Document:

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                                                                   EXHIBIT 10.28

                             RESTRICTED UNIT PLAN

                            Effective:  Award Date
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
Article I DEFINITIONS......................................................   1

Article II SHARES SUBJECT TO THE PLAN......................................   2

Article III RESTRICTED UNIT GRANT..........................................   2

Article IV RESTRICTED UNIT ACCOUNTS........................................   3
 4.1  Restricted Unit Account..............................................   3
 ---  -----------------------
 4.2  Account Credits And Debits...........................................   3
 ---  --------------------------

Article V VESTING..........................................................   3

Article VI INVESTMENT EXPERIENCE...........................................   3
 6.1  General..............................................................   3
 ---  -------

Article VII DISTRIBUTIONS..................................................   4
 7.1  Distribution of Shares and Notes.....................................   4
 ---  --------------------------------
 7.2  Form of Payment......................................................   4
 ---  ---------------

Article VIII ADMINISTRATION................................................   4
 8.1  Committee............................................................   4
 ---  ---------
 8.2  Rules For Administration.............................................   5
 ---  ------------------------
 8.3  Committee Action.....................................................   5
 ---  ----------------
 8.4  Delegation...........................................................   5
 ---  ----------
 8.5  Services.............................................................   5
 ---  --------

Article IX AMENDMENT AND TERMINATION.......................................   5

Article X GENERAL PROVISIONS...............................................   5
 10.1 Limitation Of Rights.................................................   5
 ---- --------------------
 10.2 Employment Rights....................................................   6
 ---- -----------------
 10.3 Assignment, Pledge Or Encumbrance....................................   6
 ---- ---------------------------------
 10.4 Investor Rights Agreement and Note Registration Rights Agreement.....   6
 ---- ----------------------------------------------------------------
 10.5 Binding Provisions...................................................   6
 ---- ------------------
 10.6 Governing Law........................................................   6
 ---- -------------
 10.7 Pronouns.............................................................   6
 ---- --------
 10.8 Withholding..........................................................   6
 ---- -----------
 10.9 Effective Dates......................................................   7
 ---- ---------------
</TABLE>

                                       i
<PAGE>

                                   ARTICLE I

                                  DEFINITIONS

          "Award Date" means the closing date of the transaction under the
           ----------
Master Sale Agreement, dated July 10, 2000, among Shell Oil Company, the
Company, Resin Acquisition, LLC and RPP Holdings LLC (as assignee of Resin
Acquisition, LLC).

          "Board of Directors" means the Board of Directors of the Company.
           ------------------

          "Cause" has the meaning set forth in the Employment Agreement.
           -----

          "Committee" has the meaning set forth in the Company's 2000 Stock
           ---------
Option Plan.

          "Common Stock" means the common stock, par value $1.00 per share, of
           ------------
the Company.

          "Company" means Resolution Performance Products Inc., a Delaware
           -------
corporation, or any successor in interest thereto.

          "Distribution Notice" has the meaning set forth in Section 7.1.
           -------------------                               -----------

          "Employment Agreement" means the employment agreement dated the date
           --------------------
hereof between Resolution Performance Products LLC, a Delaware limited liability
company, and Marvin O. Schlanger.

          "Grant" means an award of Restricted Stock Units and Restricted Note
           -----
Units under the Plan.

          "Indenture" means the Indenture, dated as of the date hereof, with the
           ---------
Bank of New York as trustee, and pursuant to which the Company is authorized to
issue Initial Notes (as defined therein) in the principal amount of 141,400,000,
as it is amended, supplemented or restated from time to time.

          "Investor Rights Agreement" means the Investor Rights Agreement, dated
           -------------------------
as of the date hereof, among the Company and the holders party thereto, as it is
amended, supplemented or restated from time to time.

          "Notes" means the 10.9% junior subordinated notes due 2012, dated as
           -----
of the date hereof, issued by the Company pursuant to the Indenture, as they are
amended, supplemented or restated from time to time.  Each Note represents an
aggregate principal amount of $1,000 plus accrued interest.

          "Notes Registration Rights Agreement" means the notes registration
           -----------------------------------
rights agreement, dated as of the date hereof, among the Company and certain
holders of the Notes, as it is amended, supplemented or restated from time to
time.

          "Participant" means Marvin O. Schlanger.
           -----------
<PAGE>

          "Plan" means the Company's Restricted Unit Plan as set forth herein
           ----
and as it is amended, supplemented or restated from time to time.

          "Realization Event" has the meaning set forth in the Company's 2000
           -----------------
Stock Option Plan, as it is amended, supplemented or restated from time to time.

          "Restricted Note Unit" means a unit awarded to a Participant pursuant
           --------------------
to Article 3, which represents an unfunded, conditional right to receive a Note
   ---------
in the future, and which is subject to certain restrictions.

          "Restricted Stock Unit" means a unit awarded to a Participant pursuant
           ---------------------
to Article 3, which represents an unfunded, conditional right to receive a share
   ---------
of Common Stock in the future, and which is subject to certain restrictions.

          "Restricted Unit Account" has the meaning set forth in Article III.
           -----------------------                               -----------

          "Termination of Relationship" has the meaning set forth in the
           ---------------------------
Company's 2000 Stock Option Plan, as it is amended, supplemented or restated
from time to time.

                                  ARTICLE II

                          SHARES SUBJECT TO THE PLAN

          The Board of Directors has authorized the Plan which contemplates the
issuance of shares of Common Stock and Notes pursuant to the Plan.  The shares
of Common Stock issued pursuant to the Plan may, in the discretion of the Board
of Directors, be authorized but unissued shares, treasury shares or issued and
outstanding shares that are purchased in the open market.

                                  ARTICLE III

                             RESTRICTED UNIT GRANT

          As of the Award Date, the Company shall credit the Participant's
restricted unit account (the "Restricted Unit Account") with (i) 6,000
                              -----------------------
Restricted Stock Units, after giving effect to the filing of the Amended and
Restated Certificate of Incorporation of the Company and the stock dividend to
be issued on the Award Date, which represent a conditional right to receive a
share of Common Stock per unit in the future, and which are subject to certain
restrictions contained herein and (ii) 1,400 Restricted Note Units, which
represent a conditional right to receive a Note per unit in the future.

                                       2
<PAGE>

                                   ARTICLE IV

                            RESTRICTED UNIT ACCOUNTS

4.1  Restricted Unit Account.
     -----------------------

     The Participant's Restricted Unit Account shall be credited with the
Restricted Stock Units and Restricted Note Units awarded to the Participant
hereunder and shall be subject to adjustment as provided in Section 6.1.
                                                            ------------

4.2  Account Credits And Debits.
     --------------------------

     All amounts credited to the Participant's Restricted Unit Account shall at
all times prior to the dates specified in Article 7 be the sole and absolute
                                          ---------
property of the Company.  The Restricted Unit Account shall be debited to the
extent of any distributions made pursuant to Article 7.
                                             ---------

                                   ARTICLE V

                                    VESTING

     The rights of the Participant with respect to the Restricted Stock Units
and Restricted Note Units awarded hereunder shall be fully vested and
nonforfeitable at all times.  To the extent provided in Article VII, the
                                                        -----------
Participant shall become entitled to receive (i) certificates for shares of
Common Stock corresponding to such Restricted Stock Units credited to the
Participant's Restricted Unit Account on the applicable date identified in
Article VII and (ii) instruments evidencing the amount of Notes corresponding to
-----------
such Restricted Note Units credited to the Participant's Restricted Unit Account
on the applicable date identified in Article VII.
                                     -----------

                                   ARTICLE VI

                             INVESTMENT EXPERIENCE

6.1  General.
     -------

          (a)  The Participant's Restricted Unit Account shall be deemed to be
invested in Restricted Stock Units and Restricted Note Units.  The Committee
will credit and adjust the Participant's Restricted Unit Account, as provided in
Sections 4.1 and 4.2, by the amounts by which the Participant's Restricted Unit
------------     ---
Account would have increased or been adjusted if it had been invested in Common
Stock and Notes.  The deemed investment is to be used only for the purpose of
valuing the Participant's Restricted Unit Account.  Any investments actually
made by the Committee will be made solely in the name of the Company and will
remain the property of the Company.

          (b)  If the number of outstanding shares of Common Stock is increased
or decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company, in each
case on account of any recapitalization, reclassification, stock split, reverse
split, combination of shares, exchange of

                                       3
<PAGE>

shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company, the number and kinds of shares in which the Restricted Unit Account
is deemed invested shall be adjusted proportionately and accordingly by the
Company. The Restricted Unit Account also shall be credited and adjusted for any
interest that accrues or is paid on the Notes. If any amount is paid with
respect to principal of the Notes, including any redemption, the Restricted Unit
Account will be credited in the form of Restricted Stock Units for the cash
received in respect of such payment and shall be debited in the form of
Restricted Note Units for any Notes that have been redeemed in connection with
such payment.

                                  ARTICLE VII

                                 DISTRIBUTIONS

7.1  Distribution of Shares and Notes.
     --------------------------------

     Except as otherwise provided herein, as soon as practicable after the
earliest to occur of (A) the date the Participant becomes 65 years of age, (B)
the date of a Termination of Relationship or (C) immediately prior to the
consummation of a Realization Event or any merger or consolidation in which the
Company is not the surviving entity, the Company shall issue to the Participant
(i) certificates for shares of Common Stock corresponding to the number of
Restricted Stock Units credited to the Participant's Restricted Unit Account as
of the earliest of such dates and (ii) Notes corresponding to the number of
Restricted Note Units credited to the Participant's Restricted Unit Account as
of the earliest of such dates.  The Participant may elect at any time earlier
than the dates specified in the preceding sentence, which election shall be
irrevocable, by delivering written notice (the "Distribution Notice") to the
                                                -------------------
Company, to have the Restricted Unit Account distributed in part or in full;
provided that, such distribution shall not occur prior to the one year
anniversary of the Company's receipt of the Distribution Notice.  For purposes
of Section 10.4 hereof, the issuances contemplated by this Section 7.1 shall be
   ------------                                            -----------
deemed to have occurred immediately prior to any Termination of Relationship.

7.2  Form of Payment.
     ---------------

     The value of the Restricted Unit Account shall be distributed to the
Participant in shares of Common Stock and Notes.  The Participant shall have no
right to receive any payments hereunder in a form other than shares of Common
Stock or Notes.

                                  ARTICLE VIII

                                 ADMINISTRATION

8.1  Committee.
     ---------

     The general administration of the Plan and the responsibility for carrying
out its provisions shall be placed in the Committee.

                                       4
<PAGE>

8.2  Rules For Administration.
     ------------------------

     Subject to the limitations of the Plan, the Committee may from time to time
establish rules and procedures for the administration and interpretation of the
Plan and the transaction of its business as the Committee may deem necessary or
appropriate.  The determination of the Committee as to any disputed question
shall be conclusive.

8.3  Committee Action.
     -----------------

     Any act which the Plan authorizes or requires the Committee to do may be
done by a majority of its members.  The action of such majority, expressed from
time to time by a vote at a meeting (a) in person, (b) by telephone or other
means by which all members may hear one another or (c) in writing without a
meeting, shall constitute the action of the Committee and shall have the same
effect for all purposes as if assented to by all members of the Committee at the
time in office.

8.4  Delegation.
     -----------

     The Committee may authorize one or more of its members to execute or
deliver any instrument, make any payment or perform any other act which the Plan
authorizes or requires the Committee to do.

8.5  Services.
     ---------

     The Committee may employ or retain agents to perform such clerical,
accounting and other services as the Committee may require in carrying out the
provisions of the Plan.

                                   ARTICLE IX

                           AMENDMENT AND TERMINATION

     The Company, by action of the Board of Directors or the Committee, may at
any time or from time to time modify or amend any or all of the provisions of
the Plan or may at any time terminate the Plan provided that the Company may not
amend Article VII to adversely affect the Participant's rights under such
      -----------
Article VII without the Participant's consent.
-----------

                                   ARTICLE X

                               GENERAL PROVISIONS

10.1 Limitation Of Rights.
     ---------------------

     The Participant shall not have any right to any payment or benefit
hereunder except to the extent provided in the Plan.

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<PAGE>

10.2 Employment Rights.
     ------------------

     The employment rights of the Participant shall not be enlarged, guaranteed
or affected by reason of any of the provisions of the Plan.

10.3 Assignment, Pledge Or Encumbrance.
     ---------------------------------

     The rights of the Participant under the Plan shall not be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of, other than (A) by
will or (B) by the laws of descent or distribution, provided that the rights of
any transferee of the Participant shall not be greater than the rights of the
Participant hereunder.  The foregoing restriction shall be in addition to any
restrictions imposed by applicable law on the Participant's ability to dispose
of Restricted Stock Units and Restricted Note Units awarded under the Plan.

10.4 Investor Rights Agreement and Note Registration Rights Agreement.
     ----------------------------------------------------------------

     The rights of the Participant upon a distribution of shares of Common Stock
and Notes pursuant to this Plan shall be governed by the Investor Rights
Agreement, the Notes, the Notes Registration Rights Agreement and the Indenture.
The Participant hereby agrees to become a party to the Investor Rights Agreement
upon such distribution and the Notes Registration Rights Agreement upon such
distribution.

10.5 Binding Provisions.
     ------------------

     The provisions of this Plan shall be binding upon the Participant and upon
the Company, and their respective heirs, executors, administrators, and assigns.

10.6 Governing Law.
     -------------

     The validity and interpretation of the Plan and of any of its provisions
shall be construed under the laws of the State of Delaware without giving effect
to the choice of law provisions thereof.

10.7 Pronouns.
     --------

     The masculine pronoun shall be deemed to include the feminine wherever it
appears in the Plan unless a different meaning is required by the context.

10.8 Withholding.
     -----------

     The Committee shall have the right to make such provisions as it deems
appropriate to satisfy any obligation of the Company to withhold federal, state
or local income or other taxes incurred by reason of operation of the Plan,
including but not limited to at any time requiring the Participant to submit
payment to the Company for such taxes, or withholding such taxes from any
payments due to the Participant from the Company.

                                       6
<PAGE>

10.9 Effective Dates.
     ---------------

     This Plan shall be effective as of the Award Date.

                                   * * * * *

                                       7<PAGE>

                                                                   Exhibit 10.29

                                                  SEPARATION AGREEMENT dated as
                                        of March 9, 2001 (this "Agreement"),
                                                                ---------
                                        among RESOLUTION PERFORMANCE PRODUCTS
                                        INC., a Delaware corporation ("Parent"),
                                        RESOLUTION PERFORMANCE PRODUCTS LLC, a
                                        Delaware limited liability company (the
                                        "Employer") and DAVID T. PRESTON (the
                                         --------
                                        "Executive").
                                         ---------

       WHEREAS, Executive is currently the President of Employer;

       WHEREAS, pursuant to a Non-Qualified Stock Option Agreement dated as of
November 14, 2000 (the "Option Agreement"), between Parent and Executive,
                        ----------------
Executive acquired 1,300 Tranche A Options (as defined therein) and 2,600
Tranche B Options (as defined therein and collectively with the Tranche A
Options, the "Options") to purchase shares of Parent's Common Stock (as defined
              -------
therein), none of which have vested as of the Effective Date;

       WHEREAS, pursuant to a Participation Agreement dated as of November 14,
2000 (the "Participation Agreement"), Executive acquired (x) 750 shares of
           -----------------------
Parent's Common Stock (after the filing of the Amended and Restated Certificate
of Incorporation of Parent and the dividend issued on November 14, 2000) and (y)
$175,000 principal amount of Notes (as defined in the Participation Agreement).

       WHEREAS, Executive is a party to an Investor Rights Agreement dated as of
November 14, 2000 (the "Investor Rights Agreement"), among Parent and holders of
                        -------------------------
its Common Stock;

       WHEREAS, Executive is a party to a Notes Registration Rights Agreement
dated as of November 14, 2000 (the "Notes Registration Rights Agreement" and,
                                    -----------------------------------
collectively with the Investor Rights Agreement, the "Continuing Investment
                                                      ---------------------
Agreements"), among Parent and holders of its Notes.
----------

       WHEREAS, Executive has issued to Employer a Secured Promissory Note dated
November 14, 2000 (the "Executive's Note").
                        ----------------

       WHEREAS, Executive desires to resign from all of his positions as a
director, officer and/or employee of Parent, Employer and each of their
respective Affiliates (each, a "Company"); and
                                -------

       NOW, THEREFORE, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby expressly acknowledged, the parties hereto agree as follows:

1.     RESIGNATION; WAIVER; CONSIDERATION.

       (a) Executive hereby resigns as a director, officer and/or employee of
each Company, effective as of March 17, 2001 (the "Effective Date"). For
                                                   --------------
purposes of this Agreement, the term "Affiliate" shall mean, with respect to
                                      ---------
Parent or Employer, any Person that directly, or indirectly
<PAGE>

through one or more intermediaries, controls, or is controlled by, or is under
common control with, either Parent or Employer. As used in this definition, the
term "control," including the correlative terms "controlling," "controlled by"
and "under common control with," means possession, directly or indirectly, of
the power to direct or cause the direction of management or policies (whether
through ownership of securities or any partnership or other ownership interest,
by contract or otherwise) of a Person. As used in this Agreement, the term
"Person" shall be construed broadly and shall include, without limitation, an
 ------
individual, a partnership, a corporation, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.

       (b) Executive hereby waives any rights he may have to receive
compensation or benefits under any agreement, policy or arrangement of or with
any Company. Notwithstanding the preceding sentence, Executive shall be entitled
to (i) receive all salary and benefits to which he is entitled up to and
including the Effective Date, including without limitation, compensation
payments deferred by Executive, incentive compensation payments earned but not
paid in respect of the calendar year ending December 31, 2000 in accordance with
Employer's plans and policies and payment for accrued vacation days in
accordance with Employer's plans and policies, (ii) continue to receive medical
coverage under Employer's medical insurance plans and Employer shall continue to
pay its portion of the premiums, in each case, for a period commencing on the
Effective Date and ending on June 30, 2001, (iii) receive outplacement
assistance in accordance with Employer's arrangements with its outside placement
services provider and (iv) continue coverage as required under the Consolidated
Omnibus Reconciliation Act of 1985, as amended.

       (c) In consideration of the mutual covenants and agreements set forth
herein, Employer hereby agrees to continue to pay to Executive his current
salary, $18,333.33 per month, for a period commencing on the Effective Date and
ending on March 1, 2003 (such period, the "Severance Period"). Such salary shall
                                           -----------------
be paid in accordance with Employer's customary payroll practices. Employer
shall be entitled to withhold, from any payment, any amount required by law to
be withheld.

2.     CONFIDENTIAL INFORMATION; NON-SOLICITATION; NONCOMPETITION.

       (a) Executive shall not, without the prior written consent of Parent,
divulge, disclose or make accessible to any other Person any Confidential
Information pertaining to any Company, except for such disclosure as is required
by a court of competent jurisdiction, by any governmental agency having
supervisory authority over Parent and Employer, or by any administrative body or
legislative body (including a committee thereof) with purported or apparent
jurisdiction to order Executive to divulge, disclose or make accessible such
information. Without limiting the foregoing, Executive hereby represents and
warrants to each Company that it has returned to Employer all Confidential
Information in its possession pertaining to any Company. In furtherance of the
foregoing, without the prior written consent of Parent, Executive shall not
discuss any Confidential Information or any business, operations, condition
(financial or otherwise) or affairs of any Company with any supplier, customer,
employee, securityholder or investor in any Company, including, without
limitation, Shell (as defined below); provided that, (i) to the extent
                                      --------
reasonably necessary or advisable to obtain new employment, Executive

                                       2
<PAGE>

shall be permitted to refer to the names of the Companies, his title and
position with the Companies, a description of his duties, responsibilities and
accomplishments for the Companies and his salary and benefits from the Companies
and (ii) Executive shall be permitted to make inquiries to human resources
personnel of Employer to the extent reasonably necessary to obtain information
about benefits available to Executive after the Effective Date and none of the
Companies will take action to prevent Executive from making similar inquiries of
Shell.

       (b) For purposes of this Section, "Confidential Information" shall mean
                                          ------------------------
(i) any information concerning any Company's financial data, strategic business
plans, product development (or other proprietary product data), customer names
or lists and other information related to customers, supplier names and other
information related to suppliers, price lists, pricing policies, purchasing
policies, market research, marketing techniques and plans and other non-public,
proprietary and confidential information of any Company that is not otherwise
available to the public, (ii) any technical data or know-how including, but not
limited to, that which relates to any Company's hardware, software, screens,
specifications, designs, plans, drawings, data, prototypes, discoveries,
research, developments, processes, procedures, intellectual property or other
technical information and materials, (iii) personnel policies, practices and/or
plans, (iv) financial, operational or contractual arrangements between Parent
and its stockholders or any members of Parent's principal stockholder, in each
case, in oral, demonstrative, written, electronic, graphic, machine-readable or
other form and any analyses, compilations, studies or documents, whether
delivered by or on behalf of any Company or prepared by or on behalf of
Executive or any of Executive's Affiliates or representatives, including any
summaries of any such information. For the avoidance of doubt, Confidential
Information shall include, without limitation, all Confidential Information of
each Company's business prior to November 14, 2000 and Confidential Information
of each predecessor to each Company.

       (c) For the period commencing on the Effective Date and ending on the
second anniversary of the Effective Date, without the prior written consent of
Parent, Executive shall not, directly or indirectly, (i) either as principal,
manager, agent, consultant, officer, director, stockholder, partner, member,
investor, lender or employee or in any other capacity, carry on, be engaged in
or have any financial interest in any business that is in competition with the
business of any Company, (ii) solicit or hire any employees of any Company or
(iii) induce any customer, supplier or other person with whom any Company has a
business relationship to terminate, modify or amend such business relationship.
For purposes hereof, a business shall be deemed to be in competition with a
Company if it is significantly involved in the manufacture of products or the
rendering of services that are purchased, sold, dealt in or rendered by such
Company anywhere in the world. As used in the preceding sentence, the term
"significantly" shall be deemed to refer to activities generating gross annual
sales of at least $25 million. Nothing in this Section 2 shall be construed so
as to preclude Executive from investing in any publicly held company provided
Executive's beneficial ownership of any class of such company's securities does
not exceed 2% of the outstanding securities of such class.

       (d) This Section 2 shall survive any termination or revocation of this
                ---------
Agreement by Executive.

                                       3
<PAGE>

3.     NON-DISPARAGEMENT.

       (a) Executive shall not take any action that in any way disparages or
defames any Company or any employee, director, shareholder, member or partner of
any Company, or that is principally intended to cause injury to the relationship
between any Company, on the one hand, and any lessor, lessee, vendor, supplier,
customer, distributor, employee, consultant, director, shareholder, member or
partner or any other business relation or potential business relation of any
Company, on the other hand.

       (b) No officer, director or holder of more than 50% of the outstanding
shares of Common Stock of Employer shall take any action that in any way
disparages or defames Executive or that is principally intended to cause injury
to the relationship between Executive, on the one hand, and any entity in which
Executive holds more than 50% of the outstanding shares of Common Stock or any
entity that is reasonably likely to be a future employer of Executive or any
other existing business relation of Executive, on the other hand.

       (c) This Section 3 shall survive any termination or revocation of this
Agreement.

4.     OPTIONS.

       As a result of the termination of Executive's employment with Employer,
the Options will cease vesting as of the Effective Date. Executive hereby
forfeits any right to the Options and the Option Agreement is hereby terminated
without liability to any party thereunder. Executive has delivered to Employer
for cancellation, prior to the execution and delivery of this Agreement, all
original signed copies of the Option Agreement. This Section 4 shall survive any
termination or revocation of this Agreement.

5.     COMMON STOCK AND NOTES.

       (a) Parent hereby agrees to purchase, and Executive agrees to sell to
Parent, all of the shares of Parent's Common Stock and Notes held by Executive.
The purchase will be consummated in accordance with Section 9 of the Investor
Rights Agreement (it being understood that this Agreement will serve as any
notice required thereunder). Executive agrees to deliver, on the date of the
closing of the repurchase, certificates representing such shares and the Notes,
each duly endorsed for transfer to Parent or accompanied by a stock power. The
closing of such repurchase will take place on or about the twentieth business
day after the Effective Date, at which time Parent, subject to the last sentence
of this Section 5(a), will issue to Executive a check for the applicable
purchase price of $250,000, or at such other time as the parties may mutually
agree. Simultaneously with such purchase and sale, Executive shall repay in full
all principal amount of $125,000 owing by Executive under the Executive's Note
(it being understood that all accrued and unpaid interest shall be forgiven as
set forth in the Investor Rights Agreement). Employer shall be entitled to
set-off Executive's obligation to repay the Executive's Note as set forth in the
immediately preceding sentence against its obligation to pay the purchase price
for the Notes and shares of Common Stock as set forth above. Following this
transaction, Executive's Note will be considered to have been repaid in full.

       (b) Executive hereby waives any notices required to be delivered by any
Company under the Option Agreement or any of the Continuing Investment
Agreements. Executive

                                       4
<PAGE>

further waives all benefits and rights relating to the shares of Parent's Common
Stock and Notes held by Executive, including, without limitation, any benefits
or rights under the Option Agreement or any of the Continuing Investment
Agreements.

6.     RELEASE.

       (a) Executive, and each of his successors, assigns, heirs, executors and
administrators (collectively, the "Individual Releasors"), in consideration of
                                   --------------------
the premises contained herein, and for good and valuable consideration
(including, but not limited to, the agreement to pay the severance pursuant to
Section 1(b)), the receipt and sufficiency of which are hereby expressly
acknowledged, have remised, released and forever discharged, and by this
Agreement do remise, release and forever discharge each Company and their
respective stockholders, subsidiaries, affiliates, divisions and predecessors
and each of their respective past and present directors, officers, employees and
agents and each of their respective successors, assigns, heirs, executors and
administrators (collectively, the "Employer Releasees"), of and from all manner
                                   ------------------
of action and actions, cause and causes of action, suits, debts, dues, sums of
money, accounts, bonds, bills, covenants, contracts, controversies, omissions,
agreements, promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever which relate to or arise out of any dealings,
relationships or transactions by and between the Individual Releasors and
Employer Releasees, in law (including but not limited to the Civil Rights Act of
1866, as amended, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, as amended, Title VII of the United States Civil Rights
Act of 1964, as amended, 42 U.S.C. Section 1981 and the Worker Adjustment and
Retraining Notification Act), admiralty or equity (including, but not limited
to, any and all claims arising out of or in any way connected to the employment
relationship, or the termination thereof, between Executive and Employer
(including those arising out of the Participation Agreement, the Option
Agreement and the Continuing Investment Agreements), but excluding any
obligations of Employer Releasees arising under this Agreement), and which any
Employer Releasee has ever had, now has or which it hereafter can, shall or may
have, whether or not now known, for upon or by any reason of any matter, cause,
causes or thing whatsoever from the beginning of the world to the Effective
Date. By way of example only, and not by limitation, this release includes any
claim, lawsuit or cause of action with respect to (1) any Federal, state, local,
foreign or other law covering discrimination, including, without limitation,
those based upon race, sex, color, religion, national origin, citizenship, age,
disability status, handicapped status or veteran status, alleging discrimination
against myself during my employment or because of my termination, (2) any
Federal, state, local, foreign or other law relating to notification of any
plant or business closing or employee layoff, (3) any breach of any express or
implied obligation, duty or contract not to discharge except for good cause,
breach of any implied covenant of good faith and fair dealing or breach of any
express or implied obligation, duty or contract concerning the application of
any personnel policies or procedures, (4) torts, including, without limitation,
intentional or negligent infliction of emotional distress, mental anguish or
mental suffering, negligence, defamation, invasion of privacy, fraud, deceit,
promissory estoppel or personal injury, (5) alleged retaliation relating to
being offered the consideration set forth in Section 1(b) hereof on the terms
set forth herein and/or (6) any other theory of recovery.

                                       5
<PAGE>

       (b) For the avoidance of doubt, Shell Oil Company and each of its
Affiliates shall be deemed to be predecessors to Employer and therefore shall be
deemed to be Employer Releasees.

       (c) Notwithstanding the foregoing, the release set forth above shall not
apply to (i) any liability of Shell to Executive which would not result in any
liability to any Company under any agreement or arrangement between any Company
and Shell and/or (ii) any right to indemnification that Executive is entitled to
in his capacity as an officer and/or director of the Companies.

7.     KNOWING AND VOLUNTARY WAIVER; RIGHT TO CONSIDER AND REVOKE.

       (a) Executive acknowledges that he has been given a period of up to
twenty-one (21) days to review and consider whether to sign this Agreement.
Executive was given the opportunity to sign this Agreement at any time up to
March 9, 2001 to sign and return an acknowledgment copy of this Agreement to
acknowledge his understanding of and agreement with the foregoing. After such
opportunity, Executive has executed and delivered this Agreement on or prior to
the date indicated in the first paragraph of this Agreement, which is at least
seven days prior to the Effective Date.

       (b) During the seven-day period immediately following the time that
Executive executes and delivers this Agreement, Executive may revoke his
agreement to accept the terms hereof by indicating in writing to Employer his
intention to revoke.

       (c) If Executive revokes this Agreement pursuant to this Section 7,
                                                                ---------
Executive will be deemed to have forfeited his right to receive any of the
payments or benefits offered to him hereunder, but not any accrued and unpaid
amounts or severance benefits which Executive would be entitled to if this
Agreement was never executed, and the Option Agreement shall automatically
terminate and become null and void, without any liability to any Company and
this Agreement shall be automatically terminated.

       (d) Executive acknowledges that he has been advised to consult with an
attorney prior to signing this Agreement.

8.     ARRANGEMENTS WITH SHELL.

       (a) Parent agrees to provide its consent, subject to Executive's
compliance with Sections 8(b) and (c) hereof, so as to permit Executive to be
employed by Shell Oil Company and/or its Affiliates ("Shell") from and after
                                                      -----
June 1, 2001, pursuant to Section 3.03(a) of the Human Resources Agreement dated
July 10, 2000, among Shell Oil Company, RPP Holdings LLC, as assignee of Resin
Acquisition, LLC, and Employer, as amended by Amendment No. 1 to Master Sale
Agreement, Human Resources Agreement and Seller Disclosure Letter dated as of
November 14, 2000 (the "Amendment to the Transaction Documents").
                        --------------------------------------

       (b) Executive agrees not to become employed or otherwise work in any
function or department of Shell prior to November 14, 2001 if such function or
department or its employees or representatives or agents, directly or indirectly
through any subsidiary, division or Affiliate receives products or services from
or provides products or services to any Company valued in

                                       6
<PAGE>

excess of $2,000,000 per annum or reasonably may be expected to do so in the
future. For the period commencing on the Effective Date and ending on the second
anniversary of the Effective Date, Executive shall not participate in or become
involved in dealing with or negotiating with any Company relating to any
Transaction Document, Continuing Affiliate Contract, Non-US Transaction Document
or Non-US Continuing Affiliate Contract (each as defined in the Master Sale
Agreement dated as of July 10, 2000, among Shell Oil Company, RPP Holdings LLC,
as assignee of Resin Acquisition, LLC, and Parent, as amended by the Amendment
to the Transaction Documents).

       (c) Executive agrees that if he becomes employed by Shell, whether as an
employee, consultant or otherwise, the term "Severance Period" automatically
will be deemed amended so that it shall mean a period commencing on the
Effective Date and ending on the last day of the 47th week immediately following
the Effective Date.

       (d) Nothing contained in this Section 8 shall limit in any way
Executive's obligations under the other Sections of this Agreement. This Section
8 will not survive any termination or revocation of this Agreement by Executive.

       (e) Employer agrees that the assets and liabilities of Executive's entire
accrued benefit may remain in the Shell Pension Plan in lieu of being
transferred to the New Pension Plan which Employer is in process of creating;
provided that the foregoing shall be subject to (i) the prior written consent
--------
and/or waiver of Shell under the Human Resources Agreement dated as of November
14, 2000, between Shell and Employer, in form and substance reasonably
acceptable to Employer, (ii) Employer reasonably concluding that the foregoing
will not require any substantial change to the New Pension Plan, (iii) Employer
reasonably concluding that the foregoing will not result in any liability,
obligation, cost or expense to any Company (other than de minimis costs and
expenses) and (iv) Employer reasonably concluding that the foregoing will not
result in any undue burden upon Employer and its representatives. To the extent
that a consent or waiver is required for Executive's entire accrued benefit
remaining in the Shell Pension Plan under any agreement to which Employer is a
party, Executive agrees to obtain such consent or waiver at his sole cost and
expense and to cause a copy of said consent or waiver to be delivered to
Employer. Promptly after receiving said consent or waiver, subject to the
proviso contained in the first sentence of this Section 8(e), Employer will
likewise indicate its consent or agreement for Executive's entire accrued
benefit to remain in the Shell Pension Plan.

9.     NOTICES.

       All notices, demands or consents required or permitted under this
Agreement shall be in writing and shall be delivered personally, sent by air
courier or telecopy, or mailed, postage prepaid, registered or certified mail,
to the respective parties at the addresses set forth in the Participation
Agreement or to such other address as a party shall have given to the other
parties. Any such notice or other communication shall be deemed effective upon
the earliest to occur of (i) actual delivery, (ii) transmission by telecopy,
(iii) one business day after shipment by air courier as aforesaid, or (iv) three
business days after mailing as aforesaid.

                                       7
<PAGE>

10.    GOVERNING LAW.

       This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.

11.    ASSIGNMENT.

       This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of each
Company, but neither this nor any rights hereunder shall be assignable or
otherwise subject to hypothecation by Executive (except by will or by operation
of the laws of intestate succession).

12.    BINDING AGREEMENT.

       This Agreement shall be binding upon and shall inure to the benefit of
the affiliates, officers, employees, agents, successors and assigns of the
parties hereto.

13.    SEPARABILITY; ENFORCEMENT.

       (a) If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof, which shall remain in full-force and
effect.

       (b) Executive and Employer agree that the covenants contained in this
Agreement are reasonable covenants under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of such covenant as
to the court shall appear not reasonable and to enforce the remainder of the
covenant as so amended. Executive agrees that any breach of the covenants
contained in this Agreement would irreparably injure each Company. Accordingly,
any Company may, in addition to pursuing any other remedies they may have in law
(including, without limitation, collecting damages) or in equity, obtain an
injunction against Executive from any court having jurisdiction over the matter,
restraining any further violation of this Section by Executive.

14.    COUNTERPARTS.

       This Agreement may be executed in any number of counterparts, each of
which counterpart hereof shall be deemed to be an original instrument, but all
of which together shall constitute one agreement.

15.    ENTIRE AGREEMENT.

       This Agreement reflects the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and replace and
supercede any prior agreements with respect to the subject matter hereof.

                                       8
<PAGE>

       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
become effective as of the Effective Date.

                                     RESOLUTION PERFORMANCE PRODUCTS INC.

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

                                     RESOLUTION PERFORMANCE PRODUCTS LLC

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

                                     /s/ David T. Preston        March 9, 2001
                                     ------------------------    -------------
                                     DAVID T. PRESTON                DATE

                                       9
<PAGE>

                                 ACKNOWLEDGEMENT
                                 ---------------

       I acknowledge and represent to RESOLUTION PERFORMANCE PRODUCTS INC. and
RESOLUTION PERFORMANCE PRODUCTS LLC that I have had an opportunity to consult
with attorneys and other advisers of my choosing regarding this Separation
Agreement, that I have reviewed all of the terms of this Separation Agreement
and that I fully understand all of its provisions, including, without
limitation, the general release and waiver set forth in the Separation Agreement
and the non-disclosure agreement set forth therein. As my free and voluntary
act, by signing below, I am agreeing to all of the terms of this Separation
Agreement and I intend to be legally bound thereby.

                                     /s/ David T. Preston        March 9, 2001
                                     ------------------------    -------------
                                     DAVID T. PRESTON                DATE

                                       10

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