**Exhibit 10.5**PROFITS UNIT AWARD AGREEMENTPROFITS UNIT AWARD AGREEMENT, (“Agreement”) dated as of October 24, 2005 (the “Date of Grant”), byand between KRATON Management LLC, a Delaware limited liability company (the “Company”) and RaymondGuba (the “Participant”). Unless the context otherwise provides, capitalized terms not definedherein shall have the meanings ascribed to them in the Limited Liability Company OperatingAgreement of KRATON Management LLC, as amended from time to time (the “Management LLC Agreement”).1. Description of Profits Units. Each Company Profits Unit represents the right to apro rata share of any distributions received by the Company in respect of the correspondingTJ Chemical Profits Units held by the Company in accordance with the Management LLC Agreement. EachTJ Chemical Profits Unit represents the right to receive a pro rata portion of theappreciation of the assets of TJ Chemical above the Threshold Amount (as defined in the TJ ChemicalLLC Agreement) for such TJ Chemical Profits Unit after the Date of Grant. The Threshold Amount forthe Company Profits Units granted hereunder is $250,019,229, representing the current value of theassets of TJ Chemical (net of debt) as of the Date of Grant, provided that such Threshold Amountmay be appropriately and equitably adjusted by the Board of Directors of TJ Chemical forcontributions and distributions that affect the aggregate balances of all Capital Accounts (asdefined in the TJ Chemical LLC Agreement) maintained under the TJ Chemical LLC Agreement in orderto place all holders of profits units, including the Participant, in the same position they wouldhave been in had such contributions and distributions not been made. The pro rata portionof appreciation shall be determined based on all outstanding TJ Chemical Membership Units and TJChemical Profits Units for which the applicable Threshold Amount has been achieved (but only as tothe appreciation above the Threshold Amount with respect to the applicable TJ Chemical ProfitsUnits).Each Company Profits Unit is intended to be a “profits interest” within the meaning of Rev. Proc.93-27 (6/09/93) and Rev. Proc. 2001-43 (8/03/01). By virtue of ownership of a Company Profits Unit,the Participant shall have no right or obligation to make any Capital Contribution to the Companyat any time and shall have no rights to any capital contributed to the Company.2. Grant of Award. The Company hereby grants to the Participant 300,000 Company ProfitsUnits (the “Profits Units”), subject to the terms and conditions of this Agreement and theManagement LLC Agreement.3. Vesting. Notwithstanding Section 4.8 of the Management LLC Agreement, 50% of the ProfitsUnit shall vest when the fair value of the assets of TJ Chemical equal or exceed two times (2X) theThreshold Amount and the remaining 50% of the Profits Units shall vest when the fair value of theassets of TJ Chemical equal or exceed three times (3X) the Threshold Amount, in each case, asdetermined by the Board of Directors of TJ Chemical, provided that the Participant is employed bythe KRA TON Group on such vesting date, and provided further that if, at the time the Company makesa determination as to whether the Participant is entitled to any appreciation with respect to theProfits Units, the value of the assets of the Company is more
 

 
than two times (2X) but less than (3X) the value of the assets on the grant date, a pro-rataportion of the second 50% will vest based on the appreciation above the amount equal to two times(2X) the value of the assets on the grant date, and provided, further, that 100% of the ProfitsUnits shall vest upon the effective date of a disposition by the Initial Investors of 51 % or moreof their aggregate interests in KRA TON to one or more unrelated third Persons if the Participantis employed by the KRATON Group through such date. Notwithstanding anything to the contrary in anyother agreement, including the Management LLC Agreement, in the event the Participant’s employmentwith the KRATON Group is terminated prior to a portion or all Profits Units becoming vested asprovided above, all unvested Profits Units shall immediately and without any further action beforfeited on the date of termination.4. LLC Agreements. This Agreement shall be subject to all of the provisions of theManagement LLC Agreement, and such provisions are incorporated herein by this reference. TheParticipant understands that, as a condition to receiving the Profits Units granted hereunder, theParticipant must execute and comply with the Management LLC Agreement. The Participant shall be aMember and holder of Profits Unit for all purposes under the Management LLC Agreement. Unlessexpressly stated otherwise in this Agreement, to the extent that, with respect to any right orobligation of the Participant, any provisions of this Agreement are not consistent with theManagement LLC Agreement, the provisions of the Management LLC Agreement shall govern.5. Representations by Participant. The Participant represents and warrants that he hasreceived, read and executed a copy of the Management LLC Agreement.6. Restrictions on Transferability. Except as specifically provided in Article IX of theManagement LLC Agreement, the Profits Units may not be sold, transferred or otherwise disposed ofwithout the written approval of the Managing Member.7. Corporate Transaction: Termination of Employment. The Company shall have the right tocancel the Profits Units in the event of a merger, consolidation, recapitalization or othercorporate transaction involving TJ Chemical in which TJ Chemical cancels the corresponding TJChemical Profits Units and shall distribute the cash, securities or other property, or anycombination thereof, if any, received from TJ Chemical in respect of such corresponding TJ ChemicalProfits Units in accordance with Section 9.6 of the Management LLC Agreement. If the Participantbecomes a Terminated Employee, the Company shall have the right to purchase any then-vested ProfitsUnits held by the Participant in accordance with Article IX of the Management LLC Agreement.8. Fair Value. Any determination relating to the value of the assets of TJ Chemical or anyTJ Chemical Profits Unit shall be determined in good faith by the Board of Directors of TJ Chemicalin accordance with the TJ Chemical LLC Agreement and all determinations of the Board of Directorsshall be final and binding on all parties.9. Assignment. This Agreement and the rights hereunder shall not be assignable ortransferable by the Participant without the prior written consent of the Company. This Agreementshall inure to the benefit of and be binding upon the parties and to their respective heirs,executors, administrators, successors and permitted assigns.
 

 
10. Amendments. The terms and provisions of this Agreement may not be amended except by awritten instrument signed by the parties hereto.11. Counterparts: Effectiveness. This Agreement may be executed in any number ofcounterparts, each of which shall be considered an original, but all such counterparts shalltogether constitute but one and the same contract.12. Severability. Every provision of this Agreement is intended to be severable. If anyterm or provision hereof is illegal or invalid for any reason whatsoever, such term or provisionshall be enforced to the maximum extent permitted by law and, in any event, such illegality orinvalidity shall not affect the validity of the remainder of this Agreement.13. Non-Waiver. No provision of this Agreement shall be deemed to have been waived exceptif the giving of such waiver is contained in a written notice given to the party claiming suchwaiver, and no such waiver shall be deemed to be a waiver of any other or further obligation orliability of the party or parties in whose favor the waiver was given.14. Applicable Law. This Agreement and the rights and obligations of the parties heretoshall be interpreted and enforced in accordance with and governed by the laws of the state ofDelaware without regard to its principles of conflict of laws.15. Integration. This Agreement, and the other documents referred to herein or deliveredpursuant hereto (including, without limitation, the Management LLC Agreement and the TJ ChemicalLLC Agreement) which form a part hereof contain the entire understanding of the parties withrespect to its subject matter and there are no restrictions, agreements, promises, representations,warranties, covenants or undertakings with respect to the subject matter hereof other than thoseexpressly set forth in such documents and such documents supersede all prior agreements andunderstandings between the parties with respect to their subject matter.
 

 
IN WITNESS WHEREOF, the Company and the Participant have duly executed this Agreement as of the dayand year first above written.KRATON MANAGEMENT LLC     By: /s/ David A. Spuria       Name: David A. Spuria  Title: Vice-President       RAYMOND GUBA   /s/ Raymond Guba