<PAGE>   1
                                                                   EXHIBIT 10.21

                              EMPLOYMENT AGREEMENT


         This Employment Agreement ("Agreement") is entered into by and between
Inland Paperboard and Packaging, Inc., a Delaware corporation (the "Company")
and Dale E. Stahl (the "Employee"), effective as of July 1, 2000.

WHEREAS, the Company and the Employee desire to set forth the terms and
conditions of the Employee's employment with the Company in writing;

         NOW, THEREFORE, in consideration of the above recitals and the mutual
promises and conditions contained below, the parties hereby agree as follows:

1.       EMPLOYMENT: The Employee's employment shall be subject to and
         conditioned upon Employee's furnishing documentation required by law
         and providing appropriate background information as required of
         salaried employees under the Company's normal hiring practices.
         Employee's employment with the Company shall commence as of July 1,
         2000 ("Employment Date").

2.       TITLE AND DUTIES: During the term of this Agreement, the Employee shall
         be employed by the Company as its President and Chief Operating
         Officer. Employee shall also serve as Group Vice President-Paper of the
         Company's parent, Temple-Inland Inc. ("Temple-Inland"). The Employee
         agrees to devote his full time, attention, skill and energy to the
         business and affairs of the Company and Temple-Inland, and will use his
         best efforts to promote the success of the Company and Temple-Inland.

3.       NO INCONSISTENT OBLIGATIONS: The Employee affirms that he is not bound
         by any contract or agreement with any other person or entity which
         would be violated by his employment with the Company under the terms
         and conditions of this Agreement.

4.       COMPENSATION: During the term of this Agreement, the Company shall pay
         the Employee no less than the following amounts:

<TABLE>
<CAPTION>

                                SALARY         MINIMUM BONUS       TOTAL CASH
<S>                            <C>            <C>                <C>
             Year 1            $325,000          $275,000           $600,000
             Year 2            $350,000          $275,000           $625,000
</TABLE>

         The Employee's compensation shall be paid according to the Company's
         normal pay/bonus cycle for executive officers; provided, however, that
         the bonus payable in February 2001 shall be a prorata amount based on
         Employee's length of service between the Employment Date and the
         initial bonus payment date. All payments shall be subject to all
         applicable tax withholding and deductions.



                                       1
<PAGE>   2




5.       BENEFITS:

         a.       BENEFIT PLANS: The Employee shall be eligible to participate
                  in the Company's health and welfare benefit plans, retirement
                  plan, 401(k) plan and any other benefit plans provided to
                  other salaried employees from time to time during his
                  employment according to the terms set forth in such plans.

         b.       VACATION: The Employee shall be eligible for four weeks paid
                  vacation and the Company's normal paid holidays, as provided
                  to other salaried employees from time to time during the term
                  of employment.

         c.       STOCK OPTIONS: Effective on July 3, 2000, Employee shall be
                  granted an option to purchase 25,000 shares of Temple-Inland
                  Inc. common stock at fair market value on the date of such
                  grant as determined under the Temple-Inland Inc. Stock Option
                  Plan. Thereafter, Employee shall be eligible to be considered
                  for additional stock option grants as a Tier I employee
                  beginning in 2001. Employee understands and agrees that the
                  Temple-Inland Inc. Management Development and Executive
                  Compensation Committee has full and complete discretion to
                  award options to employees and, other than the initial grant
                  described above, no subsequent grants are guaranteed to be
                  awarded or to be awarded in any particular amount.

6.       RELOCATION EXPENSES: The Company shall reimburse the Employee for all
         reasonable and customary expenses incurred by the Employee in
         relocating his principal residence to Indianapolis, Indiana under the
         Company's standard relocation policy; provided, that the Employee shall
         submit to the Company a normal expense voucher which will be subject to
         the approval of the Company. Employee shall complete his relocation no
         later than December 31, 2000.

7.       CHANGE IN CONTROL: In the event Employee's employment by the Company is
         terminated or Employee resigns for Good Reason, as defined below,
         within two (2) years following any Change in Control, Employee shall be
         paid the Compensation Amount in a lump sum within thirty (30) days of
         the date of such termination or resignation. In the event Company or
         Temple-Inland adopts a change in control plan or provisions for senior
         management, Employee shall receive the benefits of such plan or
         provisions if they provide a greater cash payment to Employee, but
         shall not receive both the payment under the Agreement and the payment
         under such new plan or provisions. This item 7 shall survive the
         termination of this Agreement. For purposes of this Agreement:

         a.       CHANGE IN CONTROL: "Change in Control" means (i) a merger or
                  consolidation to which the Company or Temple-Inland is a party
                  and for which the approval of any shareholders of the Company
                  or Temple-Inland is required; (ii) any "person" (as such term
                  is used in Sections 13(d) and







                                       2
<PAGE>   3


                  14(d)(2) of the Securities Exchange Act of 1934, as amended)
                  becoming the beneficial owner, directly or indirectly, of
                  securities representing 25% or more of the combined voting
                  power of the Company's or Temple-Inland's then outstanding
                  securities; (iii) a sale or transfer of substantially all of
                  the assets of the Company or Temple-Inland; or (iv) a
                  liquidation or reorganization of the Company or Temple-Inland.

         b.       COMPENSATION AMOUNT: "Compensation Amount" means the gross
                  amount of cash required to provide a net payment after
                  federal, state and local taxes to Employee equal to two (2)
                  times his annual cash compensation (salary and minimum bonus)
                  as set forth in item 3 above.

         c.       GOOD REASON: "Good Reason" means a substantial reduction in
                  the Employee's duties as set forth in item 2 above, a
                  reduction in Employee's annual cash compensation as set forth
                  in item 4 above or a failure to pay such compensation within
                  seven (7) days of the date such compensation is due, a
                  substantial reduction in Employee's benefits as set forth in
                  item 4(a) above, or the relocation of Employee's principal
                  place of employment to a location more than 15 miles from
                  Indianapolis, Indiana.

8.       TERMINATION OF AGREEMENT:

         a.       TERM: Except for the covenants set out in sections 7, 9 and
                  10, which shall survive, this Agreement shall terminate upon
                  the earliest to occur of the following:

                  i.   24 months from the Employment Date;

                  ii.  the Employee's death, resignation or retirement;

                  iii. immediately and without prior notice upon Disability of
                       the Employee (as defined below); or

                  iv.  immediately and without prior notice upon the
                       determination of the Company to terminate the Employee's
                       employment, with or without cause, for any reason.

         b.       DEFINITION OF DISABILITY: The Employee will be deemed to have
                  a "disability" if, for physical or mental reasons, the
                  Employee is unable to perform the essential functions of the
                  Employee's duties under this Agreement for one-hundred-twenty
                  (120) consecutive days, or one-hundred-eighty (180) days
                  during any twelve month period, as determined in accordance
                  with this Section 8(b). The disability of the Employee will be
                  determined by a physician selected by written agreement of the
                  Company and the Employee upon the request of either party by
                  notice to the other. If the Company and the Employee cannot
                  agree on the selection of a physician, each of them will
                  select a physician and the two physicians will select a third
                  physician who will determine whether the




                                       3
<PAGE>   4


                  Employee has a disability. The determination of the physician
                  selected under this Section 8(b) will be binding on both
                  parties. The Employee must submit to a reasonable number of
                  examinations by the physician making the determination of
                  disability under this Section 8(b), and the Employee hereby
                  authorizes the disclosure and release to the Company of such
                  determination and all supporting medical records. If the
                  Employee is not legally competent, the Employee's legal
                  guardian or duly authorized attorney-in-fact will act in the
                  Employee's stead, under this Section 8(b), for the purposes of
                  submitting the Employee to the examinations, and providing the
                  authorization of disclosure, required under this Section 8(b).

         c.       TERMINATION PAY: In the event that the Employee's employment
                  with the Company is terminated for any reason other than (i) a
                  Change in Control, (ii) the Employee's resignation, (iii)
                  retirement, (iv) disability, or (v) willful misconduct
                  (including, but not limited to, dishonesty, fraud,
                  embezzlement, gross insubordination, gross misconduct and the
                  like), the Employee shall be entitled to receive a severance
                  payment in a gross amount (less applicable tax withholdings)
                  equal to the projected two-year cash compensation set forth
                  above of $1,225,000 reduced by all cash compensation paid to
                  Employee up to and including the date of termination.

         d.       EMPLOYMENT-AT-WILL: If the Employee remains employed by the
                  Company at the termination of this Agreement pursuant to item
                  8.(a)(i) hereof, his employment shall be at-will and may be
                  terminated by either the Employee or the Company thereafter
                  without regard to this Agreement except as set forth in item 7
                  hereof.

9.       NON-DISCLOSURE COVENANT:

         a.       The Employee acknowledges that:

                  i.   During the Agreement the Employee will be afforded access
                       to trade secrets and confidential business information,
                       including but not limited to: corporate planning;
                       production; distribution or marketing processes;
                       manufacturing techniques; customer lists or customer
                       leads; marketing information or procedures; development
                       or environmental work; work in process; financial
                       statements or notes, schedules or supporting financial
                       data; or any other secret or confidential matter relating
                       to the products, sales or business of the Company or
                       Temple-Inland, including plans for expansion to new
                       products, areas and markets; new product development
                       budgets and forecasts, together with all written and
                       graphic materials relating thereto (collectively
                       "Confidential Information");



                                       4
<PAGE>   5

                  ii.  Public disclosure of such Confidential Information could
                       have an adverse effect on the Company and its business or
                       Temple-Inland and its business;

                  iii. The Employee's covenants in this Section 9 are a material
                       inducement for the Company to enter into this Agreement
                       and to allow the Employee access to the Confidential
                       Information; and

                  iv.  The provisions of this Section 9 are reasonable and
                       necessary to prevent improper use of Confidential
                       Information.

         b.       At all times during the term of this Agreement and thereafter,
                  the Employee shall hold in strictest confidence and not
                  disclose, directly or indirectly, to any person, firm or
                  corporation, without the express written prior authorization
                  of the Company or Temple-Inland, any Confidential Information.

10.      CONFIDENTIALITY: The parties agree that this Agreement is of a
         confidential nature and that neither the existence of this Agreement
         nor its terms shall be disclosed except (i) to consultants, advisors
         and affiliates (who shall be informed of and be bound by the terms of
         this Section 10), (ii) as required by securities laws or other law, or
         (iii) to the Internal Revenue Service in connection with an audit of
         any of the Company's or the Employee's tax returns.

11.      GOVERNING LAW: This Agreement will be governed by the laws of the
         United States and the State of Indiana, as applicable, without regard
         to conflicts of laws principles.

12.      MISCELLANEOUS:

         a.       The parties agree that the covenants and other terms contained
                  in this Agreement are reasonable in all respects.

         b.       The parties agree that each and every paragraph, sentence,
                  term and provision of this Agreement shall be considered
                  severable and that, in the event a court or other tribunal
                  finds any paragraph, sentence, term or provision to be invalid
                  or unenforceable, the validity, enforceability, operation or
                  effect of the remaining paragraphs, sentences, terms or
                  provisions shall not be affected.

         c.       The failure of either party to insist in any one or more
                  instances upon performance of any of the provisions of the
                  Agreement or to pursue their rights thereunder, shall not be
                  construed as a waiver of any such provisions or the
                  relinquishment of any rights.

         d.       Any notices, requests or other communications required
                  hereunder shall be in writing and shall be personally
                  delivered or, if mailed, by first class mail




                                       5
<PAGE>   6

                           If to the Company, to:

                           Inland Paperboard and Packaging, Inc.
                           4030 Vincennes Road
                           Indianapolis, Indiana  46268
                           Attn:  Steven L. Householder

                           If to the Employee, to:

                           Dale E. Stahl
                           4030 Vincennes Road
                           Indianapolis, Indiana  46268

         e.       This Agreement represents the sole and entire agreement among
                  the Employee and the Company relating to the Employee's
                  employment and supersedes all prior promises, contracts and
                  agreements of any kind, whether written or oral, express or
                  implied, as well as any negotiations and/or discussions
                  between the parties hereto. Any amendment to this Agreement
                  must be in writing and signed by duly authorized
                  representatives of each of the parties hereto and must
                  expressly state that it is the intention of each of the
                  parties hereto to amend this Agreement.

         f.       Except for the rights of the Company or Temple-Inland set
                  forth in Sections 9 and 10, this Agreement is for the benefit
                  of, and may be enforced only by, the Company and the Employee
                  and their respective assignees, heirs and personal
                  representatives, and is not for the benefit of, and may not be
                  enforced by, any other person or entity. This Agreement shall
                  be binding upon the successors and assigns of the Company.

Dated:
      ------------------------               -----------------------------------
                                             Dale E. Stahl

Dated:                                       INLAND PAPERBOARD AND PACKAGING,
      ------------------------               INC.


                                             BY:
                                                --------------------------------



                                       6