**Exhibit4.16**

PERSONAL ANDCONFIDENTIAL                                  9 February 2007

 

 

Gary McGann

Cherryfield

Stonehouse

Donnybrook

Dublin 4

 

 

Dear Gary:

 

On behalf of Smurfit Kappa plc, a public limited company formed underthe laws of Ireland (“SKP”), we are pleased to offer to you, with effect fromthe date hereof (the “Effective Date”) the following terms and conditions ofemployment by SKP.

 

1.                                                You will be employed as Groupchief executive officer of SKP on the same terms and conditions upon which youare currently employed by Smurfit Kappa Group Limited. In your capacity as  group chief executive officer, you shallreport to the SKP’s Board of Directors (the “Board”) and discharge all normalresponsibilities of a chief executive officer. As long as you remain employedby SKP or one of its subsidiaries, you shall devote substantially all of yourbusiness time and attention to SKP and its subsidiaries and use your bestefforts in furtherance of your responsibilities for SKP and its subsidiaries; providedthat, with the prior consent of the Board, you shall be entitled to serve onthe board of directors of up to three companies or organizations as long assuch service does not materially interfere with your obligations to SKP and itssubsidiaries. 

2.                                                Effective as of the EffectiveDate, your base salary will be €1,202,325 per annum, paid in equal instalmentsin accordance with SKP’s payroll practices. Your base salary is subject toincrease from time to time at the sole discretion of the Board.  All remuneration or payments payable to youpursuant to this paragraph 2 or otherwise shall be subject to such tax andother statutory deductions as are required to be deducted at source andremitted to the appropriate revenue authorities.

3.                                                You will be entitled to (a) 30days’ vacation annually (exclusive of public holidays), (b) use of a leasedautomobile paid for by a Group Company (which automobile shall be the currentmodel used by you or an equivalent, renewed every four years, together withtax, insurance, operating and maintenance costs), (c) reimbursement ofexpenses, properly vouched in accordance with Group Company policies, (d)business class travel (first class travel, where appropriate), and (e)membership of two golf or similar clubs selected by you. In addition, for aslong as you are the Group chief executive officer, you will provide services atthe headquarters for the Group Companies in Dublin, Ireland, subject tofrequent temporary travel overseas.

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4.                                                You will be eligible toparticipate in the existing Management Incentive Plan and any equity basedincentive plans of SKP and its subsidiaries as well as any new incentive plansthat may be created for senior executives, all in accordance with their terms.Each of these employee benefit plans will ultimately be subject to thesupervision and periodic review of the Board or its compensation committee;provided that your benefit package in the aggregate shall not be decreased.

5.                                                You agree that, other thanupon a dismissal for cause, SKP may terminate your employment at any time upon12 months prior notice in writing. The Company may, at its sole option,dispense with such notice and, in such circumstances, you will be entitled to apayment in lieu of such notice (or part thereof) of an amount equal to the sumof (a) your annual salary as of the date of termination, plus (b) the highestannual bonus for the most recent three years, plus (c) the regular pensioncontributions made by SKP or its subsidiaries in respect of your annual salary,plus (d) the cash value of any perks or benefits to which you are entitled as aresult of your employment (other than participation in equity-like incentiveschemes). 

6.                                                SKP agrees that you mayterminate your employment on giving SKP 12 months prior notice in writing. Onor at any time after the giving of such notice, SKP reserves the right to payyou, in lieu of notice, the then unexpired notice period. The amount of suchpayment in lieu of notice shall be calculated by reference to the precedingparagraph.

7.                                                You agree that if you aredismissed for cause you will not be entitled to any notice of the terminationof your employment.

8.                                                When used herein, “cause”shall mean (a) the commission of actual or attempted fraud, embezzlement,theft, misappropriation, serious misconduct or gross default by you against orin respect of a Group Company or your duties for a Group Company, which relatesto a material amount or which results in a criminal conviction or settlementwith criminal penalties or future restrictions or in material loss or damage tothat Group Company or other Group Companies; (b) the refusal or failure by youto carry out your duties to a Group Company to a material degree, following awritten warning that dismissal may result; (c) conviction of a crime inrelation to the business or assets of a Group Company, which has, in thereasonable opinion of the Board, a material adverse effect upon any GroupCompany or its shareholders, other than (i) a violation of the Road TrafficActs and (ii) a criminal matter in respect of which you have been indemnifiedby a Group Company and are entitled to indemnification, (d) knowing violationof the Foreign Corrupt Practices Act, or (e) material breach of a material,formal agreement in writing (other than this letter agreement) between you andSKP or the Group Company by which you are employed; provided that for theavoidance of doubt, the exclusion from this clause (e) of this letter agreementshall not exclude breach thereof from being deemed the basis for “cause”termination pursuant the provisions of any of clauses (a) through (d) of thisparagraph 8. For the avoidance of doubt, the termination of your employment bya Group Company shall not be for “cause” if it results wholly or mainly from(v) your death or disability, (w) your retirement on grounds of age or pursuantto an early retirement plan of the Group Company that employs you, (x) yourvoluntary resignation (unless you are subject to internal or externalproceedings

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likely to leadto a termination for “cause” at the time of such resignation), (y) yourredundancy, or (z) the Group Company that employs you ceasing for any reason tobe a Group Company. When used herein, “Group Companies” means SKP and each ofits subsidiaries and Associated Companies and “Group Company” means any suchcompany and “Associated Company” means any company having an Equity ShareCapital (as defined in Section 155 of the Companies Act 1963) of which not lessthan 20% in nominal value is beneficially owned by any Group Company.

9.                                                You agree that in the eventthat your employment is terminated, you shall not during the Restricted Period:(i) within the Restricted Area or any part thereof, carry on either directly orindirectly, on his own behalf or on behalf of any other person, firm, companyor entity, any material business of the same or similar kind to that in whichany of the Group Companies were materially engaged in the year preceding suchtermination, (ii) induce or attempt to induce any employee of any Group Companyto leave the employ of the Group Companies, or in any way interfere with therelationship between any Group Company and any employee thereof and or (iii)call on, solicit the custom or business of or service any customer, supplier,licensee, licensor or other business relation of any Group Company in order toinduce or attempt to induce such person or entity to cease doing or reduce theamount of business with any Group Company, or in any way interfere with therelationship between any such customer, supplier, licensee or business relationand any Group Company (including but not limited to making any negativestatements or communications about any Group Company, or any employee, directoror stockholder thereof). When used herein, (A) “Restricted Period” means theone-year period from the date of termination; and (B) “Restricted Area” meansany area of the world where any Group Company conducted a material portion ofits business in the twelve-month period immediately preceding your terminationdate. The restrictions contained in this paragraph 9 shall not restrict youfrom passively owning not more than 1% of the outstanding equity securities ofa publicly traded company that competes with the Group Companies.

10.                                          You agree that all tradesecrets, confidential operations, processes or dealings, or any informationconcerning the organization, business, finances, transactions and affairs,other than information that becomes publicly available other than throughbreach of this provision by you, shall be kept confidential both during theterm of this letter agreement and thereafter. All notes, memoranda, reports andinformation compiled by you during your employment (in whatever form compiled)regarding the business, affairs and operations of the Group Companies shall beand at all times remain the property of the Group Companies.

11.                                          Upon execution of this letteragreement by each party hereto, this letter agreement shall be binding andenforceable upon each party hereto. This letter agreement shall, effective asof the Effective Date, amend and supersede any other agreements with SKP and/orany of its subsidiaries regarding the subject matter hereof to which you are aparty; provided that your employment hereunder by SKP shall be deemed to becontiguous with your previous employment with Smurfit Kappa Group Limited,Smurfit Kappa Corporation Limited and/or their subsidiaries. In addition, youagree that you hereby release and waive, without any claims or demands, allrights under the “two-year” letter with MDCP Acquisitions plc (now known asSmurfit Kappa Corporation Limited) dated 4 July 2002.

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12.                                          This letter agreement may beexecuted in multiple counterparts (including by facsimile), each of which shallconstitute one and the same original. This letter agreement shall be construed in accordance with the laws ofthe Republic of Ireland.
|                             |   | SMURFIT KAPPA  PLC |
|-----------------------------|--------|--------------------|
|                        |   |               |   |
|                        |   |               |   |
|                        |   | By:                | /s/ Michael  O’Riordan |
|                        |   |               |   |
|                        |   |               |   |
|                        |   | Its:               | Company  Secretary |
|                        |   |               |   |
|                        |   |               |   |
| Acknowledged and  Accepted: |   |               |   |
|                        |   |               |   |
|                        |   |               |   |
| /s/  Gary McGann       |   |               |   |
| Gary McGann            |   |               |   |

 

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