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                                                                    Exhibit 10.2

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT ("AGREEMENT") is made and entered into as of the 30th day
of December, 1999, by and between SIA ADHESIVES, INC., a Delaware corporation
("SIA"), and TANNER CHEMICALS, INC., a New Hampshire corporation ("SIA") and
GERARD A. LOFTUS (the "EMPLOYEE"). SIA, Tanner and the Employee are sometimes
hereinafter collectively referred to as the "PARTIES" and individually as a
"PARTY," and as hereinbelow set forth, SIA and Tanner are sometimes collectively
referred to as the "COMPANY." Certain capitalized terms used in this Agreement
are defined in Article VII hereof.

                                    RECITALS

      A. SIA and Tanner are wholly-owned subsidiaries of Sovereign Specialty
Chemicals, Inc., a Delaware corporation (the "PARENT"), and together with their
Affiliates and the Parent, are and will be engaged in the manufacture of
adhesives, sealants and coatings.

      B. The Parent has found it to be in the best interests of itself, SIA and
Tanner that the President of SIA and Tanner be one and the same person.

      C. SIA and Tanner each desire to employ the Employee, and the Employee
wishes to be employed by SIA and Tanner as the President of each. As a condition
of that employment, SIA and Tanner each require that an employment agreement be
entered into pursuant to which the Employee furnishes to each of SIA and Tanner
with, among other things, certain covenants of the Employee, including his
covenant not to compete with the businesses of SIA, Tanner, their Subsidiaries
and their Affiliates.

      D. In order to induce the Employee to enter into this Agreement, and to
incentivize and reward his effort, loyalty and commitment to SIA and Tanner,
concurrent with the execution and delivery of this Agreement, they have caused
the Parent to grant to the Employee a certain stock option (the "OPTION") to
purchase shares of Common Stock of the Parent ("SHARES") under and pursuant to
the terms of the "Sovereign Specialty Chemicals, Inc. Stock Option Plan" (the
"PLAN") and a Stock Option Agreement in the form of Exhibit C attached hereto
and by this reference made a part hereof (the "STOCK OPTION AGREEMENT").

      E. The Employee acknowledges that as a member of the management of SIA and
Tanner, he is one of the persons charged with primary responsibility for the
implementation of their respective business plans, and that he will have regular
access to various confidential and/or proprietary information relating to each
of them, their Subsidiaries, their Affiliates and their businesses. Further, the
Employee acknowledges that his covenants to SIA and Tanner hereinafter set
forth, specifically including but not limited to the Employee's covenant not to
engage in competition with SIA, Tanner, their Subsidiaries and their Affiliates
and their businesses, are being made in partial consideration of the Parent's
grant of the Option to the Employee.
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                                    AGREEMENT

      NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereby agree as follows:

                                    ARTICLE I
                             EMPLOYMENT RELATIONSHIP

      1.1 DUAL EMPLOYMENT. Subject to the terms and conditions of this
Agreement, each of SIA and Tanner hereby agrees to employ the Employee to serve
as its President, and the Employee hereby accepts such employment, and agrees to
perform his duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient manner.

            (a) The parties hereby expressly agree that except as expressly
      provided otherwise or as the context makes obvious, subsequent references
      in this Agreement to the "COMPANY" shall mean SIA and Tanner, individually
      and jointly, such that:

                  (i) any reference to "the Company, its Subsidiaries and their
            Affiliates" shall mean and include each of SIA, Tanner and their
            respective Subsidiaries and Affiliates;

                  (ii) each obligation of the Employee to the Company set forth
            in this Agreement shall constitute an obligation of the Employee (x)
            to SIA, its Subsidiaries and their Affiliates and (y) to Tanner, its
            Subsidiaries and their Affiliates; and;

                  (iii) each obligation of the Company to the Employee set forth
            in this Agreement other than a financial obligation shall constitute
            an obligation of each of Tanner and SIA, individually, to the
            Employee.

            (b) SIA and Tanner shall be each be liable for and shall each bear
      50% of all financial obligations of the Company to the Employee hereunder
      other than expenses which are reimbursed to the Employee pursuant to the
      provisions of Section 3.4, which shall be the obligation of the company on
      whose behalf the Employee incurred such expense.

            (c) SIA and Tanner covenant to the Employee that they each shall
      promulgate and maintain no policy or policies which is or are inconsistent
      with each other.

            (d) The provisions of Section 1.3 to the contrary notwithstanding
      (but subject to the provisions of Section 1.2), the Employee shall
      determine in his own best judgment how to allocate his time between the
      SIA and Tanner.




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            (e) The termination of the employment of the Employee at the
      instance of either SIA or Tanner pursuant to the provisions of either
      Section 5.1(e) or (f) shall constitute a concurrent termination of
      employment by the other, and the termination of the Employee's employment
      by either SIA or Tanner at his instance pursuant to the provisions of
      either Section 5.1(c) or (d) shall constitute a concurrent termination of
      employment with the other.

      1.2   DUTIES.

            (a) The Employee shall have the normal and customary duties,
      responsibilities and authority of President and shall perform such other
      duties on behalf of SIA, its Subsidiaries and their Affiliates as may be
      assigned to him by the Chairman of the SIA Board and the SIA Board. The
      Employee shall report to the Chairman of the SIA Board in connection with
      the Employee's performance of his duties.

            (b) The Employee shall have the normal and customary duties,
      responsibilities and authority of President and shall perform such other
      duties on behalf of Tanner, its Subsidiaries and their Affiliates as may
      be assigned to him by the Chairman of the Tanner Board and the Tanner
      Board. The Employee shall report to the Chairman of the Tanner Board in
      connection with the Employee's performance of his duties.

      1.3 EXCLUSIVE EMPLOYMENT. While he is employed by the Company hereunder,
the Employee covenants to the Company that he will devote his entire business
time, energy, attention and skill to the Company, its Subsidiaries and their
Affiliates (except for permitted vacation periods and reasonable periods of
illness or other incapacity), and use his good faith best efforts to promote the
interests of the Company, its Subsidiaries and their Affiliates. The foregoing
shall not be construed as prohibiting the Employee from spending such time as
may be reasonably necessary to attend to his personal affairs and investments so
long as such activities do not conflict or interfere with the Employee's
obligations and\or timely performance of his duties to the Company, its
Subsidiaries and their Affiliates hereunder.

      1.4   EMPLOYEE REPRESENTATIONS.     The Employee hereby represents and
warrants to the Company that:

            (a) the execution, delivery and performance by the Employee of this
      Agreement and any other agreements contemplated hereby to which the
      Employee is a party do not and shall not conflict with, breach, violate or
      cause a default under any contract, agreement, instrument, order, judgment
      or decree to which the Employee is a party or by which he is bound;

            (b) the Employee is not a party to or bound by any employment
      agreement, non-competition agreement or confidentiality agreement with any
      other person or entity (or if a party to such an agreement, the Employee
      has disclosed the material terms thereof to the Board prior to the
      execution hereof and promptly after the date hereof shall deliver a copy
      of such agreement to the Board); and





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            (c) upon the execution and delivery of this Agreement by the
      Company, this Agreement shall be the valid and binding obligation of the
      Employee, enforceable in accordance with its terms.

The Employee hereby acknowledges and represents that he has consulted with
independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.
                                   ARTICLE II
                              PERIOD OF EMPLOYMENT

      2.1 EMPLOYMENT PERIOD. The Employee has been employed by the Company or
its predecessor for a number of years, and such employment shall continue
hereunder until the date fixed by the provisions of Section 2.2 hereof, subject
to the early termination provisions of Article V hereof (the "EMPLOYMENT
PERIOD"), it being acknowledged that the Company's fiscal year ends on December
31, and that the Employment Period shall therefore be denominated in calendar
years.

      2.2 INITIAL TERM OF EMPLOYMENT PERIOD AND EXTENSION TERMS. The Employment
Period shall initially continue for a term commencing on the date hereof and
ending on December 31, 2002 (the "INITIAL TERM"). The Employment Period shall be
automatically extended for successive calendar years of the Company following
the expiration of the Initial Term (each such one year period being hereinafter
referred to as an "EXTENSION TERM") upon the same terms and conditions provided
for herein unless either party provides the other party with advance written
notice of its or his intention not to extend the Employment Period; provided,
however, that such notice must be delivered by the non-extending party to the
other party not later than ninety (90) days prior to the expiration of the
Initial Term or any Extension Term, as the case may be.

                                   ARTICLE III
                                  COMPENSATION

      3.1 ANNUAL BASE COMPENSATION. During the Employment Period the Company
shall pay to the Employee an annual base salary (the "ANNUAL BASE COMPENSATION")
in the amount of $150,000.00. The Annual Base Compensation shall be paid in
regular installments in accordance with the Company's general payroll practices,
and shall be subject to all required federal, state and local withholding taxes.
The Employee's Annual Base Compensation shall be reviewed by the Board annually,
and may, in the discretion of the Board be increased, provided that there shall
be no obligation on the part of the Company to increase the Employee's Annual
Base Compensation, further provided that in no event shall the Employee's Annual
Base Compensation be less than the greater of (i) the amount indicated in the
first sentence of this Section 3.1 or (ii) the highest amount such Annual Base
Compensation may have been increased to by the Board subsequent to the date of
this Agreement in its discretion.

      3.2 POTENTIAL ANNUAL TARGET BONUSES. In respect of each calendar year
falling within the Employment Period, the Employee shall be eligible to earn an
annual bonus, depending upon the results of operation of the Company, the
Parent, its Subsidiaries and their Affiliates and the personal performance of
the Employee, of up to forty percent (40%) of the Employee's Annual




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Base Compensation for that calendar year (the "POTENTIAL ANNUAL TARGET BONUS")
in accordance with the terms of a bonus plan which shall be adopted and
maintained in effect by the Board for that calendar year. The amount of the
Potential Annual Target Bonus, if any, which is earned by the Employee (the
"BONUSABLE AMOUNT") shall be paid by the Company to the Employee no later than
seventy-five (75) days following the close of the Company's calendar year,
provided that unless expressly provided otherwise herein, it shall be a
condition precedent to the Employee's right to receive any Bonusable Amount that
the Employee be employed by the Company on the last day of that calendar year.

      3.3 DISCRETIONARY BONUSES. In respect of each calendar year falling within
the Employment Period, the Company may pay a discretionary annual bonus to the
Employee (a "DISCRETIONARY BONUS") to be determined by the Board, in its sole
discretion. Any Discretionary Bonus shall be paid by the Company to the Employee
within seventy-five (75) days following the close of the Company's calendar
year, provided that unless expressly provided otherwise herein, it shall be a
condition precedent to the Employee's right to receive any Discretionary Bonus
that the Employee be employed by the Company on the last day of that calendar
year.

      3.4 EXPENSES. During the Employment Period, the Employee shall be entitled
to reimbursement of all travel, entertainment and other business expenses
reasonably incurred in the performance of his duties for the Company, upon
submission of all receipts and accounts with respect thereto, and approval by
the Company thereof, in accordance with the business expense reimbursement
policies of the Company from time to time adopted by the Board.

      3.5 VACATION. In respect of each calendar year falling within the
Employment Period, the Employee shall be entitled to such vacation time as the
Company customarily provides to its senior executives (but in no event less than
four (4) weeks per calendar year), provided that unused vacation may be used by
the Employee in the following calendar year only in accordance with and as
permitted by the Company's then current vacation policies in effect from time to
time.

      3.6 OTHER FRINGE BENEFITS. During the Employment Period, the Employee
shall be entitled to receive such of the Company's other fringe benefits as are
being provided to other employees of the Company holding senior executive
positions, including but not limited to health insurance benefits, disability
benefits and retirement benefits.

      3.7 GRANT OF STOCK OPTION. Concurrently with the parties' execution and
delivery of this Agreement the Company has caused the Parent to grant to the
Employee the Option to purchase an aggregate of 9,500 Shares pursuant to the
terms of the Stock Option Agreement as part consideration for the Employee's
execution and delivery of this Agreement to the Company.

                                   ARTICLE IV
                            COVENANTS OF THE EMPLOYEE

      4.1 PROPRIETARY RIGHTS. The Employee hereby expressly agrees that all
research, discoveries, inventions and innovations (whether or not reduced to
practice or documented), improvements, developments, methods, designs, analyses,
drawings, reports and all similar or




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related information (whether patentable or unpatentable, and whether or not
reduced to writing), trade secrets (being information about the business of the
Company, its Subsidiaries and their Affiliates which is considered by the
Company or any such Subsidiary or Affiliate to be confidential and is
proprietary to the Company or any such Subsidiary or Affiliate) and confidential
information, copyrightable works, and similar and related information (in
whatever form or medium), which (x) either (i) relate to the Company's, its
Subsidiaries' or their Affiliates' actual or anticipated business, research and
development or existing or future products or services or (ii) result from any
work performed by the Employee for the Company, its Subsidiaries or any of their
Affiliates and (y) are conceived, developed, made or contributed to in whole or
in part by the Employee during the Employment Period ("WORK PRODUCT") shall be
and remain the sole and exclusive property of the Company, such Subsidiary or
such Affiliate. The Employee shall communicate promptly and fully all Work
Product to the Board.

            (a) WORK MADE FOR HIRE. The Employee acknowledges that, unless
      otherwise agreed in writing by the Company, all Work Product eligible for
      any form of copyright protection made or contributed to in whole or in
      part by the Employee within the scope of the Employee's employment by the
      Company during the Employment Period shall be deemed a "work made for
      hire" under the copyright laws and shall be owned by the Company, its
      Subsidiaries or their Affiliates, as applicable.

            (b) ASSIGNMENT OF PROPRIETARY RIGHTS. The Employee hereby assigns,
      transfers and conveys to the Company, and shall assign, transfer and
      convey to the Company, all right, title and interest in and to all
      inventions, ideas, improvements, designs, processes, trademarks, service
      marks, trade names, trade secrets, trade dress, data, discoveries and
      other proprietary assets and proprietary rights in and of the Work Product
      (the "PROPRIETARY RIGHTS") for the Company's exclusive ownership and use,
      together with all rights to sue and recover for past and future
      infringement or misappropriation thereof, provided that if a Subsidiary or
      Affiliate of the Company is the owner thereof, such assignment, transfer
      and conveyance shall be made to such Subsidiary or Affiliate, which shall
      enjoy exclusive ownership and use, together with all rights to sue and
      recover for past and future infringement or misappropriation thereof.

            (c) FURTHER INSTRUMENTS. At the request of the Company (its
      Subsidiaries or their Affiliates, as the case may be), at all times during
      the Employment Period and thereafter, the Employee will promptly and fully
      assist the Company (its Subsidiaries or their Affiliates, as the case may
      be) in effecting the purpose of the foregoing assignment, including but
      not limited to the further acts of executing any and all documents
      necessary to secure for the Company (its Subsidiaries or their Affiliates,
      as the case may be) such Proprietary Rights and other rights to all Work
      Product and all confidential information related thereto, providing
      cooperation and giving testimony.

            (d) INAPPLICABILITY OF SECTION 4.1 IN CERTAIN CIRCUMSTANCES. The
      Company expressly acknowledges and agrees that, and the Employee is hereby
      advised that, this Section 4.1 does not apply to any invention for which
      no equipment, supplies, facilities or trade secret information of the
      Company, its Subsidiaries or any of their Affiliates was




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      used and which was developed entirely on the Employee's own time, unless
      (i) the invention relates to the business of the Company, its Subsidiaries
      or any of their Affiliates or to the Company's, its Subsidiaries' or any
      of their Affiliates' actual or demonstrably anticipated research or
      development or (ii) the invention results from any work performed by the
      Employee for the Company, its Subsidiaries or any of their Affiliates.

      4.2 OWNERSHIP AND COVENANT TO RETURN DOCUMENTS, ETC. The Employee agrees
that all Work Product and all documents or other tangible materials (whether
originals, copies or abstracts), including without limitation, price lists,
quotation guides, outstanding quotations, books, records, manuals, files, sales
literature, training materials, customer records, correspondence, computer disks
or print-out documents, contracts, orders, messages, phone and address lists,
invoices and receipts, and all objects associated therewith, which in any way
relate to the business or affairs of the Company, its Subsidiaries and their
Affiliates either furnished to the Employee by the Company, its Subsidiaries or
any of their Affiliates or are prepared, compiled or otherwise acquired by the
Employee during the Employment Period, shall be the sole and exclusive property
of the Company, such Subsidiaries or such Affiliates. The Employee shall not,
except for the use of the Company, its Subsidiaries or any of their Affiliates,
use, copy or duplicate any of the aforementioned documents or objects, nor
remove them from the facilities of the Company or such Subsidiaries or such
Affiliates, nor use any information concerning them except for the benefit of
the Company, its Subsidiaries and their Affiliates, either during the Employment
Period or thereafter. The Employee agrees that he will deliver all of the
aforementioned documents and objects that may be in his possession to the
Company on the termination of his employment with the Company, or at any other
time upon the Company's request, together with his written certification of
compliance with the provisions of this Section 4.2 in the form of Exhibit A to
this Agreement in accordance with the provisions of Section 5.3 hereof.

      4.3 NON-DISCLOSURE COVENANT. During the Employment Period and at all times
thereafter, the Employee shall not, either directly or indirectly, disclose to
any "unauthorized person" or use for the benefit of the Employee or any person
or entity other than the Company, its Subsidiaries or their Affiliates any Work
Product or any knowledge or information which the Employee may acquire while
employed by the Company (whether before or after the date of this Agreement)
relating to (i) the financial, marketing, sales and business plans and affairs,
financial statements, analyses, forecasts and projections, books, accounts,
records, operating costs and expenses and other financial information of the
Company, its Subsidiaries and their Affiliates, (ii) internal management tools
and systems, costing policies and methods, pricing policies and methods and
other methods of doing business, of the Company, its Subsidiaries and their
Affiliates, (iii) customers, sales, customer requirements and usages,
distributor lists, of the Company, its Subsidiaries and their Affiliates, (iv)
agreements with customers, vendors, independent contractors, employees and
others, of the Company, its Subsidiaries and their Affiliates, (v) existing and
future products or services and product development plans, designs, analyses and
reports, of the Company, its Subsidiaries and their Affiliates, (vi) computer
software and data bases developed for the Company, its Subsidiaries or their
Affiliates, trade secrets, research, records of research, models, designs,
drawings, technical data and reports of the Company, its Subsidiaries and their
Affiliates and (vii) correspondence or other private or confidential matters,
information or data whether written, oral or electronic, which is proprietary to
the Company, its Subsidiaries and their




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Affiliates and not generally known to the public (individually and collectively
"CONFIDENTIAL INFORMATION"), without the Company's prior written permission. For
purposes of this Section 4.3, the term "UNAUTHORIZED PERSON" shall mean any
person who is not (i) an officer or director of the Company, or (ii) an
employee, officer or director of a Subsidiary or Affiliate of the Company for
whom the disclosure of the knowledge or information referred to herein is
necessary for his performance of his assigned duties, or (iii) a person
expressly authorized by the Company to receive disclosure of such knowledge or
information. The Company expressly acknowledges and agrees that the term
"Confidential Information" excludes information which is (A) in the public
domain or otherwise generally known to the trade, or (B) disclosed to third
parties other than by reason of the Employee's breach of his confidentiality
obligation hereunder or (C) learned of by the Employee subsequent to the
termination of his employment hereunder from any other party not then under an
obligation of confidentiality to the Company, its Subsidiaries and their
Affiliates. Further, the Employee covenants to the Company that in the
Employee's performance of his duties hereunder, the Employee will violate no
confidentiality obligations he may have to any third persons.

      4.4 ANTI-PIRATING AND NON-INTERFERENCE COVENANTS. The Employee covenants
to the Company that while the Employee is employed by the Company hereunder and
for the two (2) year period thereafter (the "NON-SOLICITATION PERIOD"), he will
not, for any reason, directly or indirectly: (a) solicit, hire, or otherwise do
any act or thing which may induce any other employee of the Company, its
Subsidiaries or their Affiliates to leave the employ or otherwise interfere with
or adversely affect the relationship (contractual or otherwise) of the Company,
its Subsidiaries and their Affiliates with any person who is then or thereafter
becomes an employee of the Company, its Subsidiaries and their Affiliates; or
(b) do any act or thing which may interfere with or adversely affect the
relationship (contractual or otherwise) of the Company, its Subsidiaries and
their Affiliates with any customer or vendor of the Company, its Subsidiaries
and their Affiliates or induce any such customer or vendor to cease doing
business with the Company, its Subsidiaries and their Affiliates.

      4.5 COVENANT NOT TO COMPETE. The Employee expressly acknowledges that (i)
the Company is and will be engaged in the manufacture of adhesives, sealants and
coatings; (ii) the Employee is one of a limited number of persons who has
extensive knowledge and expertise relevant to the businesses of the Company, its
Subsidiaries and their Affiliates; (iii) the Employee's performance of his
services for the Company hereunder will afford him full and complete access to
and cause him to become highly knowledgeable about the Company's, its
Subsidiaries' and their Affiliates' Confidential Information; (iv) the
agreements and covenants contained in this Section 4.5 are essential to protect
the business and goodwill of the Company, its Subsidiaries and their Affiliates
because, if the Employee enters into any activities competitive with the
businesses of the Company, its Subsidiaries and their Affiliates, he will cause
substantial harm to the Company or its Subsidiaries and Affiliates; and (v) his
covenants to the Company, its Subsidiaries and their Affiliates set forth in
this Section 4.5 are being made in partial consideration of the Company having
caused the Parent to grant the Option to him. Accordingly, the Employee hereby
agrees that while he is employed by the Company hereunder and for the one (1)
year period thereafter (the "NON-COMPETITION PERIOD"), he shall not directly or
indirectly own any interest in, invest in, lend to, borrow from, manage,
control, participate in, consult with, become employed by, render




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services to, or in any other manner whatsoever engage in, any business which is
competitive with any business actively being engaged in by the Company, its
Subsidiaries and their Affiliates or actively (and demonstrably) being
considered by the Company, its Subsidiaries and their Affiliates for entry into
on the date of the termination of the Employment Period, within any states or
geographical regions in which any such business is being conducted or in which
the Company, its Subsidiaries and their Affiliates is or are actively (and
demonstrably) considering engaging in on the date of the termination of the
Employment Period. The preceding to the contrary notwithstanding, the Employee
shall be free to make investments in the publicly traded securities of any
corporation, provided that such investments do not amount to more than 1% of the
outstanding securities of any class of such corporation.

      4.6 REMEDIES FOR BREACH. If the Employee commits a breach, or threatens to
commit a breach, of any of the provisions of this Article IV, the Company and
its Subsidiaries shall have the right and remedy, in addition to any other
remedy that may be available at law or in equity, to have the provisions of this
Article IV specifically enforced by any court having equity jurisdiction,
together with an accounting therefor, it being expressly acknowledged and agreed
by the Employee that any such breach or threatened breach will cause irreparable
injury to the Company and its Subsidiaries and that money damages will not
provide an adequate remedy to the Company and its Subsidiaries. Such injunction
shall be available without the posting of any bond or other security, and the
Employee hereby consents to the issuance of such injunction. The Employee
further agrees that any such injunctive relief obtained by the Company or its
Subsidiaries shall be in addition to, and not in lieu of, monetary damages and
any other remedies to which the Company or its Subsidiaries may be entitled.
Further, in the event of an alleged breach or violation by the Employee of any
of the provisions of Sections 4.4 or 4.5 hereof, the Non-Solicitation Period
and\or the Non-Competition Period, as the case may be, shall be tolled until
such breach or violation has been cured. The parties agree that in the event of
the institution of any action at law or in equity by either party to enforce the
provisions of this Article IV, the losing party shall pay all of the costs and
expenses of the prevailing party, including reasonable legal fees, incurred in
connection therewith. If any covenant contained in this Article IV or any part
thereof is hereafter construed to be invalid or unenforceable, the same shall
not affect the remainder of such covenant or any other covenants, which shall be
given full effect, without regard to the invalid portions, and any court having
jurisdiction shall have the power to modify such covenant to the least extent
necessary to render it enforceable and, in its modified form, said covenant
shall then be enforceable.

                                    ARTICLE V
                            TERMINATION OF EMPLOYMENT

      5.1 TERMINATION AND TRIGGERING EVENTS. Notwithstanding anything to the
contrary elsewhere contained in this Agreement, the Employment Period shall
terminate at the expiration of the Initial Term or any Extension Term, or prior
to the expiration of the Initial Term or any Extension Term upon the occurrence
of any of the following events (hereinafter referred to as "TRIGGERING EVENTS"):
(a) the Employee's death; (b) the Employee's Total Disability; (c) the
Employee's Resignation; (d) the Employee's Resignation with Good Grounds; (e) a
Termination by the Company for Cause; or (f) a Termination by the Company
Without Cause.




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      5.2 RIGHTS UPON OCCURRENCE OF A TRIGGERING EVENT. Subject to the
provisions of Section 5.3 hereof, the rights of the parties upon the occurrence
of a Triggering Event prior to the expiration of the Initial Term or any
Extension Term shall be as follows:

            (a) RESIGNATION AND TERMINATION BY THE COMPANY FOR CAUSE: If the
      Triggering Event was the Employee's Resignation or a Termination by the
      Company for Cause, the Employee shall be entitled to receive his Annual
      Base Compensation and accrued but unpaid vacation through the date thereof
      in accordance with the policy of the Company, and to continue to
      participate in the Company's health, insurance and disability plans and
      programs through that date and thereafter, only to the extent permitted
      under the terms of such plans and programs.

            (b) DEATH OR TOTAL DISABILITY: If the Triggering Event was the
      Employee's death or Total Disability, the Employee (or the Employee's
      designated beneficiary) shall be entitled to receive the Employee's Annual
      Base Compensation and accrued but unpaid vacation through the date thereof
      plus a pro rata portion of the Employee's Potential Annual Target Bonus
      for the calendar year in which such death or Total Disability occurred
      (based on the number of days the Employee was employed during the
      applicable calendar year), in accordance with the policy of the Company,
      and to continue to participate in the Company's health, insurance and
      disability plans and programs through the date of termination and
      thereafter only to the extent permitted under the terms of such plans and
      programs.

            (c) TERMINATION BY COMPANY WITHOUT CAUSE OR RESIGNATION BY EMPLOYEE
      WITH GOOD GROUNDS: If the Triggering Event was a Termination by the
      Company Without Cause or a Resignation by the Employee With Good Grounds,
      the Employee shall be entitled to receive his Annual Base Compensation and
      accrued but unpaid vacation through the date thereof plus, in the case of
      either (i) Resignation by the Employee with Good Grounds or (ii) a
      Termination By the Company Without Cause in the discretion of the Chairman
      of the Board of the Company, a pro rata portion of the Employee's
      Potential Annual Target Bonus for the calendar year in which such
      Triggering Event occurred (based on the number of days the Employee was
      employed during the applicable calendar year), payable in accordance with
      the Company's normal payroll practices, provided that in addition, the
      Employee shall also be paid an amount equal to his then current Annual
      Base Compensation payable in accordance with the Company's normal payroll
      practices, and to continue to participate in the Company's health,
      insurance and disability plans and programs ("ADDITIONAL SEVERANCE
      BENEFITS") during the one (1) year period immediately following the date
      of the termination of the Employment Period (the "SEVERANCE PERIOD");
      provided that the Employee shall be entitled to receive such Additional
      Severance Benefits during the Severance Period if and only if the Employee
      has executed and delivered to the Company the General Release
      substantially in form and substance as set forth in Exhibit B to this
      Agreement and only so long as the Employee has not breached any of his
      covenants to the Company set forth in Article IV of this Agreement.




                                      -10-
<PAGE>   11
            (d) CESSATION OF ENTITLEMENTS AND COMPANY RIGHT OF OFFSET. Except as
      otherwise expressly provided herein, all of the Employee's rights to
      salary, employee benefits, fringe benefits and bonuses hereunder (if any)
      which would otherwise accrue after the termination of the Employment
      Period shall cease upon the date of such termination. The Company may
      offset any loans, cash advances or fixed amounts which the Employee owes
      the Company or its Affiliate against any amounts it owes the Employee
      under this Agreement.

      5.3 SURVIVAL OF CERTAIN OBLIGATIONS AND TERMINATION CERTIFICATE. The
provisions of Articles IV, VI and VIII shall survive any termination of the
Employment Period, whether by reason of the occurrence of a Triggering Event or
the expiration of the Initial Term or any Extension Term. Immediately following
the termination of the Employment Period, the Employee shall promptly return to
the Company all property required to be returned to the Company pursuant to the
provisions of Section 4.2 hereof and execute and deliver to the Company the
Termination Certificate attached hereto as Exhibit A and by this reference made
a part hereof.

                                   ARTICLE VI
                                   ASSIGNMENT

      6.1 PROHIBITION OF ASSIGNMENT BY EMPLOYEE. The Employee expressly agrees
for himself and on behalf of his executors, administrators and heirs, that this
Agreement and his obligations, rights, interests and benefits hereunder shall
not be assigned, transferred, pledged or hypothecated in any way by the
Employee, his executors, administrators or heirs, and shall not be subject to
execution, attachment or similar process. Any attempt to assign, transfer,
pledge, hypothecate or otherwise dispose of this Agreement or any such rights,
interests and benefits thereunder contrary to the foregoing provisions, or the
levy of any attachment or similar process thereupon shall be null and void and
without effect and shall relieve the Company of any and all liability hereunder.

      6.2 RIGHT OF COMPANY TO ASSIGN. This Agreement shall be assignable and
transferable by the Company to any successor-in-interest without the consent of
the Employee.

                                   ARTICLE VII
                                   DEFINITIONS

      "AFFILIATE" means the Parent and each of its Subsidiaries.

      "BOARD" means either the SIA Board or the Tanner Board.

      "PARENT" means Sovereign Specialty Chemicals, Inc., a Delaware
corporation.

      "RESIGNATION" means the voluntary termination of employment hereunder by
the Employee which is not a Resignation with Good Grounds (except if made in
contemplation of a Termination by the Company for Cause), provided that if such
action is taken by the Employee without the




                                      -11-
<PAGE>   12
giving of at least ninety (90) days prior written notice, such termination of
employment shall not be a "Resignation," but instead shall constitute a
Termination for Cause.

      "RESIGNATION WITH GOOD GROUNDS" means a voluntary termination of the
Employee's employment hereunder on account of, and within sixty (60) days after,
the occurrence of one or more of the following events:

            (i) the assignment to the Employee of any duties inconsistent in any
      material respect with the Employee's position (including status, offices
      and titles), authority, duties or responsibilities as contemplated by
      Section 1.2 hereof which results in a diminution of the Employee's
      position, excluding for this purpose an isolated, insubstantial or
      inadvertent action not taken in bad faith and which is remedied by the
      Company promptly after receipt of written notice thereof given by the
      Employee;

            (ii) the Employee's Annual Base Compensation and\or Potential Annual
      Target Bonus is\are decreased below the amount of his then Annual Base
      Compensation and\or Potential Annual Target Bonus fixed by the applicable
      provisions of Sections 3.1 and 3.2 hereof (provided that so long as the
      aggregate sum of the Employee's Annual Base Compensation and Potential
      Annual Target Bonus in respect of any calendar year during the Employment
      Term are not decreased, the Company shall be free to decrease the
      Potential Annual Target Bonus for that year and commensurately increase
      the Annual Base Compensation for that year without any affect on the
      subsequent calendar year Annual Base Compensation and Potential Annual
      Target Bonus, it being expressly acknowledged by the Employee that the
      operating result achievement criteria for the payment of any of the
      Potential Annual Target Bonus by the Company, its Subsidiaries and their
      Affiliates shall be determined by the Board, in its absolute discretion)
      or the Employee's benefits under any material employee benefit plan,
      program or arrangement of the Company (other than a change that affects
      all Employees of the Company) are materially reduced from the level in
      effect upon the Employee's commencement of participation therein; or

            (iii) the failure of the Company to comply with any of the
      provisions of this Agreement, other than an isolated, insubstantial or
      inadvertent action not taken in bad faith and which is remedied by the
      Company promptly after receipt of written notice thereof given by the
      Employee.

      "SIA BOARD" means the Board of Directors of SIA.

            "SUBSIDIARY" means, with respect to any person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such person or entity or one or more of
the other Subsidiaries of such person or entity or a combination thereof, or
(ii) if a limited liability company, partnership, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by





                                      -12-
<PAGE>   13
any person or entity or one or more Subsidiaries of such person or entity or a
combination thereof For purposes hereof, a person or persons shall be deemed to
have a majority ownership interest in a limited liability company, partnership,
association or other business entity if such person or persons shall be
allocated a majority of limited liability company, partnership, association or
other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association or other business entity.

      "TANNER BOARD" means the Board of Directors of Tanner.

      "TERMINATION BY THE COMPANY FOR CAUSE" means termination by the Company
of the Employee's employment for:

            (i)   misappropriation of any significant monies or significant
      assets or properties of the Company;

            (ii) conviction of a felony or a crime involving moral turpitude;

            (iii) substantial and repeated failure to comply with directions of
      the Chairman of the Board of the Company;

            (iv)  gross negligence or willful misconduct;

            (v) chronic alcoholism or drug addiction together with the
      Employee's refusal to cooperate with or participate in counseling and/or
      treatment of same; or

            (vi) any willful action or inaction of the Employee which, in the
      reasonable opinion of the Board, constitutes dereliction (willful neglect
      or willful abandonment of assigned duties), or a material breach of
      Company policy or rules which, if susceptible to cure, is not cured by the
      Employee within five (5) days following the Employee's receipt of written
      notice from the Company advising the Employee with reasonable specificity
      as to the action or inaction viewed by the Board to be dereliction or a
      material breach of Company policy or rules;

provided that the termination of the Employee's employment hereunder by the
Company shall not be deemed a Termination by the Company for Cause unless and
until there shall have been delivered to the Employee a written notice from the
Chairman of the Board (after reasonable notice to and an opportunity for the
Employee (alone and in person) to have a meeting with the Chairman of the Board)
finding that in the good faith opinion of the Chairman of the Board, the
Employee was guilty of the conduct set forth in one or more of such clauses.

      "TERMINATION BY THE COMPANY WITHOUT CAUSE" means a termination of the
Employee's employment by the Company which is not a Termination by the Company
for Cause, provided that the termination of the Employment Period on account of
the failure of the Company to extend the



                                      -13-
<PAGE>   14
Employment Period in accordance with the provisions of Section 2.2 hereof shall
constitute a Termination by the Company Without Cause.

      "TOTAL DISABILITY" means the Employee's inability, because of illness,
injury or other physical or mental incapacity, to perform his duties hereunder
(as determined by the Board in good faith) for a continuous period of one
hundred eighty (180) consecutive days, or for a total of one hundred eighty
(180) days within any three hundred sixty (360) consecutive day period, in which
case such Total Disability shall be deemed to have occurred on the last day of
such one hundred eighty (180) day or three hundred sixty (360) day period, as
applicable.

                                  ARTICLE VIII
                                     GENERAL

      8.1 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed properly sent, (i) when delivered, if by personal service or
reputable overnight courier service, or (ii) when received, if sent (x) by
certified or registered mail, postage prepaid, return receipt requested, or (y)
via facsimile transmission (provided that a hard copy of such notice is sent to
the addressee via one of the methods of delivery or mailing set forth above on
the same day the facsimile transmission is sent); to the recipient at the
address indicated below:

            Notices to Employee:
            --------------------

            Gerard A. Loftus
            8500 Countryview Drive
            Broadview Heights, Ohio  44147


            Notices to Company:
            -------------------

            SIA ADHESIVES, INC. and TANNER CHEMICALS, INC.
            C\O Chief Executive Officer
            Sovereign Specialty Chemicals, Inc.
            Suite 2200
            225 West Washington Street
            Chicago, Illinois 60606
            Facsimile (312) 419-7151


            With Copies to:
            ---------------

            Robert I. Schwimmer, Esq.
            McBride Baker & Coles
            500 West Madison, 40th Floor
            Chicago, Illinois 60661
            Facsimile (312) 993-9350



                                      -14-
<PAGE>   15
            Timothy E. Peterson, Esq.
            Fried, Frank, Harris, Shriver & Jacobson
            4 Chriswell Street
            London EC1Y 4UP
            Facsimile (0207) 972-9602

            Christine J. Smith, Esq.
            AEA Investors Inc.
            65 East 55th Street
            New York, New York 10022
            Facsimile (212) 888-1459

      8.2 GOVERNING LAW. This Agreement shall be subject to and governed by the
laws of the State of Ohio without regard to any choice of law or conflicts of
law rules or provisions (whether of the State of Ohio or any other
jurisdiction), irrespective of the fact that the Employee may become a resident
of a different state.

      8.3 BINDING EFFECT. The Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and the Employee and his
executors, administrators, personal representatives and heirs.

      8.4 COMPLETE UNDERSTANDING. This Agreement constitutes the complete
understanding among the parties hereto with regard to the subject matter hereof,
and supersedes any and all prior agreements and understandings relating to the
employment of the Employee by the Company, including, without limitation, the
employment agreement between the Employee and the Company, dated March 31, 1996,
which is hereby null and void.

      8.5 AMENDMENTS. No change, modification or amendment of any provision of
this Agreement shall be valid unless made in writing and signed by all of the
parties hereto.

      8.6 WAIVER. The waiver by the Company of a breach of any provision of this
Agreement by the Employee shall not operate or be construed as a waiver of any
subsequent breach by the Employee. The waiver by the Employee of a breach of any
provision of this Agreement by the Company shall not operate as a waiver of any
subsequent breach by the Company.

      8.7 VENUE, JURISDICTION, ETC. The Employee hereby agrees that any suit,
action or proceeding relating in any way to this Agreement may be brought and
enforced in the Court of Common Pleas of Summit County of the State of Ohio or
in the District Court of the United States of America for the Northern District
of Ohio, and in either case the Employee hereby submits to the jurisdiction of
each such court. The Employee hereby waives and agrees not to assert, by way of
motion or otherwise, in any such suit, action or proceeding, any claim that the
Employee is not personally subject to the jurisdiction of the above-named
courts, that the suit, action or proceeding is brought in an inconvenient forum
or that the venue of the suit, action or proceeding is improper. The Employee
consents and agrees to service of process or other legal summons for purpose of
any



                                      -15-
<PAGE>   16
such suit, action or proceeding by registered mail addressed to the Employee at
his or her address listed in the business records of the Company. Nothing
contained herein shall affect the rights of the Company to bring suit, action or
proceeding in any other appropriate jurisdiction. The Employee and the Company
do each hereby waive any right to trial by jury, he or it may have concerning
any matter relating to this Agreement.

      8.8 SEVERABILITY. If any portion of this Agreement shall be for any
reason, invalid or unenforceable, the remaining portion or portions shall
nevertheless be valid, enforceable and carried into effect.

      8.9 HEADINGS. The headings of this Agreement are inserted for convenience
only and are not to be considered in the construction of the provisions hereof.

      8.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which, taken together, shall constitute one and the same
agreement.

      IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officers and its corporate seal to be hereunto affixed, and
the Employee has hereunto set his hand on the day and year first above written.

COMPANY:                                  EMPLOYEE:
--------                                  ---------

SIA ADHESIVES, INC.
a Delaware Corporation
                                          ------------------------------
                                                     Gerard A. Loftus
 By:
     ------------------------------
         Chairman of the Board

TANNER CHEMICALS, INC., a
New Hampshire Corporation



By:
   ------------------------------
         Chairman of the Board


                                      -16-
<PAGE>   17


                                    EXHIBIT A
                                       TO
                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                              SIA ADHESIVES, INC.,
                             TANNER CHEMICALS, INC.
                                       AND
                                GERARD A. LOFTUS

                             TERMINATION CERTIFICATE

         This is to certify that, except as permitted by the Employment
Agreement (as defined below) I do not have in my possession, nor have I failed
to return, any software, inventions, designs, works of authorship, copyrightable
works, formulas, data, marketing plans, forecasts, product concepts, marketing
plans, strategies, forecasts, devices, records, data, notes, reports, proposals,
customer lists, correspondence, specifications, drawings, blueprints, sketches,
materials, patent applications, continuation applications, continuation-in-part
applications, divisional applications, other documents or property, or
reproductions of any aforementioned items belonging to SIA ADHESIVES, INC.
and\or TANNER CHEMICALS, INC., (individually and jointly, the "COMPANY"), their
Subsidiaries and their Affiliates, successors or assigns.

         I further certify that I have complied with all the terms of the
Employment Agreement dated December 30, 1999 between the Company and me (the
"EMPLOYMENT AGREEMENT"), relating to the reporting of any Work Product (as that
term is defined therein), conceived or made by me (solely or jointly with
others) covered by the Employment Agreement.

         I acknowledge that the provisions of the Employment Agreement relating
to Confidential Information, as defined in the Employment Agreement, continue in
effect beyond the termination of the Employment Agreement, as set forth therein.

         Finally, I further acknowledge that the provisions of the Employment
Agreement relating to my (i) anti-pirating, (ii) noninterference and (iii)
non-competition covenants to the Company, its Subsidiaries and their Affiliates,
remain in effect following the date of my termination of employment with the
Company.

Date:____________                           ______________________________
                                                 Employee
<PAGE>   18
                                    EXHIBIT B
                                       TO
                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                              SIA ADHESIVES, INC.,
                             TANNER CHEMICALS, INC.
                                       AND
                                GERARD A. LOFTUS

                                 GENERAL RELEASE


         I, Gerard A. Loftus, in consideration of and subject to the performance
by SIA ADHESIVES, INC., a Delaware corporation and TANNER CHEMICALS, INC., a New
Hampshire corporation, of their material obligations under the Employment
Agreement, dated as of the date as of December 30, 1999 (the "AGREEMENT"), do
hereby release and forever discharge as of the date hereof the "Company," its
"Subsidiaries" and their "Affiliates" (as those terms are defined in the
Agreement, subject to the provisions of Section 1.1 of the Agreement) and all
present and former directors, officers, agents, representatives, employees,
successors and assigns of the Company, its Subsidiaries and their Affiliates and
their direct or indirect owners (collectively, the "RELEASED PARTIES") to the
extent provided below.

1.       I understand that any payments or benefits paid or granted to me under
         Section 5.2(c) of the Agreement represent, in part, consideration for
         signing this General Release and are not salary, wages or benefits to
         which I was already entitled. I understand and agree that I will not
         receive the payments and benefits specified in Section 5.2(c) of the
         Agreement unless I execute this General Release and do not revoke this
         General Release within the time period permitted hereafter or breach
         this General Release.

2.       Except as provided in paragraph 4 of this General Release, I knowingly
         and voluntarily release and forever discharge the Company and the other
         Released Parties from any and all claims, controversies, actions,
         causes of action, cross-claims, counterclaims, demands, debts,
         compensatory damages, liquidated damages, punitive or exemplary
         damages, other damages, claims for costs and attorneys' fees, or
         liabilities of any nature whatsoever in law and in equity, both past
         and present (through the date of this General Release) and whether
         known or unknown, suspected, or claimed against the Company or any of
         the Released Parties which I, my spouse, or any of my heirs, executors,
         administrators or assigns, may have, which arise out of or are
         connected with my employment with, or my separation from, the Company
         (including, but not limited to, any allegation, claim or violation,
         arising under: Title VII of the Civil Rights Act of 1964, as amended;
         the Civil Rights Act of 1991; the Age Discrimination in Employment Act
         of 1967, as amended (including the Older Workers Benefit Protection
         Act); the Equal Pay Act of 1963, as amended; the Americans with
         Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the
         Civil Rights Act of 1866, as amended; the Worker Adjustment
<PAGE>   19
         Retraining and Notification Act; the Employee Retirement Income
         Security Act of 1974; any applicable Employee Order Programs; the Fair
         Labor Standards Act; or their state or local counterparts; or under any
         other federal, state or local civil or human rights law, or under any
         other local, state, or federal law, regulation or ordinance; or under
         any public policy, contract or tort, or under common law; or arising
         under any policies, practices or procedures of the Company; or any
         claim for wrongful discharge, breach of contract, negligent or
         intentional infliction of emotional distress, defamation; or any claim
         for costs, fees, or other expenses, including attorneys' fees incurred
         in these matters) (all of the foregoing collectively referred to herein
         as the "CLAIMS").

3.       I represent that I have made no assignment or transfer of any right,
         claim, demand, cause of action, or other matter covered by paragraph 2
         of this General Release.

4.       I and the Company mutually agree that this General Release does not
         waive or release any rights or claims that I may have under (a) the Age
         Discrimination in Employment Act of 1967 and (b) any agreements to
         which I and Sovereign Specialty Chemicals, Inc., a Delaware corporation
         (the "PARENT") are parties pertaining to any shares of capital stock of
         the Parent owned by me, which arise after the date I execute this
         General Release. I acknowledge and agree that my separation from
         employment with the Company in compliance with the terms of the
         Agreement shall not serve as the basis for any claim or action
         (including, without limitation, any claim under the Age Discrimination
         in Employment Act of 1967).

5.       In signing this General Release, I acknowledge and intend that it shall
         be effective as a bar to each and every one of the Claims hereinabove
         mentioned or implied. I expressly consent that this General Release
         shall be given full force and effect according to each and all of its
         express terms and provisions, including those relating to unknown and
         unsuspected Claims (notwithstanding any state statute that expressly
         limits the effectiveness of a general release of unknown, unsuspected
         and unanticipated Claims), if any, as well as those relating to any
         other Claims hereinabove mentioned or implied. I acknowledge and agree
         that this waiver is an essential and material term of this General
         Release and that without such waiver the Company would not have agreed
         to the terms of the Agreement. I further agree that in the event I
         should bring a Claim seeking damages against the Company, or in the
         event I should seek to recover against the Company in any Claim brought
         by a governmental agency on my behalf, this General Release shall serve
         as a complete defense to such Claims. I further agree that I am not
         aware of any pending charge or complaint of the type described in
         paragraph 2 as of the execution of this General Release.

6.       I agree that neither this General Release, nor the furnishing of the
         consideration for this General Release, shall be deemed or construed at
         any time to be an admission by the Company, any Released Party or
         myself of any improper or unlawful conduct.

7.       I agree that I will forfeit all amounts payable by the Company pursuant
         to the Agreement if I challenge the validity of this General Release,
         provided that nothing herein contained


                                      -2-
<PAGE>   20
         in this Agreement shall prohibit or bar me from filing a charge,
         including a challenge to the validity of the Agreement, with the United
         States Equal Employment Opportunity Commission ("EEOC"), or any state
         or local fair employment practices agency, or from participating in any
         investigation, hearing or proceeding conducted by the EEOC, or any
         state or local fair employment practices agency. I also agree that if I
         violate this General Release by suing the Company or the other Released
         Parties, I will pay all costs and expenses of defending against the
         suit incurred by the Released Parties, including reasonable attorneys'
         fees, and return all payments received by me pursuant to the Agreement.

8.       I agree that this General Release is confidential and agree not to
         disclose any information regarding the terms of this General Release,
         except to my immediate family and any tax, legal or other counsel I
         have consulted regarding the meaning or effect hereof or as required by
         law, and I will instruct each of the foregoing not to disclose the same
         to anyone.

9.       Any non-disclosure provision in this General Release does not prohibit
         or restrict me (or my attorney) from responding to any inquiry about
         this General Release or its underlying facts and circumstances by the
         Securities and Exchange Commission (SEC), the EEOC (or a state or local
         fair employment practices agency), the National Association of
         Securities Dealers, Inc. (NASD), any other self-regulatory organization
         or governmental entity.

10.      I agree to reasonably cooperate with the Company in any internal
         investigation or administrative, regulatory, or judicial proceeding. I
         understand and agree that my cooperation may include, but not be
         limited to, making myself available to the Company upon reasonable
         notice for interviews and factual investigations; appearing at the
         Company's request to give testimony without requiring service of a
         subpoena or other legal process; volunteering to the Company pertinent
         information; and turning over to the Company all relevant documents
         which are or may come into my possession all at times and on schedules
         that are reasonably consistent with my other permitted activities and
         commitments. I understand that in the event the Company asks for my
         cooperation in accordance with this provision, the Company will
         reimburse me solely for reasonable travel expenses, including lodging
         and meals, upon my submission of receipts.

11.      Notwithstanding anything in this General Release to the contrary, this
         General Release shall not relinquish, diminish, or in any way affect
         any rights or claims arising out of any breach by the Company or by any
         Released Party of the Agreement.

12.      Whenever possible, each provision of this General Release shall be
         interpreted in, such manner as to be effective and valid under
         applicable law, but if any provision of this General Release is held to
         be invalid, illegal or unenforceable in any respect under any
         applicable law or rule in any jurisdiction, such invalidity, illegality
         or unenforceability shall not affect any other provision or any other
         jurisdiction, but this General Release

                                      -3-
<PAGE>   21
         shall be reformed, construed and enforced in such jurisdiction as if
         such invalid, illegal or unenforceable provision had never been
         contained herein.

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

(a)      I HAVE READ IT CAREFULLY;

(b)      I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT
         RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE
         DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE
         CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE
         AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT
         INCOME SECURITY ACT OF 1974, AS AMENDED;

(c)      I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

(d)      I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND
         I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE
         CHOSEN NOT TO DO SO OF MY OWN VOLITION;

(e)      I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE
         SUBSTANTIALLY IN ITS FINAL FORM ON _______________ ____, ____ TO
         CONSIDER IT AND THE CHANGES MADE SINCE THE ______________ _____,
         _____VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE
         REQUIRED 21-DAY PERIOD;

(f)      THE CHANGES TO THE AGREEMENT SINCE ____________ ___, _____ EITHER ARE
         NOT MATERIAL OR WERE MADE AT MY REQUEST.

(g)      I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE
         TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR
         ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

(h)      I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH
         THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

(i)      I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,
         WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED
         BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.



                                      -4-
<PAGE>   22
DATE:                           ,




                                      -5-
<PAGE>   23
                                    EXHIBIT C
                                       TO
                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                              SIA ADHESIVES, INC.,
                             TANNER CHEMICALS, INC.
                                       AND
                                GERARD A. LOFTUS


                             STOCK OPTION AGREEMENT