EXHIBIT 10.31

EXECUTIVE EMPLOYMENT AGREEMENT

BETWEEN

INTERNATIONAL PAPER COMPANY

AND

PAUL HERBERT

This Executive Employment Agreement (“Agreement”) is by and between
INTERNATIONAL PAPER COMPANY, a New York corporation (“IP”) and PAUL HERBERT (the
“Executive”) and is dated October 4, 2007.

WHEREAS, Executive has been employed by IP since August 1992, and has been
nominated and approved to serve as the chief executive officer of the joint
venture between IP and Ilim Holding, S.A. (the “JV Company”), effective
October 1, 2007 (the “Effective Date”);

WHEREAS, Executive is a party to an employment agreement with the JV Company
(the “JV Employment Agreement”); and

WHEREAS, IP and Executive desire to enter into this Agreement to memorialize the
rights and obligations as set forth below of the IP and Executive as they relate
to one another and to the JV Employment Agreement.

FIRST: This Agreement shall be in effect for so long as Executive is employed by
the JV Company (the “Term”). Executive shall not be a Senior Vice President of
IP or a member of IP’s Senior Lead Team as of the Effective Date.

SECOND: It is contemplated that at the expiration of the Term, or upon a sooner
termination of Executive’s employment with the JV Company in accordance with the
JV Employment Agreement, Executive shall return to full-time employment with IP
in a position that is reasonably commensurate with the position he held with IP
immediately prior to the Effective Date (a “Comparable Position”). In the event
that Executive is removed from the position of Chief Executive Officer of the JV
Company by the Board of Directors of the JV Company (the “JV Board”) in
accordance with Section 6.2 of the Shareholders Agreement, the consent of at
least 66% of the JV Board shall be required in order for Executive to return to
full-time employment with IP. At completion of the Term of his employment
(including agreed upon extensions), or following termination of his employment
with the JV Company for Good Reason (as defined below), or in the event of
termination of employment other than in accordance with Section 6.2 of the
Shareholders Agreement, Executive may, without the consent of the JV Board,
return to a Comparable Position at IP.

THIRD: Executive shall be eligible to receive an award under IP’s Management
Incentive Plan (“MIP”) for the year 2007 (prorated for the period of January 1,
2007 through the Effective date) to be payable in the year 2008. Executive
acknowledges and agrees that he shall not be eligible to receive an award under
IP’s MIP for 2008 or thereafter in respect of any period while employed by the
JV Company. Executive shall be eligible to receive an annual incentive bonus
from the JV Company in accordance with Section 3.7 of the JV Employment
Agreement.

FOURTH: Executive acknowledges and agrees that he shall not be eligible to
receive a grant under IP’s Performance Share Plan (“PSP”) for the year 2008 or
thereafter in respect of any period while employed by the JV Company. The
Parties agree that, except as provided in the following sentences, Executive’s
outstanding grants for years prior to and including the year 2007 under IP’s PSP
shall remain outstanding and administered in accordance with the terms and
conditions of the applicable plans and awards, provided, however, that the
Executive shall be credited with service to IP through December 31, 2007 for
purposes of the 2007 portion of any outstanding PSP grant.

IP agrees to establish an unfunded, unsecured deferred compensation book entry
amount for the benefit of Executive to which is shall credit a dollar amount
equal to (1) the closing price of IP's common stock on September 24, 2007
($35.59), multiplied by (2) the number of restricted shares payable to an
employee at Position Level 34 based on IP's achieving performance for each of
the following PSP segments: (a) the third segment and 1/3 of the fourth segment
for the 2006-2008 PSP and (b) the second and third segments and 2/3 of the
fourth segment for the 2007-2009 PSP.

 

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The 2006 PSP agreed targeted amounts referenced above shall be paid to Executive
in a lump sum in February 2009 less applicable taxes. The 2007 PSP agreed
targeted amounts shall be paid to Executive in a lump sum in February 2010 less
applicable taxes. Executive shall not be permitted to elect to receive either
such lump sum amounts at a different time or in a different format.

Executive shall be eligible to receive a long-term incentive bonus from the JV
Company in accordance with Section 3.8 of the JV Employment Agreement.

FIFTH: During the Term Executive and his spouse, as applicable, shall continue
participation in, or receive comparable benefits to, the following IP health and
welfare plans, all of which shall be provided to Executive on equivalent terms
as provided to similarly situated senior executives of IP: (i) group health
insurance for medical, dental, and prescription drugs: (ii) long-term
disability; (iii) short-term disability; (iv) group life insurance;
(v) executive supplemental life insurance (which coverage shall be based on
Executive’s annual base salary in 2007 paid by IP); (vi) retiree medical savings
plan matching contribution; and (v) post-retirement medical benefits.

SIXTH: As of the Effective Date, Executive shall become vested in a retirement
benefit payable upon his retirement under IP’s Unfunded Supplemental Retirement
Plan for Senior Managers (the “SERP”). Executive’s benefit under the SERP shall
be determined under the formula set forth in Section 5(A) of the SERP based on
his total period of service with IP and its affiliates (collectively, “Company
Employers”), including, without limitation, Executive’s service for any Company
Employer in Russia. For purposes of this Agreement and the SERP, the parties
agree that Executive’s service with the Company Employers commenced on August 1,
1992, and has continued without interruption through the Effective Date. Service
during his employment with the JV Company shall be counted in determining
Executive’s SERP and Pension Restoration Plan benefit. The parties agree that
compensation for purposes of calculating a benefit under the non-qualified
retirement plans shall be limited to Executive’s annual base salary in 2007 paid
by IP, assuming an annual merit increase equivalent to IP’s annual merit
increase budget for the period of Executive’s employment during the Term, plus
the target bonus for Position Level 34 under IP’s MIP in 2007 (“Covered
Compensation”) for the period beginning in 2008 and continuing thereafter for so
long as Executive is employed by the JV Company under this Agreement. The
parties agree that in the event Executive has a termination of employment under
the following situations, Executive will receive the Additional Retirement
Benefit described in Paragraph SEVENTH: (i) Executive is terminated from the JV
Company without Cause as defined below; (ii) Executive is terminated by the JV
Company for any reason, that IP determines is without Cause; (iii) Executive
terminates his employment with the JV Company for Good Reason; (iv) Executive
completes two years of service to the JV Company; (v) Executive is disabled, as
that term is defined under IP’s long-term disability plan; or (vi) upon a change
in control of the JV Company as defined in the JV Employment Agreement resulting
in termination of Executive’s employment with the Company and Executive does not
return to a Comparable Position. For purposes of this Agreement, in addition to
the defined terms set forth in the Agreement, the following definitions shall
apply:

“Cause” shall include only willful misconduct. Examples of misconduct are
willful insubordination, illegal activity or disorderly conduct.

“Good Reason” shall include (i) the physical and mental health of Executive and
his spouse such that it would be unreasonable for him to continue in his
position with the JV Company; (ii) a reduction in annual base salary, fringe
benefits or other compensation as in effect on the date hereof or as the same
may be increased from time to time, except if such reduction is mutually agreed
to in writing by the parties; (iii) a reduction of Executive’s authority, duties
and responsibilities, or the assignment to Executive of duties materially
inconsistent with Executive’s position with the JV Company; (iv) failure to pay
amounts due that are required under the Agreement; (v) failure by the JV Company
to continue in effect any material compensation or benefit plan in which
Executive participates, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or a
substitute plan has been put in place for Executive and all other management
employees, or the failure by the JV Company to continue Executive’s
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of Executive’s participation relative to other participants;
(vi) failure by the JV Company to continue to provide Executive with benefits
required hereunder; (vii) a reduction in the opportunity to receive incentive
compensation; (viii) failure to obtain the agreement of a successor to the
business to assume the Agreement; (ix) relocation of the JV Company more

 

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than 50 miles from its current location; (x) political instability in Russia or
other conditions outside the control of the JV Company that otherwise jeopardize
the safety of Executive or his spouse in Executive’s reasonable opinion; or
(xi) any other material breach by the JV Company or IP of this Agreement.

SEVENTH: In addition to the retirement benefits contemplated by Paragraph SIXTH,
Executive shall be entitled to the Additional Retirement Benefit, determined
without reduction for early commencement of payment of his SERP benefits, with
the amount of the benefit of such enhancement derived from the waiver of such
reduction payable at the same time and in the same form (including the lump sum
discount rate) as Executive’s regular SERP benefit entitlement. Such additional
benefit will be subject to appropriate U.S. federal, state (if applicable) and
social security tax withholdings.

EIGHTH: Executive shall not be eligible for severance under the IP Salaried
Severance Plan if Executive terminates his employment with the JV Company for
any reason including Good Reason as defined above. Executive shall be eligible
for payment of a severance amount from IP in the event that, following the Term
or his earlier termination of employment hereunder with a right to return to a
Comparable Position, there is no Comparable Position available. The amount of
severance payable by IP shall be equal to two weeks’ salary for every year or
partial year of service to the JV Company and IP in the aggregate, and shall be
paid at such time is required under IP’s Salaried Severance Plan. In the event
that Executive is offered a Comparable Position, but Executive declines to
accept such position, then Executive shall not be eligible for severance from
IP, and Executive may retire. To the extent Executive is eligible for payment of
severance benefits from the JV Company in accordance with the JV Employment
Agreement, Executive shall not be eligible for severance benefits paid by IP.

NINTH: All costs related to the negotiation and execution of this Agreement and
the JV Employment Agreement, including fees and disbursements of legal counsel
in the U.S. and Russia, shall be paid by IP and imputed in income to Executive.
Executive shall be eligible to receive a gross-up payment for taxes on such
reimbursement amounts includible in Executive’s income.

TENTH: In the event Executive’s employment is terminated in the circumstances
described in Executive’s Change in Control Agreement dated November 10, 2005
with International Paper Company (the “IP Change in Control Agreement”),
Executive shall be entitled to the severance and other termination benefits
payable under the IP Change in Control Agreement. In the event Executive’s
employment is terminated within two years of a change in control of the JV
Company wherein either IP or Ilim Holding S.A. sells all or part of its interest
in the JV Company to an unrelated third party entity, then Executive may,
without the consent of the JV Company Board, return to a Comparable Position. If
there is no such Comparable Position offered by IP, then Executive may retire
and be eligible for severance under IP’s Salaried Severance Plan in the same
manner as described above in Paragraph EIGHTH. If IP offers Executive a
Comparable Position, and Executive declines to accept such offer of employment,
then Executive may retire, and shall not be eligible for Severance Benefits from
IP.

ELEVENTH: In the event that there are any potential risks to the life or safety
of the Executive and/or his spouse and family members, IP shall cause the JV
Company and/or the JV Company's management, and the JV Company's directors,
officers or employees to make all best efforts to assist the Executive and/or
his spouse and immediate family members to leave Russia at the earliest
convenience, including, without limitation, transfer and visas/consulate
arrangements.

TWELFTH: IP shall cause JV Company to make such payments to Executive as
required to ensure that Executive shall not pay more income (or social) taxes
than would have been paid had Executive remained in the United States during the
tax year(s) involved. The payments shall be calculated and paid in a manner
consisted with IP's Global Mobility Policy, “Tax Equalization” provisions, to
the extent consistent with the previous sentence.

THIRTEENTH:

 

(a)

This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original but all such
counterparts together shall constitute one and the same instrument. Each
counterpart may consist of two copies hereof each signed by one of the parties
hereto.

 

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(b)

This Agreement shall be governed by and construed in accordance with the laws of
Tennessee, USA, without regard to any principles of conflicts of law which could
cause the application of the laws of any jurisdiction other than the law of
Tennessee, USA and any disputes therefrom shall be resolved in the courts of
Memphis, Tennessee.

 

(c)

Any notice or other communication required or permitted hereunder shall be in
writing and shall be delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given when so delivered personally,
telegraphed, telexed or sent by facsimile transmission or, if mailed, five days
after the date of deposit in the United States or Russian mails as follows:

 

  (i)

If to IP, to:

Maura A. Smith, Senior Vice President, General Counsel and Corporate Secretary

International Paper Company

6400 Poplar Avenue

Memphis, Tennessee 38197

 

  (ii)

If to Executive, to:

Paul Herbert

OJSC Ilim Group

17 Marata Street

Saint-Petersburg, 191025, Russian Federation

with a copy to:

White and Case LLP

115 Avenue of the Americas

New York, New York 10036

Attention: Andrew L. Oringer, Esq.

Any such person may by notice given in accordance with this paragraph to the
other parties hereto designate another address or person for receipt by such
person of notices hereunder.

 

(d)

The parties agree that, in the event any clause or provision of this Agreement
shall be deemed illegal or ineffective, such event shall not in any way affect
the remaining clauses, which shall continue in full force.

 

(e)

This Agreement contains the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements, written or oral,
with respect thereto.

 

(f)

This Agreement may be amended, superseded, canceled, renewed or extended, and
the terms hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege nor any single or partial exercise of any
such right, power or privilege, preclude any other or further exercise thereof
or the exercise of any other such right, power or privilege.

 

(g)

Executive shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise, nor
will any payments hereunder be subject to offset in the event Executive does
mitigate.

 

(h)

This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs and assigns. No rights or obligations of the
JV Company or IP under this Agreement may be assigned or transferred without
Executive’s prior written consent, except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation in which the JV
Company or IP is not the continuing entity, or a sale, liquidation or other
disposition of all or substantially all of its business or the assets of the JV
Company or IP, provided that the assignee or transferee is the successor to all
or substantially all of the business or assets of the JV Company or IP and
assumes the liabilities, obligations and duties of the JV Company or IP under
this Agreement, either contractually or as a matter of law. None of Executive’s
rights or obligations under this Agreement may be assigned or transferred by
Executive, without prior written consent, other than Executive’s rights to
compensation and benefits, which may be transferred only by will or operation of
law or as provided in the applicable plan, program, grant or agreement of the JV
Company or IP.

 

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(i)

The respective rights and obligations of the parties hereunder shall survive any
termination of employment to the extent necessary to the intended preservation
of such rights or obligations as provided herein.

 

(j)

Notwithstanding anything herein to the contrary, (i) if at the time of
Executive’s termination of employment with the JV Company or IP, Executive is a
“specified employee” of a public company as defined in Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a result
of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then such payment
shall be deferred (without any reduction in such payments or benefits ultimately
paid or provided to Executive) until the date that is six months following
Executive’s termination of employment (or the earliest date as is permitted
under Section 409A of the Code) and (ii) if any other payments of money or other
benefits due to Executive hereunder could cause the application of an
accelerated or additional tax under Section 409A of the Code, such payments or
other benefits shall be deferred if deferral shall make such payment or other
benefits compliant under Section 409A of the Code, or otherwise such payment or
other benefits shall be restructured, to the extent possible, in a manner,
determined by the Company, that does not cause such an accelerated or additional
tax, provided that no such restructuring shall cause an adverse financial impact
to the Executive. Executive shall be indemnified and held harmless by IP for any
adverse consequences that may arise under Section 409A of the Code in connection
with any compensation that is provided under, or referenced in, this Agreement
and payable by IP whether or not contemplated by the foregoing sentence.

 

(k)

Executive shall be provided indemnification by IP to the same extent provided to
other similarly-situated officers in accordance with IP’s By-laws, which provide
that IP shall indemnify each Officer or Director of IP who is made, or
threatened to be made, a party to any action by reason of the fact that he or
she is or was serving at the request of IP in any capacity for IP or any other
enterprise, to the fullest extent permitted by applicable law. IP shall also
advance the costs and expenses of Executive in respect of any such action
pending a final determination of Executive’s entitlement to indemnification,
provided, however, that Executive shall repay the amount of such advance if it
shall ultimately be determined by an unappealable decision of a court that
Executive is not entitled to be indemnified against such costs and expenses. To
the extent that the JV Company is also required to indemnify Executive or has
put in place insurance for the benefit of Executive that indemnifies Executive
for any such liability, IP’s obligation to indemnify Executive shall be
secondary to the obligations of the JV Company or the issuer of such policy.

 

(l)

It is agreed that Executive’s service to the JV Company shall not be a violation
of his Non-Competition Agreement entered into on June 14, 2006.

 

(m)

In the event that Executive’s employment with the JV Company ends and Executive
again becomes a full-time employee of IP at any time during the Term, IP shall
have no obligation hereunder to pay Executive any of the compensation that is or
was to be provided to him by the JV Company under the terms of this Agreement,
and his compensation with IP on a going-forward basis shall be determined by IP
in accordance with its standard practices and procedures for the payment of
compensation to senior executives.

This Agreement is prepared and signed in two counterparts, being one document
for each party.

INTERNATIONAL PAPER COMPANY

 

By:     /s/    MARY LASCHINGER        

Its:

  S.V.P. INTERNATIONAL PAPER

Date:

  04/10/07

PAUL HERBERT

 

  /s/    PAUL HERBERT         Date:     04/10/07

 

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