Exhibit 10.6

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT OF PATRICK J. MOORE

 

This Amended and Restated Employment Agreement (the “Agreement”) by and between
Patrick J. Moore (the “Executive”) and Smurfit-Stone Container Corporation (the
“Company”) shall be deemed to have been made and entered into as of the date of
the order of confirmation entered by the United States Bankruptcy Court for the
District of Delaware with respect to the Company’s plan of reorganization in the
matter of In re: Smurfit-Stone Container Corp., Case No. 09-10235 (BLS) (the
“Chapter 11 Cases”) (such plan, the “Plan of Reorganization” and such date, the
“Confirmation Date”), and shall become effective as of the effective date of the
Plan of Reorganization (the “Effective Date”).

 

WHEREAS, the Executive currently is employed as the Company’s Chief Executive
Officer (“CEO”) and was Chairman of the Company’s Board of Directors prior to
the Effective Date (the Company’s pre- and post-Effective Date Boards of
Directors hereinafter collectively referred to herein as the “Board”) and the
Company desires to continue to employ the Executive upon and subject to the
terms and conditions set forth herein, and the Executive wishes to accept such
employment upon and subject to such terms and conditions;

 

WHEREAS, the Company and the Executive are parties to that certain employment
agreement effective as of April 1, 1999, which was amended effective as of
January 4, 2002, July 25, 2006 and January 1, 2008 (such employment agreement,
together with subsequent amendments, referred to herein as the “Predecessor
Agreement”);

 

WHEREAS, the Company and the Executive desire to enter into the Agreement and,
in so doing, to amend and restate the Predecessor Agreement in its entirety;

 

WHEREAS, the Company has adopted and implemented an Equity Incentive Plan
(“Equity Incentive Plan”), as of the Confirmation Date, pursuant to the Plan of
Reorganization; and

 

WHEREAS the Executive is a participant in the Jefferson Smurfit Corporation
Supplemental Income Pension Plan II (“SIPP II”), which was not assumed pursuant
to the Company’s Plan of Reorganization and therefore is of no further force and
effect;

 

NOW, THEREFORE, in consideration of the promises and mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by both parties, the parties hereby
agree as follows:

 

1.                                      Employment Period and Positions. 
Subject to the terms and conditions of this Agreement (including without
limitation Section 5):

 

(a)                                  the Company shall employ the Executive as
its CEO from the Effective Date until the nine (9) month anniversary of the
Effective Date (hereinafter referred to as the “Retirement Date”), provided that
the Retirement Date may be accelerated to an earlier date (i) by the Board for
any reason other than Cause upon thirty (30) calendar days’ advance written
notice to the Executive specifying such accelerated Retirement Date (ii) by the
Executive if he

 

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terminates his employment with the Company for Good Reason or following a Change
in Control (as such terms are defined in Section 5 of this Agreement) in
accordance with Section 5 of this Agreement; or (iii) due to the Executive’s
death (in which case, the Retirement Date shall be the date of the Executive’s
death); and

 

(b)                               on the Retirement Date, the Executive shall
retire voluntarily (or, as applicable, be deemed to have retired voluntarily)
from his positions and from his employment with the Company (hereinafter
referred to as the Executive’s “Retirement”), at which time his employment with
and service to the Company shall terminate (such period of the Executive’s
employment from the Effective Date until Retirement Date (or such earlier
effective date of the termination of his employment for Cause or without Good
Reason pursuant to Section 5) herein after referred to as the “Employment
Period”); provided that upon the Executive’s Retirement or other termination of
his employment, the Board shall, in accordance with its normal procedures for
election, retention and removal of directors, determine whether the Executive
shall continue his service as a member of the Board.

 

2.                                                  Duties and Responsibilities.

 

(a)                                  During the Employment Period, the Executive
(i) shall perform the duties assigned to him by the Board from time to time
(provided that the Executive shall not be assigned tasks inconsistent with those
of CEO) faithfully, with the utmost loyalty, to the best of his abilities and in
the best interests of the Company; (ii) shall devote his full business time,
attention and effort to the affairs of the Company, except that the Executive
may continue to serve on corporate boards (in addition to the Board) and/or
(y) civic or charitable boards or committees, in either case as long as such
activities do not, individually or in the aggregate, interfere with the
performance of the Executive’s employment duties and responsibilities or harm
the business or reputation of the Company or any of its Affiliates; and
(iii) shall not engage in any other business activities (whether or not for
gain, profit, or other pecuniary advantage) or any other actions which he knows
or reasonably should know could harm the business or reputation of the Company
or any of its affiliates or other related entities. The time involved in such
activities shall not be treated as vacation time.  The Executive shall be
entitled to keep any amounts paid to him in connection with such activities
(e.g., directors fees and honoraria).   For purposes of this Agreement,
“Affiliates” shall mean any entity that, directly or indirectly, is controlled
by the Company, and any entity in which the Company has a 20% or greater equity
interest.

 

(b)                                 The Executive shall act in conformity with
the Company’s written and oral policies and within the limits, budgets and
business plans set by the Company.  The Executive will at all times during the
Employment Period strictly adhere to and obey all of the rules and regulations
in effect from time to time relating to the conduct of Company executives. 
Except as provided in Section 2(a), the Executive shall not engage in consulting
work or any trade or business for his own account or for or on behalf of any
other person, firm or company that competes, conflicts or interferes with the
performance of his duties hereunder in any material way.

 

(c)                                  The Executive covenants, represents and
warrants that:  (i) the execution, delivery and complete performance of this
Agreement by him does not and will not breach,

 

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violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which the Executive is a party or by which he is bound;
and (ii) he is not a party to or bound by any employment or services agreement,
confidentiality agreement, noncompetition agreement, other restrictive covenant,
or other obligation or agreement that would or could prohibit or restrict him
from being employed by the Company or from performing any of his duties under
this Agreement.

 

(d)                                 The Executive shall not, at any time during
or after his employment with the Company, make or publish any derogatory,
unfavorable, negative, disparaging, false, damaging or deleterious written or
oral statements or remarks regarding the Company or any of its Affiliates or any
members of their respective boards of directors or managements, or any of their
respective business affairs or performance.  The Company, members of its Board
and its senior executives shall not, at any time during or after the Executive’s
employment with the Company, make or publish any derogatory, unfavorable,
negative, disparaging, false, damaging or deleterious written or oral statements
or remarks regarding the Executive.

 

3.                                                  Compensation and Benefits.

 

(a)                                  Base Salary.  During the Employment Period,
subject to the terms and conditions of this Agreement, the Company shall pay to
the Executive an annual base salary at the gross rate of $1,107,000 (the “Base
Salary”), payable in installments in accordance with the Company’s executive
payroll policy (but not less frequently than monthly).

 

(b)                                 Incentive Compensation.  During the
Employment Period, the Executive shall be eligible to participate in the
Company’s annual incentive plan(s), including without limitation the Company’s
Management Incentive Plan (“MIP”), with an initial target level incentive bonus
percentage for the 2010 MIP equal to 125% of the Executive’s Base Salary and a
subsequent target level incentive bonus percentage for the 2010 MIP (that shall
become effective at such time as set forth in, and in accordance with, the terms
of the 2010 MIP) equal to 115% of the Executive’s Base Salary, provided that the
gross amount of any such annual incentive bonus payment to the Executive under
the 2010 MIP shall be reduced by $30,000 at the time that such bonus is paid,
and further provided that such reduction in such 2010 MIP bonus payment shall
not be considered, and shall be excluded, for purposes of determining any other
amounts to which the Executive is or may be entitled under any other provision
of this Agreement (including without limitation Sections 4 and 8) or otherwise.

 

(c)                                  Special Annual Incentive and
Change-in-Control Payments.  Subject to the terms and conditions of this
Agreement (including without limitation Section 11) and provided that the
Executive complies with his obligations under this Agreement (including without
limitation those contained in Sections 2, 6, 9 and 10) and the Executive’s
employment has not terminated for Cause or without Good Reason (each as defined
in this Agreement):

 

(i)                                the Company shall pay the Executive a special
annual incentive payment (the “Special Annual Incentive Payment”) in the amount
of (A) $3,500,000 reduced by (B) that portion of the Executive’s target level
incentive bonus under the Company’s 2009 Long-Term Incentive Plan approved in
the Chapter 11 Cases (the “2009 LTIP”) that was (i) based only upon the
Company’s financial performance (and not any restructuring goals under the 2009

 

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LTIP) and (ii) earned in 2010 (the “2010 LTIP Credit”).  The 2010 LTIP Credit is
calculated as those number of full calendar months between January 1, 2010 and
the Effective Date divided by the twenty-four (24) months in the 2009 LTIP plan
cycle.  The Special Annual Incentive Payment is payable in a lump sum on the
earlier of (X) the sixtieth (60th) calendar day after the Retirement Date or
(Y) March 15, 2011, which amount of the Special Annual Incentive Payment the
Executive acknowledges and agrees is in lieu of the Executive’s receipt of any
grant of equity in the Company pursuant to the Company’s Plan of Reorganization
or the Equity Incentive Plan;

 

(ii)                             in the event (A) of a Change in Control (as
defined in this Agreement) during the Employment Period or (B) that, at any time
prior to the Retirement Date, the Company receives an offer from a third party
to purchase the Company or enter into any other transaction(s) that would
constitute a Business Combination (as defined in this Agreement) that results in
a Change in Control at any time within fifteen months after the Effective Date
(and provided that the Executive participated in the efforts to sell the Company
or to otherwise effectuate the Business Combination), the Company shall pay to
the Executive, within thirty calendar (30) days after the Change in Control, an
additional lump sum amount equal to (X) the monetary value of equity that the
individual holding the positions of President and Chief Operating Officer
(“COO”) of the Company as of the Effective Date would receive if all of the
equity-based compensation that such President and COO received pursuant to and
in accordance with the Company’s Plan of Reorganization (i.e., that pursuant to
the Plan of Reorganization, the President and COO will receive 0.9% of the
common shares of the Company issued on the Effective Date on a fully diluted
basis, allocated in a restricted stock unit award with respect to 0.22% of such
common shares and in an award granting options to acquire 0.68% of such common
shares) were fully vested and liquidated at the Change in Control Value (as
defined below) reduced by (Y) the amount of the Special Annual Incentive
Payment; and

 

(iii)                          for purposes of Section 3(c)(ii):  (A) “Change in
Control Value” means the consideration paid or payable or the value received or
receivable with respect to a share of common stock of the Company in connection
with the Change in Control (as reasonably determined by the Company), multiplied
by the number of shares of common stock, common stock units, or common stock
equivalents held by the President and COO of the Company as of the Effective
Date; and (B) in the case of an option, stock appreciation right or the
equivalent, “Change in Control Value” means the amount described in the
preceding Section 3(c)(iii)(A), reduced by the exercise price or strike price of
the option, stock appreciation right or the equivalent.

 

(d)                                 Employee Benefits.  During the Employment
Period, the Executive shall be eligible to participate in such employee benefit
plans (including group medical and dental), and to receive such other fringe
benefits and perquisites (including but not limited to reimbursement for annual
income tax return preparation and tax counseling up to $25,000 per year), as the
Company may make available to senior executives generally, subject to all
present and future terms and conditions of such benefit plans and other fringe
benefits and perquisites.  If the Executive elects to pay the entire premium for
long-term disability coverage with after-tax dollars, the Company will reimburse
the Executive for the amount of such premium.  The Company reserves the right in
its sole discretion to alter, suspend, amend, or discontinue any and all of its
employee and fringe benefits, perquisites, benefit plans, policies and
procedures, in whole or in part, at any time with or without notice, provided
that the Company will not make

 

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any change to the Executive’s employee or fringe benefits that it does not also
make on a consistent basis for other senior executives of the Company.

 

(e)                                  Executive Plans and Programs.  During the
Employment Period, the Executive shall be entitled to participate on
substantially the same basis as the Company’s other senior executive officers in
any executive benefit plans offered by the Company, provided that the Executive
shall not be entitled to receive any emergence equity grant pursuant to the
Company’s Plan of Reorganization or Equity Incentive Plan.

 

(f)                                    Vacation.  The Executive shall be
entitled to accrue vacation in accordance with the Company’s vacation policy for
senior executive officers as in effect or amended from time to time, but in no
event less than five (5) weeks per calendar year.

 

(g)                                 Expense Reimbursement.  The Company shall
reimburse the Executive for all reasonable and necessary business expenses
incurred by him in connection with his duties hereunder (including, without
limitation, Section 10) after the Executive’s timely presentation of
IRS-acceptable itemized and documented accounts of such expenditures, provided
that the Executive shall secure the Board’s approval before incurring any
extraordinary expenses, and provided further that such reimbursement for
reasonable and necessary business expenses is subject to the Company’s expense
reimbursement policy.

 

(h)                                 Withholdings and Deductions.  Any and all
payments to the Executive under this Agreement shall be reduced by required or
authorized withholding and deductions.

 

(i)                                     Clawback.  In the event that the Board
determines in good faith that the amount of any incentive and/or performance
based compensation based in whole or in part on the financial performance of the
Company (or any division thereof) paid or granted to the Executive was
materially incorrect because the performance criteria were applied incorrectly,
within sixty (60) days after receiving written notice from the Board, the
Executive shall repay to the Company the portion of any cash payments or return
and forfeit the portion of any such grant, as the case may be, that the
Executive received that he was not entitled to receive due to such incorrect
application of the performance criteria (which such amount(s) to be repaid or
returned shall be reduced by the Net Tax Costs (as defined below)), provided
that the foregoing written notice from the Board is received by the Executive no
later than the earlier of (i) ninety (90) days after the date on which the
Company becomes aware of the incorrect application of the performance criteria
and (ii) the second anniversary of the payment, vesting or delivery, as
applicable, of the compensation.  “Net Tax Costs” shall mean the net amount of
any federal, state or local income and employment taxes paid by the Executive in
respect to the portion of the compensation subject to repayment or return, after
taking into account any and all available deductions, credits or other offsets
allowable to the Executive (including without limit, any deductions permitted
under the claim of right doctrine), and regardless of whether the Executive
would be required to amend any prior income or other tax returns.

 

4.                                                  Payments Upon Retirement.

 

Upon and subject to his Retirement from his employment and separation from
service with the Company as set forth in Section 1 above (including due to any
acceleration of

 

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the Retirement Date as set forth therein), subject to the terms and conditions
of this Agreement (including without limitation Sections 6 and 11), provided
that the Executive executes (without revoking) and returns to the Company an
enforceable waiver and release in a form acceptable to the Company (a “Release
Agreement”) within the time period specified by the Company (which time period
shall not be more than sixty (60) calendar days after the effective date of the
Executive’s termination of employment) and that the applicable statutory
revocation period with respect to such Release Agreement has expired, and
further provided that the Executive remains in compliance with his obligations
under this Agreement (including without limitation those contained in Sections 9
and 10), the Company’s sole obligation under this Agreement shall be to:

 

(a)                                  pay to the Executive a new supplemental
pension benefit that shall be determined and payable in accordance with the
applicable terms and conditions of, and formula(s) set forth in, the SIPP II, as
though the SIPP II had continued in effect after the Effective Date (the
“Supplemental Pension Benefit”), provided that, notwithstanding anything to the
contrary in the SIPP II, the Supplemental Pension Benefit shall (i) be
determined using the Executive’s total service credit with the Company, its
Affiliates and their respective predecessors, which service credit shall include
the Executive’s service with any such predecessor(s) of the Company or any of
its Affiliates from January 1, 1987 through and including the Retirement Date,
(ii) be payable in such manner and at such time(s) as it would have been paid
under the SIPP II, pursuant to the Executive’s election thereunder, had the SIPP
II continued in effect after the Effective Date, and (iii) include as necessary
for purposes of calculating the Executive’s final average earnings under the
SIPP II such compensation received by the Executive prior to the Effective Date
(including prior to the commencement of the Chapter 11 Cases) and thereafter,
further provided, however, that the Executive acknowledges and agrees that such
final average earnings calculation excludes any cash long-term incentive plan
payments made to the Executive after the filing of the Chapter 11 Cases and the
payments set forth in Section 3(c) of this Agreement;

 

(b)                                 provide the Executive with reasonable office
space and secretarial support at the Company’s offices in the St. Louis,
Missouri metropolitan area, at the Company’s expense, through the period ending
on December 31 of the second year following the Retirement Date (except in the
case of the Executive’s death), provided that the Executive’s entitlement to the
foregoing shall cease upon his full-time employment by another employer;

 

(c)                                  pay the Executive the Special Annual
Incentive Payment and any payment due pursuant to the terms and conditions of
Section 3(c)(ii), in the amount(s) and at the time(s) described in
Section 3(c) to the extent not theretofore paid;

 

(d)                                 in the event the Retirement Date occurs on
or prior to December 31, 2010, pay the Executive (i) an amount equal to the
difference between $1,107,000 and the portion of the Base Salary that the
Executive already has earned as of the effective date of the termination,
payable in a lump sum on the sixtieth (60th) calendar day after the Retirement
Date; and (ii) an additional amount equal to difference between (A) the total
actual annual incentive bonus(es) under the Company’s 2010 MIP that the
Executive would have earned during the 2010 MIP plan year had he remained
employed and been entitled to receive such bonus(es) for the entire 2010 MIP
plan year (including the reduction thereto as set forth in Section 3(b) of this
Agreement) and (B) the portions of any such annual incentive bonus(es) already
earned by the Executive during

 

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the 2010 MIP plan year, which amount of such difference shall be paid at such
time(s) as provided in such 2010 MIP for participants who have not had a
separation from service;

 

(e)                                  in the event that the Retirement Date
occurs during calendar year 2011, a pro-rated portion of the annual incentive
bonus(es) that the Executive would have earned for the performance period(s) in
2011 as though he had remained employed and been entitled to receive such
bonus(es) for the applicable incentive plan performance period(s), the amount of
which pro-rated bonus payment(s) shall be based upon the number of full calendar
months in which the Executive was employed during the applicable performance
period(s), divided by the number of full calendar months in the applicable
performance period(s), which payment(s) shall be paid at such time(s) as
provided in such 2011 annual incentive plan as though the Executive had remained
employed through the entire applicable performance period(s);

 

(f)                                    determine the Executive’s age and service
with the Company with respect to the amount of benefits under the Company’s
executive benefit plans based upon the Executive’s actual age and service as of
the Retirement Date;

 

(g)                                 pay to the Executive the amounts set forth
in Section 8(a) of this Agreement to the extent that such amounts do not
duplicate any amount(s) set forth in Section 4(a); and

 

(h)                                 pay the employer portion of the costs of
continued health coverage at the Executive’s then-current level under the
Company’s health, dental, life, disability and other welfare benefit plans (the
Executive to pay the employee’s portion at regular employee rates) for a period
of three (3) years following the Retirement Date; provided that if the Executive
cannot participate in any benefit plan because he is not actively performing
services for the Company, the Company may provide such benefits under an
alternate arrangement, such as through the purchase of an individual insurance
policy that provides similar benefits.  The amount of such continued coverage
shall be determined, if applicable, by adding 36 additional months of age and
service to the Executive’s actual age and service as of the Executive’s
Retirement Date and as if the Executive earned compensation during such 36-month
period at the rate in effect during the twelve (12) month period immediately
preceding his Retirement Date.  The Executive’s eligibility for any retiree
medical or life coverage following such Retirement Date shall also be determined
by adding 36 additional months of age and service to the Executive’s actual age
and service as of the Retirement Date.  Notwithstanding the foregoing, the
Executive shall not be entitled to the benefits provided in this Section 4(h) to
the extent that he becomes eligible for coverage under another employer’s
benefit plans.

 

The Executive acknowledges and agrees that under no circumstances will he
receive, or be entitled to receive, any of the benefits set forth in Section 8
of this Agreement due to his Retirement as defined in Section 1 of this
Agreement, except as expressly set forth in Section 4(f) above.  In the event
that the termination of the Executive’s employment is due to Retirement as set
forth in Section 1, the Executive agrees to execute (without revoking) and
return to the Company a waiver and release in a form acceptable to the Company
(a “Release Agreement”) within the time period specified by the Company (which
time period shall not be more than sixty (60) calendar days after the effective
date of the Executive’s termination of employment) as a condition of receiving
the payments and benefits set forth in this Section 4, and provided that the

 

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applicable statutory revocation period with respect to such Release Agreement
has expired, subject to the terms and conditions of this Agreement, such
payments in this Section 4 shall be made at later of (A) such times of payment
specified in the applicable subsections of this Section 4 and (B) the sixtieth
(60th) calendar day following the Retirement Date.

 

5.                                                  Termination of Employment
Prior to the Retirement Date.

 

(a)                                  Termination by the Company for Cause. 
Notwithstanding anything to the contrary herein, the Company may terminate the
Executive’s employment for Cause (as defined herein) at any time immediately
upon written notice.  For purposes of this Agreement, “Cause” shall mean any of
the following:  (i) the Executive’s willful and continued failure to
substantially perform his duties as an executive of the Company (other than any
such failure resulting from inability due to physical or mental illness or
Incapacity) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed his
duties, and which gives the Executive at least thirty (30) days to cure such
alleged deficiencies, (ii) the Executive’s willful misconduct, which is
demonstrably and materially injurious to the Company, monetarily or otherwise,
or (iii) the Executive’s engaging in egregious misconduct involving serious
moral turpitude to the extent that his credibility and reputation no longer
conforms to the standard of senior executive officers of the Company.  The
Company and the Executive acknowledge and agree that an acceleration of the
Retirement Date by the Company pursuant to Section 1 of this Agreement alone
shall not be deemed a termination for Cause.

 

(b)                                 Voluntary Resignation by the Executive With
or Without Good Reason.  Notwithstanding anything to the contrary herein, the
Executive may terminate his employment with the Company for Good Reason (as
defined herein) at any time by written notice to the Company, in which case his
termination shall be a Retirement.  At any time after the ninetieth (90th)
calendar day after the Effective Date, the Executive may terminate his
employment with the Company upon sixty (60) calendar days’ advance written
notice without Good Reason (provided that this Section 5(b) shall not apply to
the Executive’s Retirement as set forth in Sections 1 and 4).  The Executive’s
employment shall terminate effective as of the effective date of any such notice
or such later effective termination date as the Executive may specify in the
notice (which shall in no event be later than sixty (60) calendar days after the
notice is given unless otherwise agreed to in writing by the Board).  For
purposes of this Agreement, “Good Reason” shall mean the occurrence of any of
the following without the Executive’s consent:  (i) assigning the Executive
duties that are materially inconsistent with those of a CEO for similar
companies in similar industries; (ii) requiring the Executive to report other
than to the Company’s Board; (iii) a material breach of this Agreement by the
Company; (iv) requiring the Executive to relocate his principal business office
to a location not within fifty (50) miles of either the Company’s principal
business office located in the St. Louis, Missouri metropolitan area or the
Chicago, Illinois metropolitan area (provided that the Company’s requiring the
Executive to relocate his principal office from the Chicago, Illinois
metropolitan area to the St. Louis, Missouri metropolitan area, or from the St.
Louis, Missouri metropolitan area to the Chicago, Illinois metropolitan area,
will not constitute Good Reason); and (v) the Agreement is not assigned to a
successor to the Company pursuant to the Plan of Reorganization; provided,
however, that an occurrence that otherwise may constitute Good Reason hereunder
shall not constitute Good Reason unless the Executive (y) provides to the
Company, at least thirty (30)

 

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calendar days prior to the Executive’s contemplated resignation for Good Reason,
a written notice containing reasonable detail setting forth the basis for the
Executive’s claim that an occurrence constitutes Good Reason, and (z) the
Company fails to cure or otherwise remedy such occurrence within thirty (30)
calendar days after receiving such notice from the Executive.  The Executive
acknowledges and agrees that the restructuring events that have taken place or
will take place solely pursuant to the Company’s Plan of Reorganization shall
not constitute Good Reason for purposes of this Agreement.

 

(c)                                  Voluntary Termination Following a Company
Change in Control.  Notwithstanding anything to the contrary herein, the
Executive may terminate his employment with the Company following a Company
Change in Control (as defined herein), at any time during the Employment Period,
upon thirty (30) calendar days’ advance written notice to the Company. Such a
termination shall be a Retirement. Neither a Change in Control with respect to
any affiliate of the Company nor an assignment of this Agreement to any
reorganized entity of the Company pursuant to the Plan of Reorganization shall
constitute a Change in Control for the purposes of this Agreement.  “Change in
Control” shall mean the occurrence of any one or more of the following:

 

(i)                                The “beneficial ownership” of securities
representing more than 20% of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Company Voting Securities”) is accumulated, held or acquired by
a Person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934,
as amended, and used in Sections 13(d) and 14(d) thereof) other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the Company’s stockholders in substantially the same proportions as their
ownership of stock of the Company; provided, however, that any acquisition from
the Company or any acquisition pursuant to a transaction that complies with
clauses (A), (B) and (C) of subparagraph (iii) of this definition will not be a
Change in Control under this subparagraph (i), and provided further that
immediately prior to such accumulation, holding or acquisition, such person was
not a direct or indirect beneficial owner of 20% or more of the Company Voting
Securities;

 

(ii)                             Individuals who, as of the Effective Date,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that an individual becoming
a director subsequent to that date whose election, or nomination for election by
the Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board will be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;

 

(iii)                          Consummation by the Company of a reorganization,
merger or consolidation, or sale or other disposition of all or substantially
all the assets of the Company or the acquisition of assets or stock of another
entity (a “Business Combination”), in each case, unless immediately following
such Business Combination: (A) more than 60% of the combined voting power of
then outstanding voting securities entitled to vote generally in the election of

 

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directors of (i) the corporation resulting from such Business Combination (the
“Surviving Corporation”), or (ii) if applicable, a corporation that as a result
of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries (the
“Parent Corporation”), is represented, directly or indirectly, by Company Voting
Securities outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Company Voting Securities
were converted pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Company Voting
Securities; (B) no person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of the
combined voting power of the then outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) except to the extent that such ownership
of the Company existed prior to the Business Combination; and (C) at least a
majority of the members of the board of directors of the Parent Corporation (or,
if there is no Parent Corporation, the Surviving Corporation) were members of
the incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination;

 

(iv)                         Approval by the Company’s stockholders of a
complete liquidation or dissolution of the Company; or

 

(v)                            The consummation of a reorganization, complete
liquidation, or dissolution under the U.S. Bankruptcy Code subsequent to the
Effective Date (and excluding the Plan of Reorganization and the Chapter 11
Cases as defined herein).

 

6.                                                  The Executive’s Duties After
Notice of Retirement or Termination.  For any period in which the Executive
gives or is given notice prior to the effective date of the Executive’s
termination of employment (including due to any acceleration of the Retirement
Date), the Executive shall be expected and required to continue performing the
Executive’s duties and responsibilities in accordance with Section 2 of this
Agreement for the notice period up to the effective date of the termination of
the Executive’s employment.

 

7.                                                  Removal from Positions. 
Unless otherwise determined by the Board, any termination of the Executive’s
employment (including because of the Executive’s Retirement) shall automatically
effectuate the Executive’s removal from the officer positions that the Executive
then holds with the Company and its Affiliates and any employee benefit plans,
as of the effective termination date.

 

8.                                                  Payments Upon Termination of
Employment Other Than Due to Retirement.

 

(a)                                  The parties acknowledge and agree that
except as expressly provided in Sections 4 and 8(b) of this Agreement, in the
event of the termination of the Executive’s employment, the Company’s sole
obligation under this Agreement shall be to pay the Executive (i) any earned but
unpaid Base Salary through the effective date of the termination; (ii) any
earned but unpaid bonus (if any) under the Company’s annual incentive plan
pursuant to, and in

 

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accordance with, the terms and conditions of such plan; (iii) an amount equal to
the Supplemental Pension Benefit, at the time and in the amount set forth in
Section 4(a) of this Agreement, provided that such amount shall be calculated as
though the Executive had retired as of the effective termination date of his
employment; (iv) any earned but unused vacation time as determined in accordance
with the Company’s policies then in effect; and (v) any unreimbursed expenses
pursuant to Section 3(g) of this Agreement existing at that time.

 

(b)                                 In the event that the Executive terminates
his employment with the Company without Good Reason in accordance with
Section 5(b) of this Agreement, subject to the terms and conditions of this
Agreement, the Company’s sole obligation under this Agreement shall be to pay to
the Executive:  (i) such amounts due to him pursuant to Section 8(a) of this
Agreement; and (ii) a pro-rated portion of any annual incentive bonus(es) that
the Executive would have earned for the performance period(s) in which the
effective termination date of his employment occurred as though he had remained
employed and been entitled to receive such bonus(es) for the applicable
incentive plan performance period(s), the amount of which pro-rated bonus
payment(s) shall be based upon the number of full calendar months in which the
Executive was employed during the applicable performance period(s), divided by
the number of full calendar months in the applicable performance period(s) and
shall be paid at such time(s) as provided in such annual incentive plan as
though Executive had remained in employment.

 

(c)                                  The Executive acknowledges and agrees that
under no circumstance will he receive or be entitled to receive payments
pursuant to more than one of Sections 4 and 8 of this Agreement and that there
shall be no “double” payments pursuant to such Sections in the event of the
termination of the Executive’s employment as forth therein; and further
acknowledges and agrees that for purposes of Section 8 of this Agreement,
“annual incentive bonus” shall mean the Executive’s incentive bonus under the
Company’s MIP then in effect or such other similar annual incentive bonus plan
or program then in effect.

 

(d)                                 Timing of Payments.  Subject to the terms
and conditions of this Agreement (including without limitation Section 11), the
payments and benefits in Sections 8(a) and 8(b) will be paid or commence (as
applicable) at such times and in such manner as set forth in the individual
provisions of this Agreement referenced therein or the applicable Company policy
and plan documents.

 

(e)                                  Release.  Notwithstanding the foregoing,
the Execute agrees to execute (without revoking) a Release Agreement within the
time period specified by the Company (which time period shall not be more than
sixty (60) calendar days after the effective date of the Executive’s termination
of employment) as a condition of receiving the payments and benefits set forth
in Sections 8(a)(iii) and 8(b)(ii).

 

9.                                                 
Confidentiality, Intellectual Property and Restrictive Covenants.  The Company
and the Executive agree that, in each of his various senior management positions
with the Company and otherwise by virtue of his unique relationship with the
Company (including pursuant to this Agreement), the Executive has and will
acquire and have access to, and has and will continue to develop substantial and
intimate knowledge of, the Company’s Confidential Information (defined below),
and has and will also continue to develop a unique and comprehensive familiarity
with the Company and the Business Conducted by the Company or

 

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any of its Affiliates, which the Executive would not have otherwise had but for
his employment with the Company, and which the Executive acknowledges are
valuable assets of the Company.  Accordingly, the Executive agrees, in exchange
for the consideration and mutual covenants contained in this Agreement, to
undertake the following obligations, which he acknowledges are reasonably
designed to protect the legitimate business interests of the Company, without
unreasonably restricting his post-employment opportunities:

 

(a)                                  Confidential Information.  The Executive
acknowledges that during his employment with the Company he has had and will
continue to have, and may continue to have during the Non-Compete Period (as
defined below), access to Confidential Information of the Company, its
Affiliates and, in certain situations, certain third parties who provide
information to the Company subject to confidentiality and non-use restrictions. 
All Confidential Information is of irreplaceable value to the Company, its
Affiliates and such third parties.  Except as required to perform the
Executive’s responsibilities for the Company and its Affiliates, to comply with
law or regulation, or as authorized in writing in advance by the Company, the
Executive shall not, at any time, use, disclose, or take any action which may
result in the use or disclosure of any Confidential Information.  For purposes
of this Agreement, “Confidential Information” shall mean all confidential and
proprietary information of the Company, its Affiliates and, in certain
situations, certain third parties who provide information to the Company subject
to confidentiality and non-use restrictions, and includes, but is not limited
to, actual and prospective customer and client lists and pricing information,
business plans, programs and tactics, research and development information
(including without limitation information relating to the formulation, testing,
registration, use, safety, efficacy and/or effects of marketed products and
compounds under development), personnel information, and all other information
unique to the Company and not readily available to the public, including
designs, improvements, inventions, formulas, compilations, methods, strategies,
capabilities, forecasts, software programs, processes, know-how, data, operating
methods and techniques, “Inventions or Developments” (as defined below), and all
business costs, profits, vendors, markets, sales, products, marketing, sales or
other financial or business information, and any modifications or enhancements
of any of the foregoing.

 

(b)                                 Inventions or Developments.  The Executive
agrees that he will, now and in the future, promptly and fully disclose to the
Company all discoveries, improvements, inventions, formulas, ideas, processes,
designs, techniques, know-how, data and computer programs (whether or not
patentable, copyrightable or susceptible to any other form of protection), that
are or have been made, conceived, reduced to practice or developed by the
Executive, either alone or jointly with others, during his employment with the
Company, that are related in any way to the past, current or future business or
products of the Company or any of its Affiliates or are devised, made,
developed, reduced to practice or perfected utilizing equipment or facilities of
the Company or any of its Affiliates (collectively, the “Inventions or
Developments”).  All Inventions or Developments shall be the sole property of
the Company, including all patents, copyrights, intellectual property or other
rights related thereto and the Executive assigns to the Company all rights (if
any) that the Executive may have or acquire in such Inventions or Developments. 
Notwithstanding the foregoing, this Section 9(b) shall not apply to any
Inventions or Developments for which no equipment, supplies, facility or trade
secret information of the Company or its Affiliates were used and which were
developed entirely on the Executive’s own time, unless:  (i) the Inventions or
Developments relate to the Business

 

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Conducted by the Company or any of its Affiliates or the actual or demonstrably
anticipated research or development of the Company or any of its Affiliates; or
(ii) the Inventions or Developments result from any work performed by the
Executive for the Company or any of its Affiliates.

 

(c)                                  Restrictive Covenants.  The Executive
agrees that during the Executive’s employment and for the two (2) year period
following the effective date of any termination of the Executive’s employment
for any reason (the “Non-Compete Period”), unless the Company gives its advance
written consent, the Executive shall not:

 

(i)                                participate or engage in, directly or
indirectly (whether as an owner, agent, representative, partner, employee,
officer, director, independent contractor, consultant, advisor, or in any other
capacity calling for the rendition of services, advice, or acts of management,
operation or control), any business that, during the Non-Compete Period, is
competitive with the Business Conducted by the Company or any of its Affiliates
anywhere in the United States, Canada, Mexico, or China (hereinafter, the
“Geographic Area”) and which business the Company was engaged (either actively
as a going concern or in the process of developing to market) during the two
(2) year period preceding his termination of employment;

 

(ii)                             directly or indirectly solicit any current
employee of the Company or any of its Affiliates, or any individual who becomes
an employee of the Company or any of its Affiliates during the Non-Compete
Period, to leave such employment and join or become affiliated with any business
that is, during the Non-Compete Period, competitive with the Business Conducted
by the Company or any of its Affiliates within the Geographic Area; or

 

(iii)                          directly or indirectly solicit, seek to divert or
dissuade from continuing to do business with or entering into business with the
Company or any of its Affiliates, any supplier, customer, or other person or
entity with which the Company had, or was actively planning or pursuing, a
business relationship at any time during the two (2) year period preceding his
termination of employment.

 

For purposes of this Agreement, during the Executive’s employment, “Business
Conducted by the Company or any of its Affiliates” shall mean (a) all businesses
conducted by the Company or any of its Affiliates and (b) any material new line
of business in which the Company or any of its Affiliates is contemplating
engaging in, provided that the plans for the Company or any of its Affiliates to
engage in such material new line of business were presented to and not rejected
by the Board.  For purposes of this Agreement, for two-year period following the
effective date of any termination of the Executive’s employment, “Business
Conducted by the Company or any of its Affiliates” shall mean (a) all business
conducted by the Company or any of its Affiliates as of the effective date of
the Executive’s termination of employment and (b) any material new line of
business in which the Company or any of its Affiliates engages within the
one-year period following the effective date of the Executive’s termination of
employment, provided that the plans for the Company or any of its Affiliates to
engage in such material new line of business were presented to and not rejected
by the Board prior to the effective date of the Executive’s termination of
employment and while the Executive was a member of the Board.

 

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(d)                                 No Diversion of Business Opportunities and
Prospects.  The Executive agrees that during his employment with the Company: 
(i) the Executive shall not directly or indirectly engage in any employment,
consulting or other business activity that is competitive with the Business
Conducted by the Company or any of its Affiliates; (ii) the Executive shall
promptly disclose to the Company all business opportunities that are presented
to the Executive in his capacity as an employee of the Company; and (iii) the
Executive shall not usurp or take advantage of any such business opportunity
without first offering such opportunity to the Company.

 

(e)                                  Return of Property.  The Executive
acknowledges and agrees that immediately upon his termination of employment with
the Company (including due to his Retirement) he will promptly return (without
retaining any copies) all property of the Company, its Affiliates or any third
parties that is within his possession, custody or control by virtue of his
employment with the Company.  Property to be returned to the Company shall
include without limitation any and all documents and other things (whether in
tangible or electronic format and whether such documents or things contain
information that reflect or contain any Confidential Information or proprietary
information) in the Executive’s possession, custody or control, further
including without limitation all computer programs, passwords, files, and
diskettes, all written and printed files, manuals, contracts, memoranda, forms,
notes, records and charts (and any and all copies of, or extracts from, any of
the foregoing), vehicles, keys, cell phones, credit cards and other equipment
and materials furnished to him by the Company; provided, however, that (i) the
Executive shall be entitled to keep his home office equipment; and (ii) the
Company and the Executive shall work together to ensure that any Confidential
Information, Inventions or Developments, or other Company business information
is removed from such home office equipment.

 

(f)                                    Irreparable Harm.  The Executive
acknowledges that:  (i) the covenants contained in Sections 2(d) and 9 are
reasonable in scope and duration, will not unduly restrict the Executive’s
ability to engage in his livelihood, and the Executive’s compliance with
Sections 2(d) and 9 is necessary to preserve and protect the Confidential
Information, Inventions or Developments, and other legitimate business interests
of the Company; (ii) any failure by the Executive to comply with the provisions
of Sections 2(d) and 9 will result in irreparable and continuing injury to the
Company for which there will be no adequate remedy at law; and (iii) in the
event that the Executive should fail to comply with the terms and conditions of
Sections 2(d) and 9, in addition to the Company’s right to set off any actual
monetary damages to the Company that are a consequence of such failure to comply
against any payments and benefits due to the Executive pursuant to Sections 4 or
8 (but excluding Sections 4(a) and 8(a)(iii)) (provided that any such set offs
first shall be taken from amounts not subject to Section 409A of the Code (as
defined in Section 11 below), and if such amounts are insufficient, any
additional set off shall not be taken until the time an amount subject to
Section 409A of the Code would otherwise be paid pursuant to the terms of this
Agreement), the Company shall be entitled, in addition to and without limiting
such other relief as may be proper, to all types of equitable relief (including
but not limited to the issuance of an injunction and/or temporary restraining
order) as may be necessary to cause the Executive to comply with Sections
2(d) and 9, to restore to the Company its property, and to make the Company
whole.  The Company and Executive acknowledge and agree that the Company or the
Executive’s failure to enforce or insist on its or his rights under Sections
2(d) and 9 shall not constitute a waiver or abandonment of any such

 

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rights or defense to enforcement of such rights.  If the provisions of Sections
2(d) and 9 are ever deemed by a court to exceed the limitations permitted by
applicable law, the Executive and the Company agree that such provisions shall
be, and are, automatically reformed to the maximum lesser limitations permitted
by such law.

 

10.                                           Cooperation.  At the request and
upon reasonable advance notice where practicable and at the sole expense of the
Company, whether during or at any time after the Executive’s employment with the
Company or any of its Affiliates, the Executive shall cooperate fully with the
Company and its Affiliates (a) in investigating, defending, prosecuting,
litigating, filing, initiating or asserting any claims or potential claims
(including without limitation in connection with any legal proceeding of any
kind) that may be made by or against the Company or any of its Affiliates, to
the extent that such claims may relate to or arise out of the Executive’s
employment with the Company or any of its Affiliates or with respect to which
the Executive has knowledge and (b) without in any way limiting subsection
(a) above, to secure any trade name, patent, trademark, copyright or
intellectual property protection or other similar rights in the United States
and/or in foreign countries, including without limitation, the execution and
delivery of assignments, patent applications and other documents or papers.  If
such cooperation is provided during the Executive’s employment with the Company
or any of its Affiliates, the Executive shall not receive any additional
compensation from the Company for such cooperation.  If the Executive no longer
is employed by the Company or any of its Affiliates, the Executive’s obligation
to cooperate shall be reasonably limited so as not to unreasonably interfere
with his other business obligations.  If the Executive spends in excess of ten
(10) hours in compliance with this Section 10 after he is no longer employed by
the Company or any of its Affiliates, the Company shall compensate the Executive
at an hourly rate equal to the amount determined by dividing (x) the Executive’s
Base Salary as of the first day of the fiscal year of the Company within which
the Executive’s employment is terminated by (y) 2000, and shall reimburse the
Executive for any reasonable expenses incurred as a direct result of his
providing such cooperation in accordance with Section 3(g) of this Agreement. 
The Company shall provide such compensation for the Executive’s cooperation
within thirty (30) calendar days after receiving from the Executive a written
statement stating the number of hours for which he seeks payment and brief
description of the cooperation provided, provided that the Executive submits
such statement within thirty (30) calendar days after the end of the calendar
month in which the Executive provided such cooperation.  The Executive’s
obligation to cooperate hereunder shall include, without limitation, meeting
with such persons at such times and in such places as the Company or its
Affiliates may require, and giving evidence and testimony and executing and
delivering to the Company and any of its Affiliates any papers requested by any
of them (including without limitation joint defense agreements and affidavits). 
The Executive shall provide immediate notice to the Company of any subpoena or
other legal document that he receives that relates in any way to the Company or
any of its Affiliates, along with a copy of such subpoena or other legal
document.

 

11.                                           Compliance with Section 409A.  All
references in this Agreement to the Executive’s termination of employment shall
mean his separation from service within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and Treasury regulations
promulgated thereunder.  To the extent this Agreement provides for compensation
that is deferred compensation subject to Section 409A of the Code, it is
intended that the Executive not be subject to the imposition of taxes and
penalties (“409A Penalties”)

 

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under Section 409A of the Code, and shall be construed in accordance with that
intent.  In the event the terms of this Agreement would subject the Executive to
409A Penalties, the Company and the Executive shall cooperate diligently to
amend the terms of the Agreement to avoid such 409A Penalties, to the extent
possible.  Notwithstanding any other provision in this Agreement, if as of the
date on which the Executive’s employment terminates, the Executive is a
“specified employee” as determined by the Company, then to the extent any amount
payable or benefit provided under this Agreement that the Company reasonably
determines would be nonqualified deferred compensation within the meaning of
Section 409A of the Code, for which payment is triggered by Executive’s
separation from service (other than on account of death), and that under the
terms of this Agreement would be payable prior to the six-month anniversary of
the Executive’s effective date of termination, such payment or benefit shall be
delayed until the earlier to occur of (a) the six-month anniversary of such
termination date or (b) the date of the Executive’s death.  In the case of
taxable benefits that constitute deferred compensation, the Company, in lieu of
a delay in payment, may require the Executive to pay the full costs of such
benefits during the period described in the preceding sentence and reimburse
that Executive for said costs within thirty (30) calendar days after the end of
such period.  With respect to any reimbursements under this Agreement, such
reimbursement shall be made on or before the last day of the Executive’s taxable
year following the taxable year in which the expense was incurred by the
Executive.  The amount of any expenses eligible for reimbursement or the amount
of any in-kind benefits provided, as the case may be, under this Agreement
during any calendar year (including without limitation pursuant to Sections 10
and 23) shall not affect the amount of expenses eligible for reimbursement or
the amount of any in-kind benefits provided during any other calendar year. The
right to reimbursement or to any in-kind benefit pursuant to this Agreement
shall not be subject to liquidation or exchange for any other benefit.  The
Executive acknowledges and agrees that notwithstanding this Section 11 or any
other provision of this Agreement, the Company and its Affiliates are not
providing him with any tax advice with respect to Section 409A of the Code or
otherwise and are not making any guarantees or other assurances of any kind to
the Executive with respect to the tax consequences or treatment of any amounts
paid or payable to the Executive under this Agreement.

 

12.                                           Section 280G Gross-up.  To the
extent permitted by applicable law:

 

(a)                                  in the event it is determined that any
payment or distribution by the Company to or for the benefit of the Executive
after the date hereof pursuant to the terms of this Agreement or otherwise
(including without limitation any deferred compensation plans), determined
without regard to any additional payments required under this Section 12(a) (a
“Payment”), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect thereto are incurred by the
Executive with respect to any such tax (any such tax, together with any such
interest or penalties, are hereinafter collectively referred to as the
“Additional Tax”), then, subject to the Executive’s compliance with
Section 12(c), the Executive shall be entitled to receive from the Company an
additional payment (a “Gross-Up Payment”) in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Additional Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Additional Tax imposed upon the Payments; provided,
however, that notwithstanding the foregoing provisions of this Section 12(a), if
it shall be determined that

 

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the Executive is entitled to a Gross-Up Payment, but that the amount of the
aggregate Payments is less than 110% of the product of (A) three (3) times
(B) the Executive’s Base Amount (as such term is defined in Section 280G of the
Code), then no Gross-Up Payment shall be made to the Executive and the cash
Payments provided in Section 8 of this Agreement shall first be reduced, and the
non-cash Payments and benefits shall thereafter be reduced, until no amount of
the Payments shall be subject to the exercise tax under Section 4999 of the
Code;

 

(b)                                 the parties are entering into this Agreement
with the reasonable mutual understanding that the Payments are not subject to
Additional Taxes, and the parties shall, subject to this Section 12(b), report
such amounts in their federal tax returns for the appropriate periods in a
manner consistent with such understanding.  Subject to the provisions of
Section 12(c), all other determinations required to be made under this
Section 12(b), including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by the Company’s public accounting firm
(the “Accounting Firm”).  All fees and expenses of the Accounting Firm shall be
borne solely by the Company.  Any Gross-Up Payment, as determined pursuant to
this Section 12(b), shall be paid by the Company to the Executive within the
earlier of five (5) business days after the Company’s receipt of the Accounting
Firm’s determination and the end of the Executive’s taxable year next following
the taxable year in which the Executive pays the Additional Taxes to which such
Gross-Up Payment relates to the applicable taxing authority.  Any determination
by the Accounting Firm shall be binding upon the Company and the Executive;

 

(c)                                  the Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of a Gross-Up Payment.  Such notification
shall be given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid.  The Executive shall not pay such claim prior to the
expiration of the 30-calendar-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due).  If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall: (i) give the Company
any information reasonably requested by the Company relating to such claim;
(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company; (iii) cooperate with the Company in
good faith in order effectively to contest such claim, and (iv) permit the
Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Additional Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment of
costs and expenses.  Any amount the Company is obligated to pay or indemnify
under this Section 12(c) shall be paid or indemnified on or before the last day
of the calendar year following the calendar year in which the expense, cost or
Additional Tax was incurred.  Without limitation on the foregoing provisions of
this Section 12(c), the Company shall control all proceedings taken in
connection with such contest and, at its

 

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sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided further, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Additional Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance.  The Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority; and

 

(d)                                 as a result of the uncertainty in the
application of Code Section 4999 at the time of the initial determination by the
Accounting Firm hereunder, it is possible that the Internal Revenue Service
(“IRS”) or other agency will claim that a greater or lesser Additional Tax is
due.  In the event that the Additional Tax is finally determined to be less than
the amount taken into account hereunder in calculating the Gross-Up Payment, the
Executive shall repay to the Company, at the time that the amount of such
reduction in Additional Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Additional Tax and taxes imposed on the Gross-Up
Payment being repaid by the Executive) plus interest on the amount of such
repayment at 120% of the rate provided in Code Section 1274(b)(2)(B).  In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder in calculating the Gross-Up Payment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by the
Executive with respect to such excess) at the time that the amount of such
excess is finally determined.  The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for
Additional Tax with respect to the total Payments.  The Company shall pay all
fees and expenses of the Executive relating to a claim by the IRS or other
agency.

 

13.                                           Notices.  Notices given pursuant
to this Agreement shall be in writing and shall be effective upon personal
delivery, upon confirmation of receipt of facsimile transmission, upon the
fourth day after mailing by certified mail, or upon the second day after sending
by express courier service.  Notice to the Company shall be directed to:

 

Smurfit-Stone Container Corporation

Six CityPlace Drive

Creve Coeur, Missouri 63141

Attention:  General Counsel

 

Notices to or with respect to the Executive will be directed to the Executive,
or to the Executive’s executors, personal representatives or distributees, if
the Executive is deceased, or

 

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the assignees of the Executive, at the Executive’s home address on the records
of the Company.  Either party may change the person and/or address to which the
other party must give notice under this Section by providing written notice of
such change, in accordance with the procedures described in this Section 13.

 

14.                                           Assignment.  This Agreement is
enforceable by the Company and its affiliates and other related entities and
shall be assigned or transferred by the Company to, and shall be binding upon
and inure to the benefit of, any parent, subsidiary or other Affiliate of the
Company or any entity which at any time, whether by merger, purchase, or
otherwise, acquires all or substantially all of the assets, stock or business of
the Company (including without limitation any successor and/or reorganized
entit(ies) of the Company or any of its Affiliates upon the Effective Date). 
The Executive and the Company agree that upon the Effective Date, this Agreement
shall be assigned to and binding upon such successor entit(ies) of the Company
as set forth in the Plan of Reorganization, provided that nothing herein shall
limit or otherwise affect the Company’s right to further assign or transfer this
Agreement after the Effective Date as set forth in the preceding sentence.  The
Executive may not assign any of his rights or obligations under this Agreement
during his life.  Upon the Executive’s death, this Agreement will inure to the
benefit of the Executive’s heirs, legatees and legal representatives of the
Executive’s estate.

 

15.                                           Beneficiary.  If the Executive
dies prior to receiving the amounts to which he is entitled under this Agreement
(if any), subject to and in accordance with the terms and conditions of this
Agreement, such amounts shall be paid to the beneficiary designated by the
Executive in writing to the Company during his lifetime (“Beneficiary”), or if
no such Beneficiary is designated, to the Executive’s estate.  Notwithstanding
anything to the contrary herein, the Beneficiary shall not be entitled to
receive any amounts pursuant to this Agreement that are conditioned upon a
Release Agreement unless the Beneficiary and any other authorized
representatives of the Executive’s estate execute a waiver and release of claims
in accordance with the Executive’s obligations set forth in Section 4.  The
Executive, without the consent of any prior Beneficiary, may change his
designation of Beneficiary or Beneficiaries at any time and from time to time by
submitting to the Company a new designation in writing.

 

16.                                           Severability.  Each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law.  The Executive and the Company agree that in the event
that any provision of this Agreement is found to be unreasonable or otherwise
unenforceable by a court, it is the purpose and intent of the parties that any
such provision be deemed modified or limited, so that as modified or limited,
such provision may be enforced to the fullest extent possible.  If any provision
of this Agreement is held invalid or unenforceable for any reason (after any
such modification or limitation pursuant to the preceding sentence, as
applicable), such provision will be effective only to the extent of such
invalidity or unenforceability without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

 

17.                                           Entire Agreement, Amendment and
Waiver.  Except as otherwise provided herein, this Agreement embodies the entire
agreement and understanding of the parties hereto with regard to the matters
described herein and supersedes any and all prior and/or contemporaneous
agreements and understandings, oral or written, between said parties regarding
such matters.  The Executive and the Company acknowledge and agree that this
Agreement

 

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amends and restates the Predecessor Agreement in its entirety and that as of the
Effective Date the provisions of this Agreement shall replace each and every
provision of the Predecessor Agreement, at which time the provisions of the
Predecessor Agreement shall be null and void, and shall be of no further force
or effect.  Except as set forth in Sections 9(f) and 16, this Agreement may be
modified only in a written agreement signed by both the Executive and the
Company’s authorized representative.  Any party’s failure to enforce this
Agreement in the event of one or more events which violate this Agreement shall
not constitute a waiver of any right to enforce this Agreement against
subsequent violations.

 

18.                                           Forum Selection.  The parties
hereby irrevocably consent to, and agree not to object or assert any defense or
challenge to, the jurisdiction and venue of the state and federal courts sitting
in Chicago, Illinois, and agree that any claim under this Agreement may be
brought in any such court.  In any action or proceeding to enforce this
Agreement, the non-prevailing party shall pay for any and all costs and expenses
(including without limitation reasonable attorneys’ fees) of the prevailing
party to the maximum extent permissible by applicable law.

 

19.                                           Governing Law.  This Agreement
shall be governed by the internal laws of the state of Illinois, without regard
to its conflict of laws rules.

 

20.                                           Headings.  The Section headings
used herein are for convenience of reference only and are not to be considered
in construction of the provisions of this Agreement.

 

21.                                           Release of SIPP II and Predecessor
Claims.  The consideration offered herein is accepted by the Executive as being
in full accord, satisfaction, compromise and settlement of any and all claims
that the Executive may have against the Company that existed on or prior to the
Effective Date arising out of or concerning amounts that are or may have been
due and owing to him pursuant to the SIPP II or the Predecessor Agreement, and
the Executive expressly agrees that he is not entitled to and will not receive
any payments, benefits, or other compensation or recovery of any kind from the
Company with respect to the SIPP II or the Predecessor Agreement.

 

22.                                           Survival.  Sections 2(d) and 4
through 24 herein shall survive and continue in full force and effect in
accordance with their respective terms, notwithstanding any termination of the
Employment Period or the Executive’s employment.

 

23.                                           Attorneys’ Fees for Negotiating
This Agreement.  The Company shall pay within thirty (30) calendar days after
receipt of the Invoices (as described below) the reasonable fees and expenses of
the Executive’s outside legal counsel, accountants, and other advisors in
connection with the negotiation and execution of this Agreement and the terms
and conditions of his employment in an amount not to exceed $100,000, provided
that the Company receives from the Executive or his advisors invoices for
services provided to the Executive in connection with the negotiation and
execution of this Agreement (“Invoices”) within sixty (60) days after the
Effective Date.

 

24.                                           Counterparts.  This Agreement may
be executed in two counterparts, each of which shall be deemed an original, and
both of which together shall constitute one and the same instrument.

 

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THE PARTIES ACKNOWLEDGE BY SIGNING BELOW THAT THEY HAVE READ AND UNDERSTAND THE
ABOVE AND INTEND TO BE BOUND THEREBY:

 

PATRICK J. MOORE

 

SMURFIT-STONE CONTAINER CORPORATION

 

 

 

 

 

 

/s/ Patrick J. Moore

 

By:

/s/ Ralph F. Hake

 

 

 

 

Date:

June 30, 2010

 

Position:

Chairman

 

 

 

 

 

 

Date:

June 30, 2010

 

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