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                                                                     EXHIBIT 10Q

                             EMPLOYMENT AGREEMENT
                             --------------------

         AGREEMENT by and between Fort James Corporation, a Virginia corporation
(the "Company") and Miles L. Marsh (the "Executive"), dated as of the 1st day
of January, 2000.

         1.  Employment Period.  The Company hereby agrees to continue the
             -----------------
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the date hereof (the "Commencement Date") and ending on the
third anniversary of such date provided, however, that the Employment Period
shall be automatically extended without action by either party for an additional
one year period on each anniversary of the Commencement Date unless, not later
than six months prior to each such anniversary, either party shall give notice
to the other in writing that such party does not intend to extend the Employment
Period.  A notice delivered by the Company that it does not intend to extend the
term of this Agreement shall hereinafter be referred to as a "Nonrenewal
Notice."  Notwithstanding the foregoing, if the Executive is employed by the
Company on the Effective Date (as defined below), the Employment Period shall be
a three year fixed term from the Effective Date (the "Employment Period").

         2.  Terms of Employment.  (a)  Position and Duties. (i)  During the
             -------------------        -------------------
Employment Period, the Executive shall serve as Chairman and Chief Executive
Officer of the Company with duties and responsibilities consistent therewith.
The Executive shall be located at the Company's headquarters. During the
Employment Period, the Executive shall serve on the Board of Directors of the
Company, provided that from and after the Effective Date (A) the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding the
Effective Date and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 50 miles from such location.

             (ii)  During the Employment Period, and excluding any periods of
vacation and sick leave to which
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the Executive is entitled, the Executive agrees to devote reasonable attention
and time during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.

         (b)  Compensation.  (i)  Base Salary.  During the Employment Period,
              ------------        -----------
the Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid in bi-weekly installments, at least equal to the base salary paid
or payable, including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies immediately preceding the
Commencement Date.  Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement.  Annual
Base Salary shall not be reduced after any such increase and the term Annual
Base Salary as utilized in this Agreement shall refer to Annual Base Salary as
so increased.  As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.

              (ii)  Annual Bonus. During the Employment Period, the Executive
                    ------------
shall have an annual bonus opportunity no less than that provided to the
Executive for the year ending immediately prior to the Commencement Date. After
the Effective Date, the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (the "Annual Bonus") in cash at
least equal to the

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Executive's highest bonus under the Company's Management Annual Incentive Plan,
or any comparable bonus under any predecessor or successor plan, for the last
five full fiscal years prior to the Effective Date (annualized in the event that
the Executive was not employed by the Company for the whole of such fiscal year)
(the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than
the end of the third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.

               (iii)  Incentive, Savings and Retirement Plans. During the
                      ---------------------------------------
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, including, without limitation, the Fort James Corporation of Virginia
Miles L. Marsh Supplemental Retirement Plan, but, after the Effective Date, in
no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies. All stock options held by the Executive shall vest and become
immediately exercisable on the Effective Date. For purposes of this Agreement,
should the Executive retire under the provisions of the Fort James Corporation
of Virginia Miles L. Marsh Supplemental Retirement Plan, he shall also be
entitled to receive:

          (A)  Eligibility for the Company's Retiree Medical Plan coverage,
regardless of years of service.

          (B)  The payment of a lump sum in cash of $50,000.

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               (iv)  Welfare Benefit Plans.  During the Employment Period, the
                     ---------------------
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but, after the Effective
Date, in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.  With respect to the Company's welfare benefit plans,
the Company shall cause any such plan to waive any pre-existing condition
exclusions and actively-at-work requirements thereunder with respect to the
Executive and the Executive's eligible dependents and shall ensure that any
covered expenses incurred on or before the Commencement Date shall be taken into
account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions after the Commencement Date to the extent that
such expenses are taken into account for the benefit of peer executives of the
Company.

               (v)   Expenses. During the Employment Period, the Executive shall
                     --------
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the policies, practices and procedures of
the Company and its affiliated companies.

               (vi)  Fringe Benefits. During the Employment Period, the
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Executive shall be entitled to fringe benefits including, without limitation,
tax and financial planning services and the payment of club dues.

               (vii) Vacation. During the Employment Period, the Executive shall
                     --------
be entitled to paid vacation in accordance with the Vacation Policy as set forth
in the Company's Benefits and Policies Manual, but in no event less

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than six weeks per year, as defined in the Benefits and Policies Manual.

               (viii)  Indemnity. The Executive shall be indemnified by the
                       ---------
Company against claims arising in connection with the Executive's status as an
employee, officer, director or agent of the Company in accordance with the
Company's indemnity policies for its senior executives, subject to applicable
law.

          3.   Termination of Employment.  (a)  Death or Disability.  The
               -------------------------        -------------------
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period.  If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 11(b) of this Agreement of its
intention to terminate the Executive's employment.  In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.  For
purposes of this Agreement, "Disability" shall be set forth in the Company's
Long-Term Disability Plan.

          (b)  Cause.  The Company may terminate the Executive's employment
               -----
during the Employment Period for Cause.  For purposes of this Agreement, "Cause"
shall mean:

             (i)   intentional gross misconduct by the Executive damaging in a
    material way to the Company, or

             (ii)  a material breach of this Agreement, after the Company has
    given the Executive notice thereof and a reasonable opportunity to cure.

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "intentional" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the

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Board or upon the instructions of the Chief Executive Officer or a senior
officer of the Company or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. Following the Effective
Date, the cessation of employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.

          (c)  Good Reason.  The Executive's employment may be terminated by the
               -----------
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean a material breach by the Company of this Agreement after the Executive has
given the Company notice thereof and a reasonable opportunity to cure. For
purposes of this Section 3(c), any good faith determination of "Good Reason"
made by the Executive after the Effective Date shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the Executive
for any reason during the 30-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a termination for Good
Reason for all purposes of this Agreement.

          (d)  Notice of Termination.  Any termination by the Company for Cause,
               ---------------------
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the

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date of receipt of such notice, specifies the termination date (which date shall
be not more than thirty days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.

          (e)  Date of Termination.  "Date of Termination" means (i) if the
               -------------------
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.

          4.   Obligations of the Company upon Termination.  (a)  Good Reason;
               -------------------------------------------        ------------
Other Than for Cause, Death or Disability. If, during the Employment Period, the
-----------------------------------------
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:

          (i)  the Company shall pay to the Executive in a lump sum in cash
    within 30 days after the Date of Termination the aggregate of the following
    amounts:

               A.   the sum of (1) the Executive's Annual Base Salary through
         the Date of Termination to the extent not theretofore paid, (2) the
         product of (x) the highest Annual Bonus paid or payable, including any
         bonus or portion thereof which has been earned but deferred (and
         annualized for any fiscal year consisting of less than twelve full
         months or during which the Executive was employed for less than twelve
         full months), in respect of the five most recently completed fiscal
         years prior to the Date of Termination (the "Minimum Bonus") and (y) a

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          fraction, the numerator of which is the number of days in the current
          fiscal year through the Date of Termination, and the denominator of
          which is 365 and (3) any accrued vacation pay, in each case to the
          extent not theretofore paid (the sum of the amounts described in
          clauses (1), (2), and (3) shall be hereinafter referred to as the
          "Accrued Obligations"); and

               B.   the amount equal to the product of (1) three, or two in the
          case of a termination prior to the Effective Date after the third
          anniversary of the Commencement Date (a "Nonrenewal Termination") and
          (2) the sum of (x) the Executive's Annual Base Salary and (y) the
          Minimum Bonus; and

               C.   in the event that the Executive is less than 55 years old on
          the Date of Termination, an amount equal to the excess of (a) the
          actuarial equivalent of the benefit under the Company's qualified
          defined benefit retirement plan or such other qualified defined
          benefit pension plan in which the Executive participates, if any (the
          "Retirement Plan") (utilizing actuarial assumptions no less favorable
          to the Executive than those in effect under the Company's Retirement
          Plan immediately prior to the Commencement Date), and any excess or
          supplemental retirement plan in which the Executive participates
          (together, the "SERP") which the Executive would receive if the
          Executive's employment continued for three years, or two years in the
          case of a Nonrenewal Termination, after the Date of Termination
          assuming for this purpose that all accrued benefits are fully vested,
          and, assuming that the Executive's compensation in each of the three
          years, or two years, as the case may be, is the sum of the Annual Base
          Salary and Minimum Bonus over (b) the actuarial equivalent of the
          Executive's actual benefit (paid or payable), if any, under the
          Retirement Plan and the SERP as of the Date of Termination provided,
          that the deemed service credit referred to above shall not apply in
          determining eligibility for the Enhanced Early Retirement Benefit; and

          (ii)  All stock incentive awards, stock options, performance shares
     and similar awards ("Stock Awards") shall vest and become exercisable or
     payable, as the

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     case may be.

          (iii) for three years, two years in the case of a Nonrenewal
     Termination, after the Executive's Date of Termination, or such longer
     period as may be provided by the terms of the appropriate plan, program,
     practice or policy, the Company shall continue benefits to the Executive
     and/or the Executive's family (other than Accidental Death and
     Dismemberment benefits, Short Term and Long Term Disability benefits, and
     Business Travel Accident Insurance) at least equal to those which would
     have been provided to them in accordance with the plans, programs,
     practices and policies described in Section 2(b)(iv) of this Agreement if
     the Executive's employment had not been terminated, including the cost of
     $3 million of term life insurance on the Executive's life or, if more
     favorable to the Executive, as in effect generally at any time thereafter
     with respect to other peer executives of the Company and its affiliated
     companies and their families, provided, however, that if the Executive
     becomes reemployed with another employer and is eligible to receive medical
     or other welfare benefits under another employer provided plan, the medical
     and other welfare benefits described herein shall be secondary to those
     provided under such other plan during such applicable period of
     eligibility. The Executive shall be entitled to retiree medical benefits as
     provided in Section 2(b)(iii).

          (iv)  to the extent not theretofore paid or provided, the Company
     shall timely pay or provide to the Executive any other amounts or benefits
     required to be paid or provided or which the Executive is eligible to
     receive under any plan, program, policy or practice or contract or
     agreement of the Company and its affiliated companies (such other amounts
     and benefits shall be hereinafter referred to as the "Other Benefits").

          (b)  Death.  If the Executive's employment is terminated by reason of
               -----
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits.  Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump

                                       9
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sum in cash within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
4(b) shall include, without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, death benefits in effect on the date
of the Executive's death with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries. In addition, all Stock
Awards shall vest immediately and/or become exercisable or payable, as the case
may be.

          (c)  Disability. If the Executive's employment is terminated by reason
               ----------
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 4(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies and their families. In addition, all Stock Awards shall
vest immediately and/or become exercisable or payable, as the case may be.

          (d)  Cause; Other than for Good Reason.  If the Executive's employment
               ---------------------------------
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, and (y) Other Benefits, in each case to the extent theretofore
unpaid.  If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other Benefits.  In such
case, all Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination.

          5.   Full Settlement.  The Company's obligation to
               ---------------

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make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the full extent permitted
by law, all legal fees and expenses which the Executive may reasonably incur as
a result of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").

          6.   Certain Additional Payments by the Company.
               ------------------------------------------

          (a)  Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company or its affiliates to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 6) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the

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Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 6(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Executive such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

          (b)  Subject to the provisions of Section 6(c), all determinations
required to be made under this Section 6, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by
PriceWaterhouse Coopers LLC or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 6, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 6(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

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          (c)  The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment.  Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid.  The
Executive  shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

          (i)   give the Company any information reasonably requested by the
     Company relating to such claim,

          (ii)  take such action in connection with contesting such claim as the
     Company shall reasonably request in writing from time to time, including,
     without limitation, accepting legal representation with respect to such
     claim by an attorney reasonably selected by the Company,

          (iii) cooperate with the Company in good faith in order effectively to
     contest such claim, and

          (iv)  permit the Company to participate in any proceedings relating to
     such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 6(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such

                                       13
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claim and may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

          (d)  If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 6(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 6(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 6(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.

          7.   Confidential Information/Noncompetition/
               ---------------------------------------

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Nonsolicitation. (a) The Executive shall hold in a fiduciary capacity for the
---------------
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          (b)  For two years following the Executive's Date of Termination,
Executive agrees not to solicit, influence or entice, either directly or
indirectly, any employee or consultant of the Company or its affiliates to cease
his or her relationship with the Company or any of its affiliates, as the case
may be.

          (c)  In the event of a termination of the Executive's employment by
the Company for Cause or by the Executive without Good Reason, until the second
anniversary of the Executive's Date of Termination, the Executive will not
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, any business which is in competition with the Company or any of its
affiliates in any geographic area where such business is being conducted during
such period. Ownership, for personal investment purposes only of not in excess
of 2% of the voting stock of any publicly held corporation shall not constitute
a violation hereof.

          (d)  Executive acknowledges that the provisions of this Section 7 are
essential to the Company, that the Company would not enter into this Agreement
if it did not include this Section 7 and that damages sustained by the Company
as a result of a breach of this Section 7 cannot be

                                       15
<PAGE>

adequately remedied by damages, and Executive agrees that the Company,
notwithstanding any other provision of this Agreement, and in addition to any
other remedy it may have under this Agreement or at law, shall be entitled to
injunctive and other equitable relief to prevent or curtail any breach of any
provision of this Agreement, including, without limitation, this Section 7.

          8.   Successors.  (a)  This Agreement is personal to the Executive and
               ----------
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.  This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b)  This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

          (c)  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

          9.   Certain Definitions.  (a)  The "Effective Date" shall mean the
               -------------------
first date during the Change of Control Period (as defined in Section 9(b)) on
which a Change of Control (as defined in Section 10) occurs.  Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.

                                       16
<PAGE>

          (b)  The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the third anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.

          10.  Change of Control.  For the purpose of this Agreement, a "Change
               -----------------
of Control" shall mean:

          (a)  The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i) and (ii) of subsection (c) of this Section 10; or

          (b)  Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though

                                       17
<PAGE>

such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

          (c)  Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (ii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or

          (d)  Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

          11.  Miscellaneous.  (a)  This Agreement shall be governed by and
               -------------
construed in accordance with the laws of the Commonwealth of Virginia, without
reference to principles of conflict of laws.  The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.  This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

          (b)  All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                                       18
<PAGE>

          If to the Executive:
          -------------------
               965 East Deer Path Road
               Lake Forest, IL 60045


          If to the Company:
          -----------------
               Fort James Corporation
               1650 Lake Cook Road
               Deerfield, IL 60015-0089

               Attention:  General Counsel


or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.

          (c)  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          (d)  The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

          (e)  The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 3(c) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.

          (f)  From and after the Commencement Date this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.

                                       19
<PAGE>

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.


                                                  /s/ Miles L. Marsh
                                              ----------------------------------
                                                      Miles L. Marsh


                                              FORT JAMES CORPORATION


                                              By /s/ Daniel J. Girvan
                                                --------------------------------

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