Exhibit 10.3
EMPLOYMENT AGREEMENT
KEVIN FOGARTY
     EMPLOYMENT AGREEMENT (the “Agreement”) dated as of November 9, 2005 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 Kevin Fogarty (the “Executive”).
     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 June 15, 2005 (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 Executive
Vice President of KRATON. In such position, Executive shall have the duties and
authority commensurate with the position as shall be determined from time to
time by the Board of Directors of KRATON (“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 8.
          3. Base Salary. During the Employment Term, the Company shall pay
Executive a base salary (the “Base Salary”) at the annual rate of $315,000,
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.

 

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          4. Incentive Compensation.
               a. 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 (i) up to
fifty percent (50%) of Executive’s Base Salary (the “Target”) based upon the
achievement of performance objectives established by the Board, and (ii) up to
100% of the Target if such performance objectives are exceeded due to
extraordinary performance, as determined by the Board, provided that, with
respect to fiscal year 2005, Executive’s Annual Bonus will not be less than
$150,000, provided the Executive is employed with KRATON on December 31, 2005.
The Company has established a deferred compensation plan, under which Executive
may elect to defer, no later than July 1st (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.
               b. Notional Restricted Unit Award. As soon as practicable after
the date hereof, the Company shall grant Executive a restricted unit award with
a current notional value of $300,000 based on the value of membership units of
TJ Chemical Holdings LLC, as determined by the Board. Each “Restricted Unit”
will be the equivalent of one notional membership unit of TJ Chemical Holdings
LLC. Executive shall not have any beneficial ownership in the notional
membership units underlying the Restricted Units and the grant of Restricted
Units shall represent an unsecured promise to deliver membership units of T.J.
Chemical Holdings LLC (either directly or through membership units of KRATON
Management LLC) on a future date. Twenty percent of the Restricted Units shall
vest on each anniversary of the grant date, provided that Executive remains
employed with the Company through the applicable vesting date. Except as
provided in the next succeeding sentence, upon termination of employment for any
reason all unvested Restricted Units shall immediately and automatically be
forfeited. In the event of a Change in Control, if the Executive’s employment is
terminated without Cause or for Good Reason during the two-year period
immediately following the date of the Change in Control, all unvested Restricted
Units shall become immediately vested. Distribution of membership units
representing the portion of vested Restricted Units shall occur as soon as
practicable after the earlier of a Change in Control or termination of
Executive’s employment, provided that following a Change in Control, unvested
Restricted Units shall remain outstanding and continue to vest as provided above
until the Executive’s employment terminates.
          5. Employee Benefits.
               a. General. 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

 

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(collectively “Employee Benefits”), on the same basis as those benefits are
generally made available to other senior executives of the Company.
               b. Other. 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, and provided further that KRATON
may elect to waive such notice period and to pay Executive in lieu of such
notice.
          (ii) For purposes of this Agreement “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) failure of Executive to maintain his principal residence
in the same metropolitan area as KRATON’s principal headquarters, which is
currently located in Houston, Texas, or elsewhere as mutually agreed to by
Executive and Company, (C) theft or embezzlement of Company property,
(D) Executive’s conviction of or plea of guilty or no contest to (x) a felony or
(y) a crime involving moral turpitude, (E) 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

 

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subsidiaries or affiliates, or (F) Executive’s breach of the provisions of
Sections 9 or 10 of this Agreement.
          (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(a) (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.
               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

 

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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;
          (B) continuation of Executive’s annual Base Salary until the first
anniversary of such termination, provided that if, prior to such first
anniversary, Executive begins to provide services (as an employee, consultant or
otherwise) to another person or entity and such services are expected to
continue or actually continue for more than 30 days, then the period of
continuation of Base Salary shall be reduced to the later of (A) 6 months
following

 

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such termination of employment or (B) the date the Executive begins to provide
such services (the ”Severance Continuation Period”) and, in either case, the
Base Salary continuation 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, (B) a reduction in Executive’s Base Salary, the
Target Annual Bonus opportunity described in Section 4 herein, or Employee
Benefits other than an across-the-board reduction in salary or bonus opportunity
for all of the members of the Company’s management team and other than a
decrease in Employee Benefits that applies to all employees otherwise eligible
to participate in the affected plan, or (C) a relocation of Executive’s primary
work location more than 50 miles from the work location on the date hereof,
without written consent; provided that none of these events shall constitute
Good Reason unless the Company fails to cure such event within 30 days after
receipt from Executive of written notice specifying in reasonable detail 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 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) or by Executive’s resignation for Good Reason, except as
set forth in 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.

 

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               d. Expiration of Employment Term.
          (i) Election Not to Extend the Employment Term. In the event either
party elects not to extend the Employment Term pursuant to Section 1, unless
Executive’s employment is earlier terminated pursuant to paragraphs (a), (b) or
(c) of this Section 7, Executive’s termination of employment hereunder (whether
or not Executive continues as an employee of the Company thereafter) shall be
deemed to occur on the close of business on the day immediately preceding the
next scheduled Extension Date. If Executive’s employment is terminated due to
Executive’s election not to extend the Employment Term, Executive shall be
entitled to receive the Accrued Obligations. If Executive’s employment is
terminated by KRATON other than for Cause following KRATON ’s election not to
extend the Employment Term, Executive shall be entitled to receive (1) at the
times set forth in Section 7(a)(iii) hereof, the Accrued Obligations,
(2) continuation of Executive’s annual Base Salary during the Severance
Continuation Period at the same time and in the same manner as if Executive had
remained employed by KRATON during such period, and (3) 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.
     The payments and benefits described in this subparagraph (i) 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 such termination of Executive’s
employment hereunder as a result either party’s election not to extend the
Employment Term, except as set forth in this Section 7(d)(i), 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.
          (ii) Continued Employment Beyond the Expiration of the Employment
Term. Unless the parties otherwise agree in writing, continuation of Executive’s
employment with the Company beyond the expiration of the Employment Term shall
be deemed an employment at-will and shall not be deemed to extend any of the
provisions of this Agreement and Executive’s employment may thereafter be
terminated at will by either Executive or the Company; provided that the
provisions of Sections 8, 9 and 10 of this Agreement (and the Company’s
potential severance obligation under Section 7(d)(i) if applicable) shall
survive any

 

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termination of this Agreement or Executive’s termination of employment
hereunder.
               e. Notice of Termination. Any purported termination of employment
by the Company or by Executive (other than due to Executive’s death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 11(h) hereof. For purposes of this Agreement, a “Notice
of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.
               f. Equity Investment. Nothwithstanding anything herein to the
contrary, upon a termination of employment, the Executive shall have such rights
and obligations with respect to any options to purchase membership units of TJ
Chemical Holdings LLC (“TJ Chemical”) then held by the Executive and with
respect to Executive’s investment in TJ Chemical and/or KRATON Management LLC
(including with respect to profits units and/or membership units, as applicable)
in accordance with the applicable governing documents thereof.
          8. Non-Competition.
               a. Executive acknowledges and recognizes the highly competitive
nature of the businesses of the Company and accordingly agrees as follows:
          (i) During the Employment Term and, for a period of one year following
the date Executive ceases to be employed by the Company (the “Restricted
Period”), Executive will not, whether on Executive’s own behalf or on behalf of
or in conjunction with any person, company, business entity or other
organization engaged in a Competitive Business (as defined below), directly or
indirectly solicit or assist in soliciting on behalf of any entity engaged in a
Competitive Business, the business of any client or prospective client:
          (A) with whom Executive had personal contact or dealings on behalf of
the Company during the one year period preceding Executive’s termination of
employment;
          (B) with whom employees reporting to Executive have had personal
contact or dealings on behalf of the Company during the one-year period
immediately preceding the Executive’s termination of employment; or
          (C) for whom Executive had direct or indirect responsibility during
the one-year period immediately preceding Executive’s termination of employment.

 

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          (ii) During the Restricted Period, Executive will not directly or
indirectly:
          (A) engage in a Competitive Business;
          (B) enter the employ of, or render any services to, any person or
entity (or any division of any person or entity) who or which engages in a
Competitive Business; provided that Executive shall not be prohibited from
rendering any services to any company that derives less than 10% of its revenues
from a Competitive Business (a “Permitted Company”), if such services or
employment relate solely to a business of the Company that is not in competition
with a Competitive Business;
          (C) acquire a financial interest in, or otherwise become actively
involved with, any Competitive Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, trustee
or consultant; provided, however, a Competitive Business shall not include a
Permitted Company, or
          (D) interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the date of this Agreement)
between the Company and customers, clients, suppliers partners, members or
investors of the Company of which it is reasonable to expect that Executive is
aware.
          (iii) For purposes of this Agreement, “Competitive Business” means the
development, manufacture, license, sale or provision of products or services
that the Company currently, or at any time during the Employment Term, sells,
manufactures, licenses or provides, or has specific plans to do so, including
without limitation styrenic block copolymers made by anionic polymerization.
          (iv) Notwithstanding anything to the contrary in this Agreement,
Executive may, directly or indirectly own, solely as an investment, securities
of any person engaged in a Competitive Business which is publicly traded on a
national or regional stock exchange or on the over-the-counter market if
Executive (i) is not a controlling person of, or a member of a group which
controls, such person and (ii) does not, directly or indirectly, own 5% or more
of any class of securities of such person.
          (v) During the Restricted Period, Executive will not, whether on
Executive’s own behalf or on behalf of or in conjunction with any person,
company, business entity or other organization whatsoever, directly or
indirectly:
          (A) solicit or encourage any employee of the Company to leave the
employment of the Company or

 

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          (B) hire any such employee who was employed by the Company as of the
date of Executive’s termination of employment with the Company or who left the
employment of the Company coincident with, or within six months prior to or
after, the termination of Executive’s employment with the Company.
Notwithstanding the foregoing, following a Change in Control, Executive will not
be restricted from hiring any employee who is terminated without Cause following
such Change in Control.
          (vi) During the Restricted Period, Executive will not, directly or
indirectly, solicit or encourage to cease to work with the Company any
individual consultant then under contract with the Company.
               b. It is expressly understood and agreed that although Executive
and the Company consider the restrictions contained in this Section 8 to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Agreement is an unenforceable restriction against Executive, the provisions
of this Agreement shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such maximum extent as such
court may judicially determine or indicate to be enforceable. Alternatively, if
any court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
          9. Confidentiality; Inventions.
               a. Confidentiality. During the Employment Term and thereafter,
Executive will not disclose or use for Executive’s own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other business organization, entity or enterprise
other than the Company, any trade secrets, or other confidential information or
data of the Company relating to the Company’s customers, development programs,
costs, marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans, or the
business and affairs of the Company generally; provided that the foregoing shall
not apply to information which is not unique to the Company or which is
generally known to the industry or the public other than as a result of
Executive’s breach of this covenant. Except as required by law, Executive will
not disclose to anyone, other than his immediate family, legal or financial
advisors or any subsequent employer, the contents of this Agreement. Executive
agrees that upon termination of Executive’s employment with the Company for any
reason, he will return to the Company immediately all memoranda, books, papers,
plans, information, letters and other data, and all copies thereof or therefrom,
in any way relating to the business of the Company, except that he may retain
personal notes, notebooks and diaries and personally owned books, reference
material or information of a similar nature, that do not contain confidential
information of the type described in the preceding sentence of this section.
Executive further agrees that he will not retain or use for Executive’s account
at any time

 

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any trade names, trademark or other proprietary business designation used or
owned in connection with the business of the Company.
               b. Prior Inventions. Executive has attached hereto, as Exhibit A,
a list describing all material creations, inventions, and developments which
were created or contributed to by Executive either solely or jointly with others
prior to Executive’s employment with the Company which relate to the Company’
proposed or current business, services, products or research and development
(collectively referred to as “Prior Inventions”). If no such list is attached,
Executive either will advise the Company that Prior Inventions exist but cannot
be disclosed because of prior existing confidentiality obligations or, absent
such advice, will be understood to represent that there are no such Prior
Inventions. If in the course of Executive’s employment with the Company,
Executive uses or relies upon a Prior Invention, or any works of authorship
(including software, related items, data bases, documentation, site content,
text or graphics), developments, improvements or trade secrets which were
created or contributed to by Executive either solely or jointly with others
prior to Executive’s employment with the Company (“Prior Intellectual Property”)
in Executive’s creation or contribution to any work of authorship, invention,
product, service, process, machine or other property of the Company, Executive
will inform the Company promptly and, upon request, use Executive’s best efforts
to procure any consents of third parties necessary for the Company’ use of such
Prior Intellectual Property. To the fullest extent permissible by law, and to
the extent not in contravention of any prior legal obligation of Executive to
others all of which are disclosed to KRATON on Exhibit B, attached hereto,
Executive hereby grants the Company a non-exclusive royalty-free, irrevocable,
perpetual, worldwide license under all of Executive’s Prior Inventions to make,
have made, copy, modify, distribute, use and sell works of authorship, products,
services, processes and machines and to otherwise operate the Company’ current
and future business.
               c. Ownership of Inventions. Executive agrees that Executive will
promptly make full written disclosure to the Company, and hereby assigns to the
Company, or its designee, all of Executive’s right, title, and interest in and
to any and all creations, inventions or developments, whether or not patentable,
which Executive may solely or jointly conceive or develop or reduce to practice,
during the period of time Executive is in the employ of the Company
(collectively referred to as “the Company Inventions”), other than (and the
Company Inventions shall not include) any such creations, inventions or
developments which demonstrably bear no relationship whatsoever to the business
of the Company, the chemical industry, or the application of technologies,
ideas, or processes directly or indirectly related to the business of the
Company or the chemical industry to any other industries or disciplines. For the
avoidance of doubt, the Company Inventions shall include any creations,
inventions or developments that relate directly or indirectly to a Competitive
Business. Executive further acknowledges that all original works of authorship
which are created or contributed to by Executive (solely or jointly with others)
within the scope of and during the period of Executive’s employment with the
Company (“the Company Copyrights”) are to be deemed “works made for hire,” as
that term is defined in the United States Copyright Act, and the copyright and
all intellectual property rights therein shall be the sole property of the
Company. To the extent any of such works are deemed not to be

 

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“works made for hire,” Executive hereby assigns the copyright and all other
intellectual property rights in such works to the Company.
               d. Contracts with the United States. Executive agrees to execute
any licenses or assignments of the Company Inventions or the Company Copyrights
as required by any contract between the Company and the United States or any of
its agencies.
               e. Maintenance of Records. Executive agrees to keep and maintain
adequate and current written records of all the Company Inventions made by
Executive (solely or jointly with others) during the term and within the scope
of Executive’s employment with the Company. The records will be in the form of
notes, sketches, drawings, and any other format that may be specified to
Executive or within the Company’ policies, manuals or procedures by the Company.
The records will be available to and remain the sole property and intellectual
property of the Company at all times.
               f. Further Assurances. Executive covenants to take all requested
actions and execute all requested documents to assist the Company, or its
designee, at the Company’ expense, in every way; consistent with applicable law,
(1) to secure the Company’s above rights in the Prior Intellectual Property and
Company Inventions and any of the Company’s Copyrights, patents, mask work
rights or other intellectual property rights relating thereto in any and all
countries, and (2) to pursue any patents or registrations with respect thereto.
This covenant shall survive the termination of this Agreement. If the Company is
unable for any reason, after reasonable efforts, to secure Executive’s signature
on any document for this purpose, then Executive hereby irrevocably designates
and appoints the Company and its duly authorized officers and agents as
Executive’s agent and attorney in fact, for the limited purpose of acting for
and in Executive’s behalf and stead to execute such documents and to do all
other lawfully permitted acts in connection with the execution of such
documents.
          10. Specific Performance. Executive acknowledges and agrees that the
Company’s remedies at law for a breach or threatened breach of any of the
provisions of Sections 8 through 10 would be inadequate and, in recognition of
this fact, Executive agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available and in the event of a
breach of Sections 8 through 10, shall be entitled to cease making any payments
or providing any benefit otherwise required by this Agreement.
          11. Miscellaneous.
               a. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflicts of laws principles thereof.

 

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               b. Entire Agreement/Amendments. Except for the documents related
to the Company and its affiliates’ equity incentive plans, this Agreement
contains the entire understanding of the parties with respect to the employment
of Executive by the Company, there are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.
               c. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party’s rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
               d. Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
               e. Assignment. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company to a person or entity
which is an affiliate or a successor in interest to substantially all of the
business operations of the Company. Upon such assignment, the rights and
obligations of the Company hereunder shall become the rights and obligations of
such affiliate or successor person or entity.
               f. Set Off. The Company’s obligation to pay Executive the amounts
provided and to make the arrangements provided hereunder shall be subject to
set-off, counterclaim or recoupment of amounts owed by Executive to the Company
or its affiliates.
               g. Successors; Binding Agreement. This Agreement shall inure to
the benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees.
               h. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below Agreement, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
If to the Company:
KRATON Polymers LLC
c/o Texas Pacific Group
301 Commerce Street, suite 3300

 

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Fort Worth, Texas 76102
AND
KRATON Polymers LLC
700 Milam Street 13th floor, North Tower
Houston, TX 77002
Attention: General Counsel
Fax: 832.204.1346
If to Executive:
To the most recent address of Executive set forth in the personnel records of
the Company.
                  i. Executive Representation. Executive hereby represents to
the Company that the execution and delivery of this Agreement by Executive and
the Company and the performance by Executive of Executive’s duties hereunder
shall not constitute a breach of, or otherwise contravene, the terms of any
employment agreement or other agreement or policy to which Executive is a party
or otherwise bound.
                  j. Cooperation. Executive shall at the Company’s expense
provide his reasonable cooperation in connection with any action or proceeding
(or any appeal from any action or proceeding) which relates to events occurring
during Executive’s employment hereunder. This provision shall survive any
termination of this Agreement.
                  k. Withholding Taxes. The Company may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as may
be required to be withheld pursuant to any applicable law or regulation.
                  l. Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
                  m. Insurance. Notwithstanding anything to the contrary herein:
          (i) All rights the Executive has to indemnification as a director,
officer or fiduciary pursuant to any agreement, applicable statue, Company
by-laws or articles of organization as in effect from time to time shall not be
impacted by the provisions of this Agreement and all such rights, if any, shall
survive the termination and/or expiration of this Agreement and/or the
termination of the Executive’s employment with the Company; and

 

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          (ii) So long as the Executive is employed by the Company and for a
period of six (6) years following the Executive’s termination of employment, the
Company agrees to purchase and maintain insurance for the Executive’s benefit,
covering director, officer and fiduciary liability on the same basis as active
directors, officers and/or fiduciaries, as applicable, of the Company.
          IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

     
KRATON POLYMERS LLC
  KEVIN FOGARTY  
/s/ Richard A. Ott
  /s/ Kevin M. Fogarty
 
   
By: Richard A. Ott
   
Title: Vice President