Document:

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                                                                   EXHIBIT 10.31
                                                                   -------------

                 Employment Agreement of Joseph J. Gurandiano
                 --------------------------------------------

          This Employment Agreement (the "Agreement") is effective as of May 31,
2000 (the "Effective Date"), by and between Smurfit-Stone Container Corporation
(the "Company"), and Joseph J. Gurandiano (the "Executive").

          WHEREAS, the Company desires to employ the Executive as its Chief
Operating Officer; and

          WHEREAS, the Company and the Executive have reached agreement
concerning the terms and conditions of his employment and wish to formalize that
agreement;

          NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions stated in this Agreement, the Company and the Executive hereby agree
as follows:

          1.  Employment.  The Company hereby employs the Executive and the
              ----------
Executive hereby accepts employment with the Company as Chief Operating Officer.
During the Employment Term (as hereinafter defined), Executive will have the
title, status and duties of Chief Operating Officer and will report directly to
the Company's President and Chief Executive Officer.

          2.  Term of Employment.  The term of employment ("Employment Term")
              ------------------
will commence on the Effective Date, and will continue thereafter until three
years from the Effective Date and will be automatically extended for subsequent
one (1) day periods for each day of the Employment Term that passes after the
Effective Date, unless sooner terminated by either party in accordance with the
provisions of this Agreement.  The intent of the foregoing provision is that the
Agreement becomes "evergreen" on the Effective Date so that on each passing day
after the Effective Date the Employment Term automatically extends to a full
three-year period.

          3.  Duties.  During the Employment Term:
              ------

              (a)   The Executive will be primarily responsible for the
          operation of the Company's folding carton and boxboard, specialty
          packaging and bag packaging divisions, and the specialty packaging
          operations of recently acquired "St. Laurent Paperboard". In addition,
          the Executive will be primarily responsible for managing the
          development and marketing of the Company's micro-flute, protective
          packaging and internet-based marketing operations and activities.

              (b)   The Executive will perform such other duties assigned by the
          Company's President and Chief Executive Officer, or the Company's
          Board of Directors (the "Board"), from time to time; provided that the
          Executive shall not be assigned tasks inconsistent with those of Chief
          Operating Officer.

              (c)   The Executive will devote his full time and best talents,
          knowledge and experience to serving as the Company's Chief Operating
          Officer. However, the Executive may devote reasonable time to
          activities such as supervision of personal

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          investments and activities involving professional, charitable,
          educational, religious and similar types of activities, speaking
          engagements and membership on other boards of directors, provided such
          activities do not interfere in any material way with the business of
          the Company; provided that, the Executive cannot serve on the board of
                       -------- ----
          directors of more than one publicly-traded company without the Board's
          written consent. The time involved in such activities shall not be
          treated as vacation time. The Executive shall be entitled to keep any
          amounts paid and any compensation granted to him in connection with
          such activities (including, but not limited to, director fees, stock
          options, stock awards and other similar grants and honoraria).

              (d)   The Executive will perform his duties diligently and
          competently and shall act in conformity with Company's written
          policies of general application and, to the extent reasonably
          possible, and within the limits, budgets and business plans set by the
          Company (as approved by the Board). The Executive will at all times
          during the Employment Term adhere to and obey all of the rules and
          regulations in effect from time to time relating to the conduct of
          executives of the Company. Except as provided in (c) above, the
          Executive shall not engage in consulting work or any trade or business
          for his own account or for or on behalf of any other person, firm or
          company that competes, conflicts or interferes with the performance of
          his duties hereunder in any material way.

          4.  Compensation and Benefits.  During Executive's employment
              -------------------------
hereunder, Company shall provide to Executive, and Executive shall accept from
Company as full compensation for Executive's services hereunder, compensation
and benefits as follows:

              (a)   Base Salary.  The Company shall pay the Executive at an
                    -----------
          annual base salary ("Base Salary") of eight hundred thousand dollars
          ($800,000). The Board, or such committee of the Board as is
          responsible for setting the compensation of senior executive officers
          of the Company, shall review the Executive's performance and Base
          Salary annually in January of each year, and determine whether to
          adjust the Executive's Base Salary on a prospective basis. The first
          review shall be in January 2001. Such adjusted annual salary then
          shall become the Executive's "Base Salary" for purposes of this
          Agreement. The Executive's annual Base Salary shall not be reduced
          after any increase, without the Executive's consent. The Company shall
          pay the Executive's Base Salary according to payroll practices in
          effect for all senior executive officers of the Company. When used in
          this Agreement, the expression "senior executive officers" shall
          include, without limitation, the President and Chief Executive Officer
          of the Company and the Vice President and Chief Financial Officer of
          the Company.

              (b)   Incentive Compensation.  The Executive shall be eligible to
                    ----------------------
          participate in any annual performance bonus plans, long-term incentive
          plans, equity-based compensation plans and/or other performance bonus,
          incentive or compensation plans established or maintained by the
          Company for its senior executive officers, including, but not limited
          to, the Management Incentive Plan and the Smurfit-Stone Container
          Corporation 1998 Long-Term Incentive Plan. On the Effective Date, the
          Company will grant to Executive 750,000 options to purchase the common
          stock, par value $.01 per share, of the Company. The terms of the
          aforesaid 750,000 options shall be in accordance with those granted to
          the Chairman of the Board, President and Chief

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          Executive Officer and Vice President and Chief Financial Officer of
          the Company. For the Company's 2000 fiscal year, the Executive shall
          be eligible for a target bonus under the Company's annual incentive
          plan equal to 40% of his Base Salary provided that all performance
          goals set by the Company are met. The Board (or appropriate Board
          committee) will determine and communicate to the Executive his annual
          incentive plan participation for subsequent fiscal years, no later
          than March 31 of such fiscal year.

              (c)   Executive Benefit Plans.  The Executive will be eligible to
                    -----------------------
          participate on substantially the same basis as the Company's other
          senior executive officers in any executive benefit plans offered by
          the Company including, without limitation, medical, dental, short-term
          and long-term disability, life, pension, profit sharing and
          nonqualified deferred compensation arrangements. The Company reserves
          the right to modify, suspend or discontinue any and all of the plans,
          practices, policies and programs at any time without recourse by the
          Executive, so long as Company takes such action generally with respect
          to other similarly situated senior executive officers (including, but
          not limited to, the President and Chief Executive Officer, and the
          Vice President and Chief Financial Officer of the Company).

              (d)   Business Expenses.  The Company shall reimburse the
                    -----------------
          Executive for all reasonable and necessary business expenses incurred
          in the performance of services with the Company, according to
          Company's policies and upon Executive's presentation of an itemized
          written statement and such verification as the Company may require.

              (e)   Perquisites.  The Company will provide the Executive with
                    -----------
          all perquisites it provides to other senior executive officers. Such
          perquisites shall not be less than those provided to the Executive on
          the Effective Date. The Company will also reimburse the Executive for
          annual income tax return preparation and tax counseling up to $25,000
          per year. On the Effective Date, the Company will purchase from the
          leasing company the car currently leased by St. Laurent Paperboard
          Inc. for the benefit of the Executive and will give the said car to
          the Executive together with a gross-up payment to cover any and all
          taxes and duties, if any,

              (f)   Vacation.  The Executive will be entitled to vacation in
                    --------
          accordance with the Company's vacation policy for senior executive
          officers, but in no event less than 5 weeks per calendar year. Unused
          vacation shall be carried over for a period not in excess of twelve
          (12) months.

              (g)   After-Tax Payment of LTD Coverage.  The Company will permit
                    ---------------------------------
          the Executive to pay the entire premium for long-term disability
          coverage with his after-tax dollars. If the Executive elects to pay
          the entire premium for long-term disability coverage with after-tax
          dollars, the Company will reimburse the Executive, at least annually,
          for the amount of such premium.

              (h)   Extended Short-Term Disability Coverage.  If the Executive
                    ---------------------------------------
          is unable to perform his duties under this Agreement by reason of
          illness or injury, whether or not such inability leads to long-term
          disability benefits, the Company shall continue to pay to the
          Executive his full Base Salary until the earliest to occur of the
          following: (i) the end

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          of the Employment Term, (ii) the end of the Executive's disability and
          return to the usual duties of his employment on a substantially full-
          time basis, and (iii) the date on which long-term disability payments
          begin to the Executive. For greater certainty, it is acknowledged that
          the Executive is fully vested under the Company's long-term disability
          plans.

              (i)   Restricted Stock Award.  On the Effective Date, the Company
                    ----------------------
          shall issue to the Executive a one-time award of restricted shares
          (the "Restricted Shares") of Company stock, equal to $750,000 (such
          amount to be calculated based on closing price of the Company's stock
          on the day prior to Effective Date), which stock will become vested on
          the first anniversary of the Effective Date (the "Vesting Date"), if
          the Executive remains continuously employed by the Company until that
          date. In the event that the value of the Restricted Shares on the
          Vesting Date (based on the closing price of the Company's common stock
          on the last trading day immediately preceding the Vesting Date) is
          less than $750,000, the Company shall make a cash payment to the
          Executive equal to the amount of such shortfall. In the event that the
          amount of the excess of the after-tax value of the Restricted Shares
          on the Vesting Date over $750,000 (based on the closing price of the
          Company's common stock on the last trading day immediately preceding
          the Vesting Date, and assuming a 40% tax rate on the excess value over
          $750,000) is greater than $125,000, the Executive shall make a cash
          payment to the Company equal to the amount of such excess over
          $125,000. By way of example, if the value of the Restricted Shares on
          the Vesting Date is $1,000,000, the Executive would make a payment
          equal to (1,000,000 - 750,000) (1 - .40) - 125,000, or $25,000.

              (j)   Relocation Benefit.  The Company shall reimburse the
                    ------------------
          reasonable expenses of the Executive and his family in relocating to
          the Chicago metropolitan area from Montreal, Canada, in accordance
          with the Company's existing relocation policy, including, without
          limitation: (i) moving expenses, (ii) temporary living arrangements,
          (iii) "home visit" expenses, (iv) real estate commissions and closing
          costs on the sale of the Executive's current residence, and (v) real
          estate commissions and closing costs on the purchase of a residence in
          the Chicago metropolitan area. The Employee agrees to furnish the
          Company with substantiation for the moving expenses he incurs, in
          accordance with Company policy. The portion of the moving expenses
          attributable to the Executive's "qualified moving expenses" (as such
          term is defined in Code Section 132) is eligible for exclusion from
          the Executive's gross income, and the reimbursement of such expenses
          shall not be reported by the Company as taxable income of the
          Executive. The reimbursement of any expenses that do not qualify as
          "qualified moving expenses" shall be reported as taxable compensation
          on the Executive's IRS Form W-2 for the calendar year in which such
          payment was made and shall be "grossed-up" for tax purposes pursuant
          to Company policy.

          5.  Payments on Termination of Employment.
              -------------------------------------

              (a)   Termination of Employment for any Reason.  The following
                    ----------------------------------------
          payments will be made upon the Executive's termination of employment
          for any reason:

                    (i)  Earned but unpaid Base Salary through the date of
              termination;

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                    (ii)   Any annual incentive plan bonus, or other form of
              incentive compensation, for which the performance measurement
              period has ended, but which is unpaid at the time of termination;

                    (iii)  Any accrued but unpaid vacation;

                    (iv)   Any amounts payable under any of the Company's
              executive benefit plans in accordance with the terms of those
              plans, except as may be required under Code Section 401(a)(13);
              and

                    (v)    Unreimbursed business expenses incurred by the
              Executive on the Company's behalf.

              (b)   Voluntary Termination of Employment for Other Than Good
                    -------------------------------------------------------
          Reason.  In addition to the amounts determined under (a) above, if the
          ------
          Executive voluntarily terminates employment for other than Good
          Reason, then in addition to the amounts determined under (a) above,
          the Executive shall be entitled to a pro rata portion of the target
          bonus under the Company's annual incentive plan for the year in which
          such termination occurs.

              (c)   Termination of Employment for Death or Disability.  In
                    -------------------------------------------------
          addition to the amounts determined under (a) above, if the Executive's
          termination of employment occurs by reason of death or Disability, the
          Executive (or his estate) will receive a pro rata portion of any bonus
          payable under the Company's annual incentive plan for the year in
          which such termination occurs determined based on the highest of (i)
          the actual annual bonus paid for the fiscal year immediately preceding
          such termination, (ii) the target bonus for the fiscal year in which
          such termination occurs, or (iii) the actual bonus attained for the
          fiscal year in which such termination occurs. For purposes of this
          Agreement, "Disability" means the Executive's long-term disability as
          defined under the Company's long-term disability plan, or if the
          Executive is not covered by a long-term disability plan sponsored by
          the Company, the Executive's inability to engage in any substantial
          gainful activity by reason of any medically-determined physical or
          mental impairment that can be expected to result in death or to be of
          long-continued and indefinite duration.

              (d)   Termination by the Company Without Cause, or Voluntary
                    ------------------------------------------------------
          Termination by the Executive for Good Reason.  If the Company
          --------------------------------------------
          terminates the Executive's employment other than for Cause, or the
          Executive voluntarily terminates his employment for Good Reason, in
          addition to the benefits payable under (a), the Company will pay the
          following amounts and provide the following benefits:

                    (i)  The Base Salary and annual bonus that the Company would
              have paid under the Agreement had the Executive's employment
              continued to the end of the Employment Term. For this purpose,
              annual bonus will be determined as the highest of (A) the actual
              bonus paid for the fiscal year immediately preceding such
              termination, (B) the target bonus for the fiscal year in which
              such

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              termination occurs, or (C) the actual bonus attained for the
              fiscal year in which such termination occurs.

                    (ii)   Continued coverage under the Company's medical,
              dental, life, disability, pension, profit sharing and other
              executive benefit plans through the end of the Employment Term, at
              the same cost to the Executive as in effect on the date of the
              Executive's termination. If the Company determines that the
              Executive cannot participate in any benefit plan because he is not
              actively performing services for the Company, the Company may
              provide such benefits under an alternate arrangement, such as
              through the purchase of an individual insurance policy that
              provides similar benefits or, if applicable, through a
              nonqualified pension or profit sharing plan. To the extent that
              the Executive's compensation is necessary for determining the
              amount of any such continued coverage or benefits, such
              compensation (Base Salary and annual bonus) through the end of the
              Employment Term shall be at the highest rate in effect during the
              12-month period immediately preceding the Executive's termination
              of employment.

                    (iii)  The Company will provide the Executive with the
              following executive perquisites on the same basis on which the
              Executive was receiving such perquisites prior to his employment
              termination: (A) reimbursement for club dues through the end of
              the Employment Term; and (B) reimbursement of expenses relating to
              financial planning services and tax return preparation through
              December 31 of the calendar year that includes the third
              anniversary of Executive's employment termination. The Company
              will bear the cost of such perquisites, at the same level in
              effect immediately prior to the Executive's employment
              termination. Perquisites otherwise receivable by the Executive
              pursuant to this subparagraph (iii) shall be reduced to the extent
              comparable perquisites are actually received by or made available
              to the Executive without cost during the 36 month period following
              the Executive's employment termination. The Executive shall report
              to the Company any such perquisites actually received by or made
              available to the Executive.

                    (iv)   The period through the end of the Employment Term
              shall continue to count for purposes of determining the
              Executive's age and service with the Company (including, but not
              limited to, predecessor companies and entities) with respect to
              (A) eligibility, vesting and the amount of benefits under the
              Company's executive benefit plans, and (B) the vesting of any
              outstanding stock options, restricted stock or other equity-based
              compensation awards.

                    (v)    Outplacement services, as elected by the Executive
              (and with a firm elected by the Executive), not to exceed $50,000
              in total.

              (e)   Good Reason.  For purposes of this Agreement, "Good Reason"
                    -----------
          shall mean the occurrence of any of the following without the
          Executive's consent (i) assigning duties to the Executive that are
          inconsistent with those described in Section 3(a) (except to the
          extent the Company promotes the Executive to a higher executive
          position); (ii)

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          requiring the Executive to report to other than the Company's
          President and Chief Executive Officer, or the Company's Board; (iii)
          the failure of the Company to pay any portion of the Executive's
          compensation within 10 days of the date such compensation is due; (iv)
          the Company requires the Executive to relocate his principal business
          office to a location not within 50 miles of either the Company's
          principal business office located in the St. Louis, Missouri
          metropolitan area, or the Company's principal business office located
          in the Chicago, Illinois metropolitan area (provided, that, the
          Company's requiring the Executive to relocate his principal office
          from Chicago to St. Louis, or from St. Louis to Chicago, will not
          constitute Good Reason); or (v) the Company's failure to continue in
          effect any cash or stock-based incentive or bonus plan, pension plan,
          welfare benefit plan or other benefit plan, program or arrangement,
          unless the aggregate value of all such arrangements provided to the
          Executive after such discontinuance is not materially less than the
          aggregate value as of the Effective Date. For purposes of this
          paragraph, "Company" shall mean the Company and, following any Change
          in Control, the Surviving Corporation or, if applicable, the Parent
          Corporation (as those terms are defined in Section 6(d)).

              (f)   Cause.  For purposes of this Agreement, "Cause" shall mean:
                    -----
          (i) the Executive's willful and continued failure to substantially
          perform his duties as an executive of the Company (other than any such
          failure resulting from incapacity due to physical or mental illness)
          after a written demand for substantial performance is delivered to the
          Executive by the Board, which demand specifically identifies the
          manner in which the Board believes that the Executive has not
          substantially performed his duties, and which gives the Executive at
          least 30 days to cure such alleged deficiencies, (ii) the Executive's
          willful misconduct, which is demonstrably and materially injurious to
          the Company, monetarily or otherwise, or (iii) the Executive's
          engaging in egregious misconduct involving serious moral turpitude to
          the extent that his creditability and reputation no longer conforms to
          the standard of senior executive officers of the Company.

              (g)   Timing of Payments.  All payments described above shall be
                    ------------------
          made in a lump sum cash payment as soon as practicable (but in no
          event more than 10 days) following the Executive's termination of
          employment. If the total amount of annual bonus is not determinable on
          that date, the Company shall pay the amount of bonus that is
          determinable and the remainder shall be paid in a lump sum cash
          payment within 10 days of the date that annual performance results are
          finalized.

          6.  Change in Control.
              -----------------

              (a)   Payments and Benefits Upon Employment Termination After a
                    ---------------------------------------------------------
          Change in Control.  If within two years after a Change in Control (as
          -----------------
          defined below), the Company terminates the Executive's employment
          other than for Cause, or the Executive voluntarily terminates his
          employment for Good Reason, the Company will provide the following
          payments and benefits to the Executive, in lieu of those payments and
          benefits provided under Sections 5(c) or (d) above, but in addition to
          the amounts payable under Section 5(a) above:

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                    (i)    Three times the Executive's Base Salary as in effect
               on the date of the Executive's termination of employment.

                    (ii)   Three times the highest of (A) the average annual
               bonus paid for the three fiscal years immediately preceding the
               Executive's employment termination, (B) the target bonus for the
               fiscal year in which such termination of employment occurs, or
               (C) the actual bonus attained for the fiscal year in which such
               termination occurs.

                    (iii)  Continued coverage for a period of 36 months from the
               Executive's termination under the Company's medical, dental,
               life, disability and other welfare benefit plans, at the same
               cost to the Executive as in effect on the date of the Change in
               Control (or, if lower, as in effect at any time thereafter). If
               the Company determines that the Executive cannot participate in
               any benefit plan because he is not actively performing services
               for the Company, the Company may provide such benefits under an
               alternate arrangement, such as through the purchase of an
               individual insurance policy that provides similar benefits. The
               amount of such continued coverage shall be determined, if
               applicable, by adding 36 additional months of age and service to
               the Executive's actual age and service as of the Executive's
               termination date and as if the Executive earned compensation
               during such 36-month period at the rate in effect during the 12-
               month period immediately preceding his termination date. The
               Executive's eligibility for any retiree medical or life coverage
               following such termination date shall also be determined by
               adding 36 additional months of age and service to the Executive's
               actual age and service as of the termination date.

                    (iv)   The value of continued coverage for a period of 36
               months under any pension, profit sharing or other retirement plan
               maintained by the Company. The value of such coverage under a tax
               qualified plan may be provided through a nonqualified pension or
               profit sharing plan and shall be determined by adding 36
               additional months of age and service to the Executive's actual
               age and service at the date of the Executive's termination of
               employment and as if the Executive earned compensation during
               such 36-month period at the rate in effect during the 12-month
               period immediately preceding his termination date. In the case of
               a defined benefit pension plan, such value shall include any
               early retirement subsidies to which the Executive would have
               become entitled under the plan and shall be determined using the
               actuarial factors set forth in such plan.

                    (v)    The Company will provide the Executive with the
               following executive perquisites on the same basis on which the
               Executive was receiving such perquisites prior to the Change in
               Control: (A) reimbursement for club dues for 36 months following
               the Executive's employment termination; and (B) reimbursement of
               expenses relating to financial planning services and tax return
               preparation through December 31 of the calendar year that
               includes the third anniversary of the Executive's employment
               termination. The Company will bear the cost of such perquisites,
               at the same level in effect immediately prior to the Change in
               Control. Perquisites otherwise receivable by the Executive
               pursuant to

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               this paragraph shall be reduced to the extent comparable
               perquisites are actually received by or made available to the
               Executive without cost during the 36 month period following the
               Executive's employment termination. The Executive shall report to
               the Company any such perquisites actually received by or made
               available to the Executive.

                    (vi)   Immediate vesting of all stock options, restricted
               stock and other equity-based awards.

                    (vii)  Outplacement services, as elected by the Executive
               (and with a firm elected by the Executive), not to exceed
               $50,000.

               (b)  Timing of Payment.  All payments under paragraphs (a)(i),
                    -----------------
          (ii) and (iv) above, and paragraph (c) below, shall be made in a lump
          sum cash payment as soon as practicable, but in no event more than 10
          days after the Executive's termination of employment (or the date of
          the Change in Control, if applicable). If the total amount of bonus is
          not determinable on that date, the Company shall pay the amount of
          bonus that is determinable, and shall pay the remainder in a lump sum
          cash payment within 10 days of the date that annual performance
          results are finalized.

               (c)  Gross-Up Payment by the Company.  In the event that any
                    -------------------------------
          payment, benefit or distribution by or on behalf of the Company to or
          for the benefit of the Executive (whether paid or payable or
          distributed or distributable pursuant to the terms of this Agreement
          or otherwise, but determined without regard to any additional payments
          required under this Section) (the "Payments") is determined to be an
          "excess parachute payment" pursuant to Code Section 280G or any
          successor or substitute provision of the Code, with the effect that
          the Executive is liable for the payment of the excise tax described in
          Code Section 4999 or any successor or substitute provision of the Code
          (the "Excise Tax"), then the Company shall pay to the Executive an
          additional amount (the "Gross-Up Payment") such that the net amount
          retained by Executive, after deduction of any Excise Tax on the Total
          Payments and any federal, state and local income and employment taxes
          and Excise Tax on the Gross-Up Payment, shall be equal to the Total
          Payments.

                    (i)    All determinations required to be made under this
               paragraph (c), and the assumptions to be utilized in arriving at
               such determination, shall be made by the certified public
               accounting firm used for auditing purposes by the Company
               immediately prior to the Executive's employment termination (the
               "Accounting Firm"), which shall provide detailed supporting
               calculations both to the Company and the Executive. The Company
               shall pay all fees and expenses of the Accounting Firm. Any
               determination by the Accounting Firm shall be binding upon the
               Company and the Executive, except as provided in subparagraph
               (ii) below.

                    (ii)   As a result of the uncertainty in the application of
               Code Sections 280G and 4999 at the time of the initial
               determination by the Accounting Firm hereunder, it is possible
               that the Internal Revenue Service (the "IRS") or other

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               agency will claim that a greater or lesser Excise Tax is due. In
               the event that the Excise Tax is finally determined to be less
               than the amount taken into account hereunder in calculating the
               Gross-Up Payment, the Executive shall repay to the Company, at
               the time that the amount of such reduction in Excise Tax is
               finally determined, the portion of the Gross-Up Payment
               attributable to such reduction (plus that portion of the Gross-Up
               Payment attributable to the Excise Tax and federal, state and
               local income and employment taxes imposed on the Gross-Up Payment
               being repaid by the Executive to the extent that such repayment
               results in a reduction in Excise Tax and/or a federal, state or
               local income or employment tax deduction) plus interest on the
               amount of such repayment at 120% of the rate provided in Code
               Section 1274(b)(2)(B). In the event that the Excise Tax is
               determined to exceed the amount taken into account hereunder in
               calculating the Gross-Up Payment (including by reason of any
               payment the existence or amount of which cannot be determined at
               the time of the Gross-Up Payment), the Company shall make an
               additional Gross-Up Payment in respect of such excess (plus any
               interest, penalties or additions payable by the Executive with
               respect to such excess) at the time that the amount of such
               excess is finally determined. The Executive and the Company shall
               each reasonably cooperate with the other in connection with any
               administrative or judicial proceedings concerning the existence
               or amount of liability for Excise Tax with respect to the Total
               Payments. The Company shall pay all fees and expenses of the
               Executive relating to a claim by the IRS or other agency.

               (d)  Definition of Change in Control.  For purposes of the
                    -------------------------------
          Agreement, a "Change in Control" of the Company will be deemed to
          occur as of the first day that any one or more of the following
          condition is satisfied:

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

                    (ii)   Individuals who, as of the date of the Agreement,
               constitute the Board of Directors (the "Incumbent Board") cease
               for any reason to constitute at

                                      -10-
<PAGE>

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

                    (iii)  Consummation by the Company of a reorganization,
               merger or consolidation, or sale or other disposition of all or
               substantially all of the assets of the Company or the acquisition
               of assets or stock of another entity (a "Business Combination"),
               in each case, unless immediately following such Business
               Combination: (A) more than 60% of the combined voting power of
               then outstanding voting securities entitled to vote generally in
               the election of directors of (x) the corporation resulting from
               such Business Combination (the "Surviving Corporation"), or (y)
               if applicable, a corporation that as a result of such transaction
               owns the Company or all or substantially all of the Company's
               assets either directly or through one or more subsidiaries (the
               "Parent Corporation"), is represented, directly or indirectly by
               Company Voting Securities outstanding immediately prior to such
               Business Combination (or, if applicable, is represented by shares
               into which such Company Voting Securities were converted pursuant
               to such Business Combination), and such voting power among the
               holders thereof is in substantially the same proportions as their
               ownership, immediately prior to such Business Combination, of the
               Company Voting Securities, (B) no Person (excluding any employee
               benefit plan (or related trust) of the Company or such
               corporation resulting from such Business Combination)
               beneficially owns, directly or indirectly, 20% or more of the
               combined voting power of the then outstanding voting securities
               eligible to elect directors of the Parent Corporation (or, if
               there is no Parent Corporation, the Surviving Corporation) except
               to the extent that such ownership of the Company existed prior to
               the Business Combination and (C) at least a majority of the
               members of the board of directors of the Parent Corporation (or,
               if there is no Parent Corporation, the Surviving Corporation)
               were members of the Incumbent Board at the time of the execution
               of the initial agreement, or of the action of the Board,
               providing for such Business Combination; or

                    (iv)   Approval by the Company's stockholders of a complete
               liquidation or dissolution of the Company.

               However, in no event will a Change in Control be deemed to have
          occurred, with respect to the Executive, if the Executive is part of a
          purchasing group that consummates the Change in Control transaction.
          The Executive will be deemed "part of a purchasing group" for purposes
          of the preceding sentence if the Executive is an equity participant in
          the purchasing company or group (except: (i) passive ownership of less
          than two percent (2%) of the stock of the purchasing company; or (ii)
          ownership of equity participation in

                                      -11-
<PAGE>

          the purchasing company or group that is otherwise not significant, as
          determined prior to the Change in Control by a majority of the
          nonemployee continuing Directors).

               (e)  Change in Control Involving Jefferson Smurfit Group plc. Any
                    -------------------------------------------------------
          reorganization, merger or consolidation of, or sale, acquisition or
          exchange of substantially all of the assets or a majority of the
          voting securities between, the Company and Jefferson Smurfit Group
          plc, shall constitute a Change in Control for purposes of this Section
          6. If within two years after such Change in Control, the Company
          terminates the Executive's employment other than for Cause, or the
          Executive voluntarily terminates his employment for Good Reason (as
          defined in Section 5(e)), the Company will provide the payments and
          benefits described in Section 6(a) above.

          7.   Restrictive Covenants.
               ---------------------

               (a)  Definitions.  For purposes of this Agreement, the following
                    -----------
          terms will be defined as follows:

                    (i)    "Confidential Information" shall mean the Company's
               trade secrets and all other information unique to the Company and
               not readily available to the public, including developments,
               designs, improvements, inventions, formulas, compilations,
               methods, strategies, forecasts, software programs, processes,
               know-how, data, research, operating methods and techniques, and
               all business plans, strategies, costs, profits, customers,
               vendors, markets, sales, products, key personnel, pricing
               policies, marketing, sales or other financial or business
               information, and any modifications or enhancements of any of the
               foregoing.

                    (ii)   The term "Business Conducted by the Company or any of
               its Affiliates" shall mean all businesses conducted by the
               Company or any of its Affiliates as of the Effective Date, of
               whatever kind, within or outside of the United States.

                    (iii)  The term "Affiliates" shall mean (A) any entity that
               directly or indirectly, is controlled by the Company, and (B) any
               entity in which the Company has a significant equity interest.

               (b)  Inventions or Developments.  The Executive agrees that he
                    --------------------------
          will promptly and fully disclose to the Company all discoveries,
          improvements, inventions, formulas, ideas, processes, designs,
          techniques, know-how, data and computer programs (whether or not
          patentable, copyrightable or susceptible to any other form of
          protection), made, conceived, reduced to practice or developed by the
          Executive, either alone or jointly with others, during his employment
          with the Company (collectively, the "Inventions or Developments"). All
          Inventions and Developments shall be the sole property of the Company,
          including all patents, copyrights, intellectual property or other
          rights related thereto and Executive assigns to the Company all rights
          (if any) that the Executive may have or acquire in such Inventions or
          Developments.

                                      -12-
<PAGE>

               Notwithstanding the foregoing, any right of the Company or
          assignment by the Executive as provided in this paragraph shall not
          apply to any Inventions or Developments for which no equipment,
          supplies, facility or trade secret information of the Company or its
          Affiliates were used and which were developed entirely on the
          Executive's own time, unless: (i) the Inventions or Developments
          relate to the Business Conducted by the Company or any of its
          Affiliates or the actual or demonstrably anticipated research or
          development of the Company or any of its Affiliates; or (ii) the
          Inventions or Developments result from any work performed by the
          Executive for the Company or any of its Affiliates.

               (c)  Non-Disclosure of Confidential Information or Inventions or
                    -----------------------------------------------------------
          Developments.  The Executive acknowledges that he has had and will
          ------------
          have access to Confidential Information or Inventions or Developments
          of the Company and/or its Affiliates and agrees that he shall not, at
          any time, directly or indirectly use, divulge, furnish or make
          accessible to any person any Confidential Information or Inventions or
          Developments, but instead shall keep all such matters strictly and
          absolutely confidential.

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

               (e)  Actions Upon Termination.  Upon the Executive's employment
                    ------------------------
          termination for whatever reason, the Executive shall neither take or
          copy nor allow a third party to take or copy, and shall deliver to the
          Company all property of the Company, including, but not limited to,
          all Confidential Information or Inventions or Developments, regardless
          of the medium (i.e., hard copy, computer disk, CD ROM) on which the
          information is contained.

               (f)  Non-Competition.  The Executive agrees that so long as he is
                    ---------------
          employed by the Company and for a period of two (2) years thereafter
          (the "Period"), he shall not, without the prior written consent of the
          Company, participate or engage in, directly or indirectly (as an
          owner, partner, employee, officer, director, independent contractor,
          consultant, advisor or in any other capacity calling for the rendition
          of services, advice, or acts of management, operation or control), any
          business that, during the Period, is competitive with the Business
          Conducted by the Company or any of its Affiliates within the United
          States (hereinafter, the "Geographic Area").

               (g)  Non-Solicitation of Employees.  The Executive agrees that,
                    -----------------------------
          during the Period, he shall not, without the prior written consent of
          the Company, directly or indirectly solicit any current employee of
          the Company or any of its Affiliates, or any

                                      -13-
<PAGE>

          individual who becomes an employee during the Period, to leave such
          employment and join or become affiliated with any business that is,
          during the Period, competitive with the Business Conducted by the
          Company or any of its Affiliates within the Geographic Area.

               (h)  Non-Solicitation of Suppliers or Customers.  The Executive
                    ------------------------------------------
          agrees that, during the Period, he shall not, without the prior
          written consent of the Company, directly or indirectly solicit, seek
          to divert or dissuade from continuing to do business with or entering
          into business with the Company or any of its Affiliates, any supplier,
          customer, or other person or entity that had a business relationship
          with or with which the Company was actively planning or pursuing a
          business relationship at or before the date of termination of his
          employment.

               (j)  Irreparable Harm.  The Executive acknowledges that: (i) the
                    ----------------
          Executive's compliance with this Section is necessary to preserve and
          protect the Confidential Information, Inventions or Developments and
          the goodwill of the Company and its Affiliates as going concerns; (ii)
          any failure by the Executive to comply with the provisions of this
          Section will result in irreparable and continuing injury for which
          there will be no adequate remedy at law; and (iii) in the event that
          the Executive should fail to comply with the terms and conditions of
          this Section, the Company shall be entitled, in addition to such other
          relief as may be proper, to all types of equitable relief (including,
          but not limited to, the issuance of an injunction and/or temporary
          restraining order) as may be necessary to cause the Executive to
          comply with this Section, to restore to the Company its property, and
          to make the Company whole.

               (j)  Survival.  The provisions set forth in this Section shall,
                    --------
          as noted, survive termination of this Agreement.

               (k)  Forfeiture.  If the Executive violates any provision of this
                    ----------
          Section, the Executive will, to the extent of the damages suffered by
          the Company, if any, forfeit his right to all payments and benefits
          under Section 5(d) and Section 6 above, except to the extent otherwise
          provided by law.

               (l)  Unenforceability.  If any provision(s) of this Section 7
                    ----------------
          shall be found invalid or unenforceable, in whole or in part, then
          such provision(s) shall be deemed to be modified or restricted to the
          extent and in the manner necessary to render the same valid and
          enforceable, or shall be deemed excised from this Agreement, as the
          case may require, and this Agreement shall be construed and enforced
          to the maximum extent permitted by law, as if such provision(s) had
          been originally incorporated herein as so modified or restricted, or
          as if such provision(s) had not been originally incorporated herein,
          as the case may be.

          8.   Assignment; Successors.  This Agreement shall inure to the
               ----------------------
benefit of and be binding upon the Company and its successors. The Company may
not assign this Agreement without the Executive's written consent, except that
the Company's obligations under this Agreement shall be the binding legal
obligations of any successor to the Company by sale, and in the event of any
transaction that results in the transfer of substantially all of the assets or
business

                                      -14-
<PAGE>

of the Company, the Company will use its best efforts to cause the transferee to
assume the obligations of the Company under this Agreement. The Executive may
not assign this Agreement during his life. Upon the Executive's death this
Agreement will inure to the benefit of Executive's heirs, legatees and legal
representatives of the Executive's estate.

          9.   Interpretation.  The laws of the State of Illinois shall govern
               --------------
the validity, interpretation, construction and performance of this Agreement,
without regard to the conflict of laws principles thereof.

          10.  Withholding.  The Company may withhold from any payment that it
               -----------
is required to make under this Agreement amounts sufficient to satisfy
applicable withholding requirements under any federal, state or local law.

          11.  Amendment.  This Agreement may be amended at any time by written
               ---------
agreement between the Company and the Executive.

          12.  Notices.  Notices given pursuant to this Agreement shall be in
               -------
writing and shall be deemed received when personally delivered, or on the date
of written confirmation of receipt by (i) overnight carrier, (ii) telecopy,
(iii) registered or certified mail, return receipt requested, addressee only,
postage prepaid, or (iv) such other method of delivery that provides a written
confirmation of delivery.  Notice to the Company shall be directed to:

                      Smurfit-Stone Container Corporation
                      150 North Michigan Avenue
                      Chicago, Illinois 60610
                      Attention: General Counsel

The Company may change the person and/or address to whom the Executive must give
notice under this Section by giving the Executive written notice of such change,
in accordance with the procedures described above.  Notices to or with respect
to the Executive will be directed to the Executive, or to the Executive's
executors, personal representatives or distributees, if the Executive is
deceased, or the assignees of the Executive, at the Executive's home address on
the records of the Company.

          13.  Severability.  If any provisions(s) of this Agreement shall be
               ------------
found invalid or unenforceable by a court of competent jurisdiction, in whole or
in part, then it is the parties' mutual desire that such court modify such
provision(s) to the extent and in the manner necessary to render the same valid
and enforceable, and this Agreement shall be construed and enforced to the
maximum extent permitted by law, as if such provision(s) had been originally
incorporated herein as so modified or restricted, or as if such provision(s) had
not been originally incorporated herein, as the case may be.

          14.  Entire Agreement.  This Agreement sets forth the entire agreement
               ----------------
and understanding between the Company and the Executive and supersedes all prior
agreements and understandings, written or oral, relating to the subject matter
hereof.

                                      -15-
<PAGE>

          15.  Consultation With Counsel.  Executive acknowledges that he has
               -------------------------
had a full and complete opportunity to consult with counsel of Executive's own
choosing concerning the terms, enforceability and implications of this
Agreement, and the Company has made no representations or warranties to
Executive concerning the terms, enforceability or implications of this Agreement
other than as are reflected in this Agreement.

          16.  No Waiver.  No failure or delay by the Company or the Executive
               ---------
in enforcing or exercising any right or remedy hereunder shall operate as a
waiver thereof.  No modification, amendment or waiver of this Agreement nor
consent to any departure by the Executive from any of the terms or conditions
thereof, shall be effective unless in writing and signed by the Chairman of the
Company's Board.  Any such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.

          17.  Effect on Other Obligations.  Payments and benefits herein
               ---------------------------
provided to be paid to the Executive by the Company shall be made without regard
to and in addition to any other payments or benefits required to be paid the
Executive at any time hereafter under the terms of any other agreement between
the Executive and the Company or under any other policy of the Company relating
to compensation, or retirement or other benefits.  No payments or benefits
provided the Executive hereunder shall be reduced by any amount the Executive
may earn or receive from employment with another employer or from any other
source.

          18.  Survival.  All Sections of this Agreement survive beyond the
               --------
Employment Term except as otherwise specifically stated.

          19.  Headings.  The headings in this Agreement are for convenience of
               --------
reference only and shall not limit or otherwise affect the meaning thereof.

          20.  Counterparts.  The parties may execute this Agreement in one or
               ------------
more counterparts, all of which together shall constitute but one Agreement.

          21.  Dollars.  All references to dollars in this Agreement are to
               --------
United States dollars.

               IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above written.

                                        Smurfit-Stone Container corporation

/s/ Joseph J. Gurandiano
-----------------------------
    Joseph J. Gurandiano                   By:_____________________________
                                           Its: ___________________________

                                      -16-<PAGE>

                                                                   Exhibit 10.32

                                   AGREEMENT

     This Agreement is dated as of May 31, 2000, by and between Smurfit-Stone
Container Corporation, a Delaware corporation (the "Company"), and Joseph J.
Gurandiano (the "Executive").

                                  WITNESSETH:

     WHEREAS, on the date hereof, a subsidiary of the Company has acquired the
owner of all of the equity interest in St. Laurent Paperboard Inc., a
corporation existing under the laws of Canada ("St. Laurent");

     WHEREAS, the Executive has previously served as President and Chief
Executive Officer of St. Laurent and was a party to a letter agreement dated
March 7, 1996 (the "Change of Control Agreement") pursuant to which the
Executive would receive certain severance benefits calculated as set forth on
Exhibit A (the "Severance Benefits") from St. Laurent in the event of, among
other things, a diminution of his duties or responsibilities following a change
of control with respect to St. Laurent;

     WHEREAS, the Company and the Executive have entered into an Employment
Agreement as of the date hereof (the "Employment Agreement"), pursuant to which
the Executive will serve as Chief Operating Officer of the Company; and

     WHEREAS, the Company and the Executive wish to evidence their agreements
regarding the Severance Benefits and certain other matters;

     NOW, THEREFORE, in consideration of their mutual promises and covenants,
the parties hereby agree as follows:

     1.  Payment of Severance Benefits.  The Company shall cause St. Laurent to
         -----------------------------
pay the Severance Benefits, net of applicable withholdings for taxes and other
payroll deductions, to the Executive as promptly as possible (and in no event
more than five (5) business days) following the date hereof in Canadian dollars.
The payment of Severance Benefits shall be recognized as income to the Executive
under the St. Laurent Canadian qualified and supplemental pension plans in the
year 2000 for purposes of calculating benefits payable to the Executive
thereunder, and the Company shall forthwith cause St. Laurent to amend such
plans to the extent necessary to carry out the intent and purposes of this
Agreement.  The Severance Benefits aggregate Cdn. $3,106,734 million, subject to
withholding taxes and other payroll deductions.
<PAGE>

     2.  Receipt of payment of the Severance Benefits.  Concurrent with the
         --------------------------------------------
payment of the Severance Benefits, the Executive shall acknowledge full and
complete receipt of the Severance Benefits.

     3.  Pension Plan Arrangements.  The Executive shall cease participation as
         -------------------------
an active employee in the Canadian supplementary employee retirement pension
plan (the "SERP" and the registered pension plans for non-unionized employees of
St. Laurent as of the date hereof.  The Executive shall, without duplication,
commence participation in all United States pension plans of the Company
applicable to senior executives as of the date hereof, and shall not have any
prior service recognized for purposes of pension calculations under such plans.
For, greater certainty, prior service with those entities set forth in Exhibit B
shall be recognized for vesting and eligibility purposes under such plans.

     4.  Age and Service 80.  Pursuant to Section II (iii) and Schedule A (iii)
         ------------------
of the Change of Control Agreement, additional benefits that would have been
earned through the end of the Change of Control Severance Period (as defined in
the Change of Control Agreement) are taken into account under the registered
retirement plan for non-unionized employees of St. Laurent and the SERP at the
date of Change of Control (as defined in the Change of Control Agreement).

     Effective May 31, 2000, the Executive will have achieved the sum of age and
number of years of continuous service (as defined below) equals 80 for all
purposes and the SERP will provide, and the Executive will benefit from, the
following additional benefits:

     (a) three (3) additional years of pensionable service (age and service);

     (b) increases in final average earnings that would have resulted from those
         additional years as if the Executive had worked for St. Laurent in
         Canada;

     (c) inclusion of the Severance Benefit in the Executive's remuneration for
         2000 for pension purposes;

     (d) elimination of the actuarial reduction on the total benefits
         (including, without limitation, in respect of the registered retirement
         plan for non-unionized employees of St. Laurent) since the sum of the
         Executive's age and number of years of continuous service would have
         been equal to 80 during the Change of Control Severance Period; and

                                      -2-
<PAGE>

     (e) at the option of the Executive, the additional benefits as described
         above and in Section II (iii) and Schedule A (iii) of the Change of
         Control Agreement, payment of a lump sum or a monthly pension
         commencing at any time, without duplication.

     It is understood that the additional benefits described in this Section 4
are not taken into consideration in computing the amount of the Severance
Benefits described in Section 1 above.  The expression "continuous service"
means service with the Corporation, together with the predecessor entities
listed in Exhibit B.

     5.  General Terms.  The provisions set forth in Sections 9 through 20 of
         -------------
the Employment Agreement are hereby incorporated by reference and made a part of
this Agreement as if set forth in full herein.

     IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.

                       /s/ Joseph J. Gurandiano
                       ---------------------------------------
                           Joseph J. Gurandiano

                       SMURFIT-STONE CONTAINER CORPORATION

                       By: /s/ Ray M. Curran
                          ------------------------------------
                           Ray M. Curran
                           President and Chief Executive Officer

                                      -3-

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