Exhibit 10.10


 


Blue Ridge Paper Products Inc.


1 West Pack Square, Suite #1100


Asheville, NC 28801


 


September 16, 1999


 


Richard Lozyniak


144 Topstone Road


Redding, CT 06896


 


Dear Rich:


 


This letter sets forth our agreement on the terms and conditions of your
employment by Blue Ridge Paper Products Inc. (the “Company”).  The effectiveness of this letter agreement,
and any agreements contemplated pursuant to paragraphs 7 and 8 hereof, is
subject, however, to its approval by more than seventy-five (75%) of the shareholders
of Blue Ridge Holding Corp. (the “Parent”), which is the owner of all of the
stock of the Company, and of the Company, and of which approvals you will
promptly be advised in writing:


 


1.                                       Position.  The Company will employ you as Chief
Financial Officer and Treasurer of the Company.  In such capacity you will report to the President and Chief
Executive Officer (the “CEO”) of the Company. 
You agree that you shall devote your full business time and efforts to
promote the interests of the Company.


 


2.                                       Term.  The term (the “Term”) of this letter
agreement shall commence on June 28, 1999 (the “Effective Date”) and shall
continue through and including the earlier of (i) the fifth anniversary of the
Effective Date or (ii) the date on which this letter agreement is terminated
pursuant to paragraphs 12, 13, 14, or 15 of this letter agreement.


 


3.                                       Duties.  You shall have such duties and
responsibilities as are consistent with the role of Chief Financial Officer and
Treasurer of the Company, and such other duties and responsibilities as the
President and CEO may reasonably assign to you.


 


4.                                       Location.  You shall perform your services hereunder
primarily at the Company office in Asheville, North Carolina but understand and
agree that the Company may require you to travel away from such office as may
reasonably be required to fulfill your duties hereunder.  The Company shall pay the reasonable and
customary expenses you incur in connection with your move from Redding,


 

















 


Connecticut to the Asheville, North Carolina area, including a
reasonable home purchase program and reimbursement of reasonable expenses,
including closing costs and real estate brokerage commissions incurred in
connection with the sale of your current home in Connecticut.


 


5.                                       Salary.  The Company will pay you a base salary
(“Salary”), payable in accordance with the normal payment procedures of the
Company and subject to such withholdings and other normal employee deductions
as may be required by law or elected by you in accordance with the Company’s
benefit plans, at an annual rate of $200,000 until the third anniversary of the
Effective Date.  Thereafter until the
end of the Term, your Salary may be increased but not decreased after
consultation between you and the Company; provided that any such increase shall
be in the sole discretion of the Board of Directors of the Company (the
“Board”).  The parties to this letter
agreement acknowledge that the initial salary reflects a negotiated reduction
in pay consistent with similar reductions in compensation being asked of other
employees of the Company based on the projected financial condition of the
Company on the date of its inception.


 


6.                                       Bonus.  You will be eligible to receive an annual
cash bonus payment (the “Annual Bonus”) calculated as follows:


 


(a)                                  Calculation.  If the Company’s actual EBITDA (as defined
below) for a fiscal year exceeds 75% of its target for EBITDA (the “Target
EBITDA”) for such fiscal year (such Target EBITDAs are set forth on Exhibit A,
attached to and made a part of this letter agreement), then your Annual Bonus
for such fiscal year shall be not less than the product of (i) $2,667
multiplied by (ii) the number of percentage points (not to exceed seventy-five
(75)), rounded to the nearest percentage point, by which the Company’s actual
EBITDA for such fiscal year exceeds 75% of the Target EBITDA for such fiscal
year.  Except in respect of a fiscal
year of the Company during which your employment is terminated pursuant to
paragraphs 12, 13, 14 or 15 hereof other than by death or Disability, your
Annual Bonus with respect to any fiscal year of the Company commencing, but not
ending, during the Term shall be equal to the product of the amount calculated
in the manner set forth in the preceding sentence in respect of such fiscal year
multiplied by a fraction, the numerator of which is the number of calendar days
in such fiscal year prior to the end of the Term and the denominator of which
is 365.  Except as set forth in
subparagraph 6(c), if the Company’s actual EBITDA for any fiscal year
commencing during the Term is less than 75% of Target EBITDA for such fiscal
year, your Annual Bonus in respect of such fiscal year shall be determined by
the Board in its sole discretion.


 


(b)                                 “EBITDA.”  For purposes of this letter agreement, actual
“EBITDA” means, for a given period, the accounting earnings for the Company
determined under U.S. generally accepted accounting principles, as applied on a
consistent basis, before taking into account any interest expense, any
provision for


 


2

















 


income taxes or any depreciation or amortization expense, and excluding
for this purpose extraordinary gains and losses unless included in the
determination of the applicable Target EBITDA.


 


(c)                                  Fiscal
1999.  Your Annual Bonus for the
fiscal year of the Company ending December 31, 1999 shall equal the
greater of (i) the product of the amount calculated pursuant to the first
sentence of subparagraph (a) above in respect of the 1999 fiscal year of the
Company multiplied by a fraction, the numerator of which is the number of
calendar days after May 14, 1999 in such fiscal year and the denominator of
which is 365 and (ii) $100,000.


 


(d)                                 Payment.  The Annual Bonus, if any, will be paid as
soon as practicable following the end of the fiscal year to which it relates,
but not later than thirty (30) days following the Company’s receipt of audited
financial statements for such fiscal year.


 


7.                                       Contingent
Equity.  Simultaneously with the
execution of this letter agreement, the Company shall grant to you units,
representing 63,000 restricted shares of the common stock of Parent, which
number of shares is equal to one-half of one percent (0.5%) of the fully
diluted common stock of the Parent on the date hereof, in accordance with the
terms and conditions set forth in the Restricted Stock Unit Award Framework,
attached and made a part hereof as Exhibit B hereto.


 


8.                                       Purchased
Equity.  Following the execution of
this letter agreement, the Company will make reasonable efforts to provide you
with the opportunity to purchase from Parent up to 31,500 shares of the common
stock of Parent, representing a 0.25% equity interest in Parent on the date
hereof, together with a related preferred security of Parent in accordance with
the terms and conditions set forth in the Equity Purchase Agreement Framework,
attached and made a part hereof as Exhibit C hereto.


 


9.                                       Employee
Benefit Programs.  You will be
entitled to participate during the Term in such pension, savings, life
insurance, health, disability and major medical insurance plans, and in such
other employee benefit plans and programs, for the benefit of the employees of
the Company, as may be maintained by the Company from time to time during the
Term, each subject to the terms and provisions of such plans or programs
(collectively, “Benefits”).  In
addition, the Company shall make annual contributions to your account under and
in accordance with the terms of the Blue Ridge Paper Products Employee Stock
Ownership Plan.  You shall also receive
payment for country club initiation fees and periodic membership fees and
expenses and use of an appropriate automobile (made in the United States by
unionized employees) including reimbursement of reasonable gas, oil,
maintenance and insurance expenses, during the Term.


 


3

















 


10.                                 Expenses.  The Company will reimburse you for
reasonable, business-related expenses you incur in connection with the
performance of your duties hereunder, subject, however, to the Company’s
policies relating to reimbursement of business-related expenses as in effect
from time to time during the Term, including reasonable and customary attorney
fees associated with the preparation of this letter agreement in an amount not
greater than $7,000 in the aggregate.


 


11.                                 Vacation.  You will be entitled to four (4) weeks of
paid vacation per annum during the Term in accordance with Company policy.  Vacation scheduling will be on a mutually
agreeable basis, in accordance with the Company’s reasonable business needs.


 


12.                                 Termination
for Cause.  The Company may
terminate your employment at any time for “Cause,” as defined below.  If your employment is terminated by the
Company for Cause, the Company will pay to you any Salary and other compensation
earned but not paid to you prior to the date of such termination.  Other than such payment, upon such a
termination, neither you nor the Company shall have any further rights,
obligations or claims against the other except as specifically provided under
this letter agreement.


 


For purposes of this letter agreement, “Cause” shall mean: (i) the
willful failure or refusal by you to perform your duties hereunder (other than
any such failure or refusal resulting from your incapacity due to physical or
mental illness); provided that the Company shall provide you with notice of
such failure or refusal and you shall not have remedied such failure or refusal
within fifteen days of receipt of notice thereof; (ii) the commission by you of
any material act of dishonesty or breach of trust in connection with the
performance of your duties hereunder; (iii) your being convicted of, or
pleading guilty or no contest to, any felony or any lesser crime having as its
predicate element fraud, dishonesty or misappropriation; or (iv) a termination
due to a material breach of your obligations under paragraphs 16, 17, 18 or 19
of this Agreement, in each case as determined in good faith by the Board.  For purposes of clause (i), no failure or
refusal on your part shall be deemed “willful” if done, or omitted to be done,
by you in the reasonable belief that your failure or refusal was in the best
interest of the Company.


 


13.                                 Termination
Without Cause.  The Company may
terminate your employment at any time without Cause.  If your employment is terminated by the Company without Cause,
the Company shall (i) pay to you Salary, in accordance with the normal pay
practices of the Company, until the date (the “Salary Continuation Date”) which
shall be the later of (A) the third anniversary of the date hereof or (B) the
date which is the first anniversary of the date of the termination of your
employment; (ii) provide to you benefits substantially equivalent to the
Benefits to which you are entitled on the date of such termination until the Salary
Continuation Date and (iii) pay to you on the Salary Continuation Date the
product of (y) $16,666.67 and (z) the number of calendar months ending prior to
the date of such


 


4

















 


termination in the fiscal year of the Company during which such
termination occurs; provided further that any obligations of the Company to you
pursuant to this paragraph 13 shall terminate upon any matter constituting a
material breach of your obligations under paragraphs 16, 17, 18 or 19 becoming
known to the Company subsequent to such termination.  Except as set forth in this paragraph 13, upon such a
termination, neither you nor the Company shall have any further rights,
obligations or claims against the other except as specifically provided under
this letter agreement.


 


14.                                 Termination
With Good Reason.  You may
voluntarily terminate your employment at any time with “Good Reason.”  In the event of any such termination under
this paragraph 14, the Company shall (i) pay to you Salary until Salary
Continuation Date; (ii) provide to you Benefits substantially equivalent to the
Benefits to which you are entitled on the date of such termination until the
Salary Continuation Date and (iii) pay to you on the Salary Continuation Date
the product of (y) $16,666.67 and (z) the number of calendar months ending
prior to the date of such termination in the fiscal year of the Company during
which such termination occurs; provided further that any obligations of the
Company to you pursuant to this paragraph 14 shall terminate upon any matter
constituting a material breach of your obligations under paragraphs 16, 17, 18
or 19 becoming known to the Company subsequent to such termination.  Except as set forth in this paragraph 14,
upon such a termination, neither you nor the Company shall have any further
rights, obligations or claims against the other except as specifically provided
under this letter agreement.


 


For purposes of this letter agreement, “Good Reason” shall mean the
Company, without your consent, (i) assigning to you duties inconsistent with
your position, title, authority or duties which results in a substantial
diminution of such position, title, authority or duties; provided that you
shall provide the Company with notice of such diminution and the Company shall
not have remedied such diminution within fifteen days of receipt of notice
thereof; or (ii) materially breaching this letter agreement.


 


15.                                 Termination
Without Good Reason; Death and Disability. 
You may voluntarily terminate your employment without “Good Reason” (as
defined above) upon providing ninety (90) days written notice to the Company,
or such shorter notice period as the Company may allow.  If your employment is terminated pursuant to
this paragraph 15, the Company will pay to you any Salary and other
compensation earned but not paid to you prior to the date of such
termination.  Other than such payment
upon such a termination, neither you nor the Company shall have any further rights,
obligations or claims against the other except as specifically provided under
this letter agreement.


 


Your employment shall terminate automatically upon your death during
the Term in which case your surviving spouse or estate shall be entitled to
receive in a lump sum your Salary for one year and any Salary and other
compensation earned, but not paid to you prior to your death.  Your employment shall also terminate


 


5

















 


automatically upon your Disability, in which case you shall be entitled
to receive in a lump sum, the same amount that your surviving spouse or estate
is entitled to receive in the event of your death.  For purposes of this letter agreement, “Disability” shall be
deemed to occur if, as a result of your incapacity due to physical or mental
illness, you (i) shall have been absent from the full-time performance of your
duties with the Company for a period of six (6) consecutive months, the Company
shall have given you a notice of termination for Disability and, within thirty
(30) days after such notice of termination is given, you shall not have
returned to the full-time performance of your duties or (ii) shall have been
absent from the full time performance of your duties with the Company for 200
or more days in any 240 consecutive day period.


 


16.                                 Non-Competition.  By signing this letter agreement and
accepting this offer of employment, you acknowledge and agree that the services
which you will perform for the Company are services which are unique and
extraordinary and that, by reason of your employment, you will acquire and have
access to proprietary and “Confidential Information,” as defined in paragraph
18 below, and trade secrets concerning the Company’s operations, future plans
and methods of doing business and those of the Company’s affiliates.  Accordingly, you agree that:


 


(a)                                  If,
for any reason (other than Good Reason as defined above), you decide to
terminate your employment with the Company, you will provide the Company with
ninety (90) days written notice.  To the
extent available, such written notice will include the name of your new
employer and a description of your new position, duties and responsibilities,
which information the Company agrees to keep confidential and to disclose only
with your prior written consent, other than as required by law or legal
process.


 


(b)                                 During
the term of your employment and during the Restrictive Period, as defined
below, you will not, absent prior written consent from the Company, directly or
indirectly, engage in a Competitive Business Activity in the United
States.  The term “Competitive Business
Activity” shall mean:


 


(i)                                     engaging
in, or managing or directing persons engaged in the manufacture, sale or
distribution of liquid packaging board, including carton products manufactured
by the Company’s converting businesses, or uncoated freesheet paper for
envelopes, or any other paper product of similar specificity which the Company
or any affiliate of the Company manufactures, sells or distributes, other than
in a de minimus amount (“Competing Business”), whether independently or as an
employee, agent, consultant, advisor, independent contractor, proprietor,
partner, officer, director or otherwise;


 


(ii)                                  acquiring
or having an ownership interest in any entity that derives more than 10% of its
gross revenues from any Competing


 


6

















 


Business, except for ownership of 1% or less of the shares of any
entity whose securities are freely tradable on an established market; or


 


(iii)                               participating
in the financing, operation, management or control of any firm, partnership,
corporation, entity or business described in subparagraph (ii) immediately
above.


 


The term “Restrictive Period” shall mean the period beginning upon a
termination of your employment with the Company and ending on the date which is
(i) in the event that your employment is terminated pursuant to paragraphs 12
or 15, the second anniversary of such termination or (ii) in the event that
your employment is terminated pursuant to paragraphs 13 or 14, the Salary
Continuation Date.


 


17.                                 Non-Solicitation.  During the term of your employment and
during the Restrictive Period, you will not, either for your benefit or for the
benefit of any other person or entity, directly or indirectly solicit any contractor
or employee of the Company or its affiliates to terminate his or her employment
or other relationship with the Company or its affiliates.


 


18.                                 Non-Disclosure
of Confidential Information.  By
signing this letter agreement and accepting this offer of employment, you
recognize that the services to be performed by you as an employee of the
Company are unique services, and that by reason of your employment you will
have access to and acquire proprietary and other confidential information and
trade secrets concerning operations, future plans and methods of doing business
of the Company, its affiliates and their respective clients.  Accordingly, you hereby covenant that you
will not at any time during your employment by the Company or any time
thereafter, other than as required by law or legal process, reveal or divulge
to any person, firm, corporation or other business entity or use for your own
personal or business purposes any trade secrets or confidential information or
knowledge relating to the business or businesses of the Company, its affiliates
or their respective clients including, without limiting the generality of the
foregoing, any such information or knowledge pertaining to products, formulae
or processes, and developments or improvements with respect thereto,
inventions, discoveries, trademarks, patents, designs, sketches, manufacturing,
packaging, merchandising, advertising, distribution and sales methods, sales
and profits figures, budgeting materials, customer lists and relationships
between the Company and any of its customers, suppliers, ultimate consumers or
affiliates (collectively, “Confidential Information”).  Notwithstanding the foregoing, Confidential
Information shall not include information that (i) is, or becomes through no
breach of your obligations hereunder, generally known to the public; or (ii)
becomes known to you from sources other than the Company or its affiliates
under circumstances not involving any breach of an agreement to which any such
source is a party or (iii) was known to you prior to the Effective Date.  As used in this letter agreement, the term
“affiliate” means each corporation or other business entity at any time
directly or indirectly controlling, controlled by, or under common control with


 


7

















 


the Company, its successors or assigns.  As of date hereof, the Company has no affiliates other than
Parent and KPS Special Situations Fund, L.P. which, as of the date hereof, are
not engaged in any activity which constitutes a Competing Business.  As used in this letter agreement, the term
“client” means any person, firm or corporation to whom more than a de minimus
amount of goods, services or intellectual property are actively being supplied
by the Company or an affiliate for compensation at the time you learn of such
person’s, firm’s or corporation’s Confidential Information, or to whom the
Company or an affiliate is at such time actively soliciting a business
relationship to engage in such activities. 
You acknowledge that any materials or documents relating to the
Company’s Confidential Information, in existence or developed in the future,
including all copies thereof, are proprietary to the Company and shall,
following the termination of your employment, regardless of the circumstances
thereof or reasons therefor, remain the Company’s sole and exclusive property
and that you shall immediately return all such materials and documents
including any copies thereof to the Company upon any termination of your
employment or upon any prior request.


 


19.                                 Customer
and Supplier Solicitation.  During
the term of your employment and during the Restrictive Period, you shall not
divert, or attempt to divert any person, business or entity from doing business
with the Company, nor will you attempt to induce any such person, business or
entity to cease being a customer of or supplier to the Company.


 


20.                                 Remedy.  You hereby recognize and agree that the
Company would not have an adequate remedy at law or in equity for the breach or
threatened breach by you of any one or more of the covenants set forth in
paragraphs 16, 17, 18 and 19 and agree that, in addition to such other remedies
as may be available to the Company, in law or in equity, the Company may obtain
an injunction or restraining order, without the posting of any bond or security
and without the proof of special damages, to enjoin you from the breach or
threatened breach of such covenants. 
The restrictions set forth in paragraphs 16, 17, 18 and 19 are
considered by you and the Company to be reasonable for the purposes of
protecting the business of the Company. 
However, if any such restriction is found by a court of competent
jurisdiction to be unenforceable because it is too broad, it is the intention
of you and the Company that such restriction shall be interpreted to be as
broad as possible consistent with allowing its enforceability.


 


21.                                 Arbitration:
Costs, Fees and Expenses.  Except
for disputes with respect to paragraphs 16, 17, 18 and 19 hereof, any dispute
respecting the meaning and intent of this letter agreement or any of its terms
and provisions shall be submitted to arbitration in Charlotte, North Carolina
before a single arbitrator in accordance with the Commercial Rules of the
American Arbitration Association then in effect, and the arbitration
determination resulting from any such submission shall be final and binding
upon the parties hereto.  All costs,
fees and expenses relating to any dispute arising out of this letter agreement
or any of its terms and provisions,


 


8

















 


including the parties’ attorney’s fees, shall be borne by the party not
prevailing in the resolution of such dispute.


 


22.                                 Survival
of Obligations.  You agree that your
obligations under paragraphs 16, 17, 18, 19 and 21, and the Company agrees that
its obligations under paragraphs 7, 8, 10, 11, 12, 13, 14, 15, 16(a) and 21,
will survive any termination of your employment.


 


23.                                 Notices.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, or by reputable commercial messenger service
or by registered or certified mail, postage prepaid, return receipt requested,
addressed to you at 1 Stuyvesant Crescent, Asheville, NC 28803, and to the
Company at the address appearing on the top of the first page of this letter
agreement and shall be deemed to have been received on the date of receipt if
delivered personally or by reputable commercial messenger service or three business
days after posting if by registered or certified mail.


 


24.                                 Conflicting
Agreements.  By signing this letter
agreement and accepting this offer of employment, you hereby represent and
warrant to the Company that your accepting this offer and agreeing to the
obligations and duties undertaken by you hereunder will not conflict with,
violate or constitute a breach of or otherwise violate the terms of any
employment or other agreement to which you are a party and that you are not
required to obtain the consent of any person, firm, corporation or other entity
in order to accept this offer of employment. 
You agree to indemnify the Company against all damages, loss and
expenses which the Company may incur in connection with a breach of the
foregoing representation and warranty.


 


25.                                 Entire
Agreement.  This letter agreement
and its Exhibits and Appendices contains the entire understanding and agreement
between you and the Company concerning the subject matter hereof and supersedes
all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between you and the Company with respect
thereto.


 


26.                                 Amendment.  Following your execution of this letter
agreement, no provision thereof may be amended unless such amendment is agreed
to in writing and signed by you and an authorized officer of the Company.


 


9

















 


Our respective signatures below indicate our mutual assent to the terms
of this letter agreement.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Blue Ridge Paper Products Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gordon Jones

  	
   

  
	
   

  	
   

  	
  Name:  Gordon Jones

  
	
   

  	
   

  	
  Title: President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to and accepted:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Richard Lozyniak

  	
   

  	
   

  
					



 


10

















 


EXHIBIT A


 


COMPANY TARGET EBITDAs


 




	
  Fiscal Year Ending

  	
   

  	
  Target
  EBITDA

  	
   

  
	
  December 31, 1999

  	
   

  	
  $

  	
  62,300,000

  	
   

  
	
  December 31, 2000

  	
   

  	
  $

  	
  79,500,000

  	
   

  
	
  December 31, 2001

  	
   

  	
  $

  	
  105,900,900

  	
   

  
	
  December 31, 2002

  	
   

  	
  $

  	
  116,300,000

  	
   

  
	
  December 31, 2003

  	
   

  	
  $

  	
  107,400,000

  	
   

  






 


The Target EBITDA for the fiscal year of the Company ending on
December 31, 2004 shall be reasonably determined by the Board, after
consultation with Richard Lozyniak, not later than December 31, 2003.


 

















 


EXHIBIT B


 


RESTRICTED STOCK UNIT AWARD FRAMEWORK


 


In accordance with the letter agreement (the “letter agreement”) to
which this Exhibit B is attached (the “letter agreement”), Blue Ridge Paper
Products Inc.  (the “Company”) shall
cause to be granted to Richard Lozyniak (“Executive”), simultaneous with the
execution of the letter agreement, certain units representing 63,000 restricted
shares of the common stock of Blue Ridge Holding Corp. (the “Parent”).  The effectiveness of this Exhibit B and the
grant made hereunder, is subject to its approval by more than 75% of the
shareholders of the Company and of the Parent. 
Such grant shall be subject to a Restricted Stock Unit Award Agreement
which shall be entered into as promptly as practicable following the date
hereof and following such approval and shall be consistent with the following terms
and conditions:


 


1.                                       Under
the Restricted Stock Unit Award Agreement, Executive will be eligible to
receive units representing 63,000 shares of the common stock of Parent which is
equal to one-half of one percent (0.5%) of the fully diluted common equity of
the Parent (the “Executive Equity Interest”).


 


2.                                       The
Executive Equity Interest shall vest immediately upon a sale or series of sales
by KPS Special Situations Fund, L.P. (“KPS”) or any affiliate(s) of KPS in
which KPS and such affiliates sell, directly or indirectly, in the aggregate
more than eighty percent (80%) of their aggregate initial direct or indirect
equity investment in the Company (any such sales or series of sales being
hereinafter referred to as a “KPS Exit”).


 


3.                                       If
a KPS Exit does not occur sooner, the Executive Equity Interest shall vest over
five (5) years (and ratably on a daily basis within each year) pursuant to the
following vesting schedule:


 




	
  On Date of Grant

  	
   

  	
  30

  	
  %

  
	
  In Year 1

  	
   

  	
  0

  	
  %

  
	
  In Year 2

  	
   

  	
  0

  	
  %

  
	
  In Year 3

  	
   

  	
  20

  	
  %

  
	
  In Year 4

  	
   

  	
  25

  	
  %

  
	
  In Year 5

  	
   

  	
  25

  	
  %

  






 


For purposes of the above schedule, the terms “Year 1,” “Year 2,” and
so on refer to the periods of twelve (12) months which end with the respective
anniversaries of the Effective Date of the letter agreement.  The above vesting schedule shall apply
only during the period of Executive’s employment with the Company.  If during the Term Executive’s employment
with the Company is terminated by the Company without Cause (as defined in the
letter agreement) or by Executive for Good Reason (as defined in the letter
agreement) or by reason of Executive’s death or Disability (as defined in the
letter agreement), a portion of the unvested balance of the Executive Equity
Interest as described above shall vest if, and to the extent, necessary in order


 

















 


that not less than 50% of such equity interest is vested on the date of
such termination.


 


4.                                       If
at any time prior to the fifth anniversary of the Effective Date of the letter
agreement, KPS ceases to control, directly or indirectly, a majority of the
Board of Directors of the Company, all of the Executive Equity Interest shall
vest, and a KPS Exit shall be deemed to have occurred, immediately upon such
cessation of control.


 


5.                                       The
Restricted Stock Unit Award Agreement will contain reasonable provisions
governing the disposition of the Executive Equity Interest, including a right
of first refusal for the Parent and/or KPS with respect to any proposed sale of
Executive’s units; provided, however, that the effect of such provisions shall
be no less favorable than the corresponding provisions applicable to equity
interests held by KPS or any affiliate of KPS; and provided further that the
Restricted Stock Unit Award Agreement shall include the applicable terms set
forth on the “Equity Matrix,” attached hereto and made a part hereof as
Appendix A.


 


6.                                       The
remaining terms and conditions of the Restricted Stock Unit Award Agreement
shall be subject to good faith negotiation between Executive and the Company,
neither of which shall unreasonably withhold approval of terms and conditions
which are consistent with those set forth above.


 


2

















 


APPENDIX A


 


EQUITY MATRIX


 


	
   

  	
   

  	
  Company

  Call Right

  	
   

  	
  Executive

  Put Right

  	
   

  	
  Price of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Death or Disability

  	
   

  	
  The Parent and/or the Company may call all vested Units within ninety
  (90) days of Executive’s termination date.

  	
   

  	
  Executive may put vested Units within the year following death or
  disability.  The Parent and/or the
  Company will make payment no later than one year following the exercise of
  the put (with interest at the Federal Short Term Rate from the date of
  exercise through the date of payment).

  	
   

  	
  Fair market value of the shares represented by the vested Units (as
  determined by the most recent ESOP valuation) on the date Executive exercises
  the put or the Parent and/or the Company exercises the call.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Discharge Without Cause or Quit With Good Reason

  	
   

  	
  The Parent and/or the Company may call all vested Units within ninety
  (90) days of Executive’s termination date.

  	
   

  	
  Executive may put vested Units within ninety (90) days of the
  termination date.  The Parent and/or
  the Company will make payment no later than one year following the exercise
  of the put (with interest at the Federal Short Term Rate from the date of
  exercise through the date of payment).

  	
   

  	
  Fair market value of the shares represented by the vested Units (as
  determined by the most recent ESOP valuation) on the date of exercise of the
  call or the put.  All unvested Units
  are forfeited.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Discharge for Cause or Quit Without Good Reason

  	
   

  	
  The Parent and/or the Company may call all vested Units within ninety
  (90) days of Executive’s termination date.

  	
   

  	
  None.  All vested Units will
  receive a cash payment only in connection with a KPS Exit.

  	
   

  	
  Fair market value of the shares represented by the vested Units (as
  determined by the most recent ESOP valuation) on the date of exercise of the
  call or the KPS Exit.  All unvested
  Units are forfeited.

  



 

















 


Notes


 


1.                                       There will be no
put rights with respect to either Purchased Equity or Contingent Equity after
the stock of the Parent becomes publicly traded provided that Executive’s
equity is registered and transferable, subject only to normal securities law
restrictions applicable to trading of registered securities by an executive
officer of the issuer or typical restrictions put on such transfers by an
underwriter of such stock.


 


2.                                       Any put rights
with respect to both Purchased Equity and Contingent Equity will be necessarily
subject to those conditions imposed by the Parent financing documents or other
contract to which the Parent or the Company is a party or applicable law;
provided, however, that any shares held by the Blue Ridge Paper Products
Employee Stock Ownership Plan (including on account of Executive) shall have a
priority with respect to such redemptions. 
Further note that such Equity will be subject to a shareholders’
agreement, the terms of which shall not contradict the terms hereof.


 


2

















 


EXHIBIT C


 


EQUITY PURCHASE AGREEMENT FRAMEWORK


 


In accordance with paragraph 8 of the letter agreement to which this
Exhibit C is attached (the “letter agreement”), the Company will make
reasonable efforts to provide Richard Lozyniak (“Executive”) with the
opportunity to purchase from Blue Ridge Holding Corp. (“Parent”), (i) up to
31,500 shares of the common stock of Parent, which represent one-quarter of one
percent (0.25%) of the fully diluted common equity (the “Common Equity”) of
Parent and (ii) a related preferred stock security (the “Preferred
Security”).  Such equity purchases shall
be subject to, and contingent upon, Executive and the Parent and/or the Company
entering into a separate subscription or other agreement (the “Equity Purchase
Agreement”) in accordance with the following terms and conditions:


 


1.                                       Executive’s
purchase of the Common Equity and the Preferred Security, as applicable, shall
be at a price and on terms and conditions no less favorable than any equity
purchased by KPS Special Situations Fund, L.P. (“KPS”) or any affiliate of KPS,
including any preferred position relative to other purchasers; provided that,
unless otherwise agreed to by Executive in his sole discretion, the aggregate
price for Executive’s purchase of the Common Equity and the Preferred Security
shall not exceed $5.05 per share of Common Equity and related Preferred
Security purchased by Executive.


 


2.                                       The
Equity Purchase Agreement will contain reasonable provisions governing the
disposition of Executive’s equity interest in the Parent, including a right of
first refusal for the Parent and/or KPS with respect to any proposed sale of
Executive’s shares; provided, however, that the effect of such provisions shall
be no less favorable than the corresponding provisions applicable to equity
interests held by KPS or any affiliate of KPS; and provided further that the
Equity Purchase Agreement shall include the applicable terms set forth on the
“Equity Matrix,” attached hereto and made a part hereof as Appendix A.  In addition, the Equity Purchase Agreement
will require the Executive to execute a stockholders’ agreement which, among
other things, will govern the transfer, registration voting and disposition of
the capital stock governed by the Equity Purchase Agreement.


 


3.                                       The
remaining terms and conditions of the Equity Purchase Agreement shall be
subject to good faith negotiation between Executive and the Parent, neither of
which shall unreasonably withhold approval of terms and conditions which are
consistent with those set forth above.


 


4.                                       The
Preferred Security, shares or units of which shall accompany shares of the
Common Equity purchased by Executive, shall contain the same terms and
conditions and proportionate value as the preferred stock acquired by KPS and
its affiliates on May 14, 1999.


 


3

















 


APPENDIX A


 


EQUITY MATRIX


 


	
   

  	
   

  	
  Company

  Call Right

  	
   

  	
  Executive

  Put Right

  	
   

  	
  Price of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Death or Disability

  	
   

  	
  The Parent and/or the Company may call all vested Units within ninety
  (90) days of Executive’s termination date.

  	
   

  	
  Executive may put vested Units within the year following death or
  disability.  The Parent and/or the
  Company will make payment no later than one year following the exercise of
  the put (with interest at the Federal Short Term Rate from the date of
  exercise through the date of payment).

  	
   

  	
  Fair market value of the shares represented by the vested Units (as
  determined by the most recent ESOP valuation) on the date Executive exercises
  the put or the Parent and/or the Company exercises the call.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Discharge Without Cause or Quit With Good Reason

  	
   

  	
  The Parent and/or the Company may call all vested Units within ninety
  (90) days of Executive’s termination date.

  	
   

  	
  Executive may put vested Units within ninety (90) days of the termination
  date.  The Parent and/or the Company
  will make payment no later than one year following the exercise of the put
  (with interest at the Federal Short Term Rate from the date of exercise
  through the date of payment).

  	
   

  	
  Fair market value of the shares represented by the vested Units (as
  determined by the most recent ESOP valuation) on the date of exercise of the
  call or the put.  All unvested Units
  are forfeited.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Discharge for Cause or Quit Without Good Reason

  	
   

  	
  The Parent and/or the Company may call all vested Units within ninety
  (90) days of Executive’s termination date.

  	
   

  	
  None.  All vested Units will
  receive a cash payment only in connection with a KPS Exit.

  	
   

  	
  Fair market value of the shares represented by the vested Units (as
  determined by the most recent ESOP valuation) on the date of exercise of the
  call or the KPS Exit.  All unvested
  Units are forfeited.

  



 

















 


Notes


 


1.                                       There will be no
put rights with respect to either Purchased Equity or Contingent Equity after
the stock of the Parent becomes publicly traded provided that Executive’s
equity is registered and transferable, subject only to normal securities law
restrictions applicable to trading of registered securities by an executive
officer of the issuer or typical restrictions put on such transfers by an
underwriter of such stock.


 


2.                                       Any put rights
with respect to both Purchased Equity and Contingent Equity will be necessarily
subject to those conditions imposed by the Parent financing documents or other
contract to which the Parent or the Company is a party or applicable law;
provided, however, that any shares held by the Blue Ridge Paper Products
Employee Stock Ownership Plan (including on account of Executive) shall have a
priority with respect to such redemptions. 
Further note that such Equity will be subject to a shareholders’
agreement, the terms of which shall not contradict the terms hereof.


 


2

















 


	
  PAUL. WEISS, RIFKIND. WHARTON &
  CARRISON

  
	
   

  
	
   

  	
  1285 AVENUE OF THE AMERICAS

  	
  NEW YORK, NEW YORK 10019-6064

  	
   

  



 


September 15,
1999


 


MEMORANDUM


 


	
  To     Gordon L. Jones

  	
  From     J. Michael Roebuck

  
	
   

  
	
   

  
	
   

  	
  Subject 

  	
  Lozyniak Employment Agreement

  
			



 


Enclosed please find four execution copies of an employment agreement
between Richard Lozyniak and Blue Ridge Paper Products Inc.  After these agreements are executed, please
forward one copy to me, retain one copy for your records and give two copies to
Rich.


 


Please feel free to call me at 212-373-3370 with any questions or
comments.


 


J.M.R.


 


Enclosures


 


	
  cc:

  	
  Stephen Presser

  
	
   

  	
  Robert C. Fleder