Document:

Exhibit 10.4

 

EMPLOYMENT
AGREEMENT (this “Agreement”) dated as of June 10,
2005 (the “Agreement Date”), and amended and restated June 11,
2008, effective as of January 1, 2008, between PLIANT
CORPORATION, a Delaware corporation (the “Company”), and R.  DAVID COREY
(the “Executive”).

 

Each of the Company and its
Subsidiaries is engaged in the business (the “Business”) of producing
and distributing polymer-based, value-added films and flexible packaging
products for food, personal care, medical, agricultural, industrial and other
applications.

 

The Executive is currently employed by the Company as
its Executive Vice President and Chief Operating Officer and has originally
entered into this employment agreement with the Company as of June 10,
2005.

 

Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) imposes additional taxes on deferred compensation
that fails to meet certain requirements.

 

The Company and the Executive each desire to amend the
Executive’s current employment agreement to comply with the requirements of
Code Section 409A and to make certain additional modifications to the
terms and conditions of Executive’s employment by amending and restating the
Executive’s employment agreement to contain the terms and be subject to the conditions
hereinafter set forth.

 

NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as set forth below.

 

Section 1.              Employment.

 

The Company hereby employs
the Executive, and the Executive accepts employment with the Company, upon the
terms and conditions set forth in this Agreement for the period beginning on
the Agreement Date and ending on the Termination Date determined pursuant to Section 4(a) (the
“Employment Period”).

 

Section 2.              Base Salary and Benefits.

 

(a)           During the
Employment Period, the Executive’s base salary shall be $414,356.00 per annum
(the “Base Salary”), which salary shall be payable in such installments
as is customary for senior executives of the Company, but not less frequently
than monthly.  In addition, during the
Employment Period, (i) the Executive shall participate in all bonus and
incentive plans or arrangements which may be provided by the Company from time
to time to its senior executives, with award opportunities commensurate with
Executive’s position, duties and responsibilities, including the 2006
Restricted Stock Incentive Plan and the Deferred Cash Incentive Plan, but
excluding all other equity based incentive or compensation plans; (ii) the
Executive shall be entitled to participate in all savings and retirement plans
which may be provided by the Company from time to time to its senior
executives; (iii) the Executive and the Executive’s spouse and children
shall be eligible to participate in, and receive all benefits under, welfare
and insurance benefit plans which may be provided from time to time by the
Company 

 

 

(including,
without limitation, medical, prescription, dental, disability, individual life,
group life, dependent life, accidental death and travel accident plans) to
senior executives of the Company and their spouses and children generally, in
accordance with the terms of such plans; (iv) the Executive shall be
entitled to fringe benefits which may be provided by the Company from time to
time in accordance with the most favorable fringe benefit plans made available
to senior executives of the Company, generally; and (v) the Executive
shall be entitled to an office of a size and with furnishings and other
appointments, and to secretarial and other assistance, which may be provided by
the Company from time to time, in each case, in accordance with the most
favorable policies applicable to senior executives of the Company
generally.  The Executive acknowledges
that the current office, furnishings, appointments and secretarial and other
assistance provided to him by the Company satisfies the requirements set forth
in Section 2(a)(v).  The Executive
shall be entitled to take four weeks of paid vacation annually, or any greater
amount of paid vacation to which he is entitled under the Company’s vacation
policy as in effect during the Employment Period.  The Board shall conduct a review of, and may
increase (but not decrease), the Executive’s Base Salary on an annual or more
frequent basis.

 

(b)           In addition to
the Base Salary and other benefits specified in Section 2(a), Executive
shall participate in all applicable Management Incentive Plans of the Company.

 

(c)           The Company
shall reimburse the Executive for all reasonable expenses incurred by him in
the course of performing his duties under this Agreement which are consistent
with the Company’s policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company’s
requirements with respect to reporting and documentation of such expenses.

 

(d)           The Company
shall deduct from any payments to be made by it to the Executive under this
Agreement any amounts required to be withheld in respect of any Taxes.

 

Section 3.              Position and Duties.

 

(a)           The Company
employs the Executive as the Executive Vice President and Chief Operating
Officer.  His responsibilities and duties
will be commensurate with the title of his position, and will include those
duties and responsibilities normally performed by the Executive Vice President
and Chief Operating Officer of a private corporation in the Business, including
the management and direction of the affairs of the Company on a day to day
basis and such other duties as the Board shall assign to the Executive from
time to time.

 

(b)           The Executive
acknowledges and agrees to discharge his duties and otherwise act in a manner
consistent with the best interests of the Company and its Subsidiaries.  During the Employment Period, the Executive
shall devote his best efforts, on a full-time basis, to the performance of his
duties and responsibilities under this Agreement (except for vacations to which
he is entitled pursuant to Section 2(a), illness or incapacity or other
personal or personal investment activities that do not interfere with his full
and timely performance of his duties and responsibilities under this
Agreement).  During the Employment
Period, the Executive may, subject to Section 8, (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver
lectures, fulfill speaking engagements or teach at educational institutions,
and (iii) manage 

 

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personal
investments, so long as such activities, either individually or in the
aggregate, do not materially conflict with the performance of the Executive’s
duties under this Agreement.

 

Section 4.              Termination.

 

(a)           Termination
Date.  The Executive’s employment
under this Agreement shall terminate upon the earliest to occur (the date of
such occurrence being the “Termination Date”) of (i) July 31,
2010 (an “Expiration”), (ii) the effective date of the Executive’s
resignation (a “Resignation”), (iii) the effective date of the
Executive’s Resignation for Good Reason, (iv) the Executive’s death, (v) the
Executive’s Disability, (vi) the Executive’s Retirement, (vii) the
effective date of a termination of the Executive’s employment for Cause by the
Company (including by the Board) (a “Termination for Cause”), and (viii) the
effective date of a termination of the Executive’s employment by the Company
(including by the Board) for reasons that do not constitute Cause (a “Termination
Without Cause”).  The effective date
of the Executive’s Resignation or the Executive’s Retirement shall be as
determined under Section 4(b); the effective date of a Resignation for
Good Reason shall be as determined under Section 4(c); the effective date
of the Executive’s Disability shall be the date specified in a Notice of
Termination delivered to the Executive by the Company; and the effective date
of a Termination for Cause or a Termination Without Cause shall be the date
specified in the Notice of Termination delivered to the Executive by the
Company.

 

(b)           Resignation or
Retirement.  The
Executive shall give the Company and the Board at least ninety (90) days’ prior
written notice of a Resignation or Retirement, with the effective date of such
Resignation or Retirement specified therein. 
The Board may, in its discretion, accelerate the effective date of a
Resignation, but not of a Retirement.

 

(c)           Resignation for
Good Reason.  Except for
a Resignation for Good Reason effected pursuant to Section 19(e), the
Executive will give the Company and the Board at least thirty (30) days’ prior
written notice of a Resignation for Good Reason.  Such notice may be provided only after the
Company shall fail to cure or remedy the events described in the definition of “Resignation
for Good Reason” (other than in clause (e) thereof) during the Cure
Period.

 

Section 5.              Effect of Termination; Severance.

 

(a)           In the event of
a Termination Without Cause or a Resignation for Good Reason, the Executive or
his beneficiaries or estate shall receive the following:

 

(i)            a lump sum payment of the
unpaid portion of the Base Salary, computed on a pro  rata basis
to the Termination Date, payable on the Company’s next payroll date;

 

(ii)           subject to Section 17(b),
the monthly portion of the Base Salary, payable in such installments as is
customary for senior executives of the Company, but not less frequently than
monthly, over the period beginning on the Termination Date and ending on the
second anniversary of the Termination Date; provided, however,
that in the event of a breach by the Executive of Sections 6, 7, 8 or 9 on or
after the Termination Date, the provisions of Section 11 shall apply;

 

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(iii)          subject to Section 17(b),
a lump sum amount equal to any incentive plan award earned under any applicable
Management Incentive Plan that was paid or is payable to the Executive for the
year preceding the calendar year in which the Termination Date occurs (the “Incentive
Plan Award”), multiplied by a fraction, the numerator of which is the
number of days of the then-current calendar year that elapse before the
Termination Date, and the denominator of which is 365; provided, however,
that in the event of a breach by the Executive of Sections 6, 7, 8 or 9 on or
after the Termination Date, the provisions of Section 11 shall apply;

 

(iv)          subject to Section 17(b),
a lump sum payment in an amount equal to two times the Incentive Plan Award,
payable on the Termination Date.

 

(v)           a lump sum reimbursement for
any expenses for which the Executive shall not have been previously reimbursed,
as provided in Section 2(c), payable on the next payroll date following
the date on which such reimbursement expense is submitted to the Company; provided,  however, that such reimbursement
expense is submitted to the Company within one year from the Termination Date;
and

 

(vi)          subject to Section 17,
continued participation in the Company’s comprehensive medical and dental plan
for the period beginning on the Termination Date and ending on the second
anniversary of the Termination Date, with the COBRA continuation coverage
qualifying event connected with the Executive’s termination occurring when he
loses coverage occurring at the end of that two-year period.  If it is unable to obtain the consent of its
medical and/or dental plan insurer to provide coverage under this clause (v),
the Company may instead pay the full premium cost of other medical and dental
insurance that provides comparable coverage for the required two year period,
and require the Executive to pay an amount equal to the then-current COBRA
continuation premium for the period commencing on the second anniversary of the
Termination Date during which the Executive would be entitled to COBRA
continuation coverage (with the Executive and his dependents being treated for all
notice, election, coverage entitlement and other administrative purposes the
same as other COBRA qualified beneficiaries under the Company’s medical and
dental plan).  Payment or reimbursement
of the amount of any premium, medical or dental expenses under this clause (v) shall
be made on or before the last day of the Executive’s taxable year following the
taxable year in which the premium, medical or dental expense was incurred.  The parties agree that the Executive’s
entitlement to medical and dental coverage during the two years after the
Termination Date will end on the date he becomes eligible for comprehensive
medical and dental coverage under a plan of his successor employer, if he
becomes so eligible before the second anniversary of the Termination Date.

 

(b)           In the event of
the Executive’s death, Disability, Retirement or an Expiration, the Executive
or his beneficiaries or estate shall have the right to receive the following:

 

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(i)            a lump sum payment of the
unpaid portion of the Base Salary, computed on a pro  rata basis
to the Termination Date, payable on the Company’s next payroll date;

 

(ii)           a lump sum reimbursement for
any expenses for which the Executive shall not have been previously reimbursed,
as provided in Section 2(c), payable on the next payroll date following
the date on which such reimbursement expense request is submitted to the
Company; provided,  however,
that such reimbursement expense is submitted to the Company within one year from
the Termination Date; and

 

(iii)          subject to Section 17(b),
in the event of a termination due to Disability, such Executive’s Base Salary
will continue to be in such installments as is customary for senior executives
of the Company, but not less frequently than monthly, until such time as the
Executive first receives benefits under the Company’s then-effective long-term
disability plan; and

 

(iv)          subject to Section 17(b) and
solely in the case of the Executive’s death or Disability, an amount equal to
any Incentive Plan Award earned under any applicable Management Incentive Plan
that was paid or is payable to the Executive for the year preceding the
calendar year in which the Termination Date occurs, multiplied by a fraction,
the numerator of which is the number of days of the then-current calendar year
that elapse before the Termination Date, and the denominator of which is 365; provided,
however, that in the event of a breach by the Executive of Sections 6,
7, 8 or 9 on or after the Termination Date, the provisions of Section 11
shall apply.

 

(c)           In the event of
a Termination for Cause or a Resignation, the Executive or his beneficiaries or
estate shall have the right to receive the following:

 

(i)            a lump sum payment of the
unpaid portion of the Base Salary, computed on a pro  rata basis
to the Termination Date, payable on the Company’s next payroll date; and

 

(ii)           a lump sum reimbursement for
any expenses for which the Executive shall not have been previously reimbursed,
as provided in Section 2(c), payable on the next payroll date following
the date on which such reimbursement expense request is submitted to the
Company; provided,  however,
that such reimbursement expense is submitted to the Company within one year
from the Termination Date.

 

(d)           Notwithstanding any other term of this Agreement to
the contrary, but subject to Section 11 hereof, upon termination of the
Executive’s employment for any reason, the Executive will in all events
receive, when they would otherwise be then due and owing, any amounts that, as
of his Termination Date, have accrued and become vested under the Pliant 2006
Restricted Stock Incentive Plan, the Pliant Deferred Cash Incentive Plan, the
Company’s qualified and nonqualified retirement plans, all statutory rights to
receive or purchase welfare benefits, reimbursement for unreimbursed expenses
in accordance with the policies of the 

 

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Company in effect as of
the Termination Date, accrued vacation pay, and any other employee benefits
owing to him as of the Termination Date, all as determined in accordance with
the applicable terms of the plans themselves and the laws applicable to
them.  In addition, the Company shall
continue (i) to indemnify the Executive for acts and omissions which
occurred prior to the Termination Date, subject to and in accordance with the
terms of the Company’s organizational documents referred to in Section 15(b) as
they are in effect on the Termination Date and (ii) to retain coverage for
the Executive under the Company’s directors and officers liability insurance
policies as provided in Section 15(a).

 

(e)           If the Executive is employed as the
Executive Vice President and Chief Operating Officer of the Company following
an Expiration (such period, the “Post-Employment Agreement Period”) and
no other event of termination of employment under this Agreement has occurred
prior to such Expiration, the Executive shall be employed by the Company as an “at-will”
employee during the Post-Employment Agreement Period.  Accordingly, the Executive’s employment may
be terminated at any time during the Post-Employment Agreement Period, for any
reason.  Subject to Section 17(b),
if the Executive’s employment with the Company is terminated by the Company at
any time during the Post-Employment Agreement Period for reasons that
constitute a Termination
without Cause, the Executive or his beneficiaries or estate shall receive the monthly portion
of the Base Salary, payable monthly, during the period beginning on the date
his employment with the Company is terminated and ending on the first
anniversary thereof; provided, however, that in the event of a
breach by the Executive of Sections 6, 7, 8 or 9, the provisions of Section 11
shall apply.

 

(f)            Upon
termination of his employment with the Company for any reason, the Executive
shall be deemed to have automatically resigned as an officer, manager, member,
and director of the Company and its Subsidiaries and the Executive shall
execute and deliver to the Company documentation evidencing such resignations
(but the failure to execute and deliver such documentation shall not affect
such deemed resignations).  The
resignations effected by this Section 5(f) shall not constitute a “Resignation
for Good Reason” or a “Resignation” hereunder.

 

Section 6.              Nondisclosure and Nonuse of Confidential Information.

 

The Executive will not
disclose or use at any time, either during the Employment Period or thereafter,
any Confidential Information of which the Executive is or becomes aware,
whether or not such information is developed by him, except, during the
Employment Period, to the extent that such disclosure or use is directly
related to and reasonably consistent with the Executive’s performance of duties
assigned to the Executive by the Company, and except in connection with
enforcing the Executive’s rights under this Agreement or if compelled by a
court or governmental agency.

 

Section 7.              Inventions and Patents.

 

The Executive agrees that
all Work Product belongs to the Company. 
The Executive will perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, the execution and delivery of
assignments, consents, powers of attorney and other instruments) and to provide
reasonable assistance to the Company in connection with the prosecution of any 

 

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applications
for patents, trademarks, trade names, service marks or reissues thereof or in
the prosecution or defense of interferences relating to any Work Product.  Notwithstanding the foregoing, the Executive
has been notified by the Company, and understands, that the foregoing
provisions of this Section 7 do not apply to an invention for which no
equipment, supplies, facilities or trade secret information of Company or its
affiliates was used and which was developed entirely on the Executive’s own
time, unless: (a) the invention relates (i) to the business of the
Company, or (ii) to the Company’s actual or demonstrably anticipated
research and development, or (b) the invention results from any work
performed by the Executive for the Company or any of its affiliates.

 

Section 8.              Non-Compete, Non-Solicitation, Non-Disparagement.

 

The Executive acknowledges
and agrees that during the course of such Executive’s association with the
Company or any of its Subsidiaries, the Executive has had the opportunity to
develop relationships with existing employees, customers and other business
associates of the Company and its Subsidiaries which relationships constitute
goodwill of the Company and its Subsidiaries, and the Company and its
Subsidiaries would be irreparably damaged if the Executive were to take actions
that would damage or misappropriate such goodwill.  Accordingly, from and after the Agreement Date, the Executive covenants and agrees to
comply with the terms and provisions set forth in this Section 8.

 

(a)           The Executive acknowledges
that the Company and its Subsidiaries currently conduct the Business throughout
the world (the “Territory”). 
Accordingly, during the period (the “Non-Compete Period”)
commencing on the Agreement Date and ending on the first anniversary of the
Termination Date, the Executive shall not, without the consent of the Company,
directly or indirectly, enter into, engage in, assist, give or lend funds to or
otherwise finance, be employed by or consult with, or have a financial or other
interest (other than an ownership interest of less than 1% of the outstanding
common equity securities in any publicly traded company) in, any business which
competes with the Business, whether for or by himself or as an independent
contractor, agent, stockholder, partner or joint venturer for any other
Person.  To the extent that the covenant
provided for in this Section 8(a) may later be deemed by a court to
be too broad to be enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making such determination
shall have the power to reduce the duration or scope of this Section 8(a),
and to add or delete specific words or phrases. 
This Section 8(a) as modified shall then be enforced.

 

(b)           The Executive
covenants and agrees that during the Non-Compete Period, the Executive will
not, directly or indirectly, either for himself or for any other Person (i) solicit
any employee of the Company or any of its Subsidiaries to terminate his or her
employment with the Company or any of its Subsidiaries, (ii) solicit any
customer of the Company or any of its Subsidiaries to purchase products or
services of or on behalf of the Executive or such other Person that are
competitive with the products or services provided by the Company or any of its
Subsidiaries or (iii) take any action (not otherwise described in Section 8(b)(i) and
(ii)) intended to cause injury to the relationships between the Company or any
of its Subsidiaries or any of their employees and any lessor, lessee, vendor,
supplier, customer, distributor, employee, consultant or other business
associate of the Company or any of its Subsidiaries as such relationship
relates to the Company’s or any of its Subsidiaries’ conduct of the
Business.  

 

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Notwithstanding
the foregoing, the restrictions set forth in Section 8(b)(i) shall
expire on the first anniversary of a Liquidation Event.

 

(c)           The Executive
understands that the foregoing restrictions may limit his ability to earn a
livelihood in a business similar to the Business, but he nevertheless believes
that he has received and will receive sufficient consideration and other
benefits under this Agreement to clearly justify such restrictions which, in
any event, he does not believe would prevent him from otherwise earning a
living.

 

Section 9.              Delivery of Materials Upon Termination of Employment.

 

The Executive shall deliver
to the Company at the termination of the Employment Period or at any time the
Company may request, all property belonging to the Company or its Subsidiaries,
including memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information or Work Product which he may then possess or have
under his control regardless of the location or form of such material and, if
requested by the Company, will provide the Company with written confirmation
that all such materials have been delivered to the Company.

 

Section 10.            Insurance.

 

The Company may, for its own
benefit, maintain “keyman” life and disability insurance policies covering the
Executive.  The Executive will cooperate
with the Company and provide such information or other assistance as the
Company may reasonably request in connection with the Company’s obtaining and
maintaining such policies.

 

Section 11.            Enforcement.

 

Because the Executive’s
services are unique and because the Executive has access to Confidential
Information and Work Product, the parties hereto agree that money damages would
be an inadequate remedy for any breach of Sections 5(f), 6, 7, 8 or 9 of this
Agreement.  Therefore, in the event of a
breach or threatened breach of Sections 5(f), 6, 7, 8 or 9 of this Agreement,
the Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, such Sections. 
In addition to the foregoing, and not in any way in limitation thereof,
or in limitation of any right or remedy otherwise available to the Company, if
the Executive violates any provision of the foregoing Sections 5(f), 6, 7, 8 or
9, the Company shall have the right to set-off any payments then or thereafter
due from the Company to the Executive pursuant to Section 5(a)(ii), Section 5(a)(iii),
5(a)(iv), 5(b)(iv), the Pliant
2006 Restricted Stock Incentive Plan and the Pliant Deferred
Cash Incentive Plan against any damages and costs or expenses incurred by the
Company or its Subsidiaries by such violation, in each case without limiting or
affecting the Executive’s obligations under such Sections 5(f), 6, 7, 8 and 9
or the Company’s other rights and remedies available at law or equity.

 

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Section 12.            Representations.

 

(a)           Each party hereby represents
and warrants to the other party that the execution, delivery and performance of
this Agreement by such party does not and will not conflict with, breach,
violate or cause a default under any agreement, contract or instrument to which
such party is a party or any judgment, order or decree to which such party is
subject.

 

(b)           The Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any Person other than the
Company.

 

(c)           The Company represents that
the execution, delivery and performance of this Agreement by the Company has
been duly and validly authorized by the Board.

 

Section 13.            Expense
Reimbursement and Default Interest.

 

(a)           The Company
will reimburse the Executive for reasonable legal fees and expenses incurred by
the Executive in connection with the negotiation and execution of this
Agreement.

 

(b)           If the Company fails to pay
any amount due to the Executive under this Agreement within thirty (30) days
after such amount became due and owing hereunder, interest shall accrue on such
amount from the date it became due and owing until the date of payment at an
annual rate (based on a 365 day year) equal to the prime lending rate publicly
announced from time to time by Credit Suisse First Boston in effect at its
principal office in New York City during the period of such nonpayment plus two
percent.

 

Section 14.            No
Mitigation

 

The Executive shall not have
any duty to mitigate the amounts payable by the Company under this Agreement
upon any termination of employment by seeking new employment following
termination.  Except as specifically
otherwise provided in this Agreement, all amounts payable pursuant to this
Agreement shall be paid without reduction to the extent of any amounts of
salary, compensation or other amounts which may be paid or payable to the
Executive as the result of the Executive’s employment by another employer or
self employment.

 

Section 15.            Indemnification.

 

(a)           During the
Employment Period, the Company shall maintain directors and officers liability
insurance covering the Executive through the second anniversary of the
Termination Date.  Such insurance shall
provide coverage in amounts and on terms and conditions customary for a private
corporation in the Business. The Executive confirms that the current directors
and officers liability insurance policy satisfies the foregoing requirements.

 

(b)           During the
Employment Period, the Company shall not amend or repeal any article, section
or provision of the Company’s Certificate of Incorporation or Bylaws related 

 

9

 

to
liability and/or indemnification of officers and directors of the Company in a
manner materially adverse to the Executive without the prior written consent of
the Executive.

 

Section 16.            Parachute
Gross-Up

 

If the Executive incurs an excise tax imposed on “excess
parachute payments” under Code Section 4999, as defined in Code Section 280G,
on account of any amount paid or payable to, or for the benefit of, the
Executive by the Company or its stockholders or affiliates in respect of
obligations of the Company, in each case, in respect of this Agreement or any
of the Company’s incentive and benefit plans, then the Company shall pay the
Executive, simultaneously with the payment of the excess parachute payment(s) and
in no event later than the end of the Executive’s taxable year after the
taxable year in which such taxes are remitted and subject to Section 17,
an amount equal to the sum of (x) the excise taxes payable on such excess
parachute payments, plus (y) an additional amount such
that after payment of all Taxes on such additional amount there remains a
balance sufficient to pay Taxes actually due and payable on the payment made in
clause (x).

 

Section 17.            Section 409A
Amendments

 

(a)           Benefits under this Agreement are intended either not
to be part of a deferred compensation plan within the meaning of Section 409A
of the Code and regulations and rulings thereunder (“Section 409A”)
or to meet the requirements of Section 409A for deferred compensation
plans; and this Agreement shall be construed consistently with that intent.

 

(b)           Without limiting the generality of Section 17(a) and
notwithstanding any other provision in this Agreement to the contrary, if
immediately prior to the Termination Date or, as applicable, the termination of
the Executive’s employment during any Post-Employment Agreement Period, the
Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of
the Code and the regulations or rulings thereunder), any payments otherwise
payable to the Executive pursuant to clauses (ii), (iii) or (iv) of Section 5(a),
clauses (iii) or (iv) of Section 5(b) or Section 5(e) during
the first six (6) months following the Termination Date or, as applicable,
the termination of the Executive’s employment during any Post-Employment
Agreement Period (without regard to this Section 17(b)) shall be delayed
and paid to the Executive in a lump sum on the date that is six (6) months
after the Termination Date or, as applicable, the date of termination of the
Executive’s employment during any Post-Employment Agreement Period, and any
remaining payments due under Section 5 shall be paid in accordance with
the terms of Section 5; provided, however, that this Section 17(b) shall
not apply if the Executive’s employment is terminated due to his death or due
to his disability (within the meaning of Code Section 409A(a)(2)(C)), and
further provided that if the Executive dies prior to the date that is six (6) months
after the Termination Date or, as applicable, the date of termination of the
Executive’s employment during any Post-Employment Agreement Period, his
beneficiaries or estate shall receive an immediate lump sum payment of all
amounts otherwise payable to the Executive through the date of the Executive’s
death pursuant to Section 5 (without regard to this Section 17(b))
that were delayed pursuant to this Section 17(b), and any remaining
payments due under Section 5 will be paid in accordance with the terms of Section 5.

 

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Section 18.            Definitions.

 

“Board” shall mean
the board of directors of the Company, excluding the Executive if he is a
member thereof at such time.

 

“Business Day” shall
mean any day that is not (a) a Saturday, Sunday or legal holiday or (b) a
day in which banks are not required by law to be open in New York, New York.

 

“Cause”
shall mean:

 

(a)           (i) the
Executive commits a crime involving his fraud, theft or dishonesty or (ii) engages
in willful or wrongful activities that are materially detrimental to the
Company or its Subsidiaries;

 

(b)           the material
and willful breach by the Executive of his responsibilities under this
Agreement or willful failure to comply with reasonable directives or policies
of the Company or the Board, but only if the Company has given Executive
written notice specifying the breach or failure to comply, demanding that the
Executive remedy the breach or failure to comply and the Executive (i) failed
to remedy the alleged breach or failed to comply within thirty days after
receipt of the written notice and (ii) failed to take all reasonable steps
to that end during the thirty days after he received the notice; or

 

(c)           the continued use of alcohol or drugs by
the Executive to an extent that such use interferes with the performance of the
Executive’s duties and responsibilities.

 

Notwithstanding the
foregoing, the term “Cause” shall not include any one or more of the
following: (i) bad management decision-making by the Executive or (ii) any
act or omission reasonably believed by the Executive in good faith to have been
in and not opposed to the best interests of the Company and its Subsidiaries
(without intent of the Executive to gain, directly or indirectly, a profit to
which the Executive was not legally entitled) and reasonably believed by the
Executive not to have been improper or unlawful.

 

The Executive shall have an
opportunity to appear before the Board, with or without legal representation,
in connection with any event or circumstance which is the subject matter of a
Termination for Cause in order to offer or present his perspective on any of
the matters which are the subject of a Termination for Cause.  In the event of a dispute between the
Executive and the Company regarding whether “Cause” exists, any determination
by the Board shall be subject to de novo review by any forum deciding the
disputed issue; provided, however, that such de novo review shall
not otherwise change or shift the burden of proof in connection with any
dispute resolution proceeding.

 

“COBRA” means the
Consolidated Omnibus Budget Reconciliation Act of 1985.

 

“Code” means the
Internal Revenue Code of 1986 and the regulations thereunder, as amended and in
effect from time to time.

 

“Common Stock” means
the common stock of the Company, $0.01 par value per share.

 

11

 

“Confidential Information”
means information that is not known to the public, that is used, developed or
obtained by the Company or any of its Subsidiaries in connection with the
Business, and that the Executive learns in the course of performing services
for the Company or any of its Subsidiaries, including, but not limited to, (a) information,
observations, procedures and data obtained by the Executive while employed by
the Company (including those obtained prior to the Agreement Date) concerning
the business or affairs of the Company or any of its Subsidiaries, (b) products
or services of the Company or any of its Subsidiaries, (c) costs and
pricing structures of the Company or any of its Subsidiaries, (d) analyses
of the Company or any of its Subsidiaries, (e) drawings, photographs and
reports of the Company or any of its Subsidiaries, (f) computer software,
including operating systems, applications and program listings of the Company
or any of its Subsidiaries, (g) flow charts, manuals and documentation of
the Company or any of its Subsidiaries, (h) data bases of the Company or
any of its Subsidiaries, (i) accounting and business methods of the
Company or any of its Subsidiaries, (j) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice of the Company or any of its Subsidiaries, (k) customers
and customer lists of the Company or any of its Subsidiaries, (l) other
copyrightable works of the Company or any of its Subsidiaries, (m) all
production methods, processes, technology and trade secrets of the Company or
any of its Subsidiaries, and (n) all similar and related information of
the Company or any of its Subsidiaries in whatever form.  Confidential Information will not include any
information that is now or later becomes part of the public domain, without
breach of this Agreement by the Executive.

 

“Disability” means any medically determinable physical or
mental impairment that has lasted, or is reasonably expected to last, for a
period of at least six (6) months, can reasonably be expected to be
permanent or of indefinite duration, and renders the Executive unable to
perform his duties hereunder, as certified by a physician jointly selected by
the Company and the Executive or the Executive’s legal representative.

 

“JPMP” means J.P.
Morgan Partners (BHCA), L.P., a Delaware limited partnership.

 

“Liquidation Event”
means the consummation of (a) the transfer (in one or a series of related
transactions) of all or substantially all of the Company’s consolidated assets
to a Person or a group of Persons acting in concert (other than to a Subsidiary
of the Company, JPMP or any of their respective affiliates); (b) the sale
or transfer (in one or a series of related transactions) of a majority of the
outstanding Common Stock to one Person or a group of Persons acting in concert
(other than to JPMP or any of its affiliates); or (c) the merger or
consolidation of the Company with or into another Person (other than to JPMP or
any of its affiliates), in the case of clauses (b) and (c) above,
under circumstances in which the holders of a majority of the voting power of
the outstanding Common Stock immediately prior to such transaction own less
than a majority in voting power of the outstanding Common Stock or other voting
securities of the surviving or resulting corporation or acquirer, as the case
may be, immediately following such transaction.

 

“Notice of Termination”
means a written notice delivered by the Company to the Executive which sets
forth (a) the specific termination provisions in this Agreement relied
upon by the Company to effect a termination of the Executive’s employment
hereunder, (b) in 

 

12

 

reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under such termination provision, as applicable,
and (c) if the Termination Date is other than the date of receipt of such
Notice of Termination, the Termination Date.

 

“Person” shall be
construed as broadly as possible and shall include an individual person, a
partnership (including a limited liability partnership), a corporation, an
association, a joint stock company, a limited liability company, a trust, a joint
venture, an unincorporated organization and a governmental authority.

 

“Resignation for Good
Reason” occurs if the Executive terminates his employment with the Company
and the Subsidiaries in accordance with Section 4(c) because, without
Executive’s express written consent, any of the events described below occurs
during the Employment Period and, with respect to the events described in
clauses (a) through (d) below, the Company fails to cure or remedy
the same within thirty days (the “Cure Period”) after receiving written
notice thereof from the Executive, which the Executive shall deliver within
ninety (90) days following the occurrence of any of such events; it being
agreed that the failure by the Executive to provide such notice during such 90
day period shall preclude the Executive from invoking any such events as the
basis for a Resignation for Good Reason:

 

(a)           the assignment
to the Executive of any material duty materially inconsistent with the
Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section 3(a);

 

(b)           the material
breach by the Company of any material provision of this Agreement (it being
agreed that the failure to elect or re-elect the Executive to the Board in
accordance with Section 5(f) during the Employment Period and the
failure to appoint or re-appoint the Executive as the Executive Vice President
and Chief Operating Officer of the Company in accordance with Section 3(a) during
the Employment Period shall constitute a material breach by the Company of a
material provision of this Agreement);

 

(c)           any reduction
in the Base Salary payable hereunder;

 

(d)           the Company requires the Executive to, or assigns
duties to the Executive which would reasonably require him to, relocate his
principal business office more than forty (40) miles from where it is located
on the Agreement Date;

 

(e)           a termination of employment by the Executive for any
reason or no reason at any time prior to the six month anniversary of the date
of a Liquidation Event.

 

“Retirement” means
the Executive’s election to terminate his employment with the Company and its
Subsidiaries following the date of his sixty-fifth birthday.

 

“Stockholders’ Agreement”
means the Stockholders’ Agreement dated as of July 18, 2006, among the
Company and the stockholders of the Company from time to time, as the same has
been amended and as may be amended, modified or supplemented from time to time.

 

13

 

“Subsidiary” of a
Person means any other Person fifty percent (50%) or more of whose outstanding
voting securities or other equity interests are directly or indirectly owned by
the first Person.

 

“Taxes” means any
Federal, state or local income, excise or other taxes.

 

“Termination Date”
shall have the meaning prescribed by Section 4(a); provided, however,
that for purposes of determining the date(s) of any payment(s) under Section 5
or (if applicable) Section 17(b), 
the Termination Date shall be the date of separation from service (as
defined for purposes of Section 409A).

 

“Work Product” shall
mean all inventions, innovations, improvements, technical information, systems,
software developments, methods, designs, analyses, drawings, reports, service
marks, trademarks, tradenames, logos and all similar or related information
(whether patentable or unpatentable) which relates to the Company’s or any of
its Subsidiaries’ business, research and development or existing or future
products or services and which are conceived, developed or made by the
Executive (whether or not during usual business hours and whether or not alone
or in conjunction with any other Person) while employed by the Company
(including those conceived, developed or made prior to the Agreement Date)
together with all patent applications, letters patent, trademark, tradename and
service mark applications or registrations, copyrights and reissues thereof
that may be granted for or upon any of the foregoing.

 

Section 19.            General Provisions.

 

(a)           Severability.  It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. 
Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

 

(b)           Notices.  All notices, requests, demands, claims and
other communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail,
return receipt requested, (iii) telecopied or (iv) sent to the
recipient by a nationally-recognized overnight courier service (charges
prepaid) and addressed to the intended recipient as set forth below:

 

14

 

(i)            if to the
Executive, to him at his last known residence address on file with the Company,
with a copy to

 

62 Azalea Drive

Apartment 114

Schaumburg, Illinois  60173

 

(ii)           if to the
Company, to:

 

Pliant Corporation

1475 Woodfield Road

Suite 700

Schaumburg, Illinois 60173

Attention: Chief Financial
Officer

Telecopier:   (847) 969-3338

Telephone: 
(847) 969-3330

 

with a copy to:

 

CCMP Capital Advisors, LLC

245 Park Avenue, 16th
Floor

New York, New York
10167-2402

Telephone: 
(212) 600-9650

Telecopier: 
(917) 464-9024

Attention: 
Timothy Walsh

 

or such other address as the recipient party to whom notice is to be
given may have furnished to the other party in writing in accordance
herewith.  Any such communication shall
deemed to have been delivered and received (i) in the case of personal
delivery, on the date of such delivery, (ii) in the case of delivery by
mail, on the date received, (iii) if telecopied, on the date telecopied as
evidenced by confirmed receipt, and (iv) in the case of delivery by
nationally-recognized, overnight courier, on the date received.

 

(c)           Entire
Agreement.  This
Agreement and the documents expressly referred to herein embody the complete
agreement and understanding among the parties and, with respect to the subject
matter of this Agreement, supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.

 

(d)           Counterparts
and Facsimile Execution. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (by facsimile or otherwise) to the other
party, it being understood that all parties need not sign the same
counterpart.  Any counterpart or other
signature to this Agreement that is delivered by facsimile shall be deemed for
all purposes as constituting good and valid execution and delivery  by such party of this Agreement.

 

15

 

(e)           Successors and Assigns.  Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Executive and the Company and their respective successors, assigns, heirs,
representatives and estate, as the case may be; provided, however,
that the obligations of the Executive under this Agreement shall not be
assigned without the prior written consent of the Company.  The Company will request any successor to all
or substantially all assets of the Company upon a Liquidation Event of the type
specified in clause (a) thereof to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.  If such successor shall not so assume the
performance thereof or if the Executive does not consent to such assignment,
then the Executive’s sole recourse under this Agreement with respect to such
event shall be to effect a Resignation for Good Reason, effective immediately
prior to the consummation of such Liquidation Event; provided, however,
that such Resignation for Good Reason shall not be effective if such
Liquidation Event shall not be consummated. 
Any successor to the assets of the Company which so assumes or agrees to
perform this Agreement with the consent of the Executive shall be liable under
this Agreement as if such successor were the Company.

 

(f)            Payments to Beneficiary.  If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in accordance with the terms of this Agreement to the beneficiary
designated in writing by the Executive, or if none is so designated, to the
Executive’s estate.

 

(g)           Survival of the
Executive’s Rights.  All of the
Company’s and Executive’s rights hereunder shall survive any termination of the
relationship of the Executive with the Company, other than those which
expressly terminate, or are contemplated to terminate hereunder, upon a
termination of employment.

 

(h)           Amendment and
Waiver.  The provisions of this
Agreement may be amended and waived only with the prior written consent of the
Company and the Executive, and no course of conduct or failure or delay in
enforcing the provisions of this Agreement shall affect the validity, binding
effect or enforceability of this Agreement or any provision hereof.

 

(i)            Governing Law.  This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Illinois without
giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the
State of Illinois.

 

(j)            Selection of
Jurisdiction.  WITH RESPECT TO ANY LAWSUIT OR PROCEEDING
ARISING OUT OF OR BROUGHT WITH RESPECT TO THIS AGREEMENT, EACH OF THE PARTIES
HERETO IRREVOCABLY (a) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED
STATES FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS; (b) WAIVES ANY
OBJECTION IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING
BROUGHT IN ANY SUCH COURT; (c) WAIVES ANY CLAIM THAT SUCH PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM; AND (d) FURTHER WAIVES THE RIGHT TO
OBJECT, WITH RESPECT TO SUCH PROCEEDINGS, THAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER SUCH PARTY.

 

16

 

(k)           Waiver of Jury
Trial.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

(l)            Mutual
Contribution.  The parties
to this Agreement and their counsel have mutually contributed to its
drafting.  Consequently, no provision of
this Agreement shall be construed against any party on the ground that one
party drafted the provision or caused it to be drafted.

 

(m)          Descriptive
Headings; Nouns and Pronouns.  Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.  Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice-versa.

 

IN WITNESS WHEREOF, the parties
hereto have executed this Employment Agreement on and to be effective as of the
dates first written above.

 

 

	
   

  	
  PLIANT CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Harold C. Bevis

  
	
   

  	
   

  	
  Name:  Harold C. Bevis

  
	
   

  	
   

  	
  Title:    President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   /s/ R. David Corey

  
	
   

  	
  R. David Corey

  

 

17Exhibit 10.5

 

June 2, 2008

 

Mr. Stephen T. Auburn

c/o Pliant Corporation

1475 Woodfield Road

Schaumburg, Illinois 60173

 

Dear Steve:

 

This letter revises and
supersedes as of January 1, 2008, the severance benefit provisions in your
letter to the Company of July 19, 2005, in light of the tax regulations
under Section 409A of the Internal Revenue Code.

 

In the event that your
employment is involuntarily terminated by the Company without cause, or as the
result of the occurrence of a change in control of the Company, you will
receive payment of not less than fifty-two weeks of salary continuance (payable
over the 12-month period beginning with your separation from service)  In the event that upon your separation you
are a “specified employee” of a “public company” (as those terms are defined in
those regulations) and the total salary continuance exceeds the maximum
involuntary separation pay amount (currently $460,000) permitted by the Section 409A
regulations, the excess will be paid no earlier than the date that is six
months after your separation from service.

 

These severance benefits in
lieu of amounts otherwise payable under the Company’s applicable severance and
salary continuation plan or program, and are conditional upon your delivery,
within six months of your separation from service, of a release of any
employment-related claims and customary covenants in form and substance
satisfactory to the Company.

 

If you agree that this
correctly restates the terms of your severance benefit, please sign one copy of
this letter below and return the signed copy to me.

 

	
   

  	
   

  	
  Pliant Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Harold C. Bevis

  
	
   

  	
   

  	
  Harold C. Bevis

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  

 

Agreed:

 

	
   /s/ Stephen T. Auburn

  	
   

  
	
  Stephen T. Auburn

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