Document:

EXHIBIT 10.6

 Exhibit 10.6 
  
 [FORM OF INDEMNIFICATION AGREEMENT] 
  

This INDEMNIFICATION AGREEMENT, made and entered into this
                     day of
                    , 2006 (“Agreement”), by and between MARATHON ACQUISITION CORP., a Delaware corporation
(the “Company”) and the undersigned (“Indemnitee”). 
  
 WHEREAS, highly competent persons are becoming more reluctant to serve corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation, and 
  
 WHEREAS, the Board of Directors of the Company has determined that the inability to attract and retain such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; and 
  

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and 
  
 WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so
indemnified; 
  
 NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including Indemnitee’s continued service to the Company, the Company and Indemnitee hereby covenant and agree as follows: 
  
  
 ARTICLE I 
  
 DEFINITIONS 
  
 For purposes of this Agreement, the following terms shall
have the meaning given here: 
  
 1.01
“Board” shall mean the Board of Directors of the Company. 
  
 1.02 “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit
or other enterprise which such person is or was serving at the express written request of the Company. 
  
 1.03 “Covered Act” means any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by Indemnitee or against any of the foregoing
alleged by any claimant or any claim against Indemnitee by reason of being a director, officer or stockholder of the Company. 
  
 1.04 “D&O Insurance” means the directors’ and officers’ liability insurance in favor of the Company and as reflected by the policy
or policies issued by the insurer(s), and having the policy number(s), amount(s) and deductible(s) now existing and included in the Company’s files or replacement or substitute policies issued by one or more reputable insurers providing in all
respects coverage at least comparable to and in the same amount as that provided under the policy or policies covering the Company and its directors and officers as of the date hereof. 
  

 1 

 1.05 “Determination” means a determination, based on the facts
known at the time, made by: 
  
 (a) A majority vote of a quorum of
Disinterested Directors; or 
  
 (b) Independent Counsel in a
written opinion prepared at the request of a majority of a quorum of Disinterested Directors; or 
  
 (c) A majority of the disinterested stockholders of the Company; or 
  
 (d) A final adjudication by a court of competent jurisdiction. 
  
 “Determined” shall have a correlative meaning. 
  
 1.06 “Disinterested Director” means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee. 
  
 1.07 “Effective Date” means
                    , 2006. 
  
 1.08 “Excluded Claim” means any payment for Losses or Expenses in connection with any claim: 
  
 (a) Based upon or attributable to Indemnitee gaining in fact any personal
profit or advantage to which Indemnitee is not entitled; or 
  
 (b) For the return by Indemnitee of any remuneration paid to Indemnitee without the previous approval of the stockholders of the Company which is illegal; or 
  
 (c) For an accounting of profits in fact made from the purchase or sale by Indemnitee of securities of the Company within
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, or similar provisions of any state law; or 
  
 (d) Resulting from Indemnitee’s knowingly fraudulent, dishonest or willful misconduct; or 
  
 (e) The payment of which by the Company under this Agreement is not permitted
by applicable law. 
  
 1.09 “Expenses” shall include all
reasonable attorneys fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, all costs of e-discovery, and all
other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding, but shall not include Fines.

  
 1.10 “Fines” mean any fine, penalty or, with respect
to an employee benefit plan, any excise tax or penalty assessed with respect thereto. 
  
 1.11 “Good Faith” shall mean Indemnitee having acted in good faith and in a manner Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal
Proceeding, having had no reasonable cause to believe Indemnitee’s conduct was unlawful. 
  
 1.12 “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past three years has been,
retained to represent (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing the term
“Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement. 
  

 2 

 1.13 “Loss” means any amount which Indemnitee is legally obligated to pay as a result of a claim
or claims made against him or her for Covered Acts including, without limitation, damages and judgments and sums paid in settlement of a claim or claims, but shall not include Fines. 
  
 1.14 “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other actual threatened or completed proceeding whether civil, criminal, administrative or investigative, other than one initiated by Indemnitee. For purposes of the foregoing sentence, a “Proceeding” shall
not be deemed to have been initiated by Indemnitee where Indemnitee seeks pursuant to Article IX of this Agreement to enforce Indemnitee’s rights under this Agreement relating thereto. 
  
 ARTICLE II 
  
 SERVICES BY, AND CAPACITIES OF, INDEMNITEE 
  
 Indemnitee has agreed to serve as a director or officer of the Company or may serve in both
of such capacities. The positions under which Indemnitee will render services to the Company shall be all those which are reflected in the meeting minutes of the Company’s stockholders or directors or both, as the case may be, and will include
any and all services rendered in the capacity as a stockholder of the Company. Indemnitee may at any time and for any reason resign from such position(s), subject to any other contractual obligation or any obligation imposed by operation of law.

  
 ARTICLE III 
  
 MAINTENANCE OF D&O INSURANCE 
  
 3.01 Description of D&O Insurance. The Company maintains the policies of
directors’ and officers’ liability insurance that are in effect at the date hereof, all of which have been disclosed to the Indemnitee and as to which Indemnitee acknowledges having the right to receive a copy or copies of all such
policies prior to execution hereof or upon reasonable request at any time hereafter. 
  
 3.02 Named Insured. In any policies of D&O Insurance which are maintained by the Company, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to the same
limitations, as are accorded to the Company’s directors and officers most favorably insured by such policy. 
  
 3.03 No Obligation. Nothing herein shall impose upon the Company the obligation to maintain D&O Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, or the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit.

  
 ARTICLE IV 
  
 INDEMNIFICATION 
  
 4.01 Indemnification in General. The Company shall indemnify and hold Indemnitee
harmless for any Losses, Expenses, judgments, penalties, Fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in Good Faith. 
  

 3 

 4.02 Excluded Coverage. The Company shall have no obligation to indemnify and hold Indemnitee harmless from any
Losses or Expense which has been Determined to constitute an Excluded Claim. Notwithstanding the provisions of Section 4.01, no such indemnification shall be made in respect of any claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification shall nevertheless be made by the Company in such event if and
only to the extent that the Court of Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or pending, shall Determine. 
  
 4.03 Indemnification of a Party Who Is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, against all Losses,
Expenses, judgments, penalties, Fines and amounts paid in settlement, actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee to the maximum extent permitted by law, against all Losses, Expenses, judgments, penalties, Fines
and amounts paid in settlement, actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 4.03 and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter, so long as there has been no finding (either adjudicated or pursuant
to Article VI) Indemnitee did not act in Good Faith. 
  
 4.04 Indemnification
For Expenses of a Witness. Notwithstanding any other provision of this Agreement to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in a Proceeding, Indemnitee shall be indemnified against all Losses and
Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. 
  
 ARTICLE V 
  
 ADVANCEMENT OF EXPENSES 
  
 Notwithstanding any provision to the
contrary in Article VI, the Company shall advance all reasonable Expenses which, by reason of Indemnitee’s Corporate Status, are incurred by or on behalf of Indemnitee in connection with any Proceeding, within twenty (20) days after the
receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Such
statements may be redacted to the extent necessary to preserve attorney-client confidentiality, work product or other applicable privileges, if any. Any advance and undertakings to repay pursuant to this Article V shall be unsecured and interest
free. 
  
 ARTICLE VI 
  
 PROCEDURES FOR DETERMINATION OF ENTITLEMENT 
  
 6.01 Initial Notice. Promptly after receipt by Indemnitee of notice of the
commencement of or the threat of commencement of any Proceeding, Indemnitee shall, if indemnification with respect thereto may be sought from the Company under this Agreement, notify the Company of the commencement thereof. Indemnitee shall include
therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall
promptly advise the Board in writing that Indemnitee has requested indemnification. 
  

 4 

 6.02 D&O Insurance. If, at the time of the receipt of such notice, the Company has D&O Insurance in
effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies in favor of Indemnitee. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Indemnitee, all Losses and Expenses payable as a result of such Proceeding in accordance with the terms of such policies. 
  
 6.03 Employment of Counsel. To the extent the Company does not, at the time of the commencement of or the threat of commencement of a
Proceeding, have applicable D&O Insurance, or if a Determination is made that any Expenses arising out of such Proceeding will not be payable under the D&O Insurance then in effect, the Company shall be obligated to pay the Expenses of any
such Proceeding in advance of the final disposition thereof as provided in Article V and the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel satisfactory to Indemnitee, upon the delivery to
Indemnitee of written notice of its election so to do. After delivery of such notice, the Company will not be liable to Indemnitee under this Agreement for any legal or other Expenses subsequently incurred by Indemnitee in connection with such
defense other than reasonable Expenses of investigation provided that Indemnitee shall have the right to employ its own counsel in any such Proceeding but the fees and expenses of such counsel incurred after delivery of notice from the Company of
its assumption of such defense shall be at Indemnitee’s expense and provided further that if (i) the employment of counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee and counsel shall have reasonably
concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, the fees and
expenses of counsel shall be at the expense of the Company. 
  
 6.04
Payment. All payments on account of the Company’s indemnification obligations under this Agreement shall be made within sixty (60) days of Indemnitee’s written request therefor unless a Determination is made that the claims
giving rise to Indemnitee’s request are Excluded Claims or otherwise not payable under this Agreement or applicable law. 
  
 6.05 Reimbursement by Indemnitee. Indemnitee agrees that he or she will reimburse the Company for all Losses and Expenses paid by the Company in connection with
any Proceeding against Indemnitee in the event and only to the extent that a Determination shall have been made by a court in a final adjudication from which there is no further right of appeal that Indemnitee is not entitled to be indemnified by
the Company for such Expenses because the claim is an Excluded Claim or because Indemnitee is otherwise not entitled to payment under this Agreement. 
  
 6.06 Cooperation. Indemnitee shall cooperate with the person, persons or entity making the Determination with respect to Indemnitee’s entitlement to
indemnification under this Agreement, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such Determination. Any costs or Expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such Determination
shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. 
  
 ARTICLE VII 
  
 SETTLEMENT 
  
 The Company shall have no obligation to indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any Proceeding effected without the Company’s prior written consent. The Company shall not settle any claim in any manner which would impose any Fine or other obligation on Indemnitee without Indemnitee’s
written consent. Neither the Company nor Indemnitee shall unreasonably withhold their consent to any proposed settlement. 
  

 5 

 ARTICLE VIII 
  
 RIGHTS NOT EXCLUSIVE 
  
 The rights provided hereunder shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under any bylaw, agreement, vote of stockholders or of
Disinterested Directors or otherwise, both as to action in his official capacity and as to action in any other capacity by holding such office, and shall continue after Indemnitee ceases to serve the Corporation as a director or officer. 

 
 ARTICLE IX 
  
 ENFORCEMENT 
  
 9.01 Burden of Proof. Indemnitee’s right to indemnification shall been
enforceable by Indemnitee only in the state courts of the State of Delaware and shall be enforceable notwithstanding any adverse Determination. In any such action, if a prior adverse Determination has been made, the burden of proving that
indemnification is required under this Agreement shall be on Indemnitee. The Company shall have the burden of proving that indemnification is not required under this Agreement if no prior adverse Determination shall have been made. 
  
 9.02 Costs And Expenses. In the event that any action is instituted by Indemnitee
under this Agreement, or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable counsel fees, incurred by Indemnitee with respect to such action, unless
the court determines that each of the material assertions made by Indemnitee as a basis for such action were not made in Good Faith or were frivolous. 
  
 ARTICLE X 
  
 GENERAL PROVISIONS 
  
 10.01 Successors And Assigns. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, personal representatives and
administrators. 
  
 10.02 No Duplicate Indemnity or Recovery.
Notwithstanding any provisions to the contrary herein, this Agreement shall not be interpreted or construed in such a manner as to provide Indemnitee duplicate indemnities or recoveries to the extent Indemnitee is entitled (x) under applicable
law, D&O policies or other contracts or agreements, to (y) indemnity or reimbursement of Losses, Expenses, judgments, penalties, Fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection with a Proceeding or any claim, issue or matter therein. 
  
 10.02 Severability. If any provision or provisions of this Agreement is determined by a court to be invalid, illegal or unenforceable for any reason whatsoever, such provision shall be limited or modified in its application to the
minimum extent necessary to avoid a violation of law, and, as so limited or modified, such provision and the balance of this Agreement shall be enforceable in accordance with its terms. 
  
 10.03 Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be
deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

  
 10.04 Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. 
  

 6 

 10.05 Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver. 
  
 10.06 Notices. All notices, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed. 
  

			
	 If to Indemnitee to:
	    	As shown with Indemnitee’s signature below
		
	 If to the Company to:
	    	 Marathon Acquisition Corp.
 623 5th Avenue, 26th Floor
 New York, NY 10022

		
	 With a copy to:
	    	 Sutherland Asbill & Brennan LLP
 1275 Pennsylvania Avenue, NW
 Washington, D.C. 20004
 Attn: Harry Pangas, Esq.

  
 or to such other address as may have
been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be. 
  
 10.07 Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the conflict of laws
principles thereof. 
  
 10.08 Consent to Jurisdiction. The Company and
Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any Proceeding which arises out of or relates to this Agreement, and agree that any action instituted under
this Agreement shall be brought only in the state courts of the State of Delaware. 
  
 10.09 Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto in reference to all the matters herein agreed upon. This Agreement replaces in full all prior indemnification
agreements or understandings of the parties hereto, and any and all such prior agreements or understandings are hereby rescinded by mutual agreement. 
  
 [Remainder of page intentionally blank] 
  

 7 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. 

 

			
	 MARATHON ACQUISITION CORP.,
 a Delaware Corporation

		
	By:	 	 
	 Michael S. Gross
 Chairman, Chief Executive Officer and Secretary

  

			
	INDEMNITEE
		
	 By: 
	 	 
	 Name:
 Title: Director and/or Executive Officer

	
	 Address:

  

 82006 Salaried Incentive Plan

 Exhibit 10.72 
 Hexion Specialty Chemicals, Inc. 
 2006 SALARIED INCENTIVE PLAN 
 Purpose of the Plan 
 To reward associates for profitably
growing the business. The Plan is designed to link rewards with critical financial metrics for the purposes of promoting leadership actions which are the most beneficial to the company’s short term and long term value creation. 
 Plan Year 
 January 1, 2006 – December 31, 2006

 Eligibility 
 Participation is based on
individual associates’ scope of responsibility and contribution within the organization. Participant population includes: 
  

	 	•	 	Salaried exempt and non-exempt associates in Bands B* – D in bonus eligible roles 

 *limited participation based on the associate’s level of responsibility 
 Associates must be employed in a bonus
eligible position for at least three full months during the plan period and must be actively employed by Hexion Specialty Chemicals, Inc. or a subsidiary company on December 31, 2006. 
 Eligible compensation for incentive is based on the participant’s rate of pay as of December 31, 2006. The participant’s incentive calculation will be
prorated if a change in job level or incentive target occurs during the course of the plan year. 
 Plan Performance Measures 
 Financial Measures: 
 The primary
financial metric will be: 
  

	 	•	 	EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization and excluding restructuring (as approved by the Board), gain/losses from the sale of businesses and
integration expenses (same as ‘Segment’ EBITDA) 

 The achievement of EBITDA growth is the critical measure on which the investment
community and future shareholders will evaluate Hexion’s performance in 2006. As a result, the participants who belong to the global divisions are focused and incentivized to manage the business to achieve growth in EBITDA. 
 EBITDA will be measured for global Hexion Specialty Chemicals and also at the global level for each division/business unit. 
 Personal Objectives Measures: 
 Each
bonus eligible associate will also be measured on achievement of personal performance objectives. Personal Objectives are to be established at the beginning of the year as part of the IMPACT process. Personal Objectives must be specific and
measurable (see IMPACT materials) and cannot be redundant to site/business unit/division/corporate EBITDA targets. For example, a site manager who has a site financial measure for his/her financial objective cannot have the same 

  

 1 

 
measure for his/her personal objective. At the conclusion of the year, the manager is responsible for the evaluation of the percent of personal objectives
completed. A participant’s achievement of personal objectives cannot exceed 100% 
 Payment of the Personal Objectives measure is first contingent upon
the achievement of the participant’s lowest level of Financial Measures (business unit, division or Hexion Global). This measure must meet the minimum EBITDA payout threshold for Personal Objectives to payout. And in any case, the Personal
Objectives payout will not be higher than the EBITDA performance percent payout for the division/business unit. For example: if a participant’s division payout is at 98%, then the payout for 100% achievement of Personal Objectives cannot exceed
98%. 
 Examples of acceptable Personal Objectives are: 

	 	o	To reduce imperfect inventory by 15% 

	 	o	To train 100% of site associates on new OSHA standard by October 1 

 Examples of unacceptable personal objectives are: 

	 	o	To reduce imperfect inventory 

	 	o	To hold safety training 

 Plan Incentive Targets

 Each eligible participant will have a target incentive opportunity expressed as a percent of their base salary. Targets are determined by the
associate’s pay band and by the scope and contributions to the organization. 
  

					
	Pay Band	 	 Incentive Target
 Award Range
Expressed as a % of
 Base Salary
	 	 Maximum Incentive
Payout Range
 Expressed as a % of
 Base Salary

	 B1 – B2
	 	   0% - 10%
	 	   0% -
17.5%

	 B3 – C1
	 	   0% - 15%
	 	   0% -
26.25%

	 C2 – C3
	 	 10% - 20%
	 	 17.5% -
35%

	 D
	 	 20% - 35%
	 	 35% -
61.25%

 If the maximum EBITDA performance targets are attained and the participant’s performance against their
Personal Objectives goals is evaluated to be Exceeds, this Plan can generate an award maximum of 175% of the Target Incentive Award. 
 Plan Payout
Structure 
 The structure of each participant’s incentive is determined by the individual’s role in the organization and whether they
report at a business unit level or at the corporate level. For example, an Operations Manager in a division will have a payout structure weighting as follows: 
  

									
	  	 	Hexion Global	 	Global Division	 	 Personal
 Objectives
	 	Total
	 % of
Target
 Award
	 	20%	 	50%	 	30%	 	100%

  

 2 

 At the end of the year a pool will be established for the payment of Personal Objectives with a relationship to the
overall financial achievement of the business unit. 
 Calculation of Incentive Payments 
 Financial Measure: 
 EBITDA 
  

							
	 	 	 Actual less Minimum Threshold
	 	 	 	 
	 EBITDA Payment Calculation:
	 	Maximum Less Minimum Threshold	 	=	 	%

 The EBITA measure will have the following relationship between financial performance and incentive award payout:

  

											
	  	 	 Minimum
 EBITDA
	 	Lower
Midpoint	 	 Target
 EBITDA
	 	Upper
Midpoint	 	 Maximum
 EBITDA

	 % of
EBITDA
 Target
	 	95%	 	96%	 	100%	 	104.5%	 	116%
	 % of
Financial
 Award
	 	25%	 	75%	 	100%	 	137.5%	 	175%

 For actual performance between the points above, a straight line calculation will be made. There is no
additional payment made for performance above the maximum. 
 Personal Objectives Measure: 
 At the end of the year, the participant and the participant’s manager will meet to discuss the participants’ performance against their personal objectives. The
manager will use the participant’s feedback, as well as input from peers to determine the overall effectiveness of the participant’s performance. In addition, leadership judgment will be applied to determine the degree to which the
participant’s efforts and initiative contributed to the Company’s overall success. The participant may receive an incentive payment for goal performance based on the relative individual contribution as to other participants. 
 When the 2006 audited financial performance results are available the financial award will be determined by first comparing the actual EBITDA with the plan. When the
actual results are between two of the numbers shown, the award percentage is calculated using a proportional increase or decrease. Assessment of performance compared to the Personal Objectives results will be completed by each participant’s
manager. 
 EBITDA Payout Examples: 
 See
2006 Salaried Incentive Plan Exhibits A1 – A3 
  

 3 

 Basis for Award Payouts 
 Financial Results: Bonus payments will be based on audited and approved financial results. No bonus payment will be made until formal results have been approved by Hexion’s corporate officers. 

Payment against the achievement of the financial measures will be as follows: 

	 	a.	Payment of any financial element is contingent on its own merit. 

	 	b.	If there is more than one financial measure, payment against each of the measures will be independent of each other, for example, if Measure 1: “Business Unit” is met it
will payout regardless of whether Measure 2: “Site” is met. 

	 	c.	Payment on achievement of Personal Objectives is contingent upon meeting the financial measure for the participant’s immediate area of responsibility. 

Limitations: All incentive payments must be self-funded from profits generated at each division level. Hexion Specialty Chemicals has the right to amend or
terminate this plan at any time. 
 Employment: Participants must be actively employed by Hexion Specialty Chemicals, Inc. or a subsidiary company on
December 31, 2006 and must have been in an incentive eligible position for at least three full months during the financial year. 
 Performance
Related Issues: Awards to participants who are subject to a disciplinary review of performance, or are on a performance improvement plan, need to be reviewed with the HR Divisional/Functional Leader to determine if the associate is eligible for
a partial award. 
 Incentive Payments: Payments are subject to applicable taxes and garnishment/wage orders, and if the associate participates in the
Hexion Specialty Chemical retirement plans, all incentive payments are subject to deferral and to plan provisions. 
 Pro-ration: A participant’s
incentive payment will be prorated for any of the following conditions: 
  

	 	a.	Base Salary and Incentive Group: Awards are normally based on the base salary as of December 31st of the plan year. If an associate is promoted to a new incentive group, prior to April 1st of the plan year, there is no pro-ration for this promotion. The associate will be incentivized for the prior three months at the new incentive level.

  

	 	b.	New Hires: Awards to participants who commenced employment during the plan year will be pro-rated on the basis of full month’s service during the year. Employees who commence
employment before the 15th of any month will be considered to have a full month’s service for that month but must be employed before October 1, 2006 to be eligible to receive any payout 

  

	 	c.	Promotions/Incentive Target Changes: Awards to participants whose incentive group changes After April 1st of the plan year will be pro-rated on the basis of full month’s service at each job level during the year. (Job changes on or before the 15th of any
month will be considered as in respect of the full month. Changes that take effect after the 15th of the month will be counted as effective the 1st of the next month for incentive calculation purposes.) 

  

	 	d.	 Transfers: Awards to participants transferring between Divisions/Business Units/Sites during the plan year will be pro-rated on the basis of full month’s
service in each 

  

 4 

	 	 
Division/Business Unit/Site during the year. Business performance against each applicable measure will be based on the full year performance. The award will
be funded by the relevant Business Units. (Transfers on or before the 15th of any month will be considered as in respect of the full month. Transfers that take effect after the 15th of the month will be counted as effective the 1st of the next month
for incentive calculation purposes.) 

  

	 	e.	Leaves of Absence/Disability: Approved leaves of absence for 12 weeks or less in the plan year will not be excluded from the incentive payment, i.e. the associate will be eligible
to receive the full incentive payment. If an associate is absent or on a leave that exceeds 12 cumulative weeks, then any time not worked beyond the 12 weeks will be excluded for the plan year and the associate will receive a prorated incentive.

 Timing of Payments: Typically financial results are announced in March following the end of the Plan year and incentive payouts are
made in April. In no event shall payments be made prior to the approval of the final audited financials results of Hexion Specialty Chemicals, Inc. Board of Directors. 
  

 
  
  
  
 The Hexion Salaried Incentive Plan remains at the total discretion of the Company. Hexion
retains the right to amend or adapt the design and rules of the plan. Local legislation will prevail where necessary. 
  

 5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]