SEPARATION AGREEMENT


         This is a Separation  Agreement dated as of April 18, 2000 between Fort
James Operating Company,  its parent,  affiliates,  subsidiaries,  predecessors,
successors and assigns  (collectively  "Fort James" or the "Company") and Robert
M. Lempke ("Lempke").
         A. Lempke has been  employed  by Fort James as Senior Vice  President &
Treasurer  under  his  employment  agreement  dated  as of  June  6,  1997  (the
"Employment  Agreement").  Fort James and Lempke  have agreed on the terms under
which he will terminate his employment  with the Company.  The parties desire to
resolve matters  involving  Lempke's  employment,  the Employment  Agreement and
Lempke's separation from employment with Fort James.
         B. Lempke and Fort James further desire to settle,  resolve and release
any and all existing or potential claims, controversies,  differences,  disputes
or  disagreements,  known or  unknown,  that  Lempke may have with Fort James in
exchange for Fort James'  agreement to provide Lempke certain  compensation  and
benefits to which he otherwise may not be entitled.
         C.  Fort  James  also  desires  to  provide   Lempke  with   additional
compensation  in return for Lempke  agreeing  (i) not to  compete  against  Fort
James,  (ii) not to hire Fort James  employees and (iii) to cooperate  with Fort
James.
         THEREFORE,  in  consideration  of the  above  premises  and the  mutual
covenants and promises contained herein, Lempke and Fort James agree as follows:
                  1.  Termination  of  Employment.  Lempke agrees to voluntarily
terminate his  employment  effective at the close of business on August 13, 2000
(his "Date of Termination"). He will be paid all of his regular compensation and
benefits through that date. In addition,  Lempke agrees to relinquish  effective
on the date  hereof  his  rights in  restricted  shares of the  Company,  and in
consideration therefore, the Company agrees to pay Lempke an amount equal to the
equivalent  value of 4,234  shares of common  stock of the Company on August 13,
2000, with the value of the shares of common stock being determined by averaging
the high and low price of the  common  stock or the New York Stock  Exchange  on
such date.  Fort James shall pay such  amount to Lempke on or before  August 31,
2000.
                  2. Severance Payments.  Fort James shall pay Lempke the amount
of $847,826.00 representing two (2) times the sum of (i) his current base salary
and (ii) his 1998  Management  Incentive  Bonus.  This  amount  shall be paid as
follows:  $423,913.50  on August 14, 2000 and  $423,913.50  on August 12,  2001.
Notwithstanding  the  preceding  sentence,  if an  investor  or  investor  group
acquires more than fifty  percent (50%) of the Company's  voting common stock or
if Miles L.  Marsh is no longer CEO of Fort  James,  the  Company  agrees to pay
Lempke  within  thirty  (30) days after a  shareholder  files a report  with the
Securities  and Exchange  Commission  reporting such ownership or after Miles L.
Marsh ceases to be CEO the full amount of any unpaid payments as provided in the
preceding sentence.
                    3.       MIP Bonus Payments.  Fort James shall pay Lempke,on
August 14, 2000,  $114,798.74  representing  his bonus under the 2000 Management
Incentive Plan.
                    4.       Pension and Other Benefits.
                           (a) All Company provided medical,  prescription and
dental  coverage and life  insurance  (including the split dollar life insurance
currently  provided to Lempke) in which  Lempke is currently  enrolled  shall be
provided  to  Lempke  and  eligible  members  of his  family  for two (2)  years
following August 13, 2000, to the extent provided in his Employment Agreement.
                           (b) Lempke is the beneficiary of 7,620 performance
shares issued  pursuant to the 1996 Stock  Incentive  Plan (the "Plan").  Lempke
agrees to relinquish all right to the performance shares as of August 13, 2000.
                           (c) The Company will pay Lempke,  on August 14, 2000,
in a lump sum  $13,554.54  equal to his  interest  in the  Fort  James  Salaried
Employees Retirement Plan and related additional SERP.
                           (d) Nothing herein shall forfeit or otherwise  affect
Lempke's  right to vested  benefits  in the Fort James  401(k)  Plan and related
SERP, which benefits shall be paid to Lempke according to such plan.
                           (e) Lempke  shall not be  entitled  to any other
bonus payments or profit sharing awards including any additional  payments under
the Management Incentive Plan.
                           (f) All  payments  referred  to herein are gross
payments  from which Fort James may withhold  legal and  authorized  amounts for
payment to taxing authorities as required by law.
                           (g) The Company shall pay Lempke, on August 14, 2000,
$7,000 for tax advice and tax preparation expenses.
                           (h) The Company will pay Lempke, on August 14, 2000,
$17,414.68  representing  the mortgage buydown on his Lake Forest, Illinois
residence.
                           (i) The Company will reimburse  Lempke for reasonable
legal expenses in connection with the negotiation of this Separation  Agreement,
not to exceed $2,500. The Company agrees to pay as incurred,  to the full extent
permitted by law, all legal fees and expenses which Lempke may reasonablyn incur
as a result of any contest  (regardless of the outcome  thereof) by the Company,
Lempke or others of the validity or  enforceability  of, or liability under, any
provision  of the  Employment  Agreement  or this  Separation  Agreement  or any
guarantee of performance thereof (including as a result of any contest by Lempke
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").
                           (j) Unless  exercised, Lempke's options to purchase
60,000 shares granted on January 6, 1998 and 10,000 shares granted on January 6,
1999 shall expire on his Date of Termination.
                  5.  Method of  Payment.  All cash  payments  required  by this
Agreement  shall be made by wire transfer to Lempke's  account or accounts which
he shall designate in writing to the Company's  Senior Vice  President,  General
Counsel.  Such  transfers  shall be authorized  and released in advance so as to
arrive in Lempke's account(s) by applicable due dates.
                  6. General Release.
                     (a) In consideration of all payments due him hereunder or
under  the  Employment  Agreement,   Lempke  hereby  agrees,  for  himself,  his
successors,  heirs,  representatives,  executors, agents and assigns, to release
and  forever  discharge  Fort James,  including  its  affiliates,  subsidiaries,
parents,  predecessors,  successors and assigns and their respective  directors,
officers,  employees  and  agents  thereof  from  any  and  all  claims,  debts,
responsibilities and liabilities of every kind and character  whatsoever,  known
or unknown, suspected or unsuspected,  which he has ever had or may have against
Fort James,  including  but not  limited  to, any and all claims  arising out of
Lempke's  employment  or  termination  of  employment  with Fort  James.  Lempke
acknowledges  that this Release  includes any and all claims whether in contract
or in tort,  claims that may be brought on his behalf by others,  claims brought
before any court or administrative agency, or claims under any national,federal,
state or local statute or ordinance, including any claims under Title VII of the
Civil  Rights  Act of  1964,  the Age  Discrimination  in  Employment  Act,  the
Americans with Disabilities Act or any other law.
                  It is  acknowledged  that this  Separation  Agreement does not
release  Lempke's  right to any vested  benefits  in the Fort James  Corporation
StockPlus Plan (the "StockPlus Plan") and related SERP. Lempke's eligibility for
benefits in the StockPlus Plan will be controlled by the terms of the plan.
                    (b) Fort  James,  including  its  affiliates,  subsidiaries,
parents,  predecessors,  successors and assigns and their respective  directors,
officers,  employees and agents  thereof  hereby  release and forever  discharge
Lempke, his successors,  heirs,  representatives,  executors, agents and assigns
from any and all claims, which it has ever had or may have against Lempke or any
of the foregoing persons,  arising out of (x) Lempke's employment or termination
of employment with Fort James or (y) any event,  condition or circumstance  that
existed or arose on or prior to the Date of Termination.  The foregoing  release
will not apply to Lempke's  obligations  under this Separation  Agreement.  Fort
James  acknowledges that this Release includes all claims whether in contract or
in tort,  claims  that may be brought on its  behalf by others,  claims  brought
before  any  court or  administrative  agency,  or claims  under  any  national,
federal, state or local statute or ordinance.
                  7. Special Release  Notification.  This  Separation  Agreement
includes a release of all claims under the Age Discrimination in Employment Act,
("ADEA"),  and,  therefore,  pursuant to the  requirements  of the ADEA,  Lempke
acknowledges  that he has been advised (1) that this release includes but is not
limited to, all rights or claims  arising under the ADEA up to and including the
date of execution of this release,  but does not waive rights or claims that may
arise  after the date of  execution;  (2) to consult  with an  attorney or other
advisor  of his  choosing  concerning  his  rights  and  obligations  under this
release; (3) to fully consider this release before executing it, and that he has
been offered at least twenty-one (21) days to do so; (4) that this release shall
become  effective and  enforceable  seven (7) days  following  execution of this
Separation Agreement,  during which seven (7) day period Lempke understands that
he may revoke his acceptance of this Separation  Agreement by delivering written
notice to Clifford A. Cutchins,  IV, Senior Vice President and General  Counsel,
Fort James Corporation, 1650 Lake Cook Road, Deerfield, Illinois 60015.
                  8. Post Employment Restrictions, Obligations
                     (a) Lempke agrees to comply with the terms of his
Confidentiality  Agreement executed as part of his Employment  Agreement and not
to otherwise use or disclose Fort James confidential information in the future.
                     (b)In return for the payment of the amounts on August 14,
2000 as set forth in Section 2, Lempke agrees, in order to protect the Company's
goodwill, trade secrets and confidential information and thereby help ensure the
long-term success and development of the business,  not to engage in competitive
activities  on behalf of a  competitive  business  for a period of two (2) years
following the Date of Termination with the Company for whatever reason,  without
first obtaining  written  permission from either the Senior Vice President and 3
General Counsel or the Senior Vice President,  Human Resources,  which shall not
be unnecessarily withheld or delayed.  "Engage in competitive  activities" means
rendering services or being involved directly or indirectly in any way or in any
capacity whether as an officer, director, employee, agent, owner, shareholder or
consultant  (excluding  ownership  of less  than 5% of the  stock of a  publicly
traded company), in the manufacture, development, promotion or sale of any towel
or tissue  product or tabletop  product of the type  manufactured  by Fort James
(the "Covered  Products").  A "competitive  business" means any person or entity
engaged in the  manufacture or non-retail sale of the Covered  Products.  Lempke
acknowledges  that products of the Company are sold throughout North America and
Western Europe. Accordingly, the geographic area covered by this restraint shall
include any county,  city, town, province or comparable unit of local government
where the Covered  Products are  manufactured,  marketed or sold by the Company.
The  parties  agree  that  this  non-compete   provision  supersedes  all  prior
agreements between them on this subject.
                     (c) Lempke  agrees to favorably represent the Company and
to cooperate in the transition of his responsibilities to his successor.
                     (d) Lempke agrees for a period of two (2) years not to
solicit directly or indirectly for employment any employee or former employee of
Fort James or its affiliates, as of January 1, 2000, without the written consent
of the Senior Vice President,  Human Resources for the Company,  which shall not
be  unreasonably  withheld or delayed.  Further,  Lempke agrees that if any such
Fort James  employee  approaches him for  employment,  he will refer them to the
appropriate  hiring official of his employer and will have no involvement either
in the  hiring of the  employee  or in working  with the  employee  should  such
employee work for the same company for which Lempke works.
                     (e) Lempke agrees that as Senior Vice President & Treasurer
he possesses  intimate  knowledge  about all aspects of the Company's  business,
business plans and other confidential or propriety  information.  He also agrees
that these  restrictions  are  reasonable and necessary to protect the Company's
business  and  in  consideration  of  the  substantial   benefits  provided  him
hereunder. If Lempke violates any of his obligations under this paragraph 8, the
Company shall have no further  obligation to him under this  Agreement as on the
date of breach.  Lempke agrees that the Company will be  irreparably  harmed and
will be entitled to immediate  injunctive  relief in the event of such breach in
addition to any other monetary remedies.
                      (f) If any aspect of the above post employment
restrictions  are  deemed  void  or  unenforceable  by any  court  of  competent
jurisdiction,  the parties agree that the court should modify these restrictions
to a point  they would be  enforceable  and  enforce  the  restrictions  to that
extent.
                  9.  Indemnity.  Fort James agrees to continue to indemnify and
save Lempke harmless from all claims, actions and liabilities which may arise in
connection with his reasonable  performance of his duties for the Company.  Such
indemnification  shall be to the same  extent as its  indemnification  of active
executives  of equal rank but shall relate only to Lempke's  alleged  actions or
failure to act during the period in which he was employed by the Company.
                  10. Future Cooperation.  Lempke agrees to cooperate
in providing transition assistance related to his departure as may be reasonably
required of him by Fort James, including presences as a witness in legal
proceedings as may be necessary, both before and after his Date of Termination.
                  11.  Resignation.  By  his  signature  hereto,  Lempke  hereby
resigns his position as Senior Vice  President & Treasurer and any and all other
positions with the Company,  its  subsidiaries,  its parent and its  affiliates;
provided, however, Lempke shall remain employed as provided in Paragraph 1 until
the Date of Termination.
                  12.  Confidentiality.  Lempke  agrees that he will not divulge
the contents of this Separation Agreement which are agreed to be confidential in
nature  except (a) Lempke may  divulge the  contents  to his  spouse,  attorney,
financial  advisor and income tax preparer;  or (b) except as may be required to
comply  with  legal  process.  It is  further  agreed  by  Lempke  that if it is
necessary  that this  Agreement or a  significant  portion be disclosed to those
listed  above,  Lempke  agrees to instruct and request each of them, or use such
other  efforts  as may be  reasonable,  to keep  any  information  so  disclosed
confidential.  If Lempke  materially  breaches this provision,  the Company will
have no further obligation to him under this Agreement.
                  13. Entire Agreement.  Lempke  understands and agrees that all
terms of this  Separation  Agreement are contractual and are not a mere recital.
The parties  represent  and  warrant  that in  negotiating  and  executing  this
Separation Agreement, each have had an opportunity to consult with legal counsel
or other representatives of their own choosing concerning the meaning and effect
of each  term or  provision  hereof,  and  that  there  are no  representations,
promises or agreements other than those specifically referred to or set forth in
writing herein.
                      The parties represent and warrant that they have read this
Separation Agreement in its entirety, fully understand and agree to its term and
provisions, and intend and agree that it is a final and legal binding settlement
and release of all claims Lempke or Fort James may have.
                  15. Severability. If any portions of this Separation Agreement
are void or deemed  unenforceable  for any reason,  the  unenforceable  portions
shall be deemed  severed from the  remaining  portions of this  Agreement  which
shall otherwise remain in full force and effect.
                  16. No Waiver.  The decision of either party not to assert a
claim for breach of the Separation Agreement shall not be construed as a waiver
of that or any subsequent breach which might occur.
                  17. Corporate Authority. The officer executing this Separation
Agreement on behalf of Fort James represents that he has full corporate
authority to do so and to bind the Company, its parents, affiliates,
subsidiaries, predecessors, successors and assigns.
                  18. Governing Law. This Agreement shall be governed and
construed according to the laws of the Commonwealth of Virginia.

                  IN WITNESS WHEREOF, the parties have affixed their signatures:









                                                          By:/s/Robert M. Lempke
                                                                Robert M. Lempke



                                                    FORT JAMES OPERATING COMPANY



                                                          By:/s/Daniel J. Girvan
                                                                Daniel J. Girvan
                                                           Senior Vice President