Document:

exv10w0xby

Exhibit 10.0(b)

CONSULTING AGREEMENT

     This Consulting Agreement (this “Agreement”), made as of the 1st day of February,
2008 (the “Effective Date”), is between KRATON Polymers LLC, a Delaware limited liability company
having its principal offices at 700 Milam Street, 13th Floor, North Tower, Houston, TX
77002 (“Company”), and George B. Gregory, an individual resident of the State of Texas, residing at
238 N. Tranquil Path Drive, The Woodlands, TX 77380 (“Consultant”).

WITNESSETH:

     Whereas, Consultant was, until January 14, 2008, the Chief Executive Officer of the Company;
and

     Whereas, Company desires to retain Consultant to advise and perform such reasonable services
as the Company may from time to time request in connection with the transition to a successor Chief
Executive Officer, on the terms, and subject to the conditions, set forth herein.

     Now, therefore, in consideration of the foregoing, the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

1. CONSULTANT WORK

     Consultant shall perform such services as the board of directors of the Company or the
successor Chief Executive Officer of the Company shall request from time to time during the Term as
defined below. The services described herein are collectively referred to as the “Work.”

2. TERM

     This Agreement is effective for a term commencing as of the date hereof and extending until
June 30, 2008 (the “Term”).

3. PERFORMANCE OF WORK

     (a) Consultant will perform the Work in a diligent and workmanlike manner consistent with the
best professional standards and practices. Consultant will also perform the Work in accordance with
all applicable and existing laws, regulations and ordinances, and Company standards and
specifications as are made known to Consultant by Company.

     (c) In performing the Work, Consultant will be available at such times, and at such locations,
as are agreed upon between Company and Consultant.

4. PAYMENT FOR WORK: EXPENSES

     (a) Company will pay Consultant, for performance of the Work, the sum of $93,750 (the “Fee”),
payable as follows: $20,833.33 on each of February 15, March 17, and April 15, and $10,416.67 on
each of May 15, June 16 and June 30. All reasonable travel expenses, other than local travel
expenses, related to the consultation and any other expenses reasonably incurred by the Consultant
in the course of said consultation shall be reimbursed by

 

 

Company provided that any such expenses are incurred with the prior knowledge and approval of
Company. Such reimbursement for expenses shall be paid upon submission of appropriate
invoices/receipts to Company. No payroll or employment taxes of any kind (including, but not
limited to, FICA, FUTA, federal or state personal income taxes, state disability insurance taxes,
and state unemployment taxes) shall be withheld or paid with respect to any payments to Consultant.
Company and Consultant agree that Consultant is fully and solely responsible for filing appropriate
tax returns, social security contributions and any other relevant payments to government
authorities. Consultant acknowledges and agrees that the Fee set forth herein is the only
compensation for services performed in connection with the Work, and that he is not entitled to any
commissions or compensation other than the Fee, except as provided in Section 4(b) below.

     (b) In the event that the Company enters into a definitive agreement (subject to customary
closing conditions) on or before April 30, 2008 to engage in Project Triumph on terms and
conditions substantially similar to the terms and conditions negotiated in December 2007, as
determined by the Company in good faith, and the closing of such transaction occurs on or before
December 31, 2008, Consultant shall receive, within 30 days following the consummation of such
transaction, and subject to execution of the Release, as such term is defined in the separation
agreement by and between the Consultant and the Company and dated January 24, 2008 (the “Separation
Agreement”), and such Release becoming effective, following the end of the Term, a lump sum bonus
equal to $1,750,000.

     (c) The payments of this Section 4 above are full and complete compensation for the Work
provided by Consultant under this Agreement.

5. INDEPENDENT CONTRACTOR

     Consultant’s relationship with Company will be that of an independent contractor. Nothing in
this Agreement is to be construed as designating Consultant as an employee, agent, joint venturer,
or partner of Company. Consultant shall not have the authority to bind or contract on behalf of
Company in the performance of the Work.

6. HOLD HARMLESS

     Consultant acknowledges that he shall be solely responsible for personal injury and/or
property damage incurred by him while performing the Work, except to the extent such injury and/or
property damage is the result of negligence on the part of the Company or its employees. Consultant
will hold Company harmless from and against any personal injury or property damages that occurs
while traveling on behalf of Company or while present at any facilities owned by Company, except to
the extent such injury and/or property damage is the result of negligence on the part of the
Company or its employees.

7. ASSIGNMENT.

     Neither this Agreement (including all rights, duties and obligations hereunder) nor any claim
against Company or Consultant arising directly or indirectly out of or in connection with this
Agreement shall be assignable by Company or Consultant or by operation of law, without the prior
written consent of the other party. However, notwithstanding the above, Company shall have the
right to assign this Agreement to an affiliate of Company, or to a purchaser or other successor to
a significant portion of Company’s assets involved in the subject matter hereof, without the
consent of Consultant.

8. MISCELLANEOUS

     (a) Each of the provisions contained in this Agreement shall be severable, and the
unenforceability of one shall not affect the enforceability of any others or of the remainder of
this Agreement.

 

 

     (b) This Agreement may not be amended, supplemented or otherwise modified except by an
instrument in writing signed by all the parties hereto. This Agreement and the Separation Agreement
together contain the entire agreement of the parties hereto with respect to the transactions
covered hereby, superseding all negotiations, prior discussions and preliminary agreements made
prior to the date hereof.

     (c) This Agreement is solely for the benefit of the parties hereto and their respective
affiliates, if any, and no provision of this Agreement shall be deemed to confer upon third parties
any remedy, claim, liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.

     (d) The failure of any party to enforce any condition or part of this Agreement at any time
shall not be construed as a waiver of that condition or part, nor shall it forfeit any rights to
future enforcement thereof

     (e) This Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Delaware without regard to the conflicts of laws provisions thereof

     (f) More than one counterpart of this Agreement may be executed by the parties hereto, and
each fully executed counterpart shall be deemed an original.

     (g) All communications, notices and consents provided for herein shall be in writing and be
given in person or by means of telex, facsimile or other means of wire transmission (with request
for assurance of receipt in a manner typical with respect to communications of that type) or by
mail, and shall become effective (x) on delivery if given in person, (y) on the date of
transmission if sent by telex, facsimile or other means of wire transmission, or (z) four business
days after being deposited in the United States mails, with proper postage and documentation, for
first-class registered or certified mail, prepaid.

Notices shall be addressed as follows: If to Consultant,

to:

George Gregory

238 N. Tranquil Path Drive The Woodlands,

TX 77380

 

 

If to Company, to:

KRATON Polymers LLC

c/o Texas Pacific Group

301 Commerce Street, Suite 3300

Fort Worth, TX 76102

Attention: General Counsel

provided, however, that if any party shall have designated a different address by notice to
the other, then to the last address so designated.

     (h) The language in all parts of this Agreement shall be construed, in all cases, according to
its fair meaning. The parties acknowledge that each party and its counsel have reviewed and revised
this Agreement and that any rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of this Agreement

     (i) Consultant acknowledges that Company has not made any verbal representations contrary to
what is set forth in this Agreement and the Separation Agreement.

 

 

IN WITNESS WHEREOF, Company and Consultant have executed this Agreement in duplicate originals on
the dates written below.

	 	 	 	 	 
	KRATON POLYMERS LLC

 	 	 
	By:  	/s/
Richard A. Ott 	 	 
	 	Name:  	Richard A. Ott 	 	 
	 	Title:
  	VP - HR 	 	 
	 	
Date:	2/1/08 	 	 
	 
	 	 	 
	/s/ George B. Gregory
 	 	 
	George B. Gregoryexv10w1xcy

Exhibit 10.1(c)

January 24, 2008

George B. Gregory

238 N. Tranquil Path Drive

The Woodlands, TX 77380

     Dear George:

     Pursuant to our recent conversations, we mutually agree that you shall have ceased to be the
Chief Executive Officer of KRATON Polymers LLC (“KRATON”) effective January 14, 2008
(“Resignation Date”) and your employment with KRATON and any and all of its subsidiaries
and affiliates (together and each individually, the “Company”) shall terminate effective
February 1, 2008 (the “Separation Date”). In connection with your termination of
employment, as of the Resignation Date, you shall be deemed to have resigned all offices and
directorships, including without limitation any position on the board of directors of the Company,
that you held prior thereto in respect of the Company.

     1. Conditioned upon your executing the release and waiver attached hereto as Appendix A (the
“Release”) within 30 days of the Separation Date and, to the extent the applicable payment
has not then become payable, within 30 days of the termination of your provision of consulting
services to the Company, pursuant to a consulting agreement to be entered into as of the date
hereof by you and KRATON (the “Consulting Agreement”), as set forth in the Consulting
Agreement, the Release becoming effective following the Separation Date and the termination of the
Consulting Agreement, and your continued compliance in all material respects with the obligations
set forth in this agreement, including without limitation Sections 5 and 6 hereof, KRATON shall:

     a. Pay to you the following ((i), (ii) and (iii) together, the “Accrued
Benefit Payment”):

     (i) within 30 days of the Separation Date, your annual base salary of
$500,000 (“Base Salary”) through the date of termination, to the extent
not already paid;

     (ii) within 30 days of the Separation Date, reimbursement for any
unreimbursed business expenses properly incurred by you in accordance with
KRATON policy prior to the date of your termination; and

     (iii) pursuant to Section7(a)(iii)(D) of that certain employment
agreement between you and KRATON dated November 1, 2004 as amended
(“Employment Agreement”), any vested Employee Benefits, as defined in
the Employment Agreement, to which you are entitled, pursuant to the applicable
terms of such Employee Benefits.

 

 

     b. Pay an amount, in the aggregate, equal to one and a half times (1.5x) the Base
Salary, payable as follows: (i) your Base Salary pro rated for the period from February 2,
2008 through December 31, 2008, in accordance with the standard payroll practices of KRATON
as in effect from time to time; and (ii) the remainder as soon as practicable on or after
January 1, 2009, but in no event later than January 31, 2009 (the “Continuation
Payments”);

     c. For eighteen months following the Separation Date, provide to you and any eligible
dependents medical benefits substantially similar to those provided generally to executive
officers of KRATON pursuant to KRATON’s medical plan, as applicable, provided that you shall
not be responsible for any premiums, contributions and other co-payments required to be paid
by active executive officers of KRATON under the terms of any such medical plan as may be in
effect from time to time (such coverage may be provided by paying the applicable portion of
the COBRA premiums) (the “Continuing Medical Benefits”); provided, however,
that if you become eligible to receive medical benefits from a new employer under that
employer’s plan, the Continuing Medical Benefits described herein shall be terminated. You
are required to promptly notify KRATON of any changes in your medical benefits coverage; and

     d. Within 30 days following the Separation Date, pay to you $600,000, which we agree is
due to you and which shall reflect the full amount of the retention award granted to you by
KRATON pursuant to the Retention Award Agreement, dated as of January 1, 2008 (the
“Retention Award”), less any portion of the Retention Award previously paid.

     2. Equity and Equity Based Awards. Conditioned in all respects upon your executing
the Release within 30 days of the Separation Date and, to the extent the payment has not then
become payable, within 30 days of the termination of your provision of consulting services
pursuant to the Consulting Agreement, the Release becoming effective following the Separation Date
and the termination of the Consulting Agreement, and your continued compliance in all material
respects with the obligations set forth in this agreement, including without limitation Sections 5
and 6 hereof:

     a. Set forth on Schedule I hereto is a true, accurate and complete list of all of the
equity, equity-based and profits interest awards that are, as of the Separation Date, vested
and/or exercisable (the “Equity Awards”). Notwithstanding anything to the contrary in
the TJ Chemical Holdings LLC 2004 Option Plan (the “Plan”) or applicable grant agreement, all
Equity Awards that are options shall remain outstanding and exercisable for the lesser of (i)
the period provided in the Plan or such grant agreement, without regard to a termination of
employment, and (ii) ten years from the date of grant. Except as provided in this Section 2,
the Equity Awards and all other equity, equity-based or profits interest awards held by you
on or prior to the Separation Date that are not Equity Awards (the “Unvested Awards”)
shall otherwise continue to be governed by their terms; provided, that,
notwithstanding anything to the contrary in the plan or any applicable grant agreement, the
Unvested Awards shall remain outstanding, but shall cease to vest and you shall not have any
rights with respect thereto, subject to Section 3 hereof, pending determination of whether
the Additional Vesting Condition, as defined below,

 

 

has been, and shall be forfeited without payment and without any future obligation or
rights in the event that the Additional Vesting Condition is not, or cannot be,
satisfied.

     b. The Company shall (i) exercise its right to repurchase 149,000 restricted units, for
an aggregate purchase price of $149,000; and (ii) settle the Phantom Equity Units listed on
Schedule 1 in cash, pursuant to the terms of the agreement governing such Phantom Equity
Units, for an aggregate payment of $101,010, in each case in accordance with the terms
governing the restricted stock units or Phantom Equity Units, as applicable.

     3. Triumph. In the event that the Company enters into a definitive agreement (subject
to customary closing conditions) on or before April 30, 2008 to engage in Project Triumph on terms
and conditions substantially similar to the terms and conditions negotiated in December 2007, as
determined by the Company in good faith, and such transaction is consummated on or before December
31, 2008 (together, the “Additional Vesting Condition”), you shall have the right to have
the Equity Awards and any Unvested Award repurchased or otherwise settled by the Company in cash,
at a fair market value equal to the transaction price, as if you had been employed on the date of
such change of control and terminated without cause by the Company on the day following such change
in control; provided, however, that this provision shall not apply to any Equity Award or
Unvested Award that has already been repurchased or otherwise settled by the Company in cash and in
no event shall this provision result in a duplication of benefits; and provided, further,
that this Section 3 is conditioned in all respects upon your executing the Release within 30
days of the Separation Date and, to the extent the payment has not then become payable, within 30
days of the termination of your provision of consulting services pursuant to the Consulting
Agreement, the Release becoming effective following the Separation Date and the termination of the
Consulting Agreement, and your continued compliance in all material respects with the obligations
set forth in this agreement, including without limitation Sections 5 and 6 hereof.

     4. Except (i) for the Accrued Benefits Payment, the Continuation Payments, the Continuing
Medical Benefits and the Retention Award, (ii) as set forth in Sections 2 and 3, and (iii) for any
payment pursuant to the Consulting Agreement, you shall not be entitled to any other payments or
benefits as a result of your employment with the Company or the termination thereof or pursuant to
any agreement, arrangement, plan or understanding you may have with the Company.

     5. Restrictive Covenants; Indemnity and Insurance. Sections 8 through 10
(inclusive) and Section 11(m) of the Employment Agreement are hereby included in this agreement
as if fully restated herein.

     6. Non-Disparagement. You agree not to defame or disparage the Company, or any of
its officers, directors, members, executives or employees in any material respect. You agree to
reasonably cooperate with the Company (at no expense to you) in refuting any defamatory or
disparaging remarks by any third party made in respect of the Company or any of its directors,
members, officers, executives or employees.

 

 

     7. Legal Fees. KRATON agrees to pay all reasonable legal fees and expenses incurred
by you as a result of the negotiation and preparation of this agreement; provided that
KRATON shall not have any obligation to pay any such fees and expenses in excess of $10,000.

     8. Miscellaneous. 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 two business days after it is mailed by registered or certified mail,
postage prepaid, return receipt requested or one business 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 KRATON:

KRATON Polymers LLC

c/o Texas Pacific Group

301 Commerce Street, Suite 3300

Fort Worth, TX 76102

with a copy to:

Robert J. Raymond

Cleary, Gottlieb, Steen & Hamilton LLP

One
Liberty Plaza

New York, NY 10006

If to George Gregory:

George B. Gregory

238 N. Tranquil Path Drive

The Woodlands, TX 77380

with a copy to:

Andrew H. Seiden

Curtis, Mallet-Prevost, Colt & Mosle LLP

101
Park Avenue

New York, N.Y. 10178

     or to such other address as any party hereto may designate by notice to the others.

     This agreement shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, and supersedes and is in full substitution for any and all prior
understandings or agreements with respect to your employment and the termination thereof;
provided, that the Equity Awards shall continue to be governed by the agreements
evidencing, and any plan document governing, the award thereof except as otherwise provided herein;
and provided, further, that the consulting services shall be governed by the Consulting
Agreement.

 

 

     This agreement may be amended only by an instrument in writing signed by the parties hereto,
and any provision hereof may be waived only by an instrument in writing signed by the party or
parties against whom or which enforcement of such waiver is sought. No waiver of any provision or
violation of this agreement by KRATON shall be implied by KRATON’s forbearance or failure to take
action. The failure of any party hereto at any time to require the performance by any other party
hereto of any provision hereof shall in no way affect the full right to require such performance at
any time thereafter, nor shall the waiver by any party hereto of a breach of any provision hereof
be taken or held to be a waiver of any succeeding breach of such provision or a waiver of the
provision itself or a waiver of any other provision of this 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.

     Any provision of this agreement (or portion thereof) which is deemed invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this paragraph, be
ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in
any way the remaining provisions thereof in such jurisdiction or rendering that or any other
provisions of this agreement invalid, illegal, or unenforceable in any other jurisdiction. If any
covenant should be deemed invalid, illegal or unenforceable because its scope is considered
excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the
minimum extent necessary to render the modified covenant valid, legal and enforceable.

     KRATON may withhold from any amounts payable to you hereunder all federal, state, city or
other taxes that KRATON may reasonably determine are required to be withheld pursuant to any
applicable law or regulation (it being understood, that you are responsible for payment of all
taxes in respect of the payments and benefits provided herein).

     This agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without reference to its principles of conflicts of law.

     You agree that the payment of any amounts due hereunder shall be delayed until this agreement
is executed and returned to KRATON and until the Release becomes effective pursuant to the terms of
the Release, and that the Release must be signed within 30 days following the Separation Date. In
addition, you agree that the payments hereunder and payments under the Consulting Agreement that
have not become payable as of the termination of the Consulting Agreement shall be contingent upon
your re-executing the Release following the termination of the Consulting Agreement. You
acknowledge that you have been advised to consult, and have consulted, with an attorney prior to
executing this agreement.

     This agreement may be executed in several counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. A facsimile of a
signature shall be deemed to be and have the effect of an original signature.

 

 

     The headings in this agreement are inserted for convenience of reference only and shall not
be a part of or control or affect the meaning of any provision hereof.

     This agreement shall inure to the benefit of, be binding upon, and enforceable by the
Company and its successors and assigns. This agreement shall inure to the benefit of your
successors, heirs, legatees and personal representatives but is not assignable by you without
KRATON’s consent.

     This agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986
and the regulations and guidance promulgated thereunder, as amended, and shall be construed
accordingly.

* *
* * *

 

 

     If you agree with the foregoing provisions, please sign in the appropriate space below and
return the original to me.

	 	 	 	 	 
	 	Sincerely,

KRATON Polymers LLC

 	 
	 	By:  	/s/ Richard A. Ott 	 
	 	 	Name:  	Richard A. Ott 	 
	 	 	Title:  	VP - HR 	 

	 	 	 	 	 
	Agreed and Accepted:

 	 	 
	/s/ George B. Gregory
 	 	 
	George B. Gregory 	 	 
	 

Date:

 

 

SCHEDULE I

Options 

	 	•	 	1,500,000 options to purchase units of TJ Chemical, pursuant to a grant made on December
2, 2004.
	 
	 	•	 	300,000 options to purchase units of TJ Chemical, pursuant to a grant made February 1,
2005.

Restricted Units 

	 	•	 	200,000 restricted units of TJ Chemical, pursuant to a grant made March 17, 2005.

Notional Units 

	 	•	 	525,000 notional units of TJ Chemical, pursuant to a grant made September 10, 2004.

Profits Units 

	 	•	 	None.

Phantom Equity Units 

	 	•	 	101,010 notional units of TJ Chemical, pursuant to a deferral agreement dated April 1,
2007.

Company Membership Units 

	 	•	 	300,000 Company Membership Units in KRATON Management LLC, purchased September 10,
2004.

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