Document:

Amendment No. 2 to the Credit and Guaranty Agreement

 Exhibit 4.5(c) 
  
 AMENDMENT NO. 2 TO CREDIT AND GUARANTY AGREEMENT 
  
 AMENDMENT NO. 2 TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”), dated as of October 21, 2004,
among Kraton Polymers LLC, a Delaware limited liability company (“Company”), each of the Guarantors listed on the signature pages hereto, the Lenders party hereto, and UBS AG, Stamford Branch (“UBS”), as
administrative agent and collateral agent (“Agent”). 
  
 RECITALS 
  
 WHEREAS, Company, the
Guarantors, the Lenders, Goldman Sachs Credit Partners L.P. and UBS Securities LLC, as Lead Arrangers, and UBS, as Agent, entered into the Credit and Guaranty Agreement dated as of December 23, 2003 (as amended pursuant to that certain Amendment No.
1 to Credit and Guaranty Agreement dated as of March 4, 2004, and as further amended, restated supplemented or otherwise modified from time to time, the “Credit Agreement”); 
  
 WHEREAS, Polymer Holdings LLC (“Holdings”), a
Delaware limited liability company and the parent of Company, desires to issue senior discount notes, the gross proceeds of which will be up to $100.0 million, such proceeds to be used (i) to pay costs and expenses associated therewith, (ii) to
provide up to $14.4 million of cash to the Company and (iii) to repay the Loans in accordance with Section 2.14(d) of the Credit Agreement; and 
  
 WHEREAS, Company, the Guarantors, the Requisite Lenders and Agent have agreed to amend and waive certain provisions of the Credit Agreement, in
each case, as provided herein. 
  
 NOW, THEREFORE, in
consideration of the premises made hereunder, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 
  
 Section 1. Definitions. Unless otherwise expressly defined herein, all
capitalized terms used herein and defined in the Credit Agreement shall be used herein as so defined. 
  
 Section 2. Amendment to Section 1.1. Section 1.1 of the Credit Agreement is hereby amended as follows: 
  
 (a) Clause (f) of the definition of “Consolidated
Adjusted EBITDA” in Section 1.1 is hereby amended by deleting the words “, less $2,000,000 (which may result in a negative amount).” 
  

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 (b) The definition of “Guarantor” in Section 1.1 is hereby amended to read in
its entirety as follows: 
  
 “Guarantor” means
each of Holdings and each Domestic Subsidiary of Holdings (other than the Company and Polymer Holdings Capital Corporation). 
  
 (c) A new definition of “Holdings Notes” shall be inserted in alphabetical order and shall read in its entirety as follows:

  
 “Holdings Notes” means Holdings’ senior
discount notes due 2014, issued pursuant to the Holdings Notes Indenture and any registered notes issued by Holdings in exchange for, and as contemplated by, any such notes with substantially identical terms as such notes. 
  
 (d) A new definition of “Holdings Notes Indenture”
shall be inserted in alphabetical order and shall read in its entirety as follows: 
  
 “Holdings Notes Indenture” means the indenture relating to the Holdings Notes. 
  
 (d) A new definition of “Senior Leverage Ratio” shall be inserted in alphabetical order and shall read in its entirety as
follows: 
  
 “Senior Leverage Ratio” means the
ratio as of the last day of any Fiscal Quarter or any other date of determination of (1) the outstanding principal amount of all Indebtedness hereunder minus all Cash and Cash Equivalents of the Company and its Subsidiaries on a consolidated
basis and (2) Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending on such date (or if such date of determination is not the last day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of the most recently concluded
Fiscal Quarter). 
  
 Section 3. Amendment to Section 2.8.
Clause (iii) of Section 2.8 of the Credit Agreement is hereby deleted in its entirety and replaced with the following: 
  
 (iii) in the case of Term Loans: 
  
 (1) if a Base Rate Loan, at the Base Rate plus (x) until such time as either of the conditions in the following clause (y) has been
met, 1.75% per annum, and (y) after June 30, 2005 (A) commencing at such time as the Senior Leverage Ratio has been less than 2.50:1.00 for the immediately preceding two consecutive Fiscal Quarters and thereafter, until such time as the condition in
the following clause (B) has been met, 1.50% per annum or (B) commencing at such time as the Term Loans shall have obtained a rating from Moody’s of Ba3 or better and a rating from S&P of BB- or better, and thereafter, 1.25% per annum; or

  
 (2) if a Eurodollar Rate Loan, at the
Adjusted Eurodollar Rate plus (x) until such time as either of the conditions in the following clause (y) has been met, 2.75% per annum, and (y) after June 30, 2005 (A) commencing at such time as the Senior Leverage Ratio has been less than
2.50:1.00 for the immediately preceding two consecutive Fiscal Quarters and thereafter, until such time as the condition in the following clause (B) has been met, 2.50% per annum or (B) 

  

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commencing at such time as the Term Loans shall have obtained a rating from Moody’s of Ba3 or better and a rating from S&P of BB- or better, and
thereafter, 2.25% per annum. 
  
 Section 4. Amendment to
Section 2.14. Clause (d) of Section 2.14 of the Credit Agreement is hereby amended by deleting the period at the end of such provision and inserting the following: “; provided, however, that with respect to the Holdings Notes,
this Section 2.14(d) shall not be applicable to the first $14.4 million of the net proceeds thereof.” 
  
 Section 5. Amendment to Section 6.6. Clause (iv) of Section 6.6 of the Credit Agreement is hereby deleted in its entirety and replaced with the
following: 
  
 (iv) in any of the Senior Subordinated Notes
Documents, the Holdings Notes Indenture or any documents or agreements executed in connection with the Holdings Notes Indenture, 
  
 Section 6. Amendments to Section 6.8. 
  
 (a) Interest Coverage Ratio. The table in Section 6.8(a) is hereby deleted in its entirety and replaced with the following: 
  

			
	 Fiscal Quarter

	  	Leverage Ratio

	 Each Fiscal Quarter of Fiscal Year 2004
	  	2.00:1.00
	 Each Fiscal Quarter of Fiscal Year 2005
	  	2.00:1.00
	 Each Fiscal Quarter of Fiscal Year 2006
	  	2.00:1.00
	 Each Fiscal Quarter of Fiscal Year 2007
	  	2.25:1.00
	 Each Fiscal Quarter of Fiscal Year 2008
	  	2.50:1.00
	 Each Fiscal Quarter of Fiscal Year 2009
	  	2.75:1.00
	 Each Fiscal Quarter of Fiscal Year 2010
	  	3.00:1.00

  
 (b) Leverage
Ratio. The table in Section 6.8(b) is hereby deleted in its entirety and replaced with the following: 
  

			
	 Fiscal Quarter

	  	Leverage Ratio

	 Each Fiscal Quarter of Fiscal Year 2004
	  	5.95:1.00
	 First, Second and Third Fiscal Quarters of Fiscal Year 2005
	  	6.95:1.00
	 Fourth Fiscal Quarter of Fiscal Year 2005
	  	6.45:1.00
	 First and Second Fiscal Quarters of Fiscal Year 2006
	  	6.45:1.00
	 Third and Fourth Fiscal Quarters of Fiscal Year 2006
	  	5.95:1.00
	 First and Second Fiscal Quarters of Fiscal Year 2007
	  	5.95:1.00
	 Third and Fourth Fiscal Quarters of Fiscal Year 2007
	  	4.95:1.00
	 First and Second Fiscal Quarters of Fiscal Year 2008
	  	4.95:1.00
	 Third and Fourth Fiscal Quarters of Fiscal Year 2008
	  	4.45:1.00
	 Each Fiscal Quarter of Fiscal Year 2009 and thereafter
	  	4.00:1.00

  

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 (c) Maximum Consolidated Capital Expenditures. The table in Section 6.8(c) is
hereby deleted in its entirety and replaced with the following: 
  

				
	 Fiscal Year

	  	Consolidated Capital
Expenditures

	 Fiscal Year 2004
	  	$	40,000,000
	 Fiscal Year 2005
	  	$	31,000,000
	 Fiscal Year 2006
	  	$	39,000,000
	 Fiscal Year 2007
	  	$	37,000,000
	 Fiscal Year 2008 and thereafter
	  	$	32,000,000

  
 Section 7.
Amendment to Section 6.14. Section 6.14 of the Credit Agreement is hereby amended by deleting the period at the end of such provision and inserting the following: “; provided, that notwithstanding the foregoing, Holdings may (A)
enter into the Holdings Notes Indenture and any documents and agreements in connection therewith, (B) issue Holdings Notes, the gross proceeds of which will be up to $100.0 million, (C) form a new Subsidiary to act as co-issuer of the Holdings Notes
and (D) engage in any activities incidental to the issuance of the Holdings Notes.” 
  
 Section 8. Conditions Precedent. This Amendment shall become effective upon satisfaction of each of the following conditions precedent: 
  
 (a) Agent shall have received all of the following, in form and substance satisfactory to Agent: 
  
 (i) Amendment Documents. This Amendment and each
other instrument, document or certificate required by Agent, duly executed and delivered by Company, the Guarantors, the Requisite Lenders and any other Person in connection with this Amendment; 
  
 (ii) Holdings Notes Indenture. Executed copies of the
Holdings Notes Indenture and all documents and agreements related thereto, in form and substance satisfactory to Agent; and 
  
 (iii) Additional Information. Such additional documents, instruments and information as Agent may reasonably request to effect the
transactions contemplated hereby. 
  
 (b) The representations and
warranties contained herein and in the Credit Documents shall be true and correct in all material respects as of the date hereof as if made on the date hereof (except for those which by their terms specifically refer to an earlier date, in which
case such representations and warranties shall have been true and correct in all material respects as of such earlier date). 
  
 (c) All corporate proceedings taken in connection with the execution and delivery of this Amendment and all other agreements, documents and instruments
executed 

  

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and/or delivered pursuant thereto, and all legal matters incident thereto, shall be reasonably satisfactory to Agent. 
  
 (d) No Default or Event of Default shall have occurred and be continuing
after giving effect to this Amendment. 
  
 Section 9.
Representations and Warranties. Company hereby represents and warrants to Agent and the Lenders that, as of the date hereof and after giving effect to this Amendment, (a) all representations and warranties set forth in the Credit Agreement
and in any other Credit Document are true and correct in all material respects as if made again on and as of such date (except those, if any, which by their terms specifically relate only to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects as of such earlier date), (b) no Default or Event of Default has occurred and is continuing, and (c) the Credit Agreement (as amended by this Amendment), and all other Credit
Documents are and remain legal, valid, binding and enforceable obligations in accordance with the terms thereof except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles (regardless of whether enforcement is sought in equity or at law). 
  
 Section 10. Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Credit Agreement
shall survive the execution and delivery of this Amendment, and no investigation by Agent or the Lenders shall affect the representations and warranties or the right of Agent and the Lenders to rely upon them. If any representation or warranty made
in this Agreement is false in any material respect as of the date made or deemed made, then such shall constitute an Event of Default under the Credit Agreement. 
  
 Section 11. Reference to Agreement. Each of the Credit Documents, including the Credit Agreement, and any and all
other agreements, documents or instruments now or hereafter executed and/or delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference in such Credit Documents
to the Credit Agreement, whether direct or indirect, shall mean a reference to the Credit Agreement as amended hereby. This Amendment shall constitute a Credit Document under the Credit Agreement. 
  
 Section 12. Costs and Expenses. Company shall pay on demand all
reasonable costs and expenses of Agent and the Lead Arrangers (including the reasonable fees, costs and expenses of counsel to Agent) incurred in connection with the preparation, execution and delivery of this Amendment. 
  
 Section 13. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). 
  

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 Section 14. Execution. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page
to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment. 
  
 Section 15. Limited Effect. This Amendment relates only to the specific matters expressly covered herein, shall not be considered to be a waiver of
any rights or remedies any Lender may have under the Credit Agreement or under any other Credit Document, and shall not be considered to create a course of dealing or to otherwise obligate in any respect any Lender to execute similar or other
amendments or grant any waivers under the same or similar or other circumstances in the future. 
  
 Section 16. Ratification by Guarantors. Each of the Guarantors acknowledges that its consent to this Amendment is not required, but each of the
undersigned nevertheless does hereby agree and consent to this Amendment and to the documents and agreements referred to herein. Each of the Guarantors agrees and acknowledges that (i) notwithstanding the effectiveness of this Amendment, such
Guarantor’s Guaranty shall remain in full force and effect without modification thereto and (ii) nothing herein shall in any way limit any of the terms or provisions of such Guarantor’s Guaranty or any other Credit Document executed by
such Guarantor (as the same may be amended from time to time), all of which are hereby ratified, confirmed and affirmed in all respects. Each of the Guarantors hereby agrees and acknowledges that no other agreement, instrument, consent or document
shall be required to give effect to this Section 14. Each of the Guarantors hereby further acknowledges that Company, Agent and any Lender may from time to time enter into any further amendments, modifications, terminations and/or waivers of any
provisions of the Credit Documents without notice to or consent from such Guarantor and without affecting the validity or enforceability of such Guarantor’s Guaranty or giving rise to any reduction, limitation, impairment, discharge or
termination of such Guarantor’s Guaranty. 
  
 [signature
pages follow] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized, as of the date first above written. 
  

			
	KRATON POLYMERS LLC
		
	By:	 	/s/ Joseph J. Waiter
	 Name:
	 	 Joseph J. Waiter

	 Title:
	 	 Authorized Person

	
	GUARANTORS:
	
	 POLYMER HOLDINGS LLC
 ELASTOMERS
HOLDINGS LLC
 KRATON POLYMERS U.S. LLC
 KRATON POLYMERS CAPITAL CORPORATION

		
	By:	 	/s/ Joseph J. Waiter
	 Name:
	 	 Joseph J. Waiter

	 Title:
	 	 Authorized Person

	
	AGENT:
	
	UBS AG, STAMFORD BRANCH
		
	By:	 	/s/ Doris Mesa
	 Name:
	 	 Doris Mesa

	 Title:
	 	 Associate Director Banking Products Services, US

		
	By:	 	/s/ Joselin Fernandes
	 Name:
	 	 Joselin Fernandes

	 Title:
	 	 Associate Director Banking Products Services, US

  

 Agreement No. 2 to Credit and Guarantee AgreementSeparation Agreement - Stephen Wood

 Exhibit 10.1 
  
 EXECUTION VERSION 
  
 SEPARATION AGREEMENT AND GENERAL RELEASE AND WAIVER 
  

This Separation Agreement and General Release and Waiver (this “Agreement”) is made as of September 20, 2004, between KRATON Polymers
LLC (the “Company”), and Stephen Wood (the “Employee”). 
  
 WHEREAS, the Company engaged the Employee to be its Chief Executive Officer; 
  
 WHEREAS, the Employee and the Company are parties to an Employment Agreement dated April 21, 2004 (the “Employment Agreement”);

  
 WHEREAS, Section 7(c) of the Employment Agreement provides
that, as a condition to the receipt of certain benefits described therein, the Employee shall be required to execute a general release of claims in a form satisfactory to the Company; 
  
 WHEREAS, the parties wish to confirm the termination without Cause of the Employee’s employment with the Company and
set forth their agreement as to the manner in which the Employee’s employment with the Company will be closed out; 
  
 NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Employee agree as follows: 
  
 1. Termination of Employment. 
  
 (a) The parties
agree that the Employee’s employment with the Company is terminated as of July 6, 2004 (the “Date of Termination”). The Employee hereby resigns, effective as of the Date of Termination, all positions, titles, duties,
authorities and responsibilities with, arising out of or relating to his employment with the Company and its affiliates and agrees to execute all additional documents and take such further steps as may be required to effectuate such resignation.

  
 (b) The parties agree that (i) the Employee’s termination
will be treated as a termination without Cause under Section 7(c) of the Employment Agreement and (ii) this Agreement shall serve as and fulfill all the requirements of a Notice of Termination for purposes of Section 7(e) of the Employment
Agreement. 
  
 2. Accrued Obligations. 
  
 (a) No later than October 31, 2004, the Company shall pay the Employee a lump
sum payment of $ 70,000, in satisfaction of all of the unpaid vacation time to which the Employee is entitled pursuant to company policy. 
  
 (b) The Employee has submitted to the Company any requests for reimbursement for any unreimbursed business expenses properly incurred by the Employee in
accordance with Company policy prior to the Date of Termination. The Company will process these reimbursement requests in a manner consistent with past practices in effect prior to the Date of 

  

 
Termination. The Company has agreed to pay for charges incurred on the Employee’s Company mobile telephone through July 31, 2004. Executive shall be
responsible for all Company mobile telephone charges incurred after July 31, 2004. 
  
 (c) The Employee shall be entitled to any benefit to which the Employee may be entitled under any tax qualified pension plan of the Company or its affiliates and any other benefits required to be provided by law.

  
 (d) These payments and benefits set forth in this Section 2
represent all of the Accrued Obligations (as that term is defined in the Employment Agreement) owed to the Employee and the Employee hereby acknowledges that payments of the amounts and provision of the benefits outlined in this Section 2 satisfy
all of the Company’s obligations concerning Accrued Obligations. 
  
 3. Certain Payments and Benefits. 
  
 (a) In
exchange for the Employee’s entering into this Agreement, including the General Release and Waiver contained herein and subject to Sections 10 and 14 herein, the Company shall make the following payments to the Employee and provide the Employee
with benefits as set forth below (these payments and benefits collectively the “Termination Payments”): 
  

	(i)	No later than October 31, 2004, the Company shall make a lump sum severance payment of $1,075,000 to the Employee. 

  

	(ii)	No later than October 31, 2004, the Company shall make a lump sum payment of $782,000 to the Employee, representing the Company’s obligation to the Employee under the
Company’s Supplemental Retirement Plan for Stephen Wood. 

  

	(iii)	No later than October 31, 2004, the Company shall make a lump sum payment of $49,000, representing full payment for relocation expenses, attorneys fees, outplacement fees and car
allowance benefits. 

  

	(iv)	Commencing on the Date of Termination, the Company will continue medical benefits for the Employee and the Employee’s eligible dependents comparable to those medical benefits
the Employee participated in on the Date of Termination for a period not to exceed 18 months. The Company will cease to provide such medical benefits if the Employee becomes entitled to medical benefits from a new employer. The Company may provide
such medical benefits by paying the Employee’s COBRA continuation coverage through such 18-month period. The Company will cease to provide such benefits if the Employee does not execute this Agreement within the twenty-one day period provided
in Section 14 or if the Employee revokes his agreement to accept the terms hereof during the seven-day revocation period provided for in Section 14 of this Agreement. 

  

	(v)	 Pursuant to section 10 of the Limited Liability Company Operating Agreement of Kraton Management LLC (the “Kraton Management LLC Agreement”), Kraton
Management LLC shall repurchase the 1,000,000 Company Membership Units (as that term is defined 

  

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in the Kraton Management LLC Agreement) held by the Employee at the price of $1.00 per Company Membership Unit, for a total purchase price (the
“Purchase Price”) of $1,000,000. Upon payment of the Purchase Price, Employee hereby surrenders all rights and interests in the 1,000,000 Company Membership Units and hereby represents and warrants that he has full power and authority to
sell, assign and transfer such units (subject to the Kraton Management LLC Agreement) and that Kraton Management LLC will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claims whatsoever. Employee hereby agrees that, upon request, he shall execute and deliver any additional documents reasonably deemed by Kraton Management LLC to be necessary or desirable to complete the redemption of the
Company Membership Units described herein. 

  

	(vi)	The Employee hereby acknowledges that, other than the 1,000,000 Company Membership Units referenced above, he does not own and is not entitled to any other equity interests in the
Kraton Management LLC, TJ Chemical Holdings LLC or any of their respective affiliates and all Company Profits Units (as that term is defined in the Kraton Management LLC Agreement) granted or to be granted to Employee were forfeited upon the
Termination Date. 

  
 (b) All payments and other
benefits provided to the Employee, including without limitation the Termination Payments and the Accrued Obligations shall be subject to, and reduced by, all applicable withholding or other taxes. The Termination Payments and Accrued Obligations
shall not be taken into account as compensation and no service credit shall be given after the Date of Termination for purposes of determining the benefits payable to the Employee or the Employee’s family under any plan, program, agreement or
arrangement of the Company. The Employee acknowledges that, except for the Termination Payments and the Accrued Obligations, he is not entitled to any other payment from the Company, including, without limitation, any payment in the nature of
severance, termination, or bonus pay (accrued or otherwise) from the Company. 
  
 4. General Release and Waiver. 
  
 (a) The Employee, his heirs, successors, and assigns, hereby knowingly and voluntarily remise, release and forever discharge the Company, its subsidiaries and affiliates, its and their respective officers, directors, partners, shareholders,
employees, successors and assigns (collectively, the “Related Persons”), from any and all debts, demands, actions, causes of actions, accounts, covenants, contracts, agreements, claims, damages, omissions, promises, and any and all claims
and liabilities whatsoever, of every name and nature, known or unknown, suspected or unsuspected, both in law and equity (“Claims”), which the Employee has ever had, now has, or may hereafter claim to have against the Company or any
Related Persons by reason of any matter, cause or thing whatsoever arising from the beginning of time to the time the Employee signs this Agreement. This Release of Claims shall apply to any Claim of any type, including, without limitation, any and
all Claims of any type that the Employee may have arising under the common law, under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967 (“ADEA”), the Older Workers
Benefit Protection Act, the Americans With Disabilities Act of 1967, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, the Texas Labor Code, 

  

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including without limitation the Texas Commission on Human Rights Act (V.T.C.A. Section 21.001, et seq.), each as amended, and any other Texas law,
and any other federal, state or local statutes, regulations, ordinances or common law, or under any policy, agreement, contract, understanding or promise, written or oral, formal or informal, between any of the Related 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. 
  
 5. Cooperation
of Employee 
  
 (a) The Employee shall make himself available
to consult with the Company, as needed for up to twelve full working days to be performed as agreed to between the Company and the Employee during the period commencing on the Date of Termination and ending on December 31, 2004. In consideration of
such consulting services, the Employee will retain an e-mail address and telephone number with the Company through December 31, 2004, and the Company shall pay Executive a one-time $25,000 consulting fee no later than January 10, 2005. In the event
the Company requests Executive to consult in excess of the full twelve working days, the Company and Executive will mutually agree in writing for an additional fee. The Company and the Employee agree that any rights the Employee had to insurance or
indemnification prior to the Date of Termination, including specifically, any rights to which the Employee was entitled under Section 11(m) of the Employment Agreement, shall be extended to cover any services performed by the Employee under this
Section 5(a), notwithstanding the termination of the Employment Agreement or the termination of the Employee’s employment with the Company. Further, the Company agrees to reimburse the Employee for any expenses incurred by the Employee in
connection with the performance of services by the Employee under this Section 5(a). 
  
 (b) 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. 
  

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 6. 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, 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. 
  
 7. Return of Property and Cessation of Services Provided by the Company. 
  
 (a) Employee shall return all property of the Company in his possession within 30 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; car service 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. 
  
 (b) Employee shall within 30 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. 
  
 (c) After the Date of Termination, the Company will cease taking any actions in, connection with assisting the Employee to obtain a Green Card, including,
without limitation, the Company will cease paying the expenses of outside counsel to assist in this endeavor. 
  
 8. 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 acknowledges that none of the senior executive officers of the Company nor any members of its Board of Directors are aware of any claims or causes of action arising on or prior
to the date of this Agreement against the Employee arising from the employment relationship of the Employee with the Company. 
  
 9. Incorporation by Reference. The following Sections of the Employment Agreement are hereby incorporated by reference as if repeated herein and
shall continue in effect 

  

 5 

 
notwithstanding the termination of the Employment Agreement: Section 11(j) (relating to cooperation); Section 11(m) (relating to indemnification); Section 8
(“Non-Competition”); Section 9 (“Confidentiality; Inventions”); and Section 10 (“Specific Performance”). 
  
 10. 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, 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 the Company suffers material damage as a result of any such breach, and to the extent not theretofore paid to the Employee as of the date of such breach or, if already paid as of the time
of breach, the Employee agrees that he will reimburse the Company, upon the Company meeting the requirements specified above, for the amount of such payments. 
  

11. No Admission. This Agreement does not constitute an admission of liability or wrongdoing of any kind by the Company or its affiliates.

  
 12. Heirs and Assigns. The terms of this Agreement
shall be binding on the parties hereto and their respective successors and assigns. 
  
 13. 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 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. 
  

 6 

 (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, to the address on record with the Company; or, for either party, to such other address as any party hereto may designate by notice to the others, and shall be deemed to have been given upon receipt. 
  
 14. Knowing and Voluntary Waiver. 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.
Accordingly, the Employee may execute this Agreement by October 11th, 2004, to acknowledge his understanding of and
agreement with the foregoing. 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 13 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. 
  

 7 

 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. 
  

 8 

 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:
	 	Joseph J. Waiter
	 Title:
	 	Vice President & General Counsel
	
	/s/    STEPHEN
WOOD        
	Stephen Wood

  

 9 

 Acknowledgment 
  

					
	STATE OF Texas	 	)	 	 
	 	 	 	 	ss:
	COUNTY OF Harris	 	)	 	 

  
 On the 22nd day of Sept, 2004, before me personally came Stephen Wood who, being by me duly sworn, did depose and say that he resides at
3003 Memorial Court, apt 1408, Houston, Tx 77004; 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/    MARY C.
RODRIGUEZ        
	Notary Public
		
	 Date:
	 	 9/22/04

  
 

 
  

 10

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