Exhibit 10.1

[Letterhead of Clearwater Paper Corporation]

December 13, 2011

Mr. Gordon L. Jones

Dear Gordon:

The purpose of this letter agreement (this “Agreement”) is to confirm important
terms and conditions pertaining to your continued employment as Chief Executive
Officer of Clearwater Paper Corporation (the “Company”) and supersedes in its
entirety that prior agreement entered into effective as of July 1, 2008 by and
among you and the Company as successor in interest to Potlatch Corporation under
that prior agreement.

1. Term of Agreement: The term of this Agreement shall begin on December 16,
2011 (the “Effective Date”), and will end at the close of business on
December 15, 2014 (the “Agreement Term”), unless this Agreement is terminated
earlier in accordance with its terms.

2. Position: You will continue to be employed with the Company as its Chief
Executive Officer. In addition, the Company’s Board of Directors (the “Board”)
shall use its best efforts to secure your continued election to the Board.

3. Base Salary: Your base salary as of the Effective Date is $800,000 on an
annualized basis, payable in accordance with the Company’s regular payroll
practices, as established from time to time. During the term of this Agreement,
your salary shall be reviewed on at least an annual basis by, and may be
increased but not decreased at the discretion of, the appropriate committee of
the Board. The review of your base salary will occur at the same time as the
review for other senior executives of the Company.

4. Annual Incentive Award Opportunity:

(a) You will be eligible to participate in the Company’s annual bonus plan for
similarly situated executives. Under the current terms of the annual bonus plan,
your target annual bonus is 100% of your base salary. Any actual bonus can range
from 0% to 175% of the target bonus opportunity and will be calculated 75% based
on corporate performance and 25% based on individual performance. All awards
shall be governed by the terms of, and subject to any conditions established by,
the Company’s then-current annual bonus plan.

(b) Notwithstanding the provisions of Section 4(a), and subject to Section 8(b),
for purposes of any applicable annual bonus plan, your termination of employment
on or after January 1, 2013 for any reason other than death, disability or by
the Company for “Misconduct,” as that term is defined for purposes of the
Company’s Severance Program for Executive Employees, as amended from time to
time, or any successor program (the “Severance Program”), shall be treated as a
normal retirement under the annual bonus plan.

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5. Long-Term Incentive Awards:

(a) You will be eligible to participate in the Company’s Long-Term Incentive
Plan (“LTIP”), subject to the terms and conditions of the LTIP and on a basis at
least as favorable as generally applicable to the other senior executives of the
Company. Under the current LTIP, the target value of your LTIP award is 200% of
the mid-point of the range for your salary grade. Actual payout of LTIP awards,
which may range from zero (0) shares to a maximum of two (2) times the target
number of shares, will be based on Company performance as measured by the
methodology determined by the appropriate committee of the Board and will be
paid out in shares of Company stock in accordance with the terms and conditions
of the LTIP.1

(b) Notwithstanding the provisions of Section 5(a), and subject to Section 8(b),
your termination of employment on or after January 1, 2013 for any reason other
than death, disability or termination by the Company for “Misconduct,” as that
term is defined for purposes of the Severance Program, shall be treated as a
normal retirement under the LTIP (the amount payable due to such treatment is
referred to herein as the “Section 5(b) Additional Benefit”).

6. Employee Benefits:

(a) You will be eligible to participate in Company’s employee welfare, benefit,
and retirement plans and programs, including retirement and supplemental
retirement plans, on the same basis as generally applicable to the other senior
executives of the Company. Further, you will be eligible for all fringe benefits
and perquisites generally available to the other senior executives of the
Company on at least as favorable basis as such other senior executives, and you
will be reimbursed for reasonable business expenses per Company policy.

(b) Notwithstanding the provisions of Section 6(a), and subject to Section 8(b),
if your employment terminates prior to your attainment of age 65, the Board will
take such action as is necessary to provide you with an additional benefit under
the Company’s Salaried Supplemental Benefit Plan, as amended from time to time
(or a successor plan thereto) (the “Supplemental Plan”), or under another
benefit plan or arrangement, which will make up certain benefits which cannot be
paid to you under the Clearwater Paper Salaried Retirement Plan, as amended from
time to time (the “Retirement Plan”), or under the Clearwater Paper 401(k) Plan,
as amended from time to time (the “401(k) Plan”), pursuant to the benefit
enhancement under the 401(k) Plan that will take effect January 1, 2012 in
connection with the freezing of the Retirement Plan and the Retirement Plan
Supplemental Benefit portion of the Supplemental Plan, to include: (i) any
benefit that you have accrued under the Retirement Plan but must forfeit because
you are not fully vested in your benefit under the Retirement Plan at the time
your employment with the Company terminates;

 

1  The current performance cycle is three (3) years.

 

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(ii) prompt payment or commencement of payment, without actuarial reduction for
commencement of payment prior to age 65, of (A) the benefit you have accrued
under the Retirement Plan Supplemental Benefit portion of the Supplemental Plan
plus (B) an amount equal to the benefit you have accrued under the Retirement
Plan (after taking clause (i) above into account, if you are not vested in your
benefit under the Retirement Plan at the time your employment with the Company
terminates), adjusted for the form of payment (to the extent your benefit under
the Retirement Plan is vested at the time your employment with the Company
terminates, such additional amount under part (B), above, shall cease to be paid
upon your attainment of age 65 or, if earlier, on the date your benefit under
the Retirement Plan is paid or commences to be paid), and (iii) payment in a
lump sum as soon as practicable (but, in no event, more than 30 days) after your
termination of employment of the additional benefit that you would have accrued
under the 401(k) Plan and the 401(k) Plan Supplemental Benefit portion of the
Supplemental Plan pursuant to the benefit enhancement referred to above, if you
had continued your employment with the Company until you reached age 65, with a
continued compensation rate equal to your compensation rate at the time your
employment with the Company terminates, provided, however, that the benefits
described in clause (ii) and clause (iii) above shall be paid only if your
employment terminates on or after January 1, 2013 for any reason other than
death, disability or by the Company for “Misconduct,” as that term is defined
for purposes of the Severance Program. Any additional benefits to which you may
be entitled under clause (i) and (ii) above shall be paid in the form and at the
time specified in the Supplemental Plan for Supplemental Retirement Plan
Benefits of an equivalent amount assuming no discount for early commencement.

(c) The Company will pay, or reimburse you for, the reasonable professional fees
and related expenses you incur for legal advice in connection with the
preparation and execution of this Agreement.

7. Termination of Employment; Severance: This Agreement and your employment with
the Company may be terminated at any time during its term by either you or the
Company, provided, however, that the parties’ rights and obligations upon such
termination during the term shall be as set forth in applicable provisions of
this Agreement and the Severance Program and applicable provisions of any other
documents referenced in Section 15 below. If your employment terminates during
the term of this Agreement for any reason you shall promptly offer to resign
from the Board. The Nominating and Governance Committee shall consider the
appropriateness of continued Board service and will recommend to the Board
whether the resignation should be accepted. In addition, termination of your
employment for any reason shall constitute your resignation as an officer of the
Company, its subsidiaries, and its affiliates. You will be a participant in the
Severance Program and will be subject to all the terms and conditions of the
Severance Program, which are incorporated into this agreement by reference;
provided, however, that Section 4(c) of the Severance Program and references to
Section 4(c) in Section 4(d) of the Severance Program shall not apply to you,
and in their place the following provisions shall apply:

(a) Notwithstanding any other provision of this Agreement, in the event that you
become entitled to receive or receive any payments, options, awards or benefits
(including,

 

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without limitation, the monetary value of any non-cash benefits and the
accelerated vesting of stock options) under this Agreement, the Severance
Program or under any other plan, agreement or arrangement with the Company, any
person whose actions result in a “Change of Control” (as that term is defined in
the Severance Program) or any person affiliated with the Company or such person
(collectively, the “Payments”), that may separately or in the aggregate
constitute “parachute payments” within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury
regulations promulgated thereunder (“280G”) and it is determined that, but for
this Section 7(a), any of the Payments will be subject to any excise tax
pursuant to Section 4999 of the Code or any similar or successor provision (the
“Excise Tax”), the Company shall pay to you either (i) the full amount of the
Payments or (ii) an amount equal to the Payments, reduced by the minimum amount
necessary to prevent any portion of the Payments from being an “excess parachute
payment” (within the meaning of Section 280G) (the “Capped Payments”), whichever
of the foregoing amounts results in the receipt by you, on an after-tax basis,
of the greatest amount of Payments notwithstanding that all or some portion of
the Payments may be subject to the Excise Tax. For purposes of determining
whether you would receive a greater after-tax benefit from the Capped Payments
than from receipt of the full amount of the Payments and for purposes of
Section 7(c) (if applicable), you shall be deemed to pay federal, state and
local taxes at the highest marginal rate of taxation for the applicable calendar
year.

(b) All computations and determinations called for by Sections 7(a) and 7(c)
shall be made and reported in writing to the Company and you by a third-party
service provider selected by the Company (the “Tax Advisor”), and all such
computations and determinations shall be conclusive and binding on the Company
and you. For purposes of such calculations and determinations, the Tax Advisor
shall rely on accurate information about the Payments and reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and you shall furnish to the Tax Advisor such information and
documents as the Tax Advisor may reasonably request in order to make their
required calculations and determinations. The Company shall bear all fees and
expenses charged by the Tax Advisor in connection with its services.

(c) In the event that Section 7(a) applies and a reduction is required to be
applied to the Payments thereunder, the Payments shall be reduced by the Company
in a manner and order of priority that provides you with the largest net
after-tax value; provided that payments of equal after-tax present value shall
be reduced in the reverse order of payment. Notwithstanding anything to the
contrary herein, any such reduction shall be structured in a manner intended to
comply with Section 409A of the Code.

8. Covenants:

(a) You acknowledge and agree to execute and comply with the Company’s
Inventions, Trade Secrets and Confidentiality Agreement, which is incorporated
into this agreement by reference, in the form attached to this Agreement and as
the same may be amended from time to time. You also acknowledge that your
obligations under the Inventions, Trade Secrets and Confidentiality Agreement
will survive the termination of your

 

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employment for any reason. You also acknowledge and agree that you will have
access to confidential and proprietary information of the Company and third
parties in the course of performing your responsibilities for the Company, that
such access is necessary to your ability to perform those responsibilities, that
such Company confidential and proprietary information is a valuable asset of the
Company, and that the Company has developed and will develop goodwill that is a
valuable asset of the Company. In view of the foregoing and in consideration of
the compensation and benefits as provided under this Agreement, you further
agree that:

(i) during the time you are employed and for a period of three (3) years
following your separation from employment with the Company for any reason, you
will not, without the prior written consent of the Company, directly or
indirectly, engage in, whether as an owner, consultant, outside director,
employee, or otherwise, activities competitive with those of the Company in any
state, province or like geography where the Company does business;

(ii) during the time you are employed and for a period of three (3) years
following your separation from employment with the Company for any reason, you
will not, without the prior written consent of the Company, directly or
indirectly, solicit for employment, offer, or cause to be offered employment,
either on a full time, part-time or consulting basis, to any person who was
employed by the Company or its affiliates on the date your employment terminated
and with whom you had regular contact during the course of your employment by
the Company; and

(iii) during the time you are employed and for a period of one (1) year
following your separation from employment with the Company for any reason, you
will not, without the prior written consent of the Company, directly or
indirectly, (A) solicit, divert, appropriate to or accept on behalf of any
competitor of the Company, or (B) attempt to solicit, divert, appropriate to or
accept on behalf of any competitor of the Company, any business from any
customer or actively sought prospective customer of the Company with whom you
have dealt, whose dealings with the Company have been supervised by you or about
whom you have acquired confidential information in the course of your
employment.

You agree that the foregoing restrictions are reasonable, will not preclude you
from finding gainful employment, and are necessary to protect the goodwill,
confidential information, and other protectable business interests of the
Company. You further agree that the Company would suffer irreparable harm should
you violate these restrictions and agree that injunctive relief, in addition to
any other damages or relief available to the Company, is appropriate and
necessary to protect the Company’s interests.

(b) In the event of a breach by you of your obligations under Section 8(a), no
further payment of the Section 5(b) Additional Benefit shall be made, any
further rights you may have had to future payment of the Section 5(b) Additional
Benefit shall be canceled and void, and you shall promptly repay to the Company
any prior payment made to you of the Section 5(b) Additional Benefit.

 

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9. Representation and Warranties: You represent and warrant that you are not a
party to, or otherwise subject to, any covenant not to compete, or other
agreement that would restrict or limit your ability to perform your
responsibilities under this Agreement, with any person or entity and that your
performance of your obligations under this Agreement will not violate the terms
and conditions of any contract or obligation, written or oral, between you and
any other person or entity.

10. Assignment and Successors: This Agreement is personal to you and, without
the prior written consent of the Company, shall not be assignable by you. The
Company may assign this Agreement (a) to any corporation resulting from any
merger, consolidation or other reorganization to which the Company is a party;
(b) any corporation, partnership, association or other person to which the
Company may transfer all or substantially all of the assets and business of the
Company existing at such time; or (c) any subsidiary, parent or other affiliate
of the Company, but in the event of an assignment to a subsidiary, parent or
affiliate, the Company shall remain obligated to you for the compensation and
benefits payable under this Agreement. This Agreement shall inure to the benefit
of and be enforceable by the Company and its successors and assigns.

11. Withholding: The Company may withhold from any payment that is required to
be made under this Agreement amounts sufficient to satisfy applicable
withholding requirements under any federal, state, or local law and all payments
hereunder shall be subject to applicable deductions.

12. Controlling Law: Except where otherwise provided for herein, this Agreement
shall be governed in all respects by the laws of the State of Washington,
excluding any conflict-of-law rule that might refer the construction of the
Agreement to the laws of another state or country. You consent to the exclusive
jurisdiction of the state and federal courts located in Spokane County,
Washington, for any action relating this Agreement. You will not bring any
action relating to this Agreement in any other court.

13. Separability and Construction: If any provision of this Agreement is
determined to be invalid, unenforceable, or unlawful by a court of competent
jurisdiction, the other provisions of this Agreement shall remain in full force
and effect, and the provisions that are determined to be invalid, unenforceable,
or unlawful will either be limited or reformed so that they will remain in
effect to the fullest extent allowed by law.

14. Waiver of Breach: Except as otherwise specifically provided for herein, no
failure by any party to give notice of any breach of, or to require compliance
with, any condition or provision of this Agreement shall be deemed a waiver or
relinquishment of that party’s rights, and no waiver or relinquishment of rights
by any party at any one or more times will be deemed to be a waiver or
relinquishment of such right or power at any other time or times.

15. This Agreement and the payments and benefits provided for hereunder,
including, without limitation, those provided for in Section 6(b) hereof, are
intended to comply with the deferral, payout and other limitations and
restrictions imposed under Code Section 409A (to the extent not exempt
therefrom). Notwithstanding anything herein to the contrary, this Agreement
shall be interpreted, operated and administered in a manner consistent with such
intentions;

 

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provided, however that in no event shall the Company or any of its subsidiaries
or affiliates be liable for any additional tax, interest or penalty that may be
imposed on you pursuant to Code Section 409A or for any damages incurred by you
as a result of this Agreement (or the payments or benefits hereunder) failing to
comply with, or be exempt from, Code Section 409A. If you or the Company
reasonably believes that any payment or benefit does not so comply with
Section 409A, you or the Company will promptly advise the other party and will
negotiate reasonably and in good faith to amend the terms of this Agreement such
that it complies (with the most limited possible economic effect on you and on
the Company) or to mitigate any additional tax or interest (or both) that may
apply under Section 409A if compliance is not practicable. Without limiting the
generality of the foregoing, and notwithstanding any other provision of this
Agreement to the contrary:

 

  (a) if at the time your employment hereunder terminates, you are a “specified
employee,” as defined in Treasury Regulation Section 1.409A-1(i) and determined
using the identification methodology selected by the Company from time to time,
or if none, the default methodology, any and all amounts payable under or
pursuant to this Agreement on account of such termination of employment that
would (but for this provision) be payable within six (6) months following the
date of termination (including amounts payable pursuant to Section 6(b) hereof)
shall instead be paid in a lump sum on the first day of the seventh month
following the date on which your employment terminates or, if earlier, on the
first day of the first month following your death, except (i) to the extent of
amounts that do not constitute a deferral of compensation within the meaning of
Treasury Regulation Section 1.409A-1(b) (including without limitation by reason
of the safe harbor set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii),
as determined by the Company in its reasonable good faith discretion);
(ii) benefits which qualify as excepted welfare benefits pursuant to Treasury
Regulation Section 1.409A-1(a)(5); and (iii) other amounts or benefits that are
not subject to the requirements of Code Section 409A;

 

  (b) you will not be deemed to have had a termination of employment for
purposes of any provision of this Agreement providing for the payment of amounts
or benefits upon or following your termination of employment unless such
termination is also a “separation from service,” as defined in Treasury
Regulation Section 1.409A-1(h) after giving effect to the presumptions contained
therein, and, for purposes of any such provision of this Agreement, references
to a “terminate,” “termination,” “termination of employment” and like terms
shall mean separation from service; and

 

  (c)

with regard to any provision in this Agreement, including, without limitation,
Section 6(a) hereof, that provides for reimbursement of expenses or in-kind
benefits, except for any expense, reimbursement or in-kind benefit provided
pursuant to this Agreement that does not constitute a “deferral of
compensation,” within the meaning of Treasury Regulation Section 1.409A-1(b)
(including without limitation by reason of the safe harbor set forth in Treasury
Regulation Section 1.409A-1(b)(9)(iii), as determined by the Company in its
reasonable good

 

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  faith discretion), (i) the right to reimbursement or in-kind benefits shall
not be subject to liquidation or exchange for another benefit, (ii) the amount
of expenses eligible for reimbursement, or in-kind benefits provided, during any
taxable year shall not affect the expenses eligible for reimbursement, or
in-kind benefits to be provided, in any other taxable year, and (iii) such
payments shall be made on or before the last day of your taxable year following
the taxable year in which the expense occurred.

16. Entire Agreement/Modification in Writing: This Agreement together with the
Inventions, Trade Secrets and Confidentiality Agreement and relevant plan
documents and grant notices (each as it may be amended from time to time)
constitute the entire understanding relating to the matters addressed herein and
supersede any other prior agreement, whether written or oral. No addition to, or
modification of, this Agreement shall be effective unless in writing and signed
by both you and an authorized representative of the Company.

17. Construction: Each party and his or its counsel have reviewed this Agreement
and have been provided the opportunity to revise this Agreement, and,
accordingly, the normal rule of construction providing for any ambiguities to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement. Instead, the language of all parts of this Agreement shall be
construed as a whole and according to its fair meaning, not strictly for or
against either party. Nothing in this Agreement is intended to or constitutes a
guarantee of employment for a fixed or specific term, and except as to the
specific obligations established by this Agreement, the Company reserves the
right to adopt, amend, discontinue, or otherwise alter its compensation,
benefit, and human resources practices, policies, and programs at its
discretion.

18. Survival: The provisions of Sections 7, 8, 9 and 11-16 of this Agreement
shall survive the termination of this Agreement and any termination of your
employment hereunder.

[Remainder of page intentionally left blank.]

 

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Gordon, I hope this Agreement provides you with the level of security and
incentive that will allow you to continue to contribute substantially to the
success of the Company. Please sign below and return an executed original to me
to indicate your acceptance of these terms. Again, we are pleased to have you as
a continuing member of the team.

Sincerely,

 

s/s Boh A. Dickey

Boh A. Dickey

Vice Chair of the Board of Directors

 

cc: Thomas H. Carter

I, Gordon L. Jones, have read, understand, accept and agree to the terms of the
letter/agreement from Boh A. Dickey dated December 13, 2011.

 

s/s Gordon L. Jones

Gordon L. Jones

Date: December 13, 2011

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Clearwater Paper Corporation

Inventions, Trade Secrets and Confidentiality Agreement

IN CONSIDERATION OF and as a condition of my employment or continued employment
by Clearwater Paper Corporation (the “Company”), and in consideration of the
compensation and benefits to be provided to me and the confidential and other
information of the Company to which I will be provided access, I agree as
follows:

Inventions and Improvements

 

1. I will keep adequate records regarding and will disclose to the Company all
inventions or improvements made or conceived by me, solely or jointly with
others, during my employment with the Company and during the one-year period
following the termination of my employment.

 

2. I agree to assign and hereby do assign to the Company, without further
compensation, my entire right in all such inventions and improvements, as well
as any patent applications or patents relating to them, except that my
assignment and agreement to assign does not apply to an invention or improvement
for which no equipment, supplies, facility, or trade secret information of the
Company was used and which was developed entirely on my own time, unless (a) the
invention or improvement relates (i) directly to the business of the Company, or
(ii) to the Company’s actual or demonstrably anticipated research or
development, or (b) the invention or improvement results from any work performed
by me for the Company.

 

3. I will execute all papers, testify in any legal proceeding, and give any
other assistance requested at any time by the Company to secure for the Company
exclusive rights in and patent or other protection in any country for all
inventions and improvements that are assigned to the Company pursuant to this
Agreement. In obtaining such assistance, the Company will make reasonable
efforts, not inconsistent with the Company’s timely obtaining the necessary
assistance, to avoid materially impairing me in fulfilling my then-existing
personal and professional commitments. I understand that if I am no longer
employed by the Company, the Company will reimburse me for my time spent
providing this assistance. Reimbursement shall be at my regular base rate of
compensation if I am employed elsewhere at the time I provide the assistance or,
if I am not employed elsewhere at the time, at the regular base rate of
compensation that the Company was paying me as of the termination of my
employment with the Company.

 

4. I have attached to this Agreement a list describing all inventions, original
works of authorship, developments, improvements, and trade secrets which were
made by me prior to my employment (collectively referred to as “Prior
Inventions”), which belong to me or in which I have an interest, which relate to
the Company’s current or proposed business, products or research and
development, and which are not assigned to the Company. I represent and warrant
that this list is complete and accurate. If no list is attached, I represent and
warrant that there are no Prior Inventions.

 

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Trade Secrets and Confidential Information

 

5. “Confidential Information” means any information related to the business or
other affairs of the Company or its affiliates that is not generally available
to the public, and that: (a) is conceived, compiled, developed, or discovered by
me whether solely or jointly with others, during my employment or (b) is or has
been received or otherwise becomes known to me in connection with my employment.
Without limiting the generality of the foregoing, Confidential Information
includes information, both written and oral, relating to inventions and
improvements, trade secrets and other proprietary information, technical data,
products, services, finances, business plans, marketing plans, legal affairs,
suppliers, clients, potential clients, prospects, opportunities, contracts or
assets of the Company or its affiliates. Confidential Information also includes
any information that has been made available to the Company by its customers or
other third parties and which the Company is obligated to keep confidential.

 

6. I will not at any time, either during or after my employment by the Company,
use or disclose any Company trade secrets or other Confidential Information
except as necessary to perform my duties to the Company, as authorized by the
Company, or as required by law.

 

7. I will, upon termination of my employment with the Company, or upon request,
deliver to the Company all physical materials, including any writings, which
relate to any Company trade secrets or other Confidential Information or to any
inventions or improvements transferred to the Company under this Agreement. This
obligation includes materials in any form or format, whether paper, electronic
or other.

 

8. I will not use in the performance of my work for the Company or disclose to
the Company any trade secret or other confidential or proprietary information of
any prior employer or other person or entity if and to the extent that such use
or disclosure may cause any breach, default or violation of any obligation or
duty that I owe to such other person or entity (e.g., under any agreement or
applicable law). My compliance with this obligation will not prohibit, restrict
or impair the performance of my work, obligations and duties to the Company.

 

9. I consent to the Company providing a copy of this Agreement to any future
employer or prospective employer of me.

I understand and agree that (a) my obligations under this Agreement will survive
the termination of my employment for any reason, (b) nothing in this Agreement
constitutes a promise of continued employment or a limitation on the Company’s
or my rights to terminate my employment, (c) the Company may assign this
Agreement to any entity that employs me, including but not limited to any
successor to the Company, (d) this Agreement will be governed by the laws of the
State of Washington, and (e) any legal action relating to this Agreement shall
be brought only in a state or federal court located in the State of Washington.

 

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Employee’s Signature

 

Employee’s Printed Name

 

Date

(Upon execution, this document will be placed in the employee’s personnel file.)

 

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