3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration ofthe Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditionsdescribed herein, to pay the Executive the Severance Payments and the other payments and benefitsdescribed herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payableunder this Agreement unless there shall have been (or, under the terms of the second sentence ofSection 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employmentwith the Company following a Change in Control and during the Term. This Agreement shall not beconstrued as creating an express or implied contract of employment and, except as otherwise agreedin writing between the Executive and the Company, the Executive shall not have any right to beretained in the employ of the Company.     4. The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the eventof a Potential Change in Control during the Term, the Executive will remain in the employ of theCompany until the earliest of (i) a date which is six months from the date of such Potential Changeof Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive ofthe Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv)the termination by the Company of the Executive’s employment for any reason.     5. Compensation Other Than Severance Payments.     5.1 Following a Change in Control and during the Term, during any period that the Executivefails to perform the Executive’s full time duties with the Company as a result of incapacity due tophysical or mental illness, the Company shall pay the Executive’s full salary to the Executive atthe rate in effect at the commencement of any such period, together with all compensation andbenefits payable to the Executive under the terms of any compensation or benefit plan, program orarrangement maintained by the Company during such period (other than any disability plan), untilthe Executive’s employment is terminated by the Company for Disability.     5.2 If the Executive’s employment shall be terminated for any reason following a Change inControl and during the Term, the Company shall pay the Executive’s full salary to the Executivethrough the Date of Termination at the highest rate in effect during the three-year period endingimmediately prior to the Date of Termination together with all compensation and benefits payable tothe Executive through the Date of Termination under the terms of the Company’s compensation andbenefit plans, programs or arrangements as in effect immediately prior to the Date of Terminationor, if more favorable to the Executive, as in effect immediately prior to the first occurrence ofan event or circumstance constituting Good Reason.     5.3 If the Executive’s employment shall be terminated for any reason following a Change inControl and during the Term, the Company shall pay to the Executive the Executive’s normal posttermination compensation and benefits as such payments become due. Such post terminationcompensation and benefits shall be determined under, and paid in accordance with, the Company’sretirement, insurance and other compensation or benefit plans, programs and arrangements as ineffect immediately prior to the Date of Termination or, if more favorable to
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the Executive, as in effect immediately prior to the occurrence of the first event orcircumstance constituting Good Reason.     5.4 For the two-year period commencing immediately following a Change in Control, the Companyagrees (A) to provide the Executive with benefits substantially similar to the material benefitsenjoyed by the Executive under any of the Company’s executive compensation (including bonus, equityor incentive compensation), pension, savings, life insurance, medical, health and accident, ordisability plans in which the Executive was participating immediately prior to the Change inControl and to provide the Executive with the number of paid vacation days to which the Executiveis entitled on the basis of years of service with the Company in accordance with the Company’snormal vacation policy in effect at the time of the Change in Control, (B) to timely pay to theExecutive the Executive’s current compensation and each installment of deferred compensation underany deferred compensation program of the Company, and (C) not to take any other action which woulddirectly or indirectly materially reduce any of the benefits described in paragraph (A) above ordeprive the Executive of any material fringe benefit enjoyed by the Executive at the time of theChange in Control.     6. Severance Payments.     6.1 If the Executive’s employment is terminated following a Change in Control and within two(2) years after a Change in Control (provided that such termination of employment constitutes a“separation from service” within the meaning of Section 409A of the Code), other than (A) by theCompany for Cause, (B) by reason of death or Disability, or (C) by the Executive without GoodReason, then the Company shall pay the Executive the amounts, and provide the Executive thebenefits, described in this Section 6.1 (“Severance Payments”) and Section 6.2, in addition to anypayments and benefits to which the Executive is entitled under Section 5 hereof. For purposes ofthis Agreement, the Executive’s employment shall be deemed to have been terminated following aChange in Control by the Company without Cause or by the Executive with Good Reason, if (i) theExecutive’s employment is terminated by the Company without Cause prior to a Change in Control(whether or not a Change in Control ever occurs) and such termination was at the request ordirection of a Person who has entered into an agreement with the Company the consummation of whichwould constitute a Change in Control, or (ii) the Executive terminates his employment for GoodReason prior to a Change in Control (whether or not a Change in Control ever occurs) and thecircumstance or event which constitutes Good Reason occurs at the request or direction of suchPerson. For purposes of any determination regarding the applicability of the immediately precedingsentence, any position taken by the Executive shall be presumed to be correct unless the Companyestablishes to the Board by clear and convincing evidence that such position is not correct.          (A) In lieu of any further salary payments to the Executive for periods subsequent to theDate of Termination, the Company shall pay to the Executive a lump sum severance payment, in cash,equal to three (3) times the sum of (i) the Executive’s highest base salary as in effect during thethree-year period ending immediately prior to the Date of Termination and (ii) the Executive’starget annual bonus pursuant to any annual bonus or incentive plan maintained by the Company inrespect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect ofany of the three preceding fiscal years). The amount payable pursuant to this Section 6.1(A) shallbe reduced by the amount of any cash severance or
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salary continuation benefit paid or payable to the Executive under any other plan, policy orprogram of the Company or any written employment agreement between the Executive and the Company.          (B) For the three-year period immediately following the Date of Termination, the Companyshall arrange to provide the Executive and his dependents life, short-term disability, long-termdisability, travel accident, accidental death and dismemberment, medical, dental and other healthand welfare benefits substantially similar to those provided to the Executive and his dependentsimmediately prior to the Date of Termination or, if more favorable to the Executive, those providedto the Executive and his dependents immediately prior to the first occurrence of an event orcircumstance constituting Good Reason, at no greater cost to the Executive than the cost to theExecutive immediately prior to such date or occurrence; provided, however, that, unless theExecutive consents to a different method (after taking into account the effect of such method onthe calculation of “parachute payments” pursuant to Section 6.2 hereof), such health and welfarebenefits shall be provided, as applicable, through an arrangement that satisfies the requirementsof Sections 105 and 106 of the Code. To the extent that health and welfare benefits of the sametype are received by or made available to the Executive during the three-year period following theExecutive’s Date of Termination (which such benefits received by or made available to the Executiveshall be reported by the Executive to the insurance company or other appropriate party inaccordance with any applicable coordination of benefits provisions), the benefits otherwisereceivable by the Executive pursuant to this Section 6.1(B) shall be made secondary to suchbenefits; provided, however, that the Company shall reimburse the Executive for theexcess, if any, of the cost of such benefits to the Executive over such cost immediately prior tothe Date of Termination or, if more favorable to the Executive, the first occurrence of an event orcircumstance constituting Good Reason.          (C) Each long-term incentive compensation award outstanding as of the Date of Termination(including without limitation restricted stock, stock options, restricted stock units andperformance share units) shall vest in full and any such stock options shall remain outstanding andexercisable for the full duration of their term.          (D) In addition to the benefits to which the Executive is entitled under any Pension Planthat is a defined benefit pension plan (including the Temple-Inland Retirement Plan and theTemple-Inland Supplemental Executive Retirement Plan (the “SERP”) and any successors thereto), theCompany shall pay to the Executive a lump sum amount, in cash, that is actuarially equivalent tothe sum of (i) the additional pension benefits that the Executive would have accrued under suchplans (x) assuming that the Executive remained employed for an additional three-year periodimmediately following the Date of Termination and earned compensation during such period at a rateequal to the Executive’s highest rate of compensation (as defined in the applicable Pension Plan)during the three-year period ending immediately prior to the Date of Termination, and (y)determined without regard to any amendment to any such Pension Plan made subsequent to the Changein Control and on or prior to the Date of Termination, which amendment adversely affects in anymanner the computation of benefits thereunder and (ii) the excess of (A) the Executive’s accruedbenefit under the Pension Plan as of the Date of Termination over (B) the portion of such accruedbenefit that is nonforfeitable as of the Date of Termination under the terms of the Pension Plan.For purposes of this Section 6.1(D), “actuarial equivalent” shall be determined (x) using the sameassumptions utilized under the
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applicable plan (or to the extent that the applicable plan does not provide the requiredassumptions, the assumptions provided under the SERP) immediately prior to the Date of Terminationor, if more favorable to the Executive, immediately prior to the first occurrence of an event orcircumstance constituting Good Reason, (y) on the basis of a straight life annuity (or othermandatory or default form of benefit) commencing at the date as of which the actuarial equivalentof such annuity or other form of benefit is greatest on or between the Date of Termination and thethird anniversary of the Date of Termination; and (z) taking into account any early retirementsubsidies associated with the applicable benefit (including in the case of the SERP, any earlyretirement subsidies that apply by reason of certain accrued benefits thereunder being determinedby reference to the terms of the Temple-Inland Retirement Plan, or any successor thereto). If theExecutive’s Date of Termination is three or more years prior to the earliest early retirement datepermitted under the applicable Pension Plan, the actuarial equivalent calculation described abovein this subsection (D) shall reflect any early retirement subsidy as of such earliest earlyretirement age reduced on an actuarially equivalent basis to the date as of which the benefit isthe greatest on or between the Date of Termination and the third anniversary of the Date ofTermination.          (E) In addition to the benefits to which the Executive is entitled under any Pension Planthat is a defined contribution or individual account plan, the Company shall pay the Executive alump sum amount, in cash, equal to the sum of (i) the amount that would have been contributedthereto or credited thereunder by the Company on the Executive’s behalf during the three (3) yearsimmediately following the Date of Termination, determined (x) as if the Executive made the maximumpermissible contributions thereto or credits thereunder during such period, (y) as if the Executiveearned compensation during such period at a rate equal to the Executive’s highest rate ofcompensation (as defined in the applicable Pension Plan) during the three-year period endingimmediately prior to the Date of Termination, and (z) without regard to any amendment to thePension Plan made subsequent to a Change in Control and on or prior to the Date of Termination,which amendment adversely affects in any manner the computation of benefits thereunder, and (ii)the excess, if any, of (x) the Executive’s account balance under the Pension Plan as of the Date ofTermination over (y) the portion of such account balance that is nonforfeitable under the terms ofthe Pension Plan.          (F) Notwithstanding any provision of any annual plan to the contrary, the Company shall payto the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentivecompensation which has been allocated or awarded to the Executive for a completed annual bonuscycle preceding the Date of Termination under any such plan and which, as of the Date ofTermination, is contingent only upon the continued employment of the Executive to a subsequentdate, (ii) if the Date of Termination occurs before the end of the first six months in thethen-current annual bonus cycle under the applicable plan, a pro rata portion to the Date ofTermination of the aggregate value of all contingent incentive compensation awards to the Executivefor the uncompleted period under any such plan, calculated as to each such award by multiplying theaward that the Executive would have earned on the last day of the performance award period,assuming the achievement, at the target level (or if higher, at the then projected actual finallevel), of the individual and corporate performance goals established with respect to such award,by the fraction obtained by dividing the number of full months and any fractional portion of amonth during such performance award period through the Date of Termination by the total number ofmonths contained in such performance award period, and (iii)
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if the Date of Termination occurs after the end of the first six months in the then-currentannual bonus cycle but before the end of such annual bonus cycle under the applicable plan, thefull aggregate value of all contingent incentive compensation awards to the Executive for theuncompleted period under any such plan assuming the achievement, at the target level (or if higher,at the then projected actual final level), of the individual and corporate performance goalsestablished with respect to such award.          (G) If the Executive would have become entitled to benefits under the Company’spost-retirement health care or life insurance plans, as in effect immediately prior to the Date ofTermination or, if more favorable to the Executive, as in effect immediately prior to the firstoccurrence of an event or circumstance constituting Good Reason, had the Executive’s employmentterminated at any time within three (3) years after the Date of Termination, the Company shallprovide such post-retirement health care or life insurance benefits to the Executive and theExecutive’s dependents commencing on the later of (i) the date on which such coverage would havefirst become available and (ii) the date on which benefits described in subsection (B) of thisSection 6.1 terminate.          (H) The Company shall reimburse the Executive for expenses incurred for outplacement servicessuitable to the Executive’s position for a period of one (1) year following the Date of Termination(or, if earlier, until the first acceptance by the Executive of an offer of employment) in anamount not exceeding 15% of the sum of the Executive’s highest annual base rate of salary as ineffect during the three-year period ending immediately prior to the Date of Termination, and thegreatest target annual bonus pursuant to any annual bonus or incentive plan maintained by theCompany in respect of the fiscal year in which occurs the Date of Termination (or, if higher, inrespect of any of the three preceding fiscal years), which payment shall be made as soon aspracticable but in any event within thirty (30) business days following the date of request forreimbursement. Subject to the foregoing, in no event shall any payment described in this Section6.1(H) be made after the end of the calendar year following the calendar year in which the expenseswere incurred.          (I) For the three-year period immediately following the Date of Termination, the Companyshall provide the Executive with his customary perquisites (such as any use of a Company providedautomobile, club membership fee reimbursements, income tax preparation and financial advisoryservices) in each case on the same terms and conditions that were applicable immediately prior tothe Date of Termination or, if more favorable, immediately prior to the first occurrence of anevent or circumstance constituting Good Reason, provided that in no event shall the amount ofperquisites to which the Executive is entitled under this Section 6.1(I) for any taxable year ofthe Executive affect the amount of perquisites to which the Executive is entitled under thisSection 6.1(I) for any other taxable year.          (J) Any amounts payable to the Executive in accordance with Section 8.1 of the SERP shall,notwithstanding anything to the contrary in such Section 8.1, be paid as soon as practicable afterthe Executive’s Termination of Employment (as defined in the SERP) and in all events not later thatfive days after Termination of Employment, but subject to Section 8.4 of the SERP (relating todelays in payment required under Section 409A of the Code).
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     6.2 (A) Whether or not the Executive becomes entitled to the Severance Payments, if anypayment or benefit received or to be received by the Executive in connection with a Change inControl or the termination of the Executive’s employment (whether pursuant to the terms of thisAgreement or any other plan, arrangement or agreement with the Company, any Person whose actionsresult in a Change in Control or any Person affiliated with the Company or such Person) (all suchpayments and benefits, including the Severance Payments, being hereinafter called “Total Payments”)will be subject (in whole or part) to the Excise Tax, then, subject to the provisions of subsection(B) of this Section 6.2, the Company shall pay to the Executive an additional amount (the “Gross UpPayment”) such that the net amount retained by the Executive, after deduction of any Excise Tax onthe Total Payments and any federal, state and local income and employment taxes and Excise Tax uponthe Gross-Up Payment, shall be equal to the Total Payments.          (B) In the event that the amount of the Total Payments does not exceed 110% of the largestamount that would result in no portion of the Total Payments being subject to the Excise Tax (the“Safe Harbor”), then subsection (A) of this Section 6.2 shall not apply and the noncash SeverancePayments shall first be reduced (if necessary, to zero), and the cash Severance Payments shallthereafter be reduced (if necessary, to zero) so that the amount of the Total Payments is equal tothe Safe Harbor; provided, however, that, to the extent permitted by Section 409Aof the Code, the Executive may elect to have the cash Severance Payments reduced (or eliminated)prior to any reduction of the noncash Severance Payments.          (C) For purposes of determining whether any of the Total Payments will be subject to theExcise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as“parachute payments” within the meaning of Section 280G(b)(2) of the Code, unless in the opinion oftax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accountingfirm which was, immediately prior to the Change in Control, the Company’s independent auditor (the“Auditor”), such other payments or benefits (in whole or in part) do not constitute parachutepayments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all “excess parachutepayments” within the meaning of Section 280G(b)(l) of the Code shall be treated as subject to theExcise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or inpart) represent reasonable compensation for services actually rendered, within the meaning ofSection 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonablecompensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncashbenefits or any deferred payment or benefit shall be determined by the Auditor in accordance withthe principles of Sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth inSection 6.3 hereof, the Company shall provide the Executive with its calculation of the amountsreferred to in this Section 6.2(C) and such supporting materials as are reasonably necessary forthe Executive to evaluate the Company’s calculations. If the Executive disputes the Company’scalculations (in whole or in part), the reasonable opinion of Tax Counsel with respect to thematter in dispute shall prevail.          (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A),(2) there is a Final Determination that the Excise Tax is less than the amount taken into accounthereunder in calculating the Gross-Up Payment, and (3) after giving effect to such FinalDetermination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executiveshall repay to the Company, within five (5) business days following the date of the
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Final Determination, the Gross Up Payment, the amount of the reduction in the SeverancePayments, plus interest on the amount of such repayments at 120% of the rate provided in Section1274(b)(2)(B) of the Code.               (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2)there is a Final Determination that the Excise Tax is less than the amount taken into accounthereunder in calculating the Gross-Up Payment, and (3) after giving effect to such FinalDetermination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), theExecutive shall repay to the Company, within five (5) business days following the date of the FinalDetermination, the portion of the Gross Up Payment attributable to such reduction (plus thatportion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local incomeand employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extentthat such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction inthe Executive’s taxable income and wages for purposes of federal, state and local income andemployment taxes, plus interest on the amount of such repayment at 120% of the rate provided inSection 1274(b)(2)(B) of the Code.               (III) Except as otherwise provided in clause (IV) below, in the event there is a FinalDetermination that the Excise Tax exceeds the amount taken into account hereunder in determiningthe Gross-Up Payment (including by reason of any payment the existence or amount of which cannot bedetermined at the time of the Gross Up Payment), the Company shall pay to the Executive, withinfive (5) business days following the date of the Final Determination, the sum of (1) a Gross UpPayment in respect of such excess and in respect of any portion of the Excise Tax with respect towhich the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment inrespect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of thisparagraph (III) (plus any interest, penalties or additions payable by the Executive with respect tosuch excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B)but after giving effect to such Final Determination, the Severance Payments should not have beenreduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reducedpursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided inSection 1274(b)(2)(B) of the Code.               (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2)the aggregate value of Total Payments which are considered “parachute payments” within the meaningof Section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but suchredetermined value still does not exceed 110% of the Safe Harbor, then, within five (5) businessdays following such Final Determination, (x) the Company shall pay to the Executive the amount (ifany) by which the reduced Severance Payments (after taking the Final Determination into account)exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus intereston the amount of such repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the Code,or (y) the Executive shall pay to the Company the amount (if any) by which the reduced SeverancePayments actually paid to the Executive exceeds the amount of the reduced Severance Payments (aftertaking the Final Determination into account), plus interest on the amount of such repayment at 120%of the rate provided in Section 1274(b)(2)(B) of the Code.
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     6.3 The payments provided in subsections (A), (D), (E) and (F) of Section 6.1 hereof (and, tothe extent applicable, Section 6.1(C) hereof) shall be made as soon as practicable (but in anyevent not later than the fifth day) following the Date of Termination, subject to Section 6.6hereof. The payments provided in Section 6.2 hereof shall be made on or as soon as practicablefollowing the day on which the Excise Tax is remitted (but not later than the end of the taxableyear following the year in which the Excise Tax is incurred). If the amounts of the paymentsdescribed in the preceding provisions of this Section 6.3 cannot be finally determined on or beforethe date payment is to be made, the Company shall pay to the Executive (or shall cause the grantortrust described in Section 6.5 to pay to the Executive) on such day an estimate, as determined ingood faith by the Executive or, in the case of payments under Section 6.2 hereof, in accordancewith Section 6.2 hereof, of the minimum amount of such payments to which the Executive is clearlyentitled and shall pay (or cause to be paid) the remainder of such payments (together with intereston the unpaid remainder (or on all such payments to the extent the Company fails to make suchpayments when due) at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) as soon asthe amount thereof can be determined but in no event later than the 30th day after the date paymentis to be made. In the event that the amount of the estimated payments exceeds the amountsubsequently determined to have been due, such excess shall constitute a loan by the Company to theExecutive, payable on the fifth business day after demand by the Company (together with interest at120% of the rate provided in Section 1274(b)(2)(B) of the Code). At the time that payments are madeunder this Agreement, the Company shall provide the Executive with a written statement settingforth the manner in which such payments were calculated and the basis for such calculationsincluding, without limitation, any opinions or other advice the Company has received from TaxCounsel, the Auditor or other advisors or consultants (and any such opinions or advice which are inwriting shall be attached to the statement). To the extent the benefits to be made available undersubsections (B) and (I) of Section 6.1 hereof are not medical expenses within the meaning of Treas.Reg. § 1.409A-1(b)(9)(v)(B) and are not short-term deferrals within the meaning of Section 409A ofthe Code, then to the extent the fair market value of such benefits during the first six monthsfollowing the Date of Termination exceeds two times the lesser of the Executive’s annualizedcompensation based upon the Executive’s annual rate of pay for services during the taxable year ofthe Executive preceding the year in which the Date of Termination occurs (adjusted for any increaseduring that year that was expected to continue indefinitely had no separation from serviceoccurred) or the maximum amount that may be taken into account under a qualified plan pursuant toSection 401(a)(17) of the Code for the year in which the Date of Termination occurs, the Executiveshall pay to the Company, at the time such benefits are provided, the fair market value of suchbenefits, and the Company shall reimburse the Executive for any such payment not later than thefifth day following the expiration of such six-month period; provided, however,that this requirement for payment by the Executive and reimbursement by the Company shall applysolely to the extent required by Section 409A(a)(2)(B)(i) of the Code.     6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by theExecutive in disputing in good faith any issue hereunder relating to the termination of theExecutive’s employment, in seeking in good faith to obtain or enforce any benefit or right providedby this Agreement or in connection with any tax audit or proceeding to the extent attributable tothe application of Section 4999 of the Code to any payment or benefit provided hereunder. Suchpayments shall be made within five business days after delivery of the Executive’s written requestsfor payment accompanied with such evidence of fees and expenses
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incurred as the Company reasonably may require (but in no event shall any such payment bemade after the end of the calendar year following the calendar year in which the expenses wereincurred), provided that no such payment shall be made in respect of fees or expenses incurred bythe Executive after the later of the tenth anniversary of the Date of Termination or theExecutive’s death, and provided further, that, upon the Executive’s separation from service withthe Company, in no event shall any additional such payments be made prior to the date that is sixmonths after the date of the Executive’s separation from service to the extent such payment delayis required under Section 409A(a)(2)(B)(i) of the Code.     6.5 To the extent that the payment of any amount due under subsections (A), (D), (E) or (F)of Section 6.1 hereof (and, to the extent applicable, Section 6.1(C) hereof) or any nonqualifiedPension Plan is delayed by reason of Section 409A(a)(2)(B)(i) of the Code, the Company shall, on oras soon as practicable after the Date of Termination, contribute the amounts otherwise payablepursuant to subsections (A), (D), (E) and (F) of Section 6.1 hereof or any nonqualified PensionPlan that are delayed by reason of Section 409A(a)(2)(B)(i) of the Code, together with six monthsinterest thereon at the 409A Interest Rate (as defined in Section 6.6 hereof) or such other rate ofreturn as may be provided for under the applicable nonqualfied Pension Plan, to a grantor (“rabbi”)trust (subject to the claims of the Company’s creditors, as required pursuant to applicableInternal Revenue Service guidance to prevent the imputation of income to the Executive prior todistribution from the trust), pursuant to which the amounts payable pursuant to subsections (A),(D), (E) and (F) of Section 6.1 hereof or any nonqualified Pension Plan that are delayed by reasonof Section 409A(a)(2)(B)(i) of the Code shall be payable from the trust, together with theappropriate amount of interest at the 409A Interest Rate (as defined in Section 6.6 hereof), orsuch other rate of return as may be provided for under the applicable nonqualfied Pension Plan onor as soon as practicable and in any event within five days after the Section 409A Payment Date (asdefined in Section 6.6 hereof), provided that to the extent such amount is paid to the Executive bythe Company, the trust shall pay such amount to the Company.     6.6 To the extent required to satisfy the provisions of Section 409A(a)(2)(B)(i) of the Code,the payments and reimbursements provided for under Section 6.1 hereof shall be delayed until thedate that is six (6) months after the Date of Termination (the “409A Payment Date”), and shall bepaid on the 409A Payment Date, or as soon as practicable thereafter (but in all events within fivedays after the 409A Payment Date), together with interest at the 6-month certificate of depositrate published in The Wall Street Journal on the Date of Termination (or if not published on thatdate, on the next following date when published) or, if less, the maximum rate that will avoid, ifapplicable, the imposition of any additional excise taxes under Section 4999 of the Code (the “409AInterest Rate”).     7. Termination Procedures and Compensation During Dispute.     7.1 Notice of Termination. After a Change in Control and during the Term, anypurported termination of the Executive’s employment (other than by reason of death) shall becommunicated by written Notice of Termination from one party hereto to the other party hereto inaccordance with Section 10 hereof. For purposes of this Agreement, a “Notice of Termination” shallmean a notice which shall indicate the specific termination provision in this Agreement relied uponand shall set forth in reasonable detail the facts and circumstances
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claimed to provide a basis for termination of the Executive’s employment under the provisionso indicated. For purposes of this Agreement, any purported termination of the Executive’semployment shall be presumed to be other than for Cause unless the Notice of Termination includes acopy of a resolution duly adopted by the affirmative vote of not less than three quarters (3/4) ofthe entire membership of the Board at a meeting of the Board which was called and held for thepurpose of considering such termination (after reasonable notice to the Executive and anopportunity for the Executive, together with the Executive’s counsel, to be heard before the Board)finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forthin clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof indetail.     7.2 Date of Termination. “Date of Termination,” with respect to any purportedtermination of the Executive’s employment after a Change in Control and during the Term, shall mean(i) if the Executive’s employment is terminated for Disability, 30 days after Notice of Terminationis given (provided that the Executive shall not have returned to the full time performance of theExecutive’s duties during such 30 day period), and (ii) if the Executive’s employment is terminatedfor any other reason, the date specified in the Notice of Termination (which, in the case of atermination by the Company, shall not be less than 30 days (except in the case of a termination forCause) and, in the case of a termination by the Executive, shall not be less than 15 days nor morethan 60 days, respectively, from the date such Notice of Termination is given).     7.3 Dispute Concerning Termination. If within 15 days after any Notice ofTermination is given, or, if later, prior to the Date of Termination (as determined without regardto this Section 7.3), the party receiving such Notice of Termination notifies the other party thata dispute exists concerning the termination, the Date of Termination shall be extended until theearlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finallyresolved, either by mutual written agreement of the parties or by a final judgment, order or decreeof an arbitrator or a court of competent jurisdiction (which is not appealable or with respect towhich the time for appeal therefrom has expired and no appeal has been perfected);provided, however, that the Date of Termination shall be extended by a notice ofdispute given by the Executive only if such notice is given in good faith and the Executive pursuesthe resolution of such dispute with reasonable diligence; and provided, further,that the provisions of this Section 7.3 shall apply only to the extent that, pursuant to Treas.Reg. § 1.409A-3(g), they will not cause an additional tax under Section 409A of the Code.     8. No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during theTerm, the Executive is not required to seek other employment or to attempt in any way to reduce anyamounts payable to the Executive by the Company pursuant to Section 6 hereof. Further, the amountof any payment or benefit provided for in this Agreement (other than Section 6.1(B) hereof) shallnot be reduced by any compensation earned by the Executive as the result of employment by anotheremployer, by retirement benefits, by offset against any amount claimed to be owed by the Executiveto the Company, or otherwise.
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     9. Successors; Binding Agreement.     9.1 In addition to any obligations imposed by law upon any successor to Temple-Inland,Temple-Inland will require any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise) to all or substantially all of the business and/or assets ofTemple-Inland to expressly assume and agree to perform this Agreement in the same manner and to thesame extent that Temple-Inland would be required to perform it if no such succession had takenplace.     9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’spersonal or legal representatives, executors, administrators, successors, heirs, distributees,devisees and legatees. If the Executive shall die while any amount would still be payable to theExecutive hereunder (other than amounts which, by their terms, terminate upon the death of theExecutive) if the Executive had continued to live, all such amounts, unless otherwise providedherein, shall be paid in accordance with the terms of this Agreement to the executors, personalrepresentatives or administrators of the Executive’s estate.     10. Notices. For the purpose of this Agreement, notices and all other communications provided for in theAgreement shall be in writing and shall be deemed to have been duly given when delivered or mailedby United States registered mail, return receipt requested, postage prepaid, addressed, if to theExecutive, to the address of the Executive as maintained from time to time on the payroll system ofthe Company and, if to the Company, to the address set forth below, or to such other address aseither party may have furnished to the other in writing in accordance herewith, except that noticeof change of address shall be effective only upon actual receipt:To the Company:Temple-Inland Inc.