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                                                                     EXHIBIT 2.3
                               U.S. CELLULOSE CO.
                             EMPLOYEE SEVERANCE PLAN

                                OCTOBER 15, 1999


1. INTRODUCTION

        1.1 PURPOSE. The purpose of the U.S. Cellulose Employee Severance Plan
(the "Plan") is to provide certain benefits to employees of U.S. Cellulose Co.,
a California corporation (the "Company"), upon a change in ownership of the
Company.

        1.2 NOT A QUALIFIED RETIREMENT PLAN. The Plan is not a qualified
retirement plan under Section 401 of the Internal Revenue Code of 1986, as
amended, nor is it subject to any provision of the Employee Retirement Income
Security Act of 1974, as amended. The Plan shall be governed by, and construed
in accordance with, the laws of the State of California.

        1.3 EFFECTIVE DATE. The Company hereby establishes the Plan, as set
forth in this document, effective October 15, 1999. Any of the Company's prior
policies and practices, whether formal or informal, regarding severance or
similar payments upon employment termination for the Participants, are hereby
revoked and superseded by this Plan.

        1.4 VESTING. This Plan establishes and vests, as of the date of any
Change in Control (as defined below), in each Participant a contractual right to
the benefits to which he or she is entitled pursuant to the terms thereof,
enforceable by the Participant against the Company.

        1.5 NO TRUST CREATED. The Severance Payments (as defined below) and
costs of this Plan shall be paid by the Company out of its general assets.
Nothing contained in this Plan shall be deemed to create a trust of any kind.


        2. ADMINISTRATION

        2.1 THE BOARD OF DIRECTORS. The Plan shall be administered by the Board
of Directors of the Company. The interpretation and construction by the Board of
Directors of the Company of any provisions of the Plan or of any right granted
under the Plan shall be final and binding on all Participants. The Board of
Directors of the Company may adopt such rules or guidelines as it deems
appropriate to implement the Plan. No member of the Board of Directors of the
Company shall be liable for any action or determination made in good faith with
respect to the Plan or any right granted under the Plan.

        2.2 ACTION BY THE COMPANY. Any action required or permitted by the
Company under the Plan shall be by resolution of its Board or any person or
persons authorized by resolution of its Board.

        3. PLAN PARTICIPANTS

        3.1 PARTICIPANTS. The participants in the Plan (the "Participants")
shall consist of each full-time employee of the Company who has been employed by
the Company on a full time basis


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for at least one year immediately preceding the date of any Change in Control
(as defined below), with the exception of Frederick L. and Barbara Parkinson.
For informational purposes only, Exhibit A attached hereto sets forth each of
the full-time employees of the Company as of October 15, 1999, together with the
date on which such employee became a full-time employee of the Company.

        3.2 CHANGE IN CONTROL. For purposes of this Plan, a "Change in Control"
shall mean the earlier to occur of any of the following events with respect to
the Company:

               (1) The acquisition by any individual, group of individuals or
other entity (excluding the acquisition by any current shareholders of the
Company or an employee stock ownership plan or any Affiliate (as defined below)
of the Company) of fifty-one percent (51%) or more of the voting power of the
voting securities of the Company;

               (2) The consummation of a merger, consolidation or reorganization
of the Company (other than a merger, consolidation or reorganization upon the
consummation of which shareholders of the Company or an Affiliate shall own more
than a majority of the then outstanding voting securities of the surviving
company);

               (3) The liquidation, dissolution or sale of eighty percent (80%)
or more of the aggregate fair market value of the assets of the Company to any
individual, group of individuals or other entity (excluding the acquisition by
any current shareholders of the Company or an employee stock ownership plan or
any Affiliate).

        3.3 AFFILIATE. For purposes of this Plan, an "Affiliate" shall mean any
other individual, corporation, partnership, limited liability company or other
entity, directly or indirectly, controlling or controlled by or under direct
common control with the Company. For the purposes of this definition, "control"
when used with respect to any specified individual or entity means the power to
direct the management and policies of such individual or entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the meanings "controlling" and "controlled" shall have meanings
correlative to the foregoing.

        4. SEVERANCE PAYMENTS

        4.1 SEVERANCE PAYMENTS. Upon any Change in Control (as defined below),
the Company shall pay to each Participant a severance payment (the "Severance
Payment") in the amount which shall be determined by the following schedule (the
"Severance Payment Amount"):

               (1) For any Participant who has been employed by the Company on a
full-time basis for at least the one (1) year period immediately preceding the
Change in Control, but not more than the two (2) year period immediately
preceding the Change in Control, the Severance Payment Amount shall be the
amount equal to such Participant"s monthly salary as of February 28, 1999
multiplied by three (3);

               (2) For any Participant who has been employed by the Company
on a full-time basis for at least the two (2) year period immediately preceding
the Change in Control, but not more than the three (3) year period immediately
preceding the Change in Control, the Severance Payment Amount shall be the
amount equal to such Participant"s monthly salary as of February 28, 1999
multiplied by six (6);


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               (3) For any Participant who has been employed by the Company on a
full-time basis for at least the three (3) year period immediately preceding the
Change in Control, but not more than, the four (4) year period immediately
preceding the Change in Control, the Severance Payment Amount shall be the
amount equal to such Participant"s monthly salary as of February 28, 1999
multiplied by nine (9); and

               (4) For any Participant who has been employed by the Company on a
full-time basis for at least the four (4) year period immediately preceding the
Change in Control, the Severance Payment Amount shall be the amount equal to
such Participant's monthly salary as of February 28, 1999 multiplied by twelve
(12).

        4.2 LIMITATION. In no event shall the aggregate Severance Payment Amount
for all Participants due a Severance Payment under this Plan (the "Aggregate
Severance Payment Amount") exceed the aggregate amount equal to Four Hundred
Thousand Dollars ($400,000) (the "Severance Payment Amount Maximum"). If the
Aggregate Severance Payment Amount exceeds the Severance Payment Amount Maximum,
then the Severance Payment Amount due each Participant shall be determined by
applying the percentage that each Participant would be entitled to participate
in the Aggregate Severance Payment Amount at the time of the Change in Control
against the Severance Payment Amount Maximum.

        4.3 RELEASE. As a condition to receipt of payments under this Plan, (a)
a Participant must execute and deliver to the Company a written release, in the
form attached hereto as Exhibit B and incorporated herein by reference (the
"Release"), which shall become effective in accordance with its terms and (b)
any revocation period required under any applicable law, including, without
limitation, any revocation period set forth in the Release, shall have expired.
The failure or refusal of a Participant to sign a Release, or the revocation of
a Release (to the extent permitted by its terms) shall disqualify the
Participant from receiving benefits under this Plan. If a Participant files a
legal action asserting any claim or demand within the scope of the Release, the
Company shall retain all rights and benefits of the Release and may (a) cancel
all future obligations under the Release; and (b) recoup the value of all
payments and benefits paid under this Plan, together with the Company's costs
and attorneys fees.

        5. PAYMENT OF SEVERANCE PAYMENT AMOUNTS

        5.1 PAYMENT OF SEVERANCE PAYMENT AMOUNTS. All Severance Payment Amounts
shall be payable by the Company in cash, net of any required employer and
employee payroll tax payments and withholdings, at the times set forth in
Sections 5.2 through 5.4 of this Plan. The Company reserves the right to offset
Severance Payment Amounts payable under this Plan by any advanced monies the
Participant owes the Company.

        5.2 INVOLUNTARY TERMINATION. If a Participant is involuntarily
terminated following a Change in Control, the Company or its successor shall pay
the Severance Payment Amount due such Participant in thirty-six (36) equal
monthly installments, with the first payment due on the first day of the month
immediately following such involuntary termination, and each subsequent payment
due on the first day of each successive month thereafter. For purposes of this
Plan, a Participant shall be deemed to have been "involuntary terminated
following a Change of Control" upon the occurrence of any of the following: (a)
a Participant is terminated as an employee of the


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Company or its successor within twelve (12) months of the Change of Control
(other than a termination for Cause (as defined below)), or (b) the Company or
its successor informs Participant, at any time within twelve (12) months of the
Change in Control, that such Participant's continued employment with the Company
or its successor is conditioned upon the relocation of such Participant's place
of employment to a location in excess of thirty (30) miles from such
Participant's prior place of employment, and as a result of such relocation
condition, such Participant terminates his or her employment with the Company or
its successor.

        5.3 VOLUNTARY TERMINATION. If a Participant's employment with the
Company or its successor is terminated following a Change in Control for any
reason other than that which would constitute an involuntary termination
pursuant to Section 5.2 of the Plan, the Company or its successor shall pay the
Severance Payment Amount due such Participant in one lump sum amount upon the
three (3) year anniversary of such Participant's termination of employment
pursuant to this Section 5.3. Such anniversary date will not be extended for any
such Participant who is rehired as an employee, an independent contractor, or in
other such capacity by the Company at any time before the Severance Payment
Amount is paid to such Participant pursuant to this Plan.

        5.4 EMPLOYED PARTICIPANTS. For any Participant who remains employed by
the Company or its successor for the three (3) year period immediately following
the Change in Control, the Company or its successor shall pay the Severance
Payment Amount due such Participant in thirty-six (36) equal monthly
installments, with the first payment due on the first day of the month
immediately following the three (3) year anniversary of the Change in Control,
and each subsequent payment due on the first day of each successive month
thereafter. All such payments shall be in addition to any other salary or
benefits received by the Participant by virtue of the Participant's continued
employment by the Company or its successor.

        5.5 DEATH OR LEGAL INCAPACITY. If any Participant dies or becomes
legally incapacitated prior to the date that all of the Severance Payment Amount
is paid to such Participant pursuant to this Plan, then the Company or its
successor shall pay to such Participant's beneficiary or beneficiaries in the
case of such death, or to such Participant's legal guardian or conservator, as
applicable, in the case of such legal incapacity, any and all remaining unpaid
payments of the Severance Payment Amount due such Participant under this Plan as
and when such payments would have been paid to such Participant under the Plan.
If a Participant dies while an employee of the Company or its successor or
suffers a permanent disability or legal incapacity resulting in the termination
of the Participant's employment within the three (3) year period immediately
following the Change in Control, the Company or its successor shall pay the
Severance Payment Amount due such Participant in one lump sum amount within six
(6) months of the Participant's death or the termination of Participant's
employment.

        5.6 REHIRED EMPLOYEES. A Participant who is rehired as an employee, an
independent contractor, or in other such capacity by the Company at any time
before all of the Severance Payment Amount is paid to such Participant pursuant
to this Plan, following an involuntary termination described in Section 5.2,
shall continue to receive such payments under this Plan in accordance with the
payment schedule set forth in Section 5.2 and will not be required to reimburse
the Company for payments already made.

        5.7 OTHER BENEFIT PLANS. No amount paid to a Participant under this Plan
shall be deemed to be compensation with respect to the Participant's entitlement
to benefits under any


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employee benefit plan established by the Company for its employees unless
otherwise specifically provided in such plan or such other individual employment
arrangements as may apply to the Participant.

        5.8 TERMINATION FOR CAUSE. If the Company terminates the Participant for
Cause, then the Participant shall not be entitled to receive severance or other
benefits under this Plan and shall be entitled only to those benefits (if any)
as may be available under the Company's then existing benefit plans and policies
at the time of such termination. "Cause" shall mean (i) any act of personal
dishonesty taken by the Participant in connection with his or her
responsibilities as an Employee and intended to result in substantial personal
enrichment of the Participant, (ii) the Participant's conviction of a felony
that is injurious to the Company, or (iii) a willful act by the Participant
which constitutes gross misconduct and which is injurious to the Company.


        6. MISCELLANEOUS

        6.1 WITHHOLDING TAXES. To the extent required by applicable federal,
state or local law, the recipient of any payment or distribution under the Plan
shall make arrangements satisfactory to the Company or its successor for the
satisfaction of any withholding tax obligations that arise by reason of the
receipt or vesting of such payment or distribution. The Company or its successor
shall not be required to make any cash payment under the Plan until such
obligations are satisfied.

        6.2 ASSIGNMENT. Except as provided in Section 5.5, no rights or
interests granted by the Company under this Plan to any Participant shall be
anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor's process, whether voluntarily, involuntarily or by
operation of law, and any act in violation of this Section shall be void.

        6.3 AMENDMENT. Any amendment, modification or termination of this Plan
shall require the written consent of the Company and all of the Participants.


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        6.4 EMPLOYMENT STATUS. This Plan does not constitute a contract of
employment or impose on the Participant or the Company any obligation to retain
the Participant as an Employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment. If the Participant's employment with the Company or a successor
entity terminates for any reason, the Participant shall not be entitled to any
payments, benefits, damages, awards or compensation other than as provided by
this Plan, or as may otherwise be available in accordance with the Company's
established employee plans and practices or other agreements with the Company at
the time of termination.

        6.5 COMPANY'S SUCCESSORS. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Plan and agree expressly to
perform the obligations under this Plan by executing a written agreement. For
all purposes under this Plan, the term "Company" shall include any successor to
the Company's business and/or assets which executes and delivers the assumption
agreement described in this subsection or which becomes bound by the terms of
this Plan by operation of law.

        6.6 PARTICIPANT'S SUCCESSORS. All rights of the Participant hereunder
shall inure to the benefit of, and be enforceable by, the Participant's personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

        6.7 NO DUTY TO MITIGATE. The Participant shall not be required to
mitigate the amount of any benefits contemplated by this Plan, nor shall any
such benefits be reduced by any earnings or benefits that the Participant may
receive from any other source.

        6.8 CAPTIONS. The captions of articles, sections, and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

        6.9 SEVERABILITY. Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any provision of the Plan shall be held to be prohibited by or
invalid under applicable law, then (a) such provision shall be deemed amended
to, and to have contained from the outset such language as shall be necessary
to, accomplish the objectives of the provision as originally written to the
fullest extent permitted by law; and (b) all other provisions of the Plan shall
remain in full force and effect.


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               IN WITNESS WHEREOF, U.S. CELLULOSE CO., a California corporation,
hereby adopts the U.S. CELLULOSE CO. EMPLOYEE SEVERANCE PLAN, effective as set
forth above, as of 15th Day of October, 1999.


                                          U.S. CELLULOSE CO., a California
                                          corporation



        Date: October   18, 1999   By:      /s/ FREDERICK PARKINSON
                                      ------------------------------------
                                            Frederick Parkinson
                                            President/Secretary

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