Document:

Option Grant Agreement

 Exhibit 10.21 
  
 OPTION GRANT AGREEMENT 
  
 THIS OPTION GRANT AGREEMENT, made as of the 9th day of September, 2004 between TJ Chemical Holdings LLC (the “Company”) and Richard Ott (the “Participant”). 
  
 WHEREAS, the Company has adopted and maintains the TJ Chemical Holdings LLC 2004 Option Plan (the “Plan”)
to promote the interests of the Company and the Holders of Membership Units in the Company by providing key employees, consultants, members and service providers of the Company and its affiliates with an appropriate incentive to encourage them to
continue in the employ or service and to improve the growth and profitability of the Company and its affiliates; 
  
 WHEREAS, the Plan provides for the Grant to Participants of non-qualified Options to purchase Membership Unit(s) in the Company; 
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows: 
  
 1.
Grant of Options. Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant a non-qualified option (the “Option”) with respect to 1,000,000
Membership Unit(s) in the Company. 
  
 2. Grant Date. The Grant Date
of the Option hereby granted is September 9, 2004. 
  
 3. Vesting
Commencement Date. The Vesting Commencement Date of the Option hereby granted is January 1, 2004. 
  
 4. Incorporation of Plan. All terms, conditions and restrictions of the Plan and the LLC Agreement are incorporated herein and made part hereof as if stated herein. If there is any conflict between the
terms and conditions of the Plan or the LLC Agreement and this Option Grant Agreement, the terms and conditions of this Option Grant Agreement, as interpreted by the Committee in its sole discretion, shall govern, unless explicitly provided to the
contrary in the Plan or this Option Grant Agreement. All capitalized terms used herein shall have the meaning given to such terms in the Plan. 
  
 5. Exercise Price. The exercise price per Membership Unit underlying the Option granted hereby is $1.00. 
  
 6. Vesting Date. The Option shall become exercisable as follows: twenty percent
(20%) of the Membership Unit(s) (rounded down to the nearest Membership Unit) underlying the Option shall become exercisable on each of the first five anniversaries of the Vesting Commencement Date; provided that the Participant remains
employed with the Company or any of its affiliates on each such anniversary; and provided further that notwithstanding the foregoing, if within the two-year period following a Change in Control the Participant’s Services are
terminated by the Company or its affiliate without Cause or by the Participant for Good Reason, the unvested portion of the Option shall become immediately vested as of the effective date of the termination of such Participant’s Services. For
purposes of this Option Grant Agreement, the definition of 

  

 
Good Reason contained in the Plan shall govern the Participant’s rights during the two-year period following a Change in Control, without regard to that
definition’s reference to the Participant’s employment agreement. 
  
 7. Expiration Date. The Option or such portion thereof that has not yet become exercisable on the date the Participant’s Services are terminated for any reason shall expire on such date. The Option or such portion thereof
that has become exercisable on or before the date the Participant’s Services are terminated shall expire on the earlier of (a) the commencement of business on the date the Participant’s Services are terminated for Cause; (b) 90 calendar
days after the date the Participant’s Services are terminated for any reason other than Cause, death or Disability; (c) one year after the date the Participant’s Services are terminated by reason of death or Disability; or (d) the 10th
anniversary of the Grant Date. 
  
 8. Limitations on Transfer of Membership
Units; Termination of Employment. The Participant acknowledges that upon becoming a member of the Company, the Participant will be subject to all the terms and conditions provided in the LLC Agreement. Notwithstanding anything herein or the
LLC Agreement to the contrary, the Participant shall not sell or transfer any Membership Unit acquired pursuant to the exercise of an Option, except (i) to the Participant’s beneficiaries or estate upon the Participant’s death, (ii) upon
consent of the Committee, (iii) pursuant to Sections 6.03, 6.04, 6.06 of the LLC Agreement, or (iv) if such sale or transfer occurs following the date set forth in Section 6.07 of the LLC Agreement. 
  
 In the event of a termination of a Participant’s Services, the Company
shall have the right to purchase the Participant’s Membership Units acquired pursuant to the Options in accordance with Section 6.06 of the LLC Agreement. Any Membership Units acquired pursuant to the exercise of the Options shall be subject to
certain Tag-Along and Drag-Along rights in accordance with Article VI of the LLC Agreement. 
  
 9. Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Option Grant Agreement, shall impair
any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Option Grant
Agreement, or any waiver on the part of any party or any provisions or conditions of this Option Grant Agreement, shall be in writing and shall be effective only to the extent specifically set forth in such writing. 
  
 10. Limitation on Transfer of Options. Except as set forth in this Section 10,
the Option shall be exercisable only by the Participant. The Option shall not be assignable or transferable other than by will or by the laws of descent and distribution. Notwithstanding the foregoing, the Participant may request authorization from
the Committee to assign the Option granted herein to a trust or custodianship, the beneficiaries of which may include only the Participant, the Participant’s spouse or the Participant’s lineal descendants (by blood or adoption), and, if
the Committee grants such authorization, the Participant may assign his rights accordingly. In the event of any such assignment, such trust or custodianship shall be subject to all the restrictions, 

  

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obligations, and responsibilities as apply to the Participant under the Plan and this Option Grant Agreement and shall be entitled to all the rights of the
Participant under the Plan and this Option Grant Agreement; provided that notwithstanding such assignment, if the events or dates set forth in Sections 6 and 7 of the Option Grant Agreement occur with respect to the Participant, the Option
shall not vest or expire at the times set forth in Sections 6 and 7 hereof; provided further that upon such assignment in accordance with this Section 10, all references in the Plan and Option Grant Agreement except for Sections 6 and
7 of the Option Grant Agreement (and any other provision of Services with the Company or its affiliates (or the termination thereof)) shall be deemed to be replaced by a reference to the Transferee of the Option. 
  
 11. Indemnification. The Participant agrees, to the fullest extent permitted by
law, to indemnify and hold harmless the Company and any director, officer, or employee thereof against any and all losses, liabilities, claims, damages, and expenses of any nature whatsoever (including attorneys’ fees and disbursements,
judgments, fines and amounts paid in settlement) (collectively, “Losses”) arising out of or based upon any breach or failure by the Participant to comply with his obligations made herein. This Section 11 shall survive any
termination or execution of this Option Grant Agreement. 
  
 12.
Representations. 
  
 12.1 Participant
Representations. In addition to any representations made by the Participant in the LLC Agreement, the Participant hereby represents and warrants to the Company that: (a) the Participant is an “accredited investor” as defined in
Rule 501(a) under the Securities Act; provided that the Company may, in its discretion and subject to compliance with all applicable securities laws, waive the foregoing representation with respect to a limited number of Participants; (b) the
Participant, alone or together with his representatives, possesses such expertise, knowledge, and sophistication in financial and business matters generally, and in the type of transactions in which the Company proposes to engage in particular; (c)
the Participant is aware that the LLC Agreement provides significant restrictions on the ability of a Participant to sell, transfer, assign, mortgage, hypothecate, or otherwise encumber the Membership Units; (d) the Participant has duly executed and
delivered this Option Grant Agreement; and (e) the Participant’s authorization, execution, delivery, and performance of this Option Grant Agreement do not conflict with any other agreement or arrangement to which the Participant is a party or
by which it is bound. 
  
 12.2 Truth of Representations and
Warranties. The Participant represents and warrants that all of his representations set forth in Section 12.1 of this Option Grant Agreement are true and correct as of the date hereof and will be true and correct on any Exercise Date.

  
 13. Integration. This Option Grant Agreement, and the other
documents referred to herein or delivered pursuant hereto (including, without limitation, the LLC Agreement) which form a part hereof contain the entire understanding of the parties with respect 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 those expressly set forth in such documents. This Option Grant Agreement, the Plan and the LLC Agreement supersede all
prior agreements and understandings between the parties with respect to its subject matter. 
  

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 14. Counterparts. This Option Grant Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same instrument. 
  
 15. Governing Law. This Option Grant Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to the provisions thereof governing
conflict of laws. 
  
 16. Participant Acknowledgment. The
Participant hereby acknowledges receipt of a copy of the Plan and the LLC Agreement. The Participant hereby acknowledges that all decisions, determinations and interpretations of the Committee in respect of the Plan, this Option Grant Agreement and
the Option shall be final and conclusive. 
  
 [Remainder of page
intentionally left blank.] 
  

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 IN WITNESS WHEREOF, the Company has caused this Option Grant Agreement to be duly executed by its duly
authorized officer and said Participant has hereunto signed this Option Grant Agreement on his own behalf, thereby representing that he has carefully read and understands this Option Grant Agreement, the Plan, and the LLC Agreement as of the day and
year first written above. 
  

			
	TJ CHEMICAL HOLDINGS LLC
		
	 	 	/s/    RICHARD A.
EKLEBERRY        
	By:	 	Richard A. Ekleberry
	 Title:
	 	Vice President
	
	RICHARD OTT
		
	 	 	/s/    RICHARD A. OTT        
	 

  

 5Profit Unit Award Agreement

 Exhibit 10.22 
  
 PROFITS UNIT AWARD AGREEMENT 
  

PROFITS UNIT AWARD AGREEMENT, (“Agreement”) dated as of September 10, 2004 (the “Date of Grant”), by and between KRATON Management
LLC, a Delaware limited liability company (the “Company”) and Richard Ott (the “Participant”). Unless the context otherwise provides, capitalized terms not defined herein shall have the meanings ascribed to them in the Limited
Liability Company Operating Agreement 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 a pro rata share of any distributions received by the Company in
respect of the corresponding TJ Chemical Profits Units held by the Company in accordance with the Management LLC Agreement. Each TJ Chemical Profits Unit represents the right to receive a pro rata portion of the appreciation of the
assets of TJ Chemical above the Threshold Amount (as defined in the TJ Chemical LLC Agreement) for such TJ Chemical Profits Unit after the Date of Grant. The Threshold Amount for the Company Profits Units granted hereunder is $250,019,229,
representing the current value of the assets of TJ Chemical (net of debt) as of the Date of Grant, provided that such Threshold Amount may be appropriately and equitably adjusted by the Board of Directors of TJ Chemical for contributions and
distributions that affect the aggregate balances of all Capital Accounts (as defined in the TJ Chemical LLC Agreement) maintained under the TJ Chemical LLC Agreement in order to place all holders of profits units, including the Participant, in the
same position they would have been in had such contributions and distributions not been made. The pro rata portion of appreciation shall be determined based on all outstanding TJ Chemical Membership Units and TJ Chemical Profits Units
for which the applicable Threshold Amount has been achieved (but only as to the appreciation above the Threshold Amount with respect to the applicable TJ Chemical Profits Units). 
  
 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 Company at 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 350,000 Company Profits Units (the “Profits Units”), subject to the terms and conditions of this Agreement and the Management LLC Agreement. 
  
 3. Vesting. Notwithstanding Section 4.8 of the Management LLC Agreement, 50% of the Profits Unit shall vest when the fair value of
the assets of TJ Chemical equal or exceed two times (2X) the Threshold Amount and the remaining 50% of the Profits Units shall vest when the fair value of the assets of TJ Chemical equal or exceed three times (3X) the Threshold Amount, in each case,
as determined by the Board of Directors of TJ Chemical, provided that the Participant is employed by the KRATON Group on such vesting date, and provided, further, that 100% of the Profits Units shall vest upon the effective date of a disposition by
the Initial Investors of 51% or more of their aggregate interests in KRATON to one or more unrelated third Persons if the 

  

 
Participant is employed by the KRATON Group through such date. Notwithstanding anything to the contrary in any other agreement, including the Management LLC
Agreement, in the event the Participant’s employment with the KRATON Group is terminated prior to a portion or all Profits Units becoming vested as provided above, all unvested Profits Units shall immediately and without any further action be
forfeited on the date of termination. 
  
 4. LLC Agreements. This Agreement
shall be subject to all of the provisions of the Management LLC Agreement, and such provisions are incorporated herein by this reference. The Participant understands that, as a condition to receiving the Profits Units granted hereunder, the
Participant must execute and comply with the Management LLC Agreement. The Participant shall be a Member and holder of Profits Unit for all purposes under the Management LLC Agreement. Unless expressly stated otherwise in this Agreement, to the
extent that, with respect to any right or obligation of the Participant, any provisions of this Agreement are not consistent with the Management LLC Agreement, the provisions of the Management LLC Agreement shall govern. 
  
 5. Representations by Participant. The Participant represents and warrants that he has
received, read and executed a copy of the Management LLC Agreement. 
  
 6.
Restrictions on Transferability. Except as specifically provided in Article IX of the Management LLC Agreement, the Profits Units may not be sold, transferred or otherwise disposed of without the written approval of the Managing Member.

  
 7. Corporate Transaction; Termination of Employment. The Company shall
have the right to cancel the Profits Units in the event of a merger, consolidation, recapitalization or other corporate transaction involving TJ Chemical in which TJ Chemical cancels the corresponding TJ Chemical Profits Units and shall distribute
the cash, securities or other property, or any combination thereof, if any, received from TJ Chemical in respect of such corresponding TJ Chemical Profits Units in accordance with Section 9.6 of the Management LLC Agreement. If the Participant
becomes a Terminated Employee, the Company shall have the right to purchase any then-vested Profits Units 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
any TJ Chemical Profits Unit shall be determined in good faith by the Board of Directors of TJ Chemical in accordance with the TJ Chemical LLC Agreement and all determinations of the Board of Directors shall be final and binding on all parties.

  
 9. Assignment. This Agreement and the rights hereunder shall not be
assignable or transferable by the Participant without the prior written consent of the Company. This Agreement shall 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 a written instrument signed by the parties hereto. 
  

 11. Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts, each of which shall
be considered an original, but all such counterparts shall together constitute but one and the same contract. 
  
 12. Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such term or provision shall be enforced to the
maximum extent permitted by law and, in any event, such illegality or invalidity 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 except if the giving of such waiver is contained in a written notice given to
the party claiming such waiver, and no such waiver shall be deemed to be a waiver of any other or further obligation or liability 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
hereto shall be interpreted and enforced in accordance with and governed by the laws of the state of Delaware without regard to its principles of conflict of laws. 
  
 15. Integration. This Agreement, and the other documents referred to herein or delivered pursuant hereto (including, without
limitation, the Management LLC Agreement and the TJ Chemical LLC Agreement) which form a part hereof contain the entire understanding of the parties with respect 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 those expressly set forth in such documents and such documents supersede all prior agreements and understandings 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 day and
year first above written. 
  

					
	 KRATON MANAGEMENT LLC

			
	 By:
	 	 	 	/s/    RICHARD A.
EKLEBERRY        
	 	 	 Name:
	 	 Richard A. Ekleberry

	 	 	 Title:
	 	 Vice President

	
	
	/s/    RICHARD A. OTT        
	Richard Ott

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