1



                                                                   Exhibit 10.31

                                                    EXHIBIT I

                     READ CAREFULLY AND CONSULT WITH YOUR
                            ATTORNEY BEFORE SIGNING

                              RELEASE


         1.  In full consideration of the execution of this Release by Russell
M. Gard ("RMG"), American Pad & Paper Company (the "Company") will provide RMG
with the consideration and other rights set forth in the letter agreement (the
"Letter Agreement") dated July 8, 1998 to which this Release is attached as
Exhibit I.

         2.  RMG, intending to be legally bound and for and in consideration of
the benefits described in the Letter Agreement, does for himself his heirs,
executors, administrators, successors and assigns hereby remise, release and
forever discharge the Company, its successors, predecessors, subsidiaries,
affiliates, directors, officers, agents and employees, and all persons,
corporations or other entities who might be claimed to be jointly and severally
liable with them, from any and all actions and causes of action, claims and
demands, suits, damages including back pay, front pay, employee benefits,
bonuses, liquidated damages, attorneys' fees, expenses, debts, dues, accounts,
bonds, covenants, contracts, agreements and compensation whatsoever and from
any claims for retaliation, and from any and all other claims of any nature
whatsoever against the Company, whether known or unknown or whether asserted or
unasserted, including but not limited to claims under the Americans with
Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.), Title VII of the
Civil Rights Act of 1964 (42 U.S.C. Section 2000e et seq.), the Consolidated
Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. Section 1161 et seq.), and
the Age Discrimination in Employment Act (29 U.S.C. Section 626 et seq.),
claims for breach of contract, discrimination, wrongful discharge, tortious
interference with contract, intentional and negligent infliction of emotional
distress, and any other statutory or common law theories, including any claim
for attorneys' fees and costs, from the beginning of time to the date of the
Letter Agreement, which he or anyone claiming by, through or under him in any
way might have or could claim against the Company; provided that, RMG
specifically does not release and specifically reserves all of his rights with
respect to the following:

         (a)     the Letter Agreement;

         (b)     the Employment Agreement;

         (c)     those certain Stock Option Agreements between RMG and the
                 Company;

         (d)     that certain Amended and Restated Management Agreement dated
                 as of December 29, 1992, as amended as of June 6, 1996,
                 between RMG and the Company;

         (e)     any rights of RMG pursuant to the Company's health and welfare
                 plans; and





   2



         (f)     any rights of RMG as to indemnification with regard to any 
existing or future litigation involving RMG to the extent such rights are
provided to CGH in the Company's certificate of incorporation and/or bylaws.

         3.  RMG confirms that he has (a) received adequate notice and election
forms regarding his and his family's rights to elect COBRA continuation coverage
and he and his family have chosen not to elect such coverage in light of the
benefits provided to he and his family pursuant to paragraph 3 of the Letter
Agreement and (b) had at least twenty-one (21) day to consider whether or not to
sign this Release, it first having been presented to RMG on July 1, 1998.  RMG
certifies that he has read the terms of the Letter Agreement and the Release,
that he understands the terms and effects, and that he has signed the Letter
Agreement and the Release voluntarily and knowingly in exchange for the
consideration described in the Letter Agreement, which consideration RMG
acknowledges is in addition to anything to which RMG already is entitled and
which he acknowledges as adequate and satisfactory to him.

         4.  RMG acknowledges that he understands he may revoke his agreement 
to this release if he does so within 7 days of executing it and that this
release is not effective until that 7 day period has expired.

         5.  This Release shall be governed by and construed in accordance with 
the laws of the State of Texas.

         6.  Except as provided herein, each of the provisions of this Release 
is intended to be severable.  If any term or provision is held to be invalid,
void or unenforceable by a court of competent jurisdiction for any reason
whatsoever, such ruling shall not effect the remainder of this Release.

         7.  RMG, intending to be legally bound, has voluntarily executed this 
Release with full understanding of the contents hereof and after having had
ample time to review and study the  Letter Agreement and this Release.

         Signed and executed this ____ day of July, 1998.

WITNESS:



     /s                                          /s
- ------------------------                     -----------------------------(SEAL)
                                             RUSSELL M. GARD              




                                       2