EMPLOYMENT AGREEMENT

WHEREAS , the Company desires to employ the Executive and the Executive desires to be employed by the Company effective as of the Effective Date (as defined in Section 10(l) of this Agreement);

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

Section 1.   Employment Period.

The initial term of the Executive’s employment will commence on the Effective Date and end on the fifth anniversary of the Effective Date (the “ Initial Employment Period ”), unless terminated earlier pursuant to Section 3 of this Agreement; provided, however, that as of the expiration date of each of (i) the Initial Employment Period and (ii) if applicable, any Renewal Period (as defined below), the Employment Period will automatically be extended for a one-year period (each, a “ Renewal Period ”), unless either party gives at least ninety (90) days written notice prior to such expiration date of its intention not to renew the Employment Period (the Initial Employment Period and each subsequent Renewal Period shall constitute the “ Employment Period ”). The Employment Period shall automatically end upon termination of the Executive’s employment for any reason. Upon the Executive’s termination of employment with the Company for any reason, he shall immediately resign all positions (including directorships) with the Company or any of its subsidiaries or affiliates.

Section 2.   Terms of Employment.

(a)   Position . During the Employment Period, the Executive shall serve as the Chief Executive Officer of the Company reporting to the Board of Directors of the Company (the “ Board ”) and perform such duties and responsibilities customary to such position. The Executive shall also serve as a member of the Board and as a member of the Board of Directors of Covalence Specialty Materials Holding Corp. (the “Parent Board”). At the request of the Company, the Executive shall also serve as an officer of any of its subsidiaries or affiliates without additional compensation.

(b)   Duties . During the Employment Period, the Executive agrees to devote all of his business time to the business and affairs of the Company and to use the Executive’s reasonable best efforts to perform the duties of a Chief Executive Officer and his responsibilities and obligations hereunder faithfully, effectively and efficiently. Notwithstanding the foregoing, nothing herein shall prohibit the Executive from (i) serving on civic or charitable boards or committees, (ii) delivering lectures or fulfilling speaking engagements, (iii) managing personal investments, so long as such

(c)   activities do not interfere with the performance of the Executive’s responsibilities hereunder and (iv) serving on the boards of directors of each of Longyer Realty Corporation and Minnesota Steel Industries until September 30, 2006.

(d)   Compensation .

(i)   Base Salary . During the Employment Period, the Executive shall receive an initial annual base salary in an amount equal to $600,000 (the “ Annual Base Salary ”), which shall be paid in accordance with the customary payroll practices of the Company. The Base Salary will be reviewed by the Board or the Compensation Committee of the Board (the “ Compensation Committee ”) or its designee annually. The Base Salary, as then increased, will be the “Base Salary” for all purposes of this Employment Agreement.

(ii)   Bonuses . During the Employment Period, the Company shall establish an annual bonus plan for each fiscal year of the Company (the “ Plan ”) pursuant to which the Executive will be eligible to receive a target annual bonus in an amount equal to 75 percent of the Annual Base Salary (the “ Bonus ”), which Bonus may be higher or lower than this percentage based on actual performance. With respect to the Company’s 2006 fiscal year, the Executive will be entitled to a pro-rated Bonus from the Effective Date to the end of such fiscal year (provided that the Executive remains employed by the Company) (the “ 2006 Pro-Rata Bonus Period ”) based on actual performance by the Company for the entirety of such fiscal year. The Board or the Compensation Committee will administer the Plan and establish performance objectives for each year. The Executive’s Bonus will be determined based on the achievement of performance objectives for the applicable year, provided that the Board and/or the Compensation Committee may provide discretionary bonuses to the Executive under the Plan. Unless the Executive is employed on the last day of the applicable performance period, the Executive will not be entitled to receive the Bonus upon the Company’s achievement of the specified performance objectives (subject to Section 4 of this Agreement); provided, however, the Compensation Committee may award such bonus to Executive. Except as provided for in Section 4 of this Agreement, the Bonus shall become payable on or before March 15 following the end of the applicable fiscal year provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of Bonus that shall be paid to the Executive for the applicable Plan year.

(iii)   Benefits . During the Employment Period, the Executive shall be entitled to participate in employee benefit plans generally made available to senior executives of the Company.

(iv)   Expenses . During the Employment Period, the Executive shall be entitled to receive reimbursement for all reasonable expenses incurred by the Executive in performance of his duties hereunder provided that the Executive provides all necessary documentation in accordance with Company policy.

(v) Vacation and Holidays . During the Employment Period, the Executive shall be entitled to four weeks per annum of paid vacation.

(vi)   Relocation Benefits . In connection with the Executive’s commencement of employment with the Company hereunder and the Executive’s relocation to Princeton, New Jersey from Houston, Texas, the Company will reimburse the Executive in accordance with the Company’s standard relocation policy for all of the normal and customary relocation expenses the Executive incurs.

(vii)   Stock Options . The Executive and the Company acknowledge that on the Effective Date, the Parent shall grant the Executive stock options (the “ Executive Options ”) to purchase 91,772 shares of common stock of Covalence Specialty Materials Holding Corp. (the “ Parent ”) at an exercise price of $10.00 per share pursuant to the terms and conditions set forth in the Covalence Specialty Materials Holding Corp. 2006 Long-Term Incentive Plan (the “ Long-Term Incentive Plan ”). The Executive Options shall be subject to the terms of the Long-Term Incentive Plan and the Executive’s Non-Qualified Stock Option Agreement (attached hereto as Exhibit A).

(viii)   Investment . The Executive hereby agrees to purchase, as soon as reasonably practicable (but no later than three (3) business days)   after the disposition of the portion of the Executive’s equity interests in Hexion LLC pursuant to the Securities Purchase Agreement by and among the Executive, Apollo and Hexion LLC (such date of purchase, the “ Purchase Date ”), 61,212 shares of common stock of the Parent, par value $0.01 (the “ Common Stock ”), at a price of $10.00 per share and 1,017.097 shares of Series A Cumulative Non-Redeemable Perpetual Preferred Stock of the Company, liquidation preference $1,000 per share (the “ Preferred Stock ”), at a price of $1,038.639 per share (collectively, the “ Purchased Shares ”). The Purchased Shares shall be subject to the terms of the Long-Term Incentive Plan and the Executive’s Subscription Agreement (attached hereto as Exhibit B).

(ix)   Notwithstanding anything to the contrary herein, all of the Purchased Shares will be fully vested at the Effective Date and all Purchased Shares, all Executive Options and Common Stock held by the Executive pursuant to the exercise of the Executive Options will be subject to the terms and conditions of the Investor Rights Agreement by and among the Parent, the Executive, and other signatories thereto (the “ Investor Rights Agreement ”).

Section 3.   Termination of Employment.

(a)   Death or Disability . The Executive’s employment shall terminate automatically upon the Executive’s death. If the Executive becomes subject to a Disability during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give the Executive written notice in accordance with Sections 3(e) and 10(h) of its intention to terminate the Executive’s employment. For purposes of this Agreement, “ Disability ” means (i) the Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or

(ii) mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Executive is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident, disability or health plan covering employees of the Company. Whether the Executive has incurred a “Disability” shall be determined by a physician jointly-selected by the Company or its insurers and the Executive (or the Executive’s legal representative).

(b)   Cause . The Executive’s employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “Cause” shall mean (i) the Executive’s commission of a felony or a crime of moral turpitude; (ii) the Executive’s willful commission of a material act of dishonesty involving the Company; (iii) the Executive’s material breach (which breach is not promptly cured) of his obligations hereunder or any other agreement entered into between the Executive and the Company or any of its subsidiaries or affiliates, including, without limitation, the Executive’s failure to purchase the Purchased Shares by the Purchase Date (as defined in Section 2(c)(vii) of this Agreement); (iv) the Executive’s willful failure to perform his duties; (v) the Executive’s material breach of the Company’s material policies or the material policies of the Parent or any of their respective subsidiaries (collectively, the “ Affiliated Entities ” and each such entity an “ Affiliated Entity ”) or procedures that is not reasonably curable in the Company’s reasonable discretion; or (vi) any other willful misconduct by the Executive which causes material harm to the Company or any of the Affiliated Entities or their business reputation, including due to any adverse publicity. A termination will not be for “Cause” under (iii), (iv) or (v) above unless the Company shall have given the Executive 15 days’ prior written notice describing the alleged action(s) and then only if the Executive has not reasonably cured such actions (except in the case of actions that are not curable).

(c)   Termination Without Cause . The Company may terminate the Executive’s employment hereunder without Cause at any time upon thirty (30) days prior written notice.

(d)   Good Reason . The Executive’s employment may be terminated at any time by the Executive for Good Reason or without Good Reason upon thirty (30) days prior written notice. For purposes of this Agreement, “Good Reason” means voluntary resignation after any of the following actions are taken by the Company or any of its subsidiaries without the Executive’s consent: (i) a reduction in the Executive’s Annual Base Salary or Bonus potential (i.e., 75% of Base Salary) described in Section 2(c)(ii) of this Agreement (but not including any diminution related to an across the board reduction applying to senior executives of the Company generally); (ii) the assignment to Executive by the Company of duties materially inconsistent with Executive’s duties as set forth in Section 2 hereof, or any material diminution of the Executive’s responsibilities, which for these purposes shall not include the failure to maintain the Executive as an officer of the Parent or a member of the Parent Board in the event that (x) the Company or any successor to the Company ceases to be owned by the

Parent or any successor to the Parent or (y) the Parent or any successor to the Parent ceases to exist whether by merger or otherwise; or (iii) any other material breach by the Company of this Agreement; provided, however, that none of the events described in the foregoing clauses (i), (ii) or (iii) shall constitute Good Reason unless the Executive shall have notified the Company in writing describing the events which constitute Good Reason within sixty (60) days following the Executive’s knowledge of such events and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

(e)   Notice of Termination . Any termination by the Company for Cause or without Cause, or by the Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(h). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

(f)   Date of Termination . “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by the Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if the Executive’s employment is terminated by reason of death, the date of death.

Section 4.   Obligations of the Company upon Termination.

(a)   With Good Reason; Other Than for Cause . If during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause or the Executive shall terminate his employment for Good Reason, then the Company will provide the Executive with the following severance payments and/or benefits:

(i)   The Company shall pay to the Executive in a lump sum (x) the Annual Base Salary through the Date of Termination to the extent not paid, and (y) to the extent not previously paid, the Bonus earned for any year prior to the year in which the Date of Termination occurs, to the extent that the Executive is employed on the last day of the applicable performance period and such Bonus shall be paid in accordance with the terms of the Plan (the “ Accrued Obligations ”);

(ii)   Starting as of the next applicable Company payroll date after the Date of Termination (provided that the Executive has complied with Section 4(d) of this Agreement), the Company will pay the Executive a monthly amount equal to (x) the Annual Base Salary, divided by (y) 12 (the “ Severance Amount ”), until the earlier of (A) the end of the 18th month following the Date of Termination (the “ Severance Period ”), and (B) the date, if any, the Executive violates the terms of this Agreement; provided however, that in the event that the Executive’s employment is terminated by the Company other than for Cause or by the Executive for Good Reason, in each case during the one-year period after a Change in Control of the Parent (as defined in the Long-Term Incentive Plan), the Severance Amount shall be equal to (xx) the Annual Base Salary, divided by (yy) 12, and the Severance Period shall be until the earlier of (AA) the end of the 24th month following the Date of Termination, and (BB) the date, if any, the Executive violates the terms of this Agreement;

(iii)   The Company will pay the Executive a prorated Bonus for the year in which termination occurs, based on actual performance for such year, the amount of w