**Exhibit 10.3**

AGREEMENT

AGREEMENT (this “Agreement”)made and entered into by and between Cellu Tissue Holdings, Inc., aDelaware corporation (the “Company”), and Mr. Steven Ziessler (the “Executive”),effective as of the Closing Date as defined in the Agreement and Plan ofMerger, dated May 8, 2006, (the “Merger Agreement”) by and amongCellu Parent Corporation, a Delaware corporation (“Cellu Parent”), CelluAcquisition Corporation, a Delaware corporation and a wholly owned subsidiaryof Cellu Parent Corporation (“Cellu Acquisition”), and Cellu Paper Holdings, Inc.,a Delaware corporation (“Cellu Paper”), and which is hereafter referredto as the “Effective Date.

WHEREAS, the Company is awholly owned subsidiary of Cellu Paper; and Cellu Acquisition is a wholly ownedsubsidiary of Cellu Parent;

WHEREAS, the MergerAgreement contemplates that Cellu Acquisition will merge with and into CelluPaper, with Cellu Paper as the surviving entity (the “Merger”);

WHEREAS, theoperations of the Company and its Affiliates are a complex matter requiringdirection and leadership in a variety of areas, including financial, strategicplanning, regulatory, community relations and others;

WHEREAS, theExecutive is possessed of certain experience and expertise that qualify the Executiveto provide the direction and leadership required by the Company and itsAffiliates;

WHEREAS, prior tothe closing under the Merger Agreement, the Executive was employed by theCompany as its Chief Operations Officer; and

WHEREAS, subjectto the terms and conditions hereinafter set forth, the Company wishes to employthe Executive as its President of Marketing and Sales and the Executive wishesto accept such continued employment, effective as of the Closing;

NOW, THEREFORE, inconsideration of the foregoing premises and the mutual promises, terms,provisions and conditions set forth in this Agreement, the parties herebyagree:

# 1.             Employment.Subject to the terms and conditions set forth in this Agreement, the Companyhereby offers and the Executive hereby accepts employment.

# 2.             Term.      Subject to earlier termination ashereinafter provided, the Executive’s employment hereunder shall be for a termof four (4) years, commencing on the Effective Date, and shall beautomatically extended thereafter for successive terms of one year each, unlesseither party provides notice to the other at least sixty (60) days prior to theexpiration of the original or any extension term that the Agreement is not tobe extended. The term of this Agreement, as from time to time extended orrenewed, is hereafter referred to as “the term of this Agreement” or “theterm hereof.”   Notwithstandinganything in this Agreement to the contrary, this Agreement shall be null, voidand without effect upon termination of the Merger Agreement prior toconsummation of the Merger.

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# 3.             Capacityand Performance.

## (a)         Subject to earliertermination as hereinafter provided, during the term of this Agreement, theExecutive shall serve the Company as its President of Marketing and Sales,reporting to the Company’s Chief Executive Officer. In addition, during theterm hereof, and without further compensation, the Executive shall serve as adirector and/or officer of one or more of the Company’s Affiliates (as definedbelow) if so elected or appointed from time to time.

## (b)         During the termhereof, the Executive shall be employed by the Company on a full-time basis andshall perform such duties and responsibilities on behalf of the Company and itsAffiliates consistent with the Executive’s position with the Company as may bedesignated from time to time by the Board or by its designees.

## (c)         During the term of theExecutive’s employment, the Executive shall devote the Executive’s fullbusiness time and the Executive’s best efforts, business judgment, skill andknowledge exclusively to the advancement of the business and interests of theCompany and its Affiliates and to the discharge of the Executive’s duties andresponsibilities hereunder. The Executive shall not engage in any otherbusiness activity or serve in any industry, trade, professional, governmentalor academic position during the term of this Agreement, except as may beexpressly approved in advance by the Board in writing.

# 4.             Compensationand Benefits. As compensation for all services performed by the Executiveunder and during the term hereof and subject to performance of the Executive’sduties and of the obligations of the Executive to the Company and itsAffiliates, pursuant to this Agreement or otherwise:

## (a)         Base Salary. Duringthe term hereof, the Company shall pay the Executive a base salary at the rateof Two Hundred Fifty Thousand Dollars ($250,000) per annum, payable inaccordance with the normal payroll practices of the Company for its executivesand subject to increase (but not decrease) from time to time by the Board, inits discretion. The Board will review the Executive’s base salary each year. Suchbase salary, as from time to time increased, is hereafter referred to as the “BaseSalary”.

## (b)         Annual BonusCompensation.

##### (i)            During the term hereof and beginningwith the first fiscal year after the Closing Date, Executive shall be eligibleto receive an annual bonus of 100% of Base Salary (the “Target Bonus”),subject to the achievement of an EBITDA target set by the Chairman of the Board(after consultation with the Executive), approved by the Board and subject tothe terms and conditions of any applicable annual incentive program in effectfrom time to time (the “Incentive Plan”). The amount of any bonusawarded (whether more than or less than the Target Bonus) shall be determinedby the Board, based upon the achievement of the EBITDA target, after thecompletion of the 

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##### Company’s annual audit and the Board’s reviewthereof, and shall further be subject to the terms of the Incentive Plan as ineffect from time to time. Except as otherwise expressly provided under thisAgreement or under the terms of the Incentive Plan as in effect from time totime, the Executive shall not be entitled to earn bonus compensation for anyperiod of service less than a full year, except as set forth in Sections 5(a),5(b), 5(d), 5(e), 5(g) and 5(h).

### (ii)           Any bonus duehereunder shall be payable not later than two and one half months following thefiscal year for which the bonus was earned or as soon as is practicable withinthe meaning of Section 409A of the Internal Revenue Code of 1986, asamended, (“Section 409A”).

## (c)         Equity Arrangements.On the Effective Date, the Company will make a grant of restricted stock to theExecutive under the Company’s Stock Option and Restricted Stock Plan (the “Plan”).The terms and conditions of such restricted stock grant shall be subject to theterms of the Plan and the Restricted Stock Award Agreement in the form attachedhereto as Exhibit A.

## (d)         Vacations. Duringthe term hereof, the Executive shall be entitled to four (4) weeks ofvacation per annum, to be taken at such times and intervals as shall bedetermined by the Executive, subject to the reasonable business needs of theCompany.

## (e)         Other Benefits.During the term hereof and subject to any contribution therefor generallyrequired of employees of the Company, the Executive shall be entitled toparticipate in any and all employee benefit plans from time to time in effectfor employees of the Company generally, except to the extent such plans are ina category of benefit otherwise provided to the Executive. Such participationshall be subject to (i) the terms of the applicable plan documents, (ii) generallyapplicable Company policies and (iii) the discretion of the Board or anyadministrative or other committee provided for in or contemplated by such plan.The Company may alter, modify, add to or delete its employee benefit plans atany time as it, in its sole judgment, determines to be appropriate, withoutrecourse by the Executive.

## (f)          Perquisites. Duringthe term hereof, the Executive shall be entitled to receive any and allperquisites in effect from time to time for senior executives of the Companygenerally, except to the extent such perquisite is otherwise provided to theExecutive. Such receipt shall be subject to (i) generally applicableCompany policies and (ii) the discretion of the Board. The Company mayalter, modify, add to or delete any such perquisite at any time as it, in itssole judgment, determines to be appropriate without recourse by the Executive.

## (g)         AutomobileAllowance. During the term hereof, the Company will pay the Executive anautomobile allowance of Six Hundred and Fifty Dollars ($650.00) per month,payable in accordance with the normal payroll practices of the Company for itsexecutives and subject to increase (but not decrease) from time to time by theBoard, in its discretion.

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## (h)         Term Life Insurance.During the term hereof, and, except as otherwise provided herein, for a periodof one (1) year thereafter, the Company shall bear the cost of a term lifeinsurance policy covering Executive in the amount of $1,000,000. All benefitsof such term life insurance policy shall inure to the Executive’s designatedbeneficiaries. Such term life insurance policy shall become effective as soonas possible after Executive has complied with the requirements of the insurancecompany underwriting such policy (including but not limited to submission toand satisfactory results of a physical evaluation).

## (i)          Business Expenses.The Company shall pay or reimburse the Executive for reasonable, customary andnecessary business expenses incurred or paid by the Executive in theperformance of the Executive’s duties and responsibilities hereunder, subjectto such reasonable substantiation and documentation as may be specified by theBoard or Company policy from time to time.

# 5.             Terminationof Employment and Severance Benefits. The Executive’s employment hereundershall terminate under the following circumstances:

## (a)         Death. In theevent of the Executive’s death during the term hereof, the Executive’semployment hereunder shall terminate and the Company shall pay or provide tothe Executive’s designated beneficiary or, if no beneficiary has beendesignated by the Executive, to the Executive’s estate:  (i) any earned, but unpaid, Base Salarythrough the date of termination; (ii) any earned, but unpaid annual bonusfor any fiscal year prior to the fiscal year of the Executive’s termination; (iii) apro rata portion (based on the number of days preceding the Executive’stermination in the fiscal year of termination) of the Target Bonus; (iv) alump sum equal to the lesser of (A) twelve (12) months of Base Salary or (B) BaseSalary for the remainder of the term hereof; and (v) any unreimbursedbusiness expenses. In addition, subject to any employee contribution applicableto employees and their dependents generally, for the twelve (12) month periodfollowing termination, the Company shall continue to contribute to the premiumcost of coverage for the Executive’s dependents under the Company’s medical anddental plans provided that a timely COBRA election is made. The paymentsreferred to in clauses (i), (ii) and (v) above shall be payable in alump-sum within thirty (30) days after the date of termination. The Company’spayments under clauses (iii) and (iv) above, as well as the continuedcontribution toward medical and dental premiums, are expressly conditioned uponthe Executive’s designated beneficiary, or if no beneficiary has beendesignated, a representative of the Executive’s estate executing and deliveringto the Company a timely and effective separation agreement, including a generalrelease of claims, in form and substance satisfactory to the Company (“SeparationAgreement”). Payment under clauses (iii) and (iv) will be madewithin thirty (30) days after the Company’s receipt of such release of claimsin form and substance satisfactory to the Company. Other than as set forth inthis clause (a), the Company shall have no further obligation to the Executive’sbeneficiary or the Executive’s estate.

## (b)         Disability.

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### (i)            The Company may terminate theExecutive’s employment hereunder, upon notice to the Executive, in the eventthat the Executive becomes disabled during the Executive’s employment hereunderthrough any illness, injury, accident or condition of either a physical orpsychological nature and, as a result, is unable to perform substantially allof the Executive’s material duties and responsibilities hereunder for (x) ninety(90) consecutive calendar days or (y) one hundred and twenty (120) totaldays during any period of three hundred and sixty-five (365) consecutivecalendar days. The Board may designate another employee to act in the Executive’splace during any period of the Executive’s disability.

### (ii)           If any questionshall arise as to whether during any period the Executive is disabled throughany illness, injury, accident or condition of either a physical or psycholog­icalnature so as to be unable to perform substantially all of the Executive’sduties and responsibilities hereunder, the Executive may, and at the request ofthe Company shall, submit to a medical examination by a physician selected bythe Company to whom the Executive or the Executive’s duly appointed guardian,if any, has no reasonable objection to determine whether the Executive is sodisabled and such determination shall for the purposes of this Agreement beconclusive of the issue. If such question shall arise and the Executive shallfail to submit to such medical examination, the Company’s determination of theissue shall be binding on the Executive.

### (iii)          Upon the giving ofnotice of termination of the Executive’s employment due to disabilityhereunder, the Company shall have no further obligation or liability to theExecutive, other than for (i) any earned, but unpaid, Base Salary throughthe date of termination; (ii) any earned, but unpaid annual bonus for anyfiscal year prior to the fiscal year of the Executive’s termination; (iii) apro rata portion (based on the number of days preceding the Executive’stermination in the fiscal year of termination) of the Target Bonus; (iv) alump sum payment equal to the lesser of (A) twelve (12) months of BaseSalary or (B) Base Salary for the remainder of the term hereof; and (v) anyunreimbursed business expenses. In addition, (x) the Company shallcontinue the benefits contemplated by Section 4(h) for the periodcontemplated therein, and (y) subject to any employee contributionapplicable to active employees and their dependents generally, for the twelve(12) month period following termination, the Company shall continue tocontribute to the premium cost of coverage for the Executive and the Executive’sdependents under the Company’s medical and dental plans provided that a timelyCOBRA election is made. The payments referred to in clauses (i), (ii) and (v) aboveshall be payable in a lump-sum within thirty (30) days after the date oftermination. The Company’s payments under clauses (iii) and (iv) above,as well as the continued contribution toward medical and dental premiums, areexpressly conditioned upon the Executive (or the Executive’s duly appointedguardian, if any) executing and delivering to the Company a timely andeffective Separation Agreement. Payment under clauses (iii) and (iv) willbe made within thirty (30) days after the Company’s receipt of the SeparationAgreement. Other than as set forth in this clause (b), the Company shall haveno further obligation to the Executive.

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## (c)         By the Company forCause. The Company may terminate the Executive’s employment hereunder forCause at any time upon notice to the Executive setting forth in reasonabledetail the nature of such Cause. The following, as determined by the Board inits reasonable judgment, shall constitute Cause for termination:

### (i)            the Executive’s repeated and willful refusalor failure (other than during periods of illness, disability or vacation) toperform the Executive’s duties hereunder or under any lawful directive of theBoard (consistent with the terms of this Agreement;

### (ii)           the Executive’s willful misconduct or grossneglect in the performance of the Executive’s duties hereunder which in eithercase is materially injurious to the Company or any of its Subsidiaries,monetarily or otherwise;

### (iii)          the willful material breach of this Agreementby the Executive;

### (iv)          except as provided in clause (v) below,the conviction of the Executive of any felony or any other crimeinvolving dishonesty or moral turpitudeor the Executive’s pleading guilty to any felony, other than motor vehicleoffenses, or any other crime involving dishonesty or moral turpitude;

### (v)           the commission offraud, embezzlement, theft or other dishonesty by the Executive with respect tothe Company or any of its Affiliates;

### (vi)          any other conductthat involves a breach of fiduciary obligation on the part of the Executive orotherwise could reasonably be expected to have a material adverse effect uponthe business, interests or reputation of the Company or any of its Affiliates;or

### (vii)         a previous employer of Executive shallcommence against Executive and/or Cellu Tissue an action, suit, proceeding ordemand arising from an alleged violation of a non-competition or other similaragreement between Executive and such previous employer.

##### For purposes of this Section 5(c),no act, or failure to act, on the Executive’s part, will be considered “willful”unless done or omitted to be done by him not in good faith and without areasonable belief that the Executive’s action or omission was in furtherance ofthe Company’s business. If the Company desires to terminate the Executive’semployment pursuant to clause (i), (ii), (iii) or (v) above, it shallfirst give the Executive written notice of the facts and circumstancesproviding Cause and shall allow the Executive no less than twenty (20) days (x) inthe case of a proposed termination pursuant to clause (i), (ii) or (iii) aboveto remedy, cure or rectify the situation giving rise to Cause and (y) inthe case of a proposed termination pursuant to clause (v) above to explainthe circumstances of the Executive’s actions or to show that the circumstancesunderlying the indictment do not constitute the type of felony described inclause (v). Termination by the Company for Cause pursuant to clause (iv) abovemay be effected by 

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##### written notice of theCompany to the Executive. Upon the giving of notice of termination ofthe Executive’s employment hereunder for Cause, the Company shall have nofurther obligation to the Executive, other than for (i) Base Salaryearned, but unpaid at the date of termination, (ii) any earned, but unpaidannual bonus for any fiscal year prior to the fiscal year of termination of theExecutive’s employment; and (iii) any unreimbursed business expenses.

## (d)           Bythe Company without Cause. The Company may terminate the Executive’semployment hereunder without Cause at any time upon notice to the Executive. Inthe event of such termination, the Company shall have no further obligation orliability to the Executive, other than for (i) any earned, but unpaid,Base Salary through the date of termination; (ii) any earned, but unpaidannual bonus for any fiscal year prior to the fiscal year of the Executive’stermination; (iii) a pro rata portion (based on the number of days precedingthe Executive’s termination in the fiscal year of termination) of the TargetBonus; (iv) a lump sum equal to twenty-four (24) months of Base Salary; (v) alump sum equal to one times the Target Bonus; and (vi) any unreimbursedbusiness expenses. In addition, (x) the Company shall continue thebenefits contemplated by Section 4(h) for the period contemplatedtherein, and (y) subject to any employee contribution applicable toemployees and their dependents generally, for the twelve (12) month period followingtermination, or if earlier, until the date that the Executive becomes eligiblefor coverage with a subsequent employer, the Company shall continue tocontribute to the premium cost of coverage for the Executive and the Executive’sdependents under the Company’s medical and dental plans provided that a timelyCOBRA election is made. The payments referred to in clauses (i), (ii) and (vi) aboveshall be payable in a lump-sum within thirty (30) days after the date oftermination. The Company’s payments under clauses (iii), (iv) and (v) above,as well as the continued contribution toward medical and dental premiums, areexpressly conditioned upon the Executive executing and delivering to theCompany a timely and effective Separation Agreement. Payment under clauses(iii), (iv) and (v) will be made within thirty (30) days after theCompany’s receipt of the Separation Agreement. Other than as set forth in thisclause (d), the Company shall have no further obligation to the Executive.

## (e)           Bythe Executive for Good Reason. The Executive may terminate the Executive’semployment hereunder for Good Reason, provided that the Executive shall havegiven written notice setting forth in reasonable detail the nature of such GoodReason to the Company upon the Executive’s becoming aware or at such time asExecutive should have been aware of the occurrence of any such event orcondition, and the Company shall not have fully corrected the situation withinten (10) days after such notice of Good Reason. The following shall constitute“Good Reason” for termination by the Executive:

### (i)            failure by the Company to pay anycompensation when due hereunder;

### (ii)           any significant reduction by the Company’s ofthe Executive’s title, duties or responsibilities (except in connection with terminationof the Executive’s 

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### employment for Cause, as aresult of Disability, as a result of the Executive’s death or by the Executiveother than for Good Reason);

### (iii)          a reduction by the Company in the Executive’sBase Salary or any other compensation due hereunder; or

### (iv)          any material breach by the Company of anyother provision of this Agreement.

## If theExecutive desires to terminate the Executive’s employment with the Companypursuant to this Section 5(e), the Executive shall first give written noticeof the facts and circumstances providing Good Reason to the Company, and shallallow the company no less than twenty (20) days to remedy, cure or rectify thesituation giving rise to Good Reason. The Company’s failure to continue theExecutive’s appointment or election as a director or officer of any of itsAffiliates, a change in reporting relationships resulting from the direct orindirect control of the Company (or a successor corporation) by anothercorporation (in the absence of an independent change constituting Good Reasonas defined above) and any diminution of the business of the Company or any ofits Affiliates or any sale or transfer of equity, property or other assets ofthe Company or any of its Affiliates (in the absence of an independent changeconstituting Good Reason as defined above) shall not constitute Good Reason. Inthe event of termination in accordance with this Section 5(e), then theExecutive will be entitled to receive the payments and benefits in accordancewith Section 5(d) hereof provided the Executive complies with therequirement of executing and delivering the Separation Agreement. Other than asset forth in this clause (e), the Company shall have no further obligation tothe Executive.

## (f)            Bythe Executive Without Good Reason. The Executive may terminate theExecutive’s employment hereunder at any time upon sixty (60) days’ writtennotice to the Company. In the event of termination of the Executive pursuant tothis Section 5(f), the Board may elect to waive the period of notice, orany portion thereof, and, if the Board so elects, the Company will pay theExecutive the Executive’s Base Salary for the notice period (or for anyremaining portion of the period). The Company shall also pay the Executive (i) anyearned, but unpaid annual bonus for any fiscal year prior to the fiscal year ofthe termination of the Executive’s employment, and (ii) any unreimbursedbusiness expenses.

## (g)           Non-Renewalby Company. The Company may elect not to renew this Agreement in accordancewith Section 2 above. In the event of such non-renewal for a reason otherthan Cause (as defined in Section 5(c) above), the Company shall haveno further obligation or liability to the Executive other than for (i) anyearned, but unpaid, Base Salary through the date of termination; (ii) anyearned, but unpaid annual bonus for any fiscal year prior to the fiscal year ofthe Executive’s termination; (iii) a pro rata portion (based on the numberof days preceding the Executive’s termination in the fiscal year of termination)of the Target Bonus; (iv) a lump sum equal to twenty-four (24) months ofBase Salary and (v) any unreimbursed business expenses. In addition,subject to any employee contribution applicable to employees and theirdependents generally, for the twenty-four (24) month period following 

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## termination, or if earlier until the date that the Executive becomeseligible for coverage with a subsequent employer, the Company shall continue tocontribute to the premium cost of coverage for the Executive and the Executive’sdependents under the Company’s medical and dental plans provided that a timelyCOBRA election is made. The payments referred to in clauses (i), (ii) and (v) aboveshall be payable in a lump-sum within thirty (30) days after the date oftermination. The Company’s payments under clauses (iii) and (iv) above,as well as the continued contribution toward medical and dental premiums, areexpressly conditioned upon the Executive executing and delivering to theCompany a timely and effective Separation Agreement. Payment under clauses (iii) and(iv) will be made within thirty (30) days after the Company’s receipt ofsuch Separation Agreement. Other than as set forth in this clause (g), theCompany shall have no further obligation to the Executive or the Executive’sestate hereunder.

## (h)           Changeof Control/Gross Up Payment. The Company and the Executive agree that inthe event that any of the severance payments or severance benefits underSections 5(d), 5(e) or 5(g) of this Agreement might be characterizedas parachute payments under Section 280G of the Internal Revenue Code of1986, as amended (“Section 280G”), the parties shall timely takereasonable steps to avoid the tax liability under Section 280G and Section 4999of the Internal Revenue Code of 1986, as amended (the “Code”) to theextent permitted by law. Accordingly, the Executive agrees to cooperate fullyin procuring a shareholder vote (including, but not limited to, providing anyrequired consents or waivers) to approve the severance payments or severancebenefits under this Agreement received, to be received by, or payable on behalfof, the Executive in satisfaction of the shareholder approval requirementsdescribed in Treas. Reg. Section 1.280G-1, Q&A-7, to theextent applicable. If the shareholder approval requirements described in Treas.Reg. Section 1.280G-1, Q&A-7 cannot be satisfied and ifthe Company determines that any of the severance payments or severance benefitsunder this Agreement received, to be received by, or payable on behalf of, theExecutive would be subject to the excise tax imposed by Section 4999 ofthe Code, (the “Excise Tax”), then the Company will, on or prior to thedate on which the Excise Tax must be paid or withheld, make an additional lumpsum payment (the “gross up payment”) to the Executive. The gross uppayment will be sufficient, after giving effect to federal, state, and localincome taxes (excluding any taxes imposed under or as a result of Section 409A,but otherwise including interest and penalties, if any) with respect to thegross up payment, to make the Executive whole for such taxes and associatedinterest and penalties imposed under or as a result of Section 4999. Determinationsunder this Section 5(h) will be made by the Company’ s independentauditors unless the Executive has reasonable objections to the use of thatfirm, in which case the determinations will be made by a comparable firm chosenby the Executive after consultation with the Company (the firm making thedeterminations to be referred to as the “Firm”). The determinations ofthe Firm will be binding upon the Company and the Executive except as thedeterminations are established in resolution (including by settlement) of acontroversy with the Internal Revenue Service to have been incorrect. All feesand expenses of the Firm will be paid by the Company. If the Internal RevenueService asserts a claim that, if successful, would require the Company to makea gross up payment or an additional gross up payment, the Company and theExecutive will cooperate fully in resolving the controversy with the InternalRevenue Service. The Company will make or advance such gross up payments as arenecessary 

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## to prevent the Executive from having to bear the cost of the paymentsto the Internal Revenue Service in the course of, or as a result of, thecontroversy. The Firm will determine the amount of such gross up payments oradvances and will determine after resolution of the controversy whether anyadvances must be returned by the Executive to the Company. The Company willbear all expenses of the controversy.

## (i)            Timingof Payments. If at the time of the Executive’s separation from service, theExecutive is a “specified employee,” as hereinafter defined, any and allamounts payable under this Section 5 in connection with such separationfrom service that constitute deferred compensation subject to Section 409A,as determined by the Company in its sole discretion, and that would (but forthis sentence) be payable within six months following such separation fromservice, shall instead be paid on the date that follows the date of suchseparation from service by six (6) months. For purposes of the precedingsentence, “separation from service” shall be determined in a manner consistentwith subsection (a)(2)(A)(i) of Section 409A and the term “specifiedemployee” shall mean an individual determined by the Company to be a specifiedemployee as defined in subsection (a)(2)(B)(i) of Section 409A.

# 6.             Effectof Termination. The provisions of this Section 6 shall apply to a terminationpursuant to Section 5 or otherwise.

## (a)           Acondition precedent to the Company’s obligations to provide any severancepayments or severance benefits hereunder, including lump-sum payments, vestingof restricted stock and contributions toward health insurance premiums, shallbe the Executive’s executing and delivering (and not revoking) a timely andeffective Separation Agreement, or in the case of a termination due to thedeath of the Executive, the Executive’s beneficiary or representative of theExecutive’s estate executing and delivering a general release of claims in formand substance satisfactory to the Company.

## (b)           Upontermination of the Executive’s employment with the Company, unless otherwisespecifically provided herein, the Executive’s rights to benefits and paymentsunder any benefits or welfare plan or under any stock option, restricted stock,stock appreciation right, bonus unit, management or bonus incentive or otherplan of the Company shall be determined in accordance with the terms andprovisions of such plans and any agreements under which such stock options,restricted stock or other awards were granted.

## (c)           Provisionsof this Agreement shall survive any termination if so provided herein or ifnecessary or desirable fully to accomplish the purposes of such provision,including without limitation the obligations of the Executive under Sections 7,8 and 9 hereof. The obligation of the Company to provide any severance paymentor benefit is expressly conditioned upon the Executive’s continued fullperformance of obligations under Sections 7, 8 and 9 hereof. The Executiverecognizes that, except as expressly provided in Sections 5(d), 5(e) or5(g), no compen­sation is earned after termination of employment.

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## (d)           Exceptas expressly provided herein, Executive is entitled to no payments or benefitsin connection with a termination of the Executive’s employment.

# 7.             Confidential Information.

## (a)           TheExecutive acknowledges that the Company and its Affiliates continually develop “TradeSecrets” and “Confidential Information” that the Executive may develop TradeSecrets and Confidential Information for the Company or its Affiliates and thatthe Executive may learn of Trade Secrets and Confidential Information during thecourse of employment. The Executive will comply with the policies andprocedures of the Company and its Affiliates for protecting Trade Secrets andConfidential Information and shall never disclose to any Person (except asrequired by applicable law or for the proper performance of the Executive’sduties and responsibilities to the Company and its Affiliates), or use for theExecutive’s own benefit or gain, any Trade Secrets or Confidential Informationobtained by the Executive incident to the Executive’s employment or otherassociation with the Company or any of its Affiliates.

## (b)           Forpurposes of this Agreement, “Trade Secrets means all information thatconstitutes a trade secret within the meaning of the Georgia Trade Secrets Act,as amended (the “Georgia Act”). Under the Georgia Act, a trade secret isdefined as:  “Information without regardto form, including, but not limited to, technical or non-technical data, aformula, a pattern, a compilation, a program, a device, a method, a technique,a drawing, a process, financial data, financial plans, product plans, or a listof actual or potential customers or suppliers which is not commonly known by oravailable to the public and which information: (i) derives economic value, actual or potential, from not beinggenerally known to, and not being readily ascertainable by proper means by,other persons who can obtain economic value from its disclosure or use; and (ii) isthe subject of efforts that are reasonable under the circumstances to maintainits secrecy.”

## (c)            For purposes ofthis Agreement, “Confidential Information” means any and all informationof the Company and its Affiliates other than Trade Secrets that is notgenerally known by others with whom they compete or do business, or with whomthey plan to compete or do business and any and all information, not publiclyknown, which, if disclosed by the Company or its Affiliates would assist incompetition against them. Confidential Information includes without limitationsuch information relating to (i) the development, research, testing,manufacturing, marketing and financial activities of the Company and itsAffiliates, (ii) the Products, (iii) the costs, sources of supply,financial performance and strategic plans of the Company and its Affiliates, (iv) theidentity and special needs of the customers of the Company and its Affiliatesand (v) the people and organizations with whom the Company and itsAffiliates have business relationships and those relationships. ConfidentialInformation also includes comparable information that the Company or any of itsAffiliates have received belonging to others or which was received by theCompany or any of its Affiliates with any understanding that it would not bedisclosed.

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## (d)           The foregoingobligations do not apply to the extent that the Confidential Information is orbecomes generally available to the public through no fault of the Executive. TheExecutive understands and agrees that the Executive’s obligations under thisAgreement with regard to Trade Secrets shall remain in effect for as long assuch information shall remain a trade secret under applicable law. TheExecutive acknowledge that the Executive’s obligations with regard to theConfidential Information shall remain in effect while employed or retained bythe Company and for three (3) years after the termination of employment,regardless of the reason for such termination.

## (e)           All documents,records, tapes and other media of every kind and description relating to thebusiness, present or otherwise, of the Company or its Affiliates and anycopies, in whole or in part, thereof (the “Documents”), whether or notprepared by the Executive, shall be the sole and exclusive property of theCompany and its Affiliates. The Executive shall safeguard all Documents andshall surrender to the Company at the time the Executive’s employmentterminates, or at such earlier time or times as the Board or its designee mayspecify, all Documents then in the Executive’s possession or control.

# 8.             Assignmentof Rights to Intellectual Property. The Executive shall promptly and fullydisclose all Intellectual Property to the Company. The Executive hereby assignsand agrees to assign to the Company (or as otherwise directed by the Company)the Executive’s full right, title and interest in and to all IntellectualProperty. The Executive agrees to execute any and all applications for domesticand foreign patents, copyrights or other proprietary rights and to do suchother acts (including without limitation the execution and delivery of instrumentsof further assurance or confirmation) requested by the Company to assign theIntellectual Property to the Company and to permit the Company to enforce anypatents, copyrights or other proprietary rights to the Intellectual Property. TheExecutive will not charge the Company for time spent in complying with theseobligations. All copyrightable works that the Executive creates shall beconsidered “work made for hire.”

# 9.             RestrictedActivities. In exchange for good and valuable consideration including,without limitation, the grant of restricted stock hereunder, the Executiveagrees that some restrictions on the Executive’s activities during and afterthe Executive’s employment are necessary to protect the goodwill, ConfidentialInformation and other legitimate interests of the Company and its Affiliates:

## (a)           While the Executiveis employed by the Company and for a period of twenty-four (24) months afterthe Executive’s employment terminates (the “Non-Competition Period”), theExecutive shall not, directly or indirectly, provide services in a RestrictedCapacity to any Person with respect to any product or service of that Personwhich directly competes with, or may be used in substitution for, one or moreof the Products of the Company and/or its Subsidiaries with respect to whichthe Executive has had access to Confidential Information or customer goodwillas a result of the Executive’s employment or other association with the Companyand/or its Subsidiaries, but this restriction shall apply only with respect tothe following states:  Alabama, Alaska,Arizona, Arkansas, California, Colorado, Connecticut, 

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## Florida,Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska,Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio,Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas,Utah, Virginia, Washington and Wisconsin.  For the purposes of this Section 9, thebusiness of the Company and its Subsidiaries shall include the research,development, testing, manufacture, sale, license, lease or distribution of allProducts and the Executive’s undertaking shall encompass all items, productsand services that may be used in substitution for Products.

## (b)           The Executivefurther agrees that while the Executive is employed by the Company and duringthe Non-Competition Period, the Executive will not, and will not assist anyoneelse to solicit for hiring any employee of the Company or any of itsAffiliates, or seek to persuade any employee of the Company or any of itsAffiliates to discontinue employment. For purposes of this Agreement, an “employee”of the Company or any of its Affiliates is any person who was such at any timewithin the preceding one year.

## (c)           The Executivefurther agrees that while the Executive is employed by the Company and duringthe Non-Competition Period, the Executive will not directly or indirectly (1) solicitor encourage any customer of the Company or any of its Affiliates to terminateor diminish its relationship with them, or, (2) seek to persuade anycustomer or prospective customer of the Company or any of its Affiliates toconduct with any Person any business or activity which such customer orprospective customer conducts or could conduct with the Company; provided thatthese restrictions shall apply (a) only with respect to those Persons whoare or have been a customer of the Company of any of its Affiliates at any timewithin the immediately preceding one year period or whose business has beensolicited on behalf of the Company or any of its Affiliates by any of theirofficers, employees or agents within said one year period, other than by formletter, blanket mailing or published advertisement, and (b) only if theExecutive had a business relationship with such Person as a result of theExecutive’s employment or other associations with the Company or one of itsAffiliates. Notwithstanding anything to the contrary contained in this Section 9,after termination of Executive’s employment, this restriction shall apply onlyto customers or prospective customers located in those states within the UnitedStates in which the Company was doing business during the year precedingExecutive’s termination.

## (d)           The Executivefurther agrees that while the Executive is employed by the Company and duringthe Non-Competition Period the Executive shall not willfully make false,misleading or disparaging statements about the Company including, withoutlimitation, its products, services, management, direct or indirect equityholders, employees and customers.

# 10.           Enforcementof Covenants. The Executive acknowledges that the Executive has carefullyread and considered all the terms and conditions of this Agreement, includingthe restraints imposed upon the Executive’s pursuant to Sections 7, 8 and 9hereof. The Executive agrees without reservation that each of the restraintscontained herein is necessary for the reasonable and proper protection of thegoodwill, Confidential Information and other legitimate 

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# interests of theCompany and its Affiliates; that each and every one of those restraints isreasonable in respect to subject matter, length of time and geographic area;and that these restraints, individually or in the aggregate, will not preventthe Executive from obtaining other suitable employment during the period inwhich the Executive is bound by these restraints. The Executive further agreesthat the Executive will never assert, or permit to be asserted on the Executive’sbehalf, in any forum, any position contrary to the foregoing.  The Executive further acknowledges that, werethe Executive to breach any of the covenants contained in Sections 7, 8 or 9hereof, the damage to the Company would be irreparable. The Executive thereforeagrees that the Company, in addition to any other remedies available to it,shall be entitled to preliminary and permanent injunctive relief against anybreach or threatened breach by the Executive of any of said covenants, withouthaving to post bond. The parties further agree that, in the event that anyprovision of Section 7, 8 or 9 hereof shall be determined by any court ofcompetent jurisdiction to be unenforceable by reason of its being extended overtoo great a time, too large a geographic area or too great a range ofactivities, such provision shall be deemed to be modified to permit itsenforcement to the maximum extent permitted by law.

# 11.           ConflictingAgreements. The Executive hereby represents and warrants that the executionof this Agreement and the performance of the Executive’s obligations hereunderwill not breach or be in conflict with any other agreement to which theExecutive is a party or is bound and that the Executive is not now subject toany covenants against competition or similar covenants that would affect theperformance of the Executive’s obligations hereunder. The Executive will notdisclose to or use on behalf of the Company any proprietary information of athird party without such party’s consent.

# 12.           Indemnification.The Executive shall be entitled, at all times (including after the terminationof this Agreement for any reason), to the benefit of the maximumindemnification and advancement of expenses available from time to time underthe Company’s certificate of incorporation and Bylaws, and if not set forththerein, to the maximum extent available under the laws of the State ofDelaware. In addition, the Company shall maintain in full force and effect thedirectors’ and officers’ liability insurance policy currently in effect or suchother insurance with reputable insurance carriers which may provide for areduced level of coverage for the Executive, provided that such coverage isidentical to that provided by the Company for the benefit of the other directorsof the Company and its other executive officers. The Executive agrees topromptly notify the Company of any actual or threatened claim arising out of oras a result of the Executive’s employment with the Company. The Executivehereby represents and warrants to the Company that, as of the date hereof, theExecutive has no and is aware of no such claim.

# 13.           Definitions.Words or phrases which are initially capitalized or are within quotation marksshall have the meanings provided in this Section 13 and as providedelsewhere herein. For purposes of this Agreement, the following definitionsapply:

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## (a)           “Affiliates”means all persons and entities directly or indirectly controlling, controlledby or under common control with the Company, where control may be by eithermanagement authority or equity interest.

## (b)           “Changeof Control” means (i) a sale of all or substantially all of the assetsof the Company, Cellu Paper or Cellu Parent to a Person in which theshareholders of Cellu Parent immediately prior to such transaction do not,directly or indirectly, own securities representing more than 50% of the votingpower of the Person acquiring such assets immediately following thetransaction, (ii) a sale of shares of capital stock of Cellu Parent byCellu Parent or its shareholders resulting in more than 50% of the voting powerof Cellu Parent being held, directly or indirectly, by a Person other than theshareholders of Cellu Parent immediately prior to such sale, (iii) a saleby Cellu Parent of the equity securities of Cellu Paper or the Companyresulting in more than 50% of the voting power of Cellu Paper or Cellu Tissue(as the case may be) being held directly or indirectly by a Person other thanCellu Parent or the shareholders of Cellu Parent immediately prior to suchsale, or (iv) a merger or consolidation of the Company, Cellu Paper orCellu Parent with or into another Person, if and only if, after such merger orconsolidation, more than 50% of the voting power of the Company, Cellu Paper orCellu Parent (as the case may be) is directly or indirectly owned by a Personother than Cellu Parent or the shareholders of Cellu Parent immediately priorto such merger or consolidation. For the avoidance of doubt, the transactioncontemplated by the Merger Agreement shall not constitute a Change of Control.

## (c)          “Intellectual Property” means inventions, discoveries, developments,methods, processes, compositions, works, concepts and ideas (whether or notpatentable or copyrightable or constituting trade secrets) conceived, made,created, developed or reduced to practice by the Executive (whether alone orwith others, whether or not during normal business hours or on or off Companypremises) during the Executive’s employment and during the period of six (6) monthsimmediately following termination of the Executive’s employment that relate toeither the Products or any prospective activity of the Company or any of itsAffiliates.

## (d)           “Person”means an individual, a corporation, an association, a partnership, an estate, atrust and any other entity or organization, other than the Company or any ofits Affiliates.

## (e)           “Products”mean all specialty paper products, tissue hard rolls, tissue converted productsand/or deep colored napkin products planned, researched, developed, tested,manufactured, sold, licensed, leased or otherwise distributed or put into useby the Company or any of its Affiliates, together with all services provided orplanned by the Company or any of its Affiliates, during the Executive’semployment.

## (f)            “RestrictedCapacity” means a position which is the same or comparable to the positionthe Executive held with the Company or in which the Confidential Information orcustomer goodwill which the Executive created or to which the Executive hadaccess during the Executive’s employment with the Company would give thatcompetitor an unfair 

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## competitive advantage. For the avoidance of doubt, this definition asused herein shall in no way diminish the Executive’s obligations under Section 7.

# 14.           Withholding.All payments made by the Company under this Agreement shall be reduced by anytax or other amounts required to be withheld by the Company under applicablelaw.

# 15.           Assignment.Neither the Company nor the Executive may make any assignment of this Agreementor any interest herein, by operation of law or otherwise, without the priorwritten consent of the other; provided, however, that the Companymay assign its rights and obligations under this Agreement without the consentof the Executive in the event that the Company shall hereafter affect areorganization, consolidate with, or merge into, any other Person or transferall or substantially all of its properties or assets to any other Person. ThisAgreement shall inure to the benefit of and be binding upon the Company and theExecutive, their respective successors, executors, administrators, heirs andpermitted assigns.

# 16.           Severability.If any portion or provision of this Agreement shall to any extent be declaredillegal or unenforceable by a court of competent jurisdiction, then theremainder of this Agreement, or the application of such portion or provision incircumstances other than those as to which it is so declared illegal orunenforceable, shall not be affected thereby, and each portion and provision ofthis Agreement shall be valid and enforceable to the fullest extent permittedby law.

# 17.           Waiver.No waiver of any provision hereof shall be effective unless made in writing andsigned by the waiving party. The failure of either party to require theperformance of any term or obligation of this Agreement, or the waiver byeither party of any breach of this Agreement, shall not prevent any subsequentenforcement of such term or obligation or be deemed a waiver of any subsequentbreach.

# 18.           Notices.Any and all notices, requests, demands and other communications provided for bythis Agreement shall be in writing and shall be effective when delivered inperson or deposited in the United States mail, postage prepaid, registered orcertified, and addressed to the Executive at the Executive’s last known addresson the books of the Company or, in the case of the Company, at its principalplace of business, attention of the Chairman of the Board, or to such otheraddress as either party may specify by notice to the other actually received.

# 19.           EntireAgreement. This Agreement constitutes the entire agreement between theparties and supersedes and terminates all prior communications, agreements andunderstandings, written or oral, with respect to the terms and conditions ofthe Executive’s employment with the Company. For the avoidance of doubt, inconsideration of the benefits to which the Executive is entitled under thisAgreement and other good and valuable consideration, the Executive herebywaives any and all rights to any severance payment, change of control paymentor any other payment or benefit that the Executive may have under any agreementwith, or policy of, the Company.

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# 20.           Amendment;Section 409A. This Agreement may be amended or modified only by awritten instrument signed by the Executive and by an expressly authorizedrepresentative of the Company. The parties acknowledgethat certain provisions of this Agreement may be required to be amended,following the issuance of additional guidance by the Internal Revenue Servicewith respect to Section 409A, to avoid the possible imposition ofadditional tax under Section 409A with respect to certain payments andbenefits under this Agreement. The Company agrees that it will not unreasonablywithhold its consent to any such amendments which in its determination are (i) feasibleand necessary to avoid adverse tax treatment under Section 409A for theExecutive, and (ii) not adverse to the interests of the Company.

# 21.           DisputeResolution. In the event of any dispute relating toExecutive’s employment, the termination thereof, or this Agreement, other thana dispute in which the primary relief sought is an equitable remedy such as aninjunction, the parties shall be required to have the dispute, controversy orclaim settled by alternative dispute resolution conducted by JAMS (or, if JAMSis not available, another mutually agreeable alternative dispute resolutionorganization), in the city of Executive’s principal place of employment. Anyaward entered by JAMS (or such other organization) shall be final, binding andnonappealable, and judgment may be entered thereon by either party inaccordance with applicable law in any court of competent jurisdiction. This Section 21shall be specifically enforceable. JAMS (or such other organization) shall haveno authority to modify any provision of this Agreement. THE PARTIES IRREVOCABLYWAIVE ANY RIGHT TO TRIAL BY JURY AS TO ALL CLAIMS HEREUNDER.

# 22.           Headings.The headings and captions in this Agreement are for convenience only and in no waydefine or describe the scope or content of any provision of this Agreement.

# 23.           Counterparts.This Agreement may be executed in two or more counterparts, each of which shallbe an original and all of which together shall constitute one and the same instrument.

# 24.           GoverningLaw, Choice of Forum. This is a New York contract and shall be construedand enforced under and be governed in all respects by the laws of the State ofNew York, without regard to the conflict of laws principles thereto. Theparties consent to the jurisdiction of any state or federal court sitting inthe State of New York and waive any objection either party may have to thelaying of venue of any such suit, action or proceeding in any such court. TheCompany and the Executive each also irrevocably and unconditionally consent toservice of any process, pleadings, notices or other papers in a mannerpermitted by the notice provisions of Section 18 of this Agreement.

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IN WITNESSWHEREOF, this Agreement has been executed as a sealed instrument by theCompany, by its duly authorized representative, and by the Executive, as of thedate first above written.
| THE EXECUTIVE:      | THE COMPANY:                |
|---------------------|-----------------------------|
|                |                        |
|                | CELLU TISSUE HOLDINGS, INC. |
|                |                        |
|                |                        |
| /s/ Steven Ziessler |                        | By: | /s/ Russell C. Taylor |
| Steven Ziessler     |                        |   |   |
|                |                        | Title: |  President |

 

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EXHIBIT A

[Form ofRestricted Stock Award Agreement]

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** **

THE SHARESRECEIVED PURSUANT TO THIS AWARD SHALL BE SUBJECT TO THE RIGHTS, RESTRICTIONS,AND OBLIGATIONS APPLICABLE TO SUCH SECURITIES, ALL AS PROVIDED IN THESHAREHOLDERS AGREEMENT DATED AS OF JUNE 12, 2006 BETWEEN THE COMPANY AND ITSHAREHOLDERS, AS AMENDED AND IN EFFECT FROM TIME TO TIME (THE “SHAREHOLDERSAGREEMENT”).

Mr. Steven Ziessler

**CELLUPARENT CORPORATION**

**2006 STOCK OPTION AND RESTRICTED STOCK PLAN**

Restricted Stock Award Agreement

Cellu Parent Corporation

c/o Weston Presidio

Pier 1, Bay 2

SanFrancisco, CA 94111

Attn:       Chief ExecutiveOfficer

Ladiesand Gentlemen:

The undersigned (i) acknowledges that he has received an award(the “Award”) of restricted stock from Cellu Parent Corporation (the “Company”)under the Cellu Parent Corporation 2006 Stock Option and Restricted Stock Plan(the “Plan”), subject to the terms set forth below and in the Plan; (ii) furtheracknowledges receipt of a copy of the Plan as in effect on the date hereof; and(iii) agrees with the Company as follows:

1.               *Effective Date*. This Agreement shall take effect as of June 12,2006, which is the date of grant of the Award.

2.               *Shares Subject to Award*. The Award consists of 1,349 shares (the “Shares”)of common stock of the Company (“Stock”). The undersigned’s rights to theShares are subject to the restrictions described in this Agreement and the Plan(which is incorporated herein by reference with the same effect as if set forthherein in full) in addition to such other restrictions, if any, as may beimposed by law.

3.               *Meaning of Certain Terms*. Except as otherwise expressly provided, allterms used herein shall have the same meaning as in the Plan. The term “vest”as used herein with respect to any Share means the lapsing of the restrictionsdescribed herein with respect to such Share.

4.               *Nontransferability of Shares*. The Shares acquired by the undersignedpursuant to this Agreement shall not be sold, transferred, pledged, assigned orotherwise encumbered or disposed of except as provided below and in the Plan.

5.               *Forfeiture Risk*. If the undersigned ceases to be employed bythe Company and its subsidiaries any then outstanding and unvested Sharesacquired by the undersigned hereunder shall be automatically and immediatelyforfeited; *provided, however*, that if theundersigned ceases to be employed by the Company due to the undersigned’s deathor disability, fifty  percent (50%) ofthe Shares granted under this Award that are not then already vested shall

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vest;*and further provided* that if theundersigned ceases to be employed by the Company by reason of the Company’selection not to renew the undersigned’s employment agreement with the Companydated June 12, 2006 (the “Employment Agreement”) and at the time theCompany elects not to renew such Employment Agreement there exists no Cause forthe termination of the undersigned, one hundred percent (100%) of the Sharesgranted under this Award that are not then already vested shall vest. Forpurposes of the preceding sentence, Cause shall be as defined in the EmploymentAgreement. The undersigned hereby (i) appoints the Company as theattorney-in-fact of the undersigned to take such actions as may be necessary orappropriate to effectuate a transfer of the record ownership of any such sharesthat are unvested and forfeited hereunder, (ii) agrees to deliver to theCompany, as a precondition to the issuance of any certificate or certificateswith respect to unvested Shares hereunder, one or more stock powers, endorsedin blank, with respect to such Shares, and (iii) agrees to sign such otherpowers and take such other actions as the Company may reasonably request toaccomplish the transfer or forfeiture of any unvested Shares that are forfeitedhereunder.

6.               *Retention of Certificates*. Any certificates representing unvestedShares shall be held by the Company. If unvested Shares are held in book entryform, the undersigned agrees that the Company may give stop transferinstructions to the depository to ensure compliance with the provisions hereof.

7.               *Vesting of Shares*. The shares acquired hereunder shall vest inaccordance with the provisions of this Paragraph 7 and applicable provisions ofthe Plan, as follows:

25% of the Shares on andafter June 12, 2007;

an additional 25% of theShares on and after June 12, 2008;

an additional 25% of theShares on and after June 12, 2009; and

an additional 25% of theShares on and after June 12, 2010.

Notwithstanding the foregoing, no sharesshall vest on any vesting date specified above unless the undersigned is then,and since the date of grant has continuously been, employed by the Company orits subsidiaries.

8.               *Shareholders Agreement*. The granting of this Award and the issuanceof Shares received under this Award shall be subject to the Plan and theShareholders Agreement, and the issuance of this Award shall be conditionalupon the execution and delivery by the undersigned of the ShareholdersAgreement. Any Shares received under this Award shall be subject to the rights,restrictions and obligations applicable to options and shares of Stock of theCompany as provided from time to time in such Shareholders Agreement.

9.               *Legend*. Any certificates representing unvestedShares shall be held by the Company, and any such certificate shall contain alegend substantially in the following form:

THE TRANSFERABILITY OF THIS CERTIFICATE ANDTHE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS(INCLUDING FORFEITURE) OF THE CELLU PARENT CORPORATION 2006 STOCK OPTION ANDRESTRICTED STOCK PLAN AND A RESTRICTED STOCK AWARD AGREEMENT ENTERED INTO BETWEENTHE REGISTERED OWNER

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AND CELLU PARENT CORPORATION. COPIES OF SUCHPLAN AND AGREEMENT ARE ON FILE IN THE OFFICES OF CELLU PARENT CORPORATION.

THE SECURITIESREPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS,INCLUDING CERTAIN RESTRICTIONS ON TRANSFER, OF A SHAREHOLDERS AGREEMENT DATEDAS OF JUNE 12, 2006 BETWEEN CELLU TISSUE CORPORATION AND ITS SHAREHOLDERS, ASAMENDED FROM TIME TO TIME, AND NONE OF SUCH SECURITIES, OR ANY INTERESTTHEREIN, SHALL BE TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OFEXCEPT AS PROVIDED IN THAT AGREEMENT. A COPY OF THE SHAREHOLDERS AGREEMENT ISON FILE IN THE OFFICES OF CELLU PARENT CORPORATION.

As soon as practicablefollowing the vesting of any such Shares the Company shall cause a certificateor certificates covering such Shares, without the aforesaid legend, to beissued and delivered to the undersigned. If any Shares are held in book-entryform, the Company may take such steps as it deems necessary or appropriate torecord and manifest the restrictions applicable to such Shares.

10.         *Dividends, etc.*.The undersigned shall be entitled to (i) receive any and all dividends orother distributions paid with respect to those Shares of which he is the recordowner on the record date for such dividend or other distribution, and (ii) voteany Shares of which he is the record owner on the record date for such vote; *provided, however*, that any property (other than cash)distributed with respect to a share of Stock (the “associated share”) acquiredhereunder, including without limitation a distribution of Stock by reason of astock dividend, stock split or otherwise, or a distribution of other securitieswith respect to an associated share, shall be subject to the restrictions ofthis Agreement in the same manner and for so long as the associated shareremains subject to such restrictions, and shall be promptly forfeited if andwhen the associated share is so forfeited; *and further provided*,that the Administrator may require that any cash distribution with respect tothe Shares other than a normal cash dividend be placed in escrow or otherwisemade subject to such restrictions as the Administrator deems appropriate tocarry out the intent of the Plan, consistent with Section 409A of the Codeto the extent applicable. References in this Agreement to the Shares shall  refer, *mutatis mutandis*,to any such restricted amounts.

11.         *Sale of Vested Shares**.*The undersigned understandsthat he will be free to sell any Share once it has vested, subject to (i) satisfactionof any applicable tax withholding requirements with respect to the vesting ortransfer of such Share; (ii) the completion of any administrative steps(for example, but without limitation, the transfer of certificates) that theCompany may reasonably impose; (iii) applicable requirements of federaland state securities laws; and (iv) the terms and conditions of theShareholders Agreement.

12.         *Certain Tax Matters*.The undersigned expressly acknowledges the following:

a.               The undersigned has been advised to conferpromptly with a professional tax advisor to consider whether the undersignedshould make a so-called “83(b) election” with respect to the Shares. Anysuch election, to be effective, must be made in accordance with applicableregulations and within thirty (30) days following the date of this Award. TheCompany has made no recommendation to the undersigned with respect to theadvisability of making such an election. In the event that the undersigned

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makes an 83(b) electionand incurs a tax liability as a result, the Company will, on a date prior tothe date on which the taxes must be paid or withheld, make a lump sum payment(a “Gross Up Payment”) to the undersigned that will be sufficient, after givingeffect to federal, state, and local income taxes with respect to the Gross UpPayment, to pay any marginal increase in tax liability of the undersigned as aresult of such 83(b) election. For this purpose, a tax liability will betreated as incurred only to the extent that the inclusion of the income byreason of the grant will increase the undersigned’s tax liability for the yearof inclusion, after giving effect to all losses, credits, carry-forwards,carry-backs, etc. that the undersigned may be able to utilize in such year andwithout regard to any decrease in losses, credits, carry-forwards, carry-backs,etc. and the effect of any such decrease on other tax years.

b.              The award or vesting of the Shares acquiredhereunder, and the payment of dividends with respect to such Shares, may giverise to “wages” subject to withholding. The undersigned expressly acknowledgesand agrees that his rights hereunder are subject to his promptly paying to theCompany in cash (or by such other means as may be acceptable to the Company inits discretion, including, if the Administrator so determines, by the deliveryof previously acquired Stock or shares of Stock acquired hereunder or by thewithholding of amounts from any payment hereunder) all taxes required to bewithheld in connection with such award, vesting or payment.

 
|                                 |   |   | Very truly yours,        |   |
|--------------------------------------|--------|--------|--------------------------|--------|
|                                 |   |   |                     |   |
|                                 |   |   |                     |   |
|                                 |   |   |                     |   |
|                                 |   |   | (Signature of  Employee) |   |
|                                 |   |   |                     |   |
| Dated:  June 12, 2006           |   |   |                     |
|                                 |   |   |                     |   |
| The foregoing  Restricted Stock      |   |   |                     |
| Award Agreement  is hereby accepted: |   |   |                     |
|                                 |   |   |                     |   |
| CELLU PARENT  CORPORATION            |   |   |                     |
|                                 |   |   |                     |
|                                 |   |   |                     |
| By                                   |   |   |                     |   |

 

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