Document:

Exhibit 10.4

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made effective as of the 1st day of January 2006,
by and among Compression Polymers Holding Corporation, a Delaware corporation (“CPH”), and its
wholly owned subsidiaries, Compression Polymers Corp., a Delaware corporation (“CPC”), and Vycom
Corp., a Delaware corporation (“Vycom”) (CPC and Vycom, collectively, the “Employers” and
individually an “Employer”),
and James Keisling (“Executive”).

 

RECITALS

 

WHEREAS, Employers and Executive have previously entered into an
Employment Agreement dated May 10, 2005 (the “Original Agreement”), pursuant to which
Executive agreed to serve as the Chief Executive Officer of Employers; and

 

WHEREAS, Employers now desire to provide for Executive’s transition to
the position of Chairman of the Employers and to amend and restate the Original
Agreement to provide for such transition; and

 

WHEREAS, as a condition precedent and a material inducement for
Employers to employ and pay Executive, Executive has agreed to execute this
Agreement and be bound by the provisions herein; and

 

WHEREAS, the parties hereto intend this Agreement to cancel and
supersede in all respects the Original Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:

 

PROVISIONS

 

1.                                       Term
and Duties. Employers hereby agree to employ Executive for the two-year
period commencing on January 1, 2006 and ending on December 31, 2007
(the “Initial Term”)
or until terminated in accordance with this Section 1 or Section 5.
Unless terminated by written notice delivered at least thirty (30) days prior
to the expiration of the Initial Term, Executive’s employment shall continue
for successive one (1) year terms (each one (1) year term hereinafter
referred to as a “Subsequent
Term” and together with the Initial Term, the “Term”) until
terminated by written notice delivered at least thirty (30) days prior to the
expiration of the Subsequent Term. For the period commencing on January 1,
2006 and continuing until December 31, 2006 (or such earlier date (the “Promotion Date”) as
John Loyack is appointed successor Chief Executive Officer of the Employers),
Executive shall serve as the Chief Executive Officer of the Employers.

 

 

Commencing with the Promotion
Date or January 1, 2007, whichever is earlier, and continuing for the
remainder of the Term, Executive shall serve as the Chairman of the Boards of
Directors (the “Board”)
of the Employers. The Employers and Executive shall agree on the date (the “Designation Date”)
on which the Employers shall announce John Loyack as CEO designate. Subject to
the provisions of this Agreement, during the Term, Executive shall devote his
best efforts and abilities to the performance of Executive’s duties on behalf
of Employers and to the promotion of its interests consistent with Executive’s
offices and positions with the Employers and subject to the direction and
control of the Board. Until the Promotion Date, Executive shall devote
substantially all of his business time, energies, attention and abilities to
the operation of the business of Employers and shall not be actively involved
in any other trade or business or as an employee of any other trade or business
except if such other trade or business does not entail, on the average, over
ten (10) hours per week and in the aggregate, no more than forty (40)
hours in any month and does not in any way affect or impair the
performance of Executive’s duties or responsibilities hereunder. Executive’s
services shall be performed during administrative hours substantially in
Scranton, Pennsylvania, and Executive shall not be required to be absent from
the Scranton, Pennsylvania area more than five (5) business days during
any calendar month. During the period Executive serves as Chairman of the
Board, Executive shall devote the amount of time necessary to perform duties
customarily associated with the position of Chairman of the Board, including
being available to other directors and senior management to discuss the business
and operations of Employers, provide guidance, consider strategic alternatives
and help establish the agenda for Board meetings.

 

2.                                       Compensation
During Term.

 

(a)                                  Base
Compensation. In consideration of the services to be rendered by Executive
during the Term, Employers shall pay to Executive, (i) for the portion of
the Term commencing on the date hereof and ending on December 31, 2006, a
base salary of $300,000 per year, payable bi-weekly and prorated for any
partial employment period, and (ii) for the remainder of the Term, a base
salary of $50,000 per year, payable bi-weekly and prorated for any partial
employment period ($300,000 or $50,000, as the case may be, the “Base Compensation”).

 

(b)                                 Bonus.
Subject only to the limitations set forth in the Agreement, Executive shall be
entitled to receive an annual incentive bonus (the “Incentive Bonus”) based upon the
achievement of certain budget performance goals related to Employers’ (i) EBITDA,
(ii) working capital, (iii) capital expenditures and/or (iv) such
other performance criteria as the Compensation Committee of the Board (the “Compensation Committee”)
shall determine. For the 2006 fiscal year, Executive shall be eligible to
receive a target Incentive Bonus of $300,000. The EBITDA target for such year
shall be $53.8 million (i.e., 102.5% of the $52.5 million budgeted EBITDA for
such year), inclusive of the Incentive Bonus as an expense. The Compensation
Committee in

 

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consultation with Executive shall
establish other mutually agreeable performance targets and Incentive Bonus
payout ranges for 2006. For the 2007 fiscal year and any fiscal year thereafter
during the Term, Executive’s target Incentive Bonus shall be $50,000 and
Incentive Bonus payout ranges shall be established by the Compensation
Committee in consultation with Executive. Each Incentive Bonus shall be paid no
later than 21⁄2 months following the end of the fiscal year to which it relates.

 

3.                                       Benefits.

 

(a)                                  Subject
to Section 3(b) below, Executive shall be eligible to participate in
such benefit programs offered by each Employer (other than bonus plans), such
as health, dental, life insurance, vision, vacations and 401(k), as are offered
to similarly-situated employees (except in the case of equity-based incentive
plans where awards are subject to Board (or committee thereof) approval) and in
each case no more favorable than the terms of benefits generally available to
the employees of Employers (based on seniority and salary level), subject in
each case to the generally applicable terms and conditions of the plan, benefit
or program in question.

 

(b)                                 Notwithstanding
the foregoing, Executive shall be entitled, at a minimum, to the following: (i) major
medical insurance coverage comparable to the insurance coverage currently
provided by Employers for Executive; (ii) ten (10) days of paid sick
leave during each annual period, which shall be cumulative and (iii) six (6) weeks
of paid vacation leave during each annual period.

 

(c)                                  During
the Term, Executive shall be authorized to incur necessary and reasonable
travel, entertainment and other business expenses in connection with his duties
hereunder. Employers shall reimburse Executive for such expenses upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the generally applicable policies; provided the Board’s
written approval shall be required prior to Executive’s incurring $10,000 of
expenses in any one instance or $20,000 of expenses in the aggregate. During
the Initial Term, Employers shall provide to Executive a monthly allowance for
the use of an automobile (the “Automobile Expenses”) substantially similar to the
average of Executive’s Automobile Expenses over the preceding three (3) years.
With respect to each Subsequent Term, the Automobile Expenses shall be adjusted
at the commencement of each Subsequent Term to reflect changes from the prior
year in the Consumer Price Index For All Urban Consumers prepared by the United
States Department of Labor.

 

4.                                       Equity
Participation. On May 10, 2005, Executive purchased 3,000 class B
units of Compression Polymers Holding I LP (“CPH I”) pursuant to and in accordance
with the terms of the subscription agreement (the “Subscription Agreement”) between Executive
and CPH I entered into on such date. The agreement between CPH I and Executive
attached hereto as Exhibit A (the “Amendment”) modifies the terms and

 

3

 

conditions of the Subscription
Agreement. The Amendment shall be executed by CPH I and Executive
contemporaneously with this Agreement.

 

5.                                       Termination.
Executive’s employment shall terminate upon the first to occur of the following
(each a “Termination
Date”):

 

(a)                                  The
expiration of the Term;

 

(b)                                 Executive’s
death or disability (mentally, physically or emotionally), so that Executive
cannot substantially perform his duties hereunder for a period of ninety
(90) consecutive days or for one hundred eighty (180) days during any 365 day
period during the Term;

 

(c)                                  Executive’s
voluntary termination of his employment for any reason, upon not less than 10
business days’ written notice to Employers; provided, however, that any
termination by Executive pursuant to Section 5(e) shall not be
treated as a voluntary termination under this Section 5(c);

 

(d)                                 Employers’
termination of Executive’s employment for Cause (as hereinafter defined); or

 

(e)                                  Executive’s
termination of his employment for Good Reason (as hereinafter defined).

 

6.                                       Termination
Payments.

 

(a)                                  Except
as otherwise provided herein, if Executive’s employment is terminated by thirty
(30) days’ prior written notice pursuant to Section 1 hereof or Section 5,
Executive’s Base Compensation and other benefits (it being understood that no
Incentive Bonus shall be payable), if any, shall terminate at the end of the
month during which such termination occurs.

 

(b)                                 Upon
termination of Executive’s employment without Cause or upon Executive’s
termination of his employment for Good Reason, Employers shall be obligated, in
lieu of any other remedies available to Executive, to pay Executive (A) his
then current Base Compensation until the later of (1) the one (1) year
period following the Termination Date and (2) the expiration of the Term (“Termination Payment”),
plus (B) all accrued but unpaid amounts payable to Executive under this
Agreement and under any bonus, incentive or other plan. The Termination Payment
is payable under this Section 6(b) in accordance with the payroll
practices of Employers.

 

(c)                                  In
the event of a termination of Executive’s employment pursuant to Section 5(b) as
a result of his death or disability, Employers shall pay to Executive, his
estate or legal representative, as the case may be, all amounts accrued to
the date of

 

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termination and payable to
Executive hereunder and under any other bonus, incentive or other plan.

 

(d)                                 Any
termination of the Term shall not adversely affect or alter Executive’s rights
under any employee benefit plan of any Employer in which Executive, at the date
of termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.

 

(e)                                  If
Executive is a “specified employee” for purposes of Section 409A of the
Internal Revenue Code of 1986, as amended, any payments required to be made
pursuant to this Section 6 which are subject to Section 409A shall
not commence until six months from the Termination Date, with the first payment
equaling the first six months of Termination Payments.

 

7.                                       Definitions.

 

(a)                                  “Cause”
as used herein shall mean Executive’s (i) commission of an act which
constitutes common law fraud, embezzlement (other than occasional, customary
and de minimis use of Employers’ property for personal purposes) or a felony,
an act of moral turpitude, or of any tortious or unlawful act causing material
harm to any Employer’s business, standing or reputation, (ii) gross
negligence on the part of Executive in the performance of his duties
hereunder, (iii) material breach of his duty of loyalty or care to any
Employer, (iv) other misconduct that is materially detrimental to any
Employer; (v) ongoing refusal or failure to perform Executive’s
duties or the deliberate and consistent refusal to conform to or follow
any reasonable policy adopted by the Board, in each case after receiving
written notice describing his noncompliance and being given a five (5) business
days opportunity to cure (to the extent curable) such non-compliance; or (vi) material
breach by Executive of this Agreement, the Non-Competition Agreement between
CPH, Vycom, CPC, Compression Polymers Holding II Corporation and Executive,
dated as of May 10, 2005 (the “Non-Competition Agreement”) or any other
agreement with or for the benefit of Employers to which Executive is a party or
by which Executive is bound, which is not cured (to the extent curable) within
five (5) business days following written notice from Employers.

 

(b)                                 “Good Reason” shall
mean (i) there is a substantial reduction, other than as provided for in
this Agreement, of the level of Executive’s compensation, perquisites,
authority, title or scope of duties (it being understood that Executive shall
report solely to the Board), provided, however, that it is understood that Employer
may hire a successor to fill Executive’s office, Employer may require
that Executive work together with such successor as the successor takes on
increasing amounts of the responsibility formerly entrusted to Executive, and
the hiring and employment of such successor shall not constitute “Good Reason”
for Executive’s termination of his employment; (ii) the failure in any
material way of any Employer otherwise to fulfill any of its material
obligations under this Agreement; or (iii) the involuntary relocation of

 

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Employers’ offices at which
Executive is principally employed to a location more than 50 miles from such
offices, or the requirement by Employers that Executive be based anywhere other
than Employers’ offices at such location on an extended basis, except for
required travel on Employers’ business to an extent substantially consistent
with Executive’s business travel obligations.

 

8.                                       Consideration.
Executive acknowledges and agrees that the consideration set forth in the
recitals to this Agreement and the rights and benefits hereunder are all and
singularly valuable consideration which are sufficient for any or all of
Executive’s covenants set forth herein or in the Non-Competition Agreement.

 

9.                                       No
Prior Agreements. Executive represents and warrants that his performance of
all the terms of this Agreement does not and shall not breach any fiduciary or
other duty or any covenant, agreement or understanding (including, without
limitation, any agreement relating to any proprietary information, knowledge or
data acquired in confidence, trust or otherwise) to which he is a party or by
the terms of which he may be bound. Executive further covenants and agrees
not to enter into any agreement or understanding, either written or oral, in
conflict with the provisions of this Agreement.

 

10.                                 Miscellaneous.

 

(a)                                  Notices.
All notices, requests, consents and demands by the parties hereto shall be
delivered by hand, by confirmed facsimile transmission, by recognized national
overnight courier service or by deposit in the United States mail, postage
prepaid, by registered or certified mail, return receipt requested, addressed
to the party to be notified at the addresses set forth below:

 

if to
Executive:

 

5 Bucknell
Drive

Clarks Green,
PA 18411

 

with copy to:

 

Oliver, Price
and Rhodes

P.O. Box
240

1212 South
Abington Road

Clarks Summit,
PA 18411

ATTN:  Alfred J. Weinschenk, Esquire

 

6

 

if to
Employers:

 

C/o AEA
Investors LLC

Park Avenue
Tower

65 East 55th
Street

New York, NY
10022

Attn: Sanford
Krieger

 

with copy to:

 

Fried, Frank,
Harris, Shriver and Jacobson LLP

One New York
Plaza

New York, NY
10004-1980

Attn: Chris
Ewan

 

Notices shall be effective immediately upon
personal delivery or facsimile transmission, one (1) business day after
deposit with an overnight courier service or three (3) business days after
the date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified herein by
written notice to the other parties hereto.

 

11.                                 Entire
Agreement. This Agreement cancels and supersedes any and all prior
agreements and understandings between the parties hereto with respect to the
obligations of Executive including without limitation the Original Agreement
but excluding the Non-Competition Agreement. Executive hereby agrees that, as
of the date hereof, this Agreement shall take effect and no further obligations
of any kind whatsoever shall be owed by Employers under the Original Agreement.
This Agreement together with the Subscription Agreement and the Amendment
constitutes the entire agreement between the parties with respect to the
matters herein provided, and no modifications or waiver of any provision hereof
shall be effective unless in writing and signed by each Employer and Executive.

 

12.                                 Binding
Effect. All of the terms and provisions of this Agreement shall be binding
upon the parties hereto and its or his heirs, executors, administrators, legal
representatives, successors and assigns, and inure to the benefit of and be
enforceable by any Employer and its successors and assigns, except that the
duties and responsibilities of Executive hereunder are of a personal nature and
shall not be assignable or delegable in whole or in part.

 

13.                                 Severability.
In the event that any provision of this Agreement or application thereof to
anyone or under any circumstance is found to be invalid or unenforceable in any
jurisdiction to any extent for any reason, such invalidity or

 

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unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction.

 

14.                                 Remedies;
Waiver. No remedy conferred upon any Employer by this Agreement is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity. No delay or omission by any Employer
in exercising any right, remedy or power hereunder or existing at law or in
equity shall be construed as a waiver thereof, and any such right, remedy or
power may be exercised by the party possessing the same from time to time
and as often as may be deemed expedient or necessary by such party in its
sole discretion.

 

15.                                 Counterparts.
This Agreement may be executed in several counterparts, each of which is
an original and all of which shall constitute one instrument. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.

 

16.                                 Governing
Law. The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the laws of the State of New
York, without application of conflict of laws principles.

 

17.                                 Headings.
The captions and headings contained in this Agreement are for convenience only
and shall not be construed as a part of the Agreement.

 

8

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date and year first above written.

 

	
   

  	
  COMPRESSION POLYMERS

  HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CHRISTOPHER P. MAHAN

  	
   

  
	
   

  	
   

  	
  Name: Christopher P. Mahan

  
	
   

  	
   

  	
  Title:   Chairman

  
	
   

  	
   

  
	
   

  	
  EMPLOYERS:

  
	
   

  	
   

  
	
   

  	
  COMPRESSION POLYMERS CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CHRISTOPHER P. MAHAN

  	
   

  
	
   

  	
   

  	
  Name: Christopher P. Mahan

  
	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VYCOM CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CHRISTOPHER P. MAHAN

  	
   

  
	
   

  	
   

  	
  Name: Christopher P. Mahan

  
	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ JAMES KEISLING

  	
   

  
	
   

  	
  Name:

  	
  JAMES KEISLING

  
						

 

9

 

Exhibit AExhibit 10.5

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made effective as of the 1st day of January, 2006, by
and among Compression Polymers Holding Corporation, a Delaware Corporation (“CPH”), and its
wholly owned subsidiaries, Compression Polymers Corp., a Delaware corporation (“CPC”), and Vycom
Corp., a Delaware corporation (“Vycom”) (CPC and Vycom, collectively, the “Employers” and
individually an “Employer”),
John R. Loyack (“Executive”)
and, solely with respect to Section 4, Compression Polymers Holding I LP,
a Delaware limited partnership (“CPH I”).

 

RECITALS

 

WHEREAS, Executive and the Employers have previously entered into an
Employment Agreement dated August 2, 2005 (the “Original Agreement”),
pursuant to which Executive agreed to serve as the Executive-Vice President –
Finance and Administration and Chief Financial Officer of the Employers
commencing on September 6, 2005; and

 

WHEREAS, on September 6, 2005, Executive was appointed as the
Chief Financial Officer and Chief Operating Officer of the Employers;

 

WHEREAS, Employers now desire to provide for Executive’s transition to
the positions of President and Chief Executive Officer of the Employers and to
amend and restate the Original Agreement to provide for such transition;

 

WHEREAS, as a condition precedent and a material inducement for
Employers to employ and pay Executive, Executive has agreed to execute this
Agreement and be bound by the provisions herein; and

 

WHEREAS, the parties hereto intend this Agreement to cancel and supercede
in all respects the Original Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:

 

PROVISIONS

 

1.                                       Term
and Duties. Employers hereby agree to employ Executive for the three-year
period commencing on January 1, 2006 and ending December 31, 2008
(the “Initial Term”)
or until terminated in accordance with this Section 1or Section 5. Unless
terminated by written notice delivered at least thirty (30) days prior to the
expiration of the Initial Term, Executive’s employment shall continue for
successive one (1) year terms (each one (1) year term hereinafter
referred to as a “Subsequent
Term” and

 

 

together with the Initial Term,
the “Term”).
For the period commencing on January 1, 2006 and continuing until February 9,
2006 (the date on which the Employers designate Executive as successor Chief
Executive Officer of the Employers) (the “Designation Date”), Executive shall
serve as the Chief Financial Officer and Chief Operating Officer of the
Employers. For the period commencing on the Designation Date and continuing
until December 31, 2006 (or such earlier date as the Employers shall
determine), Executive shall serve as
the President and Chief Operating Officer of the Employers. For the period
commencing on January 1, 2007 (or such earlier date as the Employers shall
determine) and continuing until the expiration of the Term, Executive shall
serve as the President and Chief Executive Officer of the Employers and as a
non-compensated member of the Board of Directors of each Employer (the “Board”).
Subject to the provisions of this Agreement, during the Term, Executive shall
devote his best efforts and abilities to the performance of Executive’s duties
on behalf of Employers and to the promotion of their interests consistent with
Executive’s offices and positions with the Employers and subject to the
direction and control of the Board. Executive shall devote substantially all of
his business time, energies, attention and abilities to the operation of the
business of Employers and shall not be actively involved in any other trade or
business or as an employee of any other trade or business; provided, however,
that Executive is permitted to serve on one outside Board of Directors of
Executive’s choosing provided that such service is not in any way competitive
with the Employers and does not materially interfere with the performance of
Executive’s duties to Employers.

 

2.                                       Compensation
During Term.

 

(a)                                  Base
Compensation. In consideration of the services to be rendered by Executive
during the Term, Employers shall pay to Executive, (i) subject to
subparagraph (ii), for the period January 1, 2006 through December 31,
2006 a base salary of $300,000 per year, payable bi-weekly and prorated for any
partial employment period, and (ii) beginning January 1, 2007, a base
salary of $400,000 per year, payable bi-weekly and prorated for any partial
employment period ($300,000 or $400,000, as the case may be, the “Base Compensation”).

 

(b)                                 Bonus.
Subject only to the limitations set forth in this Agreement, commencing with
the fiscal year beginning January 1, 2006, Executive shall be entitled to
receive an annual incentive bonus (the “Incentive Bonus”) based upon the
achievement of certain budget performance goals related to Employers’ (i) EBITDA,
(ii) working capital, (iii) capital expenditures and/or (iv) such
other performance criteria as the Compensation Committee of the Board (the “Compensation Committee”)
shall determine. Such annual goals shall be determined by the Compensation
Committee in consultation with Executive. For the 2006 fiscal year, Executive
shall be eligible to receive a target Incentive Bonus of $275,000. The EBITDA
target for such year shall be
$53.8 million (i.e., 102.5% of the $52.5 million budgeted EBITDA for such
year),

 

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inclusive of the Incentive
Bonus as an expense. The Compensation Committee in consultation with Executive
shall establish other mutually agreeable performance targets and Incentive
Bonus payout ranges for 2006. For the 2007 fiscal year and thereafter during
the Term, Executive’s target Incentive Bonus shall be $375,000 and performance
targets shall be established by the Compensation Committee in consultation with
Executive. Payout ranges shall be established in a similar manner to the
establishment of ranges for the 2006 Incentive Bonus. Each Incentive Bonus
shall be paid no later than 21⁄2 months following the end of the fiscal year to
which it relates and will be no less than $50,000 for fiscal year end 2006.

 

3.                                       Benefits.

 

(a)                                  Subject
to Section 3(b) below, Executive shall be eligible to participate in
such benefit programs offered by each Employer (other than bonus plans), such
as health, dental, life insurance, vision, vacations and 401(k), as are offered
to similarly-situated employees (except in the case of equity-based incentive
plans where awards are subject to Board (or committee thereof) approval) and in
each case no more favorable than the terms of benefits generally available to
the employees of Employers (based on seniority and salary level), subject in
each case to the generally applicable terms and conditions of the plan, benefit
or program in question.

 

(b)                                 Notwithstanding
the foregoing, Executive shall be entitled, at a minimum, to the following: (i) major
medical insurance coverage comparable to the insurance coverage currently
provided by Employers for executive officers; (ii) ten (10) days of
paid sick leave during each full annual period, which shall be cumulative and (iii) four
(4) weeks of paid vacation leave during each annual period.

 

(c)                                  For
each full fiscal year of the Employers during the Term, the Employers shall
reimburse the Executive for up to $12,000 of expenses he may incur for
life, disability, automobile, liability and/or homeowners insurance upon
submission of written receipts.

 

(d)                                 Unless
otherwise determined by the Board, during the Term, Executive shall be
authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with his duties hereunder. Employers shall
reimburse Executive for such expenses upon presentation of an itemized account
and appropriate supporting documentation, all in accordance with the generally
applicable policies; provided the Board’s written approval shall be required
prior to Executive’s incurring $10,000 of expenses in any one instance or
$20,000 of expenses in the aggregate.

 

4.                                       Equity
Participation. On August 2, 2005, Executive purchased 1,000 class B
units of CPH I pursuant to and in accordance with the terms of the subscription
agreement between Executive and CPH I entered into on such date. If he is then 

 

3

 

employed by the Employers, on February 9,
2006 Executive shall purchase and CPH I shall sell 1,000 class B units of
CPH I pursuant to and in accordance with the terms of the subscription
agreement between Executive and CPH I in the form attached hereto as Exhibit A.
The purchase price per class B unit shall be $10.00. If he is then employed
by the Employers, on January 1, 2007 Executive shall purchase and CPH I
shall sell 1,000 class B units of CPH I (or, if determined by CPH I, 1,000
units of a different class of CPH I that are economically equivalent to class B
units with respect to the appreciation in the class B units from and after
January 1, 2007) pursuant to and in accordance with the terms of the
subscription agreement between Executive and CPH I substantially in the form attached
hereto as Exhibit B. The purchase price per unit shall be the Fair
Market Value (as defined in the Compression Polymers Holding I LP Agreement of
Limited Partnership (the “Partnership
Agreement”)) of such a unit; it being understood that CPH I will
sell such units at a price of $10.00 per unit and structure such sale so that
any appreciation in such units following their issuance will qualify for
capital gains treatment. If the Fair Market Value (as defined in the
Partnership Agreement) of a class B unit on January 1, 2007 exceeds
$10.00, then upon consummation of an underwritten public offering of the shares
of CPH registered with the S.E.C. or the sale by AEA Investors LP and its
affiliates of more than 50% of their partnership interests in CPH I to an
independent third party, Executive shall be paid, provided he is then employed
by the Employers, an amount equal to the product of 1,000 times such
difference.

 

5.                                       Termination.
Executive’s employment shall terminate upon the first to occur of the following
(each a “Termination
Date”):

 

(a)                                  The
expiration of the Term;

 

(b)                                 Executive’s
death or disability (mentally, physically or emotionally), so that Executive
cannot substantially perform his duties hereunder for a period of ninety
(90) consecutive days or for one hundred eighty (180) days during any 365 day
period during the Term;

 

(c)                                  Executive’s
voluntary termination of his employment for any reason, upon not less than 10
business days’ written notice to Employers; provided, however, that any
termination by Executive pursuant to Section 5(e) shall not be
treated as a voluntary termination under this Section 5(c);

 

(d)                                 Employers’
termination of Executive’s employment for Cause (as hereinafter defined); or

 

(e)                                  Executive’s
termination of his employment for Good Reason (as hereinafter defined).

 

4

 

6.                                       Termination
Payments.

 

(a)                                  Except
as otherwise provided herein, if Executive’s employment is terminated by thirty
(30) days’ prior written notice pursuant to Section 1 hereof or Section 5,
Executive’s Base Compensation and other benefits (it being understood that no
Incentive Bonus shall be payable), if any, shall terminate at the end of the
month during which such termination occurs.

 

(b)                                 Upon
termination of Executive’s employment without Cause or upon Executive’s
termination of his employment for Good Reason, Employers shall be obligated, in
lieu of any other remedies available to Executive, to pay Executive (A) his
then current Base Compensation until the later of (1) the first
anniversary of the Termination Date and (2) the expiration of the Term (“Termination Payment”) plus (B) all
accrued but unpaid amounts payable to Executive under this Agreement and under
any bonus, incentive or other plan. The Termination Payment is payable under
this Section 6(b) in accordance with the payroll practices of
Employers.

 

(c)                                  In
the event of a termination of Executive’s employment pursuant to Section 5(b) as
a result of his death or disability, Employers shall pay to Executive, his
estate or legal representative, as the case may be, all amounts accrued to
the date of termination and payable to Executive hereunder and under any other
bonus, incentive or other plan.

 

(d)                                 Any
termination of the Term shall not adversely affect or alter Executive’s rights
under any employee benefit plan of any Employer in which Executive, at the date
of termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.

 

(e)                                  If
Executive is a “specified employee” for purposes of Section 409A of the
Internal Revenue Code of 1986, as amended, any payments required to be made
pursuant to this Section 6 which are subject to Section 409A shall
not commence until six months from the Termination Date, with the first payment
equaling the first six months of Termination Payments.

 

7.                                       Definitions.

 

(a)                                  “Cause”
as used herein shall mean Executive’s (i) commission of an act which
constitutes common law fraud, embezzlement (other than occasional, customary
and de minimis use of Employers’ property for personal purposes) or a felony,
an act of moral turpitude, or of any tortious or unlawful act causing material
harm to any Employer’s business, standing or reputation, (ii) gross
negligence on the part of Executive in the performance of his duties
hereunder, (iii) breach of his duty of loyalty or care to any Employer, (iv) other
misconduct that is materially detrimental to any Employer; (v) ongoing
refusal or failure to perform Executive’s duties or the deliberate and
consistent refusal to conform to or follow any reasonable policy adopted
by the Board, in each case after receiving written notice describing his
noncompliance and being

 

5

 

given a five (5) business
days opportunity to cure (to the extent curable) such non-compliance; or (vi) material
breach by Executive of this Agreement, the Non-Competition Agreement among CPH,
Vycom, CPC and Executive, dated as of September 6, 2005 (the “Non-Competition Agreement”)
or any other agreement with or for the benefit of Employers to which Executive
is a party or by which Executive is bound, which is not cured (to the extent
curable) within five (5) business days following written notice from
Employers.

 

(b)                                 “Good Reason” shall
mean (i) there is a substantial reduction of the level of Executive’s
compensation, perquisites, authority, title or scope of duties (it being
understood that Executive shall report solely to the CEO or his designee
(during such time as Executive is not the CEO) or the Board, provided, however,
that it is understood that Employers may hire a successor to fill
Executive’s office, each Employer may require that Executive work together
with such successor as the successor takes on increasing amounts of the
responsibility formerly entrusted to Executive, and the hiring and employment
of such successor shall not constitute “Good Reason” for Executive’s
termination of his employment; (ii) the failure in any material way of any
Employer otherwise to fulfill any of its material obligations under this
Agreement; (iii) the involuntary relocation of Employers’ offices at which
Executive is principally employed to a location more than 50 miles from such
offices, or the requirement by Employers that Executive be based anywhere other
than Employers’ offices at such location on an extended basis, except for
required travel on Employers’ business to an extent substantially consistent
with Executive’s business travel obligations; or (iv) someone other than
James Keisling or Executive is serving as CEO or President.

 

8.                                       Consideration.
Executive acknowledges and agrees that the consideration set forth in the
recitals to this Agreement and the rights and benefits hereunder are all and
singularly valuable consideration which are sufficient for any or all of
Executive’s covenants set forth herein or in the Non-Competition Agreement.

 

9.                                       No
Prior Agreements. Executive represents and warrants that his performance of
all the terms of this Agreement does not and shall not breach any fiduciary or
other duty or any covenant, agreement or understanding (including, without
limitation, any agreement relating to any proprietary information, knowledge or
data acquired in confidence, trust or otherwise) to which he is a party or by
the terms of which he may be bound. Executive further covenants and agrees
not to enter into any agreement or understanding, either written or oral, in
conflict with the provisions of this Agreement.

 

10.                                 Miscellaneous.

 

(a)                                  Notices.
All notices, requests, consents and demands by the parties hereto shall be
delivered by hand, by confirmed facsimile transmission, by recognized national
overnight courier service or by deposit in the United States mail, postage

 

6

 

prepaid, by registered or
certified mail, return receipt requested, addressed to the party to be notified
at the addresses set forth below:

 

if to
Executive:

 

John R. Loyack

90 Ice Lake Drive

Mountaintop,
PA 18707

 

if to
Employers:

 

C/o AEA
Investors LLC

Park Avenue
Tower

65 East 55th
Street

New York, NY
10022

Attn: Sanford
Krieger

 

with copy to:

 

Fried, Frank,
Harris, Shriver and Jacobson LLP

One New York
Plaza

New York, NY
10004-1980

Attn: Chris
Ewan

 

Notices shall be effective immediately upon
personal delivery or facsimile transmission, one (1) business day after
deposit with an overnight courier service or three (3) business days after
the date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified herein by
written notice to the other parties hereto.

 

11.                                 Entire
Agreement. This Agreement cancels and supersedes any and all prior
agreements and understandings between the parties hereto with respect to the
obligations of Executive, including, without limitation, the Original
Agreement, but excluding the Non-Competition Agreement. Executive hereby agrees
that, as of the date hereof, this Agreement shall take effect and no further
obligations of any kind whatsoever shall be owed by Employers. This Agreement constitutes
the entire agreement between the parties with respect to the matters herein
provided, and no modifications or waiver of any provision hereof shall be
effective unless in writing and signed by each Employer and Executive.

 

7

 

12.                                 Binding
Effect. All of the terms and provisions of this Agreement shall be binding
upon the parties hereto and its or his heirs, executors, administrators, legal
representatives, successors and assigns, and inure to the benefit of and be
enforceable by either Employer and its successors and assigns, except that the
duties and responsibilities of Executive hereunder are of a personal nature and
shall not be assignable or delegable in whole or in part.

 

13.                                 Severability.
In the event that any provision of this Agreement or application thereof to
anyone or under any circumstance is found to be invalid or unenforceable in any
jurisdiction to any extent for any reason, such invalidity or unenforceability
shall not affect any other provision or application of this Agreement which can
be given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or application
in any other jurisdiction.

 

14.                                 Remedies;
Waiver. No remedy conferred upon any Employer by this Agreement is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity. No delay or omission by any Employer
in exercising any right, remedy or power hereunder or existing at law or in
equity shall be construed as a waiver thereof, and any such right, remedy or
power may be exercised by the party possessing the same from time to time
and as often as may be deemed expedient or necessary by such party in its
sole discretion.

 

15.                                 Counterparts.
This Agreement may be executed in several counterparts, each of which is
an original and all of which shall constitute one instrument. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.

 

16.                                 Governing
Law. The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the laws of the State of New
York, without application of conflict of laws principles.

 

17.                                 Headings.
The captions and headings contained in this Agreement are for convenience only
and shall not be construed as a part of the Agreement.

 

8

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date and year first above written.

 

	
   

  	
  COMPRESSION POLYMERS

  HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CHRISTOPHER P. MAHAN

  	
   

  
	
   

  	
   

  	
  Name: Christopher P. Mahan

  
	
   

  	
   

  	
  Title:  
  Chairman

  
	
   

  	
   

  
	
   

  	
  EMPLOYERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPRESSION POLYMERS CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CHRISTOPHER P. MAHAN

  	
   

  
	
   

  	
   

  	
  Name: Christopher P. Mahan

  
	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VYCOM CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CHRISTOPHER P. MAHAN

  	
   

  
	
   

  	
   

  	
  Name: Christopher P. Mahan

  
	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ JOHN R. LOYACK

  	
   

  
	
   

  	
  Name:

  	
  JOHN R. LOYACK

  

 

9

 

	
   

  	
  Solely with respect to Section 4:

  
	
   

  	
  COMPRESSION POLYMERS HOLDING I

  LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CPH Holding I LLC

  Its General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRISTOPHER P. MAHAN

  	
   

  
	
   

  	
   

  	
  Christopher P. Mahan

  	
   

  
	
   

  	
   

  	
  Chairman

  	
   

  
					

 

10

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