Separation Agreement -Garret Davies



 Exhibit 10.4 
  
 SEPARATION AGREEMENT AND GENERAL RELEASE AND WAIVER 
  
 This Separation Agreement and General Release and Waiver (this
“Agreement”) is made as of October 21  , 2004, between KRATON Polymers LLC (the “Company”), and Garret Davies (the “Employee”). 
  
 WHEREAS, the Company engaged the Employee to be its Global Director KRATON G and Vice President, the Americas; 

 
 WHEREAS, the Employee and the Company are parties to an Employment
Agreement dated April 12, 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 October 9, 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 November 15, 2004, the Company shall pay the Employee a lump sum payment of $19,686.75, in satisfaction of all of the unpaid vacation
time to which the Employee is entitled pursuant to company policy. Employee acknowledges that he has previously received payment of a sales bonus in connection with the 2003 transaction. 
  









 (b) The Employee has submitted or will submit to the Company any requests for reimbursement for any
unreimbursed business expenses properly incurred by the Employee in accordance with Company policy within forty-five days of 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. 
  
 (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. 
  
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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) continuation of Executive’s annual Base Salary of $210,000 until the first anniversary of the Date of 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 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. Executive agrees to provide prompt written notice to Company if 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; 
  
 (ii) any additional benefits Executive may be entitled to under the Pension Benefit Restoration Plan; 
  
 (iii) 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 will provide such medical benefits by paying the full cost of the Executive’s Retiree Medical Plan through such Severance Continuation Period. The Company will cease to provide such benefits if the Employee does not
execute this Agreement within the twenty-one day 

  

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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; and 
  
 (iv) a one
time payment for reasonable attorneys’ fees incurred in negotiating this Separation Agreement and fees for outplacement services of $7,500. 
  
 (b) Pursuant to section 10 of the Limited Liability Company Operating Agreement of Kraton Management LLC (the “Kraton Management LLC
Agreement”), the Kraton Management LLC shall repurchase 350,000 Company Membership Units (as that term is defined 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 $350,000. Upon payment of the Purchase Price, Employee hereby surrenders all rights and interests in the 350,000 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 deemed by Kraton Management LLC to be necessary or desirable to complete the redemption
of the Company Membership Units described herein; and 
  
 (c) The
Employee hereby acknowledges that, other than the 350,000 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 Date of Termination. The Company agrees to provide tax information to the Employee
in the same manner and at the same time it provides such tax information to all other Kraton Management LLC members. 
  
 (d) 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 

  

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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, including without limitation the Texas Commission on Human Rights Act (V.T.C.A. Section 21.001, el 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 Persons and the Employee, and shall further apply, without limitation, to any
and all Claims in connection with, related to or arising out of the Employee’s relationship, employment, or the termination of Employee’s employment, with the Company, and all Claims for alleged tortious, defamatory or fraudulent conduct.
The Employee also hereby waives any Claim for reinstatement, severance pay, attorney’s fees, or costs, except as otherwise expressly set forth in this Agreement. By signing this Agreement, the Employee agrees and represents that he will not be
entitled to any personal recovery in any action or proceeding that may be commenced on his behalf arising out of any of the matters that are the subject of the Release, including but not limited to claims brought by the Equal Employment Opportunity
Commission. This release shall not apply to any obligation of the Company or its affiliates pursuant to this Agreement or any rights in the nature of indemnification, which the Employee may have with respect to claims against the Employee relating
to or arising out of his employment with the Company or its affiliates. 
  
 (b) The Employee acknowledges that certain of the Termination Payments constitute good and valuable consideration to which he is otherwise not entitled for the release contained in this Section 4. 
  
 (c) Nothing in this Agreement shall be taken as a waiver of Employee’s
rights to unemployment benefits as allowable under Texas law. 
  
 5. Cooperation of Employee. Consistent with the obligations set forth in Section 11(j) of the Employment Agreement (which is incorporated by reference in its entirety herein and which provisions, by its express terms, survives the
termination of the Employment Agreement), the Employee shall, at the Company’s expense, provide his reasonable cooperation in connection with any action or proceeding (or any appeal therefrom) that relates to events occurring during the
Employee’s employment with the Company. The Company agrees to defend, indemnify and hold Employee harmless in conjunction with any liability that may arise as a result from such cooperation to the same extent as the Company does for its
employees and officers. 
  
 6. Insurance. For a period of
six (6) years following the Employee’s Date of Termination, the Company agrees to purchase and maintain insurance for the Employee’s 

  

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benefit, covering director, officer and fiduciary liability on the same basis as active directors, officers and/or fiduciaries. 
  
 7. Confidentiality of Agreement. The Employee and the Company shall
keep the terms of this Agreement confidential and shall not directly or indirectly disseminate any information (in any form) regarding this Agreement to any person or entity except as may be agreed to in writing by the other party. Notwithstanding
the foregoing, the Employee may disclose the information described herein to his spouse, legal counsel and financial and tax advisors, and either party may disclose the information described herein, to the extent compelled to do so by lawful service
of process, subpoena, court order, or as otherwise compelled to do by law, including any disclosure requirement of the U.S. securities laws, including full and complete disclosure in response thereto, in which event such party agrees to provide the
other party with a copy of the document(s) seeking disclosures of such information promptly upon receipt of such document(s) and prior to disclosure of any such information, so that the other party may, upon notice to the first party, take such
action as it deems to be necessary or appropriate in relation to such subpoena or request. The obligations under this Section 6 shall cease for both parties at such time that this document (once executed by both parties) is filed publicly with the
Securities and Exchange Commission. 
  
 8. Return of Property
and Cessation of Services Provided by the Company. 
  
 (a)
Employee shall return all property of the Company in his possession within 15 days of the Date of Termination, including, but not limited to: sporting event or other tickets purchased by the Company; credit cards; security key cards; telephone
cards; cell phones; car service cards; facsimile machines; computers, computer software, hardware or other equipment such as printers and wireless cards; identification cards; records and copies of records; correspondence and copies of
correspondence; files, including all computer files; and other books or manuals issued by the Company. Notwithstanding the forgoing, Employee shall have the right at Employee’s sole expense to retain the use of the cell phone number used by the
Employee during his employment. 
  
 (b) Employee shall within 15
days of the Date of Termination cancel: (i) all club memberships currently sponsored, paid for or maintained by the Company for the Employee’s benefit; (ii) all subscriptions currently sponsored, paid for or maintained by the Company for the
Employee’s benefit, including without limitation, subscriptions to periodicals; newspapers; seasonal or other tickets to sporting events or other entertainment; and (iii) any other service currently sponsored and or maintained by the Company
for the Employee’s benefit. 
  
 9. Non-Disparagement.
The Employee hereby agrees not to make any statement, written or oral, that materially disparages the business or management of the Company or its affiliates. The Company hereby agrees that it will use its reasonable efforts to ensure that the
members of the Board of Directors of the Company and its senior executive officers shall not make any statement, written or oral that materially disparages the Employee’s reputation. The Company agrees that notwithstanding Paragraph 4(a) of
this Agreement, Employee does not waive any causes of action, claims, or damages resulting from any defamation, disparagement, tortuous conduct or breaches of privacy which may result from any 

  

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of the Company’s, Board of Directors of the Company, or senior executive officers’ acts and/or omissions occurring after the Employees’ Date
of Termination. 
  
 10. Incorporation by Reference. The
following Sections of the Employment Agreement are hereby incorporated by reference as if repeated herein and shall continue in effect notwithstanding the termination of the Employment Agreement: Section 11(j) (relating to cooperation); Section 8
(“Non-Competition”); Section 9 (“Confidentiality; Inventions”); and Section 10 (“Specific Performance”). 
  
 11. Certain Forfeitures in Event of Breach. The Employee acknowledges and agrees that, notwithstanding any other provision of this Agreement, in
the event the Employee materially breaches any of his obligations under Section 4, 5, 6, 7, 8 or 9 of this Agreement, including the sections of the Employment Agreement incorporated by reference in Section 9 of this Agreement, the Employee will
forfeit his right to receive the Termination Payments to the extent not theretofore paid to him as of the date of such breach and, if already made as of the time of breach, the Employee agrees that he will reimburse the Company, immediately, for the
amount of such payments. 
  
 12. No Admission. This
Agreement does not constitute an admission of liability or wrongdoing of any kind by the Company or its affiliates. 
  
 13. Heirs and Assigns. The terms of this Agreement shall be binding on the parties hereto and their respective successors and assigns. 

 
 14. No Bar to Re-employment. Nothing in this Agreement shall be
interpreted to bar the re-employment of Employee by the Company or its successors or assigns shall the parties mutually agree to such re-employment. 
  
 15. General Provisions. 
  
 (a) Integration. This Agreement, including the specific sections of the Employment Agreement expressly incorporated by reference herein in Section
9 above, constitutes the entire understanding of the Company and the Employee with respect to the subject matter hereof and supersedes all prior understandings, written or oral, including without limitation the Employment Agreement. The terms of
this Agreement may be changed, modified or discharged only by an instrument in writing signed by the parties hereto. A failure of the Company or the Employee to insist on strict compliance with any provision of this Agreement shall not be deemed a
waiver of such provision or any other provision hereof. In the event that any provision of this Agreement is determined to be so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. 
  
 (b) Choice of Law. This Agreement shall be construed, enforced and
interpreted in accordance with and governed by the laws of the State of Texas, without regard to its choice of law provisions. 
  
 (c) Construction of Agreement. The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of
this Agreement and has had the opportunity to contribute to its revision. Accordingly, the rule of construction to the 

  

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effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement. Rather, the terms of this
Agreement shall be construed fairly as to both parties hereto and not in favor or against either party. 
  
 (d) Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. 
  
 (e) Notice. Any notice or other communication required or permitted under this Agreement shall be effective only if
it is in writing and shall be deemed to be given when delivered personally or four days after it is mailed by registered or certified mail, postage prepaid, return receipt requested or one day after it is sent by a reputable overnight courier
service and, in each case, addressed as follows (or if it is sent through any other method agreed upon by the parties): 
  
 If to the Company 
  
 KRATON Polymers LLC 
 C/o Texas Pacific Group

 301 Commerce Street, suite 3300 
 Fort Worth, TX 76102 
 Attention: Joseph Waiter, Esq. 
  
 With a copy to: 
  
 Cleary Gottlieb Steen & Hamilton 
 One
Liberty Plaza 
 New York, NY 10006 
 Attention: Robert J. Raymond, Esq. 
  
 If to the
Employee: 
  
 Garret Davies 
 4011 Arnold 
 Houston, Texas 77005 

 
 With a copy to: 
  
 Kimberly R. Stuart 
 Crain Caton & James 
 1401 McKinney St.,
Suite 1700 
 Houston, Texas 77010 
  

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 (f) Notice Requirement. In the event of a breach of this Agreement by either party, prior to
instituting any action for enforcement of any provision of this Agreement, the party alleging the breach shall provide five (5) business days advance written notice to the non-breaching party specifying the breach in reasonable detail. The five (5)
business day notice period shall commence from when notice is accomplished pursuant to Paragraph 15(e) of this Agreement. 
  
 16. Knowing and Voluntary Wavier. The Employee acknowledges that, by the Employee’s free and voluntary act of signing below, the Employee
agrees to all of the terms of this Agreement and intends to be legally bound thereby. 
  
 The Employee understands that he may consider whether to agree to the terms contained herein for a period of twenty-one days after the date hereof. The Termination Payments provided for herein will not commence until
the Effective Date as that term is defined directly below. The Employee acknowledges that he has been advised to consult with an attorney prior to executing this Agreement. 
  
 This Agreement will become effective, enforceable and irrevocable on the eighth day after the date on which it is executed
by the Employee (the “Effective Date”). During the seven-day period prior to the Effective Date, the Employee may revoke his agreement to accept the terms hereof by indicating in writing to the Company, in a manner consistent with
the Notice provisions provided for in Section 15 above, his intention to revoke. If the Employee exercises his right to revoke hereunder, he shall forfeit his right to receive any of the benefits provided for herein, other than the Accrued
Obligations, and to the extent such payments have already been made (other than the Accrued Obligations), the Employee agrees that he will immediately reimburse the Company for the amounts of such payments. 
  
 The Employee acknowledges that, by his free and voluntary act of signing
below, he agrees to all of the terms of this Agreement, including the General Release and Waiver contained herein and intends to be legally bound thereby. 
  

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 IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized
representatives and the Employee has signed this Agreement as of the day and year first above written. 
  

	
	 KRATON POLYMERS LLC

	
	/s/    JOSEPH J. WAITER        
	 Name:

	 Title:

	
	/S/    GARRET
DAVIES        
	Garret Davies


  

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 Acknowledgment 
  

					
	STATE OF Texas	 	)	 	 
	 	 	 	 	ss:
	COUNTY OF Harris	 	)	 	 

  
 On the 25th day of October, 2004, before me personally came Garret Davies who, being by me duly sworn, did depose and say that he resides
at 4011 Arnold; and did acknowledge and represent that he has had an opportunity to consult with attorneys and other advisers of his choosing regarding the Separation Agreement and General Release and Waiver set forth therein, that he has reviewed
all of the terms of the Separation Agreement and General Release and Waiver and that he fully understands all of its provisions, including, without limitation, the general release and waiver set forth therein. 
  

	
	
	/s    SONDRA E.
BROUSSARD        
	 Notary Public


  
 Date 10/25/2004 
  
 

 
  

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