1.

Eligibility. For any Performance Period (as defined in Section 3 below), the Committee shall determine and designate those officers of the Company for purposes of Section 16 of the Securities Exchange Act of 1934 (“Section 16 Officers”) and who will be granted an Award under this CIP and such persons shall be “Participants” in this CIP for that Performance Period.

2.

Awards. Unless otherwise designated by the Committee pursuant to Section 6 below, Awards made under this CIP are subject to the maximum Award amounts specified in the LTIP. Any Award granted under this CIP will be evidenced by a separate writing and subject to the terms and conditions of the LTIP and this CIP.

3.

Performance Period. The Performance Period for an Award granted under this CIP shall be the calendar year specified by the Committee in the separate writing evidencing the Award.

4.

Performance Measurement. Payment of Awards granted under this CIP will be conditioned upon the achievement of one or more performance measures during the applicable Performance Period. The applicable performance measures will be (a) determined by the Committee, and (b) set forth in the separate writing evidencing the Award.

5.

Employment on Last Day of Performance Period. Except as otherwise provided in Section 6 below or in a superseding Employment Agreement, a Participant must be actively employed by the Company on the last day of the Performance Period to receive any payment due for that Performance Period for a final Award determined under Section 7 below.

6.

Partial Year Participation. The Committee may allow an individual who transfers into or out of an eligible position (Section 16 Officers) or who terminates employment under certain circumstances during a Performance Period to participate in the CIP for that Performance Period on a prorated basis. In such a case, the Participant’s final Award will be prorated as reasonably determined by the Committee, but generally based on the Participant’s compensation earned during the Performance Period by the Participant at each applicable, position, salary and bonus level. Situations in which proration may be appropriate include, but are not limited to: (a) new hire, (b) transfer from a position that does not meet the eligibility criteria to a position that meets the eligibility criteria, (c) transfer from a position that does meet the eligibility criteria to a position that does not meet the eligibility criteria, (d) changes in the conditions of participation such as target incentive level, salary, leave of absence, etc. during the Performance Period, and (e) terminations under certain circumstances which are described below. In the case of prorated Awards, the Participant’s final Award will be the sum of all prorated Awards.

a.

Terminations – Except as otherwise provided in any written employment agreement between the Participant and the Company or in the Essendant Inc. Executive Severance Plan (or any successor plan thereto), if a Participant’s employment terminates during a Performance Period due to death, disability (as defined by the Social Security Administration), retirement (which is a voluntary termination of employment by the Participant on or after reaching age 60 if the Participant also has at least five years of service with the Company) or a reduction in force to be determined by the Company in its sole discretion,

the Participant shall be eligible to receive a prorated portion of the Award as determined based on actual performance through the end of the Performance Period in accordance with Section 7 below.

b.

Leaves of Absence - Incentive compensation, including any Award payable under the CIP, is prorated based on the number of days a Participant takes an unpaid leave of absence during the incentive measurement timeframe (i.e., the Performance Period) unless otherwise required by state law. A leave day where a Participant only receives benefit payments (e.g., short term disability, long term disability and workers’ compensation) is deemed unpaid for the purpose of determining incentive pay. An approved intermittent, partial leave day is deemed paid for the purpose of determining incentive compensation.

7.

Adjustment of Performance Measure Targets and Determination and Payment of Final Awards – The Committee has the right to adjust the performance measure targets (either up or down) during the Performance Period if it determines that external changes or other unanticipated business conditions have materially affected the fairness of the targets or unduly influenced the Company’s ability to meet them. The Committee also has the right to adjust the performance measure targets during the Performance Period in the event an extraordinary and unanticipated corporate event such as a Change of Control requires that the CIP be amended to provide for a Performance Period consisting of less than twelve months. Notwithstanding the foregoing, the Committee has the right to adjust Awards in accordance with the LTIP.

8.

No Right to Employment. Nothing herein confers upon a Participant any right to continue in the employ of the Company or any Subsidiary.

9.

Administration and Interpretation. The Committee has the authority to control and manage the operation and administration of the LTIP and this CIP. Any interpretations of the LTIP or this CIP by the Committee and any decisions made by it under the LTIP or this CIP are final and binding on the Participant and all other persons.

10.

Governing Law. This CIP and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the state of Delaware, without regard to principles of conflicts of law of Delaware or any other jurisdiction.

11.

Controlling Terms and Conditions. Notwithstanding anything in this CIP to the contrary, the terms of this CIP shall be subject to all of the terms and conditions of the LTIP (as it may be amended in accordance with its terms), a copy of which may be obtained by the Participant from the office of the Secretary of the Company. In addition, this CIP and the Participant’s rights hereunder shall be subject to all interpretations, determinations, guidelines, rules and regulations adopted or made by the Committee from time to time pursuant to the LTIP and this CIP. The LTIP (along with this CIP and any individual Award granted to a Participant) supersedes any and all prior oral and written discussions, commitments, undertakings, representations or agreements (including, without limitation, any terms of any employment offers, discussions or agreements) involving cash incentive Awards.

12.

Recovery of Payments. Notwithstanding any contrary provision of this CIP, the Companies may recover any Award granted or paid under the CIP, to the extent required by the terms of any clawback or compensation recovery policy adopted by the Companies.

13.

Amendment and Termination. This CIP may be amended or terminated in accordance with the provisions of the LTIP, and may otherwise be amended or terminated by the Company without the consent of any other person, provided that this CIP shall not be amended or terminated in any manner that would be inconsistent with Section 409A of the Code (to the extent applicable).