Document:

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                              EMPLOYMENT AGREEMENT

                  EMPLOYMENT AGREEMENT, dated as of September 17, 2002 (this
"Agreement") by and among PIONEER COMPANIES, INC., a Delaware corporation (the
"Company"), and Michael Y. McGOVERN (the "Executive").

                                   WITNESSETH:

                  WHEREAS, the Company desires to engage Executive as President
and Chief Executive Officer upon the terms and conditions contained in this
Agreement; and

                  WHEREAS, Executive desires to be so employed by the Company
from and after the Effective Date, as hereinafter defined, upon the terms and
conditions contained in this Agreement; and

                  WHEREAS, the parties hereto desire to enter this Agreement
upon the terms and conditions hereinafter set forth.

                  NOW, THEREFORE, in consideration of the foregoing, of the
mutual covenants and agreements herein contained and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties, intending legally to be bound, hereby agree as
follows:

                  1. Employment. The Company hereby employs Executive, and
Executive hereby accepts such employment, upon the terms and conditions
hereinafter set forth.

                           (a) Position. Executive shall be the President and
Chief Executive Officer of the Company. At all times during the term of this
Agreement, the Company shall cause Executive to be nominated as a member of the
Company's Board of Directors (the "Board").

                           (b) Duties. Subject to the Board's authority and
oversight, the Executive shall have full responsibility for all the day-to-day
activities of the Company and its affiliated companies and over all officers and
employees of the Company, including, but not limited to, the power to hire and,
subject to contractual commitments, fire employees, and shall have
responsibilities commensurate with those normally performed by a chief executive
officer. In such capacity, the Executive shall report solely and directly to the
Board.

                           (c) Place of Employment. During the term of this
Agreement, the Executive shall perform the services required by this Agreement
at the principal executive office of the Company, subject to travel necessary to
appropriately discharge Executive's responsibilities, recognizing that the
Company has operations, customers and suppliers in locations other than that of
its principal executive office.

                           (d) Performance of Duties. The Executive agrees to
devote his full time and best efforts to the performance of his duties and to
serve the Company well and

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faithfully in conformity with the direction of the Board and written policies of
the Company. The foregoing shall not prevent Executive from serving on the
boards of directors of which he is a member as of the Effective Date (which have
been disclosed and approved prior to the execution hereof as listed on Appendix
A) so long as such service does not interfere or conflict with the Executive's
discharge of his duties under this Agreement.

                  2. Term.

                           (a) Effective Date. This Agreement shall become
effective on September 17, 2002 (the "Effective Date") and have an initial term
of two (2) years after the Effective Date; provided, however, that the term of
this Agreement shall automatically be extended from day to day so that it always
has a remaining term of (2) years, unless terminated pursuant to Section 2(b)
below.

                           (b) Termination Date. The term of employment under
this Agreement shall terminate upon the earliest to occur of the following
events (the date specified in each such event is referred to as the "Termination
Date"):

                                (i) the date upon which the Company terminates
the Executive's employment by the Company for Cause or without Cause (it being
understood that the date of termination shall be the date upon which the Company
provides the Executive written notice of such event);

                                (ii) the date of the Executive's death;

                                (iii) the date upon which the Company terminates
Executive's employment by the Company as a result of Executive's Disability;

                                (iv) the date upon which Executive effects a
Voluntary Termination (it being understood that the date of termination shall be
the date upon which the Executive provides the Company written notice of such
event); or

                                (v) upon or after the date of a Change of
Control, but only as expressly provided in Section 4(e).

                           (c) Performance of Duties Following Notice of
Termination. In the event that either (i) the Company terminates the Executive's
employment pursuant to Section 2(b)(i) hereof or (ii) Executive effects a
Voluntary Termination pursuant to Section 2(b)(iv), Executive, if requested by
the Company, shall continue to render services hereunder to the Company for a
period not to exceed 30 days from the Termination Date, and shall, in such
event, be paid the compensation and benefits hereunder for such period.

                  3. Compensation and Benefits.

                           (a) Base Salary.

                                (i) The Company shall pay the Executive a base
salary at the annual rate of $450,000 per year ("Base Salary").

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                                (ii) The Base Salary shall be paid in equal
installments, consistent with the manner in which other senior executives of the
Company are paid, and subject to all applicable withholding and deductions, in
accordance with the usual payroll practices of the Company, but not less
frequently than monthly.

                           (b) Bonus.

                                (i) The Executive shall be entitled to
participate in the annual bonus plan to be established for senior executives on
such terms and conditions as shall be determined by the Board (the bonus to be
paid under such plan is referred to herein as the "Performance Bonus"). It is
understood that for fiscal year 2002, the Board is not expected to implement a
normal bonus plan and depending on financial results may not implement any bonus
plan for senior executives. With respect to years following fiscal year 2002, it
is understood that the bonus plan for senior executives will depend upon the
Board's judgment of the Company's ability to pay bonuses after taking into
consideration the levels of EBITDA and cash flow expected to be achieved, the
Company's debt service and capital requirements, and such other factors as the
Board considers relevant to a determination as to whether to have a bonus plan
and, if a bonus plan is implemented, the levels of payments under such plan.

                                (ii) In the event the Executive's employment is
terminated (other than if such termination is by the Company for Cause or
pursuant to Section 2(b)(i) in which case there shall be no Performance Bonus
payable), the Performance Bonus, if any, to which the Executive may be entitled
for the fiscal year in which the termination occurs shall be prorated, such
prorated portion being the portion of such Performance Bonus corresponding to
the period commencing with the beginning of such fiscal year in which such
termination occurs and ending on the date of termination.

                           (c) Benefits. During the term of this Agreement, the
Executive shall be entitled to all such benefits as may, from time to time, be
made generally available to employees and senior executives of the Company,
including, but not limited to, pension or other retirement plans, medical plans,
disability plans, incentive plans, stock plans, investment plans, additional
compensation plans and all other group and other insurance plans and benefits to
the extent that the Executive is, and remains, eligible to participate therein
and subject to eligibility provisions of such plans then in effect.

                           (d) Business Expenses. The Company shall pay, either
directly or by reimbursement to the Executive, all documented expenses incurred
by the Executive, including travel and entertainment expenses, in the
performance of his duties upon submission of appropriate evidence thereof and on
a basis consistent with the Company's then current policies.

                           (e) Vacation. For each year of this Agreement, the
Executive shall be entitled to paid vacation in accordance with the Company's
standard policy for the Company's executives.

                           (f) Stock Options. On the Effective Date, the
Executive shall receive a grant of nonqualified stock options under the Pioneer
Companies, Inc. 2001 Employee Stock Option Plan covering (1) 150,000 shares of
the Company's common stock, par value $.01 (the

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"Common Stock") and (2) 75,000 shares of Common Stock; provided, however that
the vesting of the stock options for the 75,000 shares covered by clause (2)
above shall be subject to satisfaction of special vesting requirements in
addition to satisfaction of the requirements related to the stock options for
the 150,000 shares covered by clause (1) above, all as set forth in, and
governed by, the form of the Employee Nonqualified Stock Option Agreement
attached hereto as Appendix B, which shall be entered into by Executive and the
Company as of the Effective Date.

                           (g) Moving Expenses. The Company shall pay (either
directly or by reimbursement to the Executive), consistent with its existing
policy for executives, (i) the reasonable costs of the Executive's temporary
apartment housing in Houston, Texas, and related commuting expenses between
Dallas and Houston, Texas and (ii) the reasonable costs of Executive's initial
relocation expenses for permanently moving to Houston, Texas.

                  4. Compensation Upon Termination of Employment.

                           (a) Termination Upon Death. If Executive's employment
by the Company is terminated as a result of the occurrence of Executive's death
pursuant to Section 2(b)(ii), the Company shall be obligated to pay to the
Executive's estate any unpaid compensation and other benefits expressly provided
under this Agreement through the Termination Date, and any unpaid Performance
Bonus for any prior fiscal period.

                           (b) Termination Because of Disability. If Executive's
employment by the Company is terminated by the Company as a result of the
occurrence of Executive's Disability pursuant to Section 2(b)(iii), the Company
shall pay Executive the compensation and other benefits expressly provided under
this Agreement through the Termination Date, and any unpaid Performance Bonus
for any prior fiscal period.

                           (c) Termination by the Company for Cause. If
Executive's employment by the Company is terminated by the Company for Cause
pursuant to Section 2(b)(i), Executive shall receive the compensation and other
benefits expressly provided under this Agreement through the Termination Date.

                           (d) Termination by the Company without Cause. If
Executive's employment by the Company is terminated by the Company without Cause
pursuant to Section 2(b)(i), the Company shall pay Executive (i) the
compensation and other benefits expressly provided under this Agreement through
the Termination Date, (ii) any unpaid Performance Bonus for any prior fiscal
period, and (iii) a lump sum payment equal to two (2) times the Base Salary.

                           (e) Termination Following Change of Control.

                                (i) If immediately prior to and immediately
following a Change of Control, the Fair Market Value per share of the Common
Stock is less than five dollars ($5) and if the Executive's employment with the
Company is Constructively Terminated within eighteen (18) months following such
Change in Control, such Constructive Termination shall be treated as a
termination of the Executive's employment under Section 4(d).

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                                (ii) Notwithstanding the preceding clause (i),
if immediately prior to or immediately following a Change of Control, the Fair
Market Value per share of the Common Stock is at least five dollars ($5), the
Change of Control shall be treated as a termination of the Executive's
employment under Section 4(d).

                           (f) Voluntary Termination by Executive. If the
Executive's employment by the Company is terminated as a result of a Voluntary
Termination by the Executive pursuant to Section 2(b)(iv), the Company shall pay
the Executive the compensation and other benefits expressly provided under this
Agreement through the Termination Date, and any unpaid Performance Bonus for any
prior fiscal year.

                           (g) No Mitigation. If the Executive's employment
described herein is terminated, the Executive shall have no duty to mitigate his
damages or seek other employment, and the Company shall have no right to offset
any amounts which are paid to or earned by Executive from other employment
obtained by Executive (including self-employment) against any amounts which are
payable to Executive pursuant to this Agreement.

                           (h) Continuation of Health and Life Insurance
Coverage. At Executive's own expense, Executive and Executive's dependents shall
also be entitled to any continuation of health insurance coverage rights after
the Termination Date under any applicable law; provided, however, that in the
event of the termination of Executive's employment with the Company pursuant to
Section 4(d), health and life insurance coverage shall be provided at the
Company's expense for two (2) years after the Termination Date on the same basis
as for other senior executives of the Company, including the same employee
contributions and co-payments which are required for other employees; provided,
further, that if the Company cannot legally provide the Executive with such
coverage under the Company's then existing plans as a retired or former employee
or otherwise, then, for a period terminating on the earlier of (i) two (2) years
after the Termination Date or (ii) the date on which the Executive obtains
health insurance coverage through another employer which is reasonably
comparable (as determined by the Company) to the coverage provided under the
Company's health plan, the Company shall pay for any premiums incurred by the
Executive in order for Executive and Executive's dependents to receive
continuation coverage under the Company's health plan pursuant to the
Consolidated Omnibus Reconciliation Act of 1986, as amended.

                           (i) Effects of Termination; Payments.

                                (i) Effective as of the Termination Date, the
Executive shall be deemed to have resigned from all offices and directorships
then held with the Company and its subsidiaries.

                                (ii) The covenants and agreements of the
Executive contained in Sections 5, 6 and 7 shall survive termination of the
Executive's employment by the Company and the termination of this Agreement.

                                (iii) All payments due to Executive or his
estate pursuant to Section 4 shall be paid as soon as practicable after the
Termination Date, but in no event later than ten (10) days thereafter, except in
the case of the Performance Bonus for any prior fiscal

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period which shall be paid as soon as practicable after the end of such fiscal
period, but not later than sixty (60) days thereafter, and except for benefits
provided by the Company pursuant to Section 4(h).

                  5. Confidentiality and Non-Disclosure. The Executive
recognizes and acknowledges that he will have access to certain information
concerning the Company that is confidential and proprietary and constitutes
valuable and unique property of the Company. The Executive agrees that he will
not at any time disclose to others, use, copy or permit to be copied, except
pursuant to his duties on behalf of the Company or its successors, assigns or
nominees, any secret or confidential information of the Company (whether or not
developed by the Executive) without the prior written consent of the Board of
Directors of the Company. The term "secret or confidential information of the
Company" (sometimes referred to herein as "Confidential Information") shall
include, without limitation, the Company's plans, strategies, potential
acquisitions, costs, prices, systems for buying, selling, and/or trading
relating to the manufacture and marketing of chlorine, caustic soda and related
products, client lists, pricing policies, financial information, the names of
and pertinent information regarding suppliers, computer programs, policy or
procedure manuals, training and recruiting procedures, accounting procedures,
the status and content of the Company's contracts with its suppliers or clients,
or servicing methods and techniques at any time used, developed, or investigated
by the Company, before or during the Executive's tenure of employment to the
extent any of the foregoing are (i) not generally available to the public and
(ii) maintained as confidential by the Company. The Executive further agrees to
maintain in confidence any confidential information of third parties received as
a result of the Executive's employment and duties with the Company. Upon
termination, the Executive will deliver to the Company, as determined
appropriate by the Company, all correspondence, memoranda, notes, records,
client lists, computer systems, programs, or other documents and all copies
thereof made, composed or received by the Executive, solely or jointly with
others, and which are in his possession, custody or control at such date and
which are related in any manner to the past, present or anticipated business of
the Company. The provisions of this Section 5 are in addition to any other
agreements which Executive now has or enters into in the future regarding the
Company's secret or confidential information. The provisions of this Section 5
shall survive the termination of this Agreement.

                  6. Non-Solicitation. During the term of this Agreement and for
a period of two (2) years following the Executive's termination of employment,
the Executive agrees that he will not solicit, raid, entice, encourage or induce
any person who at the time of his termination of employment is an employee of
the Company, or any of its parents, subsidiaries or affiliates or to become
employed by any person, firm or corporation or to discontinue their employment
with the Company. The Executive further agrees, for the two (2) year period
following his termination of employment, to refrain from approaching any such
employee for such purpose or authorizing or knowingly approving such actions by
any other person, firm or corporation or assisting any such person, firm or
corporation in taking such action. The provisions of this Section 6 are in
addition to any other agreements which Executive now has or enters into in the
future regarding the Executive's relationship with Company employees following
Executive's termination of employment. The provisions of this Section 6 shall
survive the termination of this Agreement.

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                  7. Enforcement. It is understood and agreed by the parties
that no amount of money would adequately compensate the Company for damages
which the parties acknowledge would be suffered as a result of a violation by
the Executive of the covenants contained in Sections 5 and 6 above, and that,
therefore, the Company shall be entitled, upon application to a court of
competent jurisdiction, to obtain injunctive relief (without the need to post
bond) to enforce the provisions of Sections 5 and 6, which injunctive relief
shall be in addition to any other rights or remedies available to the Company.
The provisions of this Section 7 shall survive the termination of this
Agreement.

                  8. Certain Defined Terms. For purposes of this Agreement the
following terms and phrases shall have the following meanings:

                           "Cause" shall mean: (i) the Executive shall have
committed an act of fraud, embezzlement or misappropriation against the Company
or committed a material breach of fiduciary duty owed to the Company; or (ii)
the Executive shall have been convicted by a court of competent jurisdiction (or
entered a plea of guilty or nolo contendere) of any felony or crime involving
moral turpitude or fraud (other than a traffic offense); or (iii) the Executive
shall have engaged in willful misconduct, material breach of his obligations
under this Agreement or the refusal or failure to perform his duties as required
by this Agreement (other than as a result of incapacity due to physical or
mental illness) which violations are not remedied within 15 days after receipt
of written notice from the Company specifying such violations.

                           "Change of Control" means (a) the sale, lease or
other transfer of all or substantially all of the assets of the Company to any
person or group (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")); (b) the adoption by the
stockholders of the Company of a plan relating to the liquidation or dissolution
of the Company; (c) the merger or consolidation of the Company with or into
another entity or the merger of another entity into the Company or any
subsidiary thereof with the effect that immediately after such transaction the
stockholders of the Company immediately prior to such transaction (or their
affiliates) hold less than fifty percent (50%) of the total voting power of all
securities generally entitled to vote in the election of directors, managers or
trustees of the entity surviving such merger or consolidation; or (d) the
acquisition by any person, entity or group, within the meaning of Section 13(d)
or 14(d) of the Exchange Act (other than Putnam Investments, any of its
affiliates, and/or any group including any of them ("Putnam") or James D.
Bennett, any of his affiliates, and/or any group including any of them
("Bennett"); provided that either Putnam or Bennett own individually at least
12% or collectively at least 20%, of the total voting power of all securities
generally entitled to vote in the election of directors) of more than fifty
percent (50%) of the voting power of all securities of the Company generally
entitled to vote in the election of directors of the Company other than as part
of a merger or business combination transaction, which shall be subject to the
test set forth in clause (c) and not this clause (d).

                           "Company" as used in this Agreement, the term "the
Company" includes the Company, any assignee or other successor of interest in
the Company, and any parent, subsidiary, or other corporation or partnership
under common ownership or control with the Company.

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                           "Constructive Termination" means a material
diminution of the title or management responsibilities of the Executive (i.e, a
material reduction in the operating assets of the Company over which the
Executive has management responsibilities) which is not remedied within 30 days
after written notice thereof is given by the Executive. Notwithstanding the
foregoing, a change in the management oversight body to which the Executive
shall report following a Change in Control, including a requirement that the
Executive report to an executive of the entity which acquired control of the
Company in lieu of a Board of Directors, shall not be deemed a Constructive
Termination.

                           "Disability" means an inability by the Executive to
perform a substantial portion of the Executive's duties by reason of physical or
mental incapacity or disability for a total of ninety (90) days or more in any
consecutive period of three hundred and sixty-five (365) days, as determined by
the reasonable judgment of a physician selected by the Executive and reasonably
acceptable to the Company.

                           "Fair Market Value" means, as of a particular date,
with respect to any security, the fair value thereof determined by the Board in
good faith taking into account all relevant factors, including recently reported
trades of such security.

                           "Voluntary Termination" shall mean the voluntary
termination by Executive of Executive's employment from the Company by voluntary
resignation or any other means (other than (i) death or Disability or (ii)
simultaneous with or following termination for Cause or an event which if known
to the Company at the time of such voluntary termination by Executive would
constitute Cause).

                  9. Miscellaneous Provisions.

                           (a) Arbitration. Any controversy or claim arising out
of or relating to this Agreement, including the making, interpretation or breach
thereof, or the employment or termination of employment of Executive shall be
resolved by expedited arbitration in the City of the principal offices of the
Company in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, and any
party to the arbitration may, if such party so elects, institute proceedings in
any court having jurisdiction for the specific performance of any such award.

The powers of the arbitrator(s) shall include, but not be limited to, the
awarding of injunctive relief. Notwithstanding any other provision of this
Section 9(a) to the contrary, the parties agree that any monetary award arising
out of a claim or controversy relating to this Agreement which may be awarded by
the arbitrator(s) or any court having jurisdiction thereof shall be limited to
the prevailing party's actual damages and shall not include any monetary awards
for punitive, special, consequential, exemplary, indirect or other damages of
any kind; provided, however, that (i) the arbitrator(s) shall include in any
award in which Executive is the prevailing party the amount of his reasonable
attorneys' fees and expenses and all other reasonable costs and expenses of

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the arbitration; and (ii) in the event the arbitrator(s) do not rule in favor of
Executive in respect to all of the material claims alleged by Executive, the
arbitrator(s) may include in the award in favor of Executive, if any, the amount
of Executive's reasonable costs and expenses of the arbitration, if any, as the
arbitrator(s) deem just and equitable under the circumstances. Except as
provided above, each party shall bear his or its own attorneys' fees and
expenses, and the parties shall bear equally all other costs and expenses of the
arbitration. The provisions of this Section 9 shall survive the termination of
this Agreement.

                           (b) Entire Agreement. This Agreement sets forth the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, arrangements, and
understandings between the parties with respect to the subject matter hereof.

                           (c) Modification. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms or covenants
hereof may be waived, only by a written instrument executed by both of the
parties or in the case of a waiver, by the party waiving compliance.

                           (d) Waiver. The failure of either party at any time
or times to require performance of any provision hereof in no manner shall
affect the right at a later time to enforce the same. No waiver by either party
of a breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach or waiver of any
other term or covenant contained in this Agreement.

                           (e) Notices. Any and all notices or other
communications provided for herein shall be given in writing and shall be
hand-delivered or sent by United States mail, postage prepaid, registered or
certified, return receipt requested, addressed as follows:

                                        If to the Company:

                                        Pioneer Companies, Inc.

                                        700 Louisiana, Suite 4300
                                        Houston, Texas 77002
                                        Attention: Board of Directors

                                        With a copy to:

                                        Baker Botts, L.L.P.
                                        One Shell Plaza
                                        910 Louisiana
                                        Houston, Texas 77002-4995
                                        Attention: J. David Kirkland, Jr.

                                        If to Executive:

                                        Michael Y. McGovern
                                        6910 Oak Manor
                                        Dallas, Texas 75230

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provided, however, that any of the parties may, from time to time, give notice
to the other parties of some other address to which notices or other
communications to such party shall be sent, in which event, notices or other
communications to such party shall be sent to such address. Any notice or other
communication shall be deemed to have been given and received hereunder as of
the date the same is actually hand delivered or, if mailed, three days after
deposit in the United States mail, postage prepaid, registered or certified,
return receipt requested.

                           (f) Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of Texas applicable to
contracts made and to be performed wholly within such state.

                           (g) Assignability. This Agreement, and the
Executive's rights and obligations hereunder, may not be assigned by the
Executive. The Company may assign its rights, together with its obligations
hereunder, only to a successor by merger or by the purchase of all or
substantially all of the assets and business of the Company and such rights and
obligations shall inure to, and be binding upon, any such successor.

                           (h) Binding Effect. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective legal
representatives, heirs, permitted successors and permitted assigns.

                           (i) Captions. Headings and titles in this Agreement
are for convenience of reference only and shall not control the construction or
interpretation of any provisions hereof. The words "herein," "hereof,"
"hereunder," and the words of similar import, when used anywhere in this
Agreement, refer to this Agreement as a whole and not merely to a subdivision in
which such words appear, unless the context otherwise requires. The singular
shall include the plural unless the context otherwise requires.

                           (j) Indemnification. The Company agrees that the
Executive shall be entitled to indemnification and payment or reimbursement of
expenses (including attorneys' fees and expenses) to the fullest extent provided
in the Company's Certificate of Incorporation, as in effect on the date hereof
and as it may be hereafter amended (but in no event on terms less favorable to
the Executive than those in effect on the date hereof), for all damages, losses
and expenses incurred by the Executive in connection with any claim, action,
suit or proceeding which arises from the Executive's services and/or activities
as an officer and/or employee of the Company or any affiliate thereof. This
Section shall survive any termination of the term of this Agreement.

                           (k) Separability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such validity or
unenforceability without rendering invalid or unenforceable the

                           (l) Remaining terms and provisions of this Agreement
or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.

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                  IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.

                                       THE COMPANY:

                                       PIONEER COMPANIES, INC.

                                       By: /s/ David N. Weinstein
                                           -------------------------------------
                                       Name:    David N. Weinstein
                                       Title:   Chairman of the Board

                                       EXECUTIVE:

                                       /s/ Michael Y. McGovern
                                       -----------------------------------------
                                       Michael Y. McGovern

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                                   APPENDIX A

                             APPROVED DIRECTORSHIPS

Goodrich Petroleum Corporation
Coho Energy, Inc.
Greystar, Inc.

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Page 13

                                   APPENDIX B

              FORM OF EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT<PAGE>

                               September 30, 2002

Mr. Michael J. Ferris
3108 Locke Lane
Houston, Texas 77019

Dear Mike:

                  In connection with your separation from Pioneer Companies,
Inc. (the "Company"), you and the Company have agreed to the terms and
conditions as contained in the attachment (the "Attachment") and this letter
agreement (the "Letter Agreement") (hereinafter the Attachment and the Letter
Agreement are jointly this "Agreement") concerning your separation from
employment as of the close of business on September 30, 2002 (the "Separation
Date"). The Attachment is part of the Letter Agreement for all purposes.

                  The Company agrees to provide you with the benefits, payments
and other items described in this Agreement.

                  In consideration of the Company's agreement to provide the
benefits, payments, and other items described in this Agreement, some of which
are in addition to anything to which you are already entitled and the receipt
and sufficiency of which are hereby acknowledged, you hereby release and forever
discharge the Company and its parents, subsidiaries and affiliates, and their
officers, directors, agents, servants, employees, successors, assigns and
insurers, and any and all other persons, firms, organizations and corporations
from any and all damages, losses, causes of action, expenses, demands,
liabilities and claims on behalf of yourself, your heirs, executors,
administrators and assigns with respect to all matters relating to the Company,
and you hereby accept the cash payments, benefits and other items described
herein in full settlement of all such damages, losses, causes of action,
expenses, demands, liabilities and claims you now have or may have with respect
to such matters; provided, however, that, notwithstanding the foregoing release
and discharge, you shall retain all rights to any claims arising from a breach
of this Agreement.

                  This release includes, but is not limited to, claims arising
under the Age Discrimination in Employment Act, the Older Workers' Benefit
Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Texas Labor Code, any
state or federal statute, regulation or common law pertaining to
"whistle-blowers," any claims for breach of contract, tort or personal injury of
any sort, and any claims under any other state or federal statute or regulation,
in equity or at common law. Further, by accepting the payments described in this
Agreement, you agree not to sue the Company or the related persons and entities
described above with respect to any matters released hereunder. You affirm and
agree that your employment relationship ends on your Separation Date, and as of
such date you withdraw unequivocally, completely and finally from your

<PAGE>

employment, and as of September 17, 2002, you resign all positions, titles,
responsibilities and authority as a director, officer or employee of the Company
and its parents, subsidiaries and affiliates and waive all rights in connection
with such relationship except to vested benefits and the payments and benefits
described in this Agreement. You agree that this Agreement is valid, fair,
adequate and reasonable, was entered into with your full knowledge and consent,
and was not procured through fraud, duress or mistake. You shall have 21 days to
decide whether to sign this Agreement and be bound by its terms. You shall have
the right to revoke or cancel it within 7 days (the "Revocation Period") after
you have signed it. This cancellation or revocation can be accomplished by
delivery of a written notification to me. In the event that this Agreement is
canceled or revoked, the Company shall have no obligation to furnish the
payments and benefits described herein, except for any compensation that is due,
benefits that are vested, and/or other contractual rights and obligations as of
the Separation Date. You acknowledge that you have been advised in writing to
consult with an attorney prior to signing this Agreement and have had an
adequate opportunity to seek advice of your own choosing. You acknowledge that
you have read this Agreement, have consulted with an attorney, have had an
opportunity to ask questions and have it explained to you and that you
understand that the Agreement will have the effect of knowingly and voluntarily
waiving any action you might pursue, including breach of contract, personal
injury, retaliation, discrimination on the basis of race, age, sex, national
origin or disability and any other claims arising prior to the date of the
Agreement.

                  In consideration of your agreements in this Agreement, the
Company, its parents, subsidiaries, affiliates, predecessors, and successors
hereby release and forever discharge you from any and all damages, losses,
causes of action, expenses, demands, liabilities and claims with respect to all
matters relating to or arising from your employment, including, without
limitation, any and all of your actions or inactions done while employed by the
Company or its predecessors, subsidiaries, or affiliates; provided, however, the
preceding sentence shall not apply to any willful conduct which results in a
fraud upon the Company, misappropriation of funds or other property of the
Company, or criminal conduct which was demonstrably injurious to the property or
business of the Company. If at any time after your termination, you are made a
party to, or are threatened to be made a party in, any civil, criminal or
administrative action, suit or proceeding by reason of the fact that you are or
were a director, officer, employee or agent of the Company, or of any other
corporation or any partnership, joint venture, trust or other enterprise for
which you served as such at the request of the Company, then you shall be
indemnified by the Company, to the fullest extent permitted under applicable
law, against expenses actually and reasonably incurred by you or imposed on you
in connection with, or resulting from, any appeal therein if you acted in good
faith and in a manner you reasonably believed to be in or not opposed to the
best interest of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe your conduct was unlawful, except
with respect to matters as to which it is adjudged that you are liable to the
Company or to such other corporation, partnership, joint venture, trust or other
enterprise for gross negligence or willful misconduct in the performance of your
duties. As used herein, the term "expenses" shall include all obligations
actually and reasonably incurred by you for the payment of money, including,
without limitation, attorney's fees, judgments, awards, fines, penalties and
amounts paid in satisfaction of a judgment or in settlement of any such action,
suit or proceeding, except amounts paid to the Company or such other
corporation, partnership, joint venture, trust or other enterprise by you. The
foregoing indemnification provisions shall be in addition to any other rights to
indemnification to which you may be entitled.

                                       2
<PAGE>

                  You recognize and acknowledge that you have had access to
certain information concerning the Company that is confidential and proprietary
and constitutes valuable and unique property of the Company. You agree that you
will not at any time disclose to others, use, copy or permit to be copied,
except pursuant to your duties on behalf of the Company or its successors,
assigns or nominees, any secret or confidential information of the Company
(whether or not developed by you) without the prior written consent of the Board
of Directors of the Company. The term "secret or confidential information of the
Company" (sometimes referred to herein as "Confidential Information") shall
include, without limitation, the Company's plans, strategies, potential
acquisitions, costs, prices, systems for buying, selling, and/or trading
relating to the manufacture or marketing of chlorine, caustic soda and related
products, client lists, pricing policies, financial information, the names of
and pertinent information regarding suppliers, computer programs, policy or
procedure manuals, training and recruiting procedures, accounting procedures,
the status and content of the Company's contracts with its suppliers or clients,
or servicing methods and techniques at any time used, developed, or investigated
by the Company, before or during your tenure of employment to the extent any of
the foregoing are (i) not generally available to the public and (ii) maintained
as confidential by the Company. You further agree to maintain in confidence any
confidential information of third parties received as a result of your
employment and duties with the Company. You affirm that you have delivered to
the Company, as determined appropriate by the Company, all correspondence,
memoranda, notes, records, client lists, computer systems, programs, or other
documents and all copies thereof made, composed or received by you, solely or
jointly with others, and which are in your possession, custody or control at
such date and which are related in any manner to the past, present or
anticipated business of the Company. You and the Company further agree that the
terms of this Agreement, including all terms and conditions contained in the
Attachment, shall be kept strictly confidential and that any disclosure to
anyone for any purpose whatsoever (save and except disclosure to your spouse, to
financial institutions as part of a financial statement, to immediate family
members and/or heirs, to financial, tax and legal advisors, or as required by
law) by you or the Company shall be a breach of this Agreement. The
aforementioned is in addition to and does not limit any existing confidentiality
agreement.

                  For a period of 12 months following the Separation Date, you
agree that you will not solicit, raid, entice, encourage or induce any person
who at the time of your termination of employment is an employee of the Company,
or any of its parents, subsidiaries or affiliates or to become employed by any
person, firm or corporation or to discontinue their employment with the Company.
You further agree, for the 12-month period, to refrain from approaching any such
employee for such purpose or authorizing or knowingly approving such actions by
any other person, firm or corporation or assisting any such person, firm or
corporation in taking such action.

                  You agree that the disclosure and solicitation restrictions in
the two preceding paragraphs contain reasonable limitations as to the time,
geographical area, and scope of activity to be restrained and that these
restrictions do not impose any greater restraint than is necessary to protect
the goodwill and other legitimate business interests of the Company, including,
but not limited to, the protection of Confidential Information. You also agree
that the general public shall not be harmed by enforcement of these provisions.
Should either of these provisions be held unreasonably broad with respect to the
restrictions as to time, geographical area or scope of activity to be
restrained, any such restriction shall be construed by limiting and reducing it
to the

                                       3
<PAGE>

extent necessary to render it reasonable, and as so construed, such provision
shall be enforced. Furthermore, you consent and agree that if you violate these
nondisclosure or nonsolicitation provisions, the Company, its parents,
subsidiaries and affiliates would sustain irreparable harm and, therefore, in
addition to any other remedies which the Company may have under this Agreement
or otherwise, the Company shall be entitled to an injunction from any court of
competent jurisdiction restraining you from committing or continuing any such
violation. You acknowledge that damages at law would not be an adequate remedy
for violation of these nondisclosure and nonsolicitation provisions, and you
therefore agree that they may be specifically enforced against you in any court
of competent jurisdiction. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company for such
breach or threatened breach, including the recovery of damages from you.

                  As a material inducement to the Company to enter into this
Agreement, you agree that you will not (i) publicly criticize or disparage the
Company or any Related Party (as defined below), or privately criticize or
disparage the Company or any Related Party in a manner intended or reasonably
calculated to result in public embarrassment to, or injury to the reputation of,
the Company or any Related Party; (ii) commit damage to the property of the
Company or any Related Party or otherwise engage in any misconduct which is
injurious to the business or reputation of the Company or any Related Party; or
(iii) take any other action, or assist any person in taking any other action,
that is materially adverse to the interests of the Company or any Related Party
or inconsistent with fostering the goodwill of the Company or any Related Party.
In addition, you agree not to make any public statements regarding the Company
or its business without prior written consent of the Company. As used in this
section, the term "Related Party" means the Company or any affiliate, any
officer, director or executive of the Company or any affiliate, and any former
officer, director or executive of the Company or any affiliate.

                  You agree to furnish such information and proper assistance as
may be reasonably necessary in connection with any inquiry, investigation,
dispute, litigation, regulatory proceeding or other action in which the Company
is or may become involved insofar as it relates to matters that occurred during
your employment, and if you are called upon to serve as a witness or provide
assistance in or with respect to any such proceeding, you agree to cooperate
with the Company to the full extent permitted by law, and the Company agrees
that any such call shall be with reasonable notice, shall not unnecessarily
interfere with your later employment, and shall provide for payment for your
costs incurred in such matters. Furthermore, you will promptly give written
notice to the Company of any inquiry, approach or other notice you receive or
are informed of by or from any private party or governmental entity regarding
any inquiry, investigation, dispute, litigation, regulatory proceeding or other
action involving the Company. The provisions of this Agreement shall not apply
to or restrict in any way the communication of information by you to any state
or federal law enforcement agency or require notice to the Company thereof.

                  The parties hereto may attempt to resolve any dispute under
this Agreement informally via mediation or other means. Otherwise, the parties
agree that any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, except as provided in the preceding paragraph,
must be adjudged by arbitration in accordance with the rules of the American
Arbitration Association, and judgment upon such award rendered by the arbitrator

                                       4
<PAGE>

may be entered in any court having jurisdiction thereof. The arbitration must be
held in the city of Houston, Texas, or such other place as may be agreed upon at
the time by the parties to the arbitration. The arbitrator(s) will, in their
award, allocate between the parties the costs of arbitration, which will include
reasonable attorneys' fees of the parties, as well as the arbitrators' fees and
expenses, in such proportions as the arbitrator(s) deem just. THIS AGREEMENT
SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW, RULE OR PRINCIPLE THAT MIGHT
OTHERWISE REFER TO THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION.

                  Any notice or other communication required or permitted
pursuant to the terms of this Agreement shall be in writing and shall be deemed
to have been duly given when delivered or mailed by United States mail, first
class, postage prepaid and registered with return receipt requested, addressed
to the intended recipient at his or its address set forth below and, in the case
of a notice or other communication to the Company, directed to the attention of
the Board of Directors of the Company with a copy to the Secretary of the
Company, or to such other address as the intended recipient may have theretofore
furnished to the sender in writing in accordance herewith, except that until any
notice of change of address is received, notices shall be sent to the following
addresses:

                  IF TO YOU:                   IF TO THE COMPANY:

                      Michael Ferris               Pioneer Companies. Inc.
                      3108 Locke Lane              700 Louisiana, Suite 4200
                      Houston, Texas 77019         Houston, Texas 77002
                                                   Attn: Chief Executive Officer

                  This Agreement supersedes all previous employment agreements,
written or oral, between the Company and you. This Agreement may be amended only
by written amendment duly executed by both parties hereto or their legal
representatives and authorized by action of the Board of Directors of the
Company. Except as otherwise specifically provided in this Agreement, no waiver
by either party hereto of any breach by the other party hereto of any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition or provision or waiver
of a similar or dissimilar provision or condition at the same or at any prior or
subsequent time. Notwithstanding anything to the contrary set forth in this
Agreement, the Company may cause any of its subsidiaries for which you render
services to pay or otherwise satisfy, in whole or in part, some or all of the
Company's obligations hereunder.

                  If any one or more of the provisions or parts of a provision
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid, illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law. Except as
otherwise indicated, this Agreement is not assignable without the written
authorization of both parties, provided that the Company may

                                       5
<PAGE>

assign this Agreement to any entity to which the Company transfers substantially
all of its assets or to any entity which is a successor to the Company by
reorganization, incorporation, merger or similar business combination.

                  This Agreement may be executed in one or more counterparts,
which shall, collectively and separately, constitute one agreement.

                                       Very truly yours,

                                       /s/ Michael Y McGovern
                                       -----------------------------------------
                                       Michael Y McGovern
                                       President and Chief Executive Officer

AGREED TO AND ACCEPTED this
1st day of October, 2002

/s/ Michael J. Ferris
-------------------------------
Michael J. Ferris

                                       6
<PAGE>

              Attachment to the Agreement dated September 30, 2002

1.       SALARY CONTINUATION

                  For the twenty-four month period commencing on your Separation
Date (the "Salary Continuation Period"), you will receive monthly payments in
the amount of $25,333 and on the same schedule as the Company's payroll schedule
in effect immediately prior to your Separation Date, subject to applicable
withholding for FICA and income taxes.

2.       ACCRUED BONUS

                  You have already received a lump sum cash payment in the
amount of $200,000, subject to applicable withholding for FICA and income taxes,
in full satisfaction of any bonus you were entitled to by reason of or relating
to the emergence of the Company from bankruptcy or for any subsequent period.

3.       HEALTH AND WELFARE CONTINUATION

                  During the Salary Continuation Period, you will receive the
same medical and dental coverage generally available to Company salaried
employees. Upon the expiration of the Salary Continuation Period, you agree that
all Company provided health and dental benefits will be terminated; provided,
however, that you will allowed, following the lapse of the Salary Continuation
Period, to continue your Company medical and dental benefits coverage for a
period not to exceed the greater of (i) the maximum period required under the
Consolidated Omnibus Reconciliation Act of 1986, as amended ("COBRA"), for the
continuation of such coverage or (ii) 60 months following the lapse of the
Salary Continuation Period . If you should elect such continuation of Company
medical and dental benefits coverage, you will be required to pay for such
coverage in an amount not to exceed the maximum amount which may be charged for
such coverage under COBRA. Notwithstanding any of the foregoing, any coverage
and benefits provided to you under this paragraph 3, whether during the period
in which the Company pays for such continuation coverage or during the period in
which you elect to pay for such continuation coverage, shall be secondary to any
non-Company provided medical or dental coverage under which you, your spouse
and/or dependents are entitled to benefits

4.       STOCK OPTIONS

                  Because your options have not been outstanding for at least
one year, they will all expire as of the Separation Date.

5.       ATTORNEY'S FEES

                  On your Separation Date, you will receive a lump sum cash
payment, not to exceed $4,000, for attorney's fees incurred by you for legal
advice related to this agreement and which the Board of Directors of the Company
has determined to be reasonable.

                                       7
<PAGE>

6.       CONSULTING

                  For two years following the Separation Date, you agreed to
provide consulting services to the Company, as reasonably requested by the CEO
of the Company, including assisting with operational and legal matters. The
Company agrees to pay you in arrears for this consulting obligation the monthly
amount of $8,000.

7.       OTHER BENEFITS

                  You are entitled to no other benefits or pay, including
vacation pay, and pension plan accruals shall cease as of the Separation Date.

8.       COMPUTERS

                  You may retain your Company laptop computer provided that you
delete all Company information or materials from such computer.

9.       PAYMENTS TO ESTATE

                  In the event of your death, to the extent that any of the
Company's obligations to you for salary continuation pay or consulting fees, as
respectively provided for in paragraphs 1 and 6 of this Attachment, remain
outstanding to you at the time of your death , the Company will continue to make
such payments to your estate in the time and manner set forth in the appropriate
provisions of paragraphs 1 and 6 of this Attachment.

                                       8

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