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Exhibit
10.26
EMPLOYMENT
AGREEMENT
DAVE
BRADLEY
EMPLOYMENT AGREEMENT (the
“Agreement”) dated as of March 8, 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 Dave Bradley (the “Executive”).
WHEREAS, in connection with
the transactions contemplated by the merger agreement between
Parent and Ripplewood Chemical Holding LLC, a Delaware limited
liability company (the “Transaction”), KRATON and its
subsidiaries (collectively, the “Company”) shall become
wholly owned subsidiaries of Parent;
WHEREAS, the Company desires
to employ the Executive 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 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,
Transformation. 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
$200,000, 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;
Restricted Unit Award . (a) 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 (i) up to forty percent (40%)
of Executive’s Base Salary (the “Target”) based
upon the achievement of performance objectives established by the
Board, and (ii) up to 200% of the Target if such performance
objectives are exceeded due to extraordinary performance, 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 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.
(b) As soon as practicable
after the date hereof, the Company shall grant restricted shares on
membership units of TJ Chemical Holdings LLC (which may be
indirectly distributed through KRATON Management LLC) with a
current value of $200,000 (the “Restricted Shares”),
based on the buy-in price of membership units of TJ Chemical
Holdings LLC by the initial investors in connection with the
Transaction, as determined by the Board. As soon as practicable
after the grant date, the Restricted Shares will be recorded on the
books of TJ Chemical Holdings LLC or KRATON Management LLC, as
applicable, in the Executive’s name, subject to restrictions
on transferability and subject to forfeitability (as described
below). The Restricted Shares will vest as to 20% of such shares on
each of the first five anniversaries of the grant date, provided
that Executive remains employed with the Company through the
applicable vesting date. Upon a termination of Executive’s
employment for any reason, any unvested Restricted Shares will be
forfeited. Unvested Restricted Shares will become vested upon a
termination of employment without Cause or resignation for Good
Reason within the two-year period following a “Change in
Control” as defined in the TJ Chemical Holdings LLC 2004
Option Plan. Executive shall execute the limited liability company
operating agreements for KRATON Management LLC and/or TJ Chemical
Holdings LLC or such other documentation requested by the Company
in connection with such award of the Restricted Shares. The
Executive shall be permitted to make an election pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended with
respect to his Restricted Shares.
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.
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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.
(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;
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(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, 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.
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
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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;
(B) continuation of
Executive’s annual Base Salary during the six-month period
immediately following the termination of Executive’s
employment, 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 for a
period of six (6) months commencing on the date of
Executive’s termination of employment (“Termination
Date”), provided 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 6-month
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 a majority 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 from Executive of
written notice of the event which constitutes Good Reason;
provided, further, that “Good Reason” shall cease to
exist for an event on the 60th 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) - (C) above shall be subject to
and
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