printer-friendly

Sample Business Contracts

Change In Control Agreement - Temple-Inland Inc. and J. Patrick Maley III

Free Change in Control Forms

Sponsored Links

                          CHANGE IN CONTROL AGREEMENT

               THIS AGREEMENT, dated May 7, 2004 (the "Effective
       Date"), is made by and between Temple-Inland Inc., a
       Delaware corporation ("Temple-Inland"), and J. Patrick
       Maley, III (the "Executive").

               WHEREAS, Temple-Inland considers it essential to
       the best interests of its stockholders to foster the
       continued employment of key management personnel; and

               WHEREAS, the Board recognizes that, as is the
       case with many publicly held corporations, the
       possibility of a Change in Control exists and that such
       possibility, and the uncertainty and questions which it
       may raise among management, may result in the departure
       or distraction of management personnel to the detriment
       of Temple-Inland and its stockholders; and

               WHEREAS, the Board has determined that
       appropriate steps should be taken to reinforce and
       encourage the continued attention and dedication of
       members of the Company's management, including the
       Executive, to their assigned duties without distraction
       in the face of potentially disturbing circumstances
       arising from the possibility of a Change in Control;

               NOW, THEREFORE, in consideration of the premises
       and the mutual covenants herein contained, Temple-Inland
       and the Executive hereby agree as follows:

               1.  Defined Terms.  The definitions of
       capitalized terms used in this Agreement are provided in
       the last Section hereof.

               2.  Term of Agreement.  The Term of this
       Agreement shall commence on the Effective Date and shall
       continue in effect through the second anniversary of the
       Effective Date; provided, however, that commencing on the
       first anniversary of the Effective Date, and on each
       anniversary of the Effective Date thereafter, the Term
       shall automatically be extended for one additional year
       unless, not later than 90 days prior to each such date,
       the Company or the Executive shall have given notice not
       to extend the Term; and provided, further, that if a
       Change in Control shall have occurred during the Term,
       the Term shall expire no earlier than 36 months beyond
       the month in which such Change in Control occurred.



<page>2


               3.  Company's Covenants Summarized.  In order to
       induce the Executive to remain in the employ of the
       Company and in consideration of the Executive's covenants
       set forth in Section 4 hereof, the Company agrees, under
       the conditions described herein, to pay the Executive the
       Severance Payments and the other payments and benefits
       described herein.  Except as provided in Section 9.1
       hereof, no Severance Payments shall be payable under this
       Agreement unless there shall have been (or, under the
       terms of the second sentence of Section 6.1 hereof, there
       shall be deemed to have been) a termination of the
       Executive's employment with the Company following a
       Change in Control and during the Term.  This Agreement
       shall not be construed as creating an express or implied
       contract of employment and, except as otherwise agreed in
       writing between the Executive and the Company, the
       Executive shall not have any right to be retained in the
       employ of the Company.

               4.  The Executive's Covenants.  The Executive
       agrees that, subject to the terms and conditions of this
       Agreement, in the event of a Potential Change in Control
       during the Term, the Executive will remain in the employ
       of the Company until the earliest of (i) a date which is
       six months from the date of such Potential Change of
       Control, (ii) the date of a Change in Control, (iii) the
       date of termination by the Executive of the Executive's
       employment for Good Reason or by reason of death,
       Disability or Retirement, or (iv) the termination by the
       Company of the Executive's employment for any reason.

               5.  Compensation Other Than Severance Payments.

               5.1  Following a Change in Control and during the
       Term, during any period that the Executive fails to
       perform the Executive's full-time duties with the Company
       as a result of incapacity due to physical or mental
       illness, the Company shall pay the Executive's full
       salary to the Executive at the rate in effect at the
       commencement of any such period, together with all
       compensation and benefits payable to the Executive under
       the terms of any compensation or benefit plan, program or
       arrangement maintained by the Company during such period
       (other than any disability plan), until the Executive's
       employment is terminated by the Company for Disability.

               5.2  If the Executive's employment shall be
       terminated for any reason following a Change in Control
       and during the Term, the Company shall pay the
       Executive's full salary to the Executive through the Date
       of Termination at the highest rate in effect during the
       three-year period ending immediately prior to the Date of



<page>3


       Termination together with all compensation and benefits
       payable to the Executive through the Date of Termination
       under the terms of the Company's compensation and benefit
       plans, programs or arrangements as in effect immediately
       prior to the Date of Termination or, if more favorable to
       the Executive, as in effect immediately prior to the
       first occurrence of an event or circumstance constituting
       Good Reason.

               5.3  If the Executive's employment shall be
       terminated for any reason following a Change in Control
       and during the Term, the Company shall pay to the
       Executive the Executive's normal post-termination
       compensation and benefits as such payments become due.
       Such post-termination compensation and benefits shall be
       determined under, and paid in accordance with, the
       Company's retirement, insurance and other compensation or
       benefit plans, programs and arrangements as in effect
       immediately prior to the Date of Termination or, if more
       favorable to the Executive, as in effect immediately
       prior to the occurrence of the first event or
       circumstance constituting Good Reason.

               6.  Severance Payments.

               6.1  If the Executive's employment is terminated
       following a Change in Control and within two (2) years
       after a Change in Control, other than (A) by the Company
       for Cause, (B) by reason of death or Disability, or (C)
       by the Executive without Good Reason, then the Company
       shall pay the Executive the amounts, and provide the
       Executive the benefits, described in this Section 6.1
       ("Severance Payments") and Section 6.2, in addition to
       any payments and benefits to which the Executive is
       entitled under Section 5 hereof.  For purposes of this
       Agreement, the Executive's employment shall be deemed to
       have been terminated following a Change in Control by the
       Company without Cause or by the Executive with Good
       Reason, if (i) the Executive's employment is terminated
       by the Company without Cause prior to a Change in Control
       (whether or not a Change in Control ever occurs) and such
       termination was at the request or direction of a Person
       who has entered into an agreement with the Company the
       consummation of which would constitute a Change in
       Control, or (ii) the Executive terminates his employment
       for Good Reason prior to a Change in Control (whether or
       not a Change in Control ever occurs) and the circumstance
       or event which constitutes Good Reason occurs at the
       request or direction of such Person.  For purposes of any
       determination regarding the applicability of the
       immediately preceding sentence, any position taken by the



<page>4


       Executive shall be presumed to be correct unless the
       Company establishes to the Board by clear and convincing
       evidence that such position is not correct.

                      (A)  In lieu of any further salary
       payments to the Executive for periods subsequent to the
       Date of Termination, the Company shall pay to the
       Executive a lump sum severance payment, in cash, equal to
       three (3) times the sum of (i) the Executive's highest
       base salary as in effect during the three-year period
       ending immediately prior to the Date of Termination and
       (ii) the Executive's target annual bonus pursuant to any
       annual bonus or incentive plan maintained by the Company
       in respect of the fiscal year in which occurs the Date of
       Termination (or, if higher, in respect of any of the
       three preceding fiscal years).  The amount payable
       pursuant to this Section 6.1(A) shall be reduced by the
       amount of any cash severance or salary continuation
       benefit paid or payable to the Executive under any other
       plan, policy or program of the Company or any written
       employment agreement between the Executive and the Company.

                      (B)  For the three-year period immediately
       following the Date of Termination, the Company shall
       arrange to provide the Executive and his dependents life,
       short-term disability, long-term disability, travel
       accident, accidental death and dismemberment, medical,
       dental and other health and welfare benefits
       substantially similar to those provided to the Executive
       and his dependents immediately prior to the Date of
       Termination or, if more favorable to the Executive, those
       provided to the Executive and his dependents immediately
       prior to the first occurrence of an event or circumstance
       constituting Good Reason, at no greater cost to the
       Executive than the cost to the Executive immediately
       prior to such date or occurrence; provided, however,
       that, unless the Executive consents to a different method
       (after taking into account the effect of such method on
       the calculation of "parachute payments" pursuant to
       Section 6.2 hereof), such health and welfare benefits
       shall be provided through a third-party insurer.  To the
       extent that health and welfare benefits of the same type
       are received by or made available to the Executive during
       the three-year period following the Executive's Date of
       Termination (which such benefits received by or made
       available to the Executive shall be reported by the
       Executive to the insurance company or other appropriate
       party in accordance with any applicable coordination of
       benefits provisions), the benefits otherwise receivable
       by the Executive pursuant to this Section 6.1(B) shall be
       made secondary to such benefits; provided, however, that
       the Company shall reimburse the Executive for the excess,
       if any, of the cost of such benefits to the Executive



<page>5

       over such cost immediately prior to the Date of
       Termination or, if more favorable to the Executive, the
       first occurrence of an event or circumstance constituting
       Good Reason.

                      (C)  Each option held by the Executive to
       purchase shares of common stock of Temple-Inland
       outstanding as of the Date of Termination shall be
       treated in accordance with the applicable terms of any
       plan (including any underlying agreement) pursuant to
       which it was granted.

                      (D)  For purposes of determining the
       amount of any benefit payable to the Executive and the
       Executive's right to any benefit otherwise payable under
       a Pension Plan, the Executive shall be treated as if he
       had accumulated (after the Date of Termination)
       thirty-six (36) additional months of service credit
       thereunder and had been credited during such period with
       compensation at the highest rate in effect during the
       three-year period ending immediately prior to the Date of
       Termination.

                      (E)  Notwithstanding any provision of any
       Pension Plan or deferred compensation plan to the
       contrary, and except to the extent otherwise provided in
       Section 6.1(F), in lieu of any other benefit under a
       supplemental, excess benefit or deferred compensation
       plan, the Company shall pay to the Executive a lump sum
       amount, in cash, equal to the sum of (i) the actuarial
       equivalent of the aggregate benefit which the Executive
       had accrued under the terms of all supplemental and
       excess benefit plans and (ii) the actuarial equivalent of
       the deferred compensation otherwise payable to the
       Executive, in either case without regard to any amendment
       to any such plan made subsequent to a Change in Control
       and on or prior to the Date of Termination, which
       amendment adversely affects in any manner the computation
       of benefits thereunder.  For purposes of this Section
       6.1(E), "actuarial equivalent" shall be determined (x)
       using the same assumptions utilized under the applicable
       plan (or if there is no provision for such assumptions,
       under the Company's tax-qualified Pension Plan in which
       the Executive participates) immediately prior to the Date
       of Termination or, if more favorable to the Executive,
       immediately prior to the first occurrence of an event or
       circumstance constituting Good Reason, (y) taking into
       account any early retirement subsidies associated with
       the applicable benefit, and (z) on the basis of a
       straight life annuity (or other default form of benefit)
       commencing at the date (but in no event earlier than the
       third anniversary of the Date of Termination) as of which
       the actuarial equivalent of such annuity or other form of
       benefit is greatest.



<page>6


                      (F)  In addition to the benefits to which
       the Executive is entitled under any defined contribution
       Pension Plan, the Company shall pay the Executive a lump
       sum amount, in cash, equal to the sum of (i) the amount
       that would have been contributed thereto by the Company
       on the Executive's behalf during the three (3) years
       immediately following the Date of Termination, determined
       (x) as if the Executive made the maximum permissible
       contributions thereto during such period, (y) as if the
       Executive earned compensation during such period at a
       rate equal to the Executive's highest rate of
       compensation (as defined in the Pension Plan) during the
       three-year period ending immediately prior to the Date of
       Termination, and (z) without regard to any amendment to
       the Pension Plan made subsequent to a Change in Control
       and on or prior to the Date of Termination, which
       amendment adversely affects in any manner the computation
       of benefits thereunder, and (ii) the excess, if any, of
       (x) the Executive's account balance under the Pension
       Plan as of the Date of Termination over (y) the portion
       of such account balance that is nonforfeitable under the
       terms of the Pension Plan.

                      (G)  Notwithstanding any provision of any
       annual or long-term incentive plan to the contrary, the
       Company shall pay to the Executive a lump sum amount, in
       cash, equal to the sum of (i) any unpaid incentive
       compensation which has been allocated or awarded to the
       Executive for a completed annual bonus cycle preceding
       the Date of Termination under any such plan and which, as
       of the Date of Termination, is contingent only upon the
       continued employment of the Executive to a subsequent
       date, (ii) if the Date of Termination occurs before the
       end of the first six months in the then-current annual
       bonus cycle under the applicable plan, a pro rata portion
       to the Date of Termination of the aggregate value of all
       contingent incentive compensation awards to the Executive
       for the uncompleted period under any such plan,
       calculated as to each such award by multiplying the award
       that the Executive would have earned on the last day of
       the performance award period, assuming the achievement,
       at the target level (or if higher, at the then projected
       actual final level), of the individual and corporate
       performance goals established with respect to such award,
       by the fraction obtained by dividing the number of full
       months and any fractional portion of a month during such
       performance award period through the Date of Termination
       by the total number of months contained in such
       performance award period, and (iii) if the Date of
       Termination occurs after the end of the first six months
       in the then-current annual bonus cycle but before the end
       of such annual bonus cycle under the applicable plan, the



<page>7


       full aggregate value of all contingent incentive
       compensation awards to the Executive for the uncompleted
       period under any such plan assuming the achievement, at
       the target level (or if higher, at the then projected
       actual final level), of the individual and corporate
       performance goals established with respect to such award.

                      (H)    If the Executive would have become
       entitled to benefits under the Company's post-retirement
       health care or life insurance plans, as in effect
       immediately prior to the Date of Termination or, if more
       favorable to the Executive, as in effect immediately
       prior to the first occurrence of an event or circumstance
       constituting Good Reason, had the Executive's employment
       terminated at any time within three (3) years after the
       Date of Termination, the Company shall provide such
       post-retirement health care or life insurance benefits to
       the Executive and the Executive's dependents commencing
       on the later of (i) the date on which such coverage would
       have first become available and (ii) the date on which
       benefits described in subsection (B) of this Section 6.1
       terminate.

                      (I)  The Company shall reimburse the
       Executive for expenses incurred for outplacement services
       suitable to the Executive's position for a period of one
       (1) year following the Date of Termination (or, if
       earlier, until the first acceptance by the Executive of
       an offer of employment) in an amount not exceeding 15% of
       the sum of the Executive's highest annual base rate of
       salary as in effect during the three-year period ending
       immediately prior to the Date of Termination, and the
       greatest target annual bonus pursuant to any annual bonus
       or incentive plan maintained by the Company in respect of
       the fiscal year in which occurs the Date of Termination
       (or, if higher, in respect of any of the three preceding
       fiscal years).

                      (J)  For the three-year period immediately
       following the Date of Termination, the Company shall
       provide the Executive with his customary perquisites
       (such as any use of a Company provided automobile, club
       membership fee reimbursements, income tax preparation and
       financial advisory services) in each case on the same
       terms and conditions that were applicable immediately
       prior to the Date of Termination or, if more favorable,
       immediately prior to the first occurrence of an event or
       circumstance constituting Good Reason.



<page>8


                 6.2    (A)  Whether or not the Executive
       becomes entitled to the Severance Payments, if any
       payment or benefit received or to be received by the
       Executive in connection with a Change in Control or the
       termination of the Executive's employment (whether
       pursuant to the terms of this Agreement or any other
       plan, arrangement or agreement with the Company, any
       Person whose actions result in a Change in Control or any
       Person affiliated with the Company or such Person) (all
       such payments and benefits, including the Severance
       Payments, being hereinafter called "Total Payments") will
       be subject (in whole or part) to the Excise Tax, then,
       subject to the provisions of subsection (B) of this
       Section 6.2, the Company shall pay to the Executive an
       additional amount (the "Gross-Up Payment") such that the
       net amount retained by the Executive, after deduction of
       any Excise Tax on the Total Payments and any federal,
       state and local income and employment taxes and Excise
       Tax upon the Gross-Up Payment, shall be equal to the
       Total Payments.  For purposes of determining the amount
       of the Gross-Up Payment, the Executive shall be deemed to
       pay federal income taxes at the highest marginal rate of
       federal income taxation in the calendar year in which the
       Gross-Up Payment is to be made and state and local income
       taxes at the highest marginal rate of taxation in the
       state and locality of the Executive's residence on the
       Date of Termination (or if there is no Date of
       Termination, then the date on which the Gross-up Payment
       is calculated for purposes of this Section 6.2), net of
       the maximum reduction in federal income tax which could
       be obtained from deduction of such state and local taxes.

               (B)    In the event that the amount of the Total
       Payments does not exceed 110% of the largest amount that
       would result in no portion of the Total Payments being
       subject to the Excise Tax (the "Safe Harbor"), then
       subsection (A) of this Section 6.2 shall not apply and
       the noncash Severance Payments shall first be reduced (if
       necessary, to zero), and the cash Severance Benefits
       shall thereafter be reduced (if necessary, to zero) so
       that the amount of the Total Payments is equal to the
       Safe Harbor; provided, however, that the Executive may
       elect to have the cash Severance Payments reduced (or
       eliminated) prior to any reduction of the noncash
       Severance Payments.

               (C)    For purposes of determining whether any of
       the Total Payments will be subject to the Excise Tax and
       the amount of such Excise Tax, (i) all of the Total
       Payments shall be treated as "parachute payments" within
       the meaning of section 280G(b)(2) of the Code, unless in
       the opinion of tax counsel ("Tax Counsel") reasonably
       acceptable to the Executive and selected by the
       accounting firm which was, immediately prior to the
       Change in Control, the Company's independent auditor (the



<page>9


       "Auditor"), such other payments or benefits (in whole or
       in part) do not constitute parachute payments, including
       by reason of section 280G(b)(4)(A) of the Code, (ii) all
       "excess parachute payments" within the meaning of section
       280G(b)(l) of the Code shall be treated as subject to the
       Excise Tax unless, in the opinion of Tax Counsel, such
       excess parachute payments (in whole or in part) represent
       reasonable compensation for services actually rendered,
       within the meaning of section 280G(b)(4)(B) of the Code,
       in excess of the Base Amount allocable to such reasonable
       compensation, or are otherwise not subject to the Excise
       Tax, and (iii) the value of any noncash benefits or any
       deferred payment or benefit shall be determined by the
       Auditor in accordance with the principles of sections
       280G(d)(3) and (4) of the Code.  Prior to the payment
       date set forth in Section 6.3 hereof, the Company shall
       provide the Executive with its calculation of the amounts
       referred to in this Section 6.2(C) and such supporting
       materials as are reasonably necessary for the Executive
       to evaluate the Company's calculations.  If the Executive
       disputes the Company's calculations (in whole or in
       part), the reasonable opinion of Tax Counsel with respect
       to the matter in dispute shall prevail.

                 (D)  (I)  In the event that (1) amounts are
       paid to the Executive pursuant to Section 6.2(A), (2)
       there is a Final Determination that the Excise Tax is
       less than the amount taken into account hereunder in
       calculating the Gross-Up Payment, and (3) after giving
       effect to such Final Determination, the Severance
       Payments are to be reduced pursuant to Section 6.2(B),
       the Executive shall repay to the Company, within five (5)
       business days following the date of the Final
       Determination, the Gross-Up Payment, the amount of the
       reduction in the Severance Payments, plus interest on the
       amount of such repayments at 120% of the rate provided in
       section 1274(b)(2)(B) of the Code.

                      (II)  In the event that (1) amounts are
       paid to the Executive pursuant to Section 6.2(A), (2)
       there is a Final Determination that the Excise Tax is
       less than the amount taken into account hereunder in
       calculating the Gross-Up Payment, and (3) after giving
       effect to such Final Determination, the Severance
       Payments are not to be reduced pursuant to Section
       6.2(B), the Executive shall repay to the Company, within
       five (5) business days following the date of the Final
       Determination, the portion of the Gross-Up Payment
       attributable to such reduction (plus that portion of the
       Gross-Up Payment attributable to the Excise Tax and
       federal, state and local income and employment taxes
       imposed on the Gross-Up Payment being repaid by the
       Executive), to the extent that such repayment results in
       a reduction in the Excise Tax and a dollar-for-dollar



<page>10


       reduction in the Executive's taxable income and wages for
       purposes of federal, state and local income and
       employment taxes, plus interest on the amount of such
       repayment at 120% of the rate provided in section
       1274(b)(2)(B) of the Code.

                      (III)  Except as otherwise provided in
       clause (IV) below, in the event there is a Final
       Determination that the Excise Tax exceeds the amount
       taken into account hereunder in determining the Gross-Up
       Payment (including by reason of any payment the existence
       or amount of which cannot be determined at the time of
       the Gross-Up Payment), the Company shall pay to the
       Executive, within five (5) business days following the
       date of the Final Determination, the sum of (1) a
       Gross-Up Payment in respect of such excess and in respect
       of any portion of the Excise Tax with respect to which
       the Company had not previously made a Gross-Up Payment,
       including a Gross-Up Payment in respect of any Excise Tax
       attributable to amounts payable under clauses (2) and (3)
       of this paragraph (III) (plus any interest, penalties or
       additions payable by the Executive with respect to such
       excess and such portion), (2) if Severance Payments were
       reduced pursuant to Section 6.2(B) but after giving
       effect to such Final Determination, the Severance
       Payments should not have been reduced pursuant to Section
       6.2(B), the amount by which the Severance Payments were
       reduced pursuant to Section 6.2(B), and (3) interest on
       such amounts at 120% of the rate provided in section
       1274(b)(2)(B) of the Code.

                      (IV)  In the event that (1) Severance
       Payments were reduced pursuant to Section 6.2(B) and (2)
       the aggregate value of Total Payments which are
       considered "parachute payments" within the meaning of
       section 280G(b)(2) of the Code is subsequently
       redetermined in a Final Determination, but such
       redetermined value still does not exceed 110% of the Safe
       Harbor, then, within five (5) business days following
       such Final Determination, (x) the Company shall pay to
       the Executive the amount (if any) by which the reduced
       Severance Payments (after taking the Final Determination
       into account) exceeds the amount of the reduced Severance
       Payments actually paid to the Executive, plus interest on
       the amount of such repayment at 120% of the rate provided
       in section 1274(b)(2)(B) of the Code, or (y) the
       Executive shall pay to the Company the amount (if any) by
       which the reduced Severance Payments actually paid to the
       Executive exceeds the amount of the reduced Severance
       Payments (after taking the Final Determination into




<page>11


       account), plus interest on the amount of such repayment
       at 120% of the rate provided in section 1274(b)(2)(B) of
       the Code.

               6.3  The payments provided in subsections (A),
       (E), (F) and (G) of Section 6.1 hereof and in Section 6.2
       hereof shall be made not later than the fifth day
       following the Date of Termination; provided, however,
       that if the amounts of such payments cannot be finally
       determined on or before such day, the Company shall pay
       to the Executive on such day an estimate, as determined
       in good faith by the Executive or, in the case of
       payments under Section 6.2 hereof, in accordance with
       Section 6.2 hereof, of the minimum amount of such
       payments to which the Executive is clearly entitled and
       shall pay the remainder of such payments (together with
       interest on the unpaid remainder (or on all such payments
       to the extent the Company fails to make such payments
       when due) at 120% of the rate provided in section
       1274(b)(2)(B) of the Code) as soon as the amount thereof
       can be determined but in no event later than the 30th day
       after the Date of Termination.  In the event that the
       amount of the estimated payments exceeds the amount
       subsequently determined to have been due, such excess
       shall constitute a loan by the Company to the Executive,
       payable on the fifth business day after demand by the
       Company (together with interest at 120% of the rate
       provided in section 1274(b)(2)(B) of the Code).  At the
       time that payments are made under this Agreement, the
       Company shall provide the Executive with a written
       statement setting forth the manner in which such payments
       were calculated and the basis for such calculations
       including, without limitation, any opinions or other
       advice the Company has received from Tax Counsel, the
       Auditor or other advisors or consultants (and any such
       opinions or advice which are in writing shall be attached
       to the statement).

               6.4   The Company also shall pay to the Executive
       all legal fees and expenses incurred by the Executive in
       disputing in good faith any issue hereunder relating to
       the termination of the Executive's employment, in seeking
       in good faith to obtain or enforce any benefit or right
       provided by this Agreement or in connection with any tax
       audit or proceeding to the extent attributable to the
       application of section 4999 of the Code to any payment or
       benefit provided hereunder.  Such payments shall be made
       within five business days after delivery of the
       Executive's written requests for payment accompanied with
       such evidence of fees and expenses incurred as the
       Company reasonably may require.




<page>12


               7.  Termination Procedures and Compensation
       During Dispute.

               7.1.  Notice of Termination.  After a Change in
       Control and during the Term, any purported termination of
       the Executive's employment (other than by reason of
       death) shall be communicated by written Notice of
       Termination from one party hereto to the other party
       hereto in accordance with Section 10 hereof.  For
       purposes of this Agreement, a "Notice of Termination"
       shall mean a notice which shall indicate the specific
       termination provision in this Agreement relied upon and
       shall set forth in reasonable detail the facts and
       circumstances claimed to provide a basis for termination
       of the Executive's employment under the provision so
       indicated.  For purposes of this Agreement, any purported
       termination of the Executive's employment shall be
       presumed to be other than for Cause unless the Notice of
       Termination includes a copy of a resolution duly adopted
       by the affirmative vote of not less than three-quarters
       (3/4) of the entire membership of the Board at a meeting
       of the Board which was called and held for the purpose of
       considering such termination (after reasonable notice to
       the Executive and an opportunity for the Executive,
       together with the Executive's counsel, to be heard before
       the Board) finding that, in the good faith opinion of the
       Board, the Executive was guilty of conduct set forth in
       clause (i) or (ii) of the definition of Cause herein, and
       specifying the particulars thereof in detail.

               7.2  Date of Termination.  "Date of Termination,"
       with respect to any purported termination of the
       Executive's employment after a Change in Control and
       during the Term, shall mean (i) if the Executive's
       employment is terminated for Disability, 30 days after
       Notice of Termination is given (provided that the
       Executive shall not have returned to the full-time
       performance of the Executive's duties during such 30 day
       period), and (ii) if the Executive's employment is
       terminated for any other reason, the date specified in
       the Notice of Termination (which, in the case of a
       termination by the Company, shall not be less than 30
       days (except in the case of a termination for Cause) and,
       in the case of a termination by the Executive, shall not
       be less than 15 days nor more than 60 days, respectively,
       from the date such Notice of Termination is given).

               7.3  Dispute Concerning Termination.  If within
       15 days after any Notice of Termination is given, or, if
       later, prior to the Date of Termination (as determined
       without regard to this Section 7.3), the party receiving
       such Notice of Termination notifies the other party that
       a dispute exists concerning the termination, the Date of
       Termination shall be extended until the earlier of (i)





<page>13



       the date on which the Term ends or (ii) the date on which
       the dispute is finally resolved, either by mutual written
       agreement of the parties or by a final judgment, order or
       decree of an arbitrator or a court of competent
       jurisdiction (which is not appealable or with respect to
       which the time for appeal therefrom has expired and no
       appeal has been perfected); provided, however, that the
       Date of Termination shall be extended by a notice of
       dispute given by the Executive only if such notice is
       given in good faith and the Executive pursues the
       resolution of such dispute with reasonable diligence.

               7.4  Compensation During Dispute.  If a purported
       termination occurs following a Change in Control and
       during the Term and the Date of Termination is extended
       in accordance with Section 7.3 hereof, the Company shall
       continue to pay the Executive the full compensation in
       effect when the notice giving rise to the dispute was
       given (including, but not limited to, salary) and
       continue the Executive as a participant in all
       compensation, benefit and insurance plans in which the
       Executive was participating when the notice giving rise
       to the dispute was given, until the Date of Termination,
       as determined in accordance with Section 7.3 hereof.
       Amounts paid under this Section 7.4 are in addition to
       all other amounts due under this Agreement (other than
       those due under Section 5.2 hereof) and shall not be
       offset against or reduce any other amounts due under this
       Agreement.

               8.  No Mitigation.  The Company agrees that, if
       the Executive's employment with the Company terminates
       during the Term, the Executive is not required to seek
       other employment or to attempt in any way to reduce any
       amounts payable to the Executive by the Company pursuant
       to Section 6 hereof or Section 7.4 hereof.  Further, the
       amount of any payment or benefit provided for in this
       Agreement (other than Section 6.1(B) hereof) shall not be
       reduced by any compensation earned by the Executive as
       the result of employment by another employer, by
       retirement benefits, by offset against any amount claimed
       to be owed by the Executive to the Company, or otherwise.

               9.  Successors; Binding Agreement.

               9.1  In addition to any obligations imposed by
       law upon any successor to Temple-Inland, Temple-Inland
       will require any successor (whether direct or indirect,
       by purchase, merger, consolidation or otherwise) to all
       or substantially all of the business and/or assets of
       Temple-Inland to expressly assume and agree to perform
       this Agreement in the same manner and to the same extent



<page>14


       that Temple-Inland would be required to perform it if no
       such succession had taken place.  Failure of
       Temple-Inland to obtain such assumption and agreement
       prior to the effectiveness of any such succession shall
       be a breach of this Agreement and shall entitle the
       Executive to compensation from the Company in the same
       amount and on the same terms as the Executive would be
       entitled to hereunder if the Executive were to terminate
       the Executive's employment for Good Reason after a Change
       in Control, except that, for purposes of implementing the
       foregoing, the date on which any such succession becomes
       effective shall be deemed the Date of Termination.

               9.2  This Agreement shall inure to the benefit of
       and be enforceable by the Executive's personal or legal
       representatives, executors, administrators, successors,
       heirs, distributees, devisees and legatees.  If the
       Executive shall die while any amount would still be
       payable to the Executive hereunder (other than amounts
       which, by their terms, terminate upon the death of the
       Executive) if the Executive had continued to live, all
       such amounts, unless otherwise provided herein, shall be
       paid in accordance with the terms of this Agreement to
       the executors, personal representatives or administrators
       of the Executive's estate.

               10.  Notices.  For the purpose of this Agreement,
       notices and all other communications provided for in the
       Agreement shall be in writing and shall be deemed to have
       been duly given when delivered or mailed by United States
       registered mail, return receipt requested, postage
       prepaid, addressed, if to the Executive, to the address
       of the Executive as maintained from time to time on the
       payroll system of the Company and, if to the Company, to
       the address set forth below, or to such other address as
       either party may have furnished to the other in writing
       in accordance herewith, except that notice of change of
       address shall be effective only upon actual receipt:

                      To the Company:

                      Temple-Inland Inc.
                      1300 S. MoPac Expressway
                      Austin, Texas 78746
                      Attention: J. Bradley Johnston

               11.  Miscellaneous.  No provision of this
       Agreement may be modified, waived or discharged unless
       such waiver, modification or discharge is agreed to in




<page>15


       writing and signed by the Executive and such officer as
       may be specifically designated by the Board.  No waiver
       by either party hereto at any time of any breach by the
       other party hereto of, or of any lack of compliance with,
       any condition or provision of this Agreement to be
       performed by such other party shall be deemed a waiver of
       similar or dissimilar provisions or conditions at the
       same or at any prior or subsequent time.  This Agreement
       supersedes any other agreements or representations, oral
       or otherwise, express or implied, with respect to the
       subject matter hereof which have been made by the
       Executive or the Company; provided, however, that this
       Agreement shall supersede any agreement setting forth the
       terms and conditions of the Executive's employment with
       the Company only in the event that the Executive's
       employment with the Company is terminated on or following
       a Change in Control, by the Company other than for Cause
       or by the Executive for Good Reason.   The validity,
       interpretation, construction and performance of this
       Agreement shall be governed by the laws of the State of
       Texas without regard to its principles of conflicts of
       law.  All references to sections of the Exchange Act or
       the Code shall be deemed also to refer to any successor
       provisions to such sections.  Any payments provided for
       hereunder shall be paid net of any applicable withholding
       required under federal, state or local law and any
       additional withholding to which the Executive has agreed.
        The obligations of the Company and the Executive under
       this Agreement which by their nature may require either
       partial or total performance after the expiration of the
       Term (including, without limitation, those under Sections
       6 and 7 hereof) shall survive such expiration.




<page>16

               12.  Validity.

               12.1  Any payments made to the Executive pursuant
       to this Agreement, or otherwise, are subject to and
       conditioned upon their compliance with 12 U.S.C. Section
       1828(k) and FDIC Regulation 12 C.F.R. Part 359, Golden
       Parachute and Indemnification Payments.

               12.2  The invalidity or unenforceability of any
       provision of this Agreement shall not affect the validity
       or enforceability of any other provision of this
       Agreement, which shall remain in full force and effect.

               13.  Counterparts.  This Agreement may be
       executed in several counterparts, each of which shall be
       deemed to be an original but all of which together will
       constitute one and the same instrument.

               14.  Settlement of Disputes.  All claims by the
       Executive for benefits under this Agreement shall be
       directed to and determined by the Board and shall be in
       writing.  Any denial by the Board of a claim for benefits
       under this Agreement shall be delivered to the Executive
       in writing and shall set forth the specific reasons for
       the denial and the specific provisions of this Agreement
       relied upon.  The Board shall afford a reasonable
       opportunity to the Executive for a review of the decision
       denying a claim and shall further allow the Executive to
       appeal to the Board a decision of the Board within 60
       days after notification by the Board that the Executive's
       claim has been denied.

               15.  Definitions.  For purposes of this
       Agreement, the following terms shall have the meanings
       indicated below:

                      (A)  "Affiliate" shall have the meaning
       set forth in Rule 12b-2 promulgated under Section 12 of
       the Exchange Act.

                      (B)  "Auditor" shall have the meaning set
       forth in Section 6.2 hereof.

                      (C)  "Base Amount" shall have the meaning
       set forth in section 280G(b)(3) of the Code.

                      (D)  "Beneficial Owner" shall have the
       meaning set forth in Rule 13d-3 under the Exchange Act.



<page>17


                      (E)  "Board" shall mean the Board of
       Directors of Temple-Inland Inc.

                      (F)  "Cause" for termination by the
       Company of the Executive's employment shall mean (i) the
       willful and continued failure by the Executive to
       substantially perform the Executive's duties with the
       Company (other than any such failure resulting from the
       Executive's incapacity due to physical or mental illness
       or any such actual or anticipated failure after the
       issuance of a Notice of Termination for Good Reason by
       the Executive pursuant to Section 7.1 hereof) after a
       written demand for substantial performance is delivered
       to the Executive by the Board, which demand specifically
       identifies the manner in which the Board believes that
       the Executive has not substantially performed the
       Executive's duties, or (ii) the willful engaging by the
       Executive in conduct which is demonstrably and materially
       injurious to the Company, monetarily or otherwise.  For
       purposes of clauses (i) and (ii) of this definition, (x)
       no act, or failure to act, on the Executive's part shall
       be deemed "willful" unless done, or omitted to be done,
       by the Executive not in good faith and without reasonable
       belief that the Executive's act, or failure to act, was
       in the best interest of the Company and (y) in the event
       of a dispute concerning the application of this
       provision, no claim by the Company that Cause exists
       shall be given effect unless the Company establishes to
       the Board by clear and convincing evidence that Cause
       exists.

                      (G)  "Change in Control" shall be deemed
       to have occurred if the event set forth in any one of the
       following paragraphs shall have occurred:

                             (I)  any Person is or becomes the
       Beneficial Owner, directly or indirectly, of securities
       of the Company (not including in the securities
       beneficially owned by such Person any securities acquired
       directly from the Company or its Affiliates) representing
       25% or more of the combined voting power of the Company's
       then outstanding securities, excluding any Person who
       becomes such a Beneficial Owner in connection with a
       transaction described in clauses (a), (b) or (c) of
       paragraph (III) below;

                             (II) within any twenty-four (24)
       month period, the following individuals cease for any
       reason to constitute a majority of the number of
       directors then serving on the Board: individuals who, on
       the Effective Date, constitute the Board and any new
       director (other than a director whose initial assumption




<page>18


       of office is in connection with an actual or threatened
       election contest, including but not limited to a consent
       solicitation, relating to the election of directors of
       the Company) whose appointment or election by the Board
       or nomination for election by the Company's shareholders
       was approved or recommended by a vote of at least
       two-thirds (2/3) of the directors then still in office
       who either were directors on the date hereof or whose
       appointment, election or nomination for election was
       previously so approved or recommended;

                             (III)  there is consummated a
       merger, consolidation of the Company or any direct or
       indirect subsidiary of the Company with any other
       corporation or any recapitalization of the Company (for
       purposes of this paragraph (III), a "Business Event")
       unless, immediately following such Business Event (a) the
       directors of the Company immediately prior to such
       Business Event continue to constitute at least a majority
       of the board of directors of the Company, the surviving
       entity or any parent thereof, (b) the voting securities
       of the Company outstanding immediately prior to such
       Business Event continue to represent (either by remaining
       outstanding or by being converted into voting securities
       of the surviving entity or any parent thereof), in
       combination with the ownership of any trustee or other
       fiduciary holding securities under an employee benefit
       plan of the Company or any subsidiary of the Company, at
       least 60% of the combined voting power of the securities
       of the Company or such surviving entity or any parent
       thereof outstanding immediately after such Business
       Event, or (c) no Person is or becomes the Beneficial
       Owner, directly or indirectly, of securities of the
       Company or such surviving entity or any parent thereof
       (not including in the securities Beneficially Owned by
       such Person any securities acquired directly from the
       Company or its Affiliates) representing 25% or more of
       the combined voting power of the then outstanding
       securities of the Company or such surviving entity or any
       parent thereof (except to the extent such ownership
       existed prior to the Business Event);

                             (IV)  the shareholders of the
       Company approve a plan of complete liquidation or
       dissolution of the Company;

                             (V)  there is consummated an
       agreement for the sale, disposition or long-term lease by
       the Company of:



<page>19



                              (A)  substantially all of the
       Company's assets, or

                              (B)  (i) substantially all of the
       Company's ownership interest in Inland Paperboard and
       Packaging, Inc. (or any successor thereto) or (ii)
       substantially all of the assets of Inland Paperboard and
       Packaging, Inc. and its direct or indirect subsidiaries
       (or any successor or successors thereto),

       other than such a sale, disposition or lease to an
       entity, at least 50% of the combined voting power of the
       voting securities of which are owned by shareholders of
       the Company in substantially the same proportions as
       their ownership of the Company immediately prior to such
       sale or disposition; or

                             (VI)  any other event that the
       Board, in its sole discretion, determines to be a Change
       in Control for purposes of this Agreement.

              Notwithstanding the foregoing, a "Change in
       Control" shall not be deemed to have occurred by virtue
       of the consummation of any transaction or series of
       integrated transactions immediately following which the
       record holders of the common stock of the Company
       immediately prior to such transaction or series of
       transactions continue to have substantially the same
       proportionate ownership in an entity which owns all or
       substantially all of the assets of the Company
       immediately following such transaction or series of
       transactions.

                      (H)  "Code" shall mean the Internal
       Revenue Code of 1986, as amended from time to time.

                      (I) "Company" shall mean, unless the
       context clearly requires otherwise, Temple-Inland Inc., a
       Delaware corporation, and any of its Affiliates that
       actually employ the Executive; provided, that (I) for
       purposes of Sections 15(G) and 15(U) hereof, Company
       shall mean Temple-Inland Inc., except that in determining
       under Section 15(G) hereof whether or not any Change in
       Control of the Company has occurred, Company shall
       include any successor to Temple-Inland Inc.'s business
       and/or assets which assumes and agrees to perform this
       Agreement by operation of law or otherwise, (II) unless
       the context clearly requires otherwise, references to the
       Company in a capacity of employer shall mean
       Temple-Inland Inc. or any of its Affiliates, whichever




<page>20


       actually employs the Executive, and (III) where the
       Agreement requires the Company to make a payment to the
       Executive or to take some other action, either
       Temple-Inland, Inc. shall do so or it shall cause any of
       its Affiliates that actually employ the Executive to do so.

                      (J)  "Date of Termination" shall have the
       meaning set forth in Section 7.2 hereof.

                      (K)  "Disability" shall be deemed the
       reason for the termination by the Company of the
       Executive's employment, if, as a result of the
       Executive's incapacity due to physical or mental illness,
       the Executive shall have been absent from the full-time
       performance of the Executive's duties with the Company
       for a period of six consecutive months, the Company shall
       have given the Executive a Notice of Termination for
       Disability, and, within 30 days after such Notice of
       Termination is given, the Executive shall not have
       returned to the full-time performance of the Executive's
       duties.

                      (L)  "Exchange Act" shall mean the
       Securities Exchange Act of 1934, as amended from time to
       time.

                      (M)  "Excise Tax" shall mean any excise
       tax imposed under section 4999 of the Code.

                      (N)  "Executive" shall mean the individual
       named in the first paragraph of this Agreement.

                      (O)  "Final Determination" means a final
       determination by the Internal Revenue Service or, if such
       determination is appealed, a final determination by any
       court of competent jurisdiction.

                      (P)  "Good Reason" for termination by the
       Executive of the Executive's employment shall mean the
       occurrence (without the Executive's express written
       consent) after any Change in Control, or prior to a
       Change in Control under the circumstances described in
       clauses (i) and (ii) of the second sentence of Section
       6.1 hereof (treating all references in paragraphs (I)
       through (VI) below to a "Change in Control" as references
       to a "Potential Change in Control"), of any one of the
       following acts by the Company, or failures by the Company
       to act, unless, in the case of any act or failure to act
       described in paragraph (I), (IV), or (V) below, such act
       or failure to act is corrected prior to the Date of


<page>21


       Termination specified in the Notice of Termination given
       in respect thereof:

                             (I)  the assignment to the
       Executive of any duties substantially inconsistent with
       the Executive's status as a senior executive officer of
       the Company or a material adverse alteration in the
       nature or status of the Executive's responsibilities from
       those in effect immediately prior to the Change in
       Control (including, as applicable and without limitation,
       the Executive ceasing to be an executive officer of a
       public company);

                             (II)  a substantial reduction by
       the Company in the Executive's annual base salary as in
       effect on the date hereof or as the same may be increased
       from time to time;

                             (III)  the relocation of the
       Executive's principal place of employment to a location
       more than 50 miles from the Executive's principal place
       of employment immediately prior to the Change in Control
       or the Company's requiring the Executive to be based
       anywhere other than such principal place of employment
       (or permitted relocation thereof) except for required
       travel on the Company's business to an extent
       substantially consistent with the Executive's present
       business travel obligations;

                             (IV)  the failure by the Company to
       pay to the Executive any portion of the Executive's
       current compensation, or to pay to the Executive any
       portion of an installment of deferred compensation under
       any deferred compensation program of the Company, within
       seven days of the date such compensation is due;

                             (V)  the failure by the Company to
       continue to provide the Executive with benefits
       substantially similar to the material benefits enjoyed by
       the Executive under any of the Company's executive
       compensation (including bonus, equity or incentive
       compensation), pension, savings, life insurance, medical,
       health and accident, or disability plans in which the
       Executive was participating immediately prior to the
       Change in Control, the taking of any other action by the
       Company which would directly or indirectly materially
       reduce any of such benefits or deprive the Executive of
       any material fringe benefit enjoyed by the Executive at
       the time of the Change in Control, or the failure by the
       Company to provide the Executive with the number of paid
       vacation days to which the Executive is entitled on the
       basis of years of service with the Company in accordance



<page>22


       with the Company's normal vacation policy in effect at
       the time of the Change in Control; or

                             (VI)  any purported termination of
       the Executive's employment which is not effected pursuant
       to a Notice of Termination satisfying the requirements of
       Section 7.1 hereof; for purposes of this Agreement, no
       such purported termination shall be effective.

              The Executive's right to terminate the Executive's
       employment for Good Reason shall not be affected by the
       Executive's incapacity due to physical or mental illness.
        The Executive's continued employment shall not
       constitute consent to, or a waiver of rights with respect
       to, any act or failure to act constituting Good Reason
       hereunder.  For purposes of any determination regarding
       the existence of Good Reason, any claim by the Executive
       that Good Reason exists shall be presumed to be correct
       unless the Company establishes to the Board by clear and
       convincing evidence that Good Reason does not exist.

                      (Q)  "Gross-Up Payment" shall have the
       meaning set forth in Section 6.2 hereof.

                      (R)  "Notice of Termination" shall have
       the meaning set forth in Section 7.1 hereof.

                      (S)  "Pension Plan" shall mean any
       tax-qualified, supplemental or excess benefit pension
       plan maintained by the Company and any other plan or
       agreement entered into between the Executive and the
       Company which is designed to provide the Executive with
       supplemental retirement benefits, and any tax-qualified,
       supplemental or excess defined contribution plan
       maintained by the Company and any other defined
       contribution plan or agreement entered into between the
       Executive and the Company.

                      (T)  "Person" shall have the meaning given
       in Section 3(a)(9) of the Exchange Act, as modified and
       used in Sections 13(d) and 14(d) thereof, except that
       such term shall not include (i) the Company or any of its
       subsidiaries, (ii) a trustee or other fiduciary holding
       securities under an employee benefit plan of the Company
       or any of its Affiliates, (iii) an underwriter
       temporarily holding securities pursuant to an offering of
       such securities, or (iv) a corporation owned, directly or
       indirectly, by the stockholders of the Company in



<page>23



       substantially the same proportions as their ownership of
       stock of the Company.

                      (U)  "Potential Change in Control" shall
       be deemed to have occurred if the event set forth in any
       one of the following paragraphs shall have occurred:

                             (I)  the Company enters into an
       agreement, the consummation of which would result in the
       occurrence of a Change in Control;

                             (II)  the Company or any Person
       publicly announces an intention to take or to consider
       taking actions which, if consummated, would constitute a
       Change in Control;

                             (III)  any Person becomes the
       Beneficial Owner, directly or indirectly, of securities
       of the Company representing 20% or more of either the
       then outstanding shares of common stock of the Company or
       the combined voting power of the Company's then
       outstanding securities (not including in the securities
       beneficially owned by such Person any securities acquired
       directly from the Company or its affiliates); or

                             (IV)  the Board adopts a resolution
       to the effect that, for purposes of this Agreement, a
       Potential Change in Control has occurred.

                      (V)  "Retirement" shall be deemed the
       reason for the termination by the Executive of the
       Executive's employment if such employment is terminated
       in accordance with the Company's retirement policy,
       including early retirement, generally applicable to its
       salaried employees.

                      (W)  "Severance Payments" shall have the
       meaning set forth in Section 6.1 hereof.

                      (X)  "Tax Counsel" shall have the meaning
       set forth in Section 6.2 hereof.

                      (Y)  "Term" shall mean the period of time
       described in Section 2 hereof (including any extension,
       continuation or termination described therein).



<page>24


                      (Z)  "Total Payments" shall mean those
       payments so described in Section 6.2 hereof.

               IN WITNESS WHEREOF, the parties have duly
       executed this Agreement to be effective as of the
       Effective Date.


                             TEMPLE-INLAND INC.



                             By: /s/ Kenneth M. Jastrow, II
                                 ----------------------------
                             Name: Kenneth M. Jastrow, II
                             Title:  Chairman and Chief
                                     Executive Officer



                             EXECUTIVE


                                    /s/ J. Patrick Maley, III
                                  ----------------------------
                                     J. Patrick Maley, III