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Exhibit
10.1
EXECUTION VERSION
SEPARATION AGREEMENT
AND GENERAL RELEASE AND WAIVER
This Separation Agreement and
General Release and Waiver (this “ Agreement ”)
is made as of September 20, 2004, between KRATON Polymers LLC (the
“Company”), and Stephen Wood (the “
Employee ”).
WHEREAS, the Company engaged
the Employee to be its Chief Executive Officer;
WHEREAS, the Employee and the
Company are parties to an Employment Agreement dated April 21, 2004
(the “ Employment Agreement ”);
WHEREAS, Section 7(c) of the
Employment Agreement provides that, as a condition to the receipt
of certain benefits described therein, the Employee shall be
required to execute a general release of claims in a form
satisfactory to the Company;
WHEREAS, the parties wish to
confirm the termination without Cause of the Employee’s
employment with the Company and set forth their agreement as to the
manner in which the Employee’s employment with the Company
will be closed out;
NOW, THEREFORE, in
consideration of the mutual covenants set forth herein and for
other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Employee agree as
follows:
1. Termination of
Employment .
(a) The parties agree that
the Employee’s employment with the Company is terminated as
of July 6, 2004 (the “ Date of Termination ”).
The Employee hereby resigns, effective as of the Date of
Termination, all positions, titles, duties, authorities and
responsibilities with, arising out of or relating to his employment
with the Company and its affiliates and agrees to execute all
additional documents and take such further steps as may be required
to effectuate such resignation.
(b) The parties agree that
(i) the Employee’s termination will be treated as a
termination without Cause under Section 7(c) of the Employment
Agreement and (ii) this Agreement shall serve as and fulfill all
the requirements of a Notice of Termination for purposes of Section
7(e) of the Employment Agreement.
2. Accrued Obligations
.
(a) No later than October 31,
2004, the Company shall pay the Employee a lump sum payment of $
70,000, in satisfaction of all of the unpaid vacation time to which
the Employee is entitled pursuant to company policy.
(b) The Employee has
submitted to the Company any requests for reimbursement for any
unreimbursed business expenses properly incurred by the Employee in
accordance with Company policy prior to the Date of Termination.
The Company will process these reimbursement requests in a manner
consistent with past practices in effect prior to the Date
of
Termination. The Company has agreed to
pay for charges incurred on the Employee’s Company mobile
telephone through July 31, 2004. Executive shall be responsible for
all Company mobile telephone charges incurred after July 31,
2004.
(c) The Employee shall be
entitled to any benefit to which the Employee may be entitled under
any tax qualified pension plan of the Company or its affiliates and
any other benefits required to be provided by law.
(d) These payments and
benefits set forth in this Section 2 represent all of the Accrued
Obligations (as that term is defined in the Employment Agreement)
owed to the Employee and the Employee hereby acknowledges that
payments of the amounts and provision of the benefits outlined in
this Section 2 satisfy all of the Company’s obligations
concerning Accrued Obligations.
3. Certain Payments and
Benefits .
(a) In exchange for the
Employee’s entering into this Agreement, including the
General Release and Waiver contained herein and subject to Sections
10 and 14 herein, the Company shall make the following payments to
the Employee and provide the Employee with benefits as set forth
below (these payments and benefits collectively the
“Termination Payments”):
| (i) |
No later than October 31, 2004, the Company shall make a lump
sum severance payment of $1,075,000 to the Employee. |
| (ii) |
No later than October 31, 2004, the Company shall make a lump
sum payment of $782,000 to the Employee, representing the
Company’s obligation to the Employee under the
Company’s Supplemental Retirement Plan for Stephen
Wood. |
| (iii) |
No later than October 31, 2004, the Company shall make a lump
sum payment of $49,000, representing full payment for relocation
expenses, attorneys fees, outplacement fees and car allowance
benefits. |
| (iv) |
Commencing on the Date of Termination, the Company will
continue medical benefits for the Employee and the Employee’s
eligible dependents comparable to those medical benefits the
Employee participated in on the Date of Termination for a period
not to exceed 18 months. The Company will cease to provide such
medical benefits if the Employee becomes entitled to medical
benefits from a new employer. The Company may provide such medical
benefits by paying the Employee’s COBRA continuation coverage
through such 18-month period. The Company will cease to provide
such benefits if the Employee does not execute this Agreement
within the twenty-one day period provided in Section 14 or if the
Employee revokes his agreement to accept the terms hereof during
the seven-day revocation period provided for in Section 14 of this
Agreement. |
| (v) |
Pursuant to
section 10 of the Limited Liability Company Operating Agreement of
Kraton Management LLC (the “Kraton Management LLC
Agreement”), Kraton Management LLC shall repurchase the
1,000,000 Company Membership Units (as that term is
defined
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2
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in the Kraton Management
LLC Agreement) held by the Employee at the price of $1.00 per
Company Membership Unit, for a total purchase price (the
“Purchase Price”) of $1,000,000. Upon payment of the
Purchase Price, Employee hereby surrenders all rights and interests
in the 1,000,000 Company Membership Units and hereby represents and
warrants that he has full power and authority to sell, assign and
transfer such units (subject to the Kraton Management LLC
Agreement) and that Kraton Management LLC will acquire good and
unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any
adverse claims whatsoever. Employee hereby agrees that, upon
request, he shall execute and deliver any additional documents
reasonably deemed by Kraton Management LLC to be necessary or
desirable to complete the redemption of the Company Membership
Units described herein.
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| (vi) |
The Employee hereby acknowledges that, other than the 1,000,000
Company Membership Units referenced above, he does not own and is
not entitled to any other equity interests in the Kraton Management
LLC, TJ Chemical Holdings LLC or any of their respective affiliates
and all Company Profits Units (as that term is defined in the
Kraton Management LLC Agreement) granted or to be granted to
Employee were forfeited upon the Termination Date. |
(b) All payments and other
benefits provided to the Employee, including without limitation the
Termination Payments and the Accrued Obligations shall be subject
to, and reduced by, all applicable withholding or other taxes. The
Termination Payments and Accrued Obligations shall not be taken
into account as compensation and no service credit shall be given
after the Date of Termination for purposes of determining the
benefits payable to the Employee or the Employee’s family
under any plan, program, agreement or arrangement of the Company.
The Employee acknowledges that, except for the Termination Payments
and the Accrued Obligations, he is not entitled to any other
payment from the Company, including, without limitation, any
payment in the nature of severance, termination, or bonus pay
(accrued or otherwise) from the Company.
4. General Release and
Waiver .
(a) The Employee, his heirs,
successors, and assigns, hereby knowingly and voluntarily remise,
release and forever discharge the Company, its subsidiaries and
affiliates, its and their respective officers, directors, partners,
shareholders, employees, successors and assigns (collectively, the
“Related Persons”), from any and all debts, demands,
actions, causes of actions, accounts, covenants, contracts,
agreements, claims, damages, omissions, promises, and any and all
claims and liabilities whatsoever, of every name and nature, known
or unknown, suspected or unsuspected, both in law and equity
(“Claims”), which the Employee has ever had, now has,
or may hereafter claim to have against the Company or any Related
Persons by reason of any matter, cause or thing whatsoever arising
from the beginning of time to the time the Employee signs this
Agreement. This Release of Claims shall apply to any Claim of any
type, including, without limitation, any and all Claims of any type
that the Employee may have arising under the common law, under
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Age Discrimination in Employment Act of 1967
(“ADEA”), the Older Workers Benefit Protection Act, the
Americans With Disabilities Act of 1967, the Family and Medical
Leave Act of 1993, the Employee Retirement Income Security Act of
1974, the Texas Labor Code,
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including without limitation the Texas
Commission on Human Rights Act (V.T.C.A. Section 21.001, et
seq .), each as amended, and any other Texas law, and any other
federal, state or local statutes, regulations, ordinances or common
law, or under any policy, agreement, contract, understanding or
promise, written or oral, formal or informal, between any of the
Related Pe
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