Document:

Exhibit 10.7

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT OF STEVEN J. KLINGER

 

This
Amended and Restated Employment Agreement (the “Agreement”) by and between
Steven J. Klinger (the “Executive”) and Smurfit-Stone Container Corporation
(the “Company”) shall be deemed to have been made and entered into as of the
date of the order of confirmation entered by the United States Bankruptcy Court
for the District of Delaware with respect to the Company’s plan of
reorganization in the matter of In re: Smurfit-Stone Container Corp.,
Case No. 09-10235 (BLS)  (the “Chapter
11 Cases”) (such plan, the “Plan of Reorganization” and such date, the “Confirmation
Date”), and shall become effective as of the effective date of the Plan of
Reorganization (the “Effective Date”).

 

WHEREAS,
the Executive currently is employed as the Company’s President and Chief
Operating Officer (“COO”) and is a member of the Company’s Board of Directors
(the Company’s pre- and post-Effective Date Boards of Directors hereinafter
collectively referred to herein as the “Board”), and the Company desires to
continue to employ the Executive upon and subject to the terms and conditions
set forth herein, and the Executive wishes to accept such employment upon and
subject to such terms and conditions;

 

WHEREAS,
the Company and the Executive are parties to that certain employment agreement
effective as of May 11, 2006, which was amended effective as of January 1,
2008 (such employment agreement, together with subsequent amendment, referred
to herein as the “Predecessor Employment Agreement”);

 

WHEREAS,
the Company and the Executive desire to enter into the Agreement and, in so
doing, to amend and restate the Predecessor Employment Agreement in its
entirety;

 

WHEREAS,
the Company has adopted and implemented an Equity Incentive Plan (“Equity
Incentive Plan”) as of the Confirmation Date, pursuant to the Plan of
Reorganization; and

 

WHEREAS
the Company and the Executive are parties to the Executive Retirement Agreement
entered into on October 2, 2006, as amended (the “Predecessor Retirement
Agreement”), which the Company did not assume pursuant to the Plan of
Reorganization;

 

NOW,
THEREFORE, in consideration of the promises and mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by both parties, the parties
hereby agree as follows:

 

1.                                      Employment
Period and Positions.

 

(a)                                  The Company shall employ the
Executive and the Executive hereby accepts such employment, subject to the terms
and conditions of this Agreement (including without limitation Section 1(b)),
commencing on the Effective Date until the second anniversary of the Effective
Date unless the Executive’s employment is earlier terminated pursuant to Section 4
(such period referred to as the “Initial Term”).  The Initial Term shall automatically be
extended on the same terms and conditions as set forth in this Agreement for
successive two-year 

 

 

periods unless and until either:  (i) a party gives the other party no
less than ninety (90) calendar days’ advance written notice prior to the end of
the Initial Term or any such two-year extension period (as applicable) that
such party will not further extend the Initial Term or two-year extension
period, or (ii) the Company or the Executive terminates the Executive’s
employment in accordance with Section 4. 
The Initial Term and any and all extensions thereof (or partial
extension in the event of an earlier termination pursuant to Section 4),
if any, shall be collectively referred to as the “Employment Period”).

 

(b)                                 Subject to the terms of this
Agreement (including without limitation Section 4), the Company shall
employ the Executive as its President and COO. 
No later than the earlier of (x) nine (9) months after the
Effective Date or (y) thirty (30) days after the Company is on notice of
the termination date of the Company’s current CEO’s employment (the earlier of
such dates hereinafter referred to as the “Promotion Date”), (i) the
Company shall consider the Executive for employment with the Company as its
President and Chief Executive Officer (“CEO”) as of the Promotion Date, and (ii) to
the extent that the Company has designated that its Chairman of the Board will
be an executive of the Company, the Board shall consider offering the Chairman
position to the Executive on, and effective as of, the later of the Promotion
Date and the designation of such executive Chairman position.  The Executive shall have thirty (30) calendar
days to accept such offer(s) or such other longer time period(s) as
specified in writing by the Board (provided that Section 1(b)(ii) shall
not apply if the Company has not designated that a Company executive will be
its Chairman of the Board).  If the
Company chooses to offer the Executive employment as President and CEO (or as
President, CEO and Chairman of the Board, as the case may be), then the terms
of any offer to become President and CEO (or President, CEO and Chairman of the
Board, as the case may be) shall be subject to good faith negotiations between
the Company and the Executive prior to the Promotion Date.  Upon the Executive’s acceptance of such offer
and the execution and delivery of an agreement of employment, the Executive
shall resign from his position as COO. 
If (a) the Company does not offer the Executive a position as
President and CEO prior to the Promotion Date, or (b) the Company has
designated an executive Chairman position on or prior to the Promotion Date and
does not offer the Executive the positions of President, CEO and Chairman of
the Board prior to the Promotion Date, or (c) the Company offers the
Executive a position as President and CEO (or as President, CEO and Chairman of
the Board, as the case may be) prior to the Promotion Date but does so on terms
that are not mutually agreeable to the Executive after good faith negotiations,
or (d) the Company and the Executive are unable to mutually agree on the
form of a mutually acceptable agreement of employment, then the Executive shall
be entitled to resign for Good Reason in accordance with Section 4(b) hereof
(without any opportunity for cure as otherwise provided in Section 4(b)),
but shall, at the request of the Board, continue to work in his current
capacities as President and COO for a period not to exceed six (6) months
to facilitate an orderly transition of responsibilities to his successor.

 

(c)                                  The Executive shall confirm
his resignations and acceptances as set forth in this Section 1 by written
notice no later than five (5) business days in advance of the effective
dates of such resignations and acceptances.

 

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2.                                      Duties
and Responsibilities.

 

(a)                                  During the Employment
Period, the Executive (i) shall perform the duties assigned to him by the
CEO and the Board from time to time (provided that the Executive shall not be
assigned tasks inconsistent with those of President, COO, CEO, or Chairman of
the Board (as applicable)) faithfully, with the utmost loyalty, to the best of
his abilities and in the best interests of the Company; (ii) shall devote
his full business time, attention and effort to the affairs of the Company,
except that the Executive may serve on (x) corporate boards or committees
with the prior written approval of the Board, and/or (y) civic or
charitable boards or committees, in either case as long as such activities do
not, individually or in the aggregate, interfere with the performance of the
Executive’s employment duties and responsibilities or harm the business or
reputation of the Company or any of its Affiliates; and (iii) shall not
engage in any other business activities (whether or not for gain, profit, or
other pecuniary advantage) or any other actions which he knows or reasonably
should know could harm the business or reputation of the Company or any of its
affiliates or other related entities. 
For purposes of this Agreement, “Affiliates” shall mean any entity that,
directly or indirectly, is controlled by the Company, and any entity in which
the Company has a 20% or greater equity interest.

 

(b)                                 The Executive shall act in
conformity with the Company’s written and oral policies and within the limits,
budgets and business plans set by the Company. 
The Executive will at all times during the Employment Period strictly
adhere to and obey all of the rules and regulations in effect from time to
time relating to the conduct of Company executives.  Except as provided in Section 2(a), 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.

 

(c)                                  The Executive covenants,
represents and warrants that:  (i) the
execution, delivery and complete performance of this Agreement by him does not
and will not breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or by
which he is bound; and (ii) he is not a party to or bound by any
employment or services agreement, confidentiality agreement, noncompetition
agreement, other restrictive covenant, or other obligation or agreement that
would or could prohibit or restrict him from being employed by the Company or
from performing any of his duties under this Agreement.

 

(d)                                 Mutual Non-Disparagement.  The Executive shall not, at any time during
or after his employment with the Company, make or publish any derogatory,
unfavorable, negative, disparaging, false, damaging or deleterious written or
oral statements or remarks regarding the Company or any of its Affiliates or
any members of their respective boards of directors or managements, or any of
their respective business affairs or performance.  The Company, members of its Board and its
senior executives shall not, at any time during or after the Executive’s
employment with the Company, make or publish any derogatory, unfavorable,
negative, disparaging, false, damaging or deleterious written or oral
statements or remarks regarding the Executive.

 

3

 

3.                                      Compensation
and Benefits.

 

(a)                                  Base Salary.  Subject to the terms and conditions of this
Agreement, from the Effective Date until the Promotion Date, the Company shall
pay to the Executive an annual base salary at the gross rate of $795,000 (“Base
Salary”), payable in installments in accordance with the Company’s executive
payroll policy (but not less frequently than monthly).  The Base Salary shall be subject to such
additional adjustments, if any, as determined by the Board in its discretion,
provided that in no event shall the Base Salary be reduced at any time without
the Executive’s prior written consent.

 

(b)                                 Incentive Compensation.  During the Employment Period, the Executive
shall be eligible to participate in the Company’s annual incentive plan(s),
long-term incentive plan(s), and any equity-based and/or other incentive
compensation plans established or maintained by the Company in which its senior
executive officers are eligible to participate, including without limitation
the Company’s Management Incentive Plan (“MIP”) and Equity Incentive Plan
(and/or any other similar long-term or equity-based incentive plan).  The Executive agrees that the gross amount of
any 2010 MIP bonus that the Company pays to him under the Company’s 2010 MIP
shall be reduced by a gross amount of $30,000 at the time that such bonus is
paid, provided that such reduction in such 2010 MIP bonus payment shall not be
considered, and shall be excluded, for purposes of determining any other amounts
to which the Executive is or may be entitled under any other provision of this
Agreement (including without limitation Section 7), the Executive
Retirement Agreement or otherwise.

 

(c)                                  Emergence Equity Grant.  The Company hereby agrees to grant the Executive
nine-tenths of one percent (0.90%) on a fully diluted basis of the new common
stock of the Company issued on the Effective Date in accordance with and
pursuant to the Plan of Reorganization in (i) a stock option award with
respect to approximately 0.68% of such shares of new common stock of the
Company and (ii) a restricted stock unit award with respect to
approximately 0.22% of such shares of new common stock of the Company (the “Emergence
Equity Grants”), in accordance with and pursuant to the Company’s Plan of
Reorganization and the terms and conditions of the Company’s Equity Incentive
Plan, any applicable incentive plan documents, and/or any award statements or
agreements (each an “Award Agreement”) and this Agreement (including without
limitation with such Emergence Equity Grants to be made on, and effective as
of, the dates set forth in the Plan of Reorganization).  The Award Agreements for the Emergence Equity
Grants shall be in substantially the form set forth in Exhibit A hereto.

 

(d)                                 Employee Benefits.  During the Employment Period, the Executive
shall be eligible to participate in such employee benefit plans (including
group medical and dental), and to receive such other fringe benefits and
perquisites, as the Company may make available to senior executives generally,
subject to all present and future terms and conditions of such benefit plans
and other fringe benefits and perquisites.  The Company reserves the right in
its sole discretion to alter, suspend, amend, or discontinue any and all of its
employee and fringe benefits, perquisites, benefit plans, policies and
procedures, in whole or in part, at any time with or without notice, provided
that the Company will not make any change to the Executive’s employee or fringe
benefits that it does not also make on a generally consistent basis for other
senior executives of the Company.

 

4

 

(e)                                  Expense Reimbursement.  The Company shall reimburse the Executive for
all reasonable and necessary business expenses incurred by him in connection
with his duties hereunder (in each case, as determined by the Company) after
the Executive’s timely presentation of IRS-acceptable itemized and documented
accounts of such expenditures, provided that the Executive shall secure the
Board’s approval before incurring any extraordinary expenses, and further
provided that such reimbursement for reasonable and necessary business expenses
is subject to the Company’s expense reimbursement policy.

 

(f)                                    Executive Retirement Agreement.  The Company and the Executive hereby agree to
execute the Executive Retirement Agreement substantially in the form attached
hereto in Exhibit B (“Retirement Agreement”), which shall be effective as
of the Effective Date of this Agreement and the parties agree amended and
restates the Predecessor Retirement Agreement in its entirety.

 

(g)                                 Withholdings and Deductions.  Any and all payments to the Executive under
this Agreement shall be reduced by required or authorized withholding and
deductions.

 

(h)                                 Clawback.  In the event that the Board determines in
good faith that the amount of any incentive and/or performance based
compensation based in whole or in part on the financial performance of the
Company (or any division thereof) paid or granted to the Executive was
materially incorrect because the performance criteria were applied incorrectly,
within sixty (60) days after receiving written notice from the Board, the
Executive shall repay to the Company the portion of any cash payments or return
and forfeit the portion of any such grant, as the case may be, that the
Executive received that he was not entitled to receive due to such incorrect
application of the performance criteria (which such amount(s) to be repaid
or returned shall be reduced by the Net Tax Costs (as defined below)), provided
that the foregoing written notice from the Board is received by the Executive
no later than the earlier of (i) ninety (90) days after the date on which
the Company becomes aware of the incorrect application of the performance
criteria and (ii) the second anniversary of the payment, vesting or
delivery, as applicable, of the compensation. 
“Net Tax Costs” shall mean the net amount of any federal, state or local
income and employment taxes paid by the Executive in respect to the portion of
the compensation subject to repayment or return, after taking into account any
and all available deductions, credits or other offsets allowable to the
Executive (including without limit, any deductions permitted under the claim of
right doctrine), and regardless of whether the Executive would be required to
amend any prior income or other tax returns.

 

4.                                      Termination
of Employment.

 

(a)                                  Termination for Cause.  Notwithstanding anything to the contrary
herein, the Company may terminate the Executive’s employment for Cause (as
defined herein) at any time immediately upon written notice.  For purposes of this Agreement, “Cause” shall
mean any of the following:  (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
inability due to physical or mental illness or Incapacity) 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 thirty (30) days to cure such alleged deficiencies, (ii) the

 

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Executive’s willful misconduct, which is
demonstrably and materially injurious to the Company, monetarily or otherwise, (iii) the
Executive’s engaging in egregious misconduct involving serious moral turpitude
to the extent that his credibility and reputation no longer conforms to the
standard of senior executive officers of the Company, or (iv) the
Executive’s material breach or threatened material breach of any provision of
this Agreement, including without limitation Section 8 of this Agreement
without the prior express written consent of a duly authorized member of the
Board (other than the Executive).

 

(b)                                 Voluntary
Resignation by the Executive With or Without Good Reason.  Notwithstanding anything to the contrary
herein, the Executive may terminate his employment with the Company for Good
Reason (as defined herein) at any time by written notice to the Company.  After the ninetieth (90th) calendar day after the
Effective Date, the Executive may terminate his employment with the Company upon
sixty (60) calendar days’ advance written notice without Good Reason, provided
that if the Executive is promoted to and accepts the position of CEO, the
foregoing ability to terminate employment without Good Reason upon sixty (60)
calendar days’ notice shall be suspended for the first ninety (90) calendar
days after such promotion.  The Executive’s
employment shall terminate effective as of the effective date of any such
notice or such later effective termination date as the Executive may specify in
the notice (which shall in no event be later than sixty (60) calendar days
after the notice is given unless otherwise agreed to in writing by the
Board).  For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any of the following without the Executive’s
consent:  (i) assigning the
Executive duties that are materially inconsistent with those of a President,
COO, CEO and/or Chairman of the Board (as applicable) for similar companies in
similar industries; (ii) requiring the Executive to report other than to
the Chairman of the Board and CEO (while holding the President and/or COO
position(s)) or other than to the Board (while holding the CEO position); (iii) failure
of the Company to pay any portion of the Executive’s compensation within ten (10) days
after the date such compensation is due or first may be paid pursuant to
applicable law; (iv) requiring the Executive to relocate his primary
residence in the absence of mutual agreement between the Executive and the
Company as to the timing and location; (v) failure of the Company to
continue in effect any broad-based bonus or incentive plan, welfare benefit,
pension, retirement benefit or other benefit plan in which the Executive
participates or becomes eligible to participate unless such discontinuance
applies on a consistent basis to other senior executives of the Company, or a
reduction by the Company of the Executive’s target level participation (as a
percentage of the Executive’s Base Salary and on an annualized basis) in its
annual incentive bonus plan from the lower of the two target levels established
with respect to his participation in the Company’s 2010 MIP as approved by the
Board prior to the Effective Date; (vi) failure of the Company to offer
the Executive the position of CEO or the parties’ inability to negotiate a
mutually acceptable agreement of employment for CEO under the circumstances and
during the period(s) as set forth in Section 1(b); (vi) if
applicable, failure of the Board to offer the Executive the position of
Chairman of the Board under the circumstances as set forth in Section 1(b)(ii);
(vii) the Agreement is not assigned to a successor to the Company pursuant
to the Plan of Reorganization; or (viii) any material breach of this
Agreement, the Retirement Agreement, or any Award Agreement applicable to an
Emergence Equity Grant; provided, however, that an occurrence which otherwise
may constitute Good Reason hereunder shall not constitute Good Reason unless
the Executive (y) provides to the Company, at least thirty (30)  calendar days prior to the Executive’s contemplated
resignation for Good Reason, a written notice containing reasonable detail
setting forth the basis for the Executive’s claim that an occurrence
constitutes 

 

6

 

Good Reason, and (z) the Company fails to cure
or otherwise remedy such occurrence within thirty (30) calendar days after
receiving such notice from the Executive. 
Notwithstanding anything to the contrary herein, the parties hereto acknowledge
and agree that the Executive must exercise his right to terminate his
employment for Good Reason within ninety (90) calendar days after the event
that gives rise to such right, and that if the Executive fails to timely
exercise such right and subsequently resigns, such resignation shall be deemed
for all purposes of this Agreement to be without Good Reason.  The Executive acknowledges and agrees that
the restructuring events that have taken place or will take place solely pursuant
to the Company’s Plan of Reorganization shall not constitute Good Reason for
purposes of this Agreement.

 

(c)                                  Termination Due to Death or
Incapacity. 
Notwithstanding anything to the contrary herein, the Executive’s
employment with the Company shall terminate automatically upon the Executive’s
death, and the Company may immediately terminate the Executive’s employment
with the Company by written notice at any time upon the Executive’s Incapacity
(as defined below) effective as of the date of the Executive’s Incapacity.  For purposes of this Agreement, “Incapacity”
shall mean such physical or mental condition of the Executive which renders and
is expected to render the Executive incapable of performing the essential
functions of his position hereunder with or without reasonable accommodation for
ninety (90) consecutive calendar days, or for 120 calendar days (whether
consecutive or not) within any 180-calendar-day period, as determined in good
faith by the Board upon consultation with a physician selected by the Board in
its discretion.  The Executive hereby
agrees to submit to any reasonable medical examination(s) as may be
recommended by the Board for the purpose of determining the existence or
absence of Incapacity.

 

(d)                                 Termination by the Company
Other Than for Cause or Incapacity.  Notwithstanding anything to the contrary
herein, the Company may terminate the Executive’s employment with the Company
for any reason other than Cause or Incapacity or for no reason, at any time
upon thirty (30) calendar days’ advance written notice to the Executive signed
by a duly authorized representative of the Board, and such termination shall be
effective upon the effective date of such notice or such later effective
termination date as the Company may specify in the notice.

 

(e)                                  Voluntary Termination
Following a Company Change in Control.  Notwithstanding anything to the contrary
herein, the Executive may terminate his employment with the Company at any time
within the 24-month period following a Company Change in Control (as defined
herein) with or without Good Reason. 
Neither a Change in Control with respect to any affiliate of the Company
nor the assignment of this Agreement to any reorganized entity of the Company
pursuant to the Plan of Reorganization shall constitute a Change in Control for
the purposes of this Agreement.  “Change
in Control” shall mean the occurrence of any one or more of the following:

 

(i)                                The “beneficial ownership”
of securities representing more than 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
Securities Exchange Act of 1934, as amended, 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 

 

7

 

Company, or 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 definition 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%
or more of the Company Voting Securities;

 

(ii)                             Individuals who, as of the
Effective Date, constitute the Board (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided, however, that
an individual becoming a director subsequent to that date 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;

 

(iii)                          Consummation by the Company
of a reorganization, merger or consolidation, or sale or other disposition of
all or substantially all 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 (i) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (ii) 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;

 

(iv)                         Approval by the Company’s
stockholders of a complete liquidation or dissolution of the Company; or

 

8

 

(v)                            The consummation of a
reorganization, complete liquidation, or dissolution under the U.S. Bankruptcy
Code subsequent to the Effective Date (and excluding the Plan of Reorganization
as defined herein).

 

5.                                      The
Executive’s Duties After Notice of Termination.  For any period in which the Executive gives
or is given notice prior to the effective date of the Executive’s termination,
the Executive shall be expected and required to continue performing the
Executive’s duties and responsibilities in accordance with Section 2 of
this Agreement for the notice period up to the effective date of the
termination of the Executive’s employment.

 

6.                                      Removal
from Positions.  Any termination of the Executive’s employment
shall automatically effectuate the Executive’s removal from the officer and/or
Board positions that the Executive then holds with the Company and its
Affiliates and any employee benefit plans, as of the effective termination
date.

 

7.                                      Payments
Upon Termination of Employment.

 

(a)                                  The parties acknowledge and
agree that except as expressly provided in Sections 7(b), (c) and (d) of
this Agreement, in the event of the termination of the Executive’s employment,
the Company’s sole obligation under this Agreement shall be to pay the
Executive (i) any accrued but unpaid Base Salary through the effective
date of the termination; (ii) any earned but unpaid bonus under the
Company’s annual incentive plan pursuant to, and in accordance with, the terms
and conditions of such plan; (iii) any earned but unused vacation time as
determined in accordance with the Company’s policies then in effect; (iv) any
unreimbursed expenses pursuant to Section 3(e) of this Agreement
existing at that time; and (v) any benefits payable pursuant to the
Retirement Agreement.

 

(b)                                 In the event that the Executive
terminates his employment with the Company without Good Reason in accordance
with Section 4(b) of this Agreement, subject to the terms and
conditions of this Agreement, the Company’s sole obligation shall be to pay to
the Executive:  (i) all such amounts
due to him pursuant to Section 7(a) of this Agreement; and (ii) pay
to the Executive a pro-rated portion of any incentive bonus(es) (if any) under
the annual incentive plan that the Executive would have earned for the
performance period(s) in which the effective termination date of his
employment occurred as though he had remained employed and been entitled to
receive such bonus(es) for the applicable incentive plan performance period(s),
the amount of which pro-rated bonus payment(s) shall be based upon the
number of full calendar months in which the Executive was employed during the
applicable performance period(s) and paid at such time(s) as provided
in such annual incentive plan.

 

(c)                                  In the event that the
Company terminates the Executive’s employment pursuant to Section 4(d) of
this Agreement or the Executive terminates his employment with the Company for
Good Reason in accordance with Section 4(b) of this Agreement,
subject to the terms and conditions of this Agreement, and provided that the
Executive executes (without revoking) and returns to the Company an enforceable
waiver and release in a form acceptable to the Company (a “Release Agreement”)
within the time period specified by the Company (which time period shall not be
more than sixty (60) calendar days after the effective date of the Executive’s
termination of employment) and further provided that the Executive remains in 

 

9

 

compliance with Sections 2(d), 8 and 9 of this
Agreement, the Company’s sole obligation under this Agreement shall be:

 

(i)                                to pay to the Executive all
such amounts due to him pursuant to Section 7(a) of this Agreement;

 

(ii)                             if the termination of the
Executive’s employment is for Good Reason pursuant to Section 4(b)(vi), is
a result of any other occurrence on or prior to the Promotion Date constituting
Good Reason pursuant to Section 4(b), or is on or prior to the Promotion
Date and is pursuant to Section 4(d), to pay to the Executive a lump sum
payment equal to the greater of (A) $5,000,000 and (B) two (2) times
the sum of the Executive’s then-current Base Salary plus the higher of the
Executive’s (x) average annual incentive bonus for the three fiscal years
preceding the effective termination date of his employment; and (y) actual
annual incentive bonus paid with respect to the fiscal year immediately
preceding the effective termination date of his employment;

 

(iii)                          if the Executive’s
employment with the Company is terminated for Good Reason after the Promotion
Date pursuant to Section 4(b) or without Cause after the Promotion
Date pursuant to Section 4(d), and Section 7(c)(ii) above does
not apply, to pay the Executive a lump sum payment equal to (A) two (2) times
the sum of the Executive’s then-current Base Salary plus the higher of the
Executive’s (x) average annual incentive bonus for the three fiscal years
preceding the effective termination date of his employment; and (y) actual
annual incentive bonus paid with respect to the fiscal year immediately
preceding the effective termination date of his employment, if the Executive
does not hold the position of CEO as of the effective date of such termination
of his employment;  or (B) 2.99
times the sum of the Executive’s then-current Base Salary plus the higher of
the Executive’s (x) average annual incentive bonus for the three fiscal
years preceding the effective termination date of his employment; and (y) actual
annual incentive bonus paid with respect to the fiscal year immediately
preceding the effective termination date of his employment, if the Executive
holds the position of CEO as of the effective date of such termination of his
employment;

 

(iv)                         to continue to provide
benefit coverage under the Company’s health, dental, and vision plans for a
period of either (A) two (2) years following the effective
termination date of his employment if the Executive does not hold the position
of CEO as of such effective date, or (B) three (3) years following
the effective termination date of his employment if the Executive holds the position
of CEO as of such effective date, provided that the Executive shall not be
entitled to the benefits provided for in this Section 7(c)(iv) to the
extent that he becomes eligible for coverage under another employer’s benefit
plans;

 

(v)                            to the extent provided for
in the Executive’s applicable Award Agreements (including without limitation,
such Award Agreement(s) attached hereto as Exhibit A), cause any and
all unvested portions of the Executive’s restricted shares, stock options, and
any and all other equity-based awards to become vested and exercisable (as
applicable) as of the effective date of the Executive’s termination of
employment;

 

(vi)                         to provide outplacement
services through a firm of the Executive’s choosing in an amount equivalent to
that provided to other similarly situated executives, 

 

10

 

provided that such amount may not exceed $50,000,
and that such outplacement services must be used within the twelve (12) month
period immediately following the effective termination date of the Executive’s
employment; and

 

(vii)                      to continue to count for
purposes of determining the Executive’s age, service with the Company, and
benefits pursuant to the terms and conditions of the Retirement Agreement either
(A) the two (2) year-period following the effective termination date
of his employment if the Executive does not hold the position of CEO as of such
effective date, or (B) three (3) year-period following the effective
termination date of his employment if the Executive holds the position of CEO
as of such effective date.

 

The
Executive acknowledges and agrees that (a) under no circumstance will he
receive or be entitled to receive payments pursuant to more than one of
Sections 7(c)(ii), (iii)(A) and (iii)(B), and that there shall be no “double,”
“triple,” or other multiple payments pursuant to such Sections in the event of
the termination of the Executive’s employment as forth therein; and (b) for
purposes of Section 7 of this Agreement, “annual incentive bonus” shall
mean the Executive’s incentive bonus under the Company’s MIP then in effect or
such other similar annual incentive bonus plan or program then in effect.

 

(d)                                 In the event that the
Executive dies or the Company terminates the Executive’s employment pursuant to
Section 4(c) of this Agreement due to Incapacity, subject to the
terms and conditions of this Agreement, the Company’s sole obligation under
this Agreement shall be to:  (i) pay
to the Executive all such amounts due to him pursuant to Section 7(a) of
this Agreement; (ii) pay to the Executive a pro-rated portion of any
annual incentive bonus(es) (if any) that the Executive would have earned for
the performance period(s) in which the effective termination date of his
employment occurred as though he had remained employed and been entitled to
receive such bonus(es) for the applicable incentive plan performance period(s),
the amount of which pro-rated bonus payment(s) shall be based upon the
number of full calendar months in which the Executive was employed during the
applicable performance period(s) and paid at such time(s) as provided
in such annual incentive plan; and (iii) to the extent provided for in the
Executive’s applicable Award Agreements (including without limitation, such
Award Agreement(s) attached hereto as Exhibit A), cause any and all
unvested portions of the Executive’s restricted shares, stock options, and any
and all other equity-based awards to become vested and exercisable (as
applicable) as of the effective date of the Executive’s termination of
employment.

 

(e)                                  Timing of Payments.  Subject to the terms and conditions of this
Agreement (including without limitation Section 10) and provided that the
Executive executes (without revoking) a Release Agreement as set forth in Section 7(c) above
(as applicable) and the applicable statutory revocation period with respect to
such Release Agreement has expired, and further provided that the Executive
remains in compliance with Sections 2(d), 5, 8 and 9 of this Agreement, any
payments or benefits made available to the Executive by the Company pursuant to
this Section 7 will be made or commence (as applicable) as follows:  (i) any payments made pursuant to
Sections 7(c)(ii) or (iii) shall be paid in a lump sum on the
sixtieth (60th) calendar day
following the effective termination date of the Executive’s employment; and (ii) the
payments and benefits in Section 7(a), 7(b), 7(c)(i), (iv), (v) and
(vi), and 7(d) will be paid or commence 

 

11

 

(as applicable) at such times and in such manner as
set forth in the applicable Company policy, plan documents, and the Retirement
Agreement.

 

(f)                                    Release.  Notwithstanding the foregoing,  the Execute agrees to execute (without revoking) a Release
Agreement within the time period specified by the Company (which time period
shall not be more than sixty (60) calendar days after the effective date of the
Executive’s termination of employment) as a condition of receiving the payments
and benefits set forth in Sections 7(a)(v) and 7(b)(ii).

 

8.                                      Confidentiality, Intellectual
Property and Restrictive Covenants.  The Company and the Executive agree that, in
each of his various senior management positions with the Company and otherwise
by virtue of his unique relationship with the Company (including pursuant to
this Agreement), the Executive has and will acquire and have access to, and has
and will continue to develop substantial and intimate knowledge of, the Company’s
Confidential Information (defined below), and has and will also continue to
develop a unique and comprehensive familiarity with the Company and the
Business Conducted by the Company or any of its Affiliates, which the Executive
would not have otherwise had but for his employment with the Company, and which
the Executive acknowledges are valuable assets of the Company.  Accordingly, the Executive agrees, in
exchange for the consideration and mutual covenants contained in this
Agreement, to undertake the following obligations, which he acknowledges are
reasonably designed to protect the legitimate business interests of the
Company, without unreasonably restricting his post-employment opportunities:

 

(a)                                  Confidential Information.  The Executive acknowledges that during his
employment with the Company he has had and will continue to have, and may
continue to have during the Non-Compete Period (as defined below), access to
Confidential Information of the Company, its Affiliates and, in certain
situations, certain third parties who provide information to the Company
subject to confidentiality and non-use restrictions.  All Confidential Information is of
irreplaceable value to the Company, its Affiliates and such third parties.  Except as required to perform the Executive’s
responsibilities for the Company and its Affiliates, to comply with law or
regulation, or as authorized in writing in advance by the Company, the
Executive shall not, at any time, use, disclose, or take any action which may
result in the use or disclosure of any Confidential Information.  For purposes of this Agreement, “Confidential
Information” shall mean all confidential and proprietary information of the
Company, its Affiliates and, in certain situations, certain third parties who
provide information to the Company subject to confidentiality and non-use
restrictions, and includes, but is not limited to, actual and prospective
customer and client lists and pricing information, business plans, programs and
tactics, research and development information (including without limitation
information relating to the formulation, testing, registration, use, safety,
efficacy and/or effects of marketed products and compounds under development),
personnel information, and all other information unique to the Company and not
readily available to the public, including designs, improvements, inventions,
formulas, compilations, methods, strategies, capabilities, forecasts, software
programs, processes, know-how, data, operating methods and techniques, “Inventions
or Developments” (as defined below), and all business costs, profits, vendors,
markets, sales, products, marketing, sales or other financial or business
information, and any modifications or enhancements of any of the foregoing.

 

12

 

(b)                                 Inventions or Developments.  The Executive agrees that he will, now and in
the future, 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), that are or have been made,
conceived, reduced to practice or developed by the Executive, either alone or
jointly with others, during his employment with the Company, that are related in
any way to the past, current or future business or products of the Company or
any of its Affiliates or are devised, made, developed, reduced to practice or
perfected utilizing equipment or facilities of the Company or any of its
Affiliates (collectively, the “Inventions or Developments”).  All Inventions or Developments shall be the
sole property of the Company, including all patents, copyrights, intellectual
property or other rights related thereto and the Executive assigns to the
Company all rights (if any) that the Executive may have or acquire in such
Inventions or Developments. 
Notwithstanding the foregoing, this Section 8(b) 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)                                  Restrictive Covenants.  The Executive agrees that during the
Executive’s employment and for the two (2) year period following the
effective date of any termination of the Executive’s employment for any reason
(the “Non-Compete Period”), unless the Company gives its advance written
consent, the Executive shall not:

 

(i)                                participate or engage in,
directly or indirectly (whether as an owner, agent, representative, 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 Non-Compete
Period, is competitive with the Business Conducted by the Company or any of its
Affiliates anywhere in the United States, Canada, Mexico, or China
(hereinafter, the “Geographic Area”) and which business the Company was engaged
(either actively as a going concern or in the process of developing to market)
during the two (2) year period preceding his termination of employment;

 

(ii)                             directly or indirectly
solicit any current employee of the Company or any of its Affiliates, or any
individual who becomes an employee of the Company or any of its Affiliates
during the Non-Compete Period, to leave such employment and join or become
affiliated with any business that is, during the Non-Compete Period,
competitive with the Business Conducted by the Company or any of its Affiliates
within the Geographic Area; or

 

(iii)                          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 with which the Company had, or was actively
planning or pursuing, a business relationship at any time during the two (2) year
period preceding his termination of employment.

 

13

 

For purposes of this Agreement, during the Executive’s
employment, “Business Conducted by the Company or any of its Affiliates” shall
mean (a) all businesses conducted by the Company or any of its Affiliates
and (b) any material new line of business in which the Company or any of
its Affiliates is contemplating engaging in, provided that the plans for the
Company or any of its Affiliates to engage in such material new line of
business were presented to and not rejected by the Board.  For purposes of this Agreement, for two-year
period following the effective date of any termination of the Executive’s
employment, “Business Conducted by the Company or any of its Affiliates” shall
mean (a) all business conducted by the Company or any of its Affiliates as
of the effective date of the Executive’s termination of employment and (b) any
material new line of business in which the Company or any of its Affiliates
engages within the one-year period following the effective date of the
Executive’s termination of employment, provided that the plans for the Company
or any of its Affiliates to engage in such material new line of business were
presented to and not rejected by the Board prior to the effective date of the
Executive’s termination of employment and while the Executive was a member of
the Board.

 

(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)                                  Return of Property.  The Executive acknowledges and agrees that
immediately upon his termination of employment with the Company he will
promptly return (without retaining any copies) all property of the Company, its
Affiliates or any third parties that is within his possession, custody or
control by virtue of his employment with the Company.  Property to be returned to the Company shall
include without limitation any and all documents and other things (whether in
tangible or electronic format and whether such documents or things contain
information that reflect or contain any Confidential Information or proprietary
information) in the Executive’s possession, custody or control, further
including without limitation all computer programs, passwords, files, and
diskettes, all written and printed files, manuals, contracts, memoranda, forms,
notes, records and charts (and any and all copies of, or extracts from, any of
the foregoing), vehicles, keys, cell phones, credit cards and other equipment
and materials furnished to him by the Company; provided, however, that (i) the
Executive shall be entitled to keep his home office equipment; and (ii) the
Company and the Executive shall work together to ensure that any Confidential
Information, Inventions or Developments, or other Company business
information is removed from such home office equipment.

 

(f)                                    Irreparable Harm.  The Executive acknowledges that:  (i) the covenants contained in Sections
2(d) and 8 are reasonable in scope and duration, will not unduly restrict
the Executive’s ability to engage in his livelihood, and the Executive’s
compliance with Sections 2(d) and 8 is necessary to preserve and protect
the Confidential Information, Inventions or 

 

14

 

Developments, and other legitimate business
interests of the Company; (ii) any failure by the Executive to comply with
the provisions of Sections 2(d) and 8 will result in irreparable and
continuing injury to the Company 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 Sections 2(d) and 8, in addition to the
Company’s right to set off any actual monetary damages to the Company that are
a consequence of such failure to comply against any payments and benefits due
to the Executive pursuant to Section 7 (provided that any such set offs
first shall be taken from amounts not subject to Section 409A of the Code
(as defined in Section 10 below), and if such amounts are
insufficient, any additional set off shall not be taken until the
time an amount subject to Section 409A of the Code would otherwise be paid
pursuant to the terms of this Agreement), the Company shall be entitled, in
addition to and without limiting 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 Sections 2(d) and 8, to restore to the Company
its property, and to make the Company whole. 
The Company and Executive acknowledge and agree that the Company or the
Executive’s failure to enforce or insist on its rights under Sections 2(d) and
8 shall not constitute a waiver or abandonment of any such rights or defense to
enforcement of such rights.  If the
provisions of Sections 2(d) and 8 are ever deemed by a court to exceed the
limitations permitted by applicable law, the Executive and the Company agree
that such provisions shall be, and are, automatically reformed to the maximum
lesser limitations permitted by such law.

 

9.                                      Cooperation.  At the request and upon
reasonable advance notice where practicable and at the sole expense of the
Company, whether during or at any time after the Executive’s employment with
the Company or any of its Affiliates, the Executive shall cooperate fully with
the Company and its Affiliates (a) in investigating, defending,
prosecuting, litigating, filing, initiating or asserting any claims or
potential claims (including without limitation in connection with any legal
proceeding of any kind) that may be made by or against the Company or any of
its Affiliates, to the extent that such claims may relate to or arise out of
the Executive’s employment with the Company or any of its Affiliates or with
respect to which the Executive has knowledge and (b) without in any way
limiting subsection (a) above, to secure any trade name, patent,
trademark, copyright or intellectual property protection or other similar
rights in the United States and/or in foreign countries, including without
limitation, the execution and delivery of assignments, patent applications and
other documents or papers.  If such
cooperation is provided during the Executive’s employment with the Company or
any of its Affiliates, the Executive shall not receive any additional
compensation from the Company for such cooperation.  If the Executive no longer is employed by the
Company or any of its Affiliates, the Executive’s obligation to cooperate shall
be reasonably limited so as not to unreasonably interfere with his other
business obligations.  If the Executive
spends in excess of ten (10) hours in compliance with this Section 9
after he is no longer employed by the Company or any of its Affiliates,  the Company shall compensate the Executive at
an hourly rate equal to the amount determined by dividing (x) the
Executive’s Base Salary as of the first day of the fiscal year of the Company
within which the Executive’s employment is terminated by (y) 2000, and
shall reimburse the Executive for any reasonable expenses incurred as a direct
result of his providing such cooperation in accordance with Section 3(e) of
this Agreement.  The Company shall
provide such compensation for the Executive’s cooperation within thirty (30)
calendar days after receiving from the Executive a written statement stating
the number of hours for which he seeks payment and brief description of the cooperation
provided, provided that the Executive submits 

 

15

 

such statement within thirty (30) calendar days
after the end of the calendar month in which the Executive provided such
cooperation.  The Executive’s obligation
to cooperate hereunder shall include, without limitation, meeting with such
persons at such times and in such places as the Company or its Affiliates may
require, and giving evidence and testimony and executing and delivering to the
Company and any of its Affiliates any papers requested by any of them
(including without limitation joint defense agreements and affidavits).  The Executive shall provide immediate notice
to the Company of any subpoena or other legal document that he receives that
relates in any way to the Company or any of its Affiliates, along with a copy
of such subpoena or other legal document.

 

10.                               Compliance
with Section 409A.  All references in this Agreement to the
Executive’s termination of employment shall mean his separation from service
within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and
Treasury regulations promulgated thereunder.  In the event the terms of this Agreement
would subject the Executive to the
imposition of taxes and penalties (“409A Penalties”) under Section 409A
of the Code, the Company and the Executive shall cooperate diligently to amend
the terms of the Agreement to avoid such 409A Penalties, to the extent
possible.  Notwithstanding any other
provision in this Agreement, if as of the date on which the Executive’s
employment terminates, the Executive is a “specified employee” as determined by
the Company, then to the extent any amount payable or benefit provided under
this Agreement that the Company reasonably
determines would be nonqualified deferred compensation within the
meaning of Section 409A of the Code, that under the terms of this
Agreement would be payable prior to the six-month anniversary of the Executive’s
effective date of termination, such payment or benefit shall be delayed until
the earlier to occur of (a) the six-month anniversary of such termination
date or (b) the date of the Executive’s death.  In the case of taxable benefits that
constitute deferred compensation, the Company, in lieu of a delay in payment,
may require the Executive to pay the full costs of such benefits during the
period described in the preceding sentence and reimburse that Executive for
said costs within thirty (30) calendar days after the end of such period.  With respect to any reimbursements under this
Agreement, such reimbursement shall be made on or before the last day of the
Executive’s taxable year following the taxable year in which the expense was
incurred by the Executive.  The amount of
any expenses eligible for reimbursement or the amount of any in-kind benefits
provided, as the case may be, under this Agreement during any calendar year
(including without limitation pursuant to Sections 9 and 22) shall not affect
the amount of expenses eligible for reimbursement or the amount of any in-kind
benefits provided during any other calendar year. The right to reimbursement or
to any in-kind benefit pursuant to this Agreement shall not be subject to
liquidation or exchange for any other benefit. 
The Executive acknowledges and agrees that notwithstanding this Section 10
or any other provision of this Agreement, the Company and its Affiliates are
not providing him with any tax advice with respect to Section 409A of the
Code or otherwise and are not making any guarantees or other assurances of any
kind to the Executive with respect to the tax consequences or treatment of any
amounts paid or payable to the Executive under this Agreement.

 

11.                               Section 280G
Gross-up.  To the extent permitted by applicable law:

 

(a)                                  in the event it is
determined that any payment or distribution by the Company to or for the
benefit of the Executive after the date hereof pursuant to the terms of this
Agreement or otherwise (including without limitation any deferred compensation
plans), 

 

16

 

determined without regard to any additional payments
required under this Section 11(a) (a “Payment”), would be subject to
the excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect thereto are incurred by the Executive with respect to
any such tax (any such tax, together with any such interest or penalties, are
hereinafter collectively referred to as the “Additional Tax”), then, subject to
the Executive’s compliance with Section 11(c), the Executive shall be
entitled to receive from the Company an additional payment (a “Gross-Up Payment”)
in an amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Additional Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Additional Tax
imposed upon the Payments; provided, however, that notwithstanding the
foregoing provisions of this Section 11(a), if it shall be determined that
the Executive is entitled to a Gross-Up Payment, but that the amount of the
aggregate Payments is less than 110% of the product of (A) three (3) times
(B) the Executive’s Base Amount (as such term is defined in Section 280G
of the Code), then no Gross-Up Payment shall be made to the Executive and the
cash Payments provided in Section 7 of this Agreement shall first be
reduced, and the non-cash Payments and benefits shall thereafter be reduced,
until no amount of the Payments shall be subject to the exercise tax under Section 4999
of the Code;

 

(b)                                 the parties are
entering into this Agreement with the reasonable mutual understanding that the
Payments are not subject to Additional Taxes, and the parties shall, subject to
this Section 11(b), report such amounts in their federal tax returns for
the appropriate periods in a manner consistent with such understanding.  Subject to the provisions of Section 11(c),
all other determinations required to be made under this Section 11(b),
including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such determination,
shall be made by the Company’s public accounting firm (the “Accounting Firm”).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Section 11(b),
shall be paid by the Company to the Executive within the earlier of five (5) business
days after the Company’s receipt of the Accounting Firm’s determination and the
end of the Executive’s taxable year next following the taxable year in which
the Executive pays the Additional Taxes to which such Gross-Up Payment relates
to the applicable taxing authority.  Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive;

 

(c)                                  the Executive shall notify
the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a Gross-Up
Payment.  Such notification shall be
given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid.  The Executive
shall not pay such claim prior to the expiration of the 30-calendar-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect
to such claim is due).  If the Company
notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall: (i) give the
Company any information reasonably requested by the Company relating to such
claim; (ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,

 

17

 

including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate
with the Company in good faith in order effectively to contest such claim, and (iv) permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Additional Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment of
costs and expenses.  Any amount the
Company is obligated to pay or indemnify under this Section 11(c) shall
be paid or indemnified on or before the last day of the calendar year following
the calendar year in which the expense, cost or Additional Tax was
incurred.  Without limitation on the
foregoing provisions of this Section 11(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided further, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Additional Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance. 
The Company’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority; and

 

(d)                                 as a result of
the uncertainty in the application of Code Section 4999 at the time of the
initial determination by the Accounting Firm hereunder, it is possible that the
Internal Revenue Service (“IRS”) or other agency will claim that a greater or
lesser Additional Tax is due.  In the
event that the Additional 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
Additional 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 Additional Tax and taxes imposed on the Gross-Up Payment
being repaid by the Executive) 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
Additional 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.

 

18

 

12.                               Notices.  Notices given pursuant to this Agreement
shall be in writing and shall be effective upon personal delivery, upon
confirmation of receipt of facsimile transmission, upon the fourth day after
mailing by certified mail, or upon the second day after sending by express
courier service.  Notice to the Company
shall be directed to:

 

Smurfit-Stone
Container Corporation

Six
CityPlace Drive

Creve
Coeur, Missouri 63141

Attention:  General Counsel

 

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. 
Either party may change the person and/or address to which the other
party must give notice under this Section by providing written notice of
such change, in accordance with the procedures described in this Section 12.

 

13.                               Assignment.  This Agreement is enforceable by the Company
and its affiliates and other related entities and may be assigned or
transferred by the Company to, and shall be binding upon and inure to the
benefit of, any parent, subsidiary or other Affiliate of the Company or any
entity which at any time, whether by merger, purchase, or otherwise, acquires
all or substantially all of the assets, stock or business of the Company
(including without limitation any successor and/or reorganized entit(ies) of
the Company or any of its Affiliates upon the Effective Date).  The Executive and the Company agree that upon
the Effective Date, this Agreement shall be assigned to and binding upon such
successor entit(ies) of the Company as set forth in the Plan of Reorganization,
provided that nothing herein shall limit or otherwise affect the Company’s
right to further assign or transfer this Agreement after the Effective Date as
set forth in the preceding sentence.  The
Executive may not assign any of his rights or obligations under this Agreement
during his life.  Upon the Executive’s
death, this Agreement will inure to the benefit of the Executive’s heirs,
legatees and legal representatives of the Executive’s estate.

 

14.                               Beneficiary.  If the Executive dies prior
to receiving the amounts to which he is entitled under this Agreement (if any),
subject to and in accordance with the terms and conditions of this Agreement,
such amounts shall be paid to the beneficiary designated by the Executive in
writing to the Company during his lifetime (“Beneficiary”), or if no such
Beneficiary is designated, to the Executive’s estate.  Notwithstanding anything to the contrary
herein, the Beneficiary shall not be entitled to receive any amounts pursuant
to Section 7 of this Agreement unless the Beneficiary and any other
authorized representatives of the Executive’s estate execute an enforceable
waiver and release of claims in accordance with the Executive’s obligations set
forth in Section 7(c).  The
Executive, without the consent of any prior Beneficiary, may change his
designation of Beneficiary or Beneficiaries at any time and from time to time
by submitting to the Company a new designation in writing.

 

15.                               Severability.  Each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable
law.  The Executive and the Company agree
that in the event that any provision of this Agreement is found to be
unreasonable or otherwise unenforceable by a court, it is the purpose and
intent of the parties that any such provision be 

 

19

 

deemed modified or limited, so that as modified or
limited, such provision may be enforced to the fullest extent possible.  If any provision of this Agreement is held
invalid or unenforceable for any reason (after any such modification or
limitation pursuant to the preceding sentence, as applicable), such provision
will be effective only to the extent of such invalidity or unenforceability
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.

 

16.                               Entire
Agreement, Amendment and Waiver.  Except as otherwise provided herein, this
Agreement embodies the entire agreement and understanding of the parties hereto
with regard to the matters described herein and supersedes any and all prior
and/or contemporaneous agreements and understandings, oral or written, between
said parties regarding such matters, provided that nothing herein shall limit
or otherwise affect any provision of the Retirement Agreement or any Emergence
Equity Grant Award Agreement.  In the
event of any conflict between any provision of this Agreement and (a) the
Retirement Agreement or (b) any Emergence Equity Grant Award Agreement,
the provisions of this Agreement shall govern. 
The Executive and the Company acknowledge and agree that this Agreement
amends and restates the Predecessor Employment Agreement in its entirety and
that as of the Effective Date the provisions of this Agreement shall replace
each and every provision of the Predecessor Employment Agreement, at which time
the provisions of the Predecessor Employment Agreement shall be null and void,
and shall be of no further force or effect. 
The Executive and the Company further acknowledge and agree that the
Retirement Agreement amends and restates the Predecessor Retirement Agreement
in its entirety and that as of the Effective Date the provisions of this
Retirement Agreement shall replace each and every provision of the Predecessor
Retirement Agreement, at which time the provisions of the Predecessor
Retirement Agreement shall be null and void, and shall be of no further force
or effect.  Except as set forth in
Sections 8(f) and 15, this Agreement may be modified only in a written
agreement signed by both the Executive and the Company’s authorized
representative.  Any party’s failure to
enforce this Agreement in the event of one or more events which violate this
Agreement shall not constitute a waiver of any right to enforce this Agreement
against subsequent violations.

 

17.                               Forum
Selection.  The parties
hereby irrevocably consent to, and agree not to object or assert any defense or
challenge to, the jurisdiction and venue of the state and federal courts
sitting in Chicago, Illinois, and agree that any claim under this
Agreement may be brought in any such court. 
In any action or proceeding to enforce this Agreement, the non-prevailing
party shall pay for any and all costs and expenses (including without
limitation reasonable attorneys’ fees) of the prevailing party to the maximum
extent permissible by applicable law.

 

18.                               Governing
Law.  This
Agreement shall be governed by the internal laws of the state of Illinois,
without regard to its conflict of laws rules.

 

19.                               Headings.  The Section headings used herein are for
convenience of reference only and are not to be considered in construction of
the provisions of this Agreement.

 

20.                               Release
of Claims Under Predecessor Agreements.  The consideration offered
herein is accepted by the Executive as being in full accord, satisfaction,
compromise and settlement of any and all amounts due and owing to him pursuant
to any and all claims that the Executive may have against the Company that
existed on or prior to the Effective Date arising 

 

20

 

out of or concerning either the Predecessor
Employment Agreement or Predecessor Retirement Agreement, and the Executive
expressly agrees that he is not entitled to and will not receive any further
payments, benefits, or other compensation or recovery of any kind from the
Company with respect to the Predecessor Employment Agreement or Predecessor
Retirement Agreement.

 

21.                               Survival.  Sections 2(d) and 4 through 23 herein
shall survive and continue in full force and effect in accordance with their
respective terms, notwithstanding any termination of the Employment Period or
the Executive’s employment.

 

22.                               Attorneys’
Fees for Negotiating This Agreement.  Within thirty (30) calendar days after
receipt of the Invoices (as described below), the Company shall reimburse the
Executive for the reasonable fees and expenses of the Executive’s outside legal
counsel, accountants, and other advisors in connection with the Chapter 11
cases, including, without limitation, the negotiation and execution of this
Agreement, in an amount not to exceed $100,000, provided that the Company
receives from the Executive within sixty (60) days after the Effective Date a
copy of the invoices for services rendered and expenses incurred by such
counsel, accountants, and other advisors (“Invoices”).

 

23.                               Counterparts.  This Agreement may be executed in two
counterparts, each of which shall be deemed an original, and both of which
together shall constitute one and the same instrument.

 

THE
PARTIES ACKNOWLEDGE BY SIGNING BELOW THAT THEY HAVE READ AND UNDERSTAND THE
ABOVE AND INTEND TO BE BOUND THEREBY:

 

	
  STEVEN
  J. KLINGER

  	
   

  	
  SMURFIT-STONE
  CONTAINER CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Steven
  J. Klinger

  	
   

  	
  By:

  	
  /s/
  Ralph F. Hake

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  June 30,
  2010

  	
   

  	
  Position: 

  	
  Chairman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  June 30, 2010

  
					

 

21

 

EXHIBIT A

 

EMERGENCE EQUITY AWARD AGREEMENT(S) OF STEVEN J. KLINGER

 

22

 

EXHIBIT B

 

AMENDED AND RESTATED

EXECUTIVE RETIREMENT AGREEMENT OF STEVEN J. KLINGER

 

23Exhibit
10.8

 

AMENDED AND RESTATED

EXECUTIVE RETIREMENT AGREEMENT

 

This
Amended and Restated Executive Retirement Agreement (the “Agreement”) by and
between Steven J. Klinger (the “Executive”) and Smurfit-Stone Container
Corporation (the “Company”) shall be deemed to have been made and entered into
as of the date of the order of confirmation entered by the United States
Bankruptcy Court for the District of Delaware with respect to the Company’s
plan of reorganization in the matter of In re: Smurfit-Stone Container Corp.,
Case No. 09-10235 (BLS) (such cases, the “Chapter 11 Cases” and such plan,
the “Plan of Reorganization”), and shall become effective as of the effective
date of the Plan of Reorganization (the “Effective Date”).

 

WHEREAS,
the Executive is and will be rendering valuable services to the Company and its
Affiliates, and the Company desires to receive the benefit of the Executive’s
continued loyalty, service and counsel and to provide the Executive and/or the
Executive’s eligible beneficiaries with benefits in the event of the Executive’s
retirement or death;

 

WHEREAS,
the Company and the Executive are parties to that certain Amended and Restated
Employment Agreement effective as of the Effective Date of the Company’s Plan
of Reorganization (the “Employment Agreement”);

 

WHEREAS,
the Company and the Executive are parties to the Executive Retirement Agreement
entered into on October 2, 2006, which was amended effective as of January 1,
2009 (the “Predecessor Retirement Agreement”), which the Company did not assume
pursuant to the Plan of Reorganization; and

 

WHEREAS,
the Company and the Executive desire to enter into the Agreement and, in so
doing, to amend and restate the Predecessor Retirement Agreement in its
entirety;

 

NOW,
THEREFORE, in consideration of the promises and mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by both parties, the parties
hereby agree as follows:

 

1.                                      Definitions

 

For
purposes of this Agreement, the capitalized terms in this Agreement shall have
the meanings set forth below:

 

(a)                                 Actuarial Equivalent.  The term “Actuarial Equivalent” shall mean a
benefit of equivalent value determined using the “applicable mortality table”
and the “applicable interest rate” prescribed under Section 417(e)(3) of
the Code or any successor provision of the Code as of the November 1
preceding the Plan Year in which the distribution is made.

 

(b)                                 Affiliate.  The term “Affiliate” shall mean (A) any
entity that directly or indirectly, is controlled by the Company, (B) any
entity in which the Company has a significant equity interest, (C) the
parent entity of the Company, and (D) any entity that is 

 

1

 

under
common control with the Company.  For
purposes of this Agreement, an Affiliate shall be considered an Affiliate only
for periods during which the Affiliate meets this definition of Affiliate.

 

(c)                                  Annuity Equivalent.  The term “Annuity Equivalent” of a given
benefit shall mean an Actuarial Equivalent benefit in the Normal Form determined
as of the Executive’s Retirement Benefit commencement date and based on the
statutory restrictions on qualified plan benefits (if applicable) as in effect
on the Executive’s Termination Date.

 

(d)                                 Average Monthly Cash Salary.  The term “Average Monthly Cash Salary” shall
mean the greater of (i) the Executive’s total Cash Salary for the highest
four (4) consecutive calendar years during the last ten (10) calendar
years of employment with the Company and its Affiliates divided by 48, or (ii) the
Executive’s average monthly Cash Salary for the last forty-eight (48) calendar
months of employment with the Company and its Affiliates (or, if fewer, all
calendar months of his or her employment with the Company and its Affiliates
which immediately precede the Executive’s Termination Date.

 

(e)                                  Beneficiary.  The term “Beneficiary” shall mean the
Executive’s Spouse at the time of the Participant’s death unless prior to his
death, (i) the Executive has designated in writing another person(s) (which
may include a trust or the Executive’s estate) as Beneficiary, and (ii) his
Spouse at the time of such designation has consented in writing to such other
Beneficiary.  If no Beneficiary has been effectively
designated by the Executive at the time of his or her death and if the
Executive has no Spouse at that time, any amounts payable to the Executive
under this Agreement at the time of his death shall be payable to the Executive’s
estate.

 

(f)                                   Cash Salary.  The term “Cash Salary” shall mean base salary
and annual incentive bonuses paid by the Company or its Affiliates, and any
such cash salary or annual incentive bonus which the Executive elected to
defer, and excludes, without limitation, severance payments or any payment made
upon the termination of the Executive’s employment (regardless of whether such
payment is characterized as a severance payment), compensation under any
long-term incentive program, any bonus (other than the annual incentive bonus),
and any other incentive compensation. 
For purposes of this Agreement, the annual incentive bonus shall be
counted in the year in which such annual incentive bonus is paid.

 

(g)                                  Disabled.  The term “Disabled” shall mean “totally
disabled” as defined under the long-term disability plan in effect generally
for salaried employees of the Company at the Executive’s Termination Date
(regardless of whether the Executive actually participates in that plan at the
time), as determined by the administrator of such plan.

 

(h)                                 Normal Form.  The term “Normal Form” shall mean a single
life annuity.

 

2

 

(i)                                     Retirement Benefit.  The term “Retirement Benefit” shall mean a
Full or Vested Retirement Benefit, as applicable, provided pursuant to the
terms of this Agreement.

 

(j)                                    Service.  The term “Service” shall mean a period of
unbroken employment with the Company and/or its Affiliates and shall include
the Executive’s service with the Company and/or its Affiliates from the date on
which the Company hired the Executive through and including the effective
termination date of his employment with the Company and any and all Affiliate(s) (including
without limitation the Executive’s employment prior to the commencement of the
Company’s Chapter 11 Cases), provided however that employment with any
Affiliate shall be counted only for periods during which such entity (if any)
satisfies the definition of Affiliate set forth in Paragraph 1(b) above.

 

(k)                                 Spouse.  The term “Spouse” shall mean the person to
whom the Executive is married (if any), as determined as of any date under
applicable state law.

 

(l)                                     Termination Date.  The term “Termination Date” shall mean the
date the Executive incurs a separation from service with the Company and its
affiliates (whether or not incorporated) that are under common control with the
Company within the meaning of Section 414(c) of the Code, except that
50% shall be substituted for the 80% ownership level of such Code section.  For purposes of this Agreement, the Executive’s
employment with the Company and its Affiliates “terminates” if the Executive
has incurred a “separation from service.” 
For purposes of this Agreement, “separation from service” shall have the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and Treasury Regulation § 1.409A-1(h).

 

2.                                      Full Retirement Benefit

 

(a)                                 The Executive shall be entitled to receive a Full Retirement Benefit if
the Executive’s employment with the Company and its Affiliates terminates after
the Executive having completed at least fifteen (15) years of Service, for
reasons other than having become disabled.

 

(b)                                 The Full Retirement Benefit shall commence on the first day of the
seventh (7th) full month following the Executive’s Termination
Date and shall be paid in five (5) substantially equal annual
installments, the last four (4) annual installment payments to be made on
the successive anniversary dates of the original installment payment.

 

(c)                                  The Full Retirement Benefit payable shall be calculated as follows:

 

(1)                                 Determine a benefit based on a monthly amount that equals fifty percent
(50%) of the Executive’s Average Monthly Cash Salary, payable in the Normal
Form;

 

(2)                                 Subtract $30,678; and

 

3

 

(3)                                 Determine the single sum amount that is the Actuarial Equivalent of the
Executive’s benefit resulting from the calculations above.

 

3.                                      Vested Retirement Benefit

 

(a)                                 The Executive shall be entitled to receive a Vested Retirement Benefit if
the Executive’s employment with the Company and its Affiliates terminates for
reason other than the Executive having become disabled, and such termination
occurs prior to the Executive having completed fifteen (15) years of Service.

 

(b)                                 The Vested Retirement Benefit shall commence on the later of (i) the
first day of the seventh (7th)
full month following the Executive’s Termination Date or (ii) the
Executive’s attainment of the age of sixty-two (62) years, and shall be paid in
five (5) substantially equal annual installments, the last four (4) annual
installment payments to be made on the successive anniversary dates of the
original installment payment.

 

(c)                                  The Vested Retirement Benefit payable shall be calculated as follows:

 

(1)                                 Determine the monthly amount under Paragraph 2(c)(1);

 

(2)                                 Subtract $30,678;

 

(3)                                 Multiply the result by a fraction, the numerator of which shall equal the
number of the Executive’s completed years of Service at the Termination Date or
fifteen (15), whichever is less, and the denominator of which shall be fifteen
(15); and

 

(4)                                 Determine the single sum amount that is the Actuarial Equivalent of the
Executive’s benefit resulting from the calculations above.

 

4.                                      Disability Retirement Benefit

 

(a)                                 The Executive shall be entitled to receive a Disability Retirement
Benefit if the Executive’s employment with the Company and its Affiliates
terminates prior to the Executive’s attainment of the age of sixty-two (62) by
reason of the Executive having become Disabled, and (ii) the Executive has
completed at least one (1) year of Service (but has not completed at least
15 years of service).

 

(b)                                 The Disability Retirement Benefit shall commence on the first day of the
seventh (7th) full month following the Executive’s Termination Date and shall
be paid in five (5) substantially equal annual installments, the last four
(4) annual installment payments to be made on the successive anniversary
dates of the original installment payment.

 

(c)                                  The Disability Retirement Benefit payable shall be calculated as follows:

 

(1)                                 Determine the Executive’s Full Retirement Benefit as provided in
Paragraph 2(c)(1);

 

4

 

(2)                                 Multiply the result in subparagraph (1) by the appropriate early
retirement commencement percentage as indicated below:

 

	
  Age
  of the Executive

  	
   

  	
   

  
	
  At
  Termination

  	
   

  	
   

  
	
  Because
  of

  	
   

  	
   

  
	
  Disability

  	
   

  	
  Percentage

  
	
  61

  	
   

  	
  94%

  
	
  60

  	
   

  	
  88%

  
	
  59

  	
   

  	
  82%

  
	
  58

  	
   

  	
  76%

  
	
  57

  	
   

  	
  70%

  
	
  56

  	
   

  	
  64%

  
	
  55

  	
   

  	
  58%

  
	
  54 and prior

  	
   

  	
  50%

  

 

(3)                                 Subtract $30,678; and

 

(4)                                 Determine the single sum amount that is the Actuarial Equivalent of the
Executive’s benefit resulting from the calculations in paragraphs (1), (2) and
(3) immediately above.

 

5.                                      Pre-Retirement Survivor Benefits

 

(a)                                 A Pre-Retirement Survivor Benefit shall be paid to the Executive’s Beneficiary
in accordance with this Paragraph 5 in the event of the Executive’s death prior
to the commencement of his Full or Vested Retirement Benefit and after the
Executive has completed at least one (1) year of Service.  The Pre-Retirement Survivor Benefit shall be
paid to the Executive’s Beneficiary in a single sum on the first day of the
month following the Executive’s date of death.

 

(b)                                 The Pre-Retirement Survivor Benefit shall be calculated as follows:

 

(1)                                 Determine the Executive’s Full Retirement Benefit or Vested Retirement
Benefit, whichever applies based upon the Executive’s years of Service at the
time of his death and as if the Executive had survived to age 62; and

 

5

 

(2)                                 Multiply the result by the appropriate early percentage as indicated
below:

 

	
  Age
  of the Executive

  	
   

  	
   

  
	
  At
  Death

  	
   

  	
  Percentage

  
	
  62
  or older

  	
   

  	
  50%

  
	
  61

  	
   

  	
  47%

  
	
  60

  	
   

  	
  44%

  
	
  59

  	
   

  	
  41%

  
	
  58

  	
   

  	
  38%

  
	
  57

  	
   

  	
  35%

  
	
  56

  	
   

  	
  32%

  
	
  55

  	
   

  	
  29%

  
	
  54 and prior

  	
   

  	
  25%

  

 

6.                                      Post-Retirement Survivor Benefit

 

In
the event of the Executive’s death after payment to him of his Retirement
Benefit has commenced, the remaining installments payable to the Executive
shall be paid to his Beneficiary in a single sum on the first day of the month
following the Executive’s date of death.

 

7.                                      Source of Benefits

 

Nothing
contained in this Agreement and no action taken pursuant to the provisions of
this Agreement shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and the Executive, or the Executive’s
spouse, or any other person.  This
Agreement does not create any escrow account, trust fund or any other form of
asset segregation.  Any Retirement
Benefits due under the provisions of this Agreement shall be paid from the
general assets of the Company, except that in the discretion of the Company,
any Retirement Benefit payment may be made from a grantor trust, if any,
established by the Company for such purpose.

 

8.                                      Restrictive Covenants

 

The
Executive agrees that Section 8 (“Restrictive Covenants”) of his
Employment Agreement, which is herein incorporated into this Agreement by
reference, will apply to this Agreement. 
The Executive further agrees that if the Executive violates any
provision of Section 8 of the Employment Agreement, the Executive will not
be eligible to receive, and will not receive, any payments and benefits under
this Agreement.

 

9.                                      Assignment; Successors

 

This
Agreement shall inure to the benefit 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 of the
Company, the Company 

 

6

 

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 death this Agreement will
inure to the benefit of the Executive’s heirs, legatees, and legal
representatives of the Executive’s estate.

 

10.                               Other
Benefit Plans

 

The
Retirement Benefits provided for by this Agreement shall not constitute “compensation”
for purposes of computing compensation for any benefit plan maintained by the
Company or its Affiliates.

 

11.                               Enforcement

 

All
actions for the enforcement of any rights under, or interpretation of, this
Agreement shall be brought in courts within Cook County, Illinois, and the
Executive hereby consents and submits to the venue and jurisdiction of any
local, state, or federal court located within Cook County, Illinois (to
the extent that jurisdictional requirements permit).  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 and shall be
liberally construed to maximize protection of the Company’s rights in its trade
secrets and confidential information.

 

12.                               Compliance
with Code Section 409A

 

It
is intended that this Agreement comply with the requirements of Section 409A(a)(2) through
(4) of the Code and all regulations and guidance issued thereunder.  This Agreement shall be interpreted for all
purposes in accordance with this intent and may be amended by the Company at
any time if such amendment is deemed, in the Company’s sole discretion,
necessary to satisfy this intent.

 

13.                               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

Six CityPlace Drive

Creve Coeur, Missouri 63141

Attention: General Counsel

 

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

 

7

 

14.                               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.

 

15.                               Amendment

 

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

 

16.                               Severability

 

Each
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law. 
The Executive and the Company agree that in the event that any provision
of this Agreement is found to be unreasonable or otherwise unenforceable by a
court, it is the purpose and intent of the parties that any such provision be
deemed modified or limited, so that as modified or limited, such provision may
be enforced to the fullest extent possible. 
If any provision of this Agreement is held invalid or unenforceable for
any reason (after any such modification or limitation pursuant to the preceding
sentence, as applicable), such provision will be effective only to the extent
of such invalidity or unenforceability without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

 

17.                               Entire
Agreement

 

Except
as otherwise provided herein, this Agreement embodies the entire agreement and
understanding of the parties hereto with regard to the matters described herein
and supersedes any and all prior and/or contemporaneous agreements and
understandings, oral or written, between said parties regarding such matters,
provided that nothing herein shall limit or otherwise affect any provision of
the Employment Agreement or any Emergence Equity Grant Award Agreement.  In the event of any conflict between any
provision of this Agreement and the Employment Agreement, the provisions of the
Employment Agreement shall govern.  In
the event of any conflict between any provision of this Agreement and an Emergence
Equity Grant Award Agreement, the provisions of the Emergence Equity Grant
Award shall govern.  The Executive and
the Company acknowledge and agree that this Agreement amends and restates the
Predecessor Retirement Agreement in its entirety and that as of the Effective
Date the provisions of this Agreement shall replace each and every provision of
the Predecessor Retirement Agreement, at which time the provisions of the
Predecessor Retirement Agreement shall be null and void, and shall be of no
further force or effect.  Any party’s
failure to enforce this Agreement in the event of one or more events which
violate this Agreement shall not constitute a waiver of any right to enforce
this Agreement against subsequent violations.

 

18.                               Consultation
With Counsel

 

The
Executive acknowledges that he has had a full and complete opportunity to
consult with counsel of the Executive’s own choosing concerning the terms,
enforceability and implications of this Agreement, and the Company has made no
representations or warranties to 

 

8

 

the
Executive concerning the terms, enforceability or implications of this
Agreement other than as are reflected in this Agreement.

 

19.                               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 of Directors. 
Any such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.

 

20.                               Effect on
Other Obligations

 

This
Agreement shall supplement the Employment Agreement, the provisions of which
shall continue in full force and effect. 
Except as otherwise provided in a writing signed by the Executive and a
duly authorized member of the Company’s Board of Directors, the 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 the
Employment Agreement or under any other policy of the Company relating to
compensation, or retirement or other benefits. 
Except as otherwise provided in a writing signed by the Executive and a
duly authorized member of the Company’s Board of Directors, 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.

 

21.                               Survival

 

All
Paragraphs of this Agreement survive beyond the term of the Executive’s
employment with the Company except as otherwise specifically stated.

 

22.                               Headings

 

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

 

23.                               Counterparts

 

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

 

24.                               Term of
Employment

 

Nothing
in this Agreement shall be construed as providing a term of employment or
guaranteeing the Executive employment with the Company for any length or time
or in a particular position(s).

 

9

 

IN
WITNESS WHEREOF, Smurfit-Stone Container Corporation has caused this Agreement
to be executed by its duly authorized executive and the Executive has hereunto
set his/her hand as of the date first above written.

 

	
   

  	
  SMURFIT-STONE
  CONTAINER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ralph F. Hake

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:
  

  	
  June 30,
  2010

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Steven J. Klinger

  
	
   

  	
  Steven
  J. Klinger

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  June 30, 2010

  
	
   

  	
  Date Signed

  

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]