Exhibit 10.17
EMPLOYMENT
AGREEMENT
ROBERT NEWMAN
EMPLOYMENT AGREEMENT (the
“Agreement”) dated as of March 18, 2004 by and between
KRATON Polymers LLC, (“KRATON”), a Delaware limited
liability company, which is a wholly owned subsidiary of Polymer
Holdings LLC (“Parent”), a Delaware limited liability
company and Robert Newman (the “Executive”).
WHEREAS, Parent and Ripplewood
Chemical Holding LLC, a Delaware limited liability company, have
consummated a transaction (the “Transaction”) pursuant
to a merger agreement, dated November 5, 2003 (the “Merger
Agreement”), whereby KRATON and its subsidiaries
(collectively, the “Company”) became wholly owned
subsidiaries of Parent;
WHEREAS, the Company desires that,
upon the consummation of the Transaction, Executive continues to be
employed by the Company and to enter into an agreement embodying
the terms of such employment and Executive desires to accept such
employment with the Company and enter into such an
agreement.
NOW, THEREFORE, in consideration of
the premises and mutual covenants herein and for other good and
valuable consideration, the parties agree as follows:
1. Term of Employment .
Subject to the provisions of Section 7 of this Agreement, Executive
shall continue to be employed by the Company for a period
commencing on April 1, 2004 (the “Effective Date”) and
ending on the day before the third anniversary of the Effective
Date (the “Employment Term”) on the terms and subject
to the conditions set forth in this Agreement; provided, however,
that commencing with the third anniversary of the Effective Date
and on each anniversary thereafter (each an “Extension
Date”), the Employment Term shall be automatically extended
for an additional one-year period, unless KRATON or Executive
provides the other party hereto 30 days prior written notice before
the next Extension Date that the Employment Term shall not be so
extended.
2. Position .
a. During the Employment Term,
Executive shall serve as KRATON’s Vice President, Technology.
In such position, Executive shall have the duties and authority
commensurate with the position and as shall be determined from time
to time by the Board of Directors of KRATON (the
“Board”). Executive shall report to the chief executive
officer of KRATON (the “ Chief Executive Officer
”).
b. During the Employment Term,
Executive will devote Executive’s full business time and best
efforts to the performance of Executive’s duties hereunder
and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict or interfere
with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided that
nothing herein shall preclude Executive, subject to the prior
approval of the Board, from accepting appointment to or continue to
serve on any board of directors or trustees of any business
corporation or any charitable organization; provided in each case,
and in the aggregate, that such activities do not conflict or
interfere with the performance of Executive’s duties
hereunder or conflict with Section 9.
3. Base Salary . During the
Employment Term, the Company shall pay Executive a base salary (the
“Base Salary”) at the annual rate of $220,000, payable
in regular installments in accordance with the Company’s
usual payment practices. Executive shall be entitled to annual
reviews and increases in Executive’s Base Salary, if any, as
may be determined in the sole discretion of the Board.
4. Annual Bonus . With
respect to the first partial fiscal year and each full fiscal year
during the Employment Term, Executive shall be eligible to earn an
annual bonus award (an “Annual Bonus”) equal to up to
fifty percent (50%) of Executive’s Base Salary (the
“Target”) based upon the achievement of performance
objectives established by the Board, as determined by the Board.
The Company intends to establish a deferred compensation plan,
under which Executive may elect to defer, no later than March
1 st (or such later date as is provided
in the plan) of the year in which the affected Annual Bonus is
earned, up to 50% of such Annual Bonus which may be paid at a later
date in shares or units through KRATON Management LLC. The terms
and conditions of the deferred compensation plan shall be provided
in a separate plan document, which will provide, among other
things, that the Board shall determine the value of the shares or
units as applicable for purposes of the deferred compensation
plan.
5. Employee Benefits . During
the Employment Term, Executive shall be entitled to participate in
the Company’s employee benefit plans, as amended from time to
time, (other than bonus, incentive or severance plans) as in effect
from time to time (collectively “Employee Benefits”),
on the same basis as those benefits are generally made available to
other senior executives of the Company.
During the Employment Term,
Executive shall be eligible to participate in the equity incentive
plans of the Company, its Parent and TJ Chemical Holdings
LLC.
6. Business Expenses . During
the Employment Term, reasonable business expenses incurred by
Executive in the performance of Executive’s duties hereunder
shall be reimbursed by the Company in accordance with Company
policies.
7. Termination . The
Employment Term and Executive’s employment hereunder may be
terminated by either party at any time and for any reason; provided
that Executive will be required to give KRATON at least 60 days
advance written notice of any resignation of Executive’s
employment. Notwithstanding any other provision of this Agreement,
the provisions of this Section 7 shall exclusively govern
Executive’s rights upon termination of employment with the
Company and its affiliates.
a. By KRATON For Cause or By
Executive Resignation without Good Reason .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by KRATON
for Cause (as defined below) and shall terminate automatically upon
Executive’s resignation without Good Reason (as defined
below); provided that Executive will be required to give KRATON at
least 60 days advance written notice of any such resignation;
provided, that KRATON may elect to waive such notice period and to
pay Executive in lieu of such notice.
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(ii) For purposes of this
Agreement:
(x) “Cause” shall mean
(A) Executive’s continued failure substantially to perform
Executive’s duties hereunder (other than as a result of total
or partial incapacity due to physical or mental illness) for a
period of 30 days following written notice by KRATON to Executive
of such failure; provided that it is understood that this clause
(A) shall not permit KRATON to terminate Executive’s
employment for Cause because of dissatisfaction with the quality of
services provided by or disagreement with the actions taken by
Executive in the good faith performance of Executive’s duties
to KRATON, (B) theft or embezzlement of Company property, (C)
Executive’s conviction of or plea of guilty or no contest to
(x) a felony or (y) a crime involving moral turpitude, (D)
Executive’s willful malfeasance or willful misconduct in
connection with Executive’s duties hereunder or any act or
omission which is materially injurious to the financial condition
or business reputation of the Company or any of its subsidiaries or
affiliates, or (E) Executive’s breach of the provisions of
Sections 8 or 9 of this Agreement; and
(iii) If Executive’s
employment is terminated by KRATON for Cause, or if Executive
resigns without Good Reason, Executive shall be entitled to
receive, within 30 days following such termination with respect to
(A)-(C) below and at such time, if any, as the Employee Benefits
under (D) below become due in accordance with the applicable terms
thereof:
(A) the Base Salary through the date
of termination, to the extent not already paid;
(B) any Annual Bonus earned but
unpaid as of the date of termination for any previously completed
fiscal year;
(C) reimbursement for any
unreimbursed business expenses properly incurred by Executive in
accordance with KRATON policy prior to the date of
Executive’s termination; and
(D) such vested Employee Benefits,
if any, as to which Executive may be entitled under the employee
benefit plans of the Company as described in Section 5 (including,
without limitation, any retirement benefits, medical, life
insurance or disability benefits accrued but unpaid vacation or
other benefits Executive is entitled to pursuant to the terms of
the applicable plans then in effect (the amounts described in
clauses (A) through (D) hereof being referred to as the
“Accrued Obligations”).
Following such termination of
Executive’s employment by KRATON for Cause or resignation by
Executive without Good Reason, except as set forth in this Section
7(a)(iii), Executive shall have no further rights to any
compensation or any other benefits in the nature of severance or
termination pay or in connection with the termination of his
employment.
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b. Disability or Death
.
(i) The Employment Term and
Executive’s employment hereunder shall terminate upon
Executive’s death and may be terminated by KRATON if
Executive becomes physically or mentally incapacitated and is
therefore unable for a period of six (6) consecutive months or for
an aggregate of nine (9) months in any twenty-four (24) consecutive
month period to perform Executive’s duties (such incapacity
is hereinafter referred to as “Disability”); provided
that a termination on the basis of a Disability must occur within
90 days of the date when Executive is subject to termination due to
Disability. Any question as to the existence of the Disability of
Executive as to which Executive and KRATON cannot agree shall be
determined in writing by a qualified independent physician mutually
acceptable to Executive and KRATON. If Executive and KRATON cannot
agree as to a qualified independent physician, each shall appoint
such a physician and those two physicians shall select a third who
shall make such determination in writing. The determination of
Disability made in writing to the Company and Executive shall be
final and conclusive for all purposes of the Agreement.
(ii) Upon termination of
Executive’s employment hereunder for either Disability or
death, Executive or Executive’s estate (as the case may be)
shall be entitled to receive:
(A) at the times set forth in
Section 7(a)(iii) hereof, the Accrued Obligations;
(B) a pro rata portion of any Annual
Bonus that Executive would have been entitled to receive pursuant
to Section 4 hereof in such year based upon the percentage of the
fiscal year that shall have elapsed through the date of
Executive’s termination of employment, payable when such
Annual Bonus would have otherwise been payable had
Executive’s employment not terminated.
Following Executive’s
termination of employment due to death or Disability, except as set
forth in this Section 7(b)(ii), Executive shall have no further
rights to any compensation or any other benefits in the nature of
severance or termination pay or in connection with the termination
of his employment.
c. By KRATON Without Cause or
Resignation by Executive for Good Reason .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by KRATON
without Cause or by Executive’s resignation for Good
Reason.
(ii) If Executive’s employment
is terminated by KRATON without Cause (other than by reason of
death or Disability) or by Executive’s resignation for Good
Reason, Executive shall be entitled to receive:
(A) at the times set forth in
Section 7(a)(iii) hereof, the Accrued Obligations;
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(B) continuation of
Executive’s annual Base Salary until the earlier of (l) the
first anniversary of such termination or (2) the later of (A) 6
months following such termination of employment or (B) the date the
Executive begins to provide services (as an employee, consultant or
otherwise) to another person or entity which are expected to
continue for more than 30 days (the “Severance Continuation
Period”) which shall be paid at the same time and in the same
manner as if Executive had remained employed by KRATON during such
period; and
(C) medical benefits for Executive
and his eligible dependents comparable to those medical benefits
Executive participated in on the date of termination during the
Severance Continuation Period, provided in any case such medical
benefits shall cease if Executive becomes entitled to medical
benefits from a new employer. KRATON may provide such medical
benefits by paying the Executive’s COBRA continuation
coverage through such Severance Continuation Period.
(iii) For purposes of this
Agreement, “Good Reason” shall mean (A) the failure of
the Company to pay or cause to be paid Executive’s Base
Salary or Annual Bonus (if any) when due or (B) a reduction in
Executive’s base salary other than an across-the-board
reduction in salary for all of the members of the Company’s
management team; provided that either of these events shall
constitute Good Reason only if the Company fails to cure such event
within 30 days after receipt form Executive of written notice of
such event which constitutes Good Reason; provided, further, that
“Good Reason” shall cease to exist for an event on the
60 th day following the later of its
occurrence or Executive’s knowledge thereof, unless Executive
has given KRATON written notice thereof prior to such
date.
The payments and benefits described
in subparagraphs (B) and (C) above shall be subject to and
conditioned upon the Executive’s execution and delivery of a
valid and effective general release and waiver, in a form
satisfactory to the Company, waiving all claims the Executive may
have against the Company, its affiliates and their respective
executives, directors, partners, members, shareholders, successors
and assigns. Following Executive’s termination of employment
by the Company without Cause (other than by reason of
Executive’s death or Disability), except as set forth in this
Section 7(c)(ii), Executive shall have no further rights to any
compensation or any other benefits in the nature of severance or
termination pay or in connection with the termination of his
employment.
d. Expiration of Employment
Term .
(i) Election Not to Extend
the
