Employment Agreement between Gordon L. Jones and Clearwater Paper Corporation



 Exhibit 10.1 
 [Letterhead of Clearwater Paper Corporation] 
 December 13, 2011 

Mr. Gordon L. Jones 
 Dear Gordon:

 The purpose of this letter agreement (this “Agreement”) is to confirm important terms and conditions pertaining to
your continued employment as Chief Executive Officer of Clearwater Paper Corporation (the “Company”) and supersedes in its entirety that prior agreement entered into effective as of July 1, 2008 by and among you and the
Company as successor in interest to Potlatch Corporation under that prior agreement. 
 1. Term of Agreement: The term of this Agreement
shall begin on December 16, 2011 (the “Effective Date”), and will end at the close of business on December 15, 2014 (the “Agreement Term”), unless this Agreement is terminated earlier in
accordance with its terms. 
 2. Position: You will continue to be employed with the Company as its Chief Executive Officer. In addition,
the Company’s Board of Directors (the “Board”) shall use its best efforts to secure your continued election to the Board. 
 3. Base Salary: Your base salary as of the Effective Date is $800,000 on an annualized basis, payable in accordance with the Company’s regular payroll practices, as established from time to
time. During the term of this Agreement, your salary shall be reviewed on at least an annual basis by, and may be increased but not decreased at the discretion of, the appropriate committee of the Board. The review of your base salary will occur at
the same time as the review for other senior executives of the Company. 
 4. Annual Incentive Award Opportunity: 

(a) You will be eligible to participate in the Company’s annual bonus plan for similarly situated executives. Under
the current terms of the annual bonus plan, your target annual bonus is 100% of your base salary. Any actual bonus can range from 0% to 175% of the target bonus opportunity and will be calculated 75% based on corporate performance and 25% based on
individual performance. All awards shall be governed by the terms of, and subject to any conditions established by, the Company’s then-current annual bonus plan. 

(b) Notwithstanding the provisions of Section 4(a), and subject to Section 8(b), for purposes of any applicable
annual bonus plan, your termination of employment on or after January 1, 2013 for any reason other than death, disability or by the Company for “Misconduct,” as that term is defined for purposes of the Company’s Severance Program
for Executive Employees, as amended from time to time, or any successor program (the “Severance Program”), shall be treated as a normal retirement under the annual bonus plan. 







 5. Long-Term Incentive Awards: 

(a) You will be eligible to participate in the Company’s Long-Term Incentive Plan
(“LTIP”), subject to the terms and conditions of the LTIP and on a basis at least as favorable as generally applicable to the other senior executives of the Company. Under the current LTIP, the target value of your LTIP award
is 200% of the mid-point of the range for your salary grade. Actual payout of LTIP awards, which may range from zero (0) shares to a maximum of two (2) times the target number of shares, will be based on Company performance as measured by
the methodology determined by the appropriate committee of the Board and will be paid out in shares of Company stock in accordance with the terms and conditions of the LTIP.1 
 (b) Notwithstanding the provisions of Section 5(a), and
subject to Section 8(b), your termination of employment on or after January 1, 2013 for any reason other than death, disability or termination by the Company for “Misconduct,” as that term is defined for purposes of the Severance
Program, shall be treated as a normal retirement under the LTIP (the amount payable due to such treatment is referred to herein as the “Section 5(b) Additional Benefit”). 
 6. Employee Benefits: 
 (a) You will be eligible to
participate in Company’s employee welfare, benefit, and retirement plans and programs, including retirement and supplemental retirement plans, on the same basis as generally applicable to the other senior executives of the Company. Further, you
will be eligible for all fringe benefits and perquisites generally available to the other senior executives of the Company on at least as favorable basis as such other senior executives, and you will be reimbursed for reasonable business expenses
per Company policy. 
 (b) Notwithstanding the provisions of Section 6(a), and subject to Section 8(b),
if your employment terminates prior to your attainment of age 65, the Board will take such action as is necessary to provide you with an additional benefit under the Company’s Salaried Supplemental Benefit Plan, as amended from time to time (or
a successor plan thereto) (the “Supplemental Plan”), or under another benefit plan or arrangement, which will make up certain benefits which cannot be paid to you under the Clearwater Paper Salaried Retirement Plan, as
amended from time to time (the “Retirement Plan”), or under the Clearwater Paper 401(k) Plan, as amended from time to time (the “401(k) Plan”), pursuant to the benefit enhancement under the 401(k) Plan
that will take effect January 1, 2012 in connection with the freezing of the Retirement Plan and the Retirement Plan Supplemental Benefit portion of the Supplemental Plan, to include: (i) any benefit that you have accrued under the
Retirement Plan but must forfeit because you are not fully vested in your benefit under the Retirement Plan at the time your employment with the Company terminates; 

 

	1 	The current performance cycle is three (3) years. 


  
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(ii) prompt payment or commencement of payment, without actuarial reduction for commencement of payment prior to age 65, of (A) the benefit you have accrued under the Retirement Plan
Supplemental Benefit portion of the Supplemental Plan plus (B) an amount equal to the benefit you have accrued under the Retirement Plan (after taking clause (i) above into account, if you are not vested in your benefit under the
Retirement Plan at the time your employment with the Company terminates), adjusted for the form of payment (to the extent your benefit under the Retirement Plan is vested at the time your employment with the Company terminates, such additional
amount under part (B), above, shall cease to be paid upon your attainment of age 65 or, if earlier, on the date your benefit under the Retirement Plan is paid or commences to be paid), and (iii) payment in a lump sum as soon as practicable
(but, in no event, more than 30 days) after your termination of employment of the additional benefit that you would have accrued under the 401(k) Plan and the 401(k) Plan Supplemental Benefit portion of the Supplemental Plan pursuant to the benefit
enhancement referred to above, if you had continued your employment with the Company until you reached age 65, with a continued compensation rate equal to your compensation rate at the time your employment with the Company terminates, provided,
however, that the benefits described in clause (ii) and clause (iii) above shall be paid only if your employment terminates on or after January 1, 2013 for any reason other than death, disability or by the Company for
“Misconduct,” as that term is defined for purposes of the Severance Program. Any additional benefits to which you may be entitled under clause (i) and (ii) above shall be paid in the form and at the time specified in the
Supplemental Plan for Supplemental Retirement Plan Benefits of an equivalent amount assuming no discount for early commencement. 
 (c) The Company will pay, or reimburse you for, the reasonable professional fees and related expenses you incur for legal advice in connection with the preparation and execution of this Agreement.

 7. Termination of Employment; Severance: This Agreement and your employment with the Company may be terminated at any time during its
term by either you or the Company, provided, however, that the parties’ rights and obligations upon such termination during the term shall be as set forth in applicable provisions of this Agreement and the Severance Program and applicable
provisions of any other documents referenced in Section 15 below. If your employment terminates during the term of this Agreement for any reason you shall promptly offer to resign from the Board. The Nominating and Governance Committee shall
consider the appropriateness of continued Board service and will recommend to the Board whether the resignation should be accepted. In addition, termination of your employment for any reason shall constitute your resignation as an officer of the
Company, its subsidiaries, and its affiliates. You will be a participant in the Severance Program and will be subject to all the terms and conditions of the Severance Program, which are incorporated into this agreement by reference; provided,
however, that Section 4(c) of the Severance Program and references to Section 4(c) in Section 4(d) of the Severance Program shall not apply to you, and in their place the following provisions shall apply: 

(a) Notwithstanding any other provision of this Agreement, in the event that you become entitled to receive or receive any
payments, options, awards or benefits (including, 

  
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without limitation, the monetary value of any non-cash benefits and the accelerated vesting of stock options) under this Agreement, the Severance Program or under any other plan, agreement or
arrangement with the Company, any person whose actions result in a “Change of Control” (as that term is defined in the Severance Program) or any person affiliated with the Company or such person (collectively, the
“Payments”), that may separately or in the aggregate constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and
the Treasury regulations promulgated thereunder (“280G”) and it is determined that, but for this Section 7(a), any of the Payments will be subject to any excise tax pursuant to Section 4999 of the Code or any
similar or successor provision (the “Excise Tax”), the Company shall pay to you either (i) the full amount of the Payments or (ii) an amount equal to the Payments, reduced by the minimum amount necessary to prevent
any portion of the Payments from being an “excess parachute payment” (within the meaning of Section 280G) (the “Capped Payments”), whichever of the foregoing amounts results in the receipt by
you, on an after-tax basis, of the greatest amount of Payments notwithstanding that all or some portion of the Payments may be subject to the Excise Tax. For purposes of determining whether you would receive a greater after-tax benefit from the
Capped Payments than from receipt of the full amount of the Payments and for purposes of Section 7(c) (if applicable), you shall be deemed to pay federal, state and local taxes at the highest marginal rate of taxation for the applicable
calendar year. 
 (b) All computations and determinations called for by Sections 7(a) and 7(c) shall be made and
reported in writing to the Company and you by a third-party service provider selected by the Company (the “Tax Advisor”), and all such computations and determinations shall be conclusive and binding on the Company and
you. For purposes of such calculations and determinations, the Tax Advisor shall rely on accurate information about the Payments and reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company
and you shall furnish to the Tax Advisor such information and documents as the Tax Advisor may reasonably request in order to make their required calculations and determinations. The Company shall bear all fees and expenses charged by the Tax
Advisor in connection with its services. 
 (c) In the event that Section 7(a) applies and a reduction is
required to be applied to the Payments thereunder, the Payments shall be reduced by the Company in a manner and order of priority that provides you with the largest net after-tax value; provided that payments of equal after-tax present value shall
be reduced in the reverse order of payment. Notwithstanding anything to the contrary herein, any such reduction shall be structured in a manner intended to comply with Section 409A of the Code. 

8. Covenants: 
 (a) You acknowledge and agree to execute and comply with the Company’s Inventions, Trade Secrets and Confidentiality Agreement, which is incorporated into this agreement by reference, in the form
attached to this Agreement and as the same may be amended from time to time. You also acknowledge that your obligations under the Inventions, Trade Secrets and Confidentiality Agreement will survive the termination of your


  
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employment for any reason. You also acknowledge and agree that you will have access to confidential and proprietary information of the Company and third parties in the course of performing your
responsibilities for the Company, that such access is necessary to your ability to perform those responsibilities, that such Company confidential and proprietary information is a valuable asset of the Company, and that the Company has developed and
will develop goodwill that is a valuable asset of the Company. In view of the foregoing and in consideration of the compensation and benefits as provided under this Agreement, you further agree that: 

(i) during the time you are employed and for a period of three (3) years following your separation from employment
with the Company for any reason, you will not, without the prior written consent of the Company, directly or indirectly, engage in, whether as an owner, consultant, outside director, employee, or otherwise, activities competitive with those of the
Company in any state, province or like geography where the Company does business; 
 (ii) during the time you are
employed and for a period of three (3) years following your separation from employment with the Company for any reason, you will not, without the prior written consent of the Company, directly or indirectly, solicit for employment, offer, or
cause to be offered employment, either on a full time, part-time or consulting basis, to any person who was employed by the Company or its affiliates on the date your employment terminated and with whom you had regular contact during the course of
your employment by the Company; and 
 (iii) during the time you are employed and for a period of one
(1) year following your separation from employment with the Company for any reason, you will not, without the prior written consent of the Company, directly or indirectly, (A) solicit, divert, appropriate to or accept on behalf of any
competitor of the Company, or (B) attempt to solicit, divert, appropriate to or accept on behalf of any competitor of the Company, any business from any customer or actively sought prospective customer of the Company with whom you have dealt,
whose dealings with the Company have been supervised by you or about whom you have acquired confidential information in the course of your employment. 
 You agree that the foregoing restrictions are reasonable, will not preclude you from finding gainful employment, and are necessary to protect the goodwill, confidential information, and other protectable
business interests of the Company. You further agree that the Company would suffer irreparable harm should you violate these restrictions and agree that injunctive relief, in addition to any other damages or relief available to the Company, is
appropriate and necessary to protect the Company’s interests. 
 (b) In the event of a breach by you of your
obligations under Section 8(a), no further payment of the Section 5(b) Additional Benefit shall be made, any further rights you may have had to future payment of the Section 5(b) Additional Benefit shall be canceled and void, and you
shall promptly repay to the Company any prior payment made to you of the Section 5(b) Additional Benefit. 

  
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 9. Representation and Warranties: You represent and warrant that you are not a party to, or otherwise
subject to, any covenant not to compete, or other agreement that would restrict or limit your ability to perform your responsibilities under this Agreement, with any person or entity and that your performance of your obligations under this Agreement
will not violate the terms and conditions of any contract or obligation, written or oral, between you and any other person or entity. 
 10.
Assignment and Successors: This Agreement is personal to you and, without the prior written consent of the Company, shall not be assignable by you. The Company may assign this Agreement (a) to any corporation resulting from any merger,
consolidation or other reorganization to which the Company is a party; (b) any corporation, partnership, association or other person to which the Company may transfer all or substantially all of the assets and business of the Company existing
at such time; or (c) any subsidiary, parent or other affiliate of the Company, but in the event of an assignment to a subsidiary, parent or affiliate, the Company shall remain obligated to you for the compensation and benefits payable under
this Agreement. This Agreement shall inure to the benefit of and be enforceable by the Company and its successors and assigns. 
 11.
Withholding: The Company may withhold from any payment that is required to be made under this Agreement amounts sufficient to satisfy applicable withholding requirements under any federal, state, or local law and all payments hereunder shall
be subject to applicable deductions. 
 12. Controlling Law: Except where otherwise provided for herein, this Agreement shall be governed
in all respects by the laws of the State of Washington, excluding any conflict-of-law rule that might refer the construction of the Agreement to the laws of another state or country. You consent to the exclusive jurisdiction of the state and federal
courts located in Spokane County, Washington, for any action relating this Agreement. You will not bring any action relating to this Agreement in any other court. 
 13. Separability and Construction: If any provision of this Agreement is determined to be invalid, unenforceable, or unlawful by a court of competent jurisdiction, the other provisions of this
Agreement shall remain in full force and effect, and the provisions that are determined to be invalid, unenforceable, or unlawful will either be limited or reformed so that they will remain in effect to the fullest extent allowed by law. 

14. Waiver of Breach: Except as otherwise specifically provided for herein, no failure by any party to give notice of any breach of, or to require
compliance with, any condition or provision of this Agreement shall be deemed a waiver or relinquishment of that party’s rights, and no waiver or relinquishment of rights by any party at any one or more times will be deemed to be a waiver or
relinquishment of such right or power at any other time or times. 
 15. This Agreement and the payments and benefits provided for hereunder,
including, without limitation, those provided for in Section 6(b) hereof, are intended to comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A (to the extent not exempt therefrom).
Notwithstanding anything herein to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions; 

  
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provided, however that in no event shall the Company or any of its subsidiaries or affiliates be liable for any additional tax, interest or penalty that may be imposed on you pursuant to Code
Section 409A or for any damages incurred by you as a result of this Agreement (or the payments or benefits hereunder) failing to comply with, or be exempt from, Code Section 409A. If you or the Company reasonably believes that any payment
or benefit does not so comply with Section 409A, you or the Company will promptly advise the other party and will negotiate reasonably and in good faith to amend the terms of this Agreement such that it complies (with the most limited possible
economic effect on you and on the Company) or to mitigate any additional tax or interest (or both) that may apply under Section 409A if compliance is not practicable. Without limiting the generality of the foregoing, and notwithstanding any
other provision of this Agreement to the contrary: 
  

	 	(a)	if at the time your employment hereunder terminates, you are a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i) and determined
using the identification methodology selected by the Company from time to time, or if none, the default methodology, any and all amounts payable under or pursuant to this Agreement on account of such termination of employment that would (but for
this provision) be payable within six (6) months following the date of termination (including amounts payable pursuant to Section 6(b) hereof) shall instead be paid in a lump sum on the first day of the seventh month following the date on
which your employment terminates or, if earlier, on the first day of the first month following your death, except (i) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulation
Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (ii) benefits which
qualify as excepted welfare benefits pursuant to Treasury Regulation Section 1.409A-1(a)(5); and (iii) other amounts or benefits that are not subject to the requirements of Code Section 409A; 


 

	 	(b)	you will not be deemed to have had a termination of employment for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or
following your termination of employment unless such termination is also a “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h) after giving effect to the presumptions contained therein, and, for purposes
of any such provision of this Agreement, references to a “terminate,” “termination,” “termination of employment” and like terms shall mean separation from service; and 


 

	 	(c)	 with regard to any provision in this Agreement, including, without limitation, Section 6(a) hereof, that provides for reimbursement of expenses or
in-kind benefits, except for any expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a “deferral of compensation,” within the meaning of Treasury Regulation Section 1.409A-1(b)
(including without limitation by reason of the safe harbor set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good




  
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faith discretion), (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such payments shall be made on or before the
last day of your taxable year following the taxable year in which the expense occurred. 

 16. Entire Agreement/Modification in
Writing: This Agreement together with the Inventions, Trade Secrets and Confidentiality Agreement and relevant plan documents and grant notices (each as it may be amended from time to time) constitute the entire understanding relating to the
matters addressed herein and supersede any other prior agreement, whether written or oral. No addition to, or modification of, this Agreement shall be effective unless in writing and signed by both you and an authorized representative of the
Company. 
 17. Construction: Each party and his or its counsel have reviewed this Agreement and have been provided the opportunity to
revise this Agreement, and, accordingly, the normal rule of construction providing for any ambiguities to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of
this Agreement shall be construed as a whole and according to its fair meaning, not strictly for or against either party. Nothing in this Agreement is intended to or constitutes a guarantee of employment for a fixed or specific term, and except as
to the specific obligations established by this Agreement, the Company reserves the right to adopt, amend, discontinue, or otherwise alter its compensation, benefit, and human resources practices, policies, and programs at its discretion.

 18. Survival: The provisions of Sections 7, 8, 9 and 11-16 of this Agreement shall survive the termination of this Agreement and any
termination of your employment hereunder. 
 [Remainder of page intentionally left blank.] 

  
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 Gordon, I hope this Agreement provides you with the level of security and incentive that will allow you to
continue to contribute substantially to the success of the Company. Please sign below and return an executed original to me to indicate your acceptance of these terms. Again, we are pleased to have you as a continuing member of the team. 

Sincerely, 
  

	
	 s/s Boh A. Dickey

	 Boh A. Dickey
 Vice Chair of
the Board of Directors


  

	cc:	Thomas H. Carter 

 I, Gordon L. Jones, have
read, understand, accept and agree to the terms of the letter/agreement from Boh A. Dickey dated December 13, 2011. 
  

	
	 s/s Gordon L. Jones

	Gordon L. Jones

 Date: December 13, 2011 







 Clearwater Paper Corporation 

Inventions, Trade Secrets and Confidentiality Agreement 
 IN CONSIDERATION OF and as a condition of my employment or continued employment by Clearwater Paper Corporation (the “Company”), and in consideration of the compensation and benefits to be
provided to me and the confidential and other information of the Company to which I will be provided access, I agree as follows: 

Inventions and Improvements 
  

	1.	I will keep adequate records regarding and will disclose to the Company all inventions or improvements made or conceived by me, solely or jointly with others, during my
employment with the Company and during the one-year period following the termination of my employment. 

  

	2.	I agree to assign and hereby do assign to the Company, without further compensation, my entire right in all such inventions and improvements, as well as any patent
applications or patents relating to them, except that my assignment and agreement to assign does not apply to an invention or improvement for which no equipment, supplies, facility, or trade secret information of the Company was used and which was
developed entirely on my own time, unless (a) the invention or improvement relates (i) directly to the business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) the
invention or improvement results from any work performed by me for the Company. 

  

	3.	I will execute all papers, testify in any legal proceeding, and give any other assistance requested at any time by the Company to secure for the Company exclusive
rights in and patent or other protection in any country for all inventions and improvements that are assigned to the Company pursuant to this Agreement. In obtaining such assistance, the Company will make reasonable efforts, not inconsistent with
the Company’s timely obtaining the necessary assistance, to avoid materially impairing me in fulfilling my then-existing personal and professional commitments. I understand that if I am no longer employed by the Company, the Company will
reimburse me for my time spent providing this assistance. Reimbursement shall be at my regular base rate of compensation if I am employed elsewhere at the time I provide the assistance or, if I am not employed elsewhere at the time, at the regular
base rate of compensation that the Company was paying me as of the termination of my employment with the Company. 

  

	4.	I have attached to this Agreement a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by me
prior to my employment (collectively referred to as “Prior Inventions”), which belong to me or in which I have an interest, which relate to the Company’s current or proposed business, products or research and development, and which
are not assigned to the Company. I represent and warrant that this list is complete and accurate. If no list is attached, I represent and warrant that there are no Prior Inventions. 


  
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 Trade Secrets and Confidential Information 

 

	5.	“Confidential Information” means any information related to the business or other affairs of the Company or its affiliates that is not generally available to
the public, and that: (a) is conceived, compiled, developed, or discovered by me whether solely or jointly with others, during my employment or (b) is or has been received or otherwise becomes known to me in connection with my employment.
Without limiting the generality of the foregoing, Confidential Information includes information, both written and oral, relating to inventions and improvements, trade secrets and other proprietary information, technical data, products, services,
finances, business plans, marketing plans, legal affairs, suppliers, clients, potential clients, prospects, opportunities, contracts or assets of the Company or its affiliates. Confidential Information also includes any information that has been
made available to the Company by its customers or other third parties and which the Company is obligated to keep confidential. 

  

	6.	I will not at any time, either during or after my employment by the Company, use or disclose any Company trade secrets or other Confidential Information except as
necessary to perform my duties to the Company, as authorized by the Company, or as required by law. 

  

	7.	I will, upon termination of my employment with the Company, or upon request, deliver to the Company all physical materials, including any writings, which relate to any
Company trade secrets or other Confidential Information or to any inventions or improvements transferred to the Company under this Agreement. This obligation includes materials in any form or format, whether paper, electronic or other.


  

	8.	I will not use in the performance of my work for the Company or disclose to the Company any trade secret or other confidential or proprietary information of any prior
employer or other person or entity if and to the extent that such use or disclosure may cause any breach, default or violation of any obligation or duty that I owe to such other person or entity (e.g., under any agreement or applicable law). My
compliance with this obligation will not prohibit, restrict or impair the performance of my work, obligations and duties to the Company. 

  

	9.	I consent to the Company providing a copy of this Agreement to any future employer or prospective employer of me. 


I understand and agree that (a) my obligations under this Agreement will survive the termination of my employment for any reason, (b) nothing
in this Agreement constitutes a promise of continued employment or a limitation on the Company’s or my rights to terminate my employment, (c) the Company may assign this Agreement to any entity that employs me, including but not limited to
any successor to the Company, (d) this Agreement will be governed by the laws of the State of Washington, and (e) any legal action relating to this Agreement shall be brought only in a state or federal court located in the State of
Washington. 

  
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	Employee’s Signature
	
	  

	Employee’s Printed Name
	
	  


 Date 
 (Upon
execution, this document will be placed in the employee’s personnel file.) 

  
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