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                                                                 Exhibit 10.12


                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of December 20,
1999, is between PAPEREXCHANGE.COM, LLC, a Delaware limited liability company
(the "Employer"), and KENT A. DOLBY (the "Employee").

      WHEREAS, the Employer wishes to enter into this Agreement with the
Employee, and the Employee wishes to enter into this Agreement with the
Employer, on the terms set forth below.

      NOW, THEREFORE, it is hereby agreed as follows:

      ss.1. EMPLOYMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.

      ss.2. DUTIES. The Employee shall be employed by the Employer as President
and Chief Executive Officer and shall be appointed a member of the management
board of the Employer (or, in the case of a corporate successor or formation of
a parent corporation, the board of directors of such successor or parent
corporation) (the "Management Board"). In such capacities, the Employee shall
have both the general and specific responsibilities and duties assigned by the
Management Board, which shall be those as are customarily rendered by the
president and chief executive officer of a company comparable to the Employer.
The Employee shall report directly to the Management Board and shall not be
required to locate outside the greater Boston area. The Employee agrees to
devote his full professional time and best efforts to the performance of his
duties to the Employer. Nothing in this Agreement, however, shall prohibit the
Employee from making passive investments (other than investments prohibited by
Section 9 hereof) or participating in charitable, educational or professional
organizations and activities.

      ss.3. TERM.

      (a) Initial Term. The initial term of employment of the Employee hereunder
shall commence on the date that the Employee commences full-time employment with
the Employer (such date to occur not later than December 24, 1999) (the
"Effective Date"), and continue until the fourth anniversary of the Effective
Date (the "Initial Expiration Date"), unless terminated earlier pursuant to
Section 6 hereof.

      (b) Renewal Term(s). The term of the Employee's employment hereunder shall
be extended automatically for additional periods of one (1) year each (the
"Renewal Term(s)") commencing on the day after the Initial Expiration Date or
the expiration date of the then current Renewal Term, as the case may be (each
an "Expiration Date"), unless either party notifies the other to the contrary in
writing at least ninety (90) days before any Expiration Date. If this Agreement
is not renewed after the Initial Expiration Date or the Expiration Date of the
then current Renewal Term in accordance with the terms hereof, the Employee
shall thereupon become an employee-at-will (unless 90 days' prior notice has
been given to the Employee as to termination hereunder) and shall only be
subject to

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termination upon 90 days' prior written notice from the Employer. The term of
the Employee's employment hereunder, including the initial term of employment
under Section 3(a) hereof and any Renewal Term, is referred to as the "Term".

      ss.4. COMPENSATION AND BENEFITS. During the Term, in consideration for the
services of the Employee hereunder, the Employer shall compensate the Employee
as follows:

      (a) Salary. The Employer shall pay the Employee, in accordance with the
Employer's then current payroll practices, a salary of $300,000 per annum. The
Employee shall be eligible for annual pay increases as determined by the
Management Board in its sole discretion.

      (b) Performance Bonus. The Employer and the Employee will discuss possible
bonus arrangements with respect to the period commencing on the date of this
Agreement and ending at the end of the fiscal year of the Employer ending on
December 31, 2000 (the "Initial Bonus"). The Initial Bonus shall be greater than
or equal to $200,000 and shall be paid on or before February 15, 2001. With
respect to subsequent fiscal years of the Employer, the Employee shall be
entitled to receive from the Employer, within forty-five (45) days after the end
of such fiscal year, an annual performance bonus to be determined at the sole
discretion of the Management Board, based on a target bonus of at least
$200,000. The Employee shall also be eligible to participate in any stock option
plans, stock purchase plans, deferred compensation plans and any other similar
arrangements established by the Employer from time to time for the benefit of
the Employer's employees or executives; provided that any grants to the Employee
under any of such plans or arrangements shall be at the sole discretion of the
Management Board.

      (c) Equity. The Employee shall be entitled to the right to purchase
Interests (as used herein, the term "Interests" shall have the meaning ascribed
to it in the Purchase Agreement) in the Employer by entering into an Interest
Purchase Agreement with the Employer dated as of the Effective Date (the
"Purchase Agreement") substantially in the form of Exhibit A attached hereto.

      (d) Options. The Employee shall be granted options to purchase an interest
in the Employer pursuant to the Equity Option Agreement, by and between the
Employer and the Employee, dated as of the Effective Date (the "Option
Agreement") substantially in the form of Exhibit B attached hereto.

      (e) Vacation. The Employee shall be entitled to vacation consistent with
the Employer's policies but not in any event less than four (4) weeks during
each full calendar year of the Term. Any vacation shall be taken at the
reasonable and mutual convenience of the Employer and the Employee. Treatment of
any accrued vacation not taken in any calendar year is subject to the practices
and policies of the Employer.

      (f) Insurance; Other Benefits. Accident, disability and medical insurance
for the Employee shall be provided by the Employer under group accident,
disability and medical insurance plans maintained by the Employer for its other
employees at the management level. The Employer shall provide the Employee with
life insurance at a level of four (4) times the Employee's annual salary (the
"Base Coverage"). The Base Coverage shall be provided under the group life
insurance plan maintained by the Employer and/or

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through reimbursement by the Employer of premiums paid by the Employee to obtain
(under the Employer's group life insurance plan or under a separate or
supplemental life insurance policy obtained by the Employee) that portion of the
Base Coverage not already paid for by the Employer under the Employer's group
life insurance plan; provided that the life insurance coverage under any such
separate or supplemental policy not provided under the Employer's group life
insurance plan is available to the Employee on customary terms and at reasonable
rates. The Employee shall participate in all retirement and other benefit plans
of the Employer available from time to time to employees and/or senior
executives of the Employer in accordance with their respective terms. The
employment benefits described in this clause (f) may be modified from time to
time by the Employer for all such employees and/or senior executives (as the
case may be) generally, including the Employee.

      ss.5. EXPENSES. The Employer shall reimburse the Employee for all
reasonable expenses of types authorized by the Employer and in accordance with
its policies incurred by the Employee in the performance of his duties
hereunder. The Employee shall comply with such budget limitations and approval
and reporting requirements with respect to expenses as the Employer may
establish from time to time. In addition, the Employer shall pay or reimburse
the Employee for up to $100,000 of expenses related to the Employee's (and his
family's) relocation to Boston, Massachusetts, or the surrounding area.

      ss.6. TERMINATION. The Employee's employment hereunder shall commence on
the Effective Date and continue until the Initial Expiration Date or any
Expiration Date hereunder, as the case may be, except that the employment of the
Employee hereunder shall earlier terminate:

      (a) Death or Disability. Upon the death of the Employee during the term of
his employment hereunder or in the event of the Employee's Disability (as
defined below) upon thirty (30) days' prior written notice from the Employer.
The Employee shall be deemed Disabled if an independent medical doctor (selected
by the Employer's health or disability insurer) certifies that the Employee has
for 150 consecutive or nonconsecutive days in any twelve (12) month period been
disabled in a manner which renders him materially unable to perform his duties
under this Agreement. Any refusal by the Employee to submit to a medical
examination requested by the Employer, for the purpose of certifying Disability
under this Section 6(a), shall be deemed to constitute conclusive evidence of
the Employee's Disability.

      (b) For Cause. For "Cause," immediately upon written notice by the
Employer to the Employee. For purposes of this Agreement, a termination shall be
for Cause if any one or more of the following has occurred:

            (i) the Employee shall have committed an act of fraud, embezzlement,
      or misappropriation against the Employer, including, but not limited to,
      the offer, payment, solicitation or acceptance of any unlawful bribe or
      kickback with respect to the Employer's business; or

            (ii) the Employee shall have been convicted by a court of competent
      jurisdiction of, or pleaded guilty or nolo contendere to, any felony
      (other than a traffic-related felony which does not involve the death of a
      human) or any crime involving moral turpitude that the Management Board of
      the Employer reasonably

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                                       4


      determines would have a material adverse effect on the operations or
      reputation of the Employer; or

            (iii) the Employee shall have been chronically absent from work
      (excluding vacations, illnesses, Disability, or leaves of absence approved
      by the Employer), and shall not have corrected such problem within 10 days
      following written notice from the Employer; or

            (iv) the Employee shall have intentionally committed a breach of any
      of the covenants, terms or provisions of Sections 7, 8 or 9 hereof; or

            (v) the Employee shall have breached any one or more of the
      provisions (including, without limitation, the Employee's agreement to
      perform the responsibilities and duties described in Section 2 hereof) of
      this Agreement (excluding Sections 7, 8 or 9 hereof), and, in any such
      case, such breach shall have continued for a period of thirty (30) days
      after written notice to the Employee specifying such breach in reasonable
      detail; or

            (vi) the Employee shall have engaged in the unlawful use (including
      being under the influence) or possession of illegal drugs on the
      Employer's premises.

      (c) Without Cause. Immediately, upon written notice by the Employer to the
Employee.

      (d) Good Reason. In the event of written notice by the Employee that he is
terminating his employment for "Good Reason" on account of any of the following:

            (i) The Employer materially changes or diminishes the Employee's
      titles, duties or responsibilities as set forth in Section 2 above without
      his consent, (ii) the Employer removes the Employee as a member of the
      Employer's Management Board (other than in connection with a termination
      of the Employee), or (iii) the Employee is not elected to serve as a
      member of the Employer's Management Board (other than due to the
      Employee's voluntary written decision not to seek such election or in
      connection with the termination of the Employee); or

            (ii) The Employer requires the Employee to relocate outside of the
      Greater Boston, Massachusetts metropolitan area; or

            (iii) The Employer imposes requirements on the Employee, or gives
      instructions or direction to the Employee, which are (i) contrary to or in
      violation of any law, rule, ordinance or regulation and (ii) not withdrawn
      by the Employer after written request by the Employee; or

            (iv) There occurs an intentional breach (including, but not limited
      to, a failure to make any payment or provide any benefit referred to in
      this Agreement) by the Employer of any of its obligations under this
      Agreement, the Purchase Agreement, or the Option Agreement, which breach
      has not been cured in all material respects within thirty (30) days.

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      Any termination pursuant to clauses (d)(i) through (d)(iv) of this Section
6 is subject to the following: The Employee shall provide the Employer with
30-day advance written notice of a termination for Good Reason setting forth in
reasonable detail the facts and circumstances claimed to provide a basis for the
termination. Such notice may only be given within sixty (60) days following the
Employee's receipt of notice of (or the Employee's discovery of) the occurrence
of the event that provides the basis for the termination and any failure to give
notice on the basis of an event shall bar the Employee from terminating on
account of Good Reason on the basis of that event, but shall not waive the
Employee's rights as to any other or any future Good Reason events. If within
the thirty (30) day period, the Employer takes actions reasonably satisfactory
to the Employee to remedy the basis for the Good Reason termination, such notice
of termination shall be considered null and void.

      (e) Resignation. Upon sixty (60) days' written notice by the Employee to
the Employer for any reason whatsoever.

      (f) Rights and Remedies on Termination. Except as set forth in Section
6(g) hereof, the Employee shall not be entitled to any severance or other
compensation after termination under this Section 6 other than payment of any
portion of his salary earned prior to termination, and any expense
reimbursements under Section 5 hereof for expenses incurred in the performance
of his duties prior to termination. No bonus shall be payable for the fiscal
year (or portion thereof) in which the termination occurs, no compensation or
benefits shall accrue or be owing in respect of any period after the effective
date of termination, and no liability of any kind shall accrue on account of
such termination.

      (g) Severance. Notwithstanding anything contained in Section 6(f) hereof,
and subject to the Employee complying with the provisions of Sections 7, 8 and 9
hereof, in the event that (i) the Employee is terminated pursuant to Section
6(c) hereof or (ii) the Employee is terminated pursuant to Section 6(a) hereof
in the event of a Disability, or (iii) the Employee terminates this Agreement
pursuant to Section 6(d) hereof, the Employee shall be entitled to receive (in
installments consistent with the Employer's payroll practices), following the
Employee's execution of a release in a form reasonably satisfactory to the
Employer and the Employee (which such release shall not include a release of the
Employee's vested rights and claims with respect to any equity interests,
options or other benefits acquired or held by the Employee or any COBRA or other
statutory post-termination benefit rights), severance compensation as set forth
in the following table:

Date of Termination                       Severance Compensation
-------------------                       ----------------------

Within Year 1                                   $500,000

Within Year 2                                   $150,000

"Year 1" shall mean the period commencing on the Effective Date and ending one
day prior to the first anniversary thereof; and "Year 2" shall mean the period
commencing on the first anniversary of the Effective Date and ending one day
prior to the second anniversary of the Effective Date.

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If termination occurs pursuant to Sections 6(a), 6(c) or 6(d) hereof after Year
2, the Management Board, in its sole discretion, shall determine the Employee's
severance, if any. The Employee's rights to severance under this Section 6(g)
shall be without regard to any employment or compensation obtained by the
Employee after termination of the Employee's employment under this Agreement.

      ss.7.  CONFIDENTIALITY.

      (a) Definition. The term "Confidential Information" includes all
information which is acquired by the Employee from the Employer, its other
employees, its suppliers or customers, its agents or consultants, or others,
during the Employee's employment by the Employer, and which relates to the
present or potential businesses, products or services of the Employer, as well
as any other information as may be designated by the Employer as confidential.
The term Confidential Information may relate, for example, to Inventions (as
defined below), trade secrets, computer software, research, developments,
designs, engineering, manufacturing, purchasing, supplier lists, customer lists,
price lists, accounting, profit margins, marketing or sales volume information
or business or strategic plans; may include information contained, for example,
in drawings, models, data, specifications, reports, compilations or computer
programs; and may be in the nature of unwritten knowledge or technical or
manufacturing know-how.

      (b) Acknowledgment. The Employee recognizes and acknowledges that:

            (i) the Employer's Confidential Information is a valuable, special
      and unique asset of the Employer's business;

            (ii) access to and knowledge of the Confidential Information by the
      Employee may be required so that the Employee can perform his/her duties
      as an employee of the Employer;

            (iii) it is vital to the Employer's legitimate business interests
      that (A) the confidentiality of the Confidential Information be preserved
      and (B) the Confidential Information only be used for the benefit of the
      Employer;

            (iv) disclosure of the Confidential Information to any other person
      or entity outside the Employer or use of the Confidential Information by
      or on behalf of any other person or entity could result in irreparable
      harm to the Employer;

            (v) disclosure or use beyond the permitted scope of Confidential
      Information entrusted to the Employer by its customers and contractors
      could expose the Employer to substantial damages;

            (vi) the Confidential Information is and shall remain the exclusive
      property of the Employer; and

            (vii) nothing in this Agreement shall be construed as a grant to the
      Employee of any rights, title or interest in, to or under the Confidential
      Information.

      (c) Restrictions. The Employee shall not, during or after the term of the
Employee's employment by the Employer, in whole or in part, disclose such
Confidential Information to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever, nor

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shall the Employee make use of any such Confidential Information for the
Employee's own purposes or for the benefit of any person, firm, corporation or
other entity under any circumstances during or after the term of the Employee's
employment, provided that if applicable law restricts the duration of the
confidentiality and nonuse obligations set forth in this clause (c) (the
"Confidentiality and Non-Use Obligations") for Confidential Information that is
not also a trade secret under applicable law ("Other Confidential Information"),
the Confidentiality and Non-Use Obligations as to Other Confidential Information
shall remain in effect during the term of the Employee's employment and for a
period of five (5) years thereafter, but shall be perpetual as to trade secrets.

      (d) Exclusions. The Confidentiality and Non-use Obligations shall not
apply to such Confidential Information which the Employee can establish:

            (i) was known by the Employee prior to disclosure hereunder; or

            (ii) was lawfully in the public domain prior to its disclosure
      hereunder, or becomes publicly available other than through a breach of
      this Agreement; or

            (iii) was disclosed to the Employee by a third party who was not, at
      the time of the disclosure, directly or indirectly bound by any
      confidentiality obligation to the Employer with respect thereto;

provided that only the specific information that meets the exclusion shall be
excluded and not any other information that happens to appear in proximity to
such excluded portion (for example, a portion of a document may be excluded
without affecting the confidential nature of those portions that do not
themselves qualify for exclusion).

      (e) Required Disclosures. The Employee agrees to notify the Employer
promptly upon receiving notice about any court order or other legal requirement
that seeks to compel disclosure of any Confidential Information and reasonably
to cooperate with the Employer in the exercise of the Employer's right to
protect the confidentiality of the Confidential Information before any tribunal
or governmental agency. Disclosure of Confidential Information pursuant to a
court order or other legal requirement that purports to compel disclosure of any
Confidential Information shall not alter the character of that information as
Confidential Information hereunder. So long as the Employee is otherwise in
compliance with each of the immediately preceding sentences in this paragraph
(e), disclosure by the Employee that is compelled or required by legal process
or proceedings or by any governmental or quasi-governmental authority shall in
no event be deemed a breach or violation by the Employee of this Agreement.

      (f) Return of Confidential Information. All originals, copies, digests and
summaries of all written or otherwise recorded documents, writings, materials,
software or other media, or items or information of any kind, concerning
Confidential Information or any Inventions (as hereinafter defined), are and
shall continue to be the exclusive property of the Employer. Immediately upon
any termination of the Employee's employment or at any time upon the request of
the Employer, the Employee shall deliver to the Employer, or its designee, all
of such documents, writings, materials, software and other media, other items
and information then in the Employee's actual or potential constructive
possession or control. If the material is such that it cannot reasonably be
delivered, the Employee shall, upon the request of the Employer, provide
reasonable evidence that such materials have been destroyed, including but not
limited to, the

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purging and/or erasing of any and all computer records and/or data files.
Subject to Section 7(c) hereof, the provisions of this Section 7 shall survive
the termination of this Agreement for a period of five (5) years thereafter.

      ss.8.  INTELLECTUAL PROPERTY AND INVENTIONS.

      (a) Assignment. The Employee hereby sells, transfers and assigns to (and
the following shall be the exclusive property of) the Employer, or to its
designee, the entire right, title and interest of the Employee in and to all
inventions (including without limitation discoveries of new technology and
improvements to existing technology), ideas, discoveries, improvements,
Confidential Information, know-how, innovations, writings, works and other
developments or improvements, whether or not patented or patentable,
copyrightable, or reduced to practice or writing, made, discovered, invented,
authored, created, developed, originated or conceived by the Employee, solely or
jointly, during the term of the Employee's employment by the Employer, which
arise out of research or any other activities conducted by, for or under the
direction of the Employer, whether or not conducted at the Employer's
facilities, during working hours or using the Employer assets, or which relate
directly or indirectly to methods, programs, computer software, apparatus,
designs, plans, models, specifications, formulations, techniques, products,
processes or devices, sold, leased, used or under consideration or development
by the Employer (hereinafter collectively "Inventions"). The Employee
acknowledges that all copyrightable materials developed or produced by the
Employee within the scope of the Employee's employment by the Employer
constitute works made for hire.

      (b) Disclosure & Cooperation. The Employee shall use his best efforts to
communicate promptly and disclose to the Employer, in such form as the Employer
may reasonably request, all information, details and data pertaining to any such
Inventions, and the Employee shall execute and deliver to the Employer or its
designee such formal transfers and assignments and such other papers and
documents and shall give such testimony as may reasonably be deemed necessary or
required of the Employee by the Employer or its designee to develop, preserve or
extend the Employer's rights relating to any Inventions and to permit the
Employer or its designee to file and prosecute patent applications and, as to
copyrightable material, to obtain copyrights thereof.

      ss.9.  NON-COMPETITION AND NON-INTERFERENCE.

      (a) During the Term of Employment. During the Employee's employment by the
Employer, the Employee will comply with all lawful policies and rules that may
from time to time be established by the Employer, and will not engage directly
or indirectly (except as expressly permitted under this Agreement) in any
business or enterprise which in any way is competitive or conflicting with the
interests or business of the Employer. In addition, in consideration of the
Employee's employment by the Employer, the Employee recognizes that the Employee
owes a duty of loyalty to the Employer and agrees that the Employee will not
(except as expressly permitted under this Agreement) during the Employee's
employment with the Employer take personal advantage (whether directly or
indirectly through the Employee's family members or affiliates) of any business
opportunity which is in the same or a closely-related line of business as that
engaged in by the Employer during the term of this Agreement. The Employee
understands and agrees that he/she is required to devote his/her full
professional time and use his/her best efforts in the course of the Employee's
employment with the Employer and to act at all times in the best interests of
the Employer.

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                                       9


      (b) Acknowledgment. The Employee understands and recognizes that (i) his
working for a competitor of the Employer would lead to the inevitable disclosure
of the Employer's Confidential Information; (ii) in the course of the Employee's
employment with the Employer, customers and others may come to recognize and
associate the Employee with the Employer, its products and services, and that
the Employee will thereby benefit from the Employer's goodwill; and (iii) if the
Employee were to engage in competition with the Employer, directly or
indirectly, the Employee would thereby usurp the Employer's goodwill.

      (c) Competition Generally.

            (i) In consideration for the Employer's agreement set forth in
      Section 6(g) above and subject to clause (c)(ii) below, the Employee
      agrees that, during the two-year period commencing upon the date of the
      Employee's termination of employment and continuing for the next two (2)
      years (the "Non-competition Period"), the Employee shall not, directly or
      indirectly:

                  (1) solicit, service, accept orders from, or otherwise have
            business contact with any person or entity who has, within the
            one-year period immediately prior to such termination of the
            Employee's employment, been a customer (including, without
            limitation, a reseller and/or end user of products) of the Employer,
            if such contact could reasonably be expected to directly or
            indirectly divert business from or adversely affect the business of
            the Employer;

                  (2) interfere with the contractual relations between the
            Employer and any of its employees;

                  (3) work for, invest in or have an interest in any person or
            entity engaged (all or partially) in the business of providing an
            electronic internet-based forum for the buying, selling or trading
            of products which are products for which the Employer provides an
            electronic internet-based forum for buying, selling or trading (or
            for which the Employer has, pursuant to the direction of the
            Management Board, developed a business plan to provide an electronic
            internet-based forum for the buying, selling or trading) prior to
            the termination of the Employee's employment with the Employer,
            anywhere in the Territory (as hereinafter defined); or

                  (4) employ or cause to be employed in any capacity, or retain
            or cause to be retained as a consultant, any person who was employed
            by the Employer at any time during the six (6) month period ended on
            the date of termination of the Employee's employment.

            The Employee agrees to inform the Employer of the name and address
      of any employer(s) the Employee may have or any business with which the
      Employee may be involved, directly or indirectly, within the
      Non-competition Period. The Non-competition Period shall be extended for
      so long as the Employee violates the non-competition obligations set forth
      in this paragraph (c) and for any periods of time required for litigation
      to enforce its provisions. The Employee further agrees to provide any such
      employer(s) with a copy of this Agreement. "Territory" means at any date,
      the geographic area in which the Employer then offers or plans to offer
      its

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      goods or services or from which it acquires or plans to acquire goods or
      services. The Employee hereby acknowledges that the Territory is
      world-wide.

            (ii) In the event that the Employee (1) is terminated pursuant to
      Section 6(a) hereof in the event of a Disability, (2) is terminated
      pursuant to Section 6(c) hereof, or (3) terminates this Agreement pursuant
      to Section 6(d) hereof, the Employee shall not be bound by the
      non-competition obligations set forth in clause (c)(i) above unless (x)
      the Employer delivers written notice within thirty (30) days after the
      effective date of the termination of employment to the effect that the
      Employer is electing to keep the Employee bound by such non-competition
      obligations and (y) the Employer agrees to pay to the Employee $300,000
      per year in exchange for such non-competition obligations, offset by any
      other amounts paid to the Employee as severance during such year pursuant
      to Section 6(g) hereof. Such additional payment shall be paid in quarterly
      installments in advance. In the event the Employer elects, in its sole
      discretion, to cause the Employee to be bound by the non-competition
      obligations under this clause (ii) such election shall be for a period of
      not less than one (1) year and the Employer, in its discretion, shall have
      the one-time right to renew such election for a period of an additional
      one (1) year provided that the Employer gives the Employee not less than
      ninety (90) days written notice prior to the end of the first year for
      which the Employer imposed the non-competition obligation under this
      clause (ii). The Employee's rights to payment pursuant to this clause (ii)
      in exchange for his non-competition obligations shall be without regard to
      any employment or compensation obtained by the Employee (other than
      compensation paid by the Employer) after termination of the Employee's
      employment under this Agreement.

            (iii) Notwithstanding anything contained in clause (c)(i)(3) of this
      Section 9, the Employee shall have the right to own, as a
      passive-investment only, up to three percent (3%) of the securities of any
      publicly-traded company.

      (d) Disparagement. The Employee and the Employer each agrees that during
the course of employment and after the termination of employment with the
Employer, the Employee will not disparage the Employer, its products, services,
agents or employees, and the Employer will not disparage the Employee.

      (e) Reasonableness. The Employee understands and agrees that because of
the nature of the Employer's products, services, and customers, because of the
Employee's key position with the Employer, and because the Employer's business
is international in scope, the duration of the Non-competition Period is
reasonable and necessary. The Employee understands and agrees that, although his
authority may or may not from time to time extend to the entire Territory, the
information the Employee may learn in the course of employment and the goodwill
to which the Employee may be exposed belong exclusively to the Employer and have
implications and applications that are international in scope. Accordingly, the
Employee agrees that the scope of the geographical restriction on competition
with the Employer in the Territory is reasonable and necessary. The Employee
represents that he has, and brings to his employment with the Employer,
marketable skills which will enable the Employee to secure employment and earn a
living for the duration of this Agreement without competing with the Employer
directly or indirectly. Accordingly, the Employee agrees that any harm to the
Employee caused by the enforcement of this Agreement will be outweighed by the
harm to the Employer should this Agreement not be

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enforced. If at any time any of the provisions of this Section 9 shall be deemed
invalid or unenforceable or are prohibited by the laws of the state or place
where they are to be performed or enforced, by reason of being vague or
unreasonable as to duration or geographic scope or scope of activities
restricted, or for any other reason, such provisions shall be considered
divisible and shall become and be immediately amended to include only such
restrictions and to such extent as shall be deemed to be reasonable and
enforceable by the court or other body having jurisdiction over this Agreement;
and the Employer and the Employee agree that the provisions of this Section 9,
as so amended, shall be valid and binding as though any invalid or unenforceable
provision had not been included herein.

      ss.10. INDEMNIFICATION

            To the fullest extent permitted or required by the laws of the state
of incorporation or formation of the Employer, as may apply from time to time,
the Employer shall indemnify and hold harmless (including advance payment of
expenses) the Employee, in accordance with the terms of such laws, if the
Employee is made a party, or threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that the Employee is or
was an officer or director of the Employer or any subsidiary or affiliate of the
Employer, against expenses (including reasonable attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any such action, suit or proceeding, which indemnification shall
include the protection of the applicable indemnification provisions of the
Amended and Restated Operating Agreement of the Employer from time to time in
effect; provided that the Employer shall have no obligation to provide
indemnification under this Section 10 for any such expenses, judgments, fines
and amounts incurred by the Employee and arising out of the Employee's gross
negligence or willful misconduct. This Section 10 shall survive the termination
of this Agreement for any reason whatsoever.

      ss.11. GENERAL.

      (a) Notices. All notices and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally or if mailed by certified mail, return receipt
requested, postage prepaid or sent by overnight courier, written
telecommunication or telecopy, to the relevant address set forth below, or to
such other address as the recipient of such notice or communication shall have
specified to the other party hereto in accordance with this Section 11(a):

      If to the Employer, to:

            PaperExchange.com, LLC
            545 Boylston Street, 8th Floor
            Boston, Massachusetts  02108
            Attention: Chairman

      With a copy sent contemporaneously to:

            Jonathan K. Bernstein, Esq.
            Bingham Dana LLP
            150 Federal Street

<PAGE>
                                       12


            Boston, Massachusetts 02110

      If to the Employee, to:

            Kent A. Dolby
            632 Olympia Hills Circle
            Berwyn, Pennsylvania  19312

      With a copy sent contemporaneously to:

            Michael A. Schlesinger, Esq.
            Tucker Flyer
            1615 L Street, N.W.
            Suite 400
            Washington, D.C.  20036

Any such notice shall be effective (i) if delivered personally or by telecopier,
when received, (ii) if sent by overnight courier, when receipted for and (iii)
if mailed, 3 days after being mailed as described above.

      (b) Equitable Remedies. Each of the parties hereto acknowledges and agrees
that upon any breach by the Employee of his obligations under Sections 7, 8 and
9 hereof, the Employer will have no adequate remedy at law, and accordingly will
be entitled to specific performance and other appropriate injunctive and
equitable relief.

      (c) Severability. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.

      (d) Waivers. No delay or omission by either party hereto in exercising any
right, power or privilege hereunder shall impair such right, power or privilege,
nor shall any single or partial exercise of any such right, power or privilege
preclude any further exercise thereof or the exercise of any other right, power
or privilege.

      (e) Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

      (f) Assigns. This Agreement shall be binding upon and inure to the benefit
of the heirs and successors of each of the parties hereto. The Employer may
assign this Agreement to any successor to all or substantially all of the
Employer's business.

      (g) Entire Agreement. This Agreement contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto.

      (h) Waiver of Jury Trial;Consent to Jurisdiction, Counsel. EACH PARTY
HERETO WAIVES ITS RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION

<PAGE>
                                       13


OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
AGREEMENT, CONTRACT OR OTHER DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION
HEREWITH, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. Each party hereto
agrees that the courts of the Commonwealth of Massachusetts and the United
States District Court for the District of Massachusetts shall have exclusive
jurisdiction to hear and determine any claims or disputes between or among the
Employee and any person or entity (including, without limitation, the Employer)
pertaining directly or indirectly to this Agreement or to any matter arising
hereunder. Each party hereto expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced in such courts, hereby
waiving personal service of the summons and complaint, or other process or
papers issued therein, and agreeing that service of such summons and complaint,
or other process or papers, may be made by registered or certified mail
addressed to such party at the address set forth herein. The Employee
acknowledges that he has carefully read this Agreement and that he has had an
opportunity to consult with an attorney of his own selection before signing it
and he understands the effects of this Agreement and is signing it voluntarily

      (i) Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction will be applied against any party.

      (j) Governing Law. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the Commonwealth of
Massachusetts.

                            [Execution page follows.]

<PAGE>


      IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.

                                    PAPEREXCHANGE.COM, LLC


                                    By: /s/ Robert K. Kraft
                                        ------------------------
                                        Name:   Robert K. Kraft
                                        Title:  Chairman


                                    /s/ Kent A. Dolby
                                    -----------------------------
                                    Kent A. Dolby

<PAGE>


                                    Exhibit A

                           Interest Purchase Agreement


<PAGE>


                                    Exhibit B

                             Equity Option Agreement