Mutual Settlement Shell Oil Co.



 Exhibit 10.40 
  
 MUTUAL SETTLEMENT AND RELEASE OF CLAIMS 
  
 This Mutual Settlement and Release
Agreement (the “Agreement”) is made by and between Shell Oil Company (“Shell”) and Resolution Performance Products LLC (“RPPLLC”), sometimes collectively referred to herein as the “Parties” and individually
referred to as a “Party.” 
  
 WITNESSETH: 
  
 WHEREAS, Shell and RPPLLC (formerly known as Shell Epoxy Resins LLC) entered into an Environmental Agreement dated as of November 1, 2000 (the “US Environmental
Agreement”); 
  
 WHEREAS, Shell and RPPLLC have been in discussions to provide certainty and resolution
in connection with certain indemnity provisions and obligations as set forth in the US Environmental Agreement; 
  
 WHEREAS, Shell now desires to make a lump sum payment to RPPLLC, which payment is to be accepted by RPPLLC as being in full and final discharge of certain past and future indemnity obligations of Shell and/or any Shell
Affiliate to RPPLLC as provided in Section 2.1(D), Section 2.4 and Schedule 5 of the US Environmental Agreement and also in full and final settlement of each and every claim made by RPPLLC in connection with the projects listed on Attachments 1 and
2 hereto; 
  
 WHEREAS, RPPLLC now desires to settle and release Shell and/or any Shell Affiliate from such
specified past and future indemnity obligations contained in Section 2.1(D), Section 2.4 and Schedule 5 of the US Environmental Agreement and from any claims relating to the projects listed on Attachments 1 and 2 hereto; 
  
 WHEREAS, Shell now desires to finally and completely settle and release RPPLLC from any and all obligations and responsibilities of
RPPLLC to Shell associated or in connection with the projects listed on Attachments 1 and 2 hereto. 
  
 NOW,
THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereto hereby agree as follows: 
  

	1.
	Unless the context otherwise requires, terms used and not defined herein shall have the meanings set forth either in Schedule A to the Master Sale Agreement
dated as of September 10, 2000 between Shell and RPPLC (as amended by a certain Amendment No. 1 to Sale Agreement, Human Resources Agreement and Seller Disclosure Letter between the Parties dated as of November 14, 2000) or in the Environmental
Agreement, as the case may be. 
 


 
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	2.
	For and in consideration of the sum of Nine Million Seven Hundred Eight Thousand Dollars ($9,708,000.00) to be paid by Shell, on or before November 27, 2002 in
immediately available funds via wire transfer in accordance with the wiring instructions specified below, the receipt and sufficiency of which are hereby acknowledged by RPPLLC, RPPLLC for itself, its Affiliates, its parent and/or subsidiary
companies, its representatives, including without limitation agents, employees, servants, directors, officers, attorneys, successors and assigns (hereinafter together with RPPLLC referred to collectively as “Releasors”), jointly and
severally, shall fully, irrevocably and forever release and discharge Shell, its Affiliates, its parent and/or subsidiary companies, its representatives, including without limitation, agents, employees, servants, directors, officers, attorneys,
successors and assigns (hereinafter referred to collectively as “Releasees”), and each of them, from and against any and all claims, demands, sums of money, actions, rights, causes of action, obligations and liabilities which any of the
Releasors may have or assert to have pursuant to the US Environmental Agreement, which arise out of or are directly connected with or related to: 
 

  

	 	A.
	Listed US Compliance Issues as set forth in Section 2.4 and Schedule 5 of the US Environmental Agreement and in Attachment 1 hereto (the “US Compliance
Issues”); and 
 


	


	 	B.
	Indemnification obligations for all preexisting Non-Compliance Issues pursuant to Section 2.1(D) of the US Environmental Agreement of all past or future claims
that have been made or could be made, including but not limited to those projects listed on Attachment 2 hereto (the “Unlisted US Non-Compliance Issues”). 
 

  
 The wiring instructions for Shell’s payment of the sum specified above are as follows: 
  
 
	 Bank:
 	  	 Citibank, N.A. New York, New York
 
	 ABA Number:
 	  	 021000089
 
	 Account Number:
 	  	 30480009
 
	 For the Benefit of:
 	  	 Resolution Performance Products LLC
 

 
  

	3.
	RPPLLC agrees that it shall be solely responsible and liable for the execution and completion of the projects as described in 2.A. and 2.B. above and in
Attachments 1 and 2 hereto. 
 


	


	4.
	Shell agrees that this Agreement is a final and complete settlement and hereby releases RPPLLC from any and all of RPPLLC’s obligations and
responsibilities whatsoever to Shell associated or in connection with the projects as described in 2.A. and 2.B. above and in Attachments 1 and 2 hereto for those obligations and responsibilities set forth in Section 2 (Seller’s Indemnification
Obligation, including any restrictions and limitations thereto), Section 4 (Indemnification Procedures and Calculation, including any reduction for Tax Benefits received), Section 6 (Procedures for Remediation, including Shell’s audit rights
and remedies), Section 7 (Standard of Remediation Activities) and Section 8 (Access to Records; Furnishing Information) of the US Environmental Agreement. 
 


	

  

 
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	5.
	RPPLLC agrees that this Agreement is a final and complete settlement and hereby releases Shell from any and all of Shell’s obligations and responsibilities
whatsoever to RPPLLC associated or in connection with the projects as described in 2.A. and 2.B. above and in Attachments 1 and 2 hereto for those obligations and responsibilities set forth in Section 2 (Seller’s Indemnification Obligation,
including any restrictions and limitations thereto), Section 4 (Indemnification Procedures and Calculation), Section 6 (Procedures for Remediation, including RPPLLC’s audit rights and remedies), Section 7 (Standard of Remediation Activities)
and Section 8 (Access to Records; Furnishing Information) of the US Environmental Agreement. 
 


	6.
	Except as specifically set forth in this Agreement, all other terms and provisions of the US Environmental Agreement, and any other agreement between the
Parties, shall remain unchanged and in full force and effect. 
 


	7.
	No party to this Agreement may transfer or assign, directly or indirectly, by operation of law or otherwise, any of its rights or obligations under this
Agreement without the prior written consent of the other Parties. 
 


	8
	This Agreement shall be governed by the laws of the State of New York, and any dispute arising out of this Agreement will be settled by arbitration as provided
in the US Environmental Agreement. 
 

  
 [Signature Page Follows] 

 
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 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
on the date set forth underneath their respective signatures. 
  
 SHELL OIL COMPANY 
  
  
 By:    /S/    RAYMOND T.
COLLINS                              
  

Name:    Raymond T.
Collins                         (Printed) 
  
 Title:    Global Divestments Manager, Shell Chemical L.P. 
  
 Date:    11/26/2002                               
          
  
  
 RESOLUTION
PERFORMANCE PRODUCTS LLC 
  
  
 By:    /S/    MARVIN O.
SCHLANGER                     
  
 Name:    Marvin O.
Schlanger                        (Printed) 
  
 Title:    Chairman                               
              
  
 Date:    November 25, 2002                            


 
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 Attachment 1 – Summary of Listed US Compliance Issues 

 
 
	 Project Description
 	  	 Location
 
	
	
	

	 
	 Listed U.S. Compliance Issues – Schedule 5 of the US Environmental Agreement
 	  	  
	
	
	

	 
	 C-Plant Sewer within the battery limits: Integrity Assessment, including resulting upgrades and replacement.
 	  	 Deer Park
 
	
	
	

	 
	 BPA Wastewater and Stormwater Controls, including any studies, process modifications and/or upgrades at the source area and the treatment plant. A
“Post-Close Exceedance” shall be deemed to have occurred if: (i) There are a total of two or more exceedances over toxicity limits currently applicable to the wastewater effluent discharge from SET in any one quarter or any two consecutive
quarters during the period between April 30 2000 and April 30, 2002 (ii) Such exceedances are due to the presence of BPA in the wastewater effluent discharge from SET
 	  	 Deer Park
 
	
	
	

	 
	 ECH Tank Vents Permitting (Permitting of Grandfathered Tanks), including routing tank vents to the OXY Incinerator and/or the installation of other engineering
and associated instrumentation controls, including floating roofs.
 	  	 Deer Park
 
	
	
	

	 
	 BPA Rail Car Area Upgrade-Truck and Rail Car Loading Fire Prevention, including modifications necessary to limit BPA exposure to employees and/or other persons
and fire risk.
 	  	 Deer Park
 
	
	
	

	 
	 Compliance with Process Safety Management (PSM) standards with respect to Process Hazards Analyses (PHA) mitigation and abatement, including, but not limited
to, reactive hazards analyses and abatement for EPON-5 and all other PSM covered processes.
 	  	 Deer Park
 
	
	
	

	 
	 Compliance Agreement being negotiated with the TNRCC relating to LDAR program.
 	  	 Deer Park
 
	
	
	

	 
	 Works in relation to Tanks Vents for ERU5, including, but not limited to (i) LDAR program enhancement and annual monitoring costs, (ii) works associated with
routing tanks to ERU5 scrubber, and/or (iii) ERU5 scrubber upgrades and/or modifications, and/or (iv) any associated fines and penalties
 	  	 Deer Park
 
	
	
	

	 
	 The RCRA Incinerator Permit Renewal and Compliance with MACT Standards as promulgated prior to Closing.
 	  	 Norco
 
	
	
	

	 
	 The Notice of Violation Potential Penalty letter received on December 21, 1998 from the Louisiana Department of Environmental Quality regarding the leak
detection and repair (LDAR) program.
 	  	 Norco
 
	
	
	

	 
	 Electrical Improvements to C-Unit.
 	  	 Norco
 

 
 
	
	
	

	 
	 Compliance with PSM standards with respect to PHA analyses and abatement, including, but not limited to, reactive hazards analyses and abatement for HPRU
Continuous, HPRU Batch and Tanks and C-Unit, and all other PSM covered processes.
 	  	 Norco
 
	
	
	


 

 
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	 Project Description
 	  	 Location
 
	
	
	

	 
	 Compliance with PSM standards with respect to PHA mitigation and abatement, including but not limited to protective instrumentation measures, tank vents and
valve actuators, and reactive hazards analyses and abatement for all other PSM covered processes.
 	  	 Argo
 
	
	
	

	 
	 Installation of new drum transport system (elevator) and associated mechanized off-loading system.
 	  	 Argo
 
	
	
	

	 
	 Fall protection for Tank Car, Tank Truck, Hopper Car and Isotaner Car loading.
 	  	 Argo
 
	
	
	

	 
	 Compliance with any applicable OSPSF pre-treatment effluent guidelines for water discharges from the Argo Resins facilities.
 	  	 Argo
 
	
	
	

	 
	 Compliance with the Batch Process Rule and continuous temperature monitoring requirements set forth in the August 3, 2000, Title V Permit issued by the Illinois
Environmental Protection Agency, including, but not limited to, the installation of permanent temperature monitoring measures, the costs associated with obtaining a permit modification and/or the installation of additional cooling capacity and/or
such alternative response as may be required.
 	  	 Argo
 
	
	
	

	 
	 Compliance with PSM standards with respect to PHA mitigation and abatement, including but not limited to reactive hazards analyses and abatement for Reactors 1,
3 and 4 and all other PSM covered processes.
 	  	 Lakeland
 
	
	
	

	 
	 Tank Truck Storage Area Spill Containment (comprising only works in relation to Area 39)
 	  	 Lakeland
 
	
	
	

	 
	 Compliance with Toxic Substances Control Act matters related to the EPA inventory and pre-manufacture notification, including any fines and penalties associated
therewith.
 	  	 All Domestic Facilities
 
	
	
	


 

 
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 Attachement 2 – Summary of Unlisted US Non-Compliance Issues 

 
 
	 Project Description
 	  	 Location
 
	
	
	

	 
	 Steam Condensate/Stormwater Discharge
 	  	 Argo
 
	
	
	

	 
	 Unpermitted emission of chlorinated compounds from Dow SHAC process and inaccurate flare permit
 	  	 Norco
 
	
	
	

	 
	 Incomplete/inaccurate Title V application for hazardous waste incinerators
 	  	 Norco
 
	
	
	

	 
	 Incomplete/inaccurate Title V application for C-unit
 	  	 Norco
 
	
	
	

	 
	 Fall Protection
 	  	 Deer Park
 
	
	
	

	 
	 Faulty vent temperature probe in BPA unit
 	  	 Deer Park
 
	
	
	

	 
	 Fall Protection
 	  	 Norco
 
	
	
	


 

 
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