Document:

VRTV-Exhibit 10.12-20140630

EXHIBIT 10.12

February 13, 2014

Stephen Smith
31729 Maritime Ct 
Avon Lake, OH 44012 

Dear Steve

As you are aware, International Paper and Bain Capital are in discussions regarding a transaction (the “Transaction”) that would combine their respective distribution businesses into a newly formed company (“Newco”) whose shares will be listed on a national stock exchange.  We have been discussing an employment opportunity for you with Newco.  Given the nature of the Transaction and the amount of work to be done prior to closing the Transaction, we intend to hire you as an employee of IP/xpedx on the terms set forth below shortly after signing the definitive agreement for the Transaction, and in no event later than July 1, 2014. At the closing of the Transaction you would become an employee of Newco on the same terms as described below. You will be given ten (10) business days’ notice before your employment by Newco is publicly announced. If the Transaction should fail to close, you will remain an employee of IP/xpedx in accordance with the terms described herein.

We are pleased to confirm our offer of employment as Chief Financial Officer of Newco.  The specifics of our offer are outlined below:

		
	•
	Primary work location:  Atlanta, GA once Newco’s executive offices are available.  Prior to that time the expectation is you will work from Loveland OH.

		
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	Start Date: within 30 days of public announcement (the “Public Announcement”) that the definitive agreement for the Transaction has been signed.

		
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	Monthly salary of $45,833 payable in accordance with our normal payroll practices, currently payable on a the last working day of each month;

		
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	Sign-on bonus: $1,500,000 payable within 30 days of employment by IP/xpedx.

		
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	Participation in annual non-equity incentive plan which provides an opportunity to earn a target of 85% of your base salary contingent upon attainment of selected business goals;

		
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	For the period of time you are employed by IP/xpedx, the terms of International Paper’s Management Incentive Plan (MIP) will be applicable with performance award levels and targets prorated for the portion of the performance cycle employed by IP/xpedx in accordance with the terms of the MIP. .

		
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	Once employed by Newco the terms of Newco’s non-equity incentive plan (“NewCo Management Incentive Plan”) will be applicable, It is anticipated that the expectations and opportunities for performance incentives will be consistent with that presented to potential Lenders.

		
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	Participation in a long term incentive plan of Newco.  See Exhibit A to this offer letter for a summary of key terms.  For the time you are employed by IP/ xpedx you will participate in International Paper’s PSP program at a similar target level as set forth in Exhibit A. Your portion of the 2014 grant earned in 2014 will be paid out in cash following the closing of the Transaction.

		
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	Commuting expenses.  Through September 2015 your commuting expenses (flight, accommodations, rental car) will be expensed as travel or grossed up, as appropriate.  This benefit does not include living costs like food, gasoline for car, household expenses.

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	Additional incentive compensation.  You will have an opportunity to receive an additional incentive payment (“Additional Incentive Payment”) based upon Newco achieving certain EBITDA levels.  Specifics of the plan will be approved by the board of directors of Newco.  However, we contemplate this payout will be tied to EBITDA levels that Newco must achieve in order to trigger a payment to International Paper under the “earn-out” provisions of the definitive agreement for the Transaction.  

		
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	If your payout threshold is met, your minimum payment will be $1,000,000, target will be $2,000,000 and maximum payment of $3,000,000 is possible.

		
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	It is possible that the Compensation Committee of the NewCo Board will decide to implement a compensation plan (“New Incentive”) for you and other members of senior management that is similar to this Additional Incentive Payment.  In that event, the New Incentive program or plan approved by the Compensation Committee will replace the Additional Incentive Payment and your target payout under the New Incentive will not be less than $2,000,000.  The Compensation Committee will have the final determination on whether the New Incentive is similar to the Additional Incentive Payment, but it will not be less than the current Additional Incentive Compensation Plan set forth above.

		
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	Your execution of a non-compete/ non-solicitation agreement.  This agreement will be assigned to Newco at the closing of the Transaction.

		
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	Vacation: 4 weeks

		
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	Relocation: Newco Relocation program, which will be presented when available.

		
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	Travel Expenses.  All reasonable and necessary travel expenses will be paid by the company.

		
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	Severance:  

		
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	You will not be covered by IP/xpedx’s standard severance agreement, but rather the following provisions relating to severance.  

		
	i.
	if the closing of the Transaction does not occur prior to the one-year anniversary of the Public Announcement, you will have the option to leave the employment of IP/xpedx and be paid a severance of 24 months base pay and your non-equity incentive plan payout at two times target.  You must inform IP/xpedx of your decision regarding this severance within the seven days following the one-year anniversary of the Public Announcement.  

		
	ii.
	If you are severed for any reason, other than discharge for cause, you will receive an amount equal to one and one-half (1.5) times: (i) annual base pay, plus (ii) the average annual NewCo Management Incentive Plan payments earned during your employment. 

		
	iii.
	“Discharge for cause” is defined as a discharge resulting from employee’s willful misconduct, failure to comply with law or material company policy (including, but not limited to, the standards of conduct and codes of ethics), theft, dishonesty, falsification of company documents, or insubordination.

		
	iv.
	In order to receive the severance benefits described above, you must sign and not revoke a waiver and release of claims prepared by the Company at the time of termination.

		
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	Notwithstanding anything to the contrary contained in this offer letter, you shall be entitled to participate in all health, welfare, retirement, equity and perquisite plans and programs made available to other comparable senior executives of Newco generally on terms and conditions no less favorable than those offered to such senior executives

		
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	After you have accepted this offer of employment, you will receive instructions showing you how to access the online new hire materials you will need to complete for enrollment in our current IP/xpedx benefit plans, including the savings investments, retirement program, life insurance, optional medical, dental and long-term disability insurance as well as information 

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on salary continuance and paid holiday eligibility. You may contact the Employee Service Center at 1-888-372-2968 and identify yourself as a new hire if you have any questions regarding benefits.

As mentioned, our offer to join IP/xpedx/ Newco is contingent upon the following:
		
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	The verification of your eligibility for employment in accordance with the federal E-Verify system;   

		
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	Successful completion of our pre-placement Health Assessment Program, a drug screen, a background investigation, and reference checks; and

		
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	Your execution of the enclosed Non-Compete/ Non-Solicitation Agreement.

Please note that your employment with IP/xpedx/ Newco is “at-will” and is not guaranteed for any term.  This means that both you and the company retain the right to terminate the employment relationship at any time and for any reason, with or without prior notice. Additionally, the terms and conditions of your compensation and benefits plans may be changed from time to time as necessary by IP/xpedx/ Newco at its sole discretion are subject to approval by the Newco Compensation Committee. It is anticipated that the expectations and opportunities for performance incentives will be consistent with that presented to potential Lenders.

This employment offer is based on your skill and ability and not because of trade secret or proprietary information of your former employer(s) of which you may have knowledge.  By signing below, you expressly agree that during your employment with IP/xpedx/ Newco you will not utilize or disclose any trade secret or proprietary information belonging to your former employer(s).  You also represent that if you are subject to a non-compete agreement or other restrictive covenant with a former employer or any other entity, you have advised us of the existence of that agreement and/or restrictive covenant and you have represented to us your understanding that the agreement and/or restrictive covenant will not prevent you from performing the duties of the position that we have offered you.

To confirm your acceptance of our offer, please sign this letter and return to Elizabeth Patrick at Elizabeth.patrick@xpedx.com, within the next 7 days.   Please also complete the enclosed forms and include them when you return the signed copy of this letter.

All new employees are required by federal law to complete an I-9 Employment Eligibility Verification Form.  To comply with this requirement, IP/xpedx participates in the federal E-Verify program, which is an electronic system established by the Department of Homeland Security and the Social Security Administration to verify identity and employment eligibility. Upon acceptance of this offer, you will receive an e-mail from the company’s external vendor, Sterling Direct, with a personal log-in and password and instructions that will enable you to complete Section 1 of the I-9 Form.

You must use E-Verify to complete Section 1 of the I-9 form on-line before your start date, or on your first day of employment.  On your first day of work but no later than three days after you start, you will need to present originals of acceptable documentation (e.g., U.S. passport, permanent resident alien card, drivers’ license) to verify your identity and eligibility to work in the United States.  A complete list of acceptable documents will be provided to you with the I-9 Form.

This offer letter constitutes the entire agreement with respect to your offer of employment and shall supersede all previous negotiations, oral communication and writings with respect to this offer of employment.

I am delighted that you are considering coming to IP/xpedx/ Newco and I believe that you will find this opportunity with us to be personally and professionally rewarding.  

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Sincerely,

/s/ Mary A. Laschinger        
     Mary A. Laschinger                

Agreed & Accepted

		
	/s/ Stephen Smith____________
	Feb. 13, 2014                       Stephen Smith                 Date 

Enclosures:      New Hire Forms
Employment Application
Background Investigation Disclosure and Consent and Information Form
Benefits Overview for Salaried Employees

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Exhibit A
Summary of Key Terms of LTIP
(attached)

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	Annual LTIP Awards: Executive will be eligible to participate in NewCo’s long-term equity incentive program (LTIP).  For the three year period of 2014-2016 (the “Initial Term”), Executive will have a target annual participation rate of $1,100,000 (collectively, the “LTIP Awards”).  Although the details of the LTIP program are subject to review and approval by the NewCo Compensation Committee (the “Committee”), the current expectation is that 25% of the value of the LTIP Awards will be in the form of NewCo stock options (based upon the Black-Scholes value as of the date of grant, or other applicable valuation of such options as determined by the Committee) and 75% of the value of the LTIP Awards will be in the form of NewCo performance stock (based upon the value of the stock on the date of grant).  

		
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	Vesting and Payment:  

		
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	NewCo stock options will be subject to time-based cliff vesting at the end of three years from the date of grant, based on market competitive practices and, 

		
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	NewCo performance stock awards will cliff vest at the end of the three year period following the date of grant and are conditioned on Executive’s continued employment through each applicable vesting date.  NewCo performance stock LTIP Awards made in each year from 2014 through 2016 are payable (subject to vesting and performance criteria) three years after the award (e.g., the award made in 2014 is payable in 2017).  

		
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	The actual amount of each of the LTIP Awards relative to target will be based upon the satisfaction of NewCo’s performance metrics established by the Committee.  

		
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	Each of the LTIP Awards is conditioned on Executive’s continued employment through each applicable vesting date, i.e., the awards will not be prorated. 

		
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	NewCo shall have the right to deduct from any LTIP Award, including the delivery of performance shares, a sufficient amount to cover the withholding of all applicable federal, state local or foreign taxes applicable to withholdings for wages. 

		
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	The final terms and conditions of each LTIP Award will be set forth in the applicable grant documents related to such award and will be consistent with NewCo’s long-term equity incentive program approved by the Committee for such year. It is anticipated that the expectations and opportunities for performance incentives will be consistent with that presented to potential Lenders.

		
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	Bridging LTIP Payments for 2015-2016.  Because the LTIP payments will not begin until 2017, Executive will have the opportunity to earn payments of $1,100,000 in each of 2015 and 2016 (the “NewCo Bridging Award”).  The NewCo Bridging Award payments will be payments from NewCo in the form of lump sum cash payment and stock, as detailed below.  

		
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	NewCo will make a guaranteed lump sum cash payment to Executive of 50% of the NewCo Bridging Award, payable at the end of the calendar year.  The remaining 50% of the NewCo Bridging Award is payable at the sole discretion of the Committee based on NewCo performance metrics determined by the Committee.  The Committee may make such payment in either a lump sum cash award, stock or some combination thereof.  If NewCo’s performance exceeds the metrics, the Committee may, at its sole discretion increase the amount of this portion of the award. 

		
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	In order to qualify for a NewCo Bridging Award, the Executive must remain employed by NewCo until the payout for each calendar year, or have a Qualifying Termination prior to payout in that year. A Qualifying Termination is defined as:

		
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	Involuntary termination not for cause

		
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	Death 

		
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	Long-Term Disability 

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If Executive’s employment terminates for any reason in 2015, he/she will not be eligible for the 2016 payment.  

		
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	The NewCo Bridging Award payments, whether lump sum cash or stock, will be subject to all applicable federal, state local or foreign taxes applicable to withholdings for wages.

7VRTV-Exhibit 10.15-20140630

EXHIBIT 10.15

VERITIV CORPORATION 
2014 SHORT-YEAR VERITIV INCENTIVE PLAN

1.    Purpose.  The purpose of this 2014 Short-Year Veritiv Incentive Plan (the “Plan”), adopted effective August 8, 2014, is to align employee and shareholder interests by providing cash incentives to eligible senior or other select management employees of Veritiv Corporation (the “Company”) for meeting and exceeding specified performance objectives for the period from July 1, 2014 to December 31, 2014.

2.      Definitions.  The following capitalized words as used in this Plan shall have the following meanings:

a.    “Affiliate” means any corporation or other entity (including, but not limited to, partnerships, limited liability companies and joint ventures) controlled by the Company.

b.    “Award Opportunity” means a cash award opportunity established under the Plan for a Participant by the Committee pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee may establish.

c.    “Board” means the Board of Directors of the Company.

d.    “Cause” shall have the meaning provided in the Participant’s employment agreement with the Company or an Affiliate (including, without limitation, an offer letter), or, if there is no such definition in any such agreement, “Cause” shall include, but is not limited to, misconduct or other activity detrimental to the business interest or reputation of the Company or continued unsatisfactory job performance without making reasonable efforts to improve.  Examples include insubordination, protracted or repeated absence from work without permission, illegal activity, disorderly conduct, etc.  A termination for Cause shall be deemed to include a determination by the Committee following a Participant’s termination of employment that circumstances existing prior to such termination would have entitled the Company or one of its Affiliates to have terminated such Participant’s employment for Cause.

e.    “Code” means the Internal Revenue Code of 1986, as amended.

f.    “Committee” means the Compensation and Leadership Development Committee of the Board, with each member qualifying as an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulation Section 1.162-27(e)(3) or any successor to such statute and regulation.     

g.    “Company” has the meaning given such term in Section 1 of this Plan. 

h.    “Disability” means “disability” as such term is defined in the long-term disability insurance plan or program of the Company or any Affiliate then covering the Participant; provided that in the case of any Participant who, as of the date of determination, is a party to an effective services, severance, consulting or employment agreement with the Company or any 

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Affiliate of the Company that employs such individual (including, without limitation, an offer letter), “Disability” shall have the meaning, if any, specified in such agreement. 

i.     “Employee” means any person employed by the Company or an Affiliate on or after July 1, 2014.

j.    “Misconduct” shall be determined by the Company in its sole discretion and shall include, but not be limited to, any act detrimental to the business or reputation of the Company, any act determined to be a deliberate disregard of the Company’s  or Affiliate’s rules or policies, or any violation of any confidentiality, non-solicitation or non-competition restriction applicable to the Participant.

k.    “Notice of Award Opportunity” means a written notice provided by the Committee to a Participant which establishes the Participant’s eligibility to participate in the Plan for the Performance Period and such other terms as may be provided therein.

l.    “Participant” means any Employee who is selected by the Committee (or its delegate) to be eligible to participate in the Plan for the Performance Period.

m.    “Payout Formula” means the formula established by the Committee for determining Award Opportunities for the Performance Period based on the level of achievement of the Performance Objectives for the Performance Period.  Except as otherwise provided in a Participant’s Notice of Award Opportunity, the Payout Formula for the Performance Period shall be as set forth on Exhibit A hereto.

n.    “Performance Objectives” means the performance objective or objectives established pursuant to this Plan for Participants who have received Award Opportunities.  Performance Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of an Affiliate, division, business unit, department, region or function within the Company or Affiliate in which the Participant is employed.  Except as otherwise provided in a Participant’s Notice of Award Opportunity, the Performance Objectives for the Performance Period shall be as set forth on Exhibit A hereto.

o.    “Performance Period” means the period from July 1, 2014 through December 31, 2014.

p.    “Plan” means this 2014 Short-Year Veritiv Incentive Plan, as amended from time to time.

3.    Administration.  The Committee shall be responsible for administration of the Plan.  The Committee, by majority action, is authorized to interpret the Plan, to prescribe, amend, and rescind regulations relating to the Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company and its Affiliates, and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan.  Determinations, interpretations, or other actions 

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made or taken by the Committee pursuant to the provisions of the Plan shall be final, binding and conclusive for all purposes and upon all Participants.  No member of the Committee shall be liable for any such action or determination made in good faith.  To the extent permitted by law, the Committee may delegate to one or more officers of the Company, subject to such terms as the Committee shall determine, authority to administer all or any portion of the Plan, or the authority to perform certain functions, including administrative functions.  In the event of such delegation, all references to the Committee in this Plan (other than such references in the immediately preceding sentence and in the last sentence of this Section 3) shall be deemed references to such officers as it relates to those aspects of the Plan that have been delegated.  Notwithstanding the foregoing, and to the extent required by the Committee charter, the applicable exchange listing standards, or by Section 162(m)(4)(C) of the Code and Treasury Regulation Section 1.162-27 promulgated thereunder, where applicable, the Committee shall retain exclusive authority to establish Award Opportunities and determine payouts for any Board-appointed officers of the Company who are designated by the Board as “Section 16 officers”.

4.      Eligibility. The Committee, in its sole discretion, shall determine which Employees will be eligible to participate in the Plan for the Performance Period. In lieu of expressly selecting eligible Employees for Plan participation, the Committee may establish eligibility criteria providing for participation of all Employees who satisfy such criteria.  

5.      Award Opportunities.  

a.    By August 15, 2014, the Committee shall establish the Award Opportunity for each Participant, including the applicable Performance Objectives and Payout Formula and promptly thereafter shall communicate such opportunity to each Participant by a Notice of Award Opportunity.  The Committee may also establish Award Opportunities for newly hired or newly promoted Employees without compliance with the limitations provided herein, which Award Opportunities may be based on performance during less than the full Performance Period and may be pro-rated at the discretion of the Committee.

b.    Participants must achieve the Performance Objectives established by the Committee in order to receive payment of an Award Opportunity under the Plan.  However, the Committee may determine that only a threshold level relating to a Performance Objective must be achieved for Award Opportunities to be paid under the Plan.  Similarly, the Committee may establish a minimum threshold performance level, a maximum performance level, and one or more intermediate performance levels or ranges, with target award levels or ranges that will correspond to the respective performance levels or ranges included in the Payout Formula.

c.    The Committee may in its sole discretion modify the Payout Formulas, Performance Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable (i) to reflect a change in the business, operations, corporate structure or capital structure of the Company or its Affiliates, the manner in which it conducts its business, or other events or circumstances; or (ii) in the event that a Participant’s responsibilities materially change during the Performance Period or the Participant is transferred to a position that is not designated as eligible to participate in the Plan.  Notwithstanding the 

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foregoing, no modification shall be made pursuant to this Section 5(c) that would cause any Award Opportunity payable under this Plan that the Committee designates as intended to qualify as "performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code (and Treasury Regulation Section 1.162-27 promulgated thereunder) to fail to so qualify.

d.    If the Committee designates an Award Opportunity as intended to be exempt from the deduction limitation of Section 162(m) of the Code, the Committee will include such provisions and administer such award to the extent necessary to comply with any interpretation of Section 162(m) of the Code required to preserve the Company’s federal income tax deduction for compensation paid.

6.    Determination of Award Opportunities. 

a.    Following the end of the Performance Period, the Committee shall determine in writing whether and to what extent the Performance Objectives with respect to each Participant for the Performance Period have been achieved and, if such Performance Objectives have been achieved, to approve actual payment of each Award Opportunity under the Plan pursuant to the applicable Payout Formulas.  The Committee may, in its sole discretion, increase, decrease or eliminate the amount of any Award Opportunity otherwise payable to any Participant to reflect such Participant’s individual performance or such other factors as the Committee deems relevant, in recognition of changed or special circumstances, or for any other reason; provided, however, that in no event will the Committee increase any Award Opportunity otherwise payable under this Plan that the Committee designates as intended to qualify as "performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code (and Treasury Regulation Section 1.162-27 promulgated thereunder).  Except as otherwise provided in Section 6(b), or as otherwise determined by the Committee in a Participant’s Notice of Award Opportunity or as otherwise provided in a Participant’s employment agreement with the Company or an Affiliate (including, without limitation, an offer letter), in the event a Participant’s employment with the Company and its Affiliates terminates for any reason prior to the last day of the Performance Period, the Participant shall not be entitled to payment of an Award Opportunity for the Performance Period.

b.    Unless otherwise determined by the Committee in a Participant’s Notice of Award Opportunity or as otherwise provided in a Participant’s employment agreement with the Company or an Affiliate (including, without limitation, an offer letter), a Participant whose employment with the Company and its Affiliates is terminated during the Performance Period due to Disability, death or termination by the Company or an Affiliate without Cause shall be eligible to receive payment of an Award Opportunity in accordance with this Section 6(b), subject to adjustments under Section 6(a), and pro-rated for the portion of the Performance Period prior to termination of employment. Any pro-rated Award Opportunity pursuant to this Section 6(b) shall be determined based actual achievement of the Performance Objectives, as determined by the Committee after the end of the Performance Period, and shall be paid at the same time and in the same manner that Award Opportunities are otherwise payable under Section 7 of the Plan.  An Award Opportunity payable in the event of death shall be paid to the Participant’s estate or designated beneficiary (as permitted by the Committee).

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7.    Payment of Award Opportunities.  The Award Opportunity, if any, earned by each Participant for the Performance Period shall be paid in cash after the end of the Performance Period, but in no event more than two and one half months after the end of the Performance Period.

8.      Tax Withholding.  The Company and its Affiliates shall have the right to deduct from all payments made to any person under the Plan any federal, state, local, foreign or other taxes which, in the opinion of the Company and its Affiliates are required to be withheld with respect to such payments.

9.      No Employment Contract.  Nothing contained in this Plan shall confer upon a Participant any right with respect to continuance of employment by the Company and its Affiliates, nor limit or affect in any manner the right of the Company and its Affiliates to terminate the employment or adjust the compensation of a Participant.  For purposes of the Plan, the transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a termination of the Participant’s employment. 

10.      Transferability.  No right or benefit under this Plan will be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge such right or benefit will be void. No such right or benefit will in any manner be liable for or subject to the debts, liabilities, or torts of a Participant.

11.    Forfeiture and Recoupment.  

a.    If the Company determines that a Participant has committed an act of Misconduct either during employment or within 180 days thereafter, the Company or Affiliate may cause the Award Opportunity of the Participant to be forfeited or, if paid, is entitled to repayment of the Award Opportunity previously paid under the Plan, plus interest at the mid-term applicable federal rate (AFR) under Section 1274(d) of the Code as of the month of payment of the Award Opportunity, compounded monthly, within 30 days of the issuance of a letter by the Company to the Participant claiming such Misconduct and demand for repayment.

b.    The Company shall have the sole and absolute discretion to take action or not to take action pursuant to this Section 11 upon discovery of Misconduct, and its determination not to take action in any particular instance shall not in any way limit its authority to cause the forfeiture of any Participant’s Award Opportunity or to recoup any Award Opportunity by sending a notice in any other instance.

c.    If any provision of this Section 11 is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law.

d.    Each Award Opportunity shall be subject to any generally applicable policies as to forfeiture, recoupment or “clawback” adopted by the Company or Affiliate that are communicated to the Participant or any such policy adopted to comply with applicable law.

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e.    Further, as a convenience and benefit to Participants in facilitating the repayment, each Participant, by accepting any benefit under this Plan, hereby authorizes the Company or Affiliate to withhold funds from any remaining payroll compensation, including pay for unused vacation, to be applied toward any repayment pursuant to this Section 11, where the law allows.

12.      Successors.  All obligations of the Company under the Plan shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company. 

13.      Governing Law.  The Plan and all Award Opportunities shall be construed in accordance with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions.

14.      Amendment or Termination.  The Committee reserves the right, at any time, to amend, suspend or terminate the Plan, in whole or in part, in any manner, and for any reason, and without the consent of any Participant, Employee or other person.  A proper amendment of this Plan automatically shall effect a corresponding amendment to all Participants’ rights hereunder without further action or notice.  A proper termination of this Plan automatically shall effect a termination of all Participants’ rights hereunder without further action or notice.

15.    Participation by Employees of Affiliates.  Any Affiliate may, by action of its board of directors or equivalent governing body and with the consent of the Committee, adopt the Plan; provided that the Committee may waive the requirement that such board of directors or equivalent governing body effect such adoption.  By its adoption of or participation in the Plan, the adopting Affiliate shall be deemed to appoint the Company its exclusive agent to exercise on its behalf all of the power and authority conferred by the Plan upon the Company and accept the delegation to the Committee of all the power and authority conferred upon it by the Plan. The authority of the Company to act as such agent shall continue until the Plan is terminated as to the participating Affiliate.  An Award Opportunity of a Participant employed by a participating Affiliate shall be paid in accordance with the Plan solely by that Affiliate, unless the Committee otherwise determines that the Company shall be responsible for payment. Each Award Opportunity that may become payable under the Plan shall be paid solely from the general assets of the Company or the Affiliate responsible for payment thereof.  Nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right to payment of an Award Opportunity other than as an unsecured general creditor with respect to any payment to which he or she may be entitled. 

* * * * * * * *

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EXHIBIT A
PERFORMANCE OBJECTIVES AND PAYOUT FORMULA --
VERITIV CORPORATION 
2014 SHORT-YEAR VERITIV INCENTIVE PLAN

Performance Objectives

For purposes of this Plan, the Performance Objectives shall be the Company’s achievement of Adjusted EBITDA of at least $[  ] million for the Performance Period.  Adjusted EBITDA shall mean net income before equity in earnings of unconsolidated subsidiary, income tax expense, loss on early debt extinguishment, interest and other (expense) income, realized gain (loss) on investments, interest expense, equity-based compensation expense, related party management fees, restructuring charges and depreciation and amortization expense and net income attributable to noncontrolling interests, adjusted in the same manner as the Company’s “Consolidated EBITDA” is adjusted pursuant to that certain ABL Credit Agreement dated as of July 1, 2014 among the Company and certain other parties named therein (as the same may be amended from time to time); provided, however that no adjustment will be made that would cause any Award Opportunity to fail to lose any otherwise available qualification as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code.

Payout Formula

The amount of the Award Opportunity, if any, earned by each Participant for the Performance Period shall be determined in accordance with the Performance Matrix set out below, which shall constitute the Payout Formula for purposes of this Plan.

PERFORMANCE MATRIX

	
		
	Company’s Adjusted EBITDA for Performance Period
	Payout level (as percentage of target Award Opportunity)

	below $[  ] million
	0%

	$[  ] million
(threshold)
	50%

	$[  ] million
(target)
	100%

	$[  ] million or above
(maximum)
	200%

	Straight-line interpolation will be used for performance between the levels listed above, subject to applicable rounding conventions as determined by the Company

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