KRATON Management LLC Letterhead]

Exhibit 10.12(b)

[KRATON Management LLC Letterhead]

March 17, 2005

Mr. Xxxxx Xxxxx

[Insert Title]

KRATON Polymers LLC

000 Xxxxx Xxxxxx, 00xx Xx, Xxxxx Xxxxx

Houston, TX 77002

Dear Xxxxx:

This letter agreement (this “Letter Agreement”) is intended to memorialize our recent discussions concerning the Profits Units that were granted to you pursuant to the Profits Unit Award Agreement between you and KRATON Management LLC (the “Company”), dated [insert date]¹ (the “Profits Unit Award Agreement”). In accordance with those recent discussions, you agreed to forfeit [one-half (i.e., 93,750)]² [93,500] of the Profits Units that were scheduled to vest when the fair value of the assets of TJ Chemical equaled or exceeded three times (3X) the Threshold Amount, subject to certain conditions.

To reflect the foregoing forfeiture, the Profits Unit Award Agreement is hereby amended as follows:

A. Section 2 of the Profits Unit Award Agreement is hereby amended by deleting “375,000” and replacing it with “[281,250]”³ “[281,500]”.

B. Section 3 of the Profits Unit Award Agreement is hereby deleted in its entirety and replaced with the following:

3. Vesting. Notwithstanding Section 4.8 of the Management LLC Agreement, 187,500 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 [93,750]⁴[94,000] 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

¹ We need a copy of his original agreement.

² Please note that the Excel Spread Sheet contained slightly different numbers. Please confirm whether Xxxxx is forfeiting exactly one-half of the 3X tranche, or whether he is forfeiting a little less than one-half as indicated in the spread sheet.

³ See the footnote above.

⁴ See the footnote above.

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.

Except as otherwise specifically provided in this Letter Agreement, all capitalized terms used herein shall have the meaning set forth in the Profits Unit Award Agreement and all terms and conditions of the Profits Unit Award Agreement shall remain in full force and effect.

To indicate your acknowledgement and agreement to the foregoing, please sign and return the duplicate copy of this Letter Agreement to the undersigned.

Sincerely,
KRATON Management LLC
By:		/s/ Xxxx X. Xxxxx
		Name:		Xxxx X. Xxxxx
		Title:		Vice President

AGREED AND ACCEPTED:

/s/ Xxxxx Xxxxx

Xxxxx Xxxxx

Dated: May 23, 2005