collateral is sold or otherwise permanently disposed of as permitted by this Section 7.4, such Collateral shall be sold or otherwise disposed of free and clear of the Liens of the Security Documents and the Agent (or the Canadian Collateral Agent, as applicable) shall take such actions, including executing and filing appropriate releases, as are appropriate in connection therewith, and no approval of any of Lenders shall be required therefor, and (ii) to the extent any Collateral is leased as permitted by this Section 7.4, the Parent or the applicable Credit Party may request that the Agent (or the Canadian Collateral Agent, as applicable) enter into a subordination, non-disturbance and attornment agreement in form and substance acceptable to

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the related lessee and to the Agent or the Canadian Collateral Agent, as applicable (and no approval of any of the Lenders shall be required therefor) and the Agent or the Canadian Collateral Agent may require the delivery of Security Documents, including without limitation, a collateral assignment of lease, in form and substance reasonably acceptable to it; and

(6)  the Credit Parties may purchase or otherwise acquire all or a substantial portion of the assets of one or more Persons, or any shares of Stock of, or similar interest in, any Person; provided, that, (i) such transaction or series of transactions is not otherwise prohibited hereunder, (ii) the Credit Parties comply with the requirements hereof, including without limitation Section 6.19 and Section 6.20, in connection with such transaction or series of transactions, (iii) the aggregate purchase price (including merger consideration, if applicable) paid by the Credit Parties in such transaction or series of transactions does not exceed $80,000,000 in any twelve month period or $150,000,000 in the aggregate, (iv) the Availability immediately after giving effect to the completion of any such transaction and any series of transactions shall not be less than $45,000,000 on a pro forma basis (and the Borrowers shall provide the Agent with a pro forma calculation in form and substance reasonably satisfactory to the Agent) which includes all consideration given in connection with such transaction or series of transactions as  having been paid in cash at the time of the initial completion of any such transaction or series of transactions, and (vi) the Fixed Charge Coverage Ratio for the Borrowers and their Subsidiaries (after giving effect to such transaction or series of transactions) shall be greater than 1.15 to 1.00 for the most recently completed four quarter period assuming that for purposes of calculating the Fixed Charge Coverage Ratio for such period (calculated on a pro forma basis in a manner acceptable to the Agent) such transaction or series of transactions occurred on the first day of such applicable period.

7.5Nature of Business.  Materially change the nature of its business or enter into any business which is substantially different from the business in which it is engaged as of the Closing Date, except for entry into related businesses that do not in the aggregate substantially change the overall composition of the Credit Parties’ or the Offshore Entities respective businesses; provided that the Credit Parties shall not be required to remain in the timber or pulp business.

7.6Transactions with Related Parties.  Except for any Permitted Affiliate Transactions and other transactions specifically permitted by Section 7.4 or 7.7, enter into any other transaction, contract, license or agreement of any kind with any Affiliate, officer or director of any Credit Party or any of their Subsidiaries, unless such transaction, contract or agreement is made upon terms and conditions not less favorable to such Person than those which could have been obtained from wholly independent and unrelated third parties.

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7.7Investments, Loans.  Make, directly or indirectly, any Investment in or loan or advance to any Person, or make any commitment to make such loan, advance or Investment, except:

(a)Stock of any Domestic Subsidiary or any Guarantor acquired or issued in accordance with the other provisions of this Agreement, including without limitation, the provisions of Section 6.10 above, or Stock of any other Subsidiary with the prior written consent of the Agent;

(b)Permitted Investment Securities;

(c)loans otherwise permitted by the provisions of Section 7.1(f) above;

(d)loans to employees of any Credit Party made in the ordinary course of business, so long as the aggregate amount of all such loans outstanding at any time does not exceed $500,000;

(e)loans or advances to, or Investments in, any Credit Party;

(f)loans or capital contributions to Neenah Menasha Water and Power Company not to exceed $500,000 in any twelve (12)-month period;

(g)loans, advances or Investments in FinCo in an aggregate amount not to exceed €250,000 at any time outstanding;

(h)Pledged Inter-Company Loans, but solely to the extent an Unpledged Inter-Company Loan in an equal amount is made promptly thereafter and remains outstanding unless reduced in connection with a substantially contemporaneous reduction of the Pledged Inter-Company Loans;

(i)guarantees by one or more Credit Parties of Indebtedness of an Offshore Entity that is permitted under Section 7.20 and for which Reserves equal to the amount of such guaranteed Indebtedness have been established and are being maintained with respect to Availability; and

(j)Other loans, advances or Investments not covered by clauses (a) through (i) above, in any aggregate amount not to exceed $15,000,000 at any time outstanding.

7.8ERISA Compliance.

(a)At any time engage in any Prohibited Transaction with respect to a Plan which could reasonably be expected to result in a material liability; or permit any Plan to be terminated in a manner which could result in the imposition of a Lien on any Property of any Credit Party or any of their Subsidiaries pursuant to ERISA.

(b)Engage in any transaction in connection with which any Credit Party or any Subsidiary thereof would or could reasonably be expected to be subject to either a material

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civil penalty assessed pursuant to the provisions of Section 502 of ERISA or a material tax imposed under the provisions of Section 4975 of the Code.

(c)Terminate any Plan in a “distress termination” under Section 4041 of ERISA, or take any other action which could reasonably be expected to result in a material liability of any Credit Party or any Subsidiary thereof to the PBGC.

(d)Fail to make payment when due of all amounts which, under the provisions of any Plan, any Credit Party or any Subsidiary thereof is required to pay as contributions thereto, or, with respect to any Plan, fail to satisfy the minimum funding standard (as described in Section 302 of ERISA and Section 412 of the Code, whether or not waived, with respect thereto.

(e)Adopt an amendment to any Plan restricted by Section 436 of the Code.

7.9Trade Credit Extensions.  Extend credit to customers other than normal and prudent extensions of trade credit for goods and services in the ordinary course of business.

7.10Change in Accounting Method.  Make or permit any change in accounting method or financial reporting practices except as may be required by GAAP, as in effect from time to time.

7.11Redemption, Dividends, Stock Issuance, Distributions and Payments.  At any time:

(a)Redeem (whether as a result of mandatory or optional redemption obligations or rights), purchase, retire or otherwise acquire, directly or indirectly, any shares of its Stock, any warrants or other similar instruments issued by any Credit Party or any Subsidiary thereof or set aside any amount for any such purpose;

(b)Declare or pay, directly or indirectly,  any dividend, except (i) dividends paid to a Credit Party which is a direct parent of the Credit Party paying a dividend, (ii) non-cash dividends paid to the holders of any Stock of the Parent in the form of additional Stock of the Parent, and (iii) Cash Dividends to the holders of any Stock of the Parent, so long as (A) no Default or Event of Default exists on the date that the applicable Cash Dividend is declared or paid, or would result from the payment thereof, (B) the aggregate amount of such Cash Dividends paid during any twelve (12)-month period does not exceed $10,000,000 in the aggregate, (C) such Cash Dividend is legally declared and payable, (D) the Borrowers shall have pro forma Availability of at least $25,000,000 on the date of such payment and, on an average basis, for the sixty (60)-day period before the payment of such dividends, in each case after giving effect to such payment, and (E) Borrower’s Agent shall have (x) given the Agent at least five (5) Business Days prior written notice specifying the amount and date of such proposed Cash Dividend and, (y) if required by the Agent, submitted a certificate of a Responsible Officer setting forth reasonably detailed calculations demonstrating compliance with the required Availability test described above and certifying that the other conditions set forth in this clause (b) have been satisfied;

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(c)Make any other distribution of any Property, cash, securities or a combination thereof, with respect to (whether by reduction of capital or otherwise) any shares of its Stock except as permitted in Section 7.11(b) above;

(d)Set apart any money for a sinking fund or other analogous fund for any dividend or other distribution on its Stock or for any redemption, purchase, retirement, or other acquisition of any of its Stock; or

(e)Redeem (whether as a result of mandatory or optional redemption obligations or rights), purchase, defease or retire for value, or make any principal payment on, any Subordinated Indebtedness, prior to the Termination Date (other than any non-cash conversion to equity and any principal payments on Indebtedness permitted under Section 7.1(f)); provided, that each principal payment made with respect to an Unpledged Inter-Company Loan must substantially coincide with a principal payment in the same amount under a Pledged Inter-Company Loan, such that, after the initial advance on the Unpledged Inter-Company Loan, the outstanding balance of the Pledged Inter-Company Loans and the Unpledged Inter-Company Loans remain equal at all times (after giving effect to any such substantially contemporaneous principal payment).

7.12Fixed Charge Coverage Ratio.

Permit the Fixed Charge Coverage Ratio of the Borrowers and their Subsidiaries to be less than 1.1 to 1.0 as of the last day of any fiscal quarter for the four quarter period ending on such day, such ratio to be tested with respect to the most recently ended fiscal quarter on any date from time to time on which Availability falls below $20,000,000, and on the last day of each fiscal quarter ending thereafter, in each case until such time when Availability has exceeded $35,000,000 for sixty (60) consecutive days and no Default or Event of Default is continuing.

7.13Sale of  Receivables.  Sell, assign, discount, transfer or otherwise dispose of any Receivables, promissory notes, drafts or trade acceptances or other rights to receive payment held by it, with or without recourse.

7.14Sale and Lease-Back Transactions.  (a) Enter into any arrangement, directly or indirectly, with any Person whereby any Credit Party shall sell or transfer any Property, real or personal, which is used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such Property or other Property which such Credit Party intends to use for substantially the same purpose or purposes as the Property being sold or transferred, except for the sale of Property, the aggregate value of which does not exceed $5,000,000 during the term of this Agreement, so long as (i) no Default or Event of Default then exists or would exist immediately after giving effect to such sale, and (ii) upon the occurrence and during the continuation of a Dominion Event, the net proceeds of such sale are used to prepay Revolving Loans pursuant to Section 2.5, or (b) cause any Offshore Entity to enter into any arrangement, directly or indirectly, with any Person whereby any Offshore Entity shall sell or transfer any Property, real or personal, which is used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such Property or other Property which such Offshore Entity intends to use for substantially the same purpose or purposes as the Property being sold or transferred, except for the sale of Property, the aggregate value of which does not,

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during the term of this Agreement, when added to the aggregate amount of all Indebtedness of the Offshore Entities (other than FinCo) at any time outstanding, exceed €50,000,000.

7.15Change of Name or Place of Business.  Permit any Credit Party to change its address, name, identity, type of organization, corporate structure (e.g. by merger, consolidation, change in corporate form or otherwise), jurisdiction of organization, location of its chief executive office or principal place of business or the place it keeps its material books and records, unless the Borrowers’ Agent has (a) notified the Agent and the Canadian Collateral Agent of such change in writing at least ten (10) Business Days before the effective date of such change, (b) taken such action, reasonably satisfactory to the Agent (or the Canadian Collateral Agent, as applicable), to have caused the Liens against all Collateral in favor of the Agent (or the Canadian Collateral Agent, as applicable) for the ratable benefit of the Lender Parties to be at all times fully perfected and in full force and effect and (c) delivered such certificates of Governmental Authorities as the Agent (or the Canadian Collateral Agent, as applicable) may require substantiating such change.

7.16Restrictive Agreements.  Other than as provided in this Agreement, the Senior Note Documents and the Additional Senior Note Documents (but only to the extent the conditions and restrictions in the Additional Senior Note Documents are no more restrictive than those restrictions and conditions in the Senior Note Documents), directly or indirectly (a) agree to restrict or condition (i) the payment of any dividends or other distributions to any Credit Party; (ii) the payment of any Indebtedness owed to any Credit Party; (iii) the making of any loans or advances to any Credit Party; or (iv) the transfer of any of its properties or assets to any Credit Party, or (b) cause any Offshore Entity to agree to restrict or condition the payment of any dividends or other distributions to any Offshore Entity or to any Credit Party to the extent such condition or restrictions would prohibit the distribution of amounts necessary to pay the interest accruing on the Unpledged Inter-Company Loans.

7.17Tax Classification.  Elect, without the prior consent of the Agent, a different classification for United States federal tax purposes than the classification that such Credit Party, or such Subsidiary, as the case may be, had when such Person became a party to this Agreement or any other Loan Document.

7.18Deposit Accounts.  (a) Establish any additional deposit accounts for any purpose (i) which are not listed on Schedule 5.29 (as updated from time to time pursuant to the terms hereof) and (ii) unless such additional deposit accounts are Controlled Accounts; (b) allow any of Parent’s foreign exchange accounts identified in Schedule 5.29, each with Bank of America, N.A., to remain open or to be reopened, or to hold any funds of any Credit Party, unless such foreign exchange accounts are covered by a Tri-Party Agreement containing arrangements satisfactory to the Agent with respect to such accounts, or (c) allow (i) the aggregate balance of one or more accounts heretofore or hereafter established in the ordinary course of business as part of the administration of employee benefits or other corporate-related service matters and not subject to a Tri-Party Agreement to exceed $100,000 or (ii) allow any account referred to as a “Disbursement/Pass-Through Account” on Schedule 5.29 (as in effect on the Closing Date) to have a positive balance of funds of any Credit Party (except as specifically provided in such Schedule as in effect on the Closing Date) unless such account is subject to a Tri-Party Agreement.

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7.19Organizational Documents; Tax Sharing Agreements.  Modify any of their Organizational Documents in a manner that is adverse to the Lenders; or enter into any tax sharing agreement that is, or modify any tax sharing agreement in a manner that is, adverse to the Lenders.

7.20Limitation on Indebtedness of Offshore Entities.  Permit (a) FinCo to create, incur, assume or suffer to exist Indebtedness other than the Pledged Inter-Company Loans, and (b) the Offshore Entities (other than FinCo) to create, incur, assume or suffer to exist Indebtedness in excess of €50,000,000 at any time outstanding.

8.Events of Default and Remedies.

8.1Events of Default.  If any of the following events shall occur and be continuing, then the Agent (or the Canadian Collateral Agent, as applicable) may (and, if directed by the Required Lenders, shall), by written notice (or facsimile notice) to the Borrowers’ Agent, take any or all of the following actions at the same or different times:  (i) accelerate the Termination Date and declare the Loans, all Letter of Credit Advances, the Commitment Fees and all other Obligations then outstanding to be, and thereupon the Loans, said Letter of Credit Advances, the Commitment Fees and all other Obligations shall forthwith become, immediately due and payable, without further notice of any kind, notice of intention to accelerate, presentment and demand or protest, or other notice of any kind all of which are hereby expressly waived by each Credit Party; (ii) terminate all or any portion of the Commitments and any obligation to issue any additional Letters of Credit; (iii) demand that the Credit Parties provide the Agent, for the ratable benefit of the Lender Parties, and the Credit Parties jointly and severally agree upon such demand to, provide cash collateral in an amount equal to 110% of the aggregate Letter of Credit Exposure Amount then outstanding, pursuant to Section 2.10(k); and (iv) exercise any and all other rights pursuant to the Loan Documents or available under applicable law:

(a)The Credit Parties or any of their Subsidiaries shall fail to pay or prepay (i) any Obligation (other than Related Obligations) constituting principal, as and when due and payable, whether at the due date thereof (by acceleration, lapse of time or otherwise) or at any date fixed for prepayment thereof in accordance with the other provisions of the Loan Documents, (ii) any Obligation (other than Related Obligations) constituting interest or fees within two Business Days of the time such amount is due as and when due and payable, or (iii) any other Obligations (other than Related Obligations) within five (5) Business Days of the time such amount is due and payable; or

(b)Any Credit Party or any Offshore Entity (i) shall fail to pay when due, or within any applicable period of grace, any other Indebtedness (excluding Indebtedness outstanding hereunder) in excess of $5,000,000 in principal amount unless such payment is being contested in good faith (by appropriate proceedings) and adequate reserves have been provided therefor, or (ii) shall default (beyond any applicable grace and curative periods) in any other manner with respect to any other Indebtedness (excluding Indebtedness outstanding hereunder) in excess of $5,000,000 in principal amount if the effect of any such default or event of default shall be to accelerate or to permit the holder of any such other Indebtedness, at its option, to accelerate the maturity of such Indebtedness prior to the stated maturity thereof; or

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(c)Any representation or warranty made or deemed made by any Credit Party in connection with any Loan Document or in any certificate, report, notice or financial statement furnished at any time in connection with this Agreement shall prove to have been incorrect, false or misleading in any material respect when made or deemed to have been made; or

(d)Except as provided in Section 8.1(e) or 8.1(f) below, Default shall occur in the punctual and complete performance or observance of any covenant, condition or agreement to be observed or performed on the part of any Credit Party or any of their Subsidiaries pursuant to the terms of any provision of this Agreement or any other Loan Document, and such Default remains uncured fifteen (15) Business Days after the earlier to occur of (i) the Agent giving written notice of such Default to the Borrowers’ Agent or (ii) any Responsible Officer of any Credit Party or any of their Subsidiaries acquired actual knowledge of the existence of such Default; or

(e)Default shall occur in the punctual and complete performance or observance of any covenant, condition or agreement to be observed or performed on the part of any Credit Party or any of their Subsidiaries pursuant to the terms of Section 6.3 or 6.11 hereof (other than Sections 6.3(f) through Section 6.3(i) and such Default remains uncured for two (2) Business Days; or

(f)Default shall occur in the punctual and complete performance or observance of any covenant, condition or agreement to be observed or performed on the part of any Credit Party or any of their Subsidiaries pursuant to the terms of Section 6.2, Sections 6.3(f) through 6.3(i), Section 6.9, Sections 7.1 through Section 7.20 hereof; or

(g)Final judgment or judgments (or any decree or decrees for the payment of any fine or any penalty) for the payment of an uninsured money award in excess of $2,000,000 in the aggregate shall be rendered against any Credit Party or any Offshore Entity and the same shall remain undischarged and unpaid for a period of thirty (30) days during which execution shall not be effectively stayed or bonded; or

(h)Any Credit Party or any of their Subsidiaries shall have concealed, removed, or permitted to be concealed or removed, any part of its Property, with intent to hinder, delay or defraud its creditors or any of them, or made or suffered a transfer of any of its Property which is or could reasonably be expected to be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or

(i)Any of the following shall occur where such occurrence could reasonably be expected to result in any material liability:  (i) a Reportable Event shall have occurred with respect to a Plan; (ii) the filing by any Credit Party, any ERISA Affiliate, or an administrator of any Plan of a notice of intent to terminate such Plan under the provisions of Section 4041 of ERISA; (iii) the receipt of notice by any Credit Party, any ERISA Affiliate or an administrator of a Plan that the PBGC has instituted proceedings to terminate (or appoint a trustee to administer) such a Plan; (iv) any other event or condition exists which might, in the opinion of the Agent, constitute grounds under the provisions of Section 4042 of ERISA for the termination of or the appointment of a trustee to administer any Plan by the PBGC; (v) a Plan shall fail to maintain a minimum funding standard required by Section 412 of the Code for any plan year or a waiver of

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standard is sought or granted under the provisions of Section 412(c) of the Code; (vi) any Credit Party or any ERISA Affiliate has incurred, or is likely to incur, a liability under the provisions of Section 4062, 4063, 4064 or 4201 of ERISA; (vii) any Credit Party or any ERISA Affiliate fails to pay the full amount of an installment required under Section 430(j) of the Code; or (viii) any Prohibited Transaction involving any Plan; or

(j)This Agreement, any Note, any of the Security Documents or any other Loan Document, or any material provision thereof, shall for any reason cease to be, or shall be asserted by any Credit Party not to be, a legal, valid and binding obligation of any Credit Party, enforceable in accordance with its terms, or the Lien purported to be created by any of the Security Documents shall for any reason cease to be, or be asserted by any Credit Party not to be, a valid, first priority perfected Lien against any material portion of the Collateral (except to the extent otherwise permitted under this Agreement or any of the Security Documents); or

(k)Any Credit Party or any of its Subsidiaries which is a party to any Tri-Party Agreement fails to perform and observe, and/or cause to be performed and observed, all material covenants, provisions and conditions to be performed, discharged and observed by such Credit Party or Subsidiary under the terms of any Tri-Party Agreement; or

(l)Any financial institution (other than JPMorgan) which is a party to any Tri-Party Agreement fails to perform and observe, and/or cause to be performed and observed, all material covenants, provisions and conditions to be performed, discharged and observed by such financial institution under the terms of any Tri-Party Agreement and such failure remains uncured (or such defaulting financial institution and applicable Tri-Party Agreement is not replaced by the Credit Parties with a substitute financial institution and replacement Tri-Party Agreement both reasonably acceptable to the Agent) five (5) Business Days after the Agent gives written notice of such failure to the Borrowers’ Agent; or

(m)A Change of Control shall occur.

In addition, if any of the following events shall occur, then (i) the Loans, the Letter of Credit Advances, the Commitment Fees and all other Obligations then outstanding and payable hereunder shall automatically, without demand, presentment, protest, notice of intent to accelerate, notice of acceleration or other notice to any Person of any kind, all of which are hereby expressly waived by each Credit Party, become immediately due and payable and (ii) all Commitments and further obligations to issue any additional Letters of Credit shall be immediately and automatically terminated:

(n)Any Credit Party or any of their Subsidiaries or any Offshore Entity shall commence a voluntary proceeding seeking liquidation, reorganization, or other relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official of it or a substantial part of its property or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or shall generally fail to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing; or

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(o)An involuntary proceeding shall be commenced against any Credit Party or any of their Subsidiaries or any Offshore Entity seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official for it or a substantial part of its property, and such involuntary proceeding shall remain undismissed and unstayed for a period of 60 days; or

(p)Any involuntary order shall be entered in any proceeding against any Credit Party or any of their Subsidiaries or any Offshore Entity decreeing the dissolution, liquidation or split-up thereof, and such order shall remain in effect for sixty (60) days; or

(q)Any Credit Party or any of their Subsidiaries or any Offshore Entity shall admit in writing its inability to pay its debts as they become due; or

(r)Any Credit Party or any of their Subsidiaries shall suffer any writ of attachment or execution or any similar process to be issued or levied against it or any substantial part of its Property which is not released, stayed, bonded or vacated within thirty (30) days after its issue or levy; or

(s)Any court shall order a meeting of the creditors, or any class of creditors that includes any of the Lender Parties on account of any of the Obligations, of any Credit Party or any of their Subsidiaries, or any Credit Party or any of their Subsidiaries shall request or apply for any such order, or take any corporate action to authorize any such request or application.

8.2Remedies Cumulative.  No remedy, right or power conferred upon the Agent, the Canadian Collateral Agent or any Lender is intended to be exclusive of any other remedy, right or power given hereunder or now or hereafter existing at law, in equity, or otherwise, and all such remedies, rights and powers shall be cumulative.

9.The Agent; the Canadian Collateral Agent.

9.1Appointment, Powers and Immunities.  Each Lender hereby irrevocably appoints and authorizes the Agent to act as its agent hereunder and under the Letters of Credit and the other Loan Documents with such powers as are specifically delegated to the Agent by the terms hereof and thereof, together with such other powers as are reasonably incidental thereto.  Each Lender hereby irrevocably appoints and authorizes the Canadian Collateral Agent to act as its agent hereunder and the other Loan Documents with such powers as are specifically delegated to the Canadian Collateral Agent by the terms hereof and thereof, together with such other powers as are reasonably incidental thereto.  Each Lender hereby irrevocably appoints and authorizes the Agent to act as its agent under the Letters of Credit which the Agent has issued with such powers as are specifically delegated to the Agent by the terms hereof and thereof, together with such other powers as are reasonably incidental thereto.  The Agent or the Canadian Collateral Agent may each perform any and all of their respective duties and exercise their respective rights and powers by or through any one or more sub-agents appointed by either the Agent or the Canadian Collateral Agent in its reasonable credit judgment.  The exculpatory, indemnity, and expense reimbursement provisions of the Loan Documents shall apply to any such sub-agent in such capacity.  The Agent (which such term as used in this Section 9, shall, in each case, (a) include

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references to the Canadian Collateral Agent, mutatis mutandis, and (b) include reference to its (and the Canadian Collateral Agent’s) Affiliates and its own (and the Canadian Collateral Agent’s) and its (and the Canadian Collateral Agent’s) Affiliates’ officers, directors, employees’ and agents (including any sub-agents)) (i) shall not have duties or responsibilities except those expressly set forth in this Agreement, the Letters of Credit and the other Loan Documents, and shall not by reason of this Agreement or any other Loan Document be a trustee for any Lender; (ii) shall not be responsible to any Lender for any recitals, statements, representations or warranties contained in this Agreement, the Letters of Credit or any other Loan Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement, the Letters of Credit or any other Loan Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, the Letters of Credit or any other Loan Document or any other certificate or document referred to or provided for herein or therein or any property covered thereby or for any failure by any Party or any other Person (other than the Agent) to perform any of its obligations hereunder or thereunder; (iii) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under the Letters of Credit or any other Loan Document except to the extent requested by the Required Lenders, provided that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or any other Loan Documents or applicable law, and (iv) shall not be responsible for any action taken or omitted to be taken by it hereunder or under the Letters of Credit or any other Loan Document or any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, INCLUDING PURSUANT TO ITS OWN NEGLIGENCE, except to the extent it is determined by a final judicial decision that such act or omission constituted its own gross negligence or willful misconduct.  The Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by them with reasonable care.  Without in any way limiting any of the foregoing, each Lender acknowledges that the Agent shall not have any greater responsibility in the operation of the Letters of Credit than is specified in the Uniform Customs and Practice for Documentary Credits (1993 Revision, International Chamber of Commerce Publication No. 500 or any successor publication).  In any foreclosure proceeding concerning any collateral for the Notes, each holder of a Note if bidding for its own account or for its own account and the accounts of other Lenders is prohibited from including in the amount of its bid an amount to be applied as a credit against its Note or the Notes of the other Lenders, instead such holder must bid in cash only.  However, in any such foreclosure proceeding, the Agent may (but shall not be obligated to) submit a bid for all Lenders (including itself) in the form of a credit against the Notes of all of the Lenders, and the Agent or its designee may (but shall not be obligated to), with the consent of the Required Lenders, accept title to such collateral for and on behalf of all Lenders.  The Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Agent in its reasonable credit judgment.

9.2Reliance.  The Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel (which may be counsel for the Credit Parties), independent accountants and other experts selected by the Agent.  As to any matters not expressly provided for by this Agreement, the Letters of Credit or any other Loan Document, the

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Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and thereunder in accordance with instructions of the Required Lenders, and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders.

9.3Defaults.  The Agent shall not be deemed to have knowledge of the occurrence of a Default or Event of Default unless it has received notice from a Lender or the Borrowers’ Agent specifying such Default or Event of Default and stating that such notice is a “Notice of Default.”  In the event that the Agent receives such a notice of the occurrence of a Default or Event of Default, the Agent shall give prompt notice thereof to the Lenders (and shall give each Lender prompt notice of each such non-payment).  The Agent shall (subject to Section 9.7 hereof) take such action with respect to such Default or Event of Default as shall be directed by the Required Lenders and within its rights under the Loan Documents and at law or in equity, provided that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, permitted or within its rights under any of the Loan Documents or under applicable law with respect to such Default or Event of Default.

9.4Rights as a Lender.  With respect to its Commitment, the Loans and any Letter of Credit Exposure Amount, the Agent in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include the Agent in its individual capacity.  The Agent may (without having to account therefor to any Lender) accept deposits from, lend money to and generally engage in any kind of banking, trust, letter of credit, agency or other business with any Credit Party (and any of their Affiliates) as if it were not acting as the Agent, and the Agent may accept fees and other consideration from any Credit Party (in addition to the fees heretofore agreed to between the applicable Credit Parties and the Agent) for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.

9.5Indemnification.  The Lenders agree to indemnify the Agent (to the extent not reimbursed under Section 2.9(d), Section 2.10(h), Section 6.12, Section 10.9 or Section 10.10 hereof, but without limiting the obligations of the applicable Credit Parties under said Section 2.9(d), Section 2.10(h), Section 6.12, Section 10.9 or Section 10.10), ratably in accordance with their respective Commitments, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever (INCLUDING THE CONSEQUENCES OF THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, but excluding any act or omission to the extent the same is determined by a final judicial decision to have been caused by or resulted from the gross negligence or willful misconduct of such indemnified person) which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement, the Letters of Credit or any other Loan Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses which the applicable Credit Parties are obligated to pay under Section 2.9(d), Section 2.10(h), Section 6.12, Section 10.9 or Section 10.10 hereof but excluding, unless a Default or Event of Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof

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or thereof or of any such other documents, INCLUDING THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, but excluding any act or omission to the extent the same is determined by a final judicial decision to have been caused by or resulted from the gross negligence or willful misconduct of such indemnified person.  The obligations of the Lenders under this Section 9.5 shall survive the termination of this Agreement and the repayment of the Indebtedness arising in connection with this Agreement.

9.6Non-Reliance on Agent and Other Lenders.  Each Lender agrees that it has received current financial information with respect to the Credit Parties and the other Parties and that it has  independently and without reliance on the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Credit Parties and the other Parties and decision to enter into this Agreement and that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Loan Documents.  The Agent shall not be required to keep itself informed as to the performance or observance by any Party of this Agreement, the Letters of Credit or any of the other Loan Documents or any other document referred to or provided for herein or therein or to inspect the properties or books of the Credit Parties or any Party.  Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent, under the Letters of Credit or the other Loan Documents, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Credit Parties or any other Party (or any of their Affiliates) which may come into the possession of the Agent.

9.7Failure to Act.  Except for action expressly required of the Agent hereunder, under the Letters of Credit and under the other Loan Documents, the Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction by the Lenders of their indemnification obligations under Section 9.5 hereof against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.

9.8Resignation or Removal of Agent.  Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving notice thereof to the Lenders and the Borrowers’ Agent, and the Agent may be removed at any time with or without cause by the Required Lenders.  Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent reasonably acceptable to the Borrowers.  If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent reasonably acceptable to the Borrowers; provided, however, that if an Event of Default has occurred which has not been waived or cured to the satisfaction of the Agent and the Required Lenders, the Borrowers’ approval of a successor Agent shall not be required.  Any successor Agent shall be a Lender which has an office in the United States with a combined capital and surplus of at least $2,000,000,000, and any successor Canadian Collateral Agent shall be an Affiliate of such a Lender.  Upon the acceptance of any appointment as Agent hereunder by a successor Agent,

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such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.  Such successor Agent shall promptly specify by notice to the Borrowers’ Agent and the Lenders its office for the purpose of any notices and payments hereunder.  After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Section 9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent.

9.9Syndication Agent; Joint Lead Arrangers; Joint Bookrunners.  Any syndication agent, joint lead arranger or joint bookrunner appointed in connection with the Loan Documents or the transactions contemplated thereby, in its capacity as such, shall have no rights, powers, duties or responsibilities, and no rights, powers, duties or responsibilities shall be read into this Agreement or any other Loan Document or otherwise exist on behalf of or against any such syndication agent, joint lead arranger or joint bookrunner, in its capacity as such (in each case without prejudice to the rights, powers, duties or responsibilities of any such Person in its capacity as a Lender, Agent, Canadian Collateral Agent, or otherwise as a Party to any Loan Document, other than in its capacity as syndication agent, joint lead arranger or joint bookrunner).  If any such syndication agent, joint lead arranger or joint bookrunner resigns from such capacity, no successor syndication agent, joint lead arranger or joint bookrunner, as applicable, shall be appointed.

10.Miscellaneous.

10.1No Waiver.  No waiver of any Default or Event of Default shall be deemed to be a waiver of any other Default or Event of Default.  No failure to exercise and no delay on the part of the Agent, the Canadian Collateral Agent or any Lender in exercising any right or power under any Loan Document or at law or in equity shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or the abandonment or discontinuance of steps to enforce any such right or power, preclude any further or other exercise thereof or the exercise of any other right or power.  No course of dealing between the Credit Parties and the Agent or any Lender shall operate as a waiver of any right or power of the Agent or any Lender.  No notice to or demand on any Credit Party or any other Person shall entitle the Credit Parties or any other Person to any other or further notice or demand in similar or other circumstances.

10.2Notices.  Except as otherwise expressly permitted hereunder or under any other Loan Document, all notices under the Loan Documents shall be in writing and either (a) delivered to the intended recipient, (b) sent via overnight courier, or (c) sent by facsimile (promptly confirmed by mail, except for any notice pursuant to Section 4.1(a) hereof which need not be confirmed by mail), in each case to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof; or, as to any Lender who is a signatory hereto, at such other address as shall be designated by such Lender in a notice to the Borrowers’ Agent and the Agent given in accordance with this Section 10.2 or to such other address as a party may designate in a notice given in accordance with the provisions of this Section 10.2.  The Borrowers’ Agent may change its address for purposes hereof by providing written notice of such address change to the Lenders and the Agent in accordance with the provisions of this Section 10.2, with any such change in address only being effective ten (10) Business Days after such change of address has been deemed given in accordance with the provisions hereof. 

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Notices shall be deemed to have been given (whether actually received or not) when delivered (or, if sent via overnight courier, on the next Business Day after the date sent); provided, however, that the notices required or permitted by Sections 2.2(b) and 4.1(a) hereof shall be effective only when actually received by the Agent.

10.3Governing Law.  UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN DOCUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

10.4Survival; Parties Bound.  All representations, warranties, covenants and agreements made by or on behalf of the Credit Parties in connection herewith shall survive the execution and delivery of the Loan Documents and shall not be affected by any investigation made by any Person.  The term of this Agreement shall be until the termination or lapse of all Commitments, the final maturity of each Note, the payment of all amounts due under the Loan Documents, and the return of all outstanding Letters of Credit (or the cash collateralization of all outstanding Letters of Credit in an amount equal to 110% of the aggregate Letter of Credit Exposure Amount then outstanding).

10.5Counterparts.  This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument.

10.6Limitation of Interest.  The Credit Parties and the Lenders intend to strictly comply with all applicable laws, including applicable usury laws, if any.  Accordingly, the provisions of this Section 10.6 shall govern and control over every other provision of this Agreement or any other Loan Document which conflicts or is inconsistent with this Section, even if such provision declares that it controls.  As used in this Section, the term “interest” includes the aggregate of all charges, fees, benefits or other compensation which constitute interest under applicable law, provided, that, to the maximum extent permitted by applicable law, (a) any non-principal payment shall be characterized as an expense or as compensation for something other than the use, forbearance or detention of money and not as interest, and (b) all interest at any time contracted for, reserved, charged or received shall be amortized, prorated, allocated and spread, in equal or in unequal parts during the full term of the Loans and the Commitments so that interest for the entire term does not exceed the Highest Lawful Rate.  In no event shall the Borrowers or any other Person be obligated to pay, or the Agent or any Lender have any right or privilege to reserve, receive or retain, (y) any interest in excess of the maximum amount of nonusurious interest permitted under the laws of the United States or of any state, if any, which are applicable to the Agent or such Lender, respectively, or (z) total interest in excess of the amount which the Agent or such Lender could lawfully have contracted for, reserved, received, retained or charged had the interest been calculated for the full term of the Loans at the Highest Lawful Rate, if any, applicable to the Agent or such Lender.  None of the terms and provisions contained in this Agreement or in any other Loan Document which directly or indirectly relate to interest shall ever be construed without reference to this Section 10.6, or be construed to create a contract to pay any Lender for the use, forbearance or detention of money at an interest rate in excess of the Highest Lawful Rate applicable to such Lender.  If the term of

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any Loans or the Notes is shortened by reason of acceleration of maturity as a result of any Default or Event of Default or by any other cause, or by reason of any required or permitted prepayment, and if for that (or any other) reason the Agent or any Lender at any time is owed or receives (and/or has received) interest in excess of interest calculated at the Highest Lawful Rate applicable to the Agent or such Lender, then and in any such event all of any such excess interest owed to or received by the Agent or such Lender shall be canceled automatically as of the date of such acceleration, prepayment or other event which produces the excess, and, if such excess interest has been paid to the Agent or such Lender, it shall be credited pro tanto against the then-outstanding principal balance of the Borrowers’ obligations to the Agent or such Lender, effective as of the date or dates when the event occurs which causes it to be excess interest, until such excess is exhausted or all of such principal has been fully paid and satisfied, whichever occurs first, and any remaining balance of such excess shall be promptly refunded to its payor.

10.7Survival.  The obligations of the Borrower under Sections 2.3, 2.9, 2.10(h), 10.9, 10.10 and 10.17 hereof shall survive the repayment of the Loans and all other Obligations, the termination of the Commitments and the cancellation or expiration of the Letters of Credit.

10.8Captions.  The headings and captions appearing in the Loan Documents have been included solely for convenience and shall not be considered in construing the Loan Documents.

10.9Expenses, Etc.  The Borrowers agree to pay or reimburse on demand of the Agent the following:  (a) the reasonable fees and expenses of Vinson & Elkins LLP, counsel to the Agent, or any other legal counsel (including Canadian counsel) engaged by the Agent or the Canadian Collateral Agent in connection with (i) the preparation, execution and delivery of this Agreement (including the exhibits and schedules hereto) and the Loan Documents and the making of the Loans and the issuance of Letters of Credit hereunder and (ii) any modification, supplement or waiver of any of the terms of this Agreement, the Letters of Credit or any other Loan Document; (b) all out-of-pocket costs and expenses (including attorneys’ fees) of the Lenders, the Agent and the Canadian Collateral Agent, or any of them, in connection with any Default or Event of Default or the enforcement of this Agreement, the Letters of Credit or any other Loan Documents; (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement, any Letter of Credit or any other Loan Document or any other document referred to herein or therein; (d) all out-of-pocket costs, expenses, taxes, assessments and other charges incurred by the Agent or the Canadian Collateral Agent in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement, any other Loan Document or any document referred to herein or therein, and the cost of title insurance; and (e) reasonable expenses of due diligence incurred by the Agent prior to or as of the Closing Date.

10.10Indemnification.  The Borrowers agree to indemnify the Agent, the Canadian Collateral Agent, the Lenders and each Affiliate thereof and their respective directors, officers, employees, partners and agents from, and hold each of them harmless against, any and all losses, liabilities (including Environmental Liabilities), claims, costs (including Environmental Claims) or damages to which any of them may become subject, insofar as such losses, liabilities, claims, costs or damages arise out of or result from any (a) actual or proposed use by any Credit Party of the proceeds of any extension of credit (whether a

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Loan or a Letter of Credit) by any Lender hereunder, (b) breach by any Credit Party of this Agreement or any other Loan Document, (c) violation by any Credit Party or any of their Subsidiaries of any law, rule, regulation or order including any Requirements of Environmental Law, (d) Liens or security interests granted on any Property pursuant to or under the Loan Documents, to the extent resulting from any Hazardous Substance located in, on or under any such Property, (e) ownership by the Lenders, the Agent or the Canadian Collateral Agent of any Property following foreclosure under the Loan Documents, to the extent such losses, liabilities, claims, costs or damages arise out of or result from any Hazardous Substance, located in, on or under such Property prior to or at the time of such foreclosure, including losses, liabilities, claims, costs or damages which are imposed upon Persons under laws relating to or regulating Hazardous Substances, solely by virtue of ownership, (f) any Lender, the Agent or the Canadian Collateral Agent being deemed an operator of any such Property by a court or other regulatory or administrative agency or tribunal or other third party, to the extent such losses, liabilities, claims, costs or damages arise out of or result from any Hazardous Substance, petroleum, petroleum product or petroleum waste located in on or under such Property at or prior to any foreclosure thereon under the Loan Document, or (g) investigation, litigation or other proceeding (including any threatened investigation or proceeding) relating to any of the foregoing, and the Borrowers agree to reimburse the Agent, the Canadian Collateral Agent and each Lender, and each Affiliate thereof and their respective directors, officers, employees, partners, counsel and agents, upon demand for any out-of-pocket expenses (including reasonable legal fees) and costs incurred in connection with any such investigation or proceeding, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIM OR DAMAGE RESULTS FROM THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON; but excluding any such losses, liabilities, claims, costs, damages or expenses incurred by a Person or any Affiliate thereof or their respective directors, officers, employees, partners, counsel or agents to the extent the same is determined by a final judicial decision to have been caused by or resulted from the gross negligence or willful misconduct of such Person, Affiliate, director, officer, employee, partner, counsel or agent.  No party hereto, nor any other Person indemnified hereunder, shall be liable for any damages arising from the use by others of information or other materials obtained through electronic, telecommunications or other information transmission systems or for any special, indirect, consequential or punitive damages in connection with the Loan Documents or the transaction contemplated thereby.

10.11Amendments, Waivers, Etc.  No amendment, modification or waiver of any provision of this Agreement, the Notes or any other Loan Document, nor any consent to any departure by the Credit Parties or any of their Subsidiaries, nor by the Agent, the Canadian Collateral Agent or any Lenders therefrom, shall in any event be effective unless the same shall be agreed or consented to in writing by the Required Lenders and the Borrowers, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that no such amendment, waiver or consent shall, unless consented to in writing by each affected Lender (excluding a Defaulting Lender except with respect to clause (a)), do any of the following:  (a) increase the Total Commitment or any Commitment of any such Lender  or subject the Agent, the Canadian Collateral Agent or any such Lender to any additional obligations; (b) reduce the principal of, or interest on, any Loan, any Letter of Credit Exposure Amount or any fee hereunder (provided, that any waiver of Default Rate interest shall

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not be considered a reduction of interest); (c) waive or postpone any scheduled date fixed for any payment of principal of, or interest on, any Loan, any Letter of Credit Exposure Amount or any fee or other sum to be paid hereunder; (d) change the percentage of any of the Commitments or of the aggregate unpaid principal amount of any of the Loans, any Letter of Credit Exposure Amount, or the number of Lenders which shall be required for the Lenders or any of them to take any action under this Agreement; (e) increase any of the applicable Borrowing Base advance rates or sublimits; (f) change any provision contained in Sections 2.2(d), 2.2(e), 2.7, 2.11, 10.9(b) or 10.10 hereof or this Section 10.11 or Section 10.16 hereof; (g) release the Borrowers from liability for any of the Obligations; (h) release any Guarantor from any Guaranty; (i) other than as expressly permitted by this Agreement, release any Collateral for any of the Obligations if the value of such Collateral (excluding the value of all other Collateral released pursuant to  Section 7.4(f)(4) or 10.21(f) hereof) exceeds $2,000,000 in the aggregate, as reasonably determined by the Agent; (j) change any of the definitions of “Obligations” or “Required Lenders” contained herein; or (k) change any of the definitions of “Eligible Equipment,” “Eligible Inventory,” “Eligible Real Estate,” “Eligible Receivables,” “Ineligible Receivables,” or “Ineligible Inventory” contained herein, if the effect of any such change would be to materially increase the Borrowing Base, and provided further that nothing in this Section 10.11 shall affect, limit or restrict the Agent’s right to establish, fix, reduce, increase or otherwise revise any standards of eligibility for any items included within the Borrowing Base or any Reserves, from time to time in accordance with other provisions of this Agreement and subject to the limitations set forth herein.  Anything in this Section 10.11 to the contrary notwithstanding, no amendment, waiver or consent shall be made with respect to Section 9 without the written consent of the Agent and the Canadian Collateral Agent, and no amendment, waiver or consent shall amend, modify or otherwise affect the rights or duties of the Swingline Lender hereunder without the prior written consent of the Swingline Lender.  Notwithstanding any contrary provision hereof, if any Lender (a) fails to consent to any of the above-described items requiring the unanimous consent of the Lenders when such consent has been agreed to by the Agent and the Required Lenders, (b) is a Defaulting Lender hereunder, or (c) requests compensation under Section 2.9(d) and/or Section 10.16, the Agent or the Borrowers shall be entitled to cause such non-consenting Lender to be replaced hereunder by an Eligible Assignee in compliance with all relevant provisions of Section 10.12 hereof without payment of any prepayment or termination fee. In such event, such non-consenting Lender agrees to abide by the relevant provisions of Section 10.12 hereof in connection with the replacement of such non-consenting Lender by the Eligible Assignee secured by the Agent or the Borrowers.  Notwithstanding the foregoing right of the Borrowers to replace a Lender that requests compensation under Section 2.9(d) and/or Section 10.16, the Borrowers shall continue to be obligated to pay such Lender all amounts owing under Section 2.9(d) and/or Section 10.16 for the period such Lender remains a Lender hereunder.  Notwithstanding the foregoing right of the Borrowers to replace any such non-consenting Lender, neither the Agent nor any Lender shall have any obligation to the Borrowers to find or locate any substitute lender or lenders to replace any such non-consenting Lender.

10.12Successors and Assigns.

(a)This Agreement shall be binding upon and inure to the benefit of the Credit Parties, the Agent, the Canadian Collateral Agent and the Lenders and their respective successors and permitted assigns, provided that the undertaking of the Lenders hereunder to

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make Loans to the Borrowers and to issue Letters of Credit for the account of the Borrowers shall not inure to the benefit of any successor of the Borrowers, other than a successor expressly permitted by the terms of this Agreement. The Borrowers may not assign or transfer any of their rights or obligations hereunder without the prior written consent of all of the Lenders (and any attempted assignment or transfer by the Borrowers without such consent shall be null and void), and no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 10.12.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than (i) the parties hereto, their respective successors and assigns permitted hereby, (ii) any participant of a Lender (to the extent provided in subparagraph (b) below), and (iii) to the extent expressly set forth herein, the Affiliates of the Agent and each of the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)Each Lender may sell participations to any Person in all or part of any Loan, or all or part of its Notes, the Letter of Credit Exposure Amount, the Swingline Exposure or Commitments, to another bank or other entity, in which event, without limiting the foregoing, the provisions of Sections 10.10 and Section 10.16 shall inure to the benefit of each purchaser of a participation and the pro-rata treatment of payments, as described in Section 2.12, shall be determined as if such Lender had not sold such participation.  In the event any Lender shall sell any participation:  (i) the Borrowers, the Agent, the Canadian Collateral Agent and the other Lenders shall continue to deal solely and directly with such selling Lender in connection with such selling Lender’s rights and obligations under the Loan Documents (including the Note(s) held by such selling Lender), (ii) such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrowers relating to the Loans, Letter of Credit Exposure Amount and Swingline Exposure, including the right to approve any amendment, modification or waiver of any provision of this Agreement other than (and then only if expressly permitted by the applicable participation agreement) amendments, modifications or waivers with respect to (1) any reduction of fees payable hereunder to the Lender, (2) any reduction of the amount of principal or the rate of interest payable on, or the dates fixed for the scheduled repayment of principal of, the Loans and other sums to be paid to the Lenders hereunder, and (3) any postponement of any date for the payment of any amount payable in respect of the Loans of such Lender, and (iii) the Borrowers agree, to the fullest extent they may effectively do so under applicable law, that any participant of a Lender may exercise all rights of set-off, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such participant were a direct holder of Loans if such Lender has previously given notice of such participation to the Borrowers.

(c)Each Lender may assign to one or more Lenders or Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the same portion of the related Loans at the time owing to it, the related Note or Notes held by it and its Letter of Credit Exposure Amount); provided, however, that, (i) the Agent and the Borrowers must give their respective prior written consent, which consent will not be unreasonably withheld, conditioned or delayed (except that the Borrowers’ consent to any such assignment shall not be required if (A) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund or (B) an Event of Default has occurred which has not been waived or cured to the satisfaction of the Agent and the Required Lenders), (ii) the aggregate amount of the applicable Commitment, Loans, Letter of Credit Exposure Amount and

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Swingline Exposure (without duplication) of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance (as defined below) with respect to such assignment is delivered to the Agent) shall in no event be less than $5,000,000 (except for certain exceptions approved by the Borrowers and the Agent) and shall be in an amount that is an integral multiple of $1,000,000 (unless all of the assigning Lender’s applicable Commitment, Loans, Letter of Credit Exposure Amount and Swingline Exposure is being assigned); (iii) the aggregate amount of the applicable Commitment and/or Loans of the assigning Lender immediately after each partial assignment must be at least $5,000,000 (except for certain exceptions approved by the Borrowers and the Agent) and shall be in an amount which is an integral multiple of $1,000,000; provided, however, that upon the occurrence and during the continuance of any Event of Default, any Lender shall be entitled to assign to one or more Lenders or Eligible Assignees all of such assigning Lender’s Commitment, Loans, Letter of Credit Exposure Amount and Swingline Exposure in accordance with the other terms of this Section 10.12; and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in its records, and to the Borrowers’ Agent, for its acceptance on behalf of the Borrowers if the Borrowers’ approval of such assignment is otherwise required under the terms of this Section 10.12, an Assignment and Acceptance in substantially the form of Exhibit P annexed hereto, or in such other form as may be approved by the Agent (each an “Assignment and Acceptance”) with blanks appropriately completed, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3,500 (for which the Borrowers shall have no liability).  Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, unless a shorter period of time may be agreed to by the Agent in its sole and absolute discretion, (A) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (B) the Lender thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(d)By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, such Lender assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan Document or any other instrument or document furnished pursuant thereto; (ii) such assignor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Credit Parties or any of their Subsidiaries or the performance or observance by the Credit Parties of any of their obligations under any of the Loan Documents; (iii) such assignee confirms that it has received a copy of this Agreement and the other Loan Documents, together with copies of the financial statements of the Credit Parties previously delivered in accordance herewith and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee confirms that it will keep confidential all information with

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respect to the Credit Parties furnished to it by the Credit Parties, such assignor Lender, the Agent or the Canadian Collateral Agent (other than information generally available to the public or otherwise available to the Agent on a non-confidential basis or otherwise permitted pursuant to the terms of this Agreement); (v) such assignee will, independently and without reliance upon the Agent, the Canadian Collateral Agent, such assignor Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all obligations that by the terms of the Loan Documents are required to be performed by it as a Lender.

(e)The Agent, acting for this purpose as an agent of the Borrowers, shall maintain at its office a copy of each Assignment and Acceptance delivered to it and a register containing the names and addresses of the Lenders and the Commitments of, and principal amount of the Loans owing to, and the Letter of Credit Exposure Amount and Swingline Exposure of, each Lender from time to time (the “Register”).  The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrowers, the Agent, the Canadian Collateral Agent and the Lenders shall treat each person the name of which is recorded therein as a Lender hereunder for all purposes of the Loan Documents.  Such records shall be available for inspection by the Borrowers, the Canadian Collateral Agent or any Lender at any reasonable time and from time to the upon reasonable prior notice.

(f)Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and the assignee thereunder together with the Note(s) subject to such assignment, the written consent to such assignment and the fee payable in respect thereto, the Agent shall, if such Assignment and Acceptance has been completed with blanks appropriately filled, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers and the Lenders.  Contemporaneously with the receipt by the Borrowers of such Assignment and Acceptance and the surrendered Note(s), the Borrowers, at their own expense, shall execute and deliver to the Agent in exchange for the surrendered Note(s), a new Note or Notes payable to the order of such assignee in an amount equal to the applicable Commitment, Loans, Letter of Credit Exposure Amount and Swingline Exposure (without duplication) assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained Commitments, Loans, Letter of Credit Exposure Amount and/or Swingline Exposure hereunder, a new Note or Notes to the order of the assigning Lender in an amount equal to the applicable Commitment, Loans, Letter of Credit Exposure Amount and/or Swingline Exposure retained by it hereunder.  Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note(s), shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the surrendered Note(s).  Such surrendered Note shall be marked canceled and returned to the Borrowers’ Agent.

(g)Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 10.12, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Credit Parties

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and/or any Subsidiary of the Credit Parties furnished to such Lender by or on behalf of the Credit Parties or such applicable Subsidiary, so long as such assignee or participant or proposed assignee or participant confirms that it will keep confidential all information with respect to the Credit Parties furnished to it by the Credit Parties, such assignor Lender, the Agent or the Canadian Collateral Agent (other than information generally available to the public or otherwise available to the Agent on a non-confidential basis or otherwise permitted pursuant to the terms of this Agreement).

(h)Notwithstanding anything herein to the contrary, any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

10.13Entire Agreement.  This Agreement and the other Loan Documents embody the entire agreement and understanding among the Credit Parties, the Agent, the Canadian Collateral Agent and the Lenders relating to the subject matter hereof and supersede all prior proposals, agreements and understandings relating to the subject matter hereof.  Any conflict between the provisions of this Agreement and the provisions of any other Loan Documents shall be governed by the provisions of this Agreement.  The Credit Parties certify that they are relying on no representation, warranty, covenant or agreement except for those set forth in this Agreement and the other Loan Documents of even date herewith.

10.14Severability.  If any provision of any Loan Documents shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired thereby.

10.15Disclosures.  Every reference in the Loan Documents to disclosures of the Borrower or other Credit Parties to the Agent and the Lenders in writing, to the extent that such references refer to disclosures at or prior to the execution of this Agreement, shall be deemed strictly to refer only to written disclosures delivered to the Agent and the Lenders in an orderly manner prior to or concurrently with the execution hereof.

10.16Capital Adequacy.  Without duplication of the provisions of Section 2.9:

(a)If after the date of this Agreement, any Lender shall have determined that the adoption or effectiveness (regardless of whether previously announced) after the date of this Agreement of any applicable Legal Requirement or treaty regarding capital adequacy, or any change therein after the date of this Agreement, or any change in the interpretation or administration thereof by any Governmental Authority or comparable agency charged with the interpretation or administration thereof after the date of this Agreement, or compliance by any Lender with any request or directive regarding capital adequacy made or adopted after the date of this Agreement (whether or not having the force of law) of any such Governmental Authority, has or would have the effect of increasing the cost of, or reducing the rate of return on the capital of such Lender (or any holding company of which such Lender is a part) as a consequence of its

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obligations hereunder or under any Letter of Credit or its Note to a level below that which such Lender or holding company could have achieved but for such adoption, change or compliance by an amount deemed by such Lender to be material, then from time to time, upon demand by such Lender (with a copy to the Agent) in the form of a certificate stating the cause of such demand and reasonably detailed calculations therefor, the Borrowers (subject to Section 10.6 hereof) agree to pay to such Lender such additional amount or amounts as will compensate such Lender or holding company for such reduction.

(b)The certificate of any Lender setting forth such amount or amounts as shall be necessary to compensate such Lender or its holding company as specified in Section 10.16(a) above (and setting forth the calculation thereof in reasonable detail) shall be conclusive and binding, absent manifest error.  The Borrowers shall pay such Lender the amount shown as due on any such certificate within five (5) Business Days after such Lender delivers such certificate.  In preparing such certificate, such Lender may employ such assumptions and allocations of costs and expenses as it shall in good faith deem reasonable and may use any reasonable averaging and attribution method.

(c)If any Lender requests compensation from the Borrowers under this Section 10.16 or under Sections 2.9(b) or 10.17, then at any time within 120 days after receipt by the Borrowers’ Agent of the certificate from such Lender regarding the circumstances and calculation of the applicable compensation so requested, the Borrowers shall have the right to seek and obtain one or more substitute lenders approved by the Agent (which approval shall not be unreasonably withheld so long as each such substitute lender is an Eligible Assignee) to replace such Lender hereunder in compliance with all relevant provisions of Section 10.12 hereof.  In such event, the Agent or the Borrowers shall be entitled to cause such Lender so requesting compensation to be replaced hereunder by an Eligible Assignee in compliance with all relevant provisions of Section 10.12 hereof without payment of any prepayment or termination fee, and, any such Lender so requesting compensation agrees to abide by the relevant provisions of Section 10.12 hereof in connection with the replacement of such non-consenting Lender by the Eligible Assignee secured by the Agent or the Borrowers.  Contemporaneously with the replacement of such Lender hereunder with one or more such substitute lenders, the Borrowers shall cause such substitute lender(s) to pay in full, as the purchase price for such assignment, the Obligations owed to such replaced Lender, including all accrued, unpaid interest thereon and any Consequential Loss owing by the Borrowers to such replaced Lender as a result of such payment.  Notwithstanding the foregoing terms and provisions of this Section 10.16, (i) the Borrowers shall remain obligated to make timely payment of the additional compensation set forth in the certificate presented to the Borrowers by such replaced Lender under the terms of Section 10.16(b) above for the periods prior to the applicable replacement date, and (ii) neither the Agent nor any Lender shall have any obligation to the Borrowers to find or locate any substitute lender or lenders to replace any Lender requesting compensation from the Borrowers under this Section 10.16.

(d)Failure or delay on the part of any Lender Party to demand compensation pursuant to this Section 10.16 or under Sections 2.9(b) or 10.17 shall not constitute a waiver of such Lender Party’s right to demand such compensation; provided that the Borrower shall not be required to compensate any Lender Party pursuant to any such section for any increased costs or reductions incurred more than one hundred eighty (180) days prior to the date that such Lender

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Party (or the Agent on behalf of such Lender Party) notifies the Borrower of the circumstance giving rise to such increased costs or reductions and of such Lender Party’s intention to claim compensation therefor; provided further that, if the circumstance giving rise to such increased costs or reductions arises with retroactive effect, then the one hundred eighty (180)-day period referred to above shall be extended to include the period of retroactive effect thereof.

10.17Taxes.

(a)As used in this Section 10.17, the following terms shall have the following meanings:

(i)“Indemnifiable Tax” means any Tax, but excluding, in any case, any Tax that (A) would not be imposed in respect of a payment to a Lender or a holder of any of the Notes under this Agreement, under the Notes held by such holder, under any Letter of Credit or under any of the other Loan Documents except for a present or former connection between the jurisdiction of the Governmental Authority imposing such Tax and such holder (or a shareholder or other Person with an interest in such holder), including a connection arising from such holder’s (or shareholder of such holder or such other Person) being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such Lender or holder having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement, the Notes held by such holder, any Letter of Credit or any other Loan Documents, or (B) is an income or franchise tax imposed on net income, net profits or gross receipts by any Governmental Authority of a jurisdiction with respect to which any Lender, a holder of any of the Notes, an issuer of any Letter of Credit or a recipient of any payment under this Agreement or any of the other Loan Documents has a present or former connection, including a connection arising from such holder’s, issuer’s or recipient’s, as the case may be (or a shareholder or other Person with an interest in such holder, issuer or recipient, as the case may be), being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such Lender, holder, issuer, or recipient, as the case may be, having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement, the Notes held by such holder, any Letter of Credit or any other Loan Documents.

(ii)“Other Tax” means any present or future recording, stamp, documentary, excise, transfer, sales, property or similar tax, levy, impost, duty, charge, assessment or fee arising from any payment made under this Agreement, any Note, any Letter of Credit or any other Loan Document or from the execution, delivery or enforcement of any Loan Document.

(iii)“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest thereon and penalties and additions thereto) that is imposed by any Governmental Authority in respect of a payment to a

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holder of any of the Notes under this Agreement, under the Notes or under any of the other Loan Documents.

(b)If any Credit Party is required by any applicable Legal Requirement to make any deduction or withholding for or on account of any Tax from any payment to be made by it under this Agreement, under the Notes, under any Letter of Credit or under any other Loan Documents, then the Credit Party shall (A) promptly notify the applicable Lender, the holder of Notes or other relevant Persons hereunder that is entitled to such payment of such requirement to so deduct or withhold such Tax, (B) pay to the relevant Governmental Authorities the full amount required to be so deducted or withheld, (C) promptly forward to such Lender, holder or other relevant Person an official receipt (or certified copies thereof), or other documentation reasonably acceptable to such holder or other relevant Person, evidencing such payment to such Governmental Authorities and (D) if such Tax is an Indemnifiable Tax, pay to such Lender, holder or other relevant Person, in addition to whatever net amount of such payment is paid to such holder or other relevant Person, such additional amount as is necessary to ensure that the total amount actually received by such holder or other relevant Person (free and clear of Indemnifiable Tax imposed on or with respect to such additional amount) will equal the full amount of the payment such holder or other relevant Person would have received had no such deduction or withholding been required.

(c)In addition, the relevant Credit Party or Credit Parties shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(d)Without duplication of the Credit Parties’ obligations on account of Indemnifiable Taxes and Other Taxes pursuant to Sections 10.17(b) and 10.17(c), the Credit Parties shall indemnify the Agent and each Lender, within ten (10) Business Days after written demand therefor, for the full amount of any Indemnifiable Taxes or Other Taxes paid by the Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Credit Parties under this Agreement, any Note, any Letter of Credit or any other Loan Document (including Indemnifiable Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 10.17) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnifiable Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability, describing the requested amounts in reasonable detail, delivered to the Credit Parties by a Lender, or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e)Each Lender or holder of a Note shall, upon request by the Credit Parties, take requested measures to mitigate the amount of Indemnifiable Tax required to be deducted or withheld from any payment made by the Credit Parties under this Agreement, under the Notes or under any other Loan Documents if such measures can, in the sole and absolute opinion of such Lender or holder, be taken without such Person suffering any economic, legal, regulatory or other disadvantage (provided, however, that no such Person shall be required to designate a funding office that is not located in the United States of America).

(f)Any Foreign Lender that is entitled to an exemption from or reduction of the deduction, withholding or payment of an Indemnifiable Tax or Other Tax under the law of

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the United States or the jurisdictions in which the Credit Parties are located (or any political subdivision thereof), or any treaty to which any such jurisdiction is a party, with respect to payments under this Agreement, under any Note, under any Letter of Credit or under any other Loan Document shall deliver to the Credit Parties and the Agent, at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Credit Parties as will permit such payments to be made without deduction or withholding or at a reduced rate.  Without limiting the generality of the foregoing, in the event that the relevant Credit Party is resident for tax purposes in the United States, any Foreign Lender shall deliver to the Credit Party and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Credit Parties or the Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

(i)duly completed copies of IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

(ii)duly completed copies of IRS Form W-8ECI,

(iii)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Credit Party within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of IRS Form W-8BEN, or

(iv)any other form prescribed by applicable law as a basis for claiming exemption from U.S. federal income tax withholding duly completed together with such supplementary documentation as may be prescribed by applicable law,

in all cases properly completed and duly executed by such Foreign Lender claiming complete exemption from withholding of U.S. federal income tax on all payments by the Credit Parties under this Agreement, under any Note, under any Letter of Credit or under any other Loan Document.  The Credit Parties shall not be required to pay additional amounts to any Foreign Lender pursuant to this Section 10.17 to the extent that the obligation to pay such additional amounts would not have arisen but for the failure of such Foreign Lender to comply with this clause (f) (unless such failure is due to a change in treaty, law or regulation, or any interpretation or administration thereof by any Governmental Authority, occurring after the date on which a form, certificate or other document originally was required to be provided).

(g)Each Lender and each Note holder agrees that if, in its good faith opinion, it has subsequently recovered or received a permanent net tax benefit with respect to any amounts of Taxes (i) previously paid by it and as to which it has been indemnified by or on behalf of the Borrowers or (ii) previously deducted by the Credit Parties (including, without limitation, any Indemnifiable Taxes deducted from any additional amounts paid under clause (b) above), the relevant Lender or Note holder, as the case may be, shall reimburse the Credit Parties

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to the extent of the amount of any such recovery or permanent net tax benefit (but only to the extent of any indemnity payments made, or additional amounts paid, by or on behalf of the Credit Parties under this Section 10.17 with respect to the Taxes giving rise to such recovery or tax benefit); provided, however, that the Credit Parties, upon the request of the Lender or Note holder, as the case may be, agree to repay to such Lender or Note holder, as the case may be, the amount paid over to the Credit Parties (together with penalties, interest or other charges), in the event such Lender or Note holder is required to repay such amount to the relevant Governmental Authority.

10.18Waiver of Claim.  Each Borrower hereby waives and releases the Agent, the Canadian Collateral Agent and all Lenders from any and all claims or causes of action which the Borrowers or any of them may own, hold or claim in respect of any of the Agent, the Canadian Collateral Agent or any Lenders as of the date of this Agreement.

10.19Right of Setoff.  The Lender Parties each are hereby authorized at any time and from time to time during the existence of an Event of Default or a Dominion Event, without notice to any Credit Party (any such notice being expressly waived by the Credit Parties by their execution of the applicable Loan Documents), to setoff and apply any and all deposits (general or special, time or demand, provisional or final, whether or not such setoff results in any loss of interest or other penalty, and including without limitation all certificates of deposit) at any time held, and any other funds or property at any time held, and other Indebtedness at any time owing by the Agent, the Canadian Collateral Agent or such other Lender Party to or for the credit or the account of any such Credit Party against any and all of the Obligations irrespective of whether or not Agent, the Canadian Collateral Agent or such other Lender Party shall have made any demand under this Agreement, the Notes or any other Loan Document.  Each Credit Party (by their execution of the applicable Loan Documents) also hereby grants to Agent, the Canadian Collateral Agent and each of the other Lender Parties a security interest in and hereby transfers, assigns, sets over, and conveys to the Agent, the Canadian Collateral Agent and to each of the other Lender Parties, as security for payment of all Obligations, all such deposits, funds or property of such Credit Party or Indebtedness of the Agent, the Canadian Collateral Agent or any other Lender Party to any such Credit Party.  Should the right of the Agent, the Canadian Collateral Agent or any other Lender Party to realize funds in any manner set forth hereinabove be challenged and any application of such funds be reversed, whether by court order or otherwise, the Lenders shall make restitution or refund to the applicable Credit Parties pro rata in accordance with their respective Commitment Percentages.  Each Lender agrees to promptly notify the Borrowers’ Agent and the Agent after any such setoff and application by it or any of its Affiliates, provided that the failure to give such notice will not affect the validity of such setoff and application.  The rights of the Agent, the Canadian Collateral Agent and the other Lender Parties under this Section are in addition to other rights and remedies (including without limitation other rights of setoff) which the Agent, the Canadian Collateral Agent or the other Lender Parties may have.  This Section is subject to the terms and provisions of Section 2.12 hereof.

10.20Waiver of Right to Jury Trial.  EXCEPT AS PROHIBITED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE

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NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS EVIDENCED THEREBY.

10.21Additional Provisions Regarding Collection of Receivables and other Collateral.

(a)Each Credit Party (by its execution of the applicable Loan Documents) hereby designates and constitutes the Agent or the Agent’s designee (or the Canadian Collateral Agent or its designee, as applicable) as each Credit Party’s attorney-in-fact with power to endorse each such Credit Party’s name upon any notes, acceptances, checks, drafts, money orders or other evidence of payment of any Receivables or any other Collateral that may come into its possession; to sign or endorse such Credit Party’s name on any invoice, bill of lading or other title or ownership documents relating to any Receivables or Inventory, drafts against any customers of any Credit Party, assignments and verifications of Receivables and, upon the occurrence and during the continuance of any Event of Default, notices to customers of any Credit Party; to send verifications of Receivables; and to notify the U.S. Postal Service authorities to change the address for delivery of mail addressed to any Credit Party to such address as the Agent (or the Canadian Collateral Agent, as applicable) may designate at any time after the occurrence of any Event of Default which is continuing.  All acts of said attorney or designee are hereby ratified and approved by each Credit Party (by its execution of the applicable Loan Documents), and said attorneys or designee shall not be liable for any acts of omission or commission, for any error of judgment or for any mistake of fact or law, provided that the Agent or its designee (or the Canadian Collateral Agent or its designee, as applicable) shall not be relieved of liability to the extent it is determined by a final judicial decision that its act, error or mistake constituted gross negligence or willful misconduct.  The power of attorney granted under this subparagraph is coupled with an interest and is irrevocable until all of the Obligations are paid in full and this Agreement and the Commitments are terminated.

(b)The Agent (or the Canadian Collateral Agent, as applicable), without notice to or consent of any Credit Party, at any time after the occurrence and during the continuation of an Event of Default:  (i) may sue upon or otherwise collect, extend the time of payment of, or compromise or settle for cash, credit or otherwise upon any terms, any of the Receivables or any instruments or insurance applicable thereto and/or release any account debtor thereon; (ii) is authorized and empowered to accept or direct shipments of Inventory and accept the return of the goods represented by any of the Receivables; and (iii) shall have the right to receive, endorse, assign and/or deliver in its name or the name of any Credit Party any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and each Credit Party (by its execution of the applicable Loan Documents) hereby waives notice of presentment, protest and non-payment of any instrument so endorsed.

(c)Nothing herein contained shall be construed to constitute any Credit Party as agent of the Agent or the Canadian Collateral Agent for any purpose whatsoever, and neither the Agent nor the Canadian Collateral Agent shall be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof (except to the extent it is determined by a final judicial decision that the Agent’s or a Lender’s act or omission constituted gross negligence of willful conduct).  The Agent, the Canadian Collateral Agent and the Lenders shall not, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of

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any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof or for any damage resulting therefrom (except to the extent it is determined by a final judicial decision that the Agent’s or such Lender’s error, omission or delay constituted gross negligence or willful misconduct).  The Agent, the Canadian Collateral Agent and the Lenders do not, by anything herein or in any assignment or otherwise, assume any of any Credit Party’s obligations under any contract or agreement assigned to the Agent, the Canadian Collateral Agent or the Lender, and the Agent, the Canadian Collateral Agent and the Lenders shall not be responsible in any way for the performance by any Credit Party of any of the terms and conditions thereof.

(d)Upon the occurrence and during the continuation of any Event of Default:  (i) if any of the Receivables includes a charge for any tax payable to any governmental tax authority, the Agent (or the Canadian Collateral Agent, as applicable) is hereby authorized (but in no event obligated) in its discretion to pay the amount thereof to the proper taxing authority for the account of any Credit Party and to charge any Credit Party’s account therefor; and (ii) the Borrowers shall notify the Agent (or the Canadian Collateral Agent, as applicable) if any Receivables include any tax due to any such taxing authority and, in the absence of such notice, the Agent (or the Canadian Collateral Agent, as applicable) shall have the right to retain the full proceeds of such Receivables and shall not be liable for any taxes that may be due from any Credit Party by reason of the sale and delivery creating such Receivables.

(e)Upon the occurrence and continuation of any Event of Default, the Agent (or the Canadian Collateral Agent, as applicable) may at any time and from time to time employ and maintain in the premises of any Credit Party a custodian selected by the Agent (or the Canadian Collateral Agent, as applicable) who shall have full authority to do all acts necessary to protect the Agent’s, the Canadian Collateral Agent’s and the Lenders’ interests and to report to the Agent (or the Canadian Collateral Agent, as applicable) thereon.  Each Credit Party (by its execution of the applicable Loan Documents) hereby agrees to cooperate with any such custodian and to do so whatever the Agent (or the Canadian Collateral Agent, as applicable) may reasonably request to preserve the Collateral.  All costs and expenses incurred by the Agent (or the Canadian Collateral Agent, as applicable) by reason of the employment of the custodian shall be added to the Obligations and may be charged to any Credit Party’s account.

(f)The Lenders hereby irrevocably authorize the Agent (or the Canadian Collateral Agent, as applicable), at its option and in its discretion, to release any Lien granted to or held by the Agent (or the Canadian Collateral Agent, as applicable) upon any Collateral (i) upon termination of the Total Commitment and payment in full in cash and satisfaction (or cash collateralization pursuant to the terms of the Loan Documents) of all Loans, any Letter of Credit Exposure Amount, and all other Obligations which have matured and which the Agent (or the Canadian Collateral Agent, as applicable) has been notified in writing are then due and payable; or (ii) constituting property being sold or disposed of in the ordinary course of any Credit Party’s business and in compliance with the terms of this Agreement and the other Loan Documents (with respect to which the Agent (or the Canadian Collateral Agent, as applicable) may rely conclusively on any certificate of any Credit Party, without further inquiry); or (iii) constituting property in which the Credit Parties owned no interest at the time the Lien was granted or at any time thereafter; or (iv) if approved, authorized or ratified in writing by the Lenders.  Upon request by the Agent (or the Canadian Collateral Agent, as applicable) at any time, the Lenders

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will confirm in writing the Agent’s (or the Canadian Collateral Agent’s, as applicable) authority to release particular types or items of Collateral pursuant to this Section 10.21(f).

(g)Without in any manner limiting the Agent’s (or the Canadian Collateral Agent’s, as applicable) authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 10.21(f)), each Lender agrees to confirm in writing, upon request by the Agent (or the Canadian Collateral Agent, as applicable), the authority to release Collateral conferred upon the Agent (or the Canadian Collateral Agent, as applicable) under Section 10.21(f).  Upon receipt by the Agent (or the Canadian Collateral Agent, as applicable) of confirmation from the Lenders of its authority to release any particular item or types of Collateral, and upon prior written request by any Credit Party, the Agent (or the Canadian Collateral Agent, as applicable) shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Agent (or the Canadian Collateral Agent, as applicable) for the benefit of the Lenders upon such Collateral; provided, however, that (i) the Agent (or the Canadian Collateral Agent, as applicable) shall not be required to execute any such document on terms which, in the Agent’s (or the Canadian Collateral Agent’s, as applicable) opinion, would expose the Agent (or the Canadian Collateral Agent, as applicable) to liability or create any obligations or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon (or obligations of any Credit Party in respect of) all interests in the Collateral retained by any Credit Party.

(h)So long as Neenah Paper Company of Canada owns the Nova Scotia Woodlands or other Timberland Properties located in Canada which are pledged as Collateral from time to time hereunder, the Canadian Collateral Agent may from time to time appoint a sub-agent pursuant to Section 9.1 (the “Designated Timber Agent”) for the purpose of facilitating sales, exchanges or other dispositions of Timberland Properties permitted by Section 7.4(f)(4)(vi) and not otherwise prohibited hereby.  Any such Designated Timber Agent shall have the authority to act on behalf of (and subject to the control of), the Canadian Collateral Agent pursuant to the terms and conditions of Sections 10.21(f) and 10.21(g) to release any Lien granted to or held by the Canadian Collateral Agent upon any Collateral sold, exchanged, or otherwise disposed of pursuant to Section 7.4(f)(4)(vi).  Subject to the terms and conditions of Sections 10.21(f) and 10.21(g) and the other applicable terms and conditions of the Loan Documents, the Agent, the Canadian Collateral Agent, and any Designated Timber Agent shall act promptly upon any request from the Borrowers’ Agent (accompanied by a certificate referred to in Section 10.21(f)(ii) and such information and documentation as may be reasonably necessary to effect such release) to execute such documents as may be reasonably necessary to release any Lien granted to or held by the Agent (or the Canadian Collateral Agent, as applicable) upon any such Collateral pursuant to any such sale, exchange, or disposition.

10.22Bank Product Obligations.

(a)The term “Obligations,” as defined and used in this Agreement, includes all Obligations under all Bank Products of any Credit Party or any of their Subsidiaries (collectively, “Related Obligations”) to the Agent, JPMorgan, the Canadian Collateral Agent, or any other Lender Party (each an “Obligee” and, collectively, the “Obligees”).  Accordingly, the

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benefit of the Loan Documents and of the provisions of this Agreement relating to the Collateral shall extend to and be available in respect of the Related Obligations solely on the condition and understanding, as among the Agent and all Obligees, that (i) the Related Obligations shall be entitled to the benefit of the Loan Documents and the Collateral to the extent expressly set forth in this Agreement and the other Loan Documents and to such extent the Agent (or the Canadian Collateral Agent, as applicable) shall hold, and have the right and power to act with respect to, any Guaranty and the Collateral on behalf of and as agent for the Obligees, but the Agent and the Canadian Collateral Agent are otherwise acting solely as agent for the Lenders and shall have no fiduciary duty, duty of loyalty, duty of care, duty of disclosure or other obligation whatsoever to any Obligee, (ii) all matters, acts and omissions relating in any manner to the Guaranty, the Collateral, or the omission, creation, perfection, priority, abandonment or release of any Lien, shall be governed solely by the provisions of this Agreement and the other Loan Documents and no separate Lien, right, power or remedy shall arise or exist in favor of any Obligee under any separate instrument or agreement or in respect of any Related Obligation, (iii) each Obligee shall be bound by all actions taken or omitted, in accordance with the provisions of this Agreement and the other Loan Documents, by the Agent, the Canadian Collateral Agent and the Required Lenders, each of whom shall be entitled to act at its sole discretion and exclusively in its own interest given its own Commitments and its own interest in the Loans, Letter of Credit Obligations and other Obligations to it arising under this Agreement or the other Loan Documents, without any duty or liability to any other Obligee or as to any Related Obligation and without regard to whether any Related Obligation remains outstanding or is deprived of the benefit of the Collateral or becomes unsecured or is otherwise affected or put in jeopardy thereby, (iv) no Obligee (except the Agents, the Canadian Collateral Agent and the Lenders, to the extent set forth in this Agreement) shall have any right to be notified of, or to direct, require or be heard with respect to, any action taken or omitted in respect of the Collateral or under this Agreement or the Loan Documents and (v) no Obligee shall exercise any right of setoff, banker’s lien or similar right except to the extent such right is exercised in compliance with Section 2.13.

(b)The Borrowers hereby irrevocably and unconditionally guarantee to each of the Obligees the full and prompt payment and performance of any and all Related Obligations to each Obligee.  Such guaranty shall be an absolute, continuing, irrevocable, and unconditional guaranty of payment and performance, and not a guaranty of collection, and the Borrowers shall remain liable on its obligations hereunder until the payment and performance in full of the Related Obligations.  No set-off, counterclaim, recoupment, reduction, or diminution of any obligation, or any defense of any kind or nature which any Credit Party or any of their Subsidiaries may have against any Obligee or any other party shall be available to, or shall be asserted by, any Credit Party against any Obligee or any subsequent holder of the Related Obligations or any part thereof or against payment of the Related Obligations or any part thereof.

(c)If any Credit Party becomes liable for any obligations or indebtedness owing by any Subsidiary of any Credit Party to any Obligee by endorsement or otherwise, other than under this Section 10.22, such liability shall not be in any manner impaired or affected hereby, and the rights of each Obligee shall be cumulative of any and all other rights that any Obligee may ever have against the Borrower.

(d)In the event of default by any Subsidiary of any Credit Party in payment or performance of any of the Related Obligations, or any part thereof, when any part of the Related

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Obligations becomes due, whether by its terms, by acceleration, upon demand or otherwise, the Borrowers shall promptly pay the amount due thereon to the applicable Obligee without notice or demand in dollars and it shall not be necessary for any Obligee, in order to enforce such payment by the Borrowers, first to institute suit or exhaust its remedies against any Subsidiary of any Credit Party or any others liable on such Related Obligations, or to enforce any rights against any collateral which shall ever have been given to secure such Related Obligations.  Notwithstanding anything to the contrary contained in this Section 10.22, the Credit Parties hereby irrevocably subordinate to the prior and defeasible payment in full of the Related Obligations, any and all rights the Borrowers may now or hereafter have under any agreement or at law or in equity (including, without limitation, any law subrogating the Borrowers to the rights of any of the Obligees) to assert any claim against or seek contribution, indemnification or any other form of reimbursement from any Subsidiary of any Credit Party or any other party liable for payment of any or all of the Related Obligations for any payment made by any Borrower under or in connection with this Section 10.22 or otherwise.

(e)The Borrowers hereby agree that their obligations under this Section 10.22 shall not be released, discharged, diminished, impaired, reduced, or affected for any reason or by the occurrence of any event, including, without limitation, one or more of the following events, whether or not with notice to or the consent of any Borrower:  (i) the taking or accepting of collateral as security for any or all of the Related Obligations or the release, surrender, exchange, or subordination of any collateral now or hereafter securing any or all of the Related Obligations; (ii) any partial release of the liability of any Borrower hereunder or any other Credit Party under the Loan Documents, or the full or partial release of any other guarantor from liability for any or all of the Related Obligations; (iii) any disability of any Credit Party or any of their Subsidiaries, or the dissolution, insolvency, or bankruptcy of any Credit Party, any of their Subsidiaries, any guarantor or any other party at any time liable for the payment of any or all of the Related Obligations; (iv) any renewal, extension, modification, waiver, amendment, or rearrangement of any or all of the Related Obligations or any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Related Obligations; (v) any adjustment, indulgence, forbearance, waiver, or compromise that may be granted or given by any Obligee to any Credit Party, any of their Subsidiaries, or any other party ever liable for any or all of the Related Obligations; (vi) any neglect, delay, omission, failure, or refusal of any Obligee to take or prosecute any action for the collection of any of the Related Obligations or to foreclose or take or prosecute any action in connection with any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Related Obligations; (vii) the unenforceability or invalidity of any or all of the Related Obligations or of any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Related Obligations; (viii) any payment by any Credit Party, any Subsidiary of any Credit Party or any other party to any Obligee is held to constitute a preference under applicable bankruptcy or insolvency law or if for any other reason any Obligee is required to refund any payment or pay the amount thereof to someone else; (ix) the settlement or compromise of any of the Related Obligations; (x) the non-perfection of any security interest or lien securing any or all of the Related Obligations; (xi) any impairment of any collateral securing any or all of the Related Obligations; (xii) the failure of any Obligee to sell any collateral securing any or all of the Related Obligations in a commercially reasonable manner or as otherwise required by law; (xiii) any change in the corporate existence, structure, or ownership of any Credit Party or any of their Subsidiaries; or

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(xiv) any other circumstance which might otherwise constitute a defense available to, or discharge of, any Credit Party or any of their Subsidiaries.

(f)The Borrowers hereby waive promptness, diligence, notice of any default under the Related Obligations, demand of payment, notice of acceptance of this Agreement, presentment, notice of protest, notice of dishonor, notice of the incurring by any Subsidiary of any Credit Party of additional obligations or indebtedness, and all other notices and demands with respect to the Related Obligations and this Agreement.

10.23Construction.  The Borrowers, each other Credit Party, the Agent, the Canadian Collateral Agent and each Bank acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Documents with its legal counsel and that this Agreement and the other Loan Documents shall be construed as if jointly drafted by the parties hereto.

10.24Joint and Several Obligations.  Notwithstanding anything to the contrary contained herein or in any other Loan Documents (but giving effect to Section 1.4(a)), the Borrowers acknowledge that they and the Guarantors are jointly and severally responsible for their respective agreements, covenants, representations, warranties and obligations contained and set forth in this Agreement or in any other Loan Document to which the applicable Party is a party.

10.25USA Patriot Act.  Each Lender hereby notifies the Credit Parties that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Credit Parties, which information includes the name and address of the Credit Parties and other information that will allow such Lender to identify the Credit Parties in accordance with the Act.

10.26Judgment.  The specification under the Loan Documents of Dollars and payment in New York City is of the essence.  The Credit Parties’ obligations hereunder and under the other Loan Documents to make payments in Dollars (the “Obligation Currency”) shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Lender Parties of the full amount of the Obligation Currency expressed to be payable to the Lender Parties under this Agreement or the other Loan Documents.  If, for the purpose of obtaining or enforcing judgment in any court, it is necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the “Judgment Currency”) an amount due in the Obligation Currency, the rate of exchange used shall be that at which the Lender Parties could, in accordance with normal banking procedures, purchase Dollars with the Judgment Currency on the Business Day preceding that on which final judgment is given.  The obligation of the Credit Parties in respect of any such sum due from it to the Lender Parties hereunder shall, notwithstanding any judgment in such Judgment Currency, be discharged only to the extent that, on the Business Day immediately following the date on which the Lender Parties receive any sum adjudged to be so due in the Judgment Currency, the Lender Parties may, in accordance with normal banking procedures, purchase Dollars with the Judgment Currency.  If the Dollars so purchased are less than the sum originally due to the Lender Parties in Dollars, the Credit

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Parties agree, as a separate obligation and notwithstanding any such judgment, to indemnify the Lender Parties against such loss, and if the Dollars so purchased exceed the sum originally due to the Lender Parties in Dollars, the Lender Parties agree to remit to the Credit Parties such excess.

10.27Jurisdiction; Service of Process.  Each Credit Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan Document shall affect any right that any Lender Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Credit Party or its properties in the courts of any jurisdiction.  Each Credit Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.2.  Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

10.28Confidentiality.  Each of the Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent requested by any rating agency or market data collector (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep it confidential), (d) to the extent required by law or by any subpoena or similar legal process, (e) to any other party to this Agreement, (f) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (g) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of, or any prospective assignee of, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Credit Parties and their obligations, (h) with the consent of the Borrowers or (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrowers.  For the purposes of this Section, “Information” means all information received from the Credit Parties relating to any

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of the Credit Parties, the Offshore Entities, their respective subsidiaries or their respective businesses, other than any such information that is available to the Agent, the Issuing Bank or any Lender on a non-confidential basis prior to disclosure by the Borrowers; provided that, in the case of information received from the Borrowers after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THIS SECTION 10.28 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE CREDIT PARTIES AND  THEIR RELATED PARTIES AND AFFILIATES, OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS, CONSENTS AND AMENDMENTS, FURNISHED BY THE CREDIT PARTIES, THE AGENT OR THEIR RESPECTIVE RELATED PARTIES AND AFFILIATES, PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE CREDIT PARTIES AND THEIR RELATED PARTIES AND AFFILIATES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE CREDIT PARTIES AND THE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

10.29No Fiduciary Duty/Conflicts.  The Lender Parties may have economic interests that conflict with those of Borrowers, their stockholders and/or their Affiliates.  Borrowers agree that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender Party, on the one hand, and Borrowers, their stockholders or their affiliates, on the other.  The Credit Parties acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders Parties, on the one hand, and Borrowers, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender Party has assumed an advisory or fiduciary responsibility in favor of any Borrower, its stockholders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender Party has advised, is currently advising or will advise any Borrower, its stockholders or its Affiliates on other matters) or any other obligation to Borrowers except the obligations expressly set forth in

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the Loan Documents and (y) each Lender Party is acting solely as principal and not as the agent or fiduciary of any Borrower, its management, stockholders, creditors or any other Person.  Each Borrower acknowledges and agrees that each Borrower has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  Borrower agrees that it will not claim that any Lender Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Borrower, in connection with such transaction or the process leading thereto.

(Signature Pages Follow)

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

NEENAH PAPER, INC.,
as a Borrower
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer
Address for Notices:
3460 Preston Ridge Road, Suite 600
Alpharetta, Georgia 30005
Attention: General Counsel
Facsimile: 678-518-3283
With a copy to:
Bryan Cave LLP
One Atlantic Center — Fourteenth Floor
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488
Attention: Robert C. Lewinson
Facsimile: 404-420-0623
NEENAH PAPER MICHIGAN, INC.,
as a Borrower
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer
NPCC HOLDING COMPANY, LLC
as a Borrower
By:	Neenah Paper, Inc., as its sole member
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer

Signature Page to Amended and Restated Credit Agreement

NEENAH PAPER INTERNATIONAL HOLDING COMPANY, LLC, as a Borrower
By:	Neenah Paper, Inc., as its sole member
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer
NEENAH PAPER INTERNATIONAL, LLC, as a Borrower
By:	Neenah Paper International Holding Company, LLC, as its sole member
	By:	Neenah Paper, Inc., as its sole member
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer
NEENAH PAPER FVC, INC, as a Borrower
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer
NEENAH PAPER FR, LLC, as a Borrower
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer
NEENAH PAPER COMPANY OF CANADA, as a Guarantor
By:	/s/ BONNIE C. LIND
Name:	Bonnie C. Lind
Title:	Sr. Vice President, CFO and Treasurer

Signature Page to Amended and Restated Credit Agreement

JPMORGAN CHASE BANK, N.A.,
as a Lender, as Agent and as Swingline Lender
By:	/s/ JEFF A. TOMPKINS
Name:	Jeff A. Tompkins
Title:	Vice President
Address for Notices:
2200 Ross Avenue, 9th Floor TX 2921
Dallas, Texas 75201
Attention: Jeff A. Tompkins
Facsimile: 214-965-2594
With a copy to:
Vinson & Elkins LLP
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attention: Erec R. Winandy
Facsimile: 214-999-7756
JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH,
as Canadian Collateral Agent
By:	/s/ DAN C. HOWAT
Name:	Dan C. Howat
Title:	Senior Vice President
Address for Notices:
c/o JPMorgan Chase Bank, N.A., as Agent
2200 Ross Avenue, 9th Floor TX 2921
Dallas, Texas 75201
Attention: Jeff A. Tompkins
Facsimile: 214-965-2594
With a copy to:
Vinson & Elkins, L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attention: Erec R. Winandy
Facsimile: 214-999-7756

Signature Page to Amended and Restated Credit Agreement

BANK OF AMERICA, N.A.,
as a Lender
By:	/s/ DENNIS LOSIN
Name:	Dennis Losin
Title:	Senior Vice President
Address for Notices:
	Bank of America, N.A.
	300 Galleria Parkway, Suite 800
	Atlanta, GA 30339
Attention:	Senior Portfolio Manager
Facsimile:	404-607-3277

Signature Page to Amended and Restated Credit Agreement

UBS AG, Stamford Branch,
as a Lender
By:	/s/ MARY E. EVANS
Name:	Mary E. Evans
Title:	Associate Director
By:	/s/ IRJA R. OTSA
Name:	Irja R. Otsa
Title:	Associate Director
Address for Notices:
	677 Washington Blvd.
	Stamford, CT 06901
Attention:	Daniel Goldenberg
Facsimile:	203-719-3888

Signature Page to Amended and Restated Credit Agreement

GOLDMAN SACHS LENDING PARTNERS LLC, as a Lender
By:		/s/ DENIS P. COLEMAN III
Name:		Denis P. Coleman III
Title:		Authorized Signatory
Address for Notices:
	6032 Connection Drive
	Dallas, TX 75062
Attention:	Ray Garcia
Facsimile:	212-357-4597

Signature Page to Amended and Restated Credit Agreement

EX-11

Exhibit 11

NEENAH PAPER, INC. AND SUBSIDIARIES

STATEMENT REGARDING THE COMPUTATION OF

EARNINGS PER SHARE

(Dollars in millions, except share and per share amounts)

	Year Ended December 31,
	2009			2008			2007
Income (loss) from continuing operations	$	(1.8	)	$	(47.3	)	$	32.2
Less: Distributed and undistributed amounts allocated to participating securities (a)	—			0.1			0.3
Income (loss) from continuing operations available to common stockholders	(1.8		)	(47.4		)	31.9
Income (loss) from discontinued operations, net of income taxes	0.6			(111.2		)	(22.0		)
Net income (loss) available to common stockholders	$	(1.2	)	$	(158.6	)	$	9.9
Weighted-average basic shares outstanding	14,655			14,642			14,874
Add: Assumed incremental shares under stock compensation plans	—			—			267
Assuming dilution	14,655			14,642			15,141
Earnings (Loss) Per Common Share
Basic
Continuing operations	$	(0.12	)	$	(3.24	)	$	2.15
Discontinued operations	0.04			(7.59		)	(1.48		)
	$	(0.08	)	$	(10.83	)	$	0.67
Diluted
Continuing operations	$	(0.12	)	$	(3.24	)	$	2.11
Discontinued operations	0.04			(7.59		)	(1.46		)
	$	(0.08	)	$	(10.83	)	$	0.65

(a)In accordance with ASC Topic 260, for the years ended December 31, 2009 and 2008 undistributed losses have been entirely allocated to common stockholders due to the fact that the holders of participating securities are not contractually obligated to share in the losses of the Company.

EX-12

Exhibit 12

NEENAH PAPER, INC. AND SUBSIDIARIES

STATEMENT REGARDING THE COMPUTATION OF

RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in millions, except ratio of earnings to fixed charges)

	Year Ended December 31,
	2009			2008			2007			2006			2005
Income (loss) from continuing operations before taxes	$	(6.8	)	$	(44.3	)	$	28.5		$	28.8		$	43.4
Plus fixed charges	24.2			26.0			26.1			19.8			18.7
Numerator	$	17.4		$	(18.3	)	$	54.6		$	48.6		$	62.1
Interest expense (including amortization of debt issuance costs)	$	23.4		$	25.0		$	25.5		$	19.4		$	18.5
Interest portion of rent expense (a)	0.8			1.0			0.6			0.4			0.2
Fixed charges	$	24.2		$	26.0		$	26.1		$	19.8		$	18.7
Ratio of earnings to fixed charges (b)	—			—			2.1		x	2.5		x	3.3		x

(a)Represents one-third of rent expense which is deemed to be the financing portion of the lease agreements.

(b)The deficit of earnings to fixed charges for the years ended December 31, 2009 and 2008 was $6.8 million and $44.3 million, respectively.

EX-21

EXHIBIT 21

SUBSIDIARIES OF NEENAH PAPER, INC.

The following is a list of subsidiaries of Neenah Paper, Inc., along with each entity’s place of incorporation or organization. Unless otherwise noted, the listed subsidiaries are wholly owned by Neenah Paper, Inc.

NPCC Holding Company, LLC, Delaware

Neenah Paper Company of Canada, Nova Scotia

Neenah Paper International Finance Company BV, Netherlands

Neenah Paper International Holding Company, LLC, Delaware

Neenah Paper Michigan, Inc., Delaware

Neenah and Menasha Water Power Company, Wisconsin (80%)

Neenah Paper International, LLC, Delaware

Neenah Gessner GmbH, Germany

Neenah Germany GmbH, Germany

Neenah Services GmbH&Co. KG

Neenah Lahnstein GmbH, Germany

Leiss—GmbH Co., Germany

Neenah Lahnstein Grundstücksverwaltungsgesellschaft  mbH & Co. KG, Germany

Neenah Gessner Unterstützungskasse GmbH, Germany

Neenah Gessner Grundstückswaltungsverwaltungsgesellschaft  mbH & Co, Germany

Neenah Paper FVC, Inc., Delaware

Neenah Paper FR, LLC, Delaware

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-120866 and 333-120867 on Form S-8 of our reports dated March 10, 2010, relating to the consolidated financial statements and financial statement schedule of Neenah Paper, Inc. and subsidiaries, and the effectiveness of Neenah Paper, Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Neenah Paper, Inc. for the year ended December 31, 2009.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

March 10, 2010

EX-24

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Bonnie C. Lind and Steven S. Heinrichs, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of Neenah Paper, Inc. for the fiscal year ended December 31, 2009, and any and all amendments thereto, and other documents in connection therewith and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and the New York Stock Exchange, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

This 10th day of March 2010.

/s/ Edward Grzedzinski

Edward Grzedzinski

Director

/s/ Mary Ann Leeper

Mary Ann Leeper

Director

/s/ Timothy S. Lucas

Timothy S. Lucas

Director

/s/ John F. McGovern

John F. McGovern

Director

/s/ Philip C. Moore

Philip C. Moore

Director

/s/ Stephen M. Wood

Stephen M. Wood

Director

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Sean T. Erwin, certify that:

1.I have reviewed this Annual Report on Form 10-K of Neenah Paper, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2010

/s/ Sean T. Erwin

Sean T. Erwin

Chairman of the Board, President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Bonnie C. Lind, certify that:

1.I have reviewed this Annual Report on Form 10-K of Neenah Paper, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2010

/s/ Bonnie C. Lind

Bonnie C. Lind

Senior Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Neenah Paper, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sean T. Erwin, President and Chief Executive Officer of the Company, and I, Bonnie C. Lind, Senior Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of the undersigned’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/	Sean T. Erwin
	Sean T. Erwin
	Chairman of the Board, President and Chief Executive Officer
	(Principal Executive Officer)
	Date: March 10, 2010
/s/	Bonnie C. Lind
	Bonnie C. Lind
	Senior Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)
	Date: March 10, 2010