Document:

<PAGE>

                                                                   Exhibit 10.10

                                             PLEDGE AGREEMENT dated as of
                                        March 7, 2001, among J. Travis
                                        Spoede ("Spoede"), the J. Travis Spoede
                                                 ------
                                        Trust (03/26/99) (the "Trust"; and
                                                               -----
                                        together with Spoede, the "Pledgor") and
                                                                   -------
                                        RESOLUTION PERFORMANCE PRODUCTS LLC, a
                                        Delaware limited liability company (the
                                        "Company").
                                         -------

          The Trust or Spoede (as applicable) and Resolution Performance
Products Inc., a Delaware corporation and the Company's corporate parent ("RPP
                                                                           ---
Inc."), are parties to (i) a Participation Agreement, dated as of the date
---
hereof, pursuant to which the Trust purchased that number of shares of Common
Stock, $1.00 par value, of RPP Inc. set forth on the signature page hereto (the
"Pledged Shares"), for the per share purchase price set forth on the signature
 --------------
page hereto and certain Junior Subordinated Notes, dated as of the date hereof,
with an aggregate initial principal amount set forth on the signature page
hereto (the "Pledged Notes"), for the per note purchase price set forth on the
             -------------
signature page hereto; and (ii) a Non Qualified Stock Option Agreement, dated as
of the date hereof, pursuant to which Spoede is receiving options to purchase
that amount of shares of Common Stock, $1.00 par value, of RPP Inc. set forth on
the signature page hereto (the "Pledged Options"), for the per option exercise
                                ---------------
price set forth on the signature page hereto. Spoede shall pledge hereunder the
shares received by him upon exercise of any options granted to him by the
Company (the "Pledged Option Shares"), which initial amount is set forth on the
              ---------------------
signature page hereto. The Trust and Spoede (as applicable) shall pledge
hereunder the Pledged Shares, the Pledged Notes, the Pledged Options, and the
Pledged Option Shares. As used herein, the Pledged Shares, the Pledged Notes,
the Pledged Options and the Pledged Option Shares shall be referred to
collectively as the "Pledged Securities." This Pledge Agreement provides the
                     ------------------
terms and conditions upon which a Promissory Note executed by the Trust in favor
of the Company (the "Note") in partial payment for the purchase price of the
                     ----
Pledged Securities is secured by a pledge to the Company of the Pledged
Securities.

          NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Note as
payment for the Pledged Securities, the Pledgor and the Company hereby agree as
follows:

     SECTION 1.   PLEDGE.
                  ------

          The Pledgor hereby pledges to the Company, and grants to the Company a
security interest in, the Pledged Securities as security for the prompt and
complete payment when due of the unpaid principal and of interest on the Note.

     SECTION 2.   DELIVERY OF PLEDGED SECURITIES.
                  ------------------------------

          Upon the execution of this Pledge Agreement, the Trust shall deliver
to the Company the certificates representing the Pledged Securities, together
with duly executed forms of assignment sufficient to transfer title thereto to
the Company. Upon the exercise of any Pledged Option, in lieu of delivering
certificates to Spoede, the Company will retain the certificates and such
certificates will be subject to this Pledge Agreement.
<PAGE>

     SECTION 3.  VOTING RIGHTS; CASH DISTRIBUTIONS.
                 ---------------------------------

          Notwithstanding anything to the contrary contained herein, during the
term of this Pledge Agreement until such time as there exists a default in the
payment of principal or interest on the Note or any other default under the
Note, the Pledgor shall be entitled to all voting rights with respect to the
Pledged Securities and shall be entitled to receive all cash distributions paid
in respect of the Pledged Securities. Upon the occurrence of and during the
continuance of any such default, the Company shall retain all such cash
distributions payable on the Pledged Securities as additional security
hereunder.

     SECTION 4.  STOCK DIVIDENDS; DISTRIBUTIONS ETC.
                 -----------------------------------

          If, while this Pledge Agreement is in effect, the Pledgor becomes
entitled to receive or receives any securities or other property in addition to,
in substitution of, or in exchange for any of the Pledged Securities (whether as
a distribution in connection with any recapitalization, reorganization or
reclassification, distributions or otherwise), the Pledgor shall accept such
securities or other property on behalf of and for the benefit of the Company as
additional security for the Trust's obligations under the Note and shall
promptly deliver such additional security to the Company together with duly
executed forms of assignment, and such additional security shall be deemed to be
part of the Pledged Securities hereunder.

     SECTION 5.  DEFAULT.
                 -------

          If the Trust defaults in the payment of the principal or interest
under the Note as it becomes due (whether upon demand, acceleration or
otherwise) or any other event of default under the Note occurs and has not been
remedied within the 10 day period provided in Section 3(a)(i) of the Note
(including the bankruptcy or insolvency of the Pledgor) (each such occurrence
shall be deemed a "Default"), the Company may exercise any and all of the
                   -------
rights, powers and remedies of an owner of the Pledged Securities (including the
right to vote the shares and receive dividends and distributions with respect to
such shares) and shall have and may exercise without demand any and all the
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code of the State of New York or otherwise available to the Company
under applicable law. Without limiting the foregoing, if the Trust Defaults, the
Company is authorized to sell, assign and deliver at its discretion, from time
to time, all or any part of the Pledged Securities at any private sale or public
auction, on not less than ten days written notice to the Pledgor, at such price
or prices and upon such terms as the Company may deem advisable. The Pledgor
shall have no right to redeem the Pledged Securities after any such sale or
assignment. At any such sale or auction, the Company or any other holder of
shares of the Company may bid for, and become the purchaser of, the whole or any
part of the Pledged Securities offered for sale. In case of any such sale, after
deducting the costs, attorneys' fees and other expenses of sale and delivery,
the remaining proceeds of such sale shall be applied to the principal of and
accrued interest on the Note; provided, however, that after payment in full of
                              --------  -------
the indebtedness evidenced by the Note, the balance of the proceeds of sale then
remaining shall be paid to the Trust and the Pledgor shall be entitled to the
return of any of the Pledged Securities remaining in the hands of the Company.

                                       2
<PAGE>

     SECTION 6.  COSTS AND ATTORNEYS' FEES.
                 -------------------------

          All costs and expenses, including reasonable attorneys' fees, incurred
in exercising any right, power or remedy conferred by this Pledge Agreement or
in the enforcement thereof, shall become part of the indebtedness secured
hereunder and shall be paid by the Pledgor or repaid from the proceeds of the
sale of the Pledged Securities hereunder.

     SECTION 7.  PAYMENT OF INDEBTEDNESS AND RELEASE OF PLEDGED SECURITIES.
                 ---------------------------------------------------------

          Upon payment in full of the indebtedness evidenced by the Note, the
Company shall surrender the Pledged Securities to the Pledgor together with all
forms of assignment.

     SECTION 8.  FURTHER ASSURANCES.
                 ------------------

          The Pledgor agrees that at any time and from time to time upon the
written request of the Company, the Pledgor will execute and deliver such
further documents and do such further acts and things as the Company may
reasonably request in order to effect the purposes of this Pledge Agreement.

     SECTION 9.  SEVERABILITY.
                 ------------

          Any provision of this Pledge Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     SECTION 10. NO WAIVER; CUMULATIVE REMEDIES.
                 ------------------------------

          The Company shall not by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder, and no waiver
shall be valid unless in writing, signed by the Company, and then only to the
extent therein set forth. A waiver by the Company of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Company would otherwise have on any future occasion. No failure
to exercise nor any delay in exercising on the part of the Company, any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law.

     SECTION 11. WAIVERS, AMENDMENTS; APPLICABLE LAW.
                 -----------------------------------

          This Pledge Agreement sets forth the entire agreement of the parties
hereto as to the subject matter hereof and supersedes all previous agreements
between the parties hereto, whether written, oral or otherwise. None of the
terms or provisions of this Pledge Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by the parties hereto.
This Pledge Agreement and all obligations of the Pledgor hereunder shall
together with the rights and remedies of the Company hereunder, inure to the
benefit of the

                                       3
<PAGE>

Company and its successors and assigns. This Pledge Agreement and the rights and
obligations hereunder shall be governed by, and construed in accordance with,
the laws of the State of New York.

                                 *  *  *  *  *

                                       4
<PAGE>

          IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the
date first above written.

                                        J. TRAVIS SPOEDE TRUST (DATED 03/26/99)

                                        By: /s/ J. Travis Spoede
                                           -------------------------------------
                                            Name: J. Travis Spoede
                                            Title: Trustee

                                           /s/ J. Travis Spoede
                                        ----------------------------------------
                                        J. Travis Spoede

                                        RESOLUTION PERFORMANCE PRODUCTS LLC

                                        By: /s/ Marvin O. Schlanger
                                           -------------------------------------
                                           Name: Marvin O. Schlanger
                                           Title: Chairman

Number of Pledged Shares: 600

Per Share Price of
Pledged Shares: $100

Aggregate Initial Principal
Amount of Pledged Notes:  $140,000

Per Note Price of
Pledged Notes:  $1,000

Initial Number of Shares of
Common Stock for
Pledged Options:  2,100

Option Price for Options:  $100

Number of Pledged
Option Shares:  2,100<PAGE>

                                                                   Exhibit 10.11

                            ENVIRONMENTAL AGREEMENT
                            -----------------------

     This Environmental Agreement ("AGREEMENT") dated this 1st day of November,
2000, is made between Shell Oil Company, a Delaware corporation ("SELLER"), and
Shell Epoxy Resins, Inc., LLC, a Delaware limited liability company ("SER", and
SER collectively with SELLER, the "Parties").

     WHEREAS, the Parties and Resin Acquisition LLC have entered into a Master
Sale Agreement dated July 10, 2000, whereby  SER will be recapitalized as
provided therein ("MASTER SALE AGREEMENT").

     WHEREAS, it is a condition to Closing under the Master Sale Agreement that
the Parties hereto enter into this Agreement.

     NOW, THEREFORE, the Parties hereto agree as follows:

1.   Definitions/Procedural Conventions
     ----------------------------------

     (A)  Unless the context shall otherwise require, terms used and not defined
          herein or in Schedule 1 hereto shall have the meanings set forth in
          Schedule A to the Master Sale Agreement, and all rules as to usage and
          procedural conventions set forth in Schedule A to the Master Sale
          Agreement shall govern this Agreement unless otherwise provided
          herein. Articles 4, 5 and 6 (except for Article 6.06
          (Successors/Assigns)) of Schedule A to the Master Sale Agreement are
           ------------------
          hereby incorporated by reference herein and shall control as to the
          matters set forth therein as if stated in their entirety herein,
          subject to the express provisions of this Agreement.

     (B)  In the event of any inconsistency, this Agreement shall prevail over
          the Master Sale Agreement.

2.   SELLER's Indemnification Obligation
     -----------------------------------

2.1  Subject to Sections 2.2 to 2.11, SELLER shall indemnify, defend, save and
     hold harmless the SER Indemnified Parties from and against all
     Environmental Damages imposed upon or incurred by the SER Indemnified
     Parties, resulting from:

     (A)  an Environmental Claim or Voluntary Remediation Requirement in respect
          of any Site Contamination Issues;

     (B)  an Environmental Claim in respect of any Exposure Issues;

     (C)  an Environmental Claim or Voluntary Remediation Requirement in respect
          of any Disposal Issues; or
<PAGE>

     (D)  an Environmental Claim or Voluntary Remediation Requirement in respect
          of any Non-compliance Issues,

     in each case, to the extent that such Environmental Condition occurred or
     existed prior to the Closing Date.

2.2

     (A)  SELLER's obligations under

               (a)  Section 2.1(D) of this Agreement in relation to Non-
                    compliance Issues, other than with respect to the Listed US
                    Compliance Issues; and

               (b)  under Section 2.1(A) of this Agreement in relation to Site
                    Contamination Issues at the Lakeland Facility, other than
                    with respect to the Known Lakeland Site Contamination
                    Issues; and

     (B)  SPNV's  obligations under

               (a)  Sections 2.1(D) of the Non-US Environmental Agreement in
                    relation to Non-compliance Issues, other than with respect
                    to the Listed Non-US Compliance Issues; and

               (b)  under Section 2.1 (A) of the Non-US Environmental Agreement
                    in relation to Site Contamination Issues at the Barbastro
                    Facility,

     in the aggregate shall be limited to $10,000,000.

2.3  SER Indemnified Parties shall not be entitled to indemnity under Section
     2.1 of this Agreement unless and until the SER Indemnified Parties have
     incurred Environmental Damages of $1,000,000 in the aggregate which would
     be recoverable under this Agreement and/or under the Non-US Environmental
     Agreement but for this Section 2.3 of this Agreement and Section 2.3 of the
     Non-US Environmental Agreement (the "DEDUCTIBLE AMOUNT") and the indemnity
     in Section 2.1 of this Agreement shall be limited to the excess over the
     Deductible Amount, provided that the Deductible Amount shall not apply to
     and shall not include the Listed US Compliance Issues, the Listed Non-US
     Compliance Issues or the Known Lakeland Site Contamination Issues.

2.4  SER Indemnified Parties shall not be entitled to indemnity under Section
     2.1 of this Agreement in relation to a Listed US Compliance Issue unless
     and until the SER Indemnified Parties have incurred Environmental Damages
     which:-

     (A)  would be recoverable under this Agreement in relation to Listed US
          Compliance Issues but for this Section 2.4 of this Agreement and/or
          under the Non-US
<PAGE>

          Environmental Agreement in relation to Listed Non-US
          Compliance Issues but for Section 2.4 of the Non-US Environmental
          Agreement; and

     (B)  were incurred on or before the relevant Listed Items Expiry Date; and

     (C)  such Environmental Damages in aggregate exceed the Listed Items
          Deduction

     and the indemnity under Section 2.1 of this Agreement in relation to the
     Listed US Compliance Issues and under Section 2.1 of the Non-US
     Environmental Agreement in relation to the Listed Non-US Compliance Issues
     shall be limited to (i) 100% of such excess up to a maximum of $10,000,000;
     and (ii) 80% of any such excess over $10,000,000.

2.5  SELLER shall have no obligation with respect to any Environmental Damages
     arising from:-

     (A)  any Non-compliance Issues (other than the Listed US Compliance Issues)
          unless the relevant Environmental Claim or Voluntary Remediation
          Requirement has arisen and the relevant Indemnity Claim is asserted in
          accordance with this Agreement within three (3) years of the Closing
          Date; or

     (B)  any Site Contamination Issues at the Lakeland Facility other than the
          Known Lakeland Site Contamination Issues unless the relevant
          Environmental Claim has arisen and the relevant Indemnity Claim is
          asserted within five (5) years of the Closing Date.

2.6  Notwithstanding anything herein to the contrary, the SER Indemnified
     Parties shall not be entitled to claim or seek indemnity or defense under
     this Agreement to the extent that the relevant Environmental Damages result
     from or are increased by (and only including the amount of Environmental
     Damages which so results or is so increased):

     (A)  any Change of Use by SER Indemnified Parties at all or a significant
          portion of the relevant Real Property after the Closing Date; or

     (B)  except (i) in relation to the Westhollow Facility; (ii) where due to
          the default of the SELLER in performing its obligations under the
          Continuing Affiliate Contracts (as defined in the Master Sale
          Agreement); or (iii) where due the expiry and non-renewal of any of
          the Continuing Affiliate Contracts, other than where the relevant SER
          Indemnified Party has not accepted an offer of renewal on commercially
          reasonable terms, any closure or temporary (other than for the
          purposes of operation or maintenance activities) or permanent
          cessation of substantially all of the operations of the Business at
          the relevant Real Property after Closing, but only to the extent of
          such Environmental Damages resulting from requirements under
          Environmental Law which are directly triggered by such closure or
          cessation.

2.7  Notwithstanding anything herein to the contrary, the SER Indemnified
     Parties shall not be entitled to claim or seek indemnity or defense under
     this Agreement where the relevant Environmental Claim or Remediation
     Activities results from or would not have arisen but
<PAGE>

     for any below ground investigation of soil or groundwater or other surface
     or sub-surface water ("INVESTIGATION") or disclosure ("DISCLOSURE") by SER
     Indemnified Parties after the third anniversary of the Closing Date except
     for Permitted Investigation and Disclosure. "PERMITTED INVESTIGATION AND
     DISCLOSURE" under this Agreement means Investigation and Disclosure which
     was:-

     (A)  required by Environmental Laws to be carried out by the SER
          Indemnified Parties;

     (B)  performed or undertaken in response to any requirements of a
          Governmental Entity (as part of an investigation, consultation or
          otherwise) pursuant to Environmental Law (including as the result of a
          negotiated settlement reached in accordance with this Agreement);

     (C)  undertaken as part of or in connection with the construction of
          foundations for new buildings, plant or machinery or other ground
          disturbance reasonably necessary in connection with the normal
          operation of the business;

     (D)  necessary in connection with a Specified Transaction; or

     (E)  in relation to disclosure, as necessary in relation to the agents,
          advisers, underwriters, insurers, bankers or lenders of or to the
          relevant SER Indemnified Party or as required by Law,

     excluding any such investigation or disclosure carried out with the
     intention of making or investigating the possibility of making Indemnity
     Claims. SER shall not and shall procure that SER Indemnified Parties shall
     not after the third anniversary of the Closing Date carry out or make any
     Investigation or Disclosure which is not Permitted Investigation or
     Disclosure.

2.8  Notwithstanding anything herein to the contrary:-

     (A)  SELLER shall have no indemnity obligation hereunder for any
          Environmental Damages arising from or associated with any upgrades,
          improvements, modifications, additions, changes or other expenditures
          related to any of the matters described in Schedule 3; and

     (B)  SELLER's indemnity obligation hereunder for any Environmental Damages
          arising from or associated with the matters described in Schedule 7
          shall not include the cost of carrying out Remediation Activities
          unless actually required by the relevant Governmental Entity.

2.9  Notwithstanding anything herein to the contrary, the SER Indemnified
     Parties shall not be entitled to claim under this Agreement in respect of
     the costs of carrying out the ongoing containment and monitoring programs
     set out in Schedule 4.
<PAGE>

2.10 To the extent that the SER Indemnified Parties make an Indemnity Claim for
     Environmental Damages with respect to Voluntary Remedial Actions, SER
     agrees that the relevant SER Indemnified Party shall under this Agreement
     pay on a pro rata basis and the SER Indemnified Parties shall not be
     entitled to claim for 25% of such Environmental Damages.

2.11 Notwithstanding anything herein to the contrary, the SER Indemnified
     Parties shall not be entitled to claim or seek indemnity or defense under
     this Agreement to the extent that the relevant Environmental Damages relate
     to Non-compliance Issues (except for the Listed US Compliance Issues) or to
     Site Contamination Issues at the Lakeland Facility (except for the Known
     Lakeland Site Contamination Issues) and arise out of or are increased as a
     result of:

     (A)  provisions of any Permit or Environmental Law that are not expressly
          required to be complied with on or before Closing, or the expiration,
          review, amendment, revision, replacement or renewal of any Permit
          after Closing;

     (B)  Environmental Laws that come into force or become binding after
          Closing or existing Environmental Laws that contain compliance
          requirements that become enforceable after Closing; or

     (C)  variations, changes, modifications, additions or amendments after
          Closing (whether under laws which are in force before, on or after
          Closing) to applicable standards, codes, criteria, guidance, policy or
          interpretations in relation to Environmental Laws or Permits,

     provided that this Section 2.11 does not apply to the extent the relevant
     future Environmental Law or Permit is not more onerous than the
     Environmental Law or Permit which it renews or replaces.

3.   SER's Indemnification Obligation.
     --------------------------------

3.1  Subject to Sections 3.2 below, SER shall indemnify, defend, save and hold
     harmless the SELLER Indemnified Parties from and against all Environmental
     Damages imposed upon or incurred by the SELLER Indemnified Parties
     resulting from any Environmental Condition to the extent such Environmental
     Condition occurred or arose on or after the Closing Date, provided however,
     that SER shall have no indemnity obligation under this Section 3.1 for
     those matters for which SER is entitled to indemnity from SELLER pursuant
     to Section 2.1 of this Agreement.

3.2  To the extent that SELLER Indemnified Parties make an Indemnity Claim with
     respect to Voluntary Remedial Actions, SELLER agrees that the relevant
     SELLER Indemnified Party shall pay and the SELLER Indemnified Parties shall
     not be entitled to claim for 25% of such Environmental Damages.

4.   Indemnification Procedures and Calculation.
     ------------------------------------------
<PAGE>

4.1  Notwithstanding anything to the contrary elsewhere in this Agreement or the
     Transaction Documents, the procedures in this Section 4.1 shall apply to
     Indemnity Claims which relate to the carrying out of Remediation Activities
     by the relevant Indemnified Party.

     (A)  The relevant SER Indemnified Party or SELLER Indemnified Party shall
          provide written notice to SELLER or SER, respectively ("ENVIRONMENTAL
          INDEMNIFYING PARTY") (each such notice an "ENVIRONMENTAL CLAIMS
          NOTICE") setting forth with reasonable particularity the nature of the
          Environmental Condition to be addressed by Remediation Activities
          giving rise to the related Indemnity Claim.

     (B)  If Environmental Indemnifying Party has the right under Section 5 to
          take Control of  such Remediation Activities, Environmental
          Indemnifying Party shall notify Environmental Indemnified Party within
          30 days after receipt of the Environmental Claims Notice whether it
          wishes to exercise such right (without prejudice to the right of
          Environmental Indemnifying Party to assume Control at some later
          time).

     (C)  Where Environmental Indemnified Party has Control of such Remediation
          Activities (on the basis that Environmental Indemnifying Party has not
          exercised any right which it may have to assume Control), the
          provisions of Sub-sections 4.1(C) (i) to (vi) shall apply.

          (i)   Environmental Indemnified Party shall provide a further notice
                (if not already provided as part of the original Environmental
                Claims Notice and expressly identified as the Environmental
                Claims Response in the Environmental Claims Notice) setting
                forth with reasonable particularity the nature of the activities
                undertaken or to be undertaken or, as appropriate, legal or
                consultative services to be acquired ("ENVIRONMENTAL CLAIMS
                RESPONSE") by Environmental Indemnified Party with respect to
                the relevant Environmental Condition (to the extent then
                determinable), and the estimated cost associated with such
                activities (to the extent then estimable).

          (ii)  Environmental Indemnifying Party shall within 30 days after
                receipt of an Environmental Claims Response, notify
                Environmental Indemnified Party in writing that Environmental
                Indemnifying Party in whole or in part, (i) approves (ii)
                objects or (iii) is unable to approve or reject on the basis of
                the available information to the Environmental Claims Response
                ("REPLY NOTICE").

          (iii) If Environmental Indemnifying Party's Reply Notice notifies
                Environmental Indemnified Party that it approves of all or part
                of the Environmental Claims Response set forth in the related
                Environmental Claims Notice, the Environmental Damages (or part
                thereof so approved by Environmental Indemnifying Party)
                associated with the Environmental Claims Notice shall be
                conclusively deemed Environmental Damages for which
                Environmental Indemnifying Party has an indemnity obligation.
<PAGE>

          (iv)  Environmental Indemnifying Party shall pay the amount of such
                Environmental Damages to Environmental Indemnified Party within
                30 days of receiving written confirmation from Environmental
                Indemnified Party that the relevant sum has actually been paid
                to the relevant third party.

          (v)   In the event Environmental Indemnifying Party's Reply Notice
                objects to or does not accept all or any part of the
                Environmental Claims Response set forth in the related
                Environmental Claim Notice in accordance with Sub-section
                4.1(C)(ii) the, Environmental Indemnifying Party shall notify
                Environmental Indemnified Party in writing of its objection or
                non-acceptance (and the basis thereof) regarding such
                Environmental Claim Response. If Environmental Indemnifying
                Party's Reply Notice is a non-acceptance due to insufficient
                information, Environmental Indemnifying Party shall in the Reply
                Notice identify the further information which it reasonably
                requires. If Environmental Indemnifying Party's Reply Notice
                relates to an objection to the nature of Environmental
                Indemnified Party's proposed Environmental Claims Response,
                Environmental Indemnifying Party shall provide with the Reply
                Notice an alternative proposal describing in reasonable detail
                (so far as it is reasonably able having regard to the
                information available to Environmental Indemnifying Party and
                the prescribed time limit for the Reply Notice) the proposed
                activities or response, including estimated costs associated
                therewith.

          (vi)  If a Reply Notice is served, Environmental Indemnified Party and
                Environmental Indemnifying Party shall thereafter negotiate in
                good faith in an attempt to reach agreement as to the disputed
                or non-accepted Environmental Claims Notice. In the event that
                Environmental Indemnified Party and Environmental Indemnifying
                Party are unable to resolve the dispute or non-acceptance within
                30 days after Environmental Indemnifying Party's receipt of the
                Reply Notice, Environmental Indemnifying Party or Environmental
                Indemnified Party may provide written notice to the other of its
                intent to submit the matter to arbitration pursuant to the terms
                set forth in Section 9 of this Agreement.

     (D)  The Parties acknowledge that it may be necessary for the relevant
          Remediation Activities to be assessed, designed and implemented in
          separate units or stages, having regard to technical and practical
          factors, orders or similar directives by any Governmental Entity and
          prevailing regulatory practice. The Parties agree that the procedure
          set out in this Section 4.1 shall apply separately to each such unit
          or stage and, in the event of any dispute as to the appropriate
          division of units or stages, either Party may by written notice submit
          such dispute to arbitration pursuant to the terms set forth in Section
          9 of this Agreement.

     (E)  The Parties agree that, where a response or notice is required by a
          relevant Governmental Entity within a timetable that is more demanding
          than the response
<PAGE>

          times set out above, the Parties shall use all reasonable efforts to
          meet such required timetable.

4.2  Notwithstanding anything to the contrary elsewhere in this Agreement or the
     Transaction Documents, the following procedures shall apply to Indemnity
     Claims which are not subject to Section 4.1.

     (A)  Upon notice of an Environmental Claim asserted against, resulting to,
          imposed upon or incurred by any Indemnified Party, or upon the
          Indemnified Party becoming aware of a matter for which it may be
          entitled to indemnification with respect to an Environmental Claim,
          the Indemnified Party shall promptly give written notice to the other
          Indemnifying Party of the Environmental Claim; provided, however, that
                                                         --------  -------
          no failure or delay on the part of the Indemnified Party in notifying
          any Indemnifying Party shall relieve the Indemnifying Party from any
          liability or obligation hereunder unless (and then solely to the
          extent) the Indemnifying Party thereby is prejudiced by the failure or
          delay.

     (B)  Promptly upon receiving a written notice of an indemnified
          Environmental Claim, the Indemnifying Party shall undertake the
          defense thereof by counsel of its own choosing, which counsel shall be
          reasonably satisfactory to the Indemnified Party; provided, that if,
                                                            --------
          in the Indemnified Party's and the Indemnifying Party's reasonable
          judgment, a conflict of interest may exist between the Indemnified
          Party and the Indemnifying Party with respect to such Environmental
          Claim, or if the Indemnifying Party does not promptly defend after
          notification of such Environmental Claim, such Indemnified Party shall
          undertake the defense and to compromise or settle such Environmental
          Claim on behalf of and for the account and at the risk of the
          Indemnifying Party to the extent that the Indemnifying Party is
          determined to be obligated to indemnify the Indemnified Party under
          this Agreement  with respect to such Environmental Claim.  The written
          notice of the Environmental Claim by the Indemnified Party shall
          contain all material information known to the Indemnified Party with
          respect to the Environmental Claim and shall include copies of
          materials submitted to the Indemnified Party by the relevant claimant
          with respect to the Environmental Claim.  So long as the Indemnifying
          Party is conducting the defense of a Environmental Claim in accordance
          with this Section 4.2, the Indemnified Party may retain separate co-
          counsel at its sole cost and expense and participate in the defense of
          the Environmental Claim.

     (C)  If the Indemnifying Party elects to undertake and diligently pursue
          the defense of a Environmental Claim hereunder, and acknowledges in
          writing its duty to provide full indemnification to the Indemnified
          Party regarding such Environmental Claim, the Indemnifying Party shall
          control all aspects of the defense and settlement of such
          Environmental Claim and may settle, compromise or enter into a
          judgment with respect to such Environmental Claim; provided, that the
                                                             --------
          Indemnifying Party shall not enter into any such settlement,
          compromise or judgment without the prior written consent of the
          Indemnified Party (which shall not be unreasonably withheld) if it
          would result in the imposition of any non-monetary liability or
          obligation on the
<PAGE>

          Indemnified Party. If the Indemnified Party undertakes the defense of
          an Environmental Claim hereunder, it shall not settle, compromise or
          enter into any judgment with respect to an Environmental Claim for
          which it is seeking or shall seek indemnification hereunder without
          the prior written consent of the Indemnifying Party, which shall not
          be unreasonably withheld.

     (D)  The Indemnified Party shall provide the Indemnifying Party with access
          to all reasonably requested records and documents of the Indemnified
          Party relating to any Environmental Claim, other than documents for
          which the Indemnified Party has claimed or shall validly claim a legal
          privilege.

     (E)  Without prejudice to any claim by SELLER under the indemnity in
          Section 3.1, the obligations of the Indemnifying Party to indemnify
          the Indemnified Party under this Agreement shall not be terminated,
          modified or abated if the cause or alleged cause (in whole or in part)
          of the Environmental Damages for which a claim is made hereunder is
          the sole or concurrent, active or passive, imputed, technical or other
          negligence, gross negligence, fault or strict liability of the
          Indemnified Party.

4.3  For purposes of calculating aggregate Environmental Damages under this
     Agreement, the amount of Environmental Damages incurred by any
     Environmental Indemnified Parties shall be reduced by (a) the net amount of
     the sum of (i) any Tax Benefit received by SER Indemnified  Parties or
     SELLER Indemnified Parties, as applicable, as a result of the Environmental
     Condition that gave rise to such Environmental Damages on or prior to the
     date that the indemnity payment in respect of such Environmental Damages is
     due and payable and (ii ) the present value of any Tax Benefit projected to
     be received by SER Indemnified Parties or SELLER Indemnified Parties, as
     applicable, (such present value shall be calculated by the applicable SER
     Indemnified Parties or SELLER Indemnified Parties (x) using a discount
     factor equal to 12% and (y) assuming that the Tax Benefit is received at
     such time and to the extent that it is reasonably expected to be received
     based on the applicable Person's management projections at the time of
     payment of the applicable Environmental Damage), and (b) any amounts
     received (after deducting all attorneys' fees, expenses and other costs of
     recovery) from any Third Party Insurer or other party liable for such
     Environmental Damages, and the SER Indemnified Parties and the SELLER
     Indemnified Parties, as applicable shall use reasonable efforts to effect
     any such recovery.

4.4  For purposes of this Agreement, the Master Sale Agreement and any other
     related document, (i) with respect to any Indemnity Claim in relation to
     Site Contamination Issues made prior to the third anniversary of the
     Closing Date, any Environmental Condition that is the basis of such claim
     shall be presumed to have existed as of the Closing Date unless and until
     SELLER establishes that it is more likely than not that the relevant Site
     Contamination Issues came into existence or arose after the Closing Date
     and (ii) with respect to any Indemnity Claim made after the third
     anniversary of the Closing Date in relation to Site Contamination Issues,
     no presumption as to the existence or non-existence of the Site
     Contamination Issue that is the basis of such Indemnity Claim shall exist
     and the determination with respect to the existence of such Site

<PAGE>

     Contamination Issue  shall be based on an objective determination in light
     of the evidence presented by the Parties.

5.   Control of Remediation Activities
     ---------------------------------

5.1  Notwithstanding the provisions of Sections 2, 3 and 4 above or any other
     provisions of this Agreement or the Transaction Documents, as between SER
     and SELLER, SER shall have right to Control Investigation at a Real
     Property until (if applicable) SELLER's right to Control such Investigation
     has arisen under Section 5.2 or 5.3, provided that:-

     (A)  SER shall ensure that SELLER is given advance notice of any proposal
          to carry out or make Investigation or Disclosure;

     (B)  SER shall consult in good faith with the SELLER and comply with any
          reasonable request of the Seller in relation to the nature, extent or
          conduct of such Investigation or Disclosure;

     (C)  SER take full account of the availability of data and information
          provided by SELLER in deciding whether or not the proposed
          Investigation or Disclosure is necessary and in determining the scope
          of the Investigation or Disclosure;

     (D)  SER shall consider in good faith any request from SELLER to carry out
          or make all or part of such Investigation;

     (E)  SER shall allow SELLER or its representative to attend such
          Investigation when carried out;

     (F)  SER shall provide SELLER with split samples should it so request;

     (G)  SER shall provide SELLER with draft and final reports and results as
          soon as they come into the possession of the relevant SER Indemnified
          Party.

5.2  Notwithstanding the provisions of Sections 2, 3 and 4 above or any other
     provisions of this Agreement or the Transaction Documents, as between SER
     and SELLER, SELLER shall have the right (but not the obligation) to
     exclusively Control Remediation Activities (including, for the avoidance of
     doubt, any proposal to carry out any Investigation and Disclosure where it
     is known or is reasonably probable that the Remediation Activities involve
     Environmental Damages for which SELLER has any indemnity obligation to the
     SER Indemnified Parties under this Agreement):

     (A)  with respect to Site Contamination Issues at the Norco Facility, the
          Argo Facility, the Deer Park Facility, and the Westhollow Facility
          which is not Whole Complex Contamination;
<PAGE>

     (B)  with respect to the Known Lakeland Site Contamination Issues and/or
          any Site Contamination Issues in relation to the Lakeland Facility
          which are not Known Lakeland Site Contamination Issues,

     provided that SELLER performs such Remediation Activities in accordance
     with the Lowest Cost Alternative. In the event that, where SELLER has
     Control of such Remediation Activities and fails to so perform such
     Remediation Activities in circumstances that threaten to cause material
     prejudice to SER, SER shall be entitled to serve a notice of failure on
     SELLER. If SELLER then fails to exercise Control in a manner which will
     avoid such prejudice (to the extent avoidable) within 60 days of the date
     of such notice, SER or the relevant Company, upon written notice to SELLER,
     shall have the right to assume Control of such Remediation Activities from
     SELLER subject to Section 6.2 of this Agreement and seek reimbursement for
     all Environmental Damages incurred in connection with its assumption of
     Control in accordance with and to the extent recoverable under this
     Agreement.

5.3  Notwithstanding the provisions of Sections 2, 3 and 4 above or any other
     provisions of this Agreement or the Transaction Documents, as between SER
     and SELLER, SELLER shall have the right to exclusively Control Remediation
     Activities relating to Whole Complex Contamination. In the event SELLER
     fails to perform such Remediation Activities in accordance with the Lowest
     Cost Alternative in circumstances that threaten to cause material prejudice
     to SER, SER shall have the right to seek resolution of such failure of
     performance in accordance with the Dispute Resolution Procedures set forth
     in Section 9, provided that the available remedies under any such Dispute
     Resolution Procedures shall not include any award of Control to SER or any
     SER Indemnified Party.

5.4  In performing Remediation Activities at any real property, the Party with
     Control shall use its reasonable efforts to minimize its interference with
     operations at such relevant real property.

6.   Procedures for Remediation Activities
     --------------------------------------

6.1  Where the Indemnified Party has Control of Remediation Activities that are
     covered by Indemnifying Party's indemnity obligation in Section 2 and
     Indemnifying Party has not exercised its rights (if applicable) to take
     Control under Section 5:

     (A)  Indemnified Party shall:

          (i)   consult with Indemnifying Party in advance of issuing any
                material documents, attending any material meetings or hearings
                or taking any material step or action in relation to the
                relevant activities;

          (ii)  provide Indemnifying Party with reasonable notice of and a
                reasonable opportunity to attend any meetings or hearings or the
                carrying out of any activities with respect to any Remediation
                Activities (and provide Indemnifying Party with split samples if
                the Indemnifying Party so requires);
<PAGE>

          (iii) provide to Indemnifying Party any documents, information,
                assistance or access which Indemnifying Party may reasonably
                request;

          (iv)  provide Indemnifying Party with (a) copies of all workplans for
                and test results, surveys and other data generated by the
                investigations performed by the Indemnifying Party or its
                consultants promptly upon the availability thereof; (b) final
                and any prior drafts of all reports, plans and other documents
                filed with any Governmental Entity upon the availability thereof
                and in any event prior to any such filing being made; and (c) an
                opportunity to meet with the Indemnified Party and its
                representatives prior to and following any substantive
                communications with Governmental Entities;

          (v)   where the relevant Environmental Damages are covered by
                Indemnifying Party's indemnity obligation in Section 2.1,
                provide Indemnifying Party with a reasonable opportunity to
                audit costs of such Remediation Activities;

          (vi)  where the relevant Environmental Damages are covered by
                Indemnifying Party's indemnity obligation in Section 2.1,
                implement and not exceed the Lowest Cost Alternative; and

          (vii) comply with any other reasonable request of Indemnifying Party,
                except to the extent that any such request would result in
                Remediation Activities exceeding the Lowest Cost Alternative;

          provided that, (a) communication by any SER Indemnified Party with
          -------------
          SELLER shall be made via SER (or such person as SER shall nominate to
          SELLER) and communication by any SELLER Indemnified Party with SER
          shall be made by SELLER (or such person as SELLER shall nominate to
          SER) unless the Parties agree to the contrary in any particular case;
          and (b) SER shall procure that each SER Indemnified Party and SELLER
          shall procure that each SELLER Indemnified Party shall comply with all
          of the provisions of this Section 6.1.

6.2  Each Party shall comply with reasonable requests of the other Party for
     arrangements to maintain confidentiality or privilege under this Agreement.

6.3  Where SELLER as Environmental Indemnifying Party has control of Whole
     Complex Contamination, SELLER shall consult with SER as reasonably
     appropriate and, upon request and as far as reasonably appropriate, shall
     provide SER with all material, relevant documents, summaries of all
     material meetings or hearings, and reasonable opportunity, upon reasonable
     notice, to confer on the planning and conduct of material, relevant
     Remediation Activities.

6.4  Each Party (the "HOST PARTY") agrees to provide the other Party (the
     "VISITING PARTY") and its representatives, agents and contractors access
     from time to time to any of the real property which the Host Party owns or
     occupies and/or any of the facilities, structures, plants or equipment at
     such real property in order to permit the Visiting Party to undertake and

<PAGE>

     complete Remediation Activities in relation to which the Visiting Party has
     Control under Section 5; provided, however, that
                              ------------------

     (A)  in the event that the Host Party does not have the right to grant such
          access without the consent or approval of some other person, the Host
          Party's obligation shall be subject to such approval or consent, which
          the Host Party shall use its reasonable efforts to procure;

     (B)  the Visiting Party shall provide the Host Party with reasonable notice
          prior to entering or allowing any of its agents, representatives,
          employees, consultants or contractors to enter the relevant real
          property.  In addition, the Parties shall cooperate in good faith with
          the completion of the Remediation Activities for which access by the
          Visiting Party is required, including but not limited to the execution
          of such documents, notices, consents and recordations as may be
          necessary.

7.   Standard of Remediation Activities
     ----------------------------------

7.1  Any claim for indemnification under this Agreement by an Environmental
     Indemnified Party for Remediation Activities that such Environmental
     Indemnified Party Controls shall, to the extent such Remediation Activities
     are Controlled by Environmental Indemnified Party, be limited to the Lowest
     Cost Alternative.  The Lowest Cost Alternative shall be:

     (A)

          (i)   where there is an Environmental Claim, the minimum necessary to
                comply with any settlement or agreement with the relevant
                Governmental Entity or Third Party (if applicable) reached in
                accordance with this Agreement; or

          (ii)  where there is an Environmental Claim, the minimum necessary to
                comply with Environmental Laws as enforced in relation to the
                relevant Environmental Condition, where no such settlement or
                agreement is reached; or

          (iii) where there is a Voluntary Remediation Requirement, the minimum
                necessary to comply with Environmental Laws as they would be
                very likely to be enforced, if the Governmental Entity having
                jurisdiction over the relevant real property were aware of the
                nature and extent of the relevant Environmental Condition; and

     (B)  so far as within the control of the Party which has Control, be
          consistent with the operations conducted at the relevant Real
          Property; and

     (C)  achieved for the lowest financial cost as compared with other
          potential Remediation Activities.
<PAGE>

     Taking no action shall constitute an acceptable Lowest Cost Alternative if,
     after investigation, taking no action is determined to be consistent with
     or otherwise satisfy the applicable conditions for the Lowest Cost
     Alternative as set forth above.

7.2  The Parties agree that, where SELLER has Control of  Remediation Activities
     and the extent and timescale of any outstanding works are well defined,
     SELLER shall be entitled to require SER to enter into good faith
     negotiations to determine the amount of any such payment as would be
     reasonable to settle SELLER's liability to SER under this Agreement in
     respect of the relevant matter.  The Parties further agree that, where SER
     has Control of Remediation Activities and the extent and timescale of any
     outstanding works are well defined, SER shall be entitled to require SELLER
     to enter into good faith negotiations to determine the amount of any such
     payment as would be reasonable to settle SER's liability to SELLER under
     this Agreement in respect of the relevant matter.

8.   Access to Records; Furnishing Information
     -----------------------------------------

Section 8.06 and 8.19 of the Master Sale Agreement shall apply.

9.   Dispute Resolution.
     ------------------

9.1  In the event of any Controversy between the Parties arising out of this
     Agreement, the Parties shall use good faith efforts, for a period of 60
     days following notice by a Party to the other Party that a Controversy
     exists, to resolve the Controversy through settlement and compromise.  In
     the event such a Controversy cannot be resolved by or through settlement
     and compromise during the period specified above, either Party may require
     that the Controversy be finally resolved under the provisions set forth in
     Article 3 of Schedule A to the Master Sale Agreement except as otherwise
     set forth below. Pending the completion of any arbitration proceedings,
     payments not in dispute shall continue to be made, and obligations not in
     dispute performed, and in rendering any award the arbitrators shall make
     appropriate adjustments for any such payments as may be consistent with the
     award.

9.2  Notwithstanding anything else in this Agreement or in the Master Sale
     Agreement (including the Schedules attached thereto), the place of
     arbitration for any dispute, controversy or claim arising out of or
     relating to this Agreement shall be Vancouver, British Columbia (or, if the
     Parties so agree in a particular case, in a location reasonably proximate
     to the location of the relevant Real Property) and governed by the laws of
     New York.

9.3  Notwithstanding anything else in this Agreement or in the Master Sale
     Agreement (including the Schedules attached thereto), the arbitrator shall
     have a minimum of 10 years cumulative experience of work with respect to
     the relevant matters which are the subject of the arbitration and shall
     make its decision solely on the basis of the information provided to it by
     the Parties and shall not be entitled to require further technical
     information and advice from any source (unless otherwise agreed between the
     Parties).  The cost of the arbitration shall be borne in accordance with
     Section 3.01(d) of Schedule A to the Master Sale Agreement.
<PAGE>

10.  Exclusive Remedy
     ----------------

10.1 Subject to Section 10.2 and 10.3, the limited rights provided to the
     Parties pursuant to this Agreement shall be SELLER's and SER's and the
     relevant Company's exclusive remedies against each other for any
     Environmental Conditions regardless of who caused such Environmental
     Conditions or when such Environmental Conditions occurred.  To the fullest
     extent allowed by Applicable Law, each of SELLER and SER (each on behalf of
     itself and any SELLER Indemnified Parties or SER Indemnified Parties
     ("RELEVANT PARTIES"), as applicable) and each Company hereby WAIVES AND
     RELEASES (regardless of the negligence or fault, sole or otherwise, of the
     Person being released) any and all other rights and remedies (whether
     existing or future, and of whatsoever nature) such Party (or any Relevant
     Parties) may have at law or in equity against SER or SELLER (or any
     Relevant Parties), as the case may be, with respect to any Environmental
     Conditions.

10.2 Subject to Section 10.3, Section 10.1 is without prejudice to the express
     provisions of such agreements as , in the case of the Continuing Affiliate
     Contracts, may have been or, in the case of other agreements, may at some
     future time be entered into between any SELLER Indemnified Parties and SER
     Indemnified Parties to the extent that they address or are applicable to
     Environmental Conditions, provided that the provisions of such agreements
     as identified in Schedule 6 shall be deemed not to apply as between SELLER
     and SER Indemnified Parties, to the extent expressly disapplied in Schedule
     6.

10.3 Other than (a) the provisions of any Continuing Affiliate Contract deemed
     suspended pursuant to Schedule 5 and (b) in relation to sub-clause 10.3(A)
     only, the provisions of any lease agreement between SELLER or its
     Affiliates, as the lessor, and SER or its Affiliates, as the lessee,
     obligating the lessee to conduct environmental cleanup efforts at the
     termination of any such lease, in relation to any  provision in any
     Continuing Affiliate Contract under which the Relevant Party would have an
     obligation or liability to the other party to such Continuing Affiliate
     Contract in respect of Environmental Damages ("RELEVANT PROVISION"), the
     Parties agree that:

          (A) to the extent such Environmental Damages are recoverable by either
          (i) any SER Indemnified Party under the indemnity in Section 2 of this
          Agreement or (ii) any SELLER Indemnified Party under the indemnity in
          Section 3 of this Agreement, the SER Indemnified Party's or the SELLER
          Indemnified Party's claim for such Environmental Damages (as the case
          may be) shall be made under the relevant indemnity provisions in this
          Agreement in accordance with this Agreement (and such Relevant
          Provisions shall be deemed to exclude the recovery of such
          Environmental Damages );

          (B) any Relevant Provision shall be without prejudice to the rights of
          the relevant SER Indemnified Party or the relevant SELLER Indemnified
          Party (as the case may be) to claim such Environmental Damages under
          the indemnity in either Section 2 or Section 3 of this Agreement (as
          applicable) in accordance with this Agreement.
<PAGE>

     For the avoidance of doubt, with respect to Environmental Conditions
     existing as of Closing, in the event of any conflict between any provision
     of this Agreement and any Continuing Affiliate Contracts, the provisions of
     this Agreement shall govern.

11.  Successors/Assigns
     ------------------

11.1 Subject to Section 11.2, notwithstanding anything to the contrary in the
     Master Sale Agreement, no party to this Agreement may transfer or assign,
     directly or indirectly, by operation of law or otherwise, any of its rights
     or obligations under this Agreement without the prior written consent of
     the other parties thereto and any purported transfer or assignment that
     does not comply with this Section 11.1 shall be null and void ab initio,
     provided that SER (and at and after Closing, any of the Companies) may
     --------
     assign its rights or obligations under this Agreement (i) after Closing, to
     one or more of its Affiliates or in connection with a sale or
     recapitalisation of the Business or any Company or (ii) to any lender (or
     agent thereof) for security purposes or pursuant to the assignment thereof
     by any such lender or agent in connection with the exercise by any such
     lender or agent of all of its rights and remedies as secured creditor with
     respect thereto.

11.2 It is a condition of any assignment under Section 11.1 that (i) the
     relevant transferee or assignee shall assume all of SER's liabilities under
     Section 3.1; and (ii) such transferee or assignee shall be at least as
     creditworthy as SER immediately prior to the relevant sale of the Business.

11.3 Notwithstanding anything stated above, upon the sale of a single facility
     or parcel of Real Property or any one or more facilities or parcels of Real
     Property which does not amount to a sale of the Business as referred to in
     Section 11.1 and which complies with Section 11.2, the indemnity with
     respect thereto shall not pass to the relevant purchaser or transferee or
     assignee, but will remain in full force and effect with respect to SER.
     For the avoidance of doubt, SER Indemnified Parties shall not have any
     right to claim under this Agreement in respect of liabilities they might
     incur under any indemnity or other contractual protection given to such
     purchaser or transferee or assignee.

11.4 Each party to this Agreement agrees to cause its successors and permitted
     assigns (other than a permitted assignment made only for security purposes)
     to agree in writing to be bound by the terms of this Agreement, provided,
                                                                     --------
     that nothing contained herein shall relieve any party from its obligations
     under this Agreement.

12.  Limitation on Remedies
     ----------------------

Notwithstanding anything to the contrary in this Agreement, under no
circumstances may a Party recover exemplary, treble, punitive, special,
indirect, consequential, remote or speculative damages, lost profits or internal
costs under this Agreement, provided, however, if any Indemnified Party is held
                            --------  -------
liable to a Third Party for any of such damages and the Indemnifying Party is
obligated to indemnify the Indemnified Party for the matter that gave rise to
such damages pursuant to this Agreement, then the Indemnifying Party shall be
liable for and obligated to reimburse the Indemnified Party for such damages.
<PAGE>

13.  Non-admissions
     --------------

The Parties agree and acknowledge that the inclusion or description of any
matter or issue in this Agreement and/or the provisions of this Agreement in
relation to such matter or issue shall not constitute any admission to any Third
Party or Governmental Entity that such matter or issue may exist, or is known to
exist or is or may constitute a liability.

14.  Relevant Environmental Permits
     ------------------------------

SELLER undertakes to use its reasonable efforts to procure the transfer to SER
of any Relevant Environmental Permit to SER or such person as SER shall direct.
<PAGE>

     IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of each of the Parties as of the date first above written.

SHELL OIL COMPANY

By: /s/ D.G. Naugle
    ------------------------------
Name: D.G. Naugle
      ----------------------------
Title: Attorney-In-Fact
       ---------------------------

SHELL EPOXY RESINS, LLC.

By: /s/ D.G. Naugle
    ------------------------------
Name: D.G. Naugle
      ----------------------------
Title: Attorney-In-Fact
       ---------------------------
<PAGE>

                                  SCHEDULE 1

                                  DEFINITIONS

In this Agreement:

"ARGO FACILITY" means the facility of the Business located at Argo, Illinois.

"CHANGE OF USE" means any alteration of Real Property or facilities on such Real
Property which materially changes the Business from the Resins/Derivatives
Field.

"CONTROL" means control and conduct in relation to an Environmental Claim
and/or Remediation Activities.

"DEDUCTIBLE AMOUNT" has the meaning given in Section 2.3.

"DEER PARK FACILITY" means the facility of the Business located at Deer Park,
Texas.

"DISCLOSURE" has the meaning given in Section 2.7.

"Disposal Issues" means the transportation, treatment, storage, handling or
disposal, or the arrangement for transportation, treatment, storage, handling or
disposal of Hazardous Substances generated by (i) the operations of any Company
or the Business; (ii) the operations of any facilities, equipment, or real or
personal property currently owned, operated or leased by the Business, the
Companies or the SELLER in connection with the Business or the Companies; (iii)
any Former Site; (iv) any Pre-close Toll Manufacture; or (v) in relation only to
the indemnity obligation of SER under Section 3.1 of this Agreement, any Future
Cause.

"DISPUTE RESOLUTION PROCEDURES" means the procedures set forth in Section 9 of
this Agreement.

"ENVIRONMENT" means all air, surface water, groundwater, or
land, including land surface or sub-surface, including all fish, wildlife,
biota, flora or fauna and related natural resources.

"ENVIRONMENTAL CLAIM" means any and all pending and/or threatened in writing
administrative or judicial actions, suits, orders (including orders on consent
reached in accordance with this Agreement if post-Closing), claims, liens,
notices of violations, investigations, complaints or proceedings whether
criminal or civil, pursuant to or relating to any Environmental Law by any
person (i) including, but not limited to, any Governmental Entity, private
person and citizen's group; (ii) excluding any of the above by an SER
Indemnified Party or SELLER Indemnified Party; and (iii) excluding any of the
above resulting from any Remediation Activities associated with or arising from
any Voluntary Remedial Action.

"ENVIRONMENTAL CLAIMS NOTICE" has the meaning given in Section 4.1(A) of this
Agreement.

"ENVIRONMENTAL CLAIMS RESPONSE" has the meaning given in Section
4.1(C)(i) of this Agreement.

"ENVIRONMENTAL CONDITIONS" means any (i) Site Contamination Issues; (ii)
Exposure Issues; (iii) Non-compliance Issues; or (iv) Disposal Issues.

"ENVIRONMENTAL DAMAGES" shall mean damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorneys' and
consultants' fees, medical monitoring, disbursements and expenses, liability for
the loss in value of Third Party property and costs and expenses of Remediation
Activities incurred after the Closing Date.

"ENVIRONMENTAL INDEMNIFIED PARTY" has the meaning given in Sub-section 4.1(A) of
this Agreement.

"ENVIRONMENTAL INDEMNIFYING PARTY" has the meaning given in Sub-section 4.1(A)
of this Agreement.

"ENVIRONMENTAL LAWS" means any and all applicable federal, state, provincial or
local and foreign public, civil and criminal laws, statutes, ordinances, orders,
codes, statutory guidance, rules, regulations, judgments, decrees, injunctions
or agreements with any Governmental Entity which are in force from time to time
before or after the date of this Agreement (subject to Section 2.1l), relating
to (i) the protection of human health and worker health and safety; (ii) the
protection of the Environment; (iii) governing the handling, use, generation,
treatment, storage, transportation, disposal, manufacture, distribution,
formulation, packaging, labelling or Release of Hazardous Substances to the
extent the same relate to

<PAGE>

protection of human health and the Environment; or (iv) the existence, cleanup
and/or remedy of contamination on property. Environmental Laws also include
civil or common law doctrines (including negligence, nuisance, trespass,
personal injury and property damage) to the extent that claims under such
doctrines arise out of the presence, Release or exposure to a Hazardous
Substance. Environmental Laws include laws relating to product safety, but no
other product liability issues.

"ENVIRONMENTAL PERMIT" means any federal, state, local, provincial, regional or
foreign permit, license, approval, consent, authorization, permission or
planning or zoning condition required by any Governmental Entity under or in
connection with any Environmental Law and includes any and all orders, consent
orders, binding agreements or promises of compliance issued or entered into by
or with any Governmental Entity under or in relation to any applicable
Environmental Law (entered into in accordance with this Agreement, if after
Closing).

"EXPOSURE ISSUES" means exposure or injury to persons (including death) or to
Third Party property or other interests of such persons caused by, related to,
arising from, or in connection with the generation, handling, use, treatment,
storage, transportation, disposal, discharge, presence, Release, threatened
Release or emission of any Hazardous Substances at, on, underlying, or migrating
from (i) any of the Real Property; (ii) any Former Site; (iii) any Pre-close
Toll Manufacture; (iv) any off-site facility used by the Companies or the
Business or any Former Business (but only to the extent that the Hazardous
Substances were sent or arranged to be sent to the off-site facility by the
Companies or the Business or any Former Business); or (v) in relation only to
the indemnity obligation of SER under Section 3.1 of this Agreement, any Future
Cause.

"FORMER BUSINESS" means any predecessors of and any entities previously owned by
the Companies, the Business or the SELLER in connection with the Business or the
Companies.

"FORMER SITE" means any real property, including the facilities, structures and
equipment thereon, formerly owned, operated or leased by the Business, the
Companies or the SELLER in connection with the Business or the Companies or any
Former Business.

"FUTURE CAUSE" means (i) any real property (other than the Real Property or
Former Site), including the facilities, structures and equipment thereon, which,
subsequent to the Closing Date first comes to be, or may be deemed to be owned,
operated or leased by the Business, the Companies or SER in connection with the
Business or the Companies or any Future Business; (ii) any entities which,
subsequent to the Closing Date, first come to be owned by the Companies, the
Business or SER in connection with the Business or the Companies or any
successor thereof ("Future Business"); or (iii) any toll manufacturing business
used by the Business, the Companies, SER or any Future Business in connection
with the operations of the Business or the Companies or any Future Business
after the Closing Date (but only to the extent that the Hazardous Substance
managed by the toll manufacturing facilities was as a result of such
operations).

"HAZARDOUS SUBSTANCES" means any hazardous or toxic substances, pollutants,
contaminants, raw materials, industrial materials, finished products,
intermediate products, co-products, chemicals or chemical substances, wastes or
other material or article (including, in the United States, but not limited to
those substances, materials, and wastes listed in the United States Department
of Transportation Hazardous Materials Table (49 C.F.R. (S)172.101) or by the
United States Environmental Protection Agency as hazardous substances (40 C.F.R.
(S)302) that are regulated under any applicable Environmental Laws including
without limitation, any material, waste or substance that is (i) petroleum,
petroleum hydrocarbons, petroleum products or petroleum by-products (including
crude oil or any component thereof); (ii) asbestos, or asbestos containing
materials; (iii) polychlorinated biphenyls; or (iv) defined as a "hazardous" or
"dangerous" "material, " "substance" or "waste" under applicable local, state or
federal Environmental Laws in the United States.

"HOST PARTY" has the meaning given in Section 6.4 of this Agreement.

"INDEMNIFIED PARTY" means whichever of SER or the SELLER is the claimant under
the relevant Indemnity Claim.

"INDEMNIFYING PARTY" means whichever of SER or the SELLER is not the Indemnified
Party in relation to the relevant Indemnity Claim.

"INDEMNITY CLAIM" means an indemnity claim by a Party under this Agreement.
<PAGE>

"INVESTIGATION" has the meaning given in Section 2.7 of this Agreement.

"LAKELAND FACILITY" means the facility of the Business located at Lakeland,
Florida.

"LISTED ITEMS DEDUCTION" means (i) $6,394,000; plus (ii) the Listed Items
Underspend.

"LISTED ITEMS EXPIRY DATE" means, in relation to a Listed US Compliance Issue,
the date specified in Schedule 5 in relation to that issue.

"LISTED ITEMS UNDERSPEND" means the amount (if any) by which the aggregate
expenditure by SELLER Indemnified Parties between 1st January, 2000 and 31st
December, 2000 in relation to the Listed US Compliance Issues and the Listed
Non-US Compliance Issues is less than $6,669,000.

"LISTED NON-US COMPLIANCE ISSUES" means the matters set forth in Schedule 4 of
the Non-US Environmental Agreement.

"LISTED US COMPLIANCE ISSUES" means the matters set forth in Schedule 5.

"LOWEST COST ALTERNATIVE" has the meaning given in Section 7.1 of this
Agreement.

"KNOWN LAKELAND SITE CONTAMINATION ISSUES" means the Site Contamination Issues
set forth in Schedule 2.

"NON-COMPLIANCE ISSUES" means (i) non-conformance with any deadlines or
requirements which are required to be complied with on or before the Closing
Date under any Environmental Law in effect or in force as of the Closing Date,
which is not related to or arising in connection with Site Contamination Issues,
Exposure Issues or Disposal Issues; and (ii) the Listed US Compliance Issues.

"NON-US ENVIRONMENTAL AGREEMENT" means the Environmental Agreement dated the
same as this Agreement and made between Shell Petroleum N.V., a company
organized under the laws of the Netherlands (1) and Shell Epoxy Resins LLC, a
Delaware limited liability company (2).

"NORCO FACILITY" means the facility of the Business located at Norco, Louisiana.

"PERMITTED INVESTIGATION AND DISCLOSURE" has the meaning given in Section 2.7.

"PRE-CLOSE TOLL MANUFACTURE" means any toll manufacturing facilities used by the
Companies, the Business or the SELLER in connection with the facilities and
operations of the Companies or the Business or Former Business (but only to the
extent that the Hazardous Substance managed by the toll manufacturing facilities
was as a result of such facilities and operations).

"RELEASE" means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing of Hazardous
Substances into the Environment.

"RELEVANT ENVIRONMENTAL PERMITS" means any permits which (i) relate to
Environmental Conditions; (ii) are held by SELLER as at Closing; (iii) are
required under applicable law to be held by SER or SER Indemnified Parties after
Closing.

"RELEVANT PROVISIONS" has the meaning given in Section 10.3 of this Agreement.

"Remediation Activities" means the investigation and remediation of an
Environmental Condition, including but not limited to soil and groundwater
sampling, activities associated with the construction, operation, maintenance or
monitoring of remediation or treatment equipment and systems, the investigation,
excavation, restoration, remediation, clean-up and/or treatment of contaminated
soil, groundwater and free product, measures to contain, monitor or limit
contamination and/or other works in relation to any Environmental Condition.

"REPLY NOTICE" has the meaning given in Sub-section 4.1 (C)(ii).

"SELLER INDEMNIFIED PARTIES" means SELLER, its Affiliates, and their respective
directors, stockholders, officers, partners, employees, agents, consultants,
attorneys, representatives, successors, permitted transferees and permitted
assignees.
<PAGE>

"SER INDEMNIFIED PARTIES" means SER, its Affiliates, and their respective
directors, stockholders, officers, partners, employees, agents, consultants,
attorneys, representatives, successors, permitted transferees and permitted
assignees.

"SITE CONTAMINATION ISSUES" means environmental pollution, contamination,
degradation, damages, exposure or injury to Third Party property or the
Environment caused by, relating to, arising from, or in connection with the
generation, handling, use, treatment, storage, transportation, disposal,
discharge, presence, Release, threatened Release or emission of any Hazardous
Substances at, on, underlying or migrating to (in the case of such migration, to
the extent from real property which is not owned or occupied by any Third Party)
or from (i) any of the Real Property (ii) any Former Sites or (iii) any
Pre-close Toll Manufacture; or (iv) in relation only to the indemnity obligation
of the SER under Section 3.1 of this Agreement, any Future Cause.

"SPECIFIED TRANSACTION" means (i) a recapitalisation or financing in relation to
the Companies or the Business; or (ii) a public offer, sale, merger or change of
control in relation to the Business or the Companies.

"VISITING PARTY" has the meaning given in Section 6.4 of this Agreement.

"VOLUNTARY REMEDIAL ACTION" means and a "VOLUNTARY REMEDIATION REQUIREMENT"
shall be deemed to have arisen where any Remediation Activities are performed or
undertaken in connection with Site Contamination Issues, Disposal Issues or Non-
compliance Issues (i) which are to address contamination in excess of applicable
cleanup standards or criteria under applicable Environmental Law; (ii) which are
not required by any Governmental Entity or under any Environmental Law and for
which no violation, penalty or sanction will be incurred, assessed or imposed as
a result of a party's failure to perform such activities or to report the
presence or Release of Hazardous Substances; (iii) in relation to which no
Environmental Claim has been made and (iv) in relation to which it is very
likely that there would be an Environmental Claim if the relevant Governmental
Entity were aware of the nature and extent of the relevant Site Contamination
Issues, Disposal Issues or Non-compliance Issues.

"WESTHOLLOW FACILITY" means the facility of the Business located at Houston,
Texas.

"WHOLE COMPLEX CONTAMINATION" means Site Contamination Issues at the complex
that includes the Deer Park Facility, the Westhollow Facility, the Norco
Facility or the Argo Facility and that is not specific to any of the Real
Property or the activities being conducted thereon and that is being managed,
stabilized or remediated across all or part of the larger complex of which such
Real Property forms part.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]