RPP CAPITAL CORP
EMPLOYMENT AGRMT. BETWEEN RPP LLC AND GRAZIOSI
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>h15026exv10w3.htm
<DESCRIPTION>EMPLOYMENT AGRMT. BETWEEN RPP LLC AND GRAZIOSI
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.3


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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EMPLOYMENT AGREEMENT </B>dated as of May&nbsp;10,
2004 (this &#147;Agreement&#148;), by and between
<B>RESOLUTION PERFORMANCE PRODUCTS LLC</B>, a
Delaware corporation (the &#147;Company&#148;) and <B>DAVID
S. GRAZIOSI </B>(&#147;Executive&#148;).</DIV></TD>
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to induce Executive to accept employment with the Company, the
Company desires to provide Executive with compensation and other benefits on
the terms and conditions set forth in this Agreement. Executive is willing to
enter into such employment and perform services for the Company on the terms
and conditions set forth in this Agreement. Therefore, the Company and
Executive agree as follows:


<P align="left" style="font-size: 10pt"><B><I>1. Employment.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of this Agreement, the Company agrees
to employ Executive during the term hereof as Executive Vice President and
Chief Financial Officer of the Company. Executive hereby accepts employment as
such and agrees to devote his working time and efforts, to the best of his
ability, experience and talent, to the performance of services, duties and
responsibilities in connection therewith. As Executive Vice President and
Chief Financial Officer, Executive will perform those duties that are (a)
customarily performed by executive vice presidents and chief financial officers
of companies similar to the Company and/or (b)&nbsp;requested by the Chief Executive
Officer or the Board of Directors (the &#147;Board&#148;) of the Company. Consistent
with Section&nbsp;9 herein, Executive shall be entitled to join boards of directors
of other companies subject to a conflict of interest evaluation by the
Company&#146;s General Counsel and approval of the Company&#146;s Chief Executive
Officer, which shall not be unreasonably withheld. Furthermore, Executive
shall have the opportunity to respond to inquiries from a previous employer or
others in the industry provided that it shall not substantially interfere with
the performance of his duties hereunder.


<P align="left" style="font-size: 10pt"><B><I>2. Term of Employment.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement and the term of employment shall commence and be effective
from and after the date hereof (the &#147;Commencement Date&#148;) and, subject to the
terms hereof, shall terminate on the third anniversary of the Commencement Date
(the &#147;Termination Date&#148;); provided, however, that on such anniversary date and
on each subsequent one year anniversary of such anniversary date, the
Termination Date shall automatically be extended for a period of one year,
unless either party shall have given written notice to the other party not less
than one hundred and twenty days prior to the Termination Date that the
Termination Date shall not be so extended.


<P align="left" style="font-size: 10pt"><B><I>3. Compensation and Benefits.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Base Salary. The Company shall pay Executive a base salary (&#147;Base
Salary&#148;) at the annual rate of $245,000. The Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company and shall be
subject to increase as determined by the Board or its compensation committee
(the &#147;Compensation Committee&#148;).


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Annual Bonus. In addition to the Base Salary, Executive shall receive
a cash bonus (the &#147;Bonus&#148;) with respect to each fiscal year; provided that the
Executive is employed by the Company on the last day of such fiscal year
without giving effect to any pro rata allocation in fiscal year 2004. The
Bonus shall be based on the Company&#146;s achievement of certain operating and/or
financial goals to be reasonably established by the Compensation Committee,
with an annual target bonus amount equal to 50% of Executive&#146;s then current
Base Salary.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Signing Bonus. Effective upon the execution of this Agreement by the
parties hereto, Executive shall receive a cash payment of $75,000, which shall
be due and payable by the Company no later than May&nbsp;31, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Extension Bonus Plan. Executive shall participate in the Company&#146;s
Executive Supplemental Bonus Plan (the &#147;Extension Plan&#148;). In connection
therewith, Executive shall receive the following payments (the &#147;Extension
Payments&#148;) within fifteen (15)&nbsp;days of each of the dates (the &#147;Extension
Dates&#148;) set forth below, provided that Executive remains employed by the
Company as of each such Extension Date.

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    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
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<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Extension Date</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Payment Amount</B><HR size="1" noshade></TD>
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    <TD><DIV style="margin-left:10px; text-indent:-10px">June&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">September&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>

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    <TD><DIV style="margin-left:10px; text-indent:-10px">December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>

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    <TD><DIV style="margin-left:10px; text-indent:-10px">March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>

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    <TD><DIV style="margin-left:10px; text-indent:-10px">June&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">September&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">78,000</TD>
    <TD>&nbsp;</TD>
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All remaining unpaid Extension Payments under the Extension Plan shall
become immediately due and payable effective immediately prior to a Realization
Event (as such term is defined in Resolution Performance Products Inc.&#146;s 2000
Stock Option Plan).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Benefits. During the term of employment hereunder, the Company shall
provide to Executive coverage under any standard employee benefit programs,
plans and practices, in accordance with the terms that the Company makes
generally available to its executive officers. Notwithstanding the foregoing,
the Company shall pay Executive the amount equivalent to a 6% Company match
each year until such time as the Company has a 401(k) match program that
Executive can participate in on an equivalent vested basis. The Company shall
pay Executive the above-described payment in monthly installments commencing on
the first payroll period following the Commencement Date and terminating on the
date when the Company implements a 401(k) match program that provides Executive
with an equivalent vested benefit. If Executive elects to receive any matching
contributions from the Company in connection with the Company&#146;s 401(k) program,
then the above-described annual payment will be reduced by the amount of the
Company&#146;s annual match. In addition, the Company shall provide Executive with
four weeks vacation per year.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>4.&nbsp;Termination of Employment.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Termination Rights. The Company may terminate Executive&#146;s employment
at any time, and Executive may terminate his employment at any time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Definitions.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) &#147;Affiliate&#148; of the Company shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the Company. As used in this
definition, the term &#147;control,&#148; including the correlative terms
&#147;controlling,&#148; &#147;controlled by&#148; and &#147;under common control with,&#148; means
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of
securities or any partnership or other ownership interest, by contract or
otherwise) of a Person. The term &#147;Affiliate&#148; shall not include at any
time any portfolio companies of Apollo Management IV, L.P. or its
Affiliates.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) &#147;Cause&#148; shall mean termination by the Company of Executive&#146;s
employment (a)&nbsp;based on a determination that Executive has engaged in
conduct constituting willful misconduct or gross negligence, or breach of
a fiduciary duty; (b)&nbsp;based on a determination that Executive has failed
to substantially perform the duties required by such Executive&#146;s
employment and such failure shall not have been cured within a reasonable
time after notice from the Company; (c)&nbsp;because Executive has breached or
violated any of the provisions of the Company&#146;s employee handbook or
other policies in effect from time to time that by their terms may result
in termination of employment and which meet the standard in (ii)(a)
above; (d)&nbsp;because Executive has committed a felony, has engaged in any
act involving the misuse or misappropriation of money or other property
of the Company, has defrauded the Company, any Affiliate of the Company
or any customer of the Company, or because of habitual intoxication while
performing his job duties, or drug addiction; or (e)&nbsp;because Executive
has failed to take action consistent with or has taken actions
inconsistent with a directive of the Chief Executive Officer of the
Company or the Board.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) &#147;Disability&#148; shall mean that Executive has been unable, for
180 consecutive days, or for periods aggregating 180 business days in any
period of twelve months, to perform Executive&#146;s duties under this
Agreement, as a result of physical or mental impairment, illness or
injury, as determined by a medical doctor jointly selected by the Company
and Executive. A termination of Executive&#146;s employment by either party
for Disability shall be communicated to the other party by written
notice, and shall be effective on the 30th day after receipt of such
notice by the other party (the &#147;Disability Effective Date&#148;), unless
Executive returns to full-time performance of Executive&#146;s duties before
the Disability Effective Date.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) &#147;Good Reason&#148; shall mean the occurrence of any of the
following events without Executive&#146;s express prior written consent and
which event shall not have been cured within a reasonable period after
notice from the Executive: (A)&nbsp;the assignment to Executive by the Company
of duties materially inconsistent with Executive&#146;s duties as set forth in
Section&nbsp;1 hereof, or any material reduction by the Company of Executive&#146;s


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<P align="left" style="margin-left:3%; font-size: 10pt">duties, except in connection with the termination of Executive&#146;s
employment for any other reason; (B)&nbsp;a reduction by the Company in
Executive&#146;s Base Salary or Bonus (other than due to the failure to meet
applicable performance objectives); or (C)&nbsp;any material breach by the
Company of any material provision of this Agreement after a written
notice of such breach shall have been delivered to the Company and, if
such breach can be cured, such breach shall not have been cured prior to
the tenth day after delivery of such notice.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) &#147;Person&#148; shall be construed broadly and shall include, without
limitation, an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) &#147;Termination Payments&#148; shall mean earned but unpaid amounts as
of the date of any termination under applicable benefit plans or
programs.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Termination other than for Cause or Termination for Good Reason; for
Death and Disability. If Executive&#146;s employment is terminated by the Company
other than for Cause or Executive terminates his employment for Good Reason, or
if Employee dies or his employment is terminated by either party for
Executive&#146;s Disability, in each case, prior to the Termination Date, Executive
(or his estate) shall be entitled to receive (i)&nbsp;no later than 30&nbsp;days after
the date of termination, the Termination Payments; (ii)&nbsp;in lieu of any other
cash compensation provided for herein but not in substitution for compensation
already paid or earned, payable in accordance with the Company&#146;s customary
payroll practices, for a period equal to 12&nbsp;months following the date of
termination (such period, the &#147;Termination Period&#148;) an amount equal to the
Executive&#146;s Base Salary at its then current annual rate; and (iii)&nbsp;the
remaining unpaid Extension Payments under the Extension Plan. During the
Termination Period, the Company shall continue to provide Executive with access
to the Company&#146;s health benefit programs and plans.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Voluntary Termination by Executive; Discharge for other reasons. If
Executive&#146;s employment is terminated by the Company for any reason other than a
termination without Cause or by Executive other than for Good Reason, in each
case prior to the Termination Date, Executive shall be entitled to receive,
within a reasonable time after the date of termination, the Termination
Payments and the remaining unpaid Extension Payments under the Extension Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;DEFRA.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Notwithstanding anything in this Agreement or any other
agreement between the Executive and the Company to the contrary, in the
event that the provisions of the Deficit Reduction Act of 1984 (&#147;DEFRA&#148;),
and Section&nbsp;280G of the Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;) relating to &#147;excess parachute payments&#148; (as defined in the Code)
shall be applicable to any payment or benefit received or to be received
by Executive, then the total amount of payments or benefits payable to
Executive shall be reduced to the largest amount such that the provisions
of DEFRA and Section&nbsp;280G of the Code relating to &#147;excess parachute
payments&#148; shall no longer be applicable. Should such a reduction be
required, the Executive shall determine, in the exercise of his sole
discretion, which payment or benefit to reduce or eliminate. Pending
such determination, the Company shall continue to make all other required
payments to


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<P align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt">Executive at the time and in the manner provided herein and
shall pay the largest portion of any parachute payments such that the
provisions of DEFRA relating to &#147;excess parachute payments&#148; shall no
longer be applicable.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Due to the complexity in the application of Section&nbsp;280(G) of
the Code, it is possible that payments made or benefits received
hereunder should not have been made under clause (e)(i) above (an
&#147;Overpayment&#148;). If it is determined by the Company&#146;s outside auditors in
their reasonable good faith judgment or by any court of competent
jurisdiction that an Overpayment has been made resulting in an &#147;Excess
Parachute Payment&#148; as defined in Section&nbsp;280G(b)(1) of the Code), then
any such Overpayment shall be treated for all purposes as an unsecured,
long-term loan from the Company to the Executive, or the Executive&#146;s
personal representative, successors or assigns, as the case may be, that
is payable, together with accrued interest from the date of the making of
the Overpayment at the rate of 8% per annum on the later to occur of the
third anniversary of the payment of such Overpayment, or 6&nbsp;months
following the date upon which it is determined an Overpayment was made.
Should it be determined that such an Overpayment has been made, the
Executive shall determine, in the exercise of his sole discretion, which
payments or benefits shall be deemed to constitute the Overpayment.


<P align="left" style="font-size: 10pt"><B><I>5. Notices.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All notices or communications hereunder shall be in writing, addressed, in
the case of the Executive, at the address set forth on the signature pages
hereto, and to the Company, as follows:

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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Resolution Performance Products LLC</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1600 Smith Street</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Suite&nbsp;2416</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Houston, Texas 77002</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Vice President &#151; Human Resources</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telecopy:(832) 366-2582</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telephone: (832)&nbsp;366-2429</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">with a copy to:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">RPP Holdings LLC</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">c/o Apollo Management, L.P.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1301 Avenue of the Americas</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">38th Floor</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10019</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attn: Scott Kleinman</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telecopy: (212)&nbsp;515-3232</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telephone: (212)&nbsp;515-3200</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">with a copy to:</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">O&#146;Melveny &#038; Myers LLP</TD>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Times Square Tower</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">7 Times Square</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, New York 10036</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Adam Weinstein, Esq.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telecopy: (212)&nbsp;408-2420</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telephone: (212)&nbsp;408-2491</TD>
</TR>

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</TABLE>
</DIV>



<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">Any such notice or communication shall be sent certified or registered mail,
return receipt requested, postage prepaid, addressed as above (or to such other
address as such party may designate in a notice duly delivered as described
above), and the actual date of mailing shall constitute the time at which
notice was given.


<P align="left" style="font-size: 10pt"><B><I>6. Separability; Arbitration.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof, which shall remain in full-force
and effect. Any controversy or claim arising out of or relating to this
Agreement or the breach of this Agreement (other than Section&nbsp;9 hereof) that
cannot be resolved by Executive on the one hand and the Company on the other,
including any dispute as to the calculation of Executive&#146;s benefits or any
payments hereunder, shall be submitted to arbitration in New York, New York in
accordance with New York law and the procedures of the American Arbitration
Association. The determination of the arbitrators shall be conclusive and
binding on the Company and Executive, and judgment may be entered on the
arbitrators&#146; award in any court having jurisdiction.


<P align="left" style="font-size: 10pt"><B><I>7. Assignment.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This contract shall be binding upon and inure to the benefit of the heirs
and representatives of Executive and the assigns and successors of the Company,
but neither this nor any rights hereunder shall be assignable or otherwise
subject to hypothecation by Executive except by will or by operation of the
laws of intestate succession.


<P align="left" style="font-size: 10pt"><B><I>8. Amendment.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may only be amended by written agreement of the parties
hereto.


<P align="left" style="font-size: 10pt"><B><I>9. Nondisclosure of Confidential Information; Non-Competition.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Executive shall not, without the prior written consent of the Company,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company, except (i)&nbsp;while employed by the Company, in the
business of and for the benefit of the Company, or (ii)&nbsp;when required to do so
by a court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
purported or apparent jurisdiction to order Executive to divulge, disclose or
make accessible such information.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;For purposes of this Section, &#147;Confidential Information&#148; shall mean
non-public


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">information concerning the Company&#146;s and its Affiliates&#146; financial
data, strategic business plans, product development (or other proprietary
product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of the Company and its Affiliates that
is not otherwise available to the public.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;For the period commencing on the date hereof and ending on (x)&nbsp;the
last day on which Executive receives any payment from the Company or any of its
Affiliates, with respect to a termination by the Company other than for Cause
or a termination by Executive for Good Reason, or (y)&nbsp;the one year anniversary
of the last day on which Executive receives any payment from the Company or any
of its Affiliates, with respect to all other terminations, without the prior
written consent of the Company, which shall not be unreasonably withheld, the
Executive shall not, directly or indirectly, (i)&nbsp;either as principal, manager,
agent, consultant, officer, director, stockholder, partner, member, investor,
lender or employee or in any other capacity, carry on, be engaged in or have
any financial interest in any business that is in material direct competition
with the business of the Company and/or its Affiliates, or (ii)&nbsp;solicit or hire
any employees of the Company and/or its Affiliates. For purposes hereof, a
business shall be deemed to be in material direct competition with the Company
if it is significantly involved in the rendering of any service purchased,
sold, dealt in or rendered by the Company and/or its Affiliates. As used in
the preceding sentence, the term &#147;significantly&#148; shall be deemed to refer to
activities generating gross annual sales of at least $25&nbsp;million. Nothing in
this Section shall be construed so as to preclude Executive from investing in
any publicly held company provided Executive&#146;s beneficial ownership of any
class of such company&#146;s securities does not exceed 5% of the outstanding
securities of such class.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Executive and the Company agree that the foregoing covenant not to
compete is a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of such covenant as
to the court shall appear not reasonable and to enforce the remainder of the
covenant as so amended. Executive agrees that any breach of the covenants
contained in this Section would irreparably injure the Company. Accordingly,
the Company may, in addition to pursuing any other remedies they may have in
law or in equity, obtain an injunction against Executive from any court having
jurisdiction over the matter, restraining any further violation of this Section
by Executive.


<P align="left" style="font-size: 10pt"><B><I>10. Governing Law.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall be construed, interpreted and governed in accordance
with the laws of the State of New York, without reference to rules relating to
conflict of laws.


<P align="left" style="font-size: 10pt"><B><I>11. Withholding.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall be entitled to withhold from any payment hereunder or
under any other agreement between the Company and the Executive any amount
required by law to be withheld.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B><I>12. Counterparts.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original.


<P align="left" style="font-size: 10pt"><B><I>13. Entire Agreement.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement reflects the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and replaces and
supercedes any prior employment agreements.


<P align="center" style="font-size: 10pt">* * * * *



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF, </B>the parties have duly executed this Agreement as of
the date first above written.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="55%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>RESOLUTION PERFORMANCE PRODUCTS LLC</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Marvin O. Schlanger</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Marvin O. Schlanger</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: Chief Executive Officer</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
  <TD width="20%">&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ David S. Grazioso</DIV></TD>
</TR>

<TR style="font-size: 1px">
  <TD width="20%">&nbsp;</TD>
    <TD valign="top"><HR size="1" noshade><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
  <TD width="30%">&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Name: David S. Graziosi</DIV></TD>
</TR>
<TR>
  <TD width="20%">&nbsp;</TD>
<TD align="left" valign="bottom">&nbsp;</TD></TR>
<TR valign="bottom">
  <TD width="20%">&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Address:</DIV></TD>
</TR>

<TR valign="bottom">
  <TD width="20%">&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12 Tracy Lane</DIV></TD>
</TR>

<TR valign="bottom">
  <TD width="20%">&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Morris Plains, New Jersey 07950</DIV></TD>
</TR>

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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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