Document:

Exhibit 10.1

LABOR
AGREEMENT

BETWEEN

BLUE
RIDGE PAPER PRODUCTS INCORPORATED

AND

UNITED
STEEL, PAPER AND FORESTRY, RUBBER,

MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE

WORKERS INTERNATIONAL UNION

PREAMBLE

THIS AGREEMENT is made
and entered into this 14th day of May 2006, by and between Blue Ridge Paper
Products Incorporated (the “Company”), for its plants or mills located at
Canton, North Carolina; Waynesville, North Carolina; Athens, Georgia; Clinton,
Iowa, and Olmsted Falls, Ohio, hereinafter referred to as the “Company”, and
the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union (USW) AFL-CIO, CLC, on
behalf of Local 2-0507; Local 3-0794; Local 7-0761; and Local 5-0673, both hereafter
referred to as the “Union.”

ARTICLE I

RECOGNITION

The Company recognizes
the Union as the sole and exclusive bargaining representative for the purposes
of collective bargaining with respect to rates of pay, wages, hours of
employment, and other conditions of employment for all production and
maintenance employees of the Company’s facilities as described in the Preamble,
but excluding all clerical employees, professional employees, guards and
supervisors as defined under the National Labor Relations Act as amended.

ARTICLE
II

GENERAL PURPOSE

A.           The general purpose of
this Agreement is in the mutual interest of the Company, its staff employees
and the employees represented by the Union, to provide for the uninterrupted
operation of the plant under methods which will further to the fullest extent
possible the safety, welfare, and health of the employees, economy of
operation, quality and quantity of output, cleanliness and maintenance of the
plant, and the protection of the property. 
The Union recognizes its 

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responsibilities as the
exclusive bargaining agent of the employees covered by the Agreement, and
realizes that in order to provide maximum opportunities for continuing
employment, good working conditions, and fair and equitable wages, the Company must
be in a strong competitive position.

B.             Therefore, it shall
be the duty of the Company, its staff employees, and the employees represented
by the Union, to cooperate fully, individually and collectively, in this
regard.  Further insure this ESOP be accepted
as a part of this Agreement by reference. 
This clause shall not be used to discriminate against any employee’s
rights under this Agreement.

ARTICLE
III

EQUAL EMPLOYMENT OPPORTUNITY

A.           The Company and the
Union agree that all employees shall have equal employment opportunities
regardless of race, color, religion, sex, national origin, and within the
framework of federal and state laws regarding age discrimination.

B.             The Company and the
Union shall observe the rights of the handicapped as provided in the
Rehabilitation Act of 1973 and the rights of disabled veterans and veterans of
the Vietnam era as provided in the Vietnam Era Veterans’ Readjustment
Assistance Act.

C.             Wherever used in this
Agreement, the masculine personal pronoun and/or the feminine personal pronoun
shall have equal application to the other.

ARTICLE
IV

LENGTH OF AGREEMENT

THIS AGREEMENT shall
remain in full force and effect from May 14, 2006 through May 13, 2009, and
from year to year thereafter, unless terminated in accordance with the
provisions outlined below. The terms of this Agreement will not be altered,
varied, or amended except by mutual agreement in writing and signed by the
parties hereto.

ARTICLE V

CHANGES OR MODIFICATION

In the event that either
party desires to change any provisions of this Agreement, it shall give written
notice of such desire by certified mail to the other party not more than ninety
(90) days nor less than sixty (60) days in advance of the anniversary date or
May 14, 2009.  The giving of notice, as
provided above, shall constitute an obligation upon both parties to negotiate
in good faith all questions at issue with the intent of reaching a written
agreement prior to the anniversary date.

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ARTICLE
VI

TERMINATION OF AGREEMENT

A.           At any time after May
14, 2009, or any anniversary date thereafter, if no agreement on the questions
at issue has been reached, either party may give written notice to the other
party of intent to terminate the Agreement in not less then ten (10) days.

All provisions of the Agreement shall remain in full
force and effect until the specified time has elapsed.  During this period, attempts to reach
agreement shall be continued.

B.             If the parties have
failed to resolve their differences before the specified time has elapsed, all
obligations under this Agreement are automatically cancelled.

ARTICLE
VII

NO INTERRUPTION OF PRODUCTION

There shall be no
lockouts by the Company, or strikes, slowdowns or work stoppage of any kind by
the Union, its representatives, agents or members during the duration of this
Agreement.

ARTICLE
VIII

SENIORITY

The principles of
seniority shall govern in promotions, layoff, demotions, and filling of
vacancies, transfers and recalls as hereinafter provided.

A.           An employee shall be
considered probationary for the first sixty- (60) calendar days, after which he
shall be considered a regular employee and his seniority shall date from the
most recent date of hire.  During the
probationary period, the Company shall have the right to transfer or discharge
such employee and any such action shall not be subject to the grievance and
arbitration procedure.

B.             For the purpose of
this Agreement, employees shall have four (4) types of seniority:  Plant Seniority; Department Seniority; Group
Seniority and Job Seniority.  The type of
seniority used at each location and the method of application shall be governed
by each Local supplement that is a part of this agreement.  Such supplement shall apply to each location
named in each supplement.   Should a
question of Local supplement application occur and it cannot be resolved by the
location, then this Master Agreement shall apply.  Seniority as it pertains to employees within
the bargaining unit shall retain the same application as is accrued with
Champion International Corporation

C.             Seniority shall be
broken and employment terminated for the following reasons:

1.               Voluntary quit.

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2.               Discharge for just
cause.

3.               Failure to return
from a leave of absence as of the first scheduled workday following the
termination date of the leave.

4.               Absent from work
for three (3) consecutive scheduled workdays without proper notification to the
Company.  Excluded in the computation of “days”
in this sentence are Saturdays, Sundays, and Holidays.

5.               Employment on
another job while on a leave of absence except as provided in Article XX,
Section B & C.

6.               Failure to notify
the Company of intent to return to work within seven (7) days following receipt
of certified letter sent to the employee’s address as carried on the Company’s
records and failure to return to work from layoff within ten (10) days
following receipt of such letter.

7.               Exceptions may be
made to 3, 4 and 6, if a justifiable reason is given.

 

D.            PROMOTIONS IN LINES OF
PROGRESSION

When promotions are to be made at any location, the language as applied
in each Local Supplement shall be the controlling language.

E.              JOB BIDDING

Job bidding shall be applied by using the employee’s seniority as
developed in each Local Supplement.

F.              TEMPORARY VACANCIES

Temporary
vacancies shall be filled in accordance with the method of application
developed in each Local Supplement.

G.            DEMOTIONS AND LAYOFFS

Demotions and layoffs shall follow the reverse order of
promotions.  The method of administering
this seniority provision for demotions and layoffs shall be developed in each
Local Supplement.  However, in any
location probationary employees shall be laid off first.  Layoffs from the plant shall be by plant
seniority.  Any employee’s job
classification affected by a layoff shall be given an opportunity to receive at
least thirty (30) days training prior to being reduced from their line of
progression, job, group, department or the plant.

H.            RECALL

Recall
of laid off employees shall be in the reverse order of layoff seniority.  Employees laid off shall retain their plant
seniority.

I.                 TRANSFERS

Transfers between lines of progression or departments shall be governed
by the use of seniority application determined at each Local facility.  When a vacancy occurs, prior to hiring a new
employee, incumbent employees shall be given an opportunity for transfers
between locations.  The transferring
employee(s) shall retain their seniority for earned vacation and pensions.  Their seniority date in the new location
shall be in accordance with Section B above. 
This transfer policy is attached as Appendix B.

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ARTICLE
IX

GRIEVANCES AND ARBITRATION

A.  GRIEVANCES

An earnest effort shall
be made to promptly settle complaints in the following order and manner:

Step 1:  The employee and the steward shall discuss
his complaint with his immediate supervisor within seven (7) days following the
date the incident occurred that gave rise to the complaint; however, if the
incident occurred while the employee was on an excused absence and he had no
knowledge of it until his return to work, the seven (7) day period shall begin
on his first scheduled work day following the return from the absence.  The employee, his shop steward, and his
supervisor are encouraged to make every possible effort to settle the grievance
at this stage.  The supervisor shall
reply to the employee within three (3) days of the date the complaint was
brought to his attention.

When the Company immediately agrees to resolve the issue, the Company
will provide written documentation to the personnel department and Union in
lieu of the formal grievance procedure.

Step 2:  A complaint, which is not resolved between
the employee and his supervisor, must be reduced to writing and submitted to
the department manager within seven (7) days of the supervisor’s reply.  The department manager and/or his designated
representative and foreman involved shall meet with the employee, a local union
officer and the steward within seven (7) days of the date the written grievance
was received.  He shall give his written
answer within three (3) days of the date of the meeting.

Step 3:  An appeal of the department manager’s answer
must be made in writing to the Plant Manager or his designated representative
within seven (7) days after receipt of the department manager’s answer by the
local Union.  As a result of a meeting
attended by the Plant Manager or his designated representative, together with
the International Representative or his designated representative, a committee
representing the Local Union, plus the aggrieved employee, a discussion of the
appealed grievance shall take place within nine (9) days of the date the appeal
notice was received.  The Plant Manager
shall give his answer within ten (10) days of the date of the meeting.

A grievance not appealed
from one step to the next within the specified time limits shall be considered
settled on the basis of the last answer, unless such time limits are extended
in writing by mutual agreement.  Failure
on the part of the Company to answer within the specified time limits shall
cause the grievance to be settled in favor of the grievant.

“Days” in the Grievance
and Arbitration Articles shall mean calendar days, excluding Saturdays,
Sundays, and Holidays.

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B. ARBITRATION

1. An appeal of the Plant
Manager’s answer must be made in writing to the Company within thirty (30)
days.  An extension of this time limit
will be granted up to a maximum of thirty (30) days if requested by the
Union.  If written notice is given, the
Company within three (3) days will ask the Federal Mediation and Conciliation
Service to furnish the parties with a panel of seven (7) qualified
arbitrators.  Within fourteen (14) days
after receipt of the list of arbitrators, the Union and the Company shall
alternately strike a name from the list. 
The Union and the Company shall alternate on each case in being the
first party to strike a name from the list, with the Union striking first on
the first case under this new Agreement. 
The person whose name remains shall be the arbitrator.  Either party has the right to reject one
panel of arbitrators and another panel will be requested.

The decision of the arbitrator on all matters properly submitted, shall
be final and binding on both parties to this Agreement.  Arbitrator selection shall be accomplished in
accordance with the procedure in each Local Supplement if different from above.

2. The arbitrator shall have jurisdiction and authority only to
interpret, apply, or determine compliance with the provisions of this
Agreement, insofar as shall be necessary to the determination of grievances appealed
to him.  He shall have no authority to
add to, detract from, or alter in any way, the provisions of the Agreement, nor
to establish or change any wage rate. 
The same arbitrator shall not arbitrate multiple issues.

3. The Company and the Union shall share the expenses of the arbitrator
equally.  The expenses of the witnesses
shall be paid by the party requesting the witness to testify.

4. The arbitrator shall render his award within thirty (30) days after
the receipt of post-hearing briefs.  If
the parties do not file briefs, the arbitrator shall render his award within
thirty (30) days after the close of the hearing.

ARTICLE X

VACATIONS

 

A.
ELIGIBILITY

All hourly paid employees
who have at least one (1) year seniority in the plant shall be granted a
vacation with pay each calendar year. 
Below are the numbers of years of continuous employment in the Company’s
service that must be completed to be eligible for the number of weeks vacation
indicated:

1 week vacation after           The
actual number of weeks of

2 weeks vacation after         eligibility
shall be those years

3 weeks vacation after         referred
to in the Local Supplement

4 weeks vacation after         at
each location.

5 weeks vacation after

6 weeks vacation after

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B. An
employee who works less than 1,040 hours because of an illness or injury shall
receive credit for forty (40) hours per week for all full weeks lost because of
such illness or injury.  The accumulation
of these credits will be limited to the first calendar year of each continuous
period of loss of hours due to such illness or injury.

C.
VACATION PAY

1. The amount of vacation
pay for an eligible employee shall be calculated at the rate of pay as set
forth in each Local Supplement.

2. An employee who leaves
the employ of the Company and has not taken the vacation to which he is
entitled, shall receive vacation pay at the time of leaving the employment of
the Company.  The amount of such
additional vacation pay shall be prorated according to the number of months
worked.

3. An employee who enters
the armed services, retires, or dies, and who has completed one (1) year or
more of continuous employment in the company’s service on the last previous
anniversary date of such continuous employment, shall upon termination of
employment receive in addition to vacation pay as provided above, vacation pay
for time worked during the calendar year in which his employment is
terminated.  The amount of such
additional vacation pay shall be prorated according to the number of months worked.

B. VACATION PERIODS

1. Vacations shall be
taken in periods of not less than one week, except as provided by other
provisions of this Agreement that applies to Incremental Vacation.

2. Vacations are not
accumulative from year to year.

3. Holidays falling in a
vacation period shall not extend the vacation period.

4. Vacations will be
taken to coincide with the established workweek.

5. The administration of
the vacation scheduling for employees shall be the process that is established
by the supplemental agreements at each Local facility.

ARTICLE XI

HOLIDAYS

 

Each employee shall receive eight (8) hours straight
time pay at his hourly rate (including any additional pay provided in each
Local Supplement) for the following holidays: 
Memorial Day (Federal); Independence Day, Labor Day, Thanksgiving Day,
the day after Thanksgiving Day, December 24, Christmas Day, December 26, a
floating holiday, Good Friday, Easter Monday, New Years Day and Presidents’
Day.  These are identified maximum
numbers of holidays only for purposes of this Agreement.  Each Local facility may contain a different
number of holidays, but in no event will the number 

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of holidays exceed the number listed in this
Article.  In addition to the number
deviation of holidays contained in each Local Supplement, each Local Supplement
shall determine annually which of those holidays that the location wishes to
recognize as holidays for the forthcoming year. 
Such identification meeting shall occur in December of the prior year.  The method of calculating the proper
classified rate may vary in each Local supplement.

A. ELIGIBILITY

1. The employee must have completed his probationary
period prior to such paid holiday.

2. The employee must work his last scheduled workday
before the holiday and his first scheduled workday after the holiday unless
absence on either or both of these days is due to a layoff, absence with
employer’s permission, bona fide illness of the employee, or illness of a
member of the employee’s immediate family requiring his presence.

3. If a holiday occurs during a period when an
employee who otherwise is eligible for holiday pay is laid off he will receive
pay for such holiday when he returns to work, provided the entire duration of
his layoff has not exceeded one hundred eighty (180) days.

4. An employee who is absent because of illness or
industrial injury and is otherwise eligible for holiday pay will receive
holiday pay in the regular pay period covering the holiday which occurs within
one hundred eighty (180) days of his last day worked.

B.             An employee who is
required to work on a holiday shall be paid time and one-half for all hours
worked on the holiday; and in addition, if he qualifies as provided above, he
shall be paid holiday pay.

C.             When any specified
paid holiday is celebrated within an eligible employee’s approved vacation
period and he is absent from work because of such vacation, he shall be paid
for such holiday in accordance with the provisions set out herein.

D.            Hours not worked but
paid for on a holiday shall be counted as time worked for the purpose of computing
weekly overtime.

ARTICLE XII

HOURS OF WORK AND OVERTIME

 

A.           The established
workweek begins at 7:00 a.m. on Monday and shall continue for seven (7)
consecutive twenty-four (24) hour periods. 
The workweek shall end at 6:59 a.m. the following Monday.  The starting of the workweek for the DairyPak
plants may begin at 11:00 p.m. on Sunday and shall continue for seven (7)
consecutive twenty-four (24) hour periods. 
The workweek shall end at 10:59 p.m. the following Sunday.

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B.             The normal schedule
for shift workers, which includes a paid lunch period, is as follows:

First Shift - 6:30 a.m.
to 2:30 p.m.

Second Shift - 2:30 p.m.
to 10:30 p.m.

Third Shift - 10:30 p.m. to 6:30 a.m.

This shift starting and quitting time may vary between each Local
Supplement.  However, in no event shall a
shift begin any later then 7:00 a.m., 3:00 p.m. or 11:00 p.m. or end any later
than 3:00 p.m., 11:00 p.m., or 7:00 a.m.

C.             Work performed prior
to or following the work shift will be paid at the appropriate overtime rate.

D.            For the purpose of
computing overtime, the workweek will be forty (40) hours and the workday will
be eight (8) hours.

E.              All time worked by
an employee in excess of eight (8) hours in any twenty-four (24) work period or
over forty (40) hours in any work week shall be paid at one and one-half (1 1⁄2)
times the base rate.  It is further
provided that hours not worked on any of the twelve (12) holidays designated in
Article XI, Section A, of this Agreement shall be considered as hours worked in
computing hours in excess of forty (40) per week.

F.              The normal schedule
of day workers is 7:00 a.m. to 12:00 noon and 12:30 p.m. to 3:30 p.m., Monday
through Friday.  The Company will arrange
the schedule of day workers for five (5) consecutive days of eight (8)
consecutive hours, lunch period of thirty (30) minutes excepted.  An employee on day work requested to work
through meal time will continue to work until 3:30 p.m. unless the emergency
work is completed and the employee requests to be released at 3:00 p.m.  Emergency work making it necessary to work
through mealtime will be held to a minimum and will not be performed unless
directed by the department manager.

G.             The Company will post
changes in work schedules for the following week not later than 12:00 noon on
Thursday.

H.            There shall be no
duplication of overtime pay for the same hours, and payment of overtime for any
hour or part of an hour on one basis shall exclude that time from consideration
for payment of overtime on any other basis.

ARTICLE XIII

SHIFT DIFFERENTIAL

Employees working on the
second and third shift shall be paid in accordance with the Local
Supplements.  This amount may vary
between each facility.

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ARTICLE
XIV

WAGES

Wage rates shall be paid
in accordance with the Appendix attached as a part of the Local Supplement at
each location.  The necessary increase of
wages because of working in a higher classification or the lowering of wages
because of working in a lower classification shall be in accordance with the
methods provided in each Local Supplement.

A.           Rates on existing jobs
shall not be subject to adjustment throughout the life of this Agreement,
except as provided in “B” below.

B.             When new jobs are
created, or when substantial charges are made in the duties and/or workload of
existing jobs, the Company and the Union will meet within thirty (30) days from
the date request is received, unless mutually agreed to extend the time limit,
to negotiate the rate of the new job or the rate of the existing job that has
been substantially changed.  If no
agreement can be reached, the Company will set the job rate.  Such rate may be subject to negotiations at
the next general contract negotiations, and any change agreed upon at that time
will be made retroactive to persons then on the payroll of the Company to such
time as the Company and the Union shall agree.

C.             The matter of wages
is not to be a subject of arbitration.

D.            REPORTING TIME

1.               Should an employee
report for work at his regularly scheduled time, and due to unavoidable circumstances
his services are not required for that workday, payment will be made for four
(4) hours straight time at his regular rate of pay.  Reporting time hours paid for, but not
actually worked, will be counted toward computation.

2.               Reporting time pay
shall not be paid if the failure to provide work is caused by storm, flood,
fire, accidental breakdown, power failure, or other causes beyond the control
of the Company.

ARTICLE XV

JURY DUTY

A.           When a regular employee
is called upon to serve on a jury, he shall receive the difference between the
amount received for such jury duty and the “total rate” he would have received
on his regularly scheduled job at straight time, provided the employee notifies
his supervisor so necessary arrangements can be made.

B.             If an employee is
scheduled to work the third shift on the night before he reports for jury duty,
he will be excused from work that night. 
His pay will be computed as outlined above.

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C.             Employees seeking
reimbursement under this Article must present proof of hours served on jury
duty and compensation received from the court in connection therewith.  In the event that an employee is required to
appear in court as a witness or defendant, the Company will try to grant the
employee time off without pay.

ARTICLE XVI

CALL-IN TIME

A.           An employee who is
called in to work at a time other than his regularly scheduled shift shall be
guaranteed a minimum of four (4) hours at his regular straight time rate or
time and one-half for hours worked, whichever is greater.  An employee so called will be allowed to
leave after the work for which he was called has been completed.  However, such employee may be required to do
work of an urgent nature that has developed after the Company has called him.

B.             Call-in is not applicable
when work is planned in advance and scheduled to commence at any specific time,
if the employee is scheduled to work and is notified before leaving the mill on
prior shift, or sixteen (16) hours in advance of starting time of such work.

ARTICLE XVII

DISCIPLINE AND DISCHARGE

A.           If an employee is
called in for a disciplinary interview he/she shall be advised he/she has the
right to union representation and the employee and union representative have
the right to examine the materials in their personnel files if used in the
disciplinary interview.  When a statement
against an employee is to be entered into the personnel record of the employee,
the Company will furnish the employee and the Union with a copy.

B.             An employee
discharged shall have the right to request in writing the reason for such
discharge.  A copy of the reason for such
discharge shall be sent to the Local Union President.

C.             All disciplinary
action will be taken within five (5) working days (excluding Saturdays,
Sundays, and holidays) from the date the Company becomes aware of the
infraction.

ARTICLE XVIII

FUNERAL LEAVE

A.           In the event of a death
(except for the employee’s spouse, children, mother and/pr father) in the
immediate family of an employee who has been in the employ of the Company for
sixty (60) days or more, the employee will be compensated at a regular straight
time rate of pay for his scheduled days of work 

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lost up to a maximum of
three (3) consecutive calendar days.  For
the computation of the three (3) days maximum pay, the two (2) days preceding
the funeral, the day of the funeral, and the day after the funeral are the only
days to be considered.  In the event a
Location has a greater number of days then those specified, the Local
Supplement for the Location will apply. The Company may require proof of death
and relationship before making such payments.

B.             The immediate family
of the employee shall be limited to those listed in the Local Supplement at
each location.

C.             Time spent while on
funeral leave will be counted as hours worked for computing overtime.

D.            Funeral leave pay will
not be payable if any of the days lost fall within an employee’s approved
vacation period or leave of absence.  No
allowance will be granted in the case where, because of distance or other
cause, the employee does not attend the funeral of the deceased.

ARTICLE XIX

MILITARY LEAVE

A.           The Company shall
comply with the applicable federal and state statues pertaining to the
re-employment rights of returning servicemen/women.

B.             Any regular employee
who is a member of a National or State Guard Unit, or any United States Armed
Forces Reserve component, who is required to participate in training for thirty
(30) days or less, or temporary guard duty, will be granted a leave of absence
for such purpose and may receive pay from the Company as follows:

The difference between the base pay received from the government and
the straight time earnings of his scheduled work hours at the mill during the
period of absence, up to a maximum of ninety-six (96) hours in any one calendar
year.

ARTICLE
XX

LEAVE OF ABSENCE

A. GENERAL

1. Upon application by an
employee and written permission from the Company, a leave of absence without
pay may be granted at the discretion of the Company for a period of not more
than thirty (30) calendar days without prejudice to seniority rights.

2. Extension may be
granted at the discretion of the Company and seniority shall accrue during an
approved extension.

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3. Upon termination of an
absence from work for five (5) or more scheduled workdays because of illness,
or fifteen (15) or more calendar days for any reason other than vacation, the
employee will report to the Medical Center.

4. An employee granted a
leave of absence would notify his department manager at least twenty-four (24)
hours in advance of the scheduled starting time of his job he will be ready to
resume his work.

5. Copies of all approved
leaves of absence and extensions thereof shall be furnished the Union.

6. A leave of absence is
not required when absence is due to occupational injury or disease.

B. ELECTED OFFICE LEAVE

1. Employees who are duly elected to a full-time
elected public governmental office at the Federal, State or Local level will be
granted a leave of absence up to a maximum of four (4) years  (six (6) years if elected to the United
States Senate).

2. In the case of an employee elected to the State or
Federal House of Representatives or Senate, a leave of absence will be granted
and seniority shall accrue for the length of time the body is in full session.

3. Seniority shall not accrue during an elected office
leave except as provided above.  The
Company shall be notified at least two (2) weeks prior to the end of the leave
of the employee’s intent to return.

C. UNION LEAVE

1. Employees may be granted a leave to work for the
International Union and employees to work for the Local Union, provided the
request is made in writing by the Union and approved by the Company. Such leave
shall have a maximum of two (2) years. 
Extensions may be granted at the discretion of the Company.

2. Seniority shall accrue during a Union leave.  When a promotion becomes available for which
an employee who is on Union leave is eligible, that promotion shall be offered
to him upon his return from leave.  The
company shall be notified at least two (2) weeks prior to the end of the leave
of the employee’s intent to return.

D. FAMILY MEDICAL LEAVE

In accordance with the provisions of the Family
Medical Leave Act, the Parties agree a request for Family Medical Leave will be
granted when applied for by an employee. 
This Family Medical Leave will be granted without sacrifice of any other
negotiated benefits.  (See MOA referenced
in Appendix D)

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ARTICLE XXI

MISCELLANEOUS

A.           Supervisors will not
perform work normally done by hourly rated employees, nor will the Company
condone such work, except in cases of emergencies or unforeseen circumstances
where failure to act promptly might result in harm or damage to personnel,
plant, or equipment.

B.             When it becomes
necessary to change methods of operation or kinds of products, which may result
in elimination of jobs or combining of jobs, the Company will advise and
negotiate the matter with the Local Union.

C.             With respect to the
subject of contracting out, it is understood production employees will normally
perform production work and maintenance employees will normally perform
maintenance work.  It is understood there
may be times the Company must employ the service of outside contractors.  The Company will notify, meet and discuss the
need, manner and necessity to use such outside services with the Union prior to
letting of the contract.  If the work can
be accomplished by the use of mill forces then bargaining employees will
perform the work.

Excluding from these provisions are new construction
and major replacement of equipment that requires special tools or
equipment.  The use of outside
contractors shall be unionized contractors as long as cost and service levels
are competitive.

D.            Each employee is
expected to respect his supervisors and each supervisor is expected to respect
the employee.  Both parties to this
Agreement realize the importance of getting along in the plant.  Harassment, profanity, or any other act of
disrespect in the plant will not be tolerated.

E.              Items
pertaining to any particular location at the time of development of this Master
Agreement will continue to be handled by the Supplement at each Location.

F.              The Company will
compensate those Union Officers, Stewards, or members, as designated by the
Union at their respective hourly rates for the time lost from work due to
keeping their appointments with Management, or investigating incidents that may
become grievances.

G.             Future medical/dental
plan cost increases and decreases, starting 1/1/07, will be shared 50/50 until
employee contribution reaches 20% of premium, starting with current dollar
contributions.  This change will replace
all current cost sharing language in the Master and Local Supplements.

H.            Attached as Appendix
D, is a listing of Memorandum Of Agreement’s (MOA’s) and Side Letter Agreements
incorporated into this Agreement by reference.

 

 14

 

ARTICLE XXII

COMPANY RULES

Company
rules include those listed in each Local supplement and are included in this
Master Agreement by reference.  Changes
or additions to these rules may be made from time to time and the parties shall
agree on the rules prior to the notification to all employees.  By the publishing of these rules and
notification of changes and additions, it shall be considered that employees
will have complete knowledge of the rules. 
The employees shall abide by the Company’s rules and practices.

ARTICLE
XXIII

NON-COERCION

The Company agrees not to
interfere in any way with the exercise by employees of their legitimate rights
to join and be active in the Union.  The
Union agrees not to intimidate or coerce employees to join the Union.

ARTICLE
XXIV

CONTRAVENTION OF LAW

If any provision or
section of this Agreement is found to be in violation of laws or regulations of
the United States, or the State in which the mill covered by this Agreement is
located, such provisions shall be superseded by the appropriate provisions of
such law or regulations, so long as same is in force and effect.  All other provisions of this Agreement shall
continue in full force and effect.  The
parties will discuss any change to a federal or state law, which may be related
to this Agreement, and if it is found to affect a provision of this Agreement,
the parties shall meet and negotiate the change or changes to the Agreement to
conform to the law.  Should Section 14B
of the National Labor Relations Act be amended or repealed, by either the State
or Federal Government, the Company will notify the bargaining unit members they
have thirty (30) days to become members of the Union.

ARTICLE
XXV

DEDUCTION OF UNION DUES

A.           Subject to the
provisions of State and Federal laws, the Company agrees to make a payroll
deduction of current Union dues of employees who are members of the Union.  This deduction will commence with the next
full bi-weekly pay period following receipt of an authorization signed by the
employee in the following form:

The form shall be the standard form for Union dues
deduction provided by the United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers International
Union (USW).

 15
 

 

B.             It shall be the sole
obligation of the Company to remit the sums deducted to the designated
Financial Officer of the Local Union. 
The Union shall keep the Company harmless against all claims, demands or
other forms of liability that may arise out of the Company’s compliance with
this Article.

C.             The Company agrees
that it will deduct voluntary contributions to the USW Political Action Fund
each pay period from the earnings of those employees who voluntarily authorize
such contributions on forms provided for that purpose by the USW/PAC.  The signing of USW/PAC checkoff forms and the
making of such voluntary contributions are not conditions of membership in the
Union or of employment with the Company. 
The USW/PAC checkoff program shall remain in compliance with any
applicable state or federal statute.

The Company shall remit monthly to the Treasurer of
the USW/PAC, the total amount of voluntary contributions and a list of the
employees who made said voluntary contributions.  The remission of monthly USW/PAC checkoff
will be made to the USW Political Action Fund at Five Gateway Center,
Pittsburgh, PA 15222 within fifteen days following the end of each month.

The Union shall indemnify and save the Company
harmless against any and all claims, demands, suits or other forms of liability
that shall arise out of or by reason of action taken or not taken by the
Company for the purpose of complying with any of the provisions of this
understanding.

ARTICLE
XXVI

SAFETY AND HEALTH COMMITTEE

1. The Company agrees to
provide and maintain a safe and healthy workplace for its employees.  The Company will maintain all reasonable and
necessary precautions for safeguarding the safety and health of employees and
employees are expected to cooperate in the implementation of this safe work
environment.

2. In
addition to “for cause” drug and alcohol testing, “post accident” drug and
alcohol testing will be used by the Company in the event of on the job
injuries.  It is understood that such
testing will be conducted only when an injured employee is treated by a
licensed physician.  This provision
becomes effective 1/1/07.  The method of
administering this provision shall be set forth in each Local supplement of
this Agreement.

ARTICLE XXVII

ATTENDANCE POLICY

The need for all
employees to attend work whenever scheduled is an inherent portion of this work
process.  Therefore, each location shall
establish and maintain an attendance 

 16
 

 

policy that fits the
circumstances at each of their locations. 
Such attendance policy shall be included as part of this Agreement by
reference.

ARTICLE XXVIII

CONTINUOUS WORK

In consideration of the Union’s execution of this Agreement, the
Employer promises its operations covered by this Agreement shall not be sold,
conveyed, or otherwise transferred or assigned to any successor without first
securing the agreement of the successor to assume the Employer’s obligations
under this Agreement.

ARTICLE
XXIX

PROFIT SHARING

A.           The intention of Blue
Ridge Paper Products Inc. is to establish a profit sharing program to bind Blue
Ridge Paper and its Union employees together in a team to improve Company
profits.  Increased profits in one fiscal
year may be used in part to increase wages of its employees in the next fiscal
year.

B.             The Company will pay
to its hourly employees the contracted amount of operating profits before taxes
earned in the fiscal year January 1 to December 31 of any given year.  The total payments due will be divided
equally between employees on an annual basis.

C.             Blue Ridge Paper
Products Inc. will absorb the administrative costs of the plan.

D.            The full contents of
the Profit Sharing plan are attached hereto as Appendix A. It shall describe
this Profit Sharing plan in detail.

ARTICLE XXX

WORK PLACE CULTURE DEVELOPMENT

The parties signatory to
the Labor Agreement between the United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers International
Union (USW) and its affiliated Local Unions and Blue Ridge Paper Products Inc.
(an ESOP Company) at each of its locations do jointly enter into the following
agreement:

There is a mutual
recognition on the part of both the Union and the Company in order to maintain
economic viability, gain a competitive advantage in the marketplace, and
maintain job security, it is necessary for Blue Ridge Paper Products Inc. to
upgrade 

 17
 

 

profitability through
increased efficiency, team effort, mutual cooperation and the elimination of
barriers to improved productivity.

It is agreed between the
parties, as part of Work Place Cultural Development, during the life of the
Agreement the Company and the Union will work together to explore either new or
improved work processes or concepts.  It
is understood that any subsequent changes that may be required in any
provisions of the Agreement are subject to negotiations and agreement between
the parties.

The method of development
of this Work Place Culture shall be determined by each location.  Its necessary and use shall be incorporated
as part of this agreement by reference.

Each Location shall have
a Work Place Culture Steering Committee. 
The provisions set forth in each Local supplement shall determine the
creation and maintenance of this Committee.

ARTICLE
XXXI

ESOP RECOGNITION AND ELECTION

The Bargaining Unit
members recognize with the ratification of this Labor Agreement they are accepting
the Employee Stock Ownership Plan (ESOP) as a part of this Agreement.  The ESOP, along with its supporting documents
is incorporated herein by reference. (See Appendix C)

A.
Board of Directors

1. The Company and the
Union acknowledge that every member of the Company’s Board of Directors (Board,
members of such Board, Directors) has a fiduciary duty to the Company and all
of its stockholders.

2. The Company agrees that the Union shall have the right, subject to
the procedure; the Directors’ discharge of their fiduciary duties; and as
described below, to designate three (3) individuals to serve on the Board.

a. The International President shall provide the Board’s Chairman with
the names and resumes of the individuals whom s/he wishes to have serve on the
Board.

b. Provided that the individuals are acceptable to the Chairman, (it
being understood that in all respects each individual will be dealt with
separately) such acceptance not to be unreasonably withheld, the Chairman shall
promptly recommend such individual(s) to the Board’s Nominating Committee, who
absent compelling reasons to the contrary, shall promptly recommend such
individual(s) to the full Board for election at its next meeting.

c. Once elected, the individual(s) shall be recommended by the Board
for election by the shareholders to serve a regular term at the Company’s next
Annual Meeting of Shareholders.

 18
 

 

3. If after election, the
individual(s) becomes unwilling or unable to serve, or the Union wishes to
replace one or all of them, the International President shall provide the Board’s
Chairman with the name of a new individual(s) whom s/he wishes to have serve on
the Board and the process outlined above shall thereafter be followed.  In such case the individual(s) previously
named by the International President may be removed from or not nominated for
re-election to the Board.

4. At the time that any person is nominated by the Union as provided in
this Section A, said nominee shall acknowledge in whatever fashion such
acknowledgement is given by all of the Company’s other Directors, that such
nominee, if elected to the Board, would have a fiduciary duty to the Company
and its stockholders.

B.            Benefit Pool

There shall be a pool of funds established from unused funds that
result from the contribution from Blue Ridge Paper Products to employee
benefits.  At the conclusion of the Labor
Agreement or the sale of Blue Ridge Paper Products, any funds that remain in
this pool, including any earned interest, shall be distributed to bargaining
unit employees.  This distribution shall
be in some type of monetary compensation.

ARTICLE XXXII

ESOP DISPUTE RESOLUTION

Any ESOP Plan or Board of
Directors disputed issues or fiduciary responsibility issues shall be handled
in the following manner:

1.               The ESOP Plan
Administration Committee shall appoint a Mediator to explore resolution of the
dispute.

2.               Failing to achieve
resolution of the dispute by a Mediator, the complainant and the ESOP shall
mutually agree on an arbitrator to hear the disputed issue.  At the conclusion of the hearing the
arbitrator shall be required to provide the Parties with an immediate
decision.  The arbitrator’s decision
shall be final and binding on all parties.

ARTICLE
XXXIII

ESOP PLAN ADMINISTRATION COMMITTEE

There shall be an ESOP
Plan Administration Committee created and maintained for the ESOP.  This Committee shall have two (2) Union
members nominated and elected to this position. 
These members shall be from the Canton and Waynesville, North Carolina
locations.

There shall as well be an
ESOP Plan Administration Sub-Committee created and maintained for the
ESOP.  This Sub-Committee shall have two
(2) Union members 

 19
 

 

nominated and elected to
this position from each DairyPak location. 
All committee positions shall be for terms of two (2) years.

ARTICLE
XXXIV

ESOP TRUST COMMITTEE

There shall be an ESOP
Trust Committee created and maintained. 
This committee shall have two (2) Union members nominated and elected to
this committee.

There shall be an ESOP
Trust Sub-Committee created and maintained. 
This Sub-Committee shall have two (2) Union members nominated and
elected to this Committee from each DairyPak location.  All committee positions shall be for terms of
two (2) years.

ARTICLE
XXXV

COMMITTEE COMPENSATION

All Board of Director and
Committee positions shall be reimbursed for any hours lost from work at their
regular rate of pay.  The Company shall
pay this reimbursement.

ARTICLE
XXXVI

SEVERANCE PAY

In the event a plant must
sustain a permanent curtailment or shut down, an employee with one (1) or more
year’s plant seniority will be eligible for severance pay.

A laid off employee
entitled to severance pay will be paid one (1) week of pay for each year of
continuous service at his classified rate of pay.

The employee’s continuous
service shall be calculated from his most recent date of hire without further
interruption in service.

If an employee is
recalled after having received all the severance pay due, he or she, will begin
again as of the date of his or her return accumulating a period of time which
will be credited toward any future lay-off.

 20
 

 

This Master Agreement,
including any appendix or exhibits hereto, and the Local Supplemental
Agreements, embodies the entire agreement and understanding of the parties in
all respects.  This Master Agreement and
the Local Supplemental Agreements supersede all prior agreements and
understandings between the parties.

 21
 

 

IN WITNESS WHEREOF, the
parties hereto, have caused their names to be subscribed below by their duly
authorized officers and representatives as of this              
day of                         ,
2006.

	
  United Steelworkers, AFL-CIO/CLC

  	
   

  	
  Blue Ridge Paper Products Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  41 Main Street

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Canton, NC, 28716

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /S/ Darrell E. Douglas

  	
   

  
	
   

  	
   

  	
  Leo G. Gerard

  	
   

  	
   

  	
  Darrell E. Douglas

  	
   

  
	
   

  	
   

  	
  International
  President

  	
   

  	
   

  	
  VP-Human Resources

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  /S/ Terry Huskey

  	
   

  
	
   

  	
   

  	
  James D. English

  	
   

  	
   

  	
  Terry Huskey

  	
   

  
	
   

  	
   

  	
  International
  Secretary-Treasurer

  	
   

  	
   

  	
  VP-Gen. Mgr. Paper Division

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  /S/ Robert M. Shanahan

  	
   

  
	
   

  	
   

  	
  Thomas Conway

  	
   

  	
   

  	
  Robert M. Shanahan

  	
   

  
	
   

  	
   

  	
  International Vice President

  	
   

  	
   

  	
  VP-Mfg., Mill Mgmt.-Canton, NC

  	
   

  
	
   

  	
   

  	
  Administration

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  /S/ David M. Lewallen

  	
   

  
	
   

  	
   

  	
  Fred Redmond

  	
   

  	
   

  	
  David M. Lewallen

  	
   

  
	
   

  	
   

  	
  International Vice President

  	
   

  	
   

  	
  VP-Operations, DairyPak

  	
   

  
	
   

  	
   

  	
  Human Affairs

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  /S/ Alan W. Denney

  	
   

  
	
   

  	
   

  	
  C.L. “Connie” Entrekin

  	
   

  	
   

  	
  Alan W. Denney

  	
   

  
	
   

  	
   

  	
  Director, District 9

  	
   

  	
   

  	
  VP & Gen. Mgr. Extrusion— 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Waynesville

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Stan Johnson

  	
   

  	
   

  	
  /S/ James E. Froehlich

  	
   

  
	
   

  	
   

  	
  Assistant to the Director, District 9

  	
   

  	
   

  	
  James E. Froehlich

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Director Human Resources-Canton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Local
  Union Negotiating Committee:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /S/ Chuck Grotsky

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Chuck Grotsky

  	
   

  
	
   

  	
   

  	
  /S/ Howard
  Taylor

  	
   

  	
   

  	
   

  	
  Manager HROD-Olmsted Falls, OH

  	
   

  
	
   

  	
   

  	
  President Local
  No. 507

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /S/ Larry Foster

  	
   

  
	
   

  	
   

  	
  /S/ Robert Riggs

  	
   

  	
   

  	
   

  	
  Larry Foster

  	
   

  
	
   

  	
   

  	
  President Local
  No. 673

  	
   

  	
   

  	
  Plant Manager-Clinton, IA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /S/ Mark Howard

  	
   

  	
   

  	
   

  	
  /S/ Jeff Hykin

  	
   

  
	
   

  	
   

  	
  President Local
  No. 761

  	
   

  	
   

  	
  Jeff Hykin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Plant Manager-Olmsted Falls, OH

  	
   

  
	
   

  	
   

  	
  /S/ Pat Kitchens

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  President Local
  No. 794

  	
   

  	
   

  	
  /S/ Victor G. Orr

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Victor G. Orr

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Plant Manager-Athens, GA

  	
   

  

 

 22

 

Appendix
A

AGREEMENT ON
PROFIT SHARING

On this 14th day of May 1999, Blue Ridge Paper Products
Inc. hereinafter referred to as the Company, and the USW and its Locals, hereby
agree to the establishment of this Profit Sharing Plan for the purpose of
providing profit sharing contributions by the Company to eligible employees:

1.              Eligibility

Eligible employees are all active employees of Blue
Ridge Paper Products Inc., including those who retire, die, go on military,
pregnancy, union or sick leave, or are laid off during a Plan Year, who have
completed the probationary period (as set forth under the Collective Bargaining
Agreement between the parties) as of the last day of such Plan Year, and have
completed 1,000 or more hours.  Plan
Years end on December 31.

2.              Contribution Formula

The total Profit Sharing Contribution each Plan Year
shall be an amount equal to 10% of Profit, as defined in Section 3.

3.              Definition of Profit

Profit means the Company’s reported profit, before
income taxes, and before deductions.

4.              Allocation of
Benefits

The total Profit Sharing Contribution shall be divided
equally among eligible employees, as determined under the Eligibility
clause.  Eligible employees or their
beneficiaries who retire, die, go on military, pregnancy, union or sick leave,
or are laid off during a Plan Year will receive their applicable profit sharing
check for the Plan Year the event occurs.

5.              Distribution of
Benefits

The Company shall pay all Profit Sharing Benefits by
separate check within 90 days following the close of the Plan Year.

6.              Audits and Reports

Future changes in the Company’s accounting procedures
should not significantly affect payments under this Plan.  The parties shall meet prior to the
determination of the annual Profit Sharing Contribution to discuss the
adjustments, if any, needed to offset such changes.

 23
 

 

All computations and adjustments required under this
Plan shall be reviewed by an Auditor, who shall be from an independent
Certified Public Accounting firm that is mutually acceptable to the Company and
the Union.  As soon as practicable after
the close of each Plan Year, the Auditor shall provide the Union with a report
on the operation of the Plan.  Such
report shall include information on the adjustments, if any, that are necessary
to determine Profits in Section 3, and other relevant information reflecting
Plan experience.  In addition, the
Company shall respond as soon as practicable to requests from the Union for
information supporting the Profit Sharing Contribution calculations.  The Union shall have access to all financial
records for the purpose of verifying the profit sharing calculations.

If the Union should question a conclusion or decision
of the Auditor, the Auditor shall review its methods and procedures with the
Union and will take into account any new information, which may be developed by
such review.

7.              Other Understandings

A.           In the event an
otherwise eligible employee dies during a Plan Year, his/her Profit Sharing
Benefit shall be paid to the person designated as his/her Beneficiary under the
Company’s group life insurance plan.

B.             The parties agree to
refer any disagreement over the interpretation of the terms of this Agreement
to a mutually acceptable impartial person or persons for resolution.

8.              Effective Dates and
Duration

The Plan will become effective May 14, 1999.  This Agreement and the Plan will continue in
effect until May 13, 2006, and will continue from Plan Year to Plan Year
thereafter unless either party, upon written notice to the other, requests a
modification, change or termination of the Agreement at the end of such yearly
period; provided further, the party requesting such modifications shall, at
least sixty (60) days prior to December 31st, or prior to the completion of any such
subsequent yearly period, as the case may be, serve notice in writing upon the
other party setting forth such changes or modifications so desired, together
with a request that a meeting be held to discuss such proposals, and both
parties shall thereupon arrange such meetings as may be required for the
purpose of negotiating on such proposals.

 24
 

 

Appendix B

HOURLY RELOCATION
GUIDELINES

At the time a Blue Ridge
manufacturing location makes a decision to fill an hourly job position(s) from
outside the facility (new hire), the following guidelines will apply per
Article VIII (Seniority), Section I (Transfers), of the new master Labor
Agreement.  Note:  These guidelines are effective for all
current Blue Ridge Paper Products Inc. manufacturing facilities.

1.               When a vacancy
occurs, prior to hiring a new employee, incumbent Blue Ridge employees shall be
given an opportunity for transfers between locations.  It will be the responsibility of the location
Human Resources representatives to notify other Blue Ridge manufacturing
facilities of vacancies utilizing the attached form (A).  This form will be transmitted after all
internal bidding procedures have been utilized at a facility and a decision has
been made to fill the vacancy externally.

2.               “Incumbent Blue
Ridge employees,” as used above, includes current active employees as well as
laid off employees so long as they continue to maintain recall rights under the
terms of their location labor agreement.

3.               Although current
Blue Ridge incumbent employees shall be considered prior to hiring from the
outside, interested employees are still subject to the selection criteria
(i.e., interview, testing, drug screening, etc.) in effect at the receiving
location.  Whenever possible the
selection process will be coordinated with the interested employee’s current
location to minimize travel (i.e., telephone interview, local testing and/or
drug screening, etc.).  It must also be
understood that the receiving location controls the timing of their vacancies
and to be considered the employee must be able and willing to make themselves
available based upon the time constraints of the receiving location.

4.               If an incumbent
employee satisfies the hiring criteria and accepts an offer of employment at
another Blue Ridge facility, they will establish a new plant seniority date
consistent with the date they report for work at their new location.  Transferring employees will not be subject to
the new hire probationary period at the receiving location.

5.               Transferring
employees shall only retain their prior location seniority for earned vacation
and pension.  Their selection of specific
vacation weeks will be in accordance with their new seniority and vacation
scheduling procedures at their new location.

 25
 

 

6.               Any existing
waiting periods for employee benefits will be waived for a transferring
employee and the employee will be immediately eligible for those benefits in
effect at the new location.

7.               A transferring
employee will maintain membership in the international union and will be a
member of the local union on the date of transfer.

 26
 

 

Appendix C

EMPLOYEE STOCK
OWNERSHIP PLAN

Refer to Blue Ridge Paper
Products Inc. Employee Stock Ownership Plan incorporated herein by
reference. Copies of the Plan are available from

The Blue Ridge ESOP

41 Main St.

Canton, NC 28716

Attn:  ESOP Coordinator

 27
 

 

Appendix D

Listing of Side Letter
Agreements and MOA’s incorporated in the Master Agreement by reference.

1. MOA regarding Health
Care Program for 2003 and future years, dated November 2. 2002.

2. MOA regarding “Clarification
of Article XX “Leave of Absence, Section D., “Family Medical Leave”, effective
April, 28, 2004.

3. MOA interpreting
Article V of the Master Labor Agreement, dated January 20, 2005.

4. Side Letter Agreement
dated July 10, 2006 regarding a potential future Acquisition of or by Blue
Ridge Paper Products Inc.

5. Side Letter Agreement
dated July 10, 2006 regarding the “Right to Terminate” the Labor Agreement by
the Union upon the occurrence of certain circumstances.

 

 28Exhibit
10.1

SECOND
AMENDED AND RESTATED

EXCO
RESOURCES, INC.

SEVERANCE
PLAN

(EFFECTIVE
AS OF NOVEMBER 8, 2006)

 

 

TABLE OF
CONTENTS

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ONE  PURPOSE OF PLAN

  	
  1

  
	
  TWO  PRIOR SEVERANCE ARRANGEMENTS

  	
  1

  
	
  THREE  DEFINITIONS

  	
  1

  
	
  FOUR  ELIGIBILITY AND SEVERANCE PAY
  BENEFITS

  	
  5

  
	
  4.1

  	
  Eligibility

  	
  5

  
	
  4.2

  	
  Release Form

  	
  5

  
	
  4.3

  	
  Termination of Eligibility for Severance Pay

  	
  5

  
	
  4.4

  	
  Severance Pay

  	
  5

  
	
  FIVE  FUNDING

  	
  6

  
	
  SIX  CLAIMS PROCEDURE

  	
  6

  
	
  6.1

  	
  Filing and Initial Determination of Claim

  	
  6

  
	
  6.2

  	
  Duty of Plan Administrator Upon Denial of Claim

  	
  6

  
	
  6.3

  	
  Request for Review of Claim Denial

  	
  6

  
	
  6.4

  	
  Decision on Review of Denial

  	
  7

  
	
  SEVEN  ADMINISTRATION OF THE PLAN

  	
  7

  
	
  7.1

  	
  Plan Administrator

  	
  7

  
	
  7.2

  	
  Responsibilities

  	
  7

  
	
  7.3

  	
  Allocation and Delegation of Plan Administrator
  Responsibilities

  	
  7

  
	
  7.4

  	
  Actions of Fiduciaries

  	
  8

  
	
  7.5

  	
  General Administrative Powers

  	
  8

  
	
  7.6

  	
  Appointment of Professional Assistance

  	
  9

  
	
  7.7

  	
  Discretionary Acts

  	
  9

  
	
  7.8

  	
  Responsibility of Fiduciaries

  	
  9

  
	
  7.9

  	
  Indemnity by Employer

  	
  9

  
	
  EIGHT  ADOPTION OF PLAN BY SUBSIDIARY

  	
  9

  
	
  NINE  AMENDMENT OF THE PLAN

  	
  10

  
	
  TEN  TERMINATION OF THE PLAN

  	
  10

  
	
  ELEVEN  VESTING

  	
  10

  
	
  TWELVE  STATUS OF EMPLOYMENT RELATIONS

  	
  10

  
	
  THIRTEEN  RESTRICTIONS ON ASSIGNMENT

  	
  11

  
	
  FOURTEEN  APPLICABLE LAW

  	
  11

  
	
  FIFTEEN  INTERPRETATION OF THE PLAN

  	
  11

  

 

 i

 

SECOND AMENDED AND RESTATED

EXCO RESOURCES, INC.

SEVERANCE PLAN

EXCO RESOURCES, INC. (the “Company”) is amending and
restating its severance plan, originally adopted on August 15, 2002 and amended
and restated as of August 17, 2004, and further amended and restated as of
November 8, 2006 (the “Effective Date”), in accordance with the terms and
conditions contained herein.  The amended
and restated severance plan adopted on August 17, 2004, is replaced in its
entirety with this Second Amended and Restated EXCO Resources, Inc. Severance
Plan (the “Plan”) and no provision of the August 17, 2004, plan shall
survive.

SECTION ONE

PURPOSE OF PLAN

The purpose of the Plan is to provide financial
support to Eligible Employees who incur a Termination of Employment due to a
Change of Control.

SECTION TWO

PRIOR SEVERANCE ARRANGEMENTS

As of the Effective Date, the Plan replaces any and
all severance pay obligations, plans, policies, practices, arrangements or
programs, written or unwritten, under which the Eligible Employees may
otherwise be eligible for severance benefit payments.  Notwithstanding the foregoing provisions of
this Section Two, nothing in this Plan shall adversely affect the rights an
individual Eligible Employee may have to severance payments under any written
agreement executed by and between the Employer and that Eligible Employee (a “Severance
Agreement”); provided, however, that in the event any Eligible Employee that is
a party to a Severance Agreement suffers a Termination of Employment and is
entitled to and is receiving the severance benefits intended to be provided
under his or her Severance Agreement, such Eligible Employee shall not be
entitled to receive severance benefits pursuant to this Plan.

SECTION THREE

DEFINITIONS

As used in the Plan:

3.1           “Base
Pay” shall mean the Eligible Employee’s gross annual salary or wages before any
deductions, exclusions or any deferrals or contributions under any Company plan
or program, but excluding overtime, bonuses, incentive compensation, shift and
lead premium payments, employee benefits or any other form of compensation,
being received by an Eligible Employee immediately prior to employment
termination.  The Base Pay for an
Eligible Employee paid on an hourly basis shall be the individual’s hourly pay
rate in effect immediately prior to the sale multiplied by 40 hours per week
and multiplied by 52 weeks.

 

3.2           “Cause”
shall mean (i) the willful breach or habitual neglect of assigned duties
related to the Company, including compliance with Company policies; (ii) conviction
(including any plea of nolo contendere) of the Eligible Employee of any felony
or crime involving dishonesty or moral turpitude; (iii) any act of personal
dishonesty knowingly taken by the Eligible Employee in connection with his
responsibilities as an employee and intended to result in personal enrichment
of the Eligible Employee or any other person; (iv) bad faith conduct that is
materially detrimental to the Company; (v) inability of the Eligible Employee
to perform the Employee’s duties due to alcohol or illegal drug use; (vi) the
Eligible Employee’s failure to comply with any legal written directive of the
Board of Directors of the Company; (vii) any act or omission of the Eligible
Employee which is of substantial detriment to the Company because of the
Eligible Employee’s intentional failure to comply with any statute, rule or
regulation, except any act or omission believed by the Eligible Employee in
good faith to have been in or not opposed to the best interest of the Company
(without intent of the Eligible Employee to gain, directly or indirectly, a
profit to which the Eligible Employee was not legally entitled) and except that
Cause shall not mean bad judgment or negligence other than habitual neglect of
duty; or (viii) any other act or failure to act or other conduct which is
determined by the Plan Administrator, in its sole discretion, to be
demonstrably and materially injurious to the Employer, monetarily or otherwise.

3.3           “Change
of Control” shall mean

(i)            the Company is merged or consolidated into or
with another entity, and as a result of such merger or consolidation less than
a majority of the combined voting power of the then-outstanding securities of
such entity immediately after such transaction is held by the holders of Voting
Stock of the Company immediately prior to such transaction;

(ii)           the Company sells or otherwise transfers all or substantially all of
its assets to any person or entity, and less than a majority of the combined
voting power of the then-outstanding
securities of such person or entity immediately after such sale or transfer is
held by the holders of Voting Stock of the Company immediately prior to such
sale or transfer; or

(iii)          any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that for purposes of this clause (iii)
such person shall be deemed to have “beneficial ownership” of all shares that
any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, directly or indirectly, of more
than 50% of the total voting power of the Voting Stock of the Company; or

(iv)          individuals who on the Effective Date constituted the Board of
Directors of the Company (together with any new directors whose election by
such Board of Directors of the Company or whose nomination for election by the
shareholders of the Company was approved by a vote of 66-2/3% of the directors
of the Company then still in office who were either directors on the Effective
Date or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of the
Company then in office; or

(v)           the adoption of a plan relating to the liquidation or dissolution of
the Company.

Provided, however, that in
the event any subsidiary of the Company is spun off by means of a rights
offering to the Company’s shareholders or an underwritten public offering, or
any

 2
 

 

combination thereof, even
where less than a majority of the voting equity ownership is retained by the
Company, shall not in any event constitute a Change of Control.

3.4           “Company”
shall mean EXCO Resources, Inc.

3.5           “Comparable
Offer of Employment” shall mean:

(i)            that the proposed compensation and benefits,
in the aggregate, to be paid by the Company or any successor to the Company by
merger or acquisition of all or substantially all of the Company’s assets,
offering employment are commensurate with the compensation and benefits
previously paid by the Company, in the aggregate, to such Eligible Employee;

(ii)           the Eligible Employee incurs no demotion in his or her position with
the Employer from the position the Eligible Employee held immediately prior to
the effective date of the Change of Control;

(iii)          the Eligible Employee incurs no significant adverse change in the
nature or scope of the authorities, powers, functions, responsibilities or
duties attached to the position or positions with the Employer which the
Eligible Employee held immediately prior to the effective date of the Change of
Control, without the prior written consent of the Eligible Employee, which is
not remedied within ten (10) calendar days after receipt by the Employer of
written notice from the Eligible Employee of such change; and

(iv)          the Eligible Employee’s principal place of work has not changed to any
location that is more than thirty-five (35) miles from his or her principal
place of work immediately prior to the effective date of the Change of Control,
without the prior written consent of the Eligible Employee.

3.6           “Eligible
Employee” shall mean any employee employed by the Company or any subsidiary of
the Company as a regular, full-time employee on the effective date of a Change
of Control and who incurs a Termination of Employment due to a Change of
Control either on the date of the Change of Control or within the six-month
period immediately following the effective date of the Change of Control and
such Termination of Employment was not for Cause.

3.7           “Employer”
shall mean the Company and any direct or indirect United States subsidiary of
the Company which adopts the Plan, and any successor to either the Company or
any direct or indirect United States subsidiary of the Company which adopted
this Plan.

3.8           “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time.  References to any Section
of ERISA shall include any successor provision thereto.

3.9           “Exchange
Act” shall mean the Federal Securities Exchange Act of 1934, as amended from
time to time.

3.10         “Good
Reason” shall mean any of the following events that occur either on the
effective date of a Change of Control or within the six-month period
immediately following the effective date of a Change of Control:

 3
 

 

(i)            the Eligible Employee incurs a demotion in
his or her position with the Employer from the position the Eligible Employee
held immediately prior to the effective date of the Change of Control;

(ii)           the Eligible Employee incurs a reduction in his or her Base Pay from
his or her Base Pay immediately prior to the effective date of a Change of
Control;

(iii)          the Eligible Employee incurs a significant adverse change in the nature
or scope of the authorities, powers, functions, responsibilities or duties
attached to the position or positions with the Employer which the Eligible
Employee held immediately prior to the effective date of the Change of Control,
without the prior written consent of the Eligible Employee, which is not remedied
within ten (10) calendar days after receipt by the Employer of written notice
from the Eligible Employee of such change; or

(iv)          the Eligible Employee’s principal place of work changed to any location
that is more than thirty-five (35) miles from his or her principal place of
work immediately prior to the effective date of the Change of Control, without
the prior written consent of the Eligible Employee.

3.11         “Internal
Revenue Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time.  References to any Section
of the Internal Revenue Code shall include any successor provision thereto.

3.12         “Plan”
shall mean the Second Amended and Restated EXCO Resources, Inc. Severance Plan
as set forth in this document, and as hereafter amended.

3.13         “Plan
Administrator” shall mean the person, persons or entity administering the Plan
in accordance with the provisions of Section Seven hereof.  The Plan Administrator shall be the “named
fiduciary,” as referred to in Section 402(a) of ERISA, with respect to the
management, operation and administration of the Plan.

3.14         “Plan
Year” shall mean an initial period starting on the Effective Date and ending on
December 31, 2006, and thereafter the twelve (12)-month period ending on
each December 31.

3.15         “Release
Form” shall mean a release agreement which is to be signed by the Eligible
Employee releasing any and all claims against the Employer and which is in such
form as approved by the Company.

3.16         “Severance
Pay” shall mean an amount equal to an Eligible Employee’s Base Pay.

3.17          “Termination
of Employment” shall mean a termination of employment from the Employer which
results from an affirmative discharge from employment by the Employer, other
than discharge for Cause.  An Eligible
Employee who voluntarily terminates employment for Good Reason shall be deemed
to have incurred a Termination of Employment. 
An Eligible Employee shall not be deemed to have incurred a Termination
of Employment by reason of the transfer of the Eligible Employee’s employment
between the Company and any subsidiary or among subsidiaries (or among any
department or business unit of the Company). 
The Plan Administrator shall determine, in its sole discretion, whether
an Eligible Employee’s termination of employment from the Employer constitutes
a “Termination of Employment.”

 4
 

 

3.18         “Voting
Stock” shall mean shares of the Company’s Common Stock, par value $0.001 per
share, and any other securities of the Company entitled to vote for the
election of directors.

3.19         Wherever
appropriate, words used in the Plan in the singular may mean the plural, the
plural may mean the singular, and the masculine may mean the feminine.

SECTION FOUR

ELIGIBILITY AND SEVERANCE PAY BENEFITS

4.1           Eligibility.  Subject to Sections 4.3 and
4.4 of this Plan, any Eligible Employee is eligible for Severance Pay following
his or her Termination of Employment if such Termination of Employment occurs
either on the effective date of a Change of Control or within the six-month
period immediately following the effective date of a Change of Control,
provided that such Eligible Employee executes a Release Form pursuant to
Section 4.2 of this Plan.

4.2           Release Form.  An
Eligible Employee otherwise eligible for Severance Pay under this Plan shall be
paid such Severance Pay only if the Eligible Employee executes and files the
appropriate fully completed and executed Release Form (substantially in the
form of Exhibit A-1 or Exhibit A-2, as the case may be, attached hereto) with
the Plan Administrator, in accordance with the instructions and on or before
the date specified on the Release Form or any document accompanying the Release
Form, and in the case of an Eligible Employee age 40 or over, does not revoke
the Release Form within seven (7) days of executing the Release Form.

4.3           Termination of Eligibility for Severance Pay.  An
Eligible Employee will cease to be eligible to receive Severance Pay, under
this Plan upon the earlier of the following:

(a)                                  the Eligible Employee’s death, unless it
occurs after the date the Release Form is executed;

(b)                                 the Eligible Employee’s discharge for Cause
or misconduct;

(c)                                  the Eligible Employee’s failure to execute
and file the Release Form by the date specified on the Form;

(d)                                 the Eligible Employee’s receipt of a
Comparable Offer of Employment from any other operation of the Company or any
of its affiliate organizations, regardless of whether such Eligible Employee
accepts such offer; or

(e)                                  the Eligible Employee’s receipt and
acceptance of a transfer of employment to any other operation of the Company or
any of its affiliate organizations.

4.4           Severance Pay. The Severance Pay to which an Eligible
Employee is entitled shall be paid to such Employee after the effective date of
a Change in Control in cash in a lump sum within fourteen (14) days following
receipt by the Company of an executed Release Form or, where applicable,
following the expiration of the revocation period provided for on the Release
Form.  Any Severance Pay shall be offset
by any other severance pay or other income replacement, or any pay or wages in
lieu of notice of a plant closing, or any pay or wages paid following issuance
of a notice of a plant closing, including without limitation any mandated
severance pay benefits required under any applicable law.

 5
 

 

If an Eligible Employee dies following execution of
the Release Form, but before receiving all or part of the Severance Pay to
which he is entitled, the Plan Administrator shall pay such Eligible Employee’s
Severance Pay to the Eligible Employee’s estate.

SECTION FIVE

FUNDING

Funding for this Plan shall come solely from the
general assets of the Employer.  All
payments of Severance Pay shall be paid from the general assets of the
Employer.  Neither the Employer nor the
Plan Administrator shall have any obligation to establish a trust or fund for
the payment of benefits under the Plan or to insure any of the benefits under
the Plan.  None of the officers, members
of the Board of Directors, or agents of the Employer or the Plan Administrator guarantees
in any manner the payment of benefits hereunder.

SECTION SIX

CLAIMS PROCEDURE

6.1           Filing and Initial Determination of Claim.  An
Eligible Employee or his/her duly authorized representative may file a claim
for a benefit to which the claimant believes that he or she is entitled.  Such a claim must be in writing and delivered
to the Plan Administrator by postage prepaid certified mail.  Within fifteen (15) days after receipt of a
claim, the Plan Administrator shall send to the claimant by certified mail,
postage prepaid, notice of the granting or denying, in whole or in part, of
such claim, unless special circumstances require an extension of time for
processing the claim.  In no event may
the extension exceed fifteen (15) days from the end of the initial period.  If such extension is necessary, the claimant
will be given a written notice to this effect prior to the expiration of the
initial 15-day period.  The extension
notice shall indicate the special circumstances requiring an extension of time
and the date by which the Plan expects to render the benefit
determination.  The Plan Administrator
shall have full discretion to deny or grant a claim in whole or in part.  If notice of the denial of a claim is not furnished
in accordance with this Section 6.1, the claim shall be deemed denied and the
claimant shall be permitted to exercise his/or right to review pursuant to
Section 6.3.

6.2           Duty of Plan Administrator Upon Denial of
Claim.  If a claim for benefits is denied, the Plan
Administrator shall provide to the claimant written notice setting forth in a
manner calculated to be understood by the claimant: (i) the specific reason or
reasons for the denial; (ii) specific reference to pertinent Plan provisions on
which the denial is based; (iii) a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material is necessary; and (iv) a description of the Plan’s claims
review procedure and the time limits applicable to such procedures, including a
statement of the claimant’s right to bring a civil action under Section 502(a)
of ERISA following a denial of the claim on review.

6.3           Request for Review of Claim Denial.  If
an Eligible Employee receives written notification of the denial in whole or in
part of his/her claim pursuant to Section 6.1, or if an employee is not
included in Schedule A and is therefore not eligible for benefits under
this Plan, within sixty (60) days of the Eligible Employee’s receipt of claim
denial or the date the employee becomes aware that he is not eligible for
benefits under this Plan, if the claimant disagrees with such action, the
claimant or his/her

 6
 

 

authorized
representative shall file a written request with the Plan Administrator that it
conduct a full and fair review of the denial of the claim for benefits.  In connection with any request for a review
of the denial of a claim for benefits, the claimant shall have the opportunity
to submit written comments, documents, records, and other information relating
to the claim for benefits.  The Plan
Administrator shall provide the claimant, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits.  A document, record, or other information
shall be considered “relevant” to a claim for benefits if that document, record
or other information: (i) was relied upon in making the benefit determination;
(ii) was submitted, considered, or generated in the course of making the
benefit determination, without regard to whether such document, record or other
information was relied upon in making the benefit determination; or (iii)
demonstrates compliance with the administrative process and safeguards required
by ERISA in making the benefit determination. 
The review of a denial shall take into account all comments, documents,
records, and other information submitted by the claimant, without regard to
whether such information was submitted or considered in the initial benefit
determination.

6.4           Decision on Review of Denial.  Upon
receipt of the request for review, the Plan Administrator shall review the
claim and shall deliver to the claimant a written decision on the claim for
benefits within sixty (60) days after the receipt of the aforesaid request for
review, except that if there are special circumstances (such as the need to
hold a hearing, if necessary) that require an extension of time for processing,
the aforesaid sixty (60) day period shall be extended to one hundred twenty
(120) days and the claimant will be given written notice of the extension prior
to the expiration of the initial 60-day period. 
In no event shall such extension exceed a period of sixty (60) days from
the end of the initial 60-day period. 
The extension notice shall indicate the special circumstances requiring
an extension of time and the date by which the Plan expects to render the
determination on review.

The Plan Administrator’s decision shall be written in a manner
calculated to be understood by the claimant. 
Any notice of a denial on review shall include (i) the specific reason
or reasons for the denial on review; (ii) reference to the specific plan
provisions on which the denial is based; (iii) a statement that the claimant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of all documents, records, and other information relevant to the
claimant’s claim for benefits; and (iv) a statement of the claimant’s right to
bring an action under Section 502(a) of ERISA. 
If notice of the decision on the review is not furnished in accordance
with this Section 6.4, the claim shall be deemed denied and the Plan
Administrator will have no further duty to review such claim.

SECTION SEVEN

ADMINISTRATION OF THE PLAN

7.1           Plan Administrator.  The
Plan Administrator hereunder shall be the Compensation Committee as appointed
from time to time by the Board of Directors of the Company.

7.2           Responsibilities.  The
Plan Administrator shall be the “administrator” (as defined in Section 3(16)(A)
of ERISA) of the Plan, and shall be responsible for all obligations under the
Internal Revenue Code and ERISA and all other obligations required or permitted
to be performed by the Plan Administrator and not otherwise delegated pursuant
to the Plan.  The Plan Administrator
shall be the designated agent for service of legal process.

7.3           Allocation and Delegation of Plan
Administrator Responsibilities.  The Plan Administrator may appoint such
assistants or representatives as it deems necessary for the effective

 7
 

 

exercise
of its duties in administering the Plan and may delegate to such assistants and
representatives any powers and duties, both ministerial and discretionary, as
it deems expedient or appropriate.  The
Plan Administrator also may designate any person, firm or corporation to carry
out any of the other responsibilities of the Plan Administrator under the
Plan.  Any such allocation or designation
shall be made pursuant to a written instrument executed by the Plan
Administrator.

7.4           Actions of Fiduciaries.  The
Plan Administrator may authorize or approve any action by written instrument
signed by a person duly authorized to act on behalf of the Plan
Administrator.  Any written memorandum
signed by any such duly authorized person or by any other person duly
authorized by the Plan Administrator to act in respect of the subject matter of
the memorandum, shall have the same force and effect as a formal resolution
adopted by the Plan Administrator.

All acts and determinations with respect to the administration of the
Plan made by the Plan Administrator and any assistants or representatives
appointed by it shall be duly recorded by the Plan Administrator or by the
assistant or representative appointed by it to keep such records.  All records, together with such other
documents as may be necessary for the administration of the Plan, shall be
preserved in the custody of the Plan Administrator or the assistants or
representatives appointed by it.

7.5           General Administrative Powers. 
Except as otherwise provided herein, the Plan Administrator is
authorized to take such actions as may be necessary to carry out the provisions
and purposes of the Plan and shall have the authority to control and manage the
operation and administration of the Plan. 
In order to effectuate the purposes of the Plan, the Plan Administrator
shall have the discretionary authority and power to construe and interpret the
Plan, to supply any omissions therein, to reconcile and correct any errors or
inconsistencies, to decide any questions in the administration and application
of the Plan, and to make equitable adjustments for any mistakes or errors made
in the administration of the Plan.  All
such actions or determinations made in good faith by the Plan Administrator,
and the application of rules and regulations to a particular case or issue by
the Plan Administrator shall, subject to the claims procedures set forth in
Section Six hereof, not be subject to review by anyone, but shall be final,
binding and conclusive on all persons ever interested hereunder.  In construing the Plan and in exercising its
power under provisions requiring the Plan Administrator’s approval, the Plan
Administrator shall attempt to ascertain the purpose of the provisions in
question and when such purpose is known or reasonably ascertainable, such purpose
shall be given effect to the extent feasible. 
In the discharge of this discretionary authority the Plan Administrator
shall have all necessary powers and duties, including but not limited to the
following:

(a)           to require any person to furnish such information as is reasonably
necessary or appropriate for administration of the Plan as a condition to
receiving benefits under the Plan;

(b)           to make such rules and regulations and prescribe the use of such forms
as he shall deem necessary for the efficient administration of the Plan;

(c)           to establish or cause to be established such procedures, protocols and
guidelines as he shall deem necessary to interpret the terms and conditions of
the Plan;

(d)           to decide on questions concerning Plan eligibility, Years of Employment
and employment termination in accordance with the terms of the Plan;

(e)           to determine the amount of benefits payable to an Eligible Employee, in
accordance with the Plan, and to provide a full and fair review to any Eligible
Employee whose claim for benefits has been denied in whole or in part; and

 8
 

 

(f)            to designate other persons to carry out any
duty or power which would otherwise be a fiduciary responsibility of the Plan
Administrator, under the terms of the Plan.

7.6           Appointment of Professional Assistance.  The
Plan Administrator may engage accountants, attorneys and such other personnel
as it deems necessary or advisable.  The
functions of any such persons engaged by the Plan Administrator shall be
limited to the specific services and duties for which they are engaged, and
such persons shall have no other duties, obligations or responsibilities under
the Plan.  Unless otherwise specifically
so delegated, such persons shall exercise no discretionary authority or
discretionary control respecting the management of the Plan.

7.7           Discretionary Acts.  Any
discretionary actions of the Plan Administrator with respect to the
administration of the Plan shall be made in a manner which does not
discriminate in favor of stockholders, officers and highly compensated
employees.

7.8           Responsibility of Fiduciaries.  The
Plan Administrator and its assistants and representatives shall be free from
all liability for their acts and conduct in the administration of the Plan
except for acts of gross negligence, fraud or willful misconduct; provided,
however, that the foregoing shall not relieve any of them from any
responsibility or liability for any responsibility, obligation or duty that
they may have pursuant to ERISA.

7.9           Indemnity by Employer.  In
the event and to the extent not insured against by any insurance company
pursuant to provisions of any applicable insurance policy, the Employer shall
indemnify and hold harmless the Plan Administrator and its assistants and
representatives from any and all claims, demands, suits or proceedings in
connection with the Plan that may be brought by the Employer’s employees or
their legal representatives, or by any other person, corporation, entity,
government or agency thereof, including any amounts paid in settlement, with
the approval of the Plan Administrator, and any and all other losses, damages,
interest, expenses, including counsel fees approved by the Plan Administrator,
and penalties, including any penalties imposed by the Secretary of Labor
pursuant to Section 502(l) of ERISA relating to any breaches of fiduciary
responsibility under Part 4 of Title I of ERISA, arising from any
action or failure to act, except where the same is judicially determined to be
due to gross negligence, fraud, or willful misconduct of such individual in
connection with the Plan.  The
indemnification contained in this Section shall apply regardless of whether the
event causing the liability arises in whole or in part from the negligence
(other than judicially determined gross negligence) or other fault on the part
of the individual, specifically including breaches of fiduciary responsibility
under ERISA.

SECTION EIGHT

ADOPTION OF PLAN BY SUBSIDIARY

Any subsidiary of the Company, whether or not
presently existing, may, with the approval of the Plan Administrator, adopt
this Plan.  Any such subsidiary that
adopts the Plan is thereafter an Employer with respect to its employees for
purposes of the Plan.

 9
 

 

SECTION NINE

AMENDMENT OF THE PLAN

The Plan Administrator may amend the Plan at any
time and in any manner with respect to all of the Employees. Any amendment to
this Plan shall be effectuated by a written instrument signed by the Plan
Administrator and shall be incorporated into the Plan document.  Any amendment or restatement may be made
retroactive if, in the judgment of the Plan Administrator, such retroactivity
is necessary or advisable for any reason. 
Notwithstanding the above, this Plan may not be terminated or amended
within six months following a Change in Control.

SECTION TEN

TERMINATION OF THE PLAN

Continuance of the Plan is not assumed as a
contractual obligation of the Employer, and the Plan Administrator reserves the
right to terminate the Plan at any time. Notwithstanding the above, this Plan
may not be terminated or amended within six months following a Change in
Control.  Such termination may occur
without consent being obtained from the Plan Administrator, Eligible Employees
or any other interested person.  The Plan
shall automatically terminate upon dissolution of the Company, unless provision
is specifically made by its successors, if any, for the continuation of the
Plan.  If not sooner terminated, this
Plan shall terminate when all liabilities provided for hereunder have been
fully discharged.

SECTION ELEVEN

VESTING

No Eligible Employee shall have a vested right to
any benefit under this Plan prior to the time a determination is made by the
Plan Administrator that the particular Eligible Employee is entitled to receive
benefits under the Plan.  At any time
prior to such determination the Plan may be amended or terminated with respect
to any benefits to which such Eligible Employee would otherwise have been
entitled.

SECTION TWELVE

STATUS OF EMPLOYMENT RELATIONS

The adoption and maintenance of the Plan shall not
be deemed to constitute a contract between any Employer and its employees or to
be consideration for, or an inducement or condition of, the employment of any
person.  Nothing herein contained shall
be deemed (i) to give to any employee the right to be retained in the employ of
the Employer; (ii) to affect the right of the Employer to discipline or
discharge any employee at any time; (iii) to give the Employer the right to
require any employee to remain in its employ; or (iv) to affect any employee’s
right to terminate his employment at any time.

 10
 

 

SECTION THIRTEEN

RESTRICTIONS ON ASSIGNMENT

The benefits provided hereunder are not subject in
any manner to the debts or other obligations of the persons to whom they are
payable.  The interest of an Eligible
Employee may not be sold, transferred, assigned or encumbered in any manner,
either voluntarily or involuntarily, and any attempt so to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be
null and void.

SECTION FOURTEEN

APPLICABLE LAW

To the extent not preempted by ERISA, the Plan shall
be construed, regulated, interpreted and administered under and in accordance
with the laws of the State of Texas.

SECTION FIFTEEN

INTERPRETATION OF THE PLAN

It is the intention of the Employers that the Plan
shall comply with the Internal Revenue Code, and the regulations thereunder,
the requirements of ERISA and the corresponding provisions of any subsequent
laws; the provisions of the Plan shall be construed to effectuate such
intention.

 11
 

 

IN WITNESS WHEREOF, EXCO Resources, Inc. has caused
the Plan to be signed by its duly authorized officer on this 8th day of November, 2006.

	
  

  	
  EXCO RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Douglas H. Miller

  
	
   

  	
   

  	
   

  
	
   

  	
  Its: Chief Executive Officer

  	
   

  
					

 12
 

 

Exhibit A-1

40+

RELEASE AGREEMENT

IN RETURN FOR THE CONSIDERATION of payment of severance benefits to me
from EXCO Resources, Inc. (“EXCO”) in accordance with EXCO Resources, Inc.
Severance Plan, I am entering into this Release Agreement.  I understand and agree that the severance
payment is in addition to the other (non-severance) benefits to which I may be
entitled under the normal policies and procedures applicable to employees of
EXCO as a result of my termination of employment from EXCO.

I,                                                                   ,
on behalf of myself, my heirs, executors, successors and assigns hereby
irrevocably and unconditionally RELEASE, WAIVE, AND FOREVER DISCHARGE EXCO and
all of its parents, divisions, subsidiaries and affiliates, and their present
and former agents, employees, officers, directors, partners, stockholders,
successors and assigns (hereinafter collectively “Releasees”) from any and all
claims, demands, actions and causes of action, and all liability whatsoever,
whether known or unknown, fixed or contingent, which I have or may have
against Releasees as a result of my employment by or subsequent termination as
an employee of EXCO, or failure to be hired by any Releasee, up to the date of
execution of this Release Agreement.  This
Release Agreement includes but is not limited to claims at law or equity or
sounding in contract (express or implied) or tort arising under federal, state
or local laws prohibiting age, sex, race, national origin, disability,
religion, veteran or any other forms of discrimination (including but not
limited to Title VII of the Civil Rights Act of 1964, the Rehabilitation
Act of 1973, the Americans with Disabilities Act, as well as applicable state
fair employment practices laws), claims arising under the Fair Labor Standards
Act, the National Labor Relations Act, the Worker Adjustment and Retraining
Notification Act, the Family and Medical Leave Act, the Employee Retirement
Income Security Act, or any other legal and equitable claims regarding my
employment with EXCO, the continuation of employment or the termination of said
employment.

I understand and agree that this Release Agreement shall not in any way
be construed as an admission by Releasees of any unlawful or wrongful acts
whatsoever against me or any other person, and Releasees specifically disclaim
any liability to or wrongful acts against me or any other person.

I acknowledge that I have been advised in writing by EXCO that I should
consult an attorney prior to executing this Release Agreement, and I further
acknowledge that I have been given a period of forty-five (45) calendars days
after my termination by EXCO within which to review and consider the provisions
of this Release Agreement.

I acknowledge that I have been given information regarding the ages and
job titles of persons affected and unaffected by these terminations of
employment.

I understand and acknowledge that I have seven (7) calendar days
following the execution of this Release Agreement to revoke my acceptance of
this Release Agreement and that this Release Agreement shall not become
effective and the severance shall not become payable until this revocation
period has expired.  In order to revoke
this Release Agreement, I acknowledge that I am required to deliver written
notice clearly stating my intent to revoke to [Insert
Name and Address of Contact Person at Company].  I agree that my notice will not be considered
effective unless [Mr./Ms. Insert Name],
or a representative designated by EXCO, receives it within the seven calendar days
following my execution of this Release Agreement.

 13
 

 

I understand it is my choice whether or not to enter into this Release
Agreement and that my decision to do so is voluntary and made knowingly.

Please read carefully as this document includes a
release of claims.

As evidenced by my signature below, I hereby certify that I have read
the above Release Agreement and agree to its terms.

Dated this                            
day of                                             ,
2006.

 

	
  

  	
   

  	
   

  
	
  WITNESS

  	
   

  	
  EMPLOYEE SIGNATURE

  

 14
 

 

Exhibit
A-2

Under 40

RELEASE AGREEMENT

IN RETURN FOR THE CONSIDERATION of payment of severance benefits to me
from EXCO Resources, Inc. (“EXCO”) in accordance with the EXCO Resources, Inc.
Severance Plan, I am entering into this Release Agreement.  I understand and agree that the severance
payment is in addition to the other (non-severance) benefits to which I may be
entitled under the normal policies and procedures applicable to employees of
EXCO as a result of my termination of employment from EXCO.

I,                                                                   ,
on behalf of myself, my heirs, executors, successors and assigns hereby
irrevocably and unconditionally RELEASE, WAIVE, AND FOREVER DISCHARGE EXCO and
all of its parents, divisions, subsidiaries and affiliates, and their present
and former agents, employees, officers, directors, partners, stockholders,
successors and assigns (hereinafter collectively “Releasees”) from any and all
claims, demands, actions and causes of action, and all liability whatsoever,
whether known or unknown, fixed or contingent, which I have or may have
against Releasees as a result of my employment by or subsequent termination as
an employee of EXCO, or failure to be hired by any Releasee, up to the date of
execution of this Release Agreement. 
This Release Agreement includes but is not limited to claims at law or
equity or sounding in contract (express or implied) or tort arising under
federal, state or local laws prohibiting age, sex, race, national origin,
disability, religion, veteran or any other forms of discrimination (including
but not limited to Title VII of the Civil Rights Act of 1964, the
Rehabilitation Act of 1973, the Americans with Disabilities Act, as well as
applicable state fair employment practices laws), claims arising under the Fair
Labor Standards Act, the National Labor Relations Act, the Worker Adjustment
and Retraining Notification Act, the Family and Medical Leave Act, the Employee
Retirement Income Security Act, or any other legal and equitable claims
regarding my employment with EXCO, the continuation of employment or the
termination of said employment.

I understand and agree that this Release Agreement shall not in any way
be construed as an admission by Releasees of any unlawful or wrongful acts
whatsoever against me or any other person, and Releasees specifically disclaim
any liability to or wrongful acts against me or any other person.

I acknowledge that I have been advised in writing by EXCO that I should
consult an attorney prior to executing this Release Agreement, and further
acknowledge that I have been given a period of ten (10) calendar days after my
termination by EXCO within which to review and consider the provisions of this
Release Agreement.

I understand and acknowledge that once I have executed this Release
Agreement, it is immediately binding and may not be revoked or rescinded by
either party.

I understand it is my choice whether or not to enter into this Release
Agreement and that my decision to do so is voluntary and is made knowingly.

 15
 

 

Please read carefully as this document includes a
release of claims.

As evidenced by my signature below, I hereby certify that I have read
the above Release Agreement and agree to its terms.

Dated this                            
day of                                             ,
2006.

 

 

	
  

  	
   

  	
   

  
	
  WITNESS

  	
   

  	
  EMPLOYEE SIGNATURE

  

 

 16

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