Exhibit 10.1

 

EXECUTION VERSION

 

 

BUSINESS PURCHASE AGREEMENT

 

by

 

and

 

among

 

MEXICHEM COMPUESTOS, S.A. DE C.V.,

 

MEXICHEM UK LIMITED,

 

MEXICHEM FLUOR CANADA, INC.,

 

MEXICHEM AMANCO HOLDING, S.A. DE C.V.,

 

MEXICHEM, S.A.B. DE C.V.,

 

ALPHAGARY CORPORATION,

 

ALPHAGARY LIMITED,

 

ROCKWOOD ADDITIVES LIMITED,

 

ROCKWOOD SPECIALTIES INC.,

 

ROCKWOOD SPECIALTIES GROUP, INC.

 

AND

 

ROCKWOOD HOLDINGS, INC.

 

 

Dated as of December 16, 2010

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE 1

Definitions; Rules of Interpretation

 

2

 

 

 

 

1.1

Certain Defined Terms

 

2

1.2

Rules of Interpretation

 

17

 

 

 

 

ARTICLE 2

Sale and Transfer of Purchased IP and Purchased Equity Interests; Closing;
Purchase Price Adjustment

 

19

 

 

 

 

2.1

Sale of Purchased IP and Purchased Equity Interests

 

19

2.2

Timing

 

20

2.3

Consideration

 

20

2.4

Closing

 

21

2.5

Closing Obligations

 

21

2.6

Purchase Price Adjustments

 

23

2.7

Purchase Price Allocation

 

27

2.8

Tax Treatment of Payments

 

28

2.9

Withholding Taxes

 

28

 

 

 

 

ARTICLE 3

Representations and Warranties of the Rockwood Sellers

 

28

 

 

 

 

3.1

Organization and Good Standing

 

28

3.2

Authority; No Conflict

 

29

3.3

Capitalization

 

30

3.4

Title to Purchased Equity Interests

 

31

3.5

Financial Statements

 

31

3.6

Books and Records

 

32

3.7

Title to Assets; Condition of Assets

 

32

3.8

Real Property

 

32

3.9

Accounts Receivable

 

35

3.10

Inventory

 

35

3.11

No Undisclosed Liabilities

 

35

3.12

Tax Returns Filed and Taxes Paid

 

35

3.13

No Adverse Change

 

37

3.14

Employee Benefits

 

37

3.15

Compliance with Legal Requirements; Governmental Authorizations

 

41

3.16

Legal Proceedings; Orders

 

42

3.17

Absence of Certain Changes and Events

 

43

3.18

Contracts; No Defaults

 

45

3.19

Environmental Matters

 

47

3.20

Employees

 

48

3.21

Labor Relations; Compliance

 

48

3.22

Intellectual Property

 

49

3.23

Product Liability

 

53

3.24

Compliance with the Foreign Corrupt Practices Act and Export Control and
Anti-boycott Laws

 

53

 

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Page

 

 

 

 

3.25

Relationships with Related Persons

 

53

3.26

Brokers or Finders

 

54

3.27

Bank Accounts

 

54

3.28

REACH

 

54

3.29

NO OTHER REPRESENTATIONS OR WARRANTIES

 

54

 

 

 

 

ARTICLE 4

Representations and Warranties of the Purchasers

 

54

 

 

 

 

4.1

Organization and Good Standing

 

54

4.2

Authority; No Conflict

 

55

4.3

Certain Proceedings

 

56

4.4

Brokers or Finders

 

56

4.5

Experience

 

56

 

 

 

 

ARTICLE 5

Covenants of the Sellers

 

56

 

 

 

 

5.1

Access and Investigation

 

56

5.2

Operation of the Business

 

57

5.3

Negative Covenant

 

59

5.4

Required Notifications and Approvals

 

59

5.5

Notification

 

60

5.6

Exclusivity

 

61

5.7

Use of Name

 

61

5.8

Commercially Reasonable Efforts

 

61

5.9

Payment of Indebtedness; Releases

 

61

5.10

Further Assurances

 

61

5.11

Reporting Assistance Obligations of the Sellers

 

62

 

 

 

 

ARTICLE 6

Covenants of the Purchasers

 

62

 

 

 

 

6.1

Approvals of Governmental Bodies

 

62

6.2

Commercially Reasonable Efforts

 

63

6.3

Use of Name

 

63

6.4

Notification

 

63

6.5

Guarantees

 

64

6.6

Access and Investigation

 

64

6.7

Accounts Receivable Purchase

 

64

6.8

Further Assurances

 

65

6.9

Employee Communications

 

65

6.10

Reporting Assistance Obligations of the Purchasers

 

65

 

 

 

 

ARTICLE 7

Conditions Precedent to the Purchasers’ Obligation to Close

 

66

 

 

 

 

7.1

Accuracy of Representations

 

66

7.2

The Sellers’ Performance

 

66

7.3

Approvals

 

66

7.4

No Proceedings

 

66

7.5

No Injunction

 

66

7.6

No Material Adverse Change

 

67

7.7

Reorganization

 

67

7.8

Intra-Company Accounts

 

67

 

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Page

 

 

 

 

7.9

Release of Security Interests

 

67

7.10

Release of Guarantees

 

67

 

 

 

 

ARTICLE 8

Conditions Precedent to the Sellers’ Obligation to Close

 

67

 

 

 

 

8.1

Accuracy of Representations

 

67

8.2

The Purchasers’ Performance

 

68

8.3

HSR Act

 

68

8.4

No Proceedings

 

68

8.5

No Injunction

 

68

8.6

Estimated Purchase Price

 

68

 

 

 

 

ARTICLE 9

Tax Matters

 

68

 

 

 

 

9.1

Tax Returns

 

68

9.2

Overlap Period

 

69

9.3

Controversies

 

70

9.4

Transfer Taxes

 

71

9.5

Amended Tax Returns; Tax Refunds

 

71

9.6

Prior Tax Agreements

 

71

9.7

Indemnification for Taxes

 

71

9.8

Section 338 Election

 

72

9.9

Pre-Closing Tax Payments

 

73

9.10

Tax Cooperation

 

73

9.11

Mexican Taxes

 

73

 

 

 

 

ARTICLE 10

Employee Benefit Plan Matters

 

73

 

 

 

 

10.1

Employee Benefit Plan Matters

 

73

 

 

 

 

ARTICLE 11

Termination

 

75

 

 

 

 

11.1

Termination Events

 

75

11.2

Effect of Termination

 

76

 

 

 

 

ARTICLE 12

Indemnification; Remedies

 

76

 

 

 

 

12.1

Survival

 

76

12.2

Indemnification and Payment by the Rockwood Sellers

 

77

12.3

Indemnification and Payment by the Purchasers

 

78

12.4

Third-Party Claims

 

79

12.5

Other Claims

 

81

12.6

Indemnification in Case of Strict Liability or Indemnitee Negligence

 

81

12.7

Interest

 

81

12.8

Exclusive Remedy

 

81

12.9

Additional Limitations; Adjustments; Mitigation

 

81

12.10

Application to Taxes

 

82

 

 

 

 

ARTICLE 13

General Provisions

 

82

 

 

 

 

13.1

Expenses

 

82

13.2

Public Announcements

 

83

13.3

Notices

 

83

 

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Page

 

 

 

 

13.4

Governing Law

 

84

13.5

Arbitration

 

84

13.6

Waiver

 

85

13.7

Entire Agreement and Modification

 

85

13.8

Assignments, Successors, and No Third-Party Rights

 

85

13.9

Severability

 

86

13.10

Joint and Several Obligations

 

86

13.11

Section Headings, Construction

 

86

13.12

Representatives

 

86

13.13

Specific Performance

 

87

13.14

Counterparts

 

87

 

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Exhibits

EXHIBIT A

Form of Non-Competition Agreement

EXHIBIT B

Form of Non-Solicitation Agreement

EXHIBIT C

Form of Transition Services Agreement

EXHIBIT D

Form of Rockwood Specialties Group’s Certificate

EXHIBIT E

Form of the Purchasers’ Certificate

EXHIBIT F

Form of Escrow Agreement

 

Schedules

SCHEDULE 2.7                           Purchase Price Allocation

 

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BUSINESS PURCHASE AGREEMENT

 

This Business Purchase Agreement (this “Agreement”) is made as of December 16,
2010, by and among Mexichem Compuestos, S.A. de C.V., a company (sociedad
anónima de capital variable) incorporated and existing under the laws of Mexico
(“Mexichem”), Mexichem UK Limited, a company incorporated and existing under the
laws of England and Wales (“Mexichem UK”), Mexichem Fluor Canada Inc., a company
incorporated and existing under the laws of the Province of Ontario, Canada
(“Mexichem Canada”), Mexichem Amanco Holding, S.A. de C.V., a company (sociedad
anónima de capital variable) incorporated and existing under the laws of Mexico
(“Mexichem Amanco”), and Mexichem, S.A.B. de C.V., a company (sociedad anónima
bursátil de capital variable) incorporated and existing under the laws of Mexico
(“Mexichem Parent”, and, together with Mexichem, Mexichem UK, Mexichem Canada
and Mexichem Amanco, the “Purchasers”), and AlphaGary Corporation, a corporation
incorporated and existing under the laws of the State of Delaware (“AlphaGary
Corporation”), AlphaGary Limited, a company incorporated and existing under the
laws of England and Wales (“AGL”), Rockwood Additives Limited, a company
incorporated and existing under the laws of England and Wales (“Rockwood
Additives”), Rockwood Specialties Inc., a corporation incorporated and existing
under the laws of the State of Delaware (“Rockwood Specialties”), Rockwood
Specialties Group, Inc., a corporation incorporated and existing under the laws
of the State of Delaware (“Rockwood Specialties Group”), and Rockwood
Holdings, Inc., a corporation incorporated and existing under the State of
Delaware (“Rockwood Holdings”, and together with Rockwood Additives, Rockwood
Specialties and Rockwood Specialties Group, the “Rockwood Sellers”).  The
Rockwood Sellers, together with AlphaGary Corporation and AGL, shall be referred
to as the “Sellers”.

 

RECITALS

 

WHEREAS, Rockwood Holdings indirectly owns all of the equity interests of
Rockwood Specialties Group;

 

WHEREAS, Rockwood Specialties Group directly or indirectly owns all of the
equity interests of each of the other Sellers;

 

WHEREAS, Mexichem desires to purchase from AlphaGary Corporation and AGL, and
AlphaGary Corporation and AGL desire to sell to Mexichem, the AG Patents and
Know-How (as hereinafter defined);

 

WHEREAS, Mexichem Amanco desires to purchase from AlphaGary Corporation and AGL,
and AlphaGary Corporation and AGL desire to sell to Mexichem Amanco, the AG
Marks (as hereinafter defined);

 

WHEREAS, the Purchasers desire to purchase from the Rockwood Sellers, and the
Rockwood Sellers desire to sell to the Purchasers, the Purchased Equity
Interests (as hereinafter defined); and

 

WHEREAS, prior to and as a condition to the consummation of the transactions
contemplated herein, AGL shall transfer all of the issued and outstanding shares
of Princeton

 

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Silver Limited, a company incorporated and existing under the laws of England
and Wales, to an Affiliate of Rockwood Specialties Group (such transfer, the
“Reorganization”);

 

NOW, THEREFORE, in consideration of the respective covenants, agreements,
representations, warranties and indemnities herein contained and for other good
and valuable consideration (the receipt and sufficiency of which are
acknowledged by each party hereto), the parties hereto agree as follows:

 

ARTICLE 1
Definitions; Rules of Interpretation

 

1.1         Certain Defined Terms.  For purposes of this Agreement, capitalized
terms used in this Agreement have the meanings set forth below:

 

“1998 Transfer” has the meaning set forth in Section 3.8(j).

 

“2010 Financial Statements” has the meaning set forth in Section 3.5.

 

“Accounts Receivable” has the meaning set forth in Section 3.9.

 

“Adjustment Statement” has the meaning set forth in Section 2.6(c)(i).

 

“Administrative Assets” means assets utilized by the Rockwood Sellers and their
Affiliates (other than the Target Companies) in providing administrative,
accounting, tax, finance, insurance, legal, employee benefits, information
technology and other like services to the Target Companies set forth in Schedule
1.1(a) of the Seller Disclosure Letter.

 

“AG Patents and Know-How” means the following: (i) patents, patent applications,
including any continuations, divisions, continuations-in-part, renewals, and
reissues for any of the foregoing; and (ii) know-how, trade secrets, technical
information, data, databases, process technology, inventions (whether patentable
or unpatentable and whether or not reduced to practice), plans, proposals,
drawings, blue prints, research and development information, in each case owned
by AlphaGary Corporation and AGL.

 

“AG Marks” means the following: names, Internet domain names, fictional business
names, trade names, trademarks, service marks, trade dress, logos, and other
indicia of origin, and registrations and applications for registration of any of
the foregoing, together with the goodwill associated therewith, in each case
owned by AlphaGary Corporation and AGL.

 

“AGL” has the meaning set forth in the Preamble of this Agreement.

 

“Affiliate” means, with respect to a Person, another Person, directly or
indirectly, through one or more intermediaries, controlled by, under common
control with or which controls, the Person specified at such time.  For purposes
of this definition, “control” (including, with correlative meanings, “controlled
by” and “under common control with”) means the possession of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.  For

 

2

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purposes of this Agreement and the Ancillary Documents, no Person shall be
deemed to control Rockwood Holdings.

 

“Agreement” has the meaning set forth in the Preamble of this Agreement.

 

“Allocation” has the meaning set forth in Section 2.7.

 

“AlphaGary Canada” means AlphaGary (Canada) Limited, a company incorporated and
existing under the laws of the province of Ontario, Canada.

 

“AlphaGary Corporation” has the meaning set forth in the Preamble of this
Agreement.

 

“Alternative Transaction” means (a) any stock purchase, share purchase, merger,
consolidation, spin-off, split-off, sale of equity interests or other similar
transaction involving any of the Target Companies or the Business, (b) any sale
of all or any significant portion of the assets of the Target Companies (other
than pursuant to the Reorganization), (c) any other transaction in respect of
any of the Target Companies that results, directly or indirectly, in any of the
Target Companies no longer being owned directly or indirectly by Parent or
(d) any other transaction or series of transactions that has substantially
similar economic effects, in each such case, in which any of the Purchasers or
their Affiliates do not participate.

 

“Ancillary Documents” means the Non-Competition Agreement, the Non-Solicitation
Agreement, the Escrow Agreement, the Transition Services Agreement, the
instruments described in clauses (i), (ii), (iii), (v), (x), (xi), (xvii),
(xviii) and (xix) of Section 2.5(a) and clause (iii) of Section 2.5(b).

 

“Antitrust Laws” means any Legal Requirements governing monopolies, agreements
in restraint of trade or the lessening of competition through merger or
acquisition, including the HSR Act and Brazilian Law No. 8884 of 1994.

 

“Appurtenances” means all privileges, rights, easements, hereditaments and
appurtenances belonging to or for the benefit of the Real Property, including
easements appurtenant to and for the benefit of any Real Property (a “Dominant
Parcel”) for, and as the primary means of access between the Dominant Parcel and
a public way, or for any other use upon which lawful use of the Dominant Parcel
for the purposes for which it is presently being used is dependent.

 

“Basket Amount” has the meaning set forth in Section 12.2(b)(i).

 

“Benefit Plans” has the meaning set forth in Section 3.14(a).

 

“Business” means the business of developing, designing, manufacturing, marketing
and selling polymer materials, such as vinyl and fluoropolymer alloys,
halogen-free plastics, thermoplastic elastomer (TPE) compounds, polyvinyl
chloride compounds, halogen-free/flame retardant olefin blends, polyurethane
blends and crosslinkable olefins, specialty closure materials and TPE-based
products, possessing specialized characteristics for niche applications, for
manufacturers of power and communications cables, disposable medical

 

3

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devices, crown and closure sealants, automobile components, building materials
and consumer packaging, soft-touch and footwear applications.

 

“Business Day” means any day, other than a Saturday, a Sunday or a day on which
banks located in New York, New York, London, United Kingdom or Mexico City,
Mexico are authorized or required by Legal Requirement to be closed.

 

“Business Employee” means the employees of the Target Companies that perform
services exclusively for the Business.

 

“CADE” has the meaning set forth in Section 5.4.

 

“Canadian Purchased Equity Interests” means all of the issued and outstanding
common shares, no par value per share, of AlphaGary Canada, representing one
hundred percent (100%) of the issued and outstanding shares or other equity
interests of AlphaGary Canada.

 

“Claim” means any action, claim, lawsuit, demand, suit, inquiry, hearing,
government audit, investigation, notice of a violation or noncompliance,
litigation, proceeding, arbitration or appeal, whether civil, criminal or
administrative.

 

“Cleanup” has the meaning set forth in the definition of Environmental
Liabilities.

 

“Closing” has the meaning set forth in Section 2.4.

 

“Closing Date” means the date on which the Closing actually takes place.

 

“Closing Date Balance Sheet” has the meaning set forth in Section 2.6(b).

 

“Closing Date Indebtedness” means any Indebtedness of the Target Companies as of
the Closing Date.

 

“Closing Date Working Capital” means, with respect to the Target Companies, the
following current assets and current liabilities from the Estimated Closing Date
Balance Sheet or the Closing Date Balance Sheet, as the case may be: (a) the sum
of (i) cash, (ii) accounts receivable, (iii) inventory, (iv) prepaid expenses of
the Target Companies and (v) recoverable VAT and GST/HST previously paid by the
Target Companies and not yet recovered, in each case determined as of the
Closing Date; minus (b) the sum of (i) accounts payable, (ii) Taxes payable,
including Taxes payable by the Target Companies as a result of the Contemplated
Transactions (other than those described in Section 9.11), to the extent not an
income Tax to be paid by the Sellers with a Tax Return to be filed by the
Rockwood Sellers pursuant to Section 9.1(a) of this Agreement or recoverable by
any of the Target Companies after payment, (iii) accrued expenses, (iv) checks
in transit, (v) employee compensation for periods on or prior to the Closing
Date, including annual employee bonus obligations that are not accrued on the
Financial Statements and (vi) other current liabilities, contingencies or
reserves of the Target Companies, in each case determined as of the Closing
Date.

 

“COBRA” has the meaning set forth in Section 3.14(c)(iv).

 

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“Code” has the meaning set forth in Section 3.14(a).

 

“Consent” means any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).

 

“Contemplated Transactions” means all of the transactions contemplated by this
Agreement, including:

 

(a)           the sale and purchase of the Purchased IP and the Purchased Equity
Interests by the Sellers and the Purchasers;

 

(b)           the Sellers’ execution, delivery and performance of this Agreement
and the Ancillary Documents to be executed and delivered by the Sellers as
contemplated hereby;

 

(c)           the Purchasers’ execution, delivery and performance of this
Agreement and the Ancillary Documents to be executed and delivered by the
Purchasers as contemplated hereby; and

 

(d)           the Reorganization.

 

“Contested Adjustments” has the meaning set forth in Section 2.6(c)(i).

 

“Contested Adjustment Notice” has the meaning set forth in Section 2.6(c)(i).

 

“Contract” means any agreement, contract, instrument, obligation, note, bond,
mortgage, indenture, guarantee, promise, understanding, arrangement, commitment
or undertaking (whether written or oral).

 

“Copyrights” has the meaning set forth in Section 3.22(a)(iv).

 

“Credit Agreement” has the meaning set forth in the definition of Guarantees.

 

“CTA” means Corporation Tax Act 2009 of the United Kingdom.

 

“Damages” has the meaning set forth in Section 12.2(a).

 

“Dollars” or “$” means the lawful currency of the United States.

 

“Dominant Parcel” has the meaning set forth in the definition of Appurtenances.

 

“Employer Debt Regulations” has the meaning set forth in Section 10.1(e)(ii)(B).

 

“Encumbrance” means any charge, claim, lien, option, pledge, encumbrance,
mortgage, deed of trust, easement, right of way, encroachment, security
interest, right of first option, right of first refusal or similar restriction,
including any restriction on transfer.

 

“Environment” means soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins and
wetlands,

 

5

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whether manmade or naturally occurring), groundwaters, drinking water supply,
stream sediments and ambient air (including indoor air).

 

“Environmental Liabilities” means any cost, damages, expense, liability,
obligation, or other responsibility arising from or under Environmental Law and
consisting of or relating to:

 

(a)           any environmental matters or conditions (including on-site or
off-site contamination and regulation of chemical substances or products);

 

(b)           any fine, penalty, judgment, award, settlement, Proceeding,
damage, loss, claim, demand or response, investigative, remedial, or inspection
cost or expense arising under Environmental Law;

 

(c)           financial responsibility under Environmental Law for cleanup costs
or corrective action, including any investigation, cleanup, removal,
containment, or other remediation or response actions required by applicable
Environmental Law (“Cleanup”) and for any natural resource damages; or

 

(d)           any other compliance, corrective, investigative, or remedial
measures required under Environmental Law.

 

The terms “removal,” “remedial,” “response action,” “Cleanup” and “corrective
action” include the types of activities covered by Environmental Law, in each
case as applicable.

 

“Environmental Law” means any Legal Requirement relating to the protection of
the Environment or the manufacture, use, transport, treatment, storage,
disposal, release or threatened release of Hazardous Materials.

 

“ERISA” has the meaning set forth in Section 3.14(a).

 

“Escrow Agent” means Citibank N.A. or such other internationally recognized
financial institution reasonably satisfactory to the Purchasers and the Rockwood
Sellers.

 

“Escrow Agreement” means an Escrow Agreement by and among the Purchasers, the
Rockwood Sellers and the Escrow Agent in substantially the form of Exhibit F.

 

“Escrow Amount” has the meaning set forth in Section 2.3(c).

 

“Estimated Closing Date Balance Sheet” has the meaning set forth in
Section 2.6(a).

 

“Estimated Purchase Price” has the meaning set forth in Section 2.3(b).

 

“Estimated Working Capital Shortfall” has the meaning set forth in
Section 2.6(a).

 

“Estimated Working Capital Surplus” has the meaning set forth in Section 2.6(a).

 

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“ETA” means the Excise Tax Act (Canada).

 

“Facilities” means any real property, leaseholds, or other interests in real
property currently or formerly owned or operated by any of the Target Companies,
and any buildings, plants, structures, or equipment (including motor vehicles,
tank cars, and rolling stock) currently or formerly owned or operated by the
Target Companies.

 

“Financial Statements” has the meaning set forth in Section 3.5.

 

“Governmental Authorization” means any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body.

 

“Governmental Body” means any:

 

(a)           nation, state, county, province, city, town, prefect, village,
district, parish, or other jurisdiction of any nature;

 

(b)           federal, state, local, municipal, foreign, or other government;

 

(c)           governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official court or other
legally recognized tribunal);

 

(d)           multi-national organization or body; or

 

(e)           body legally exercising, or legally entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.

 

“GST/HST” means goods and services tax or harmonized sales tax, interest,
penalties and fines imposed under Part IX of the ETA and the regulations made
thereunder.

 

“Guarantees” means, collectively: (i) AlphaGary Corporation’s guarantee of the
certain senior subordinated notes due 2014 issued pursuant to that certain
Indenture, dated as of November 10, 2004, among Rockwood Specialties Group,
certain of Rockwood Specialties Group’s direct and indirect domestic
subsidiaries named in the signature pages thereto, as the guarantors, and The
Bank of New York, a New York banking corporation, as the trustee; (ii) that
certain Guarantee, dated as of July 30, 2004, made among Rockwood Specialties
International, Inc., a Delaware corporation, each of the subsidiaries of
Rockwood Specialties Group party thereto, as subsidiary guarantors, and Credit
Suisse First Boston, acting through its Cayman Islands Branch, as administrative
agent for the lenders from time to time parties to that certain Amended and
Restated Credit Agreement, dated as of June 15, 2009 (as the same may be
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Rockwood Specialties Group, Rockwood Specialties Limited, a
company organized under the laws of England and Wales, Rockwood Specialties
International, Inc., a Delaware corporation, the lenders from time to time party
thereto, Credit Suisse First Boston, acting through its Cayman Islands Branch,
as administrative agent, and UBS Securities LLC and Goldman Sachs Credit
Partners L.P., as co-syndication agents for the lenders; (iii) that certain

 

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UK Guarantee, dated as of July 30, 2004, made among Rockwood Specialties Group
and each of the subsidiaries of Rockwood Specialties Limited, a company
organized under the laws of England and Wales, party thereto, as subsidiary
guarantors, and Credit Suisse First Boston, acting through its Cayman Islands
Branch, as administrative agent for the lenders from time to time parties to the
Credit Agreement; (iv) that certain Canadian Guarantee, dated as of July 30,
2004, by and among each of the Canadian Subsidiaries of Rockwood Specialties
Group listed on Annex A thereto in favor of Credit Suisse First Boston, acting
through its Cayman Islands Branch, acting as administrative agent for the
lenders from time to time parties to the Credit Agreement; and (v) Guarantee
Agreement, dated as of July 30, 2004, by and among AlphaGary Corporation and
each of the other subsidiaries of Rockwood Specialties Group listed on the
signature pages of such Guarantee Agreement and the agents for the lenders from
time to time parties to that certain Senior Subordinated Loan Agreement, dated
as of July 30, 2004, by and among Rockwood Specialties Group, as borrower, the
several lenders form time to time party hereto, Credit Suisse First Boston,
acting through its Cayman Islands Branch, as administrative agent, Goldman Sachs
Credit Partners L.P., as syndication agent, UBS AG, Stamford Branch, as
documentation agent, Credit Suisse First Boston, acting through its Cayman
Islands Branch, UBS Loan Finance LLC and Goldman Sachs Credit Partners L.P., as
initial lenders, and Credit Suisse First Boston, acting through its Cayman
Islands Branch, UBS Securities LLC and Goldman Sachs Credit Partners L.P., as
lead arrangers.

 

“Hazardous Activity” means the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment.

 

“Hazardous Materials” means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to the
applicable Environmental Law, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials, and any
other act, business, operation, or thing that increases the environmental
danger, or environmental risk of danger, or poses an unreasonable environmental
risk of harm to persons or property on or off the Facilities.

 

“Historic Contamination” means (i) the Release, on or before the Closing, of any
Hazardous Materials at, in, on, under or from any Real Property for which
Cleanup is required by a Governmental Body, or (ii) the presence of any
contamination, pollution or similar adverse effect on the Environment that is or
becomes the responsibility of the Target Companies resulting from an act or
omission that occurred on or before Closing, whether or not resulting in or
reasonably likely to result in an Environmental Liability on or before Closing.

 

“HMRC” means HM Revenue & Customs.

 

“HSR Act” means the Hart Scott Rodino Antitrust Improvements Act of 1976.

 

“ICDR Rules” has the meaning set forth in Section 13.5(a).

 

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“ICTA” means Income and Corporation Taxes Act 1988 of the United Kingdom.

 

“Improvements” means all buildings, structures, fixtures and improvements,
including the roof, foundation, load-bearing walls and other structural elements
thereof; heating, ventilation, air conditioning, mechanical, electrical,
plumbing and other building systems; sewer, storm and waste water systems,
irrigation and other water distribution systems; parking facilities, fire
protection, security and surveillance systems and telecommunications, computer,
wiring and cable installations located on or included in the Real Property,
including those under construction.

 

“Indebtedness” means and includes, with respect to any Person, (i) indebtedness
for borrowed money or indebtedness issued or incurred in substitution or
exchange for indebtedness for borrowed money, (ii) amounts owing as deferred
purchase price for property or services, including all seller notes and
“earn-out” payments, (iii) indebtedness evidenced by any note, bond, debenture,
mortgage or other debt instrument or debt security, (iv) commitments or
obligations by which such Person assures a creditor against loss (including
contingent reimbursement obligations with respect to letters of credit),
(v) indebtedness secured by a Lien on assets or properties of such Person,
(vi) obligations under any interest rate, currency or other hedging agreement or
(vii) guarantees or other contingent liabilities (including so called
take-or-pay or keep-well agreements) with respect to any indebtedness,
obligation, claim or liability of any other Person of a type described in
clauses (i) through (vi) above.  Indebtedness shall not, however, include
liabilities comprising the Closing Date Working Capital.

 

“Indemnified Person” has the meaning set forth in Section 12.4(a).

 

“Indemnifying Person” has the meaning set forth in Section 12.4(a).

 

“Independent Accountant” has the meaning set forth in Section 2.6(c)(ii).

 

“Intellectual Property” means any of the following in any jurisdiction
throughout the world: (i) names, Internet domain names, fictional business
names, trade names, trademarks, service marks, trade dress, logos, and other
indicia of origin, and registrations and applications for registration of any of
the foregoing, together with the goodwill associated therewith; (ii) patents,
patent applications, including any continuations, divisions,
continuations-in-part, renewals, and reissues for any of the foregoing;
(iii) copyrights, and all registrations and applications for registration for
the foregoing; and (iv) know-how, Trade Secrets, confidential information,
customer lists, software, technical information, data, databases, process
technology, inventions (whether patentable or unpatentable and whether or not
reduced to practice), plans, proposals, drawings, blue prints, research and
development information.

 

“Intellectual Property Assets” has the meaning set forth in Section 3.22(a).

 

“Inventory” means the inventory of the Target Companies, wherever located,
owned, leased, licensed or held for use of the Target Companies or in connection
with the Business, including finished goods, work in process, supplies, parts,
containers, recycled materials and raw materials.

 

“IRS” means the United States Internal Revenue Service.

 

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“ITA” means Income Tax Act (Canada).

 

“Knowledge” means, with respect to any individual, as to a particular fact or
other matter, that such individual is actually or should reasonably be expected
to be aware of such fact or other matter.  A Person (other than an individual)
will be deemed to have Knowledge of a particular fact or other matter if any
individual who is currently serving as a director or officer of such Person has
Knowledge of such fact or other matter.

 

“Knowledge of Rockwood” means the Knowledge of the Sellers and the Target
Companies.

 

“Lease” means any lease, sublease, license, concession or other agreement
(written or oral), including any agreement granting rights of possession,
occupation, use or control and all amendments, extensions, renewals, guaranties
and other agreements with respect thereto, pursuant to which any of the Target
Companies hold any Leased Real Property, including the right to all security
deposits and other amounts and instruments deposited by or on behalf of any of
the Target Companies thereunder.

 

“Leased Real Property” means the parcels of real property leased, subleased or
held under license or concession by the Target Companies (together with all
Improvements thereon).

 

“Legal Requirement” means any federal, state, provincial, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law (including common law), ordinance, by-law, regulation, rule,
statute or treaty.

 

“Lien” means any charge, claim, lien, option, pledge, security interest, right
of first option, right of first refusal, right of preemption or similar
restriction, including any restriction on voting or transfer (other than any
restriction on voting or transfer imposed by operation of law).

 

“Marks” has the meaning set forth in Section 3.22(a)(ii).

 

“Material Adverse Change” means, (a) when used with respect to the Target
Companies or the Business, any materially adverse change in or effect on (x) the
business, assets, liabilities, results of operation or financial condition of
the Target Companies, taken as a whole, or (y) the ability of the Target
Companies to perform their respective obligations hereunder, or (b) when used
with respect to the Rockwood Sellers or the Purchasers, any materially adverse
change in or effect on (including any material delay) the ability of the
Rockwood Sellers or the Purchasers, as the case may be, to perform their
respective obligations hereunder, disregarding, in the case of clauses (a) and
(b), each of the following, and any effects thereof or changes relating thereto
or resulting therefrom:  (i) changes in the general economic, financial markets,
regulatory or political conditions, (ii) events or changes to the extent that
they generally affect the industry or industries, or market or markets, in which
the Business operates, (iii) the suspension of trading in securities on any
United States or foreign stock exchange, or a disruption in securities
settlement, payment or clearance services in the United States or elsewhere,
(iv) the impact of any decision by the Purchasers not to continue the employment
of any person who is an employee of the Target Companies as of the date hereof,
any voluntary

 

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termination of employment with the Target Companies by any Business Employees
occurring during the period between the date hereof and the Closing Date and any
termination of employment with the Target Companies for any reason of any
Business Employees occurring on or after the Closing Date and (v) the
announcement or pendency of this Agreement or the Contemplated Transactions,
except that clauses (i) and (ii) shall not apply with respect to the Target
Companies or the Business to any change that materially, disproportionately and
adversely affects the Business, in comparison with other companies in the
industry in which the Target Companies conduct the Business.

 

“Material Contract” has the meaning set forth in Section 3.18(a).

 

“Material Interest” has the meaning set forth in the definition of Related
Person.

 

“Mexichem” has the meaning set forth in the Preamble of this Agreement.

 

“Mexichem Amanco” has the meaning set forth in the Preamble of this Agreement.

 

“Mexichem Canada” has the meaning set forth in the Preamble of this Agreement.

 

“Mexichem Parent” has the meaning set forth in the Preamble of this Agreement.

 

“Mexichem UK” has the meaning set forth in the Preamble of this Agreement.

 

“Mutual General Release” means a mutual general release pursuant which the
director and the applicable Target Company each release the other from
liabilities related to such person’s services as a director or pursuant to which
Rockland Holdings agrees to indemnify the Target Companies for any such
liabilities, in form and substance reasonably acceptable to the Purchasers and
the Sellers.

 

“Non-Competition Agreement” means the Non-Competition and Confidentiality
Agreement by and between Mexichem and Rockwood Specialties Group in
substantially the form of Exhibit A.

 

“Non-Solicitation Agreement” means the Non-Solicitation Agreement by and between
AlphaGary Corporation and Rockwood Specialties Group in substantially the form
of Exhibit B.

 

“On-Site Environmental Liabilities” means any Environmental Liabilities arising
out of the presence of Hazardous Materials in soil, land surface or subsurface
strata, surface water or groundwater at or leaching from the Owned Real Property
or the Leased Real Property to the extent existing or occurring, or arising from
a condition or event existing or occurring prior to the Closing.

 

“Order” means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any Governmental Body
or by any arbitrator.

 

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“Ordinary Course of Business” means an action taken by a Person that is
consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal operations of such Person.

 

“Organizational Documents” means (a) the certificate of incorporation or the
articles of incorporation or association and the bylaws or memorandum of
association of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (d) the
certificate of formation or organization and the operating agreement or limited
liability company agreement of a limited liability company; and (e) any charter
or similar document adopted or filed in connection with the creation, formation
or organization of a Person (other than an individual).

 

“Outside Date” has the meaning set forth in Section 11.1(d).

 

“Overlap Period” has the meaning set forth in Section 9.1(b).

 

“Owned Real Property” means the parcels of real property owned by the Target
Companies (together with all Improvements thereon and Appurtenances thereto).

 

“Owner” has the meaning set forth in the definition of Subsidiary.

 

“PA04” means the Pensions Act 2004 of the United Kingdom.

 

“Patents” has the meaning set forth in Section 3.22(a)(iii).

 

“Per Target Company Closing Date Working Capital” means, respectively, the
Closing Date Working Capital of AlphaGary Canada, AGL and AlphaGary Corporation.

 

“Per Target Company Target Working Capital” means, with respect to AlphaGary
Canada, One Million One Hundred Seventy-Nine Thousand Dollars ($1,179,000), with
respect to AGL, Ten Million Seven Hundred Thirty-Six Thousand Dollars
($10,736,000), with respect to AlphaGary Corporation, Twelve Million Eighty-Five
Thousand Dollars ($12,085,000).

 

“Permitted Liens” means (a) with respect to real property, Liens consisting of
zoning or planning restrictions or regulations, permits, restrictive covenants,
encroachments, easements, licenses and other restrictions or limitations on the
use of real property or irregularities in, or exceptions to, title thereto
which, individually or in the aggregate, do not materially detract from the
value of, or impair the continued use and operation of, such property by the
Business, (b) subject to apportionment in accordance with the terms of this
Agreement, Liens for Taxes not yet due and payable or which are being contested
in good faith by appropriate Proceedings, in each case for which adequate
reserves have been made with respect thereto in accordance with U.S. GAAP,
(c) the title and other ownership interests of a lessor under a capital or
operating lease or of a licensor under a license or royalty agreement,
(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
similar Liens arising in the Ordinary Course of Business and (e) Liens securing
the payment or performance of any Indebtedness or other obligations of any
Affiliate of any Target Company that are fully released and discharged prior to
or at the Closing.

 

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“Person” means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, group, labor union or other
entity or Governmental Body.

 

“Pound Sterling” or “₤” means the lawful currency of the United Kingdom.

 

“Pre-Closing Periods” means all taxable years or other taxable periods that end
on or before the Closing Date and, with respect to any taxable year or other
taxable period beginning before and ending after the Closing Date, the portion
of such taxable year or period ending on and including the Closing Date.

 

“Proceeding” means any proceeding, action, arbitration, audit, hearing,
investigation, examination, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Body or arbitrator.

 

“Proprietary Rights Agreement” has the meaning set forth in Section 3.20(b).

 

“Purchase Price” has the meaning set forth in Section 2.3(a).

 

“Purchased IP” means, collectively, the Purchased Marks and the Purchased
Patents and Know-How.

 

“Purchased Marks” has the meaning set forth in Section 2.1(b).

 

“Purchased Patents and Know-How” has the meaning set forth in Section 2.1(a).

 

“Purchased Equity Interests” means, collectively, the Canadian Purchased Equity
Interests, the UK Purchased Equity Interests and the US Purchased Equity
Interests.

 

“Purchaser Disclosure Letter” means the Disclosure Letter, dated the date of
this Agreement, delivered by the Purchasers to the Rockwood Sellers
contemporaneously with the delivery of this Agreement.

 

“Purchaser Fundamental Representations” has the meaning set forth in
Section 12.1.

 

“Purchaser Indemnified Persons” has the meaning set forth in Section 9.7.

 

“Purchaser Specified Fundamental Representations” has the meaning set forth in
Section 8.1.

 

“Purchasers” has the meaning set forth in the Preamble of this Agreement.

 

“Purchasers’ Advisors” has the meaning set forth in Section 5.1(a).

 

“Purchasers’ Representative” has the meaning set forth in Section 13.12.

 

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“REACH” means the Regulation (EC) No 1907/2006 of 18 December 2006 concerning
the Registration, Evaluation, Authorization and Restriction of Chemicals
(REACH), establishing a European Chemicals Agency, as amended, amending
Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and
Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC
and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC and
the new Directive 2006/121/EC adapting the Dangerous Substances Directive
67/548/EEC to the REACH Regulation.

 

“Receivables Notice” has the meaning set forth in Section 6.7(a).

 

“Real Property” means, collectively, the Owned Real Property and the Leased Real
Property.

 

“Related Person” means, with respect to a specified Person other than an
individual:

 

(a)                                 any Affiliate of such Person;

 

(b)                                 any Person that holds a Material Interest in
such specified Person;

 

(c)                                  each Person that serves as a director,
officer, partner, executor, or trustee of such specified Person (or in a similar
capacity);

 

(d)                                 any Person in which such specified Person
holds a Material Interest;

 

(e)                                  any Person with respect to which such
specified Person serves as a general partner or a trustee (or in a similar
capacity); and

 

(f)                                   any Related Person of any individual
described in clause (b) or (c).

 

For purposes of this definition, “Material Interest” means direct or indirect
beneficial ownership of voting securities or other voting interests representing
at least ten percent (10%) of the outstanding voting power of a Person or equity
securities or other equity interests representing at least ten percent (10%) of
the outstanding equity securities or equity interests in a Person. For purposes
of this Agreement and the Ancillary Documents, no Person shall be deemed to hold
a Material Interest in Rockwood Holdings.

 

“Release” means any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing on or into the Environment or
into or out of any property, whether intentional or unintentional.

 

“Reorganization” has the meaning set forth in the Recitals of this Agreement.

 

“Representative” means, with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.

 

“Repurchase Date” has the meaning set forth in Section 6.7(a).

 

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“Required Antitrust Filings” has the meaning set forth in Section 5.4.

 

“Responsible Party” has the meaning set forth in Section 2.6(c)(ii).

 

“Rockwood Additives” has the meaning as set forth in the Preamble of this
Agreement.

 

“Rockwood Holdings” has the meaning set forth in the Preamble of this Agreement.

 

“Rockwood Sellers” has the meaning as set forth in the Preamble of this
Agreement.

 

“Rockwood Specialties” has the meaning set forth in the Preamble of this
Agreement.

 

“Rockwood Specialties Group” has the meaning set forth in the Preamble of this
Agreement.

 

“Rockwood UK” means Rockwood Specialties Limited, a company incorporated and
existing under the laws of England and Wales.

 

“Section 75 debt” has the meaning set forth in Section 10.1(e)(i).

 

“Seller Disclosure Letter” means the Disclosure Letter, dated the date of this
Agreement, delivered by the Rockwood Sellers to the Purchasers contemporaneously
with the delivery of this Agreement.

 

“Seller Fundamental Representations” has the meaning set forth in Section 12.1.

 

“Seller Indemnified Persons” has the meaning set forth in Section 12.3(a).

 

“Seller Specified Fundamental Representations” has the meaning set forth in
Section 7.1.

 

“Sellers” has the meaning set forth in the Preamble of this Agreement.

 

“Sellers’ Representative” has the meaning set forth in Section 13.12.

 

“Settlement Amount Certificate” has the meaning set forth in Section 2.6(c)(ii).

 

“Settlement Date” has the meaning set forth in Section 2.6(d).

 

“Subsidiary” means with respect to any Person (the “Owner”), any other Person
(other than an individual) of which securities or other interests having the
power to elect a majority of such other Person’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of such other Person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred) are
held by the Owner or one or more of its Subsidiaries.

 

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“Tangible Personal Property” means all machinery, equipment, furniture, tools,
computers, hardware, supplies, fixtures, vehicles and other items of tangible
property (other than Inventory) owned, leased, licensed or held for use by any
Target Company (wherever located and whether or not carried on its books) and
used in the Business.

 

“Target Companies” means, collectively, AGL, AlphaGary Canada and AlphaGary
Corporation, and each of the foregoing individually, a “Target Company”.

 

“Target Company Benefit Plans” has the meaning set forth in Section 3.14(a).

 

“Tax” or “Taxes” means all taxes, assessments, charges, duties, fees, levies or
other governmental charges, including all U.K., U.S. and Canadian federal,
state, provincial, local, foreign and other income, franchise, profits, gross
receipts, capital gains, capital stock, transfer, sales, use, value added
occupation, property, excise, severance, windfall profits, stamp, license,
payroll, social security, withholding and other taxes, assessments, charges,
duties, fees, levies or other governmental charges of any kind whatsoever
(whether payable directly or by withholding and whether or not requiring the
filing of a Tax Return), all estimated taxes, deficiency assessments, additions
to tax, penalties and interest and shall include any liability for such amounts
as a result of (i) being a transferee or successor or member of a combined,
consolidated, unitary or affiliated group or (ii) a contractual obligation to
indemnify any Person for Tax obligations or payments of such Person.

 

“Tax Matter” has the meaning set forth in Section 9.3(a).

 

“Tax Return” means any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.

 

“Third Party” means a Person that is not a Target Company (or an Affiliate
thereof) or party to this Agreement (or an Affiliate thereof).

 

“Third-Party Claim” has the meaning set forth in Section 12.4(a).

 

“TIOPA” means the Taxation (International and Other Provisions) Act 2010 of the
UK.

 

“TPR” means the Pensions Regulator, which is the entity created under Part 1 of
PA04.

 

“Trade Secrets” means all trade secrets, confidential business information
(including customer and supplier lists) and know-how (including processing and
production processes and techniques and research and development information),
in each case excluding any rights in respect of any of the foregoing that
comprise or are protected by Patents, Marks or Copyrights.

 

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“Transition Services Agreement” means the Transition Services Agreement by and
among the Target Companies, Mexichem Parent and Rockwood Specialties Group
substantially in the form of Exhibit C.

 

“U.C.C.” means the Uniform Commercial Code (as in effect on the date of
determination in the applicable jurisdiction) and any successor thereto.

 

“UK Plan” means the Rockwood UK Retirement Plan.

 

“UK Purchased Equity Interests” means all of the issued and outstanding ordinary
shares of AGL, representing one hundred percent (100%) of the issued and
outstanding share capital of AGL.

 

“United Kingdom” or “U.K.” means the United Kingdom of Great Britain and
Northern Ireland.

 

“United States” or “U.S.” means the United States of America.

 

“U.S. Business Employees” has the meaning set forth in Section 10.1(b).

 

“U.S. GAAP” means generally accepted accounting principles in the United States
as in effect as of the date hereof, applied on a consistent basis.

 

“US Purchased Equity Interests” means all of the issued and outstanding shares
of common stock of AlphaGary Corporation, representing one hundred percent
(100%) of the issued and outstanding shares of capital stock of AlphaGary
Corporation.

 

“VAT” means (a) within the European Union, any Tax imposed by any member state
in conformity with the Directive of the Council of the European Union on the
common system of value added tax (2006/112/EC) and (b) outside the European
Union, any Tax corresponding to, or substantially similar to, the common system
of value added tax referred to in clause (a) of this definition.

 

“VATA” means the Value Added Tax Act 1994 of the United Kingdom.

 

“VEBAs” has the meaning set forth in Section 3.14(a).

 

“WARN” has the meaning set forth in Section 3.21(c).

 

“Working Capital Shortfall” means the amount by which the Closing Date Working
Capital is less than twenty four million Dollars ($24,000,000).

 

“Working Capital Surplus” means the amount by which the Closing Date Working
Capital exceeds twenty four million Dollars ($24,000,000).

 

1.2                           Rules of Interpretation.

 

(a)                                 Interpretation.  In this Agreement, unless a
clear contrary intention appears:

 

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(i)                                     any singular term includes the plural
term and vice versa;

 

(ii)                                  reference to any Person includes such
Person’s successors and assigns, if applicable, but only if such successors and
assigns are not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or individually;

 

(iii)                               reference to any gender includes each other
gender;

 

(iv)                              reference to any agreement, document or
instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof;

 

(v)                                 reference to any Legal Requirement means
such Legal Requirement as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or other
provision of any Legal Requirement means that provision of such Legal
Requirement from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision;

 

(vi)                              “hereunder,” “hereof,” “hereto,” and words of
similar import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision hereof;

 

(vii)                           “including” (and with correlative meaning
“include”) means including without limiting the generality of any description
preceding such term;

 

(viii)                        “or” shall not be exclusive;

 

(ix)                              with respect to the determination of any
period of time, “from” means “from and including” and “to” means “to but
excluding”;

 

(x)                                 references to documents, instruments or
agreements shall be deemed to refer as well to all addenda, exhibits, schedules
or amendments thereto;

 

(xi)                              the headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation.  All references to “Preamble,” “Recitals,” “Articles,”
“Sections,” “Schedules” (other than any reference to a Schedule of the Seller
Disclosure Letter or the Purchaser Disclosure Letter, which shall refer to the
corresponding Schedule of the Seller Disclosure Letter or the Purchaser
Disclosure Letter, as the case may be) and “Exhibits” refer to the corresponding
Articles, Sections, Schedules and Exhibits of this Agreement;

 

(xii)                           the disclosures in the Schedules of the Seller
Disclosure Letter or the Schedules of the Purchaser Disclosure Letter, as the
case may be, relate only to the specific provision in the representations and
warranties in the Section of this Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement;

 

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(xiii)                        references to “writing” or comparable expressions
include a reference to facsimile transmission or comparable means of
communication, excluding electronic mail;

 

(xiv)                       the phrases “delivered” or “made available” shall
mean that the information referred to has been physically or electronically
delivered to the relevant parties hereto;

 

(xv)                          references to “day” or “days” are to calendar
days; and

 

(xvi)                       references to “the date hereof” shall mean the date
of this Agreement.

 

(b)                                 Accounting Terms and Determinations.  Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with U.S. GAAP.

 

(c)                                  Legal Representation of the Parties.  This
Agreement was negotiated by the parties hereto with the benefit of legal
representation, and any rule of construction or interpretation otherwise
requiring this Agreement to be construed or interpreted against any party hereto
shall not apply to any construction or interpretation hereof.

 

(d)                                 Exhibits, Schedules and Disclosure Letters. 
The Exhibits, Schedules, the Seller Disclosure Letter and the Purchaser
Disclosure Letter are incorporated into and form an integral part of this
Agreement.

 

ARTICLE 2
Sale and Transfer of Purchased IP and Purchased Equity Interests; Closing;
Purchase Price Adjustment

 

2.1                           Sale of Purchased IP and Purchased Equity
Interests.  Subject to the terms and conditions of this Agreement, on the
Closing Date:

 

(a)                                 AlphaGary Corporation and AGL shall sell,
convey, transfer and assign, and cause to be sold, conveyed, transferred and
assigned, to Mexichem, and Mexichem shall purchase from AlphaGary Corporation
and AGL, free and clear of any Liens, all of AlphaGary Corporation’s and AGL’s
right, title and interest in and to all of the following property and assets,
wheresoever located:

 

(i)                                     all of the AG Patents and Know-How and
all rights thereunder, including with respect to any AG Patents and Know-How
owned by AlphaGary Corporation and AGL, all rights to enforce such AG Patents
and Know-How with respect to past, present, and future infringements and
misappropriations thereof and any rights of renewal of the AG Patents and
Know-How; and

 

(ii)                                  all third party warranties, indemnities
and guarantees in relation to any of the AG Patents and Know-How.

 

All of the property and assets to be transferred to Mexichem hereunder are
herein referred to collectively as the “Purchased Patents and Know-How”.

 

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(b)                                 AlphaGary Corporation and AGL shall sell,
convey, transfer and assign, and cause to be sold, conveyed and transferred and
assigned, to Mexichem Amanco, and Mexichem Amanco shall purchase from AlphaGary
Corporation and AGL, free and clear of any Liens, all of AlphaGary Corporation’s
and AGL’s right, title and interest in and to all of the following property and
assets, wheresoever located:

 

(i)                                     all of the AG Marks and all rights
thereunder, including with respect to any AG Marks owned by AlphaGary
Corporation and AGL, all rights to enforce such AG Marks with respect to past,
present, and future infringements and misappropriations thereof and any rights
of renewal of the AG Marks; and

 

(ii)                                  all third party warranties, indemnities
and guarantees in relation to any of the AG Marks.

 

All of the property and assets to be transferred to Mexichem Amanco hereunder
are herein referred to collectively as the “Purchased Marks”.

 

(c)                                  Rockwood Additives shall sell, assign,
transfer, convey and deliver to Mexichem UK, and Mexichem UK shall purchase from
Rockwood Additives, the UK Purchased Equity Interests, free and clear of all
Liens.

 

(d)                                 Rockwood Specialties shall sell, assign,
transfer, convey and deliver to Mexichem, and Mexichem shall purchase from
Rockwood Specialties, the US Purchased Equity Interests, free and clear of all
Liens.

 

(e)                                  Rockwood Specialties Group shall sell,
assign, transfer, convey and deliver to Mexichem Canada, and Mexichem Canada
shall purchase from Rockwood Specialties Group, the Canadian Purchased Equity
Interests, free and clear of all Liens.

 

2.2                           Timing.  The parties acknowledge and agree that on
the Closing Date the purchase and sale of the Purchased IP shall occur
immediately prior to the acquisition of the Purchased Equity Interests.

 

2.3                           Consideration.

 

(a)                                 The consideration for the Purchased IP, the
Purchased Equity Interests, the Non-Competition Agreement and the
Non-Solicitation Agreement (the “Purchase Price”), shall be three hundred
million Dollars ($300,000,000), plus or minus the purchase price adjustments
described in Section 2.6.  The Purchase Price shall be payable as provided in
Section 2.3(b) and shall be allocated among the Purchased IP, the Purchased
Equity Interests, the Non-Competition Agreement and the Non-Solicitation
Agreement as set forth in Section 2.7.

 

(b)                                 Subject to the provisions of this
Section 2.3, the Purchasers shall pay to the Sellers’ Representative (for the
benefit of the Sellers) on the Closing Date, an amount equal to three hundred
million Dollars ($300,000,000), plus or minus, the purchase price adjustment
described in Section 2.6(a) (the “Estimated Purchase Price”), without offset or
deduction,  by wire transfer of immediately available funds to the accounts
identified by the Sellers’

 

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Representative to the Purchasers’ Representative in writing at least two
Business Days prior to the Closing Date.

 

(c)                                  Following the date hereof (but in no event
later than December 31, 2010, or if such date is not a Business Day, the
immediately preceding Business Day), the Purchasers’ Representative may deposit
with the Escrow Agent, by wire transfer of immediately available funds, an
aggregate amount equal to forty million Dollars ($40,000,000) (such amount plus
any interest or other earnings accrued thereon, the “Escrow Amount”), to be held
and released to the parties hereto in accordance with the Escrow Agreement.  In
the event of any such deposit, the Purchasers’ Representative shall give notice
to the Rockwood Sellers and concurrently with the delivery of the Escrow Amount
by the Purchasers’ Representative to the Escrow Agent, (i) Rockwood Specialties
Group shall deliver to the Escrow Agent two undated original counterpart
signature pages to the Non-Competition Agreement, each duly executed by Rockwood
Specialties Group, and (ii) Mexichem shall deliver to the Escrow Agent two
undated original counterpart signature pages to the Non-Competition Agreement,
each duly executed by Mexichem, which shall be held by the Escrow Agent to be
released to the parties hereto in accordance with the Escrow Agreement.

 

2.4                           Closing.  The purchase and sale (the “Closing”)
contemplated in this Agreement will take place at the offices of White & Case
LLP, 1155 Avenue of the Americas, New York, NY 10036-2787, at 10:00 a.m. (local
time) as soon as reasonably practicable, but in no event later than five
Business Days, following the satisfaction or waiver of the conditions set forth
in Article 7 and Article 8 (other than those conditions that by their nature are
to be satisfied or waived at the Closing, but subject to the satisfaction or
waiver of those conditions), provided that if the satisfaction or waiver of such
conditions occurs after the 15th of any month, the Closing will take place on
the last Business Day of the month ending subsequent to the date on which the
last of such conditions are satisfied or waived (other than those conditions
that by their nature are to be satisfied or waived at the Closing, but subject
to the satisfaction or waiver of those conditions), or at such other place, time
or date as may be mutually agreed upon in writing by the parties hereto.  The
Closing shall be deemed to be effective between the parties as of 11:59 p.m.
(E.S.T.) on the Closing Date.

 

2.5                           Closing Obligations.  At the Closing:

 

(a)                                 The Sellers will deliver to the Purchasers
or such other person designated by the Purchasers:

 

(i)                                     stock certificates representing all of
the US Purchased Equity Interests, accompanied by stock powers duly executed in
blank, in proper form for transfer;

 

(ii)                                  share certificates (or indemnities in a
form reasonably satisfactory to the Purchasers in respect of any such share
certificates that are lost) representing all of the UK Purchased Equity
Interests, accompanied by duly executed stock transfers in favor of Mexichem UK
in respect of the UK Purchased Equity Interests, an irrevocable power of
attorney executed by Rockwood Additives in favor of Mexichem UK, for the purpose
of securing the interest of Mexichem UK in the UK Purchased Equity Interests
during the period between the Closing and

 

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the registration of Mexichem UK as the holder of the UK Purchased Equity
Interests in AGL’s register of members;

 

(iii)                               shares certificates representing all of the
Canadian Purchased Equity Interests, accompanied by stock transfer powers duly
executed in blank, in proper form for transfer;

 

(iv)                              the stock transfer and minute books of
AlphaGary Corporation;

 

(v)                                 assignment, transfer and conveyance
instruments to transfer to Mexichem the Purchased Patents and Know-How and to
transfer to Mexichem Amanco the Purchased Marks as provided herein, in form and
substance reasonably satisfactory to the Purchasers, duly executed by the
applicable Sellers;

 

(vi)                              a certified copy of each power of attorney
under which any document to be delivered to the Purchasers has been executed;

 

(vii)                           the statutory books (which shall be written up
to but not including the Closing Date), and the common seal (if any) of AGL and
the title deeds relating to the Owned Real Property located in the U.K.;

 

(viii)                        the minute books (which shall be written up to but
not including the Closing Date), the certificate and articles of incorporation
(and any articles of amendment) and the corporate seal (if any) of AlphaGary
Canada and the title deeds or any certificates of title relating to the Owned
Real Property located in Canada;

 

(ix)                              duly executed copies of all Consents
heretofore obtained or made by the Sellers in connection with consummation of
the Contemplated Transactions;

 

(x)                                 a certificate of Rockwood Specialties Group,
dated the Closing Date, duly executed by an authorized representative of
Rockwood Specialties Group, in the form of Exhibit D, together with appropriate
insertions;

 

(xi)                              a certificate of Rockwood Specialties Group,
dated the Closing Date, duly executed by an authorized representative of
Rockwood Specialties Group, certifying that the Target Companies’ do not have
any Indebtedness;

 

(xii)                           the Non-Competition Agreement, duly executed by
Rockwood Specialties Group;

 

(xiii)                        the Non-Solicitation Agreement, duly executed by
Rockwood Specialties Group and AlphaGary Corporation;

 

(xiv)                       the Transition Services Agreement, duly executed by
the Target Companies and Rockwood Specialties Group;

 

(xv)                          U.C.C. termination statements (and comparable
instruments in other jurisdictions) in recordable form and other appropriate
releases, in form and substance

 

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reasonably satisfactory to the Purchasers, with respect to all recorded Liens on
the assets of the Target Companies;

 

(xvi)                       executed letters of resignation from, or evidence of
removal of, each of the directors of the Target Companies specified to the
Rockwood Sellers by the Purchasers no less than three Business Days prior to the
Closing Date (or if the Closing date is set less than four Business Days prior
to its occurrence, on the Business Day following the date the Closing Date is
set), together with a Mutual General Release, duly executed by each such
director and the applicable Target Company;

 

(xvii)                    a certificate of non-foreign status for Rockwood
Specialties pursuant to Section 1445 of the Code in a form reasonably acceptable
to Purchasers’ Representative;

 

(xviii)                 the certificate described in Section 7.11, unless
fulfillment of such condition shall have been waived by Purchasers; and

 

(xix)                       a certificate of U.K. tax residency from the
relevant taxing authority in the U.K. on the appropriate form prescribed by such
taxing authority for AGL.

 

(b)                                 the Purchasers will deliver to the Sellers:

 

(i)                                     the Estimated Purchase Price in
accordance with Section 2.3(b);

 

(ii)                                  the Non-Competition Agreement, duly
executed by Mexichem;

 

(iii)                               the Transition Services Agreement, duly
executed by Mexichem Parent; and

 

(iv)                              a certificate of the Mexichem Parent, dated
the Closing Date, duly executed by an authorized representative of the Mexichem
Parent in the form of Exhibit E, together with appropriate insertions.

 

2.6                           Purchase Price Adjustments.

 

(a)                                 Pre-Closing Adjustment.  At least three
Business Days prior to the Closing Date (or if the Closing Date is set less than
four Business Days prior to its occurrence, on the Business Day following the
date the Closing Date is set), the Sellers’ Representative shall prepare and
deliver to the Purchasers’ Representative an estimated unaudited consolidated
balance sheet of the Target Companies as of the Closing Date (the “Estimated
Closing Date Balance Sheet”) and an estimate of the Closing Date Working Capital
and a statement of the Closing Date Indebtedness including a separate
calculation for each Target Company, each of which shall be prepared in
accordance with U.S. GAAP, applied on basis consistent with the application of
such principles in the preparation of the Financial Statements.  The Sellers’
Representative shall also provide the Purchasers’ Representative with copies of
all work papers and other documents and data used to prepare the Estimated
Closing Date Balance Sheet.  The Estimated Closing Date Balance Sheet shall be
in form and substance reasonably satisfactory to the Purchasers and shall be
accompanied by a certificate executed by a senior financial officer of Sellers’
Representative to the effect that to his actual knowledge the Estimated Closing
Date Balance Sheet has been

 

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prepared in good faith in accordance with this Section 2.6(a). If the Estimated
Closing Date Balance Sheet shows a Working Capital Shortfall (the “Estimated
Working Capital Shortfall”), the Purchase Price shall be reduced by the
aggregate amount of such Working Capital Shortfall and if the Estimated Closing
Date Balance Sheet shows a Working Capital Surplus (the “Estimated Working
Capital Surplus”), the Purchase Price shall be increased by the aggregate amount
of such Working Capital Surplus.

 

(b)                                 Post-Closing Adjustment.  As soon as
practicable, but in any event within sixty days) after the Closing Date, the
Purchasers shall cause their accountants to prepare and deliver to the Sellers’
Representative an unaudited consolidated balance sheet of the Target Companies
as of the Closing Date (the “Closing Date Balance Sheet”) and a calculation of
the Closing Date Working Capital and Closing Date Indebtedness including a
separate calculation for each Target Company, each of which shall be prepared or
calculated, as the case may be, in accordance with U.S. GAAP, applied on basis
consistent with the application of such principles in the preparation of the
Financial Statements.  The Closing Date Balance Sheet shall be accompanied by a
certificate executed by a senior financial officer of Purchasers’ Representative
to the effect that to his actual knowledge the Closing Date Balance Sheet and
the calculation of the Closing Date Working Capital and Closing Date
Indebtedness have been prepared in good faith in accordance with this
Section 2.6(b). The Purchasers shall also provide to the Sellers’ Representative
copies of all work papers and other documents and data used to prepare the
Closing Date Balance Sheet and to determine the Closing Date Working Capital and
Closing Date Indebtedness.  The Sellers’ Representative shall have the right
(i) to dispute the Closing Date Balance Sheet (and any items therein) and the
Closing Date Working Capital and Closing Date Indebtedness calculation and
(ii) to make any proposed adjustments thereto as provided in Section 2.6(c).

 

(c)                                  Dispute Resolution Procedures.

 

(i)                                     The Sellers’ Representative shall have
until 30 days after the delivery of the calculations and certificates described
in Section 2.6(b) to review such calculations and certificates, dispute any
items therein and propose any adjustments thereto; provided that such 30-day
period shall be extended by any period of time that the Sellers’ Representative
is not provided with the access described in Section 2.6(b).  If no adjustments
are proposed by 5:00 P.M. (New York time) on such 30th day (or such other day as
extended pursuant to the preceding sentence), the calculations made by the
Purchasers’ Representative, as described in Section 2.6(b), shall be final and
binding upon the Rockwood Sellers and the Purchasers at 5:00 P.M. (New York
time) on such 30th day (or such other day as extended pursuant to the preceding
sentence).  All adjustments proposed by the Sellers’ Representative shall be set
out in detail in a written statement delivered to the Purchasers’ Representative
(the “Adjustment Statement”) and shall be incorporated into the calculation of
the Closing Date Working Capital and the Closing Date Indebtedness and shall be
final and binding upon the Rockwood Sellers and the Purchasers, unless the
Purchasers’ Representative shall object in writing to such proposed adjustments
(the proposed adjustment or adjustments to which the Purchasers’ Representative
objects are referred to herein as the “Contested Adjustments” and the
Purchasers’ Representative’s objection notice is referred to herein as the
“Contested Adjustment Notice”) within 30 days after receipt by the Purchasers’
Representative of the Adjustment Statement.

 

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(ii)                                  If the Purchasers’ Representative delivers
a Contested Adjustment Notice to the Sellers’ Representative, the Purchasers’
Representative and the Sellers’ Representative shall attempt in good faith to
resolve their dispute regarding such Contested Adjustments, but if a final
resolution thereof is not obtained within 10 days after the Purchasers’
Representative delivers to the Sellers’ Representative such Contested Adjustment
Notice, either the Purchasers’ Representative or the Sellers’ Representative
shall retain for the benefit of all parties hereto PricewaterhouseCoopers LLP
or, if such accounting firm is unable or unwilling to serve, another
internationally recognized independent accounting firm acceptable to the
Sellers’ Representative and the Purchasers’ Representative (the “Independent
Accountant”) to resolve any remaining disputes concerning the Contested
Adjustments. In the event that the Purchasers’ Representative and the Sellers’
Representative cannot agree on a replacement Independent Accountant within five
Business Days after being notified that PricewaterhouseCoopers LLP is unable or
unwilling to serve, the Purchasers’ Representative and the Sellers’
Representative shall each appoint an internationally recognized independent
accounting firm and such appointed accounting firms shall appoint another
internationally recognized independent accounting firm to serve as the
Independent Accountant.  If the Independent Accountant is retained, then the
Sellers’ Representative and the Purchasers’ Representative shall each submit to
the Independent Accountant in writing, not later than 15 days after the
Independent Accountant is retained, their respective positions with respect to
the Contested Adjustments, together with such supporting documentation as they
deem necessary or as the Independent Accountant requests.  The Purchasers’
Representative and the Sellers’ Representative shall instruct the Independent
Accountant not to review or take into account any information that is not
submitted within such 15-day deadline and to make a determination only as to the
Contested Adjustments and not any other items on the Closing Date Balance
Sheet.  The Purchasers’ Representative and the Sellers’ Representative shall
instruct the Independent Accountant to, within 30 days after receiving the
positions of the Sellers’ Representative and the Purchasers’ Representative and
all supplementary supporting documentation requested by the Independent
Accountant, render its decision as to the Contested Adjustments, which decision
shall not be greater than the highest position of the parties nor lower than the
lowest position of the parties and shall (absent manifest error) be final and
binding on, and nonappealable by, the Sellers and the Purchasers.  The decision
of the Independent Accountant shall also include a certificate of the
Independent Accountant setting forth the final calculation in question (the
“Settlement Amount Certificate”) and shall be made in a manner consistent with
this Section 2.6.  Judgment may be entered upon the determination of the
Independent Accountant in any court having jurisdiction over the party against
which such determination is to be enforced.  The Closing Date Working Capital
and Closing Date Indebtedness shall be deemed to include all proposed
adjustments not disputed by the Purchasers’ Representative and those adjustments
accepted or made by the decision of the Independent Accountant in resolving the
Contested Adjustments.  The fees and expenses of the Independent Accountant
shall be paid by the party whose position of the Contested Adjustment is
furthest from the Independent Accountant’s calculations of the Contested
Adjustment (the “Responsible Party”).  In the event that any amount due to the
Independent Accountant under this Section 2.6(c) is paid by a party other than
the Responsible Party, the Responsible Party shall pay interest on such amount
payable to such other party at a rate of six percent (6%) per annum, based on a
360-day year, which shall accrue from the date the other party pays the
Independent Accountant to the date of actual payment.

 

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(d)                                 Settlement Date.  There shall be a
“Settlement Date,” after the calculation of the Closing Date Working Capital and
the Closing Date Indebtedness, determined as follows:

 

(i)                                     If the Sellers’ Representative has
accepted the Closing Date Working Capital or Closing Date Indebtedness
calculation, the Settlement Date as to matters relating to the Closing Date
Working Capital or Closing Date Indebtedness shall be the day that falls on the
fifth Business Day after such acceptance;

 

(ii)                                  If the Sellers’ Representative has not
timely delivered an Adjustment Statement to the Purchasers’ Representative, the
Settlement Date shall be the day that falls on the 35th day after the date on
which the Closing Date Working Capital calculation shall have been delivered;

 

(iii)                               If the Sellers’ Representative has timely
delivered an Adjustment Statement and the Purchasers’ Representative has not
timely delivered a Contested Adjustment Notice, the Settlement Date shall be the
day that falls on the 35th day after the date on which the Adjustment Statement
shall have been delivered;

 

(iv)                              If the Sellers’ Representative and the
Purchasers’ Representative have any disputes regarding the Contested Adjustments
and they resolve those disputes, the Settlement Date shall be the day that falls
on the fifth Business Day after such resolution; or

 

(v)                                 If none of clauses (i) through (iv) applies,
the Settlement Date shall be the fifth Business Day after the Independent
Accountant delivers the Settlement Amount Certificate, if applicable.

 

(e)                                  Payments.

 

(i)                                     If it is determined that there is a
Working Capital Shortfall in excess of the Estimated Working Capital Shortfall,
the difference shall be paid by the Rockwood Sellers to the Purchasers’
Representative on the Settlement Date.

 

(ii)                                  If it is determined that there is a
Working Capital Shortfall which is less than the Estimated Working Capital
Shortfall, the difference shall be paid by the Purchasers to the Sellers’
Representative on the Settlement Date.

 

(iii)                               If it is determined that there is a Working
Capital Shortfall and there was an Estimated Working Capital Surplus, the amount
of the Working Capital Shortfall and an amount equal to the Estimated Working
Capital Surplus shall be paid by the Rockwood Sellers to the Purchasers’
Representative on the Settlement Date.

 

(iv)                              If it is determined that there is a Working
Capital Surplus in excess of the Estimated Working Capital Surplus, the
difference shall be paid by the Purchasers to the Sellers’ Representative on the
Settlement Date.

 

(v)                                 If it is determined that there is a Working
Capital Surplus less than the Estimated Working Capital Surplus, the difference
shall be paid by the Rockwood Sellers to the Purchasers’ Representative on the
Settlement Date.

 

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(vi)                              If it is determined that there is a Working
Capital Surplus and there was an Estimated Working Capital Shortfall, the amount
of the Working Capital Surplus and an amount equal to the Estimated Working
Capital Shortfall shall be paid by the Purchasers to the Sellers’ Representative
on the Settlement Date.

 

(vii)                           If it is determined that there is any Closing
Date Indebtedness, the amount of the Closing Date Indebtedness shall be paid by
the Rockwood Sellers to the Purchasers’ Representative on the Settlement Date.

 

(viii)                        In the event that any amount due to a party hereto
under this Section 2.6(e) is not paid on the Settlement Date, the party required
to make payment shall pay interest on such amount at a rate of six percent (6%)
per annum, based on a 360-day year, which shall accrue from the Closing Date to
the date of actual payment.

 

(ix)                              If the parties are disputing the final
calculation of the Purchase Price, to the extent part of any payment that would
be payable pursuant to this Section 2.6(e) is not in dispute, the payor shall
pay the amount not in dispute on the date the payment would otherwise be due but
for such dispute by wire transfer of immediately available funds to an account
(or accounts) designated by the recipient.  Any and all payments made pursuant
to this Section 2.6(e) shall be made in Dollars by wire transfer of immediately
available funds to the account specified by the Purchasers’ Representative or
the Sellers’ Representative, as the case may be, in a writing delivered to the
other party at least three days prior to the Settlement Date.  Any and all
payments payable by the Purchasers under this Section 2.6(e) shall be payable to
the Sellers’ Representative (for the benefit of the Rockwood Sellers) and any
and all payments payable by the Sellers under this Section 2.6(e) shall be
payable to the Purchasers’ Representative (for the benefit of the Purchasers). 
All such payments shall be subject to the allocations set forth in Section 2.7.

 

2.7                           Purchase Price Allocation.  The parties hereto
hereby agree to allocate the Purchase Price among the Purchased IP, the
Purchased Equity Interests, the Non-Competition Agreement and the
Non-Solicitation Agreement as set forth in Schedule 2.7.  The parties shall
negotiate in good faith to adjust the allocation of the Purchased Equity
Interests set forth in Schedule 2.7 to reflect any difference between the Per
Target Company Closing Date Working Capital and the Per Target Company Target
Working Capital as well as any Closing Date Indebtedness of a Target Company as
finally determined in accordance with Section 2.6.  If the parties have not
agreed to the adjustment to the allocation set forth in Schedule 2.7 by the 30th
day after the Settlement Date, the adjustment to such allocation of the
Purchased Equity Interests shall be determined by the accounting firm selected
by the parties pursuant to Section 2.6(c)(ii) in accordance with the procedures
set forth in Section 2.6(c)(ii) (the allocation set forth in Schedule 2.7 as
adjusted pursuant to the agreement of the parties or the final determination of
the selected accounting firm, the “Allocation”).  Each of the Rockwood Sellers
and the Purchasers shall (a) be bound by the Allocation for purposes of
determining any Tax and (b) prepare and file, and use its commercially
reasonable efforts to cause each of its Related Persons to prepare and file, its
Tax Returns on a basis consistent with the Allocation.  None of the Rockwood
Sellers, the Purchasers or their respective Related Persons shall take any
position inconsistent with the Allocation in any Tax Return, refund claim,
litigation or otherwise unless required by final determination by a Governmental
Body.  In the event that the Allocation is disputed by any

 

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Governmental Body, the party receiving notice of such dispute will promptly
notify the other parties hereto, and the parties hereto will consult in good
faith on how to resolve such dispute in a manner consistent with the Allocation.

 

2.8                           Tax Treatment of Payments.  Any payment made with
respect to adjustments made pursuant to Section 2.6, Section 9.4, Section 9.5,
Section 9.7, Section 9.9 and Article 12 shall be deemed to be, and each of the
Rockwood Sellers and the Purchasers shall treat such payments as, an adjustment
to the Purchase Price for all Tax purposes.

 

2.9                           Withholding Taxes.  The Purchasers shall not be
entitled to deduct or withhold from the Purchase Price otherwise payable to any
Person pursuant to this Article 2 any amount with respect to Taxes (including
pursuant to Section 116 of the ITA); provided, however, the Sellers acknowledge
and agree that any failure by the Purchaser to deduct or withhold such Taxes
from the Purchase Price will in no manner limit the Purchasers right to
indemnification for Taxes set forth in Section 9.7.

 

2.10                    Tax Certificate.  The parties will use reasonable
commercial efforts to obtain a certificate of U.S. tax residency from the IRS on
Form 6166 for AlphaGary Corporation as promptly as practicable.  The Sellers
shall have no liability as a consequence of their failure to obtain such
certificate.

 

ARTICLE 3
Representations and Warranties of the Rockwood Sellers

 

Except as set forth in the Seller Disclosure Letter, the Rockwood Sellers
jointly and severally represent and warrant to the Purchasers as follows:

 

3.1                           Organization and Good Standing.

 

(a)                                 Each Rockwood Seller and Target Company is a
corporation (or other entity) duly incorporated (or organized), validly existing
and, to the extent applicable, in good standing (or the equivalent thereof)
under the laws of the jurisdiction of its incorporation or formation, with
corporate (or other entity) power and authority to conduct its business,
including the Business, as it is now being conducted, and to own or use the
properties and assets that it purports to own or use.  Each Target Company is
duly qualified to do business and is in good standing (if such concept of good
standing or the equivalent thereof is applicable in such jurisdiction) under the
laws of each country or other jurisdiction in which either the ownership or use
of the properties owned or used by it, or the nature of the activities conducted
by it, requires such qualification, except for such failures to be so qualified
and in good standing or its functional equivalent that would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Change with respect to the Business or any Target Company.

 

(b)                                 Accurate and complete copies of
Organizational Documents of each Target Company, as currently in effect on the
date of this Agreement, have been delivered to the Purchasers’ Representative.

 

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3.2         Authority; No Conflict.

 

(a)           Each Seller has the corporate power and authority to execute and
deliver this Agreement and the Ancillary Documents to be executed and delivered
by such Seller and to consummate the Contemplated Transactions.  The execution,
delivery and performance by each Seller of this Agreement and the Ancillary
Documents to be executed, delivered and performed by such Seller and the
consummation of the Contemplated Transactions have been duly authorized by such
Seller’s board of directors (or equivalent governing body) and, to the extent
applicable, its shareholders, and no other corporate (or other entity) action on
the part of such Seller or its shareholders is necessary to authorize the
execution, delivery and performance of this Agreement and the Ancillary
Documents and the consummation of the Contemplated Transactions by such Seller. 
This Agreement has been duly executed and delivered by each Seller, and the
Ancillary Documents to be executed and delivered by such Seller at the Closing
will be duly executed and so delivered by such Seller.  This Agreement
constitutes, and at the Closing, each Ancillary Document to be executed and
delivered by the Sellers will constitute, in each case when delivered in
accordance with the terms hereof and assuming the due execution and delivery of
this Agreement and each Ancillary Document by the other parties hereto and
thereto, valid and binding obligations of such Seller, enforceable against such
Seller in accordance with their terms, except to the extent that their
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar Legal Requirements
affecting the enforcement of creditors’ rights generally and to general
equitable principles.

 

(b)           Except as set forth in Schedule 3.2(b) of the Seller Disclosure
Letter, the execution and delivery by the Sellers of this Agreement and the
Ancillary Documents to be executed and delivered by the Sellers and the
consummation and performance of the Contemplated Transactions by the Sellers
will not, directly or indirectly (with or without notice or lapse of time):

 

(i)            contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of any Rockwood Seller or any Target
Company or (B) any resolution adopted by the board of directors (or equivalent
governing body) or the shareholders or other equity holders of any Rockwood
Seller or any Target Company;

 

(ii)           contravene, conflict with, or result in a violation of, or,
except as set on Schedule 3.2(b)(ii) of the Seller Disclosure Letter, give any
Governmental Body or other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which any Rockwood Seller or any Target Company or
any of the assets owned or used by any Rockwood Seller or any Target Company may
be subject;

 

(iii)          contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by any Target Company or any of the assets owned or used by any
Target Company;

 

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(iv)          contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Contract to which any Target Company is a party or to
which any Rockwood Seller or any Target Company or any of their respective
assets are subject, except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change with respect to
the Sellers, the Target Companies or the Business; or

 

(v)           result in the imposition or creation of any Lien (other than
Permitted Liens) upon or with respect to any of the assets owned or used by any
Target Company.

 

(c)           Except for (i) the Consents set forth in Schedule 3.2(c) of the
Seller Disclosure Letter and (ii) compliance with and filings under the HSR Act
and the filings required to be made pursuant to Brazilian Antitrust Law, none of
the Sellers or their Affiliates is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
by the Sellers of this Agreement or the Ancillary Documents to be executed and
delivered by the Sellers or the consummation or performance by the Sellers of
any of the Contemplated Transactions.

 

3.3         Capitalization.  Except as set forth on Schedule 3.3 of the Seller
Disclosure Letter, the issued share capital of AGL consists of 16,935,000
ordinary shares, par value one Pound Sterling ([g240291mm09i001.jpg]1) per
ordinary share.  Except as set forth on Schedule 3.3 of the Seller Disclosure
Letter, the authorized equity securities of AlphaGary Canada consist of an
unlimited number of common shares, without par value, of which 21,416 common
shares are issued and outstanding, and an unlimited number of Class A Preference
shares, no par value, of which none are issued and outstanding. The authorized
capital stock of AlphaGary Corporation consists of 100,000 shares of common
stock, par value one Dollar ($1.00) per share, of which 30,001 shares are issued
and outstanding, and 20,000 shares of preferred stock, par value ten thousand
Dollars ($10,000) per share, of which none are issued and outstanding.  All of
the outstanding capital stock, share capital or other equity securities of each
Target Company have been duly authorized and validly issued and are fully paid
and, in such jurisdictions where such concept is applicable, nonassessable and
are not subject to, nor were they issued in violation of, any preemptive
rights.  Except as set forth on Schedule 3.3 of the Seller Disclosure Letter and
this Agreement, there are no outstanding or authorized options, warrants,
rights, subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities or other commitments, contingent or
otherwise, relating to the shares of, or other equity or voting interest in, any
Target Company or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for or acquire any share of, or other equity
or voting interest in, any Target Company.  There are no outstanding or
authorized share appreciation, phantom shares, profit participation or similar
rights with respect to the shares of, or other equity or voting interest in, any
Target Company.  No Target Company has any authorized or outstanding bonds,
debentures, notes or other Indebtedness, the holders of which have the right to
vote (or convertible into, exchangeable for or evidencing the right to subscribe
for or acquire securities having the right to vote) with the shareholders or
members, as the case may be, of any Target Company on any matter. There are no
Contracts (other than this Agreement) to which any Target Company is a party or
by which it is bound to (a) repurchase, redeem or otherwise acquire any share
of, or other equity or voting interest in, any Target Company or (b) vote or
dispose of any shares of, or other equity or voting

 

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interest in, any Target Company.  There are no irrevocable proxies and no voting
agreements with respect to any shares of, or other equity or voting interest in,
any Target Company.  None of the outstanding shares of any Target Company was
issued in violation of any Legal Requirement.

 

3.4         Title to Purchased Equity Interests.

 

(a)           Rockwood Additives is the sole legal and beneficial owner of the
UK Purchased Equity Interests.  Rockwood Specialties is the sole legal and
beneficial owner of the US Purchased Equity Interests.  Rockwood Specialties
Group is the sole legal and beneficial owner of the Canadian Purchased Equity
Interests.  The Purchased Equity Interests are free from any and all Liens. 
Upon payment of the Purchase Price to the Sellers’ Representative (for the
benefit of the Sellers) at the Closing, the Sellers will transfer to
(i) Mexichem UK legal and beneficial title to the UK Purchased Equity Interests,
free and clear of all Liens, (ii) Mexichem legal and beneficial title to the US
Purchased Equity Interests, free and clear of all Liens, and (iii) Mexichem
Canada legal and beneficial title to the Canadian Purchased Equity Interests,
free and clear of all Liens.

 

(b)           No Target Company owns, directly or indirectly, any shares of, or
other equity, ownership or voting interest in, any Person except as set forth in
Schedule 3.4(b) of the Seller Disclosure Letter.

 

(c)           Except as set forth on Schedule 3.4(c) of the Seller Disclosure
Letter, none of the Target Companies (i) is resident within the United Kingdom,
the Channel Islands or the Isle of Man, and (ii) at any time during the 10 years
prior to the date of this Agreement, has (A) equity share capital or other
equity interest that has been admitted or authorized to trade on any applicable
securities exchange, market or inter-dealer quotation system, (B) published
dealings in their equity share capital in a newspaper on a regular basis for a
continuous period of at least six months, (C) equity share capital or other
equity interest that has been subject to a marketing arrangement as described in
section 693(3) of the UK Companies Act 2006 or (D) filed a prospectus or
registration statement for the issue or registration of equity share capital or
other equity interest with the U.S. Securities and Exchange Commission, London
Stock Exchange, or any other Governmental Body, or any applicable securities
exchange, market or inter-dealer quotation system.

 

3.5         Financial Statements.  Attached as Schedule 3.5 of the Seller
Disclosure Letter are accurate and complete copies of (a) the unaudited
consolidated balance sheet of the Target Companies as at December 31, 2008 and
2009, and the related unaudited consolidated statements of income and cash flow
from operating activities section of the cash flow statement for each of the
fiscal years then ended, certified by the chief financial officer of the Target
Companies as being to his actual knowledge in conformity with the
representations and warranties contained in this Section 3.5 (collectively, the
“Financial Statements”) and (b) the unaudited consolidated balance sheet of the
Target Companies as at September 30, 2010, and the related unaudited
consolidated statement of income and cash flow from operating activities section
of the cash flow statement for the nine months then ended, certified by the
chief financial officer of the Target Companies as being to his actual knowledge
in conformity with the representations and warranties contained in this
Section 3.5 (the “2010 Financial Statements”).  The Financial

 

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Statements and the 2010 Financial Statements have been prepared in accordance
with the books and records of the Business and fairly present in all material
respects the financial position of the Business as of the dates indicated and
the statements of income and cash flows from operating activities of the
Business for the periods indicated, all in accordance with U.S. GAAP applied on
a consistent basis throughout the periods specified, except as expressly set
forth therein and except that the Financial Statements omit footnotes and the
disclosures required therein, the cash flow statements including in the
Financial Statements and the 2010 Financial Statements include only cash flow
from operating activities and are not a complete cash flow statement, and
subject, in the case of the 2010 Financial Statements, to normal year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse).

 

3.6         Books and Records.  The respective books of account and other
financial records and any other comparable records of each Target Company are in
all material respects complete and correct and have been maintained in all
material respects in accordance with sound business practices and all Legal
Requirements, including the maintenance of an adequate system of internal
controls.  The Sellers have made available to the Purchasers all material books
of account and other financial records and comparable records of each Target
Company and the respective minute books or statutory books of each Target
Company.  At the Closing, all of such books and records of each Target Company
will be in the possession of such Target Company.

 

3.7         Title to Assets; Condition of Assets.

 

(a)           Except as set forth in Schedule 3.7(a) of the Seller Disclosure
Letter, each Target Company has good and marketable title to, or a valid
leasehold interest or analogous property rights under applicable Legal
Requirements in, all its respective Real Property and Tangible Personal Property
reflected in the books and records of such Target Company as owned or leased by
it or used by it in the Business, including the properties and assets reflected
in the 2010 Financial Statements (except for personal property sold or otherwise
disposed of since September 30, 2010 in the Ordinary Course of Business) and the
properties and assets acquired since such date, in each case free and clear of
all Liens, except Permitted Liens.

 

(b)           The Tangible Personal Property currently used by the Business is
generally in good operating condition and in a state of good maintenance and
repair, ordinary wear and tear excepted and usable in the regular and Ordinary
Course of Business.

 

(c)           The assets owned and leased by the Target Companies, together with
the Administrative Assets, constitute all of the assets currently used in
connection with the Business.  Such assets are generally sufficient for the
Target Companies to conduct the Business following the Closing as it is
currently being conducted.

 

3.8         Real Property.

 

(a)           Schedule 3.8(a) of the Seller Disclosure Letter sets forth a true,
correct and complete (i) street address of all Owned Real Property, (ii) the
name of the owner of each such parcel of Owned Real Property, (iii) a list of
all Indebtedness secured by a Lien on such Owned Real Property and (iv) a list
of all other Encumbrances on such Owned Real Property (other than

 

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Permitted Liens).  There are no parties in possession of the Owned Real Property
other than the Target Companies.

 

(b)           Schedule 3.8(b) of the Seller Disclosure Letter sets forth a true,
correct and complete (i) list of all Leases and (ii) street address of all
Leased Real Property, in each case segregated with respect to each Target
Company.  True, correct and complete copies of all Leases, together with all
exhibits, schedules and attachments thereto, and all amendments thereof, have
been provided to the Purchasers.  Except as set forth in Schedule 3.8(b) of the
Seller Disclosure Letter, with respect to each of the Leases:

 

(i)            such Lease is valid and binding upon and enforceable against the
parties thereto, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar Legal Requirements affecting the enforcement of creditors’ rights
generally and to general principles of equity;

 

(ii)           the Contemplated Transactions do not require the consent of any
other party to such Lease, will not result in a breach of or default under such
Lease or will not otherwise cause such Lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing;

 

(iii)          the possession and quiet enjoyment by the Target Companies of the
Leased Real Property under such Lease have not in any material respect been
disturbed and there are no unresolved disputes with respect to such Lease;

 

(iv)          none of the Target Companies is in default under such Lease, and
no event has occurred or circumstance exists that, with the delivery of notice,
the passage of time or both, would constitute such a default or permit the
termination, modification or acceleration of rent under such Lease;

 

(v)           none of the Target Companies has subleased, licensed or otherwise
granted to any Person the right to use, enjoy or occupy such Leased Real
Property or any portion thereof; and

 

(vi)          none of the Target Companies (A) has received any written notice
of cancellation or termination under any such Lease thereunder, (B) has received
any written notice of a breach or default under such Lease, which breach or
default has not been cured and (C) has granted to any other Person any rights,
adverse or otherwise, under any such Lease.

 

(c)           No portion of the Real Property violates in any material respect
any use restriction, limitation, commission or covenant of record, public
utility or other easements or any applicable Legal Requirement, including those
relating to zoning, building, land use and planning, fire, air, sanitation and
noise control.

 

(d)           Except for the Permitted Liens, (i) no Owned Real Property, and to
the Knowledge of Rockwood, Leased Real Property is subject to any governmental
decree or Order (or, to the Knowledge of Rockwood, threatened or proposed Order)
that would cause such Real Property to be sold or taken by public authority or
(ii) no Owned Real Property is subject to any

 

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rights-of-way, building use restrictions, exceptions, variances, reservations or
limitations of any nature whatsoever, other than in the applicable land use
permits.

 

(e)           Except as set forth in Schedule 3.8(e) of the Seller Disclosure
Letter, there are no structural deficiencies or latent or hidden defects
affecting any of the Real Property, nor facts or conditions affecting any of the
Owned Real Property, which could, individually or in the aggregate, interfere in
any material respect with the use or occupancy of the Owned Real Property or any
portion thereof in the operation of any of the Target Companies. All
Improvements on the Owned Real Property and all systems and equipment providing
service thereto are in all material respects in good condition and repair,
ordinary wear and tear excepted, and sufficient for the operation of the
Business in all material respects in the manner in which it is currently being
conducted.  All Improvements on the Leased Real Property and all systems and
equipment providing service thereto are sufficient for the operation of the
Business in all material respects in the manner in which it is currently being
conducted.

 

(f)            There are no condemnation or expropriation or similar Proceedings
pending or, to the Knowledge of Rockwood, threatened against any of the Real
Property or the Improvements thereon.  There is no decree, Order or writ
outstanding, nor any Claims or Proceedings, pending or, to the Knowledge of
Rockwood, threatened, relating to the ownership, lease, use or occupancy of the
Real Property or any portion thereof.

 

(g)           Except as set forth in Schedule 3.8(g) of the Seller Disclosure
Letter, to the Knowledge of Rockwood, all Improvements are wholly within the lot
limits of the Owned Real Property, and none of the Improvements encroaches on
any land that is not included in the Owned Real Property or on any easement
affecting any Real Property, or violate any building lines or set-back lines.
Except as set forth in Schedule 3.8(g) of the Seller Disclosure Letter, to the
Knowledge of Rockwood, there are no encroachments onto any of the Owned Real
Property, or any portion thereof, which would interfere with the use or
occupancy of such Owned Real Property or the continued operation of any of the
Target Companies or the Business.

 

(h)           The Sellers have made available to the Purchasers true, correct
and complete copies of all surveys, reports and all other similar materials and
information pertaining to the Target Companies’ ownership of the Owned Real
Property or any part thereof prepared since January 1, 2008.

 

(i)            In relation to the Owned Real Property known as Units 9 and 10
Crown Business Park, Orbital Way, Old Dalby, LE14 3NQ registered at the Land
Registry under title number LT303204, there is no existing “Forfeiting Event”
(as defined in a Transfer, dated June 26, 1998, made between (1) Abro Properties
Limited, (2) Abro Properties (Management) Limited and (3) L.C.S. Services
Limited).

 

(j)            In relation to the Owned Real Property known as Land to the East
of Digby Drive, Melton Mowbray registered at the Land Registry under title
number LT357069, in accordance with a Transfer, dated June 16, 1998, made
between (1) James Anthony Lomas and others, (2) W G Herbert Developments
Limited, (3) Brian Edward Herbert and others and (4) Laporte Alpha Gary Limited
(the “1998 Transfer”), there has been no “Development” (as defined in the 1998

 

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Transfer) of the relevant property and no additional moneys are due to be paid
under the 1998 Transfer in respect of any such Development.

 

3.9         Accounts Receivable.  All accounts receivable of the Target
Companies (the “Accounts Receivable”) that are reflected on the Financial
Statements or the 2010 Financial Statements or on the accounting records of the
Target Companies as of the Closing Date in connection with the operation of the
Business represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business,
subject to reserves reflected in the Financial Statements, the 2010 Financial
Statement or the accounting records of the Target Companies.  Schedule 3.9 of
the Seller Disclosure Letter contains a complete and accurate list of all
Accounts Receivable as of November 30, 2010 and includes a list setting forth
the aging of such Accounts Receivable.

 

3.10       Inventory.  All inventory of the Target Companies reflected in the
Financial Statements or the 2010 Financial Statements (net of the respective
reserves reflected therein) consists of a quality and quantity usable and
salable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality, all of which have been written off or written down to
net realizable value in the Financial Statements or the 2010 Financial
Statements or on the accounting records of the Target Companies, as the case may
be.

 

3.11       No Undisclosed Liabilities.  The Business and the Target Companies do
not have any liabilities or obligations, whether accrued, known or unknown,
absolute, contingent or otherwise, in the case of liabilities arising in respect
of periods on or prior to the Closing, and in the case of obligations, required
to be performed prior to Closing, except for (i) liabilities or obligations
incurred or arising in the Ordinary Course of Business subsequent to
September 30, 2010, (ii) liabilities or obligations as and to the extent set
forth or reserved against in the 2010 Financial Statements, (iii) liabilities
and obligations that are fully discharged or performed on or prior to the
Closing, (iv) liabilities or obligations disclosed on Schedule 3.11 of the
Seller Disclosure Letter and (v) liabilities or obligations (including for
Taxes) retained by the Rockwood Sellers and for which they are responsible
hereunder.  Schedule 3.11(b) of the Seller Disclosure Letter sets forth a list
of all Indebtedness of the Target Companies as of the date of this Agreement.

 

3.12       Tax Returns Filed and Taxes Paid.

 

(a)           The Target Companies have filed or caused to be filed on a timely
basis all Tax Returns and all reports with respect to Taxes that are or were
required to be filed pursuant to applicable Legal Requirements.  All Tax Returns
and reports filed by the Target Companies are true, correct and complete in all
material respects.  The Target Companies have paid all Taxes that have become
due and payable.  During the three years immediately prior to the date of this
Agreement, no Claim has ever been made or is expected to be made by any
Governmental Body in a jurisdiction where any Target Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.  Other
than Permitted Liens, there are no Liens on any part of the Business that arose
in connection with any failure (or alleged failure) to pay any Tax, and, to the
Knowledge of Rockwood, no Claims attributable to Taxes have been made by any Tax
authority, which, if adversely determined, could result in any such Encumbrance.

 

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(b)           All Taxes that any of the Target Companies are or were required by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Body or
other Person.

 

(c)           None of the Target Companies is currently or during the three
years immediately prior to the date of this Agreement has been the subject of an
audit or other examination relating to the payment of a material amount of Taxes
of the Target Companies by the Tax authorities of any nation, state or locality
(and, to the Knowledge of Rockwood, no such audit is pending or threatened) nor
have the Target Companies received any written notices from any Tax authority
relating to any issue that could reasonably be expected to affect the Tax
liability of the Target Companies.

 

(d)           None of the Target Companies (i) has entered into a written
agreement or waiver extending any statute of limitations relating to the payment
or collection of a material amount of Taxes of the Target Companies that has not
expired or (ii) is presently contesting any material Tax liability of the Target
Companies before any Governmental Body.

 

(e)           There are no Tax-sharing, allocation, indemnification or similar
Contracts in effect as between any of the Target Companies or, to the Knowledge
of Rockwood, any predecessors or Related Persons thereof and any other party
(including any Rockwood Seller and any predecessors or Related Persons thereof)
under which the Purchasers or the Target Companies could be liable for any Taxes
or other claims of any other party subsequent to the Closing other than in their
capacity as a withholding agent pursuant to a Legal Requirement for withholding
or pursuant to financing arrangements, leases or other commercial agreements
entered into by the Target Companies in the Ordinary Course of Business.

 

(f)            No Target Company has within three years prior to the date of
this Agreement paid or become liable to pay any material penalty, fine,
surcharge or interest in connection with any Tax.

 

(g)           To the extent that any Target Company participates in a pay as you
earn or national insurance system, such Target Company has in all material
respects properly operated such system deducting and accounting for Tax and
maintaining records as required by applicable Legal Requirements.

 

(h)           Each of Rockwood Specialties Group, Rockwood Specialties and
AlphaGary Corporation is a member of Rockwood Holdings’ “affiliated group” (as
such term is defined in Section 1504 of the Code) and will be included in
Rockwood Specialties Group’s consolidated U.S. federal income Tax Return that
includes the period from January 1 (the first day of the Rockwood Specialties
Group taxable year) of the taxable year in which the Closing Date occurs through
the Closing Date.  As such, Rockwood Holdings is, and at all times prior to the
Closing will be, eligible to file an election under Section 338(h)(10) of the
Code with respect to a “qualified stock purchase” (as such term is defined in
Section 338 of the Code) of the stock of AlphaGary Corporation.

 

(i)            The execution and delivery of this Agreement or the consummation
of the Contemplated Transactions will not result in any profit or gain being
deemed to accrue to AGL

 

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for Tax purposes whether pursuant to section 179 (Companies ceasing to be a
member of a group) of the U.K. Taxation of Chargeable Gains Act 1992 or
otherwise.

 

(j)            AGL is a registered and taxable person for the purposes of U.K.
VAT and such registration is not subject to any conditions imposed by or agreed
with HMRC.

 

(k)           AGL has not in the last three years been treated as a member of a
VAT group registration for the purposes of section 43 (Groups of Companies) of
the VATA.

 

(l)            In the last three years, all interest, discounts and premiums
payable by AGL in respect of its loan relationships (within the meaning of
Part 5 (Loan Relationships) of the CTA) have been capable of being brought into
account by AGL as a debit for the purposes of Part 5 (Loan Relationships) of the
CTA as and to the extent that they have been from time to time recognized in
AGL’s accounts and the Sellers do not expect that any obligations entered into
by AGL prior to the Closing Date to make future payments of such amounts will
not also be capable of being brought into account by AGL (assuming that the
accounting policies and methods adopted for the purpose of the accounts continue
to be so adopted).

 

(m)          AGL neither has nor has had in the period of three years ending on
the date of this Agreement, any interest in a controlled foreign company as
defined in Chapter IV Part XVII (Controlled Foreign Companies) of the ICTA.

 

(n)           To the Knowledge of Rockwood, AGL is not a party to any
transaction or arrangement under which for the purposes of Part 4 of TIOPA
(Provision not at arm’s length) the actual provision that has been made or
imposed between AGL and any other person by means of a transaction or series of
transactions differs from the provision which would have been made as between
independent enterprises as determined in accordance with Part 4 of TIOPA.

 

(o)           All documents in the possession or under the control of each
Target Company to which such Target Company is a party relating to the Business
and which are subject to stamp duty have been properly stamped.

 

(p)           Neither the execution and delivery of this Agreement nor the
consummation of the Contemplated Transactions will result in the withdrawal of
any relief from stamp duty or stamp duty land tax granted on or before Closing
which will affect any Target Company.

 

3.13       No Adverse Change.  Since December 31, 2009, there has not been a
Material Adverse Change with respect to the Target Companies taken as a whole or
the Business, and no event has occurred or circumstance exists that could
reasonably be expected to result in a Material Adverse Change with respect to
the Target Companies taken as a whole or the Business.

 

3.14       Employee Benefits.

 

(a)           Schedule 3.14(a) of the Seller Disclosure Letter sets forth a
true, correct and complete list of all domestic and foreign (i) “employee
benefit plans,” within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder (“ERISA”), (ii) bonus, stock option, stock purchase, restricted
stock, incentive, fringe benefit, “voluntary employees’ beneficiary
associations” (“VEBAs”)

 

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under Section 501(c)(9) of the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder (the “Code”), profit-sharing, pension, or
retirement, deferred compensation, medical, life insurance, disability,
accident, salary continuation, severance, vacation, sick pay, sick leave,
supplemental retirement and unemployment benefit plans, programs, arrangements,
commitments or practices (whether or not insured) and (iii) employment,
consulting, termination, and severance contracts or agreements that are not
based on a standard form of contract or agreement; currently covering active,
retired or former employees or directors of the Target Companies, whether or not
any such plans, programs, arrangements, commitments, contracts, agreements or
practices (referred to in (i), (ii) or (iii) above) are in writing or are
otherwise exempt from the provisions of ERISA, that are maintained or
contributed to (or with respect to which an obligation to contribute has been
undertaken) or with respect to which any potential liability is borne by
Rockwood Specialties or its Affiliates (“Benefit Plans”).  The Benefit Plans
covering solely active, retired or former employees of the Target Companies are
denoted by asterisk on Schedule 3.14(a) of the Seller Disclosure Letter.  The
asterisked Benefit Plans, excluding the AlphaGary Corporation Union Employees
Pension Plan (which will be transferred to Rockwood Specialties or one of its
Affiliates (other than a Target Company) prior to Closing in accordance with
Section 10.1(d)), are hereinafter referred to as the “Target Company Benefit
Plans”.  For the avoidance of doubt, the Benefit Plans shall not include any
statutory foreign plans with respect to which any Target Company, Rockwood
Specialties or any of their Affiliates are obligated to make contributions or
comply with under applicable Legal Requirements.

 

(b)           Each Benefit Plan (including any related trust) complies in form
with the requirements of all applicable Legal Requirements, including ERISA, the
Code, and applicable foreign tax laws, and has at all times been maintained and
operated in compliance with its terms and the requirements of all applicable
Legal Requirements, including ERISA and the Code, with such exceptions as could
not, individually or in the aggregate, result in a material liability of any
Target Company.  Each Benefit Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS and each trust established in connection with any Benefit Plan, which is
intended to be exempt from U.S. federal income taxation under Section 501(a) of
the Code has been determined to be so exempt by the IRS.  Since the date of each
most recent determination letter, to the Knowledge of Rockwood Specialties, no
event has occurred and no condition or circumstance has existed that has
resulted, or is likely to result, in the revocation of any such determination
letter or that could adversely affect the qualified status of any such Benefit
Plan or the exempt status of any such trust, with such exceptions as could not,
individually or in the aggregate, result in a material liability of any Target
Company.  No complete or partial termination of any Benefit Plan has occurred,
or to the Knowledge of Rockwood Specialties is expected to occur, and to the
Knowledge of Rockwood Specialties no Proceedings have been instituted, and no
condition exists and no event has occurred that could constitute grounds, under
Title IV of ERISA to terminate, or appoint a trustee to administer, any Benefit
Plan, with such exceptions as could not, individually or in the aggregate,
result in a material liability of any Target Company.  None of the Rockwood
Sellers nor the Target Companies has any commitment, intention or understanding
to create, materially modify or terminate any Target Company Benefit Plan, other
than as required by applicable Legal Requirements, the terms of any Material
Contract, or the terms of any Target Company Benefit Plan.  Except as required
to maintain the tax-qualified status of any Benefit Plan intended to qualify
under Section 401(a) of the Code, no condition or circumstance exists that would

 

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prevent the amendment or termination of any Target Company Benefit Plan. No
event has occurred, and no condition or circumstance has existed, that could
result in a material increase in the benefits under, or the expense of
maintaining (as a result of a plan amendment, written interpretation or
announcement issued by a Governmental Body), any Target Company Benefit Plan
from the level of benefits thereunder or expense incurred thereof for the most
recent fiscal year ended.  No Target Company Benefit Plan is a plan described in
Section 4063(a) of ERISA.  No Target Company Benefit Plan has assets that
include securities issued by any Rockwood Seller or any Target Company.  As of
the date of this Agreement, neither Rockwood Specialties, the Target Companies,
nor any of their Affiliates has communicated to any employee of the Target
Companies or formally adopted or authorized any creation, material modification
or termination of any Target Company Benefit Plan, other than as may be required
by Applicable Law or the terms of any applicable collective bargaining
agreement, Material Contracts or any Target Company Benefit Plan.

 

(c)           (i)            No Target Company Benefit Plan is subject to
Sections 412 or 430 of the Code or Title IV or Sections 302 or 303 of ERISA.

 

(ii)           No Target Company Benefit Plan is a “multiemployer plan” (as such
term is defined in Section 4001(a)(3) of ERISA).

 

(iii)          No Target Company has incurred, and no event has occurred and no
condition or circumstance exists that could result, directly or indirectly, in,
any material liability (including, without limitation, any indirect, contingent
or secondary liability) of any Target Company under Title IV of ERISA or
Sections 412 or 430 of the Code or Sections 302 or 303 of ERISA.

 

(iv)          No Target Company Benefit Plan (whether qualified or non-qualified
under Section 401(a) of the Code) provides for post-employment or retiree
health, life insurance or other welfare benefits and has unfunded liabilities,
other than continuation coverage required by Section 4980B of the Code or
Sections 601-608 of ERISA (“COBRA”) or similar Legal Requirements.

 

(v)           No asset of any Target Company is subject to any Lien arising
under Section 303(k) of ERISA or Section 430(k) of the Code, and no event has
occurred and no condition or circumstance has existed that could give rise to
any such Lien. None of the Target Companies has been required to provide any
security under Section 307 of ERISA or Section 436(f) of the Code, and no event
has occurred and no condition or circumstance has existed that could give rise
to any such requirement to provide any such security.

 

(vi)          There are no Claims or disputes pending or to the Knowledge of
Rockwood, threatened, anticipated or expected to be asserted against or with
respect to any Benefit Plan or the assets of any such Benefit Plan (other than
routine claims for benefits and appeals of denied routine claims) that could,
individually or in the aggregate, result in a material liability of any Target
Company. No civil or criminal action brought pursuant to the provisions of Title
I, Subtitle B, Part 5 of ERISA is pending, or to the Knowledge of Rockwood,
threatened, anticipated, or expected to be asserted against any Target Company
or any fiduciary of any Benefit Plan, in any case with respect to any Benefit
Plan that could, individually or in the

 

39

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aggregate result in a material liability of any Target Company. No Benefit Plan
or any fiduciary thereof has been the direct or indirect subject of any
Proceeding that could, individually or in the aggregate, result in a material
liability of any Target Company.

 

(d)           Full payment has been timely made of all amounts that any Target
Company is required, under applicable Legal Requirement or under the terms of
any Target Company Benefit Plan or any agreement relating to any Target Company
Benefit Plan to which any Target Company is a party, to have paid as
contributions or premiums thereto as of the last day of the most recent fiscal
year of such Target Company Benefit Plan ended prior to the date hereof or have
been timely reflected on the most recent consolidated balance sheet filed prior
to the date hereof or accrued in the account records of the Target Companies and
such contributions or premiums have been timely deposited into the appropriate
trusts or accounts.

 

(e)           None of the Target Companies, nor any of their respective
directors, officers, or employees has engaged in any transaction with respect to
any Benefit Plan or breached any applicable fiduciary responsibilities or
obligations under Title I of ERISA that would subject any of them to a Tax,
penalty or liability for prohibited transactions or breach of any obligations
under ERISA or the Code or would result in any Claim being made under, by or on
behalf of any such Benefit Plan by any party with standing to make such Claim,
except to the extent that any such transaction or breach could not, individually
or in the aggregate, result in a material liability of any Target Company.

 

(f)            The execution of this Agreement and the consummation of the
Contemplated Transactions do not constitute a triggering event under any Target
Company Benefit Plan, which (either alone or upon the occurrence of any
additional or subsequent event) will result in any payment (whether of severance
pay or otherwise), “parachute payment” (as such term is defined in Section 280G
of the Code), acceleration, vesting or increase in benefits to any employee or
former employee or director of any Target Company.  Except as set forth on
Schedule 3.14(f) of the Seller Disclosure Letter, no Target Company Benefit Plan
provides for the payment of severance, termination, change in control or
similar-type payments or benefits.

 

(g)           The Target Companies have classified all individuals who perform
services for them correctly under each Target Company Benefit Plan, ERISA, the
Code and other applicable Legal Requirements as common law employees,
independent contractors or leased employees.

 

(h)           With respect to each Target Company Benefit Plan, Rockwood
Specialties has made available to the Purchasers true, correct and complete
copies of:  (i) all Target Company Benefit Plans as in effect on the date
hereof, together with all amendments thereto, including, in the case of any
Target Company Benefit Plan not set forth in writing, a written description
thereof; (ii) all current summary plan descriptions and summaries of material
modifications; (iii) all current trust agreements, declarations of trust and
other documents establishing other funding arrangements (and all amendments
thereto and the latest financial statements thereof); (iv) the most recent IRS
determination letter or opinion letter, if any, obtained with respect to each
Target Company Benefit Plan intended to be qualified under Section 401(a) of the
Code or exempt under Section 501(a) or 501(c)(9) of the Code; (v) the annual
report on IRS Form 5500-series or 990 for each of the last three years for each
Target Company Benefit Plan required to file such form; (vi) the two most
recently prepared actuarial valuation reports; (vii) the most

 

40

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recently prepared financial statements; and (vii) with respect to each Target
Company Benefit Plan, any service provider agreements, insurance contracts,
annuity contracts, investment management agreements, subscription agreements,
participation agreements, recordkeeping agreements and collective bargaining
agreements.

 

(i)            The UK Plan is a registered pension scheme within the meaning of
the UK Finance Act 2004, and Rockwood Specialties is not aware of any reason why
the UK Plan’s registered status will or may cease.

 

(j)            No Target Company has been a party to an act, or a deliberate
failure to act, which might result in a contribution notice being issued to any
Target Company by TPR under section 38 or 47 of the PA04 in respect of the UK
Plan.  No Target Company has at any time within the 12 months before the Closing
Date been “connected” with or an “associate” of any employer that is or has been
participating in a pension scheme established in the U.K. (other than the UK
Plan) to which sections 38, 43, 47 or 52 of the PA04 applies (for these
purposes, “connected” and “associate” have the meanings given to them in
sections 435 and 249 of the UK Insolvency Act 1986, respectively).  No financial
support direction, contribution notice or restoration order has been issued by
TPR under sections 38, 43, 47 or 52 of the PA04 against any Target Company or
any of their directors and to the Knowledge of Rockwood there are no
circumstances that are likely to lead to any direction, notice or order being
issued.

 

(k)           To the Knowledge of Rockwood, each of the Target Companies has
complied with its notification obligations under section 69 and section 70 of
the PA04.

 

(l)            No Canadian Target Company Benefit Plan is a “registered pension
plan” as defined in ITA.

 

(m)          There are no unfunded liabilities in respect of any Canadian Target
Company Benefit Plan.

 

(n)           With the exception of the Registered Retirement Savings Plan or as
may be required by any applicable Legal Requirements, none of the Canadian
Target Company Benefit Plans provide benefits after the date of retirement or
other termination of service to employees or former employees of AlphaGary
Canada or to the beneficiaries or dependents of such employees.

 

3.15         Compliance with Legal Requirements; Governmental Authorizations.

 

(a)           Except (x) as set forth on Schedule 3.15(a) of the Seller
Disclosure Letter and (y) for matters that are the subject of the
representations and warranties contained in Section 3.8 (Real Property), Section
3.19 (Environmental Matters), Section 3.22 (Intellectual Property), Section 3.24
(Compliance with the Foreign Corrupt Practices and Export Control and
Anti-boycott Laws) and Section 3.28 (REACH):

 

(i)            each of the Target Companies is, and during the last three years
has been, in compliance in all material respects with each Legal Requirement
that is or was applicable to it or to the conduct or operation of the Business
or the ownership or use of any of such Target Company’s assets;

 

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(ii)           no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) constitutes or could reasonably be expected
to result in a violation by any Target Company of, or a failure on the part of
any Target Company to comply with, any Legal Requirement or (B) could reasonably
be expected to give rise to any obligation on the part of any Target Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature; and

 

(iii)          no Target Company has received within the last three years any
written notice, Order or other written communication from any Person regarding
any actual, alleged, possible or potential violation of, or failure to comply
with, any Legal Requirement applicable to the Business.

 

(b)           Schedule 3.15(b) of the Seller Disclosure Letter contains a
complete and accurate list of each material Governmental Authorization that is
held by each Target Company as of the date of this Agreement.  The Governmental
Authorizations held by the Target Companies collectively constitute all of the
Governmental Authorizations necessary to permit the Target Companies to lawfully
conduct and operate the Business in the manner in which they currently conduct
and operate the Business.  Each Governmental Authorization held by the Target
Companies is valid and in full force and effect.  Except as set forth in
Schedule 3.15(b) of the Seller Disclosure Letter, since January 1, 2008:

 

(i)            each Target Company is and has been in all material respects in
compliance with all of the terms and requirements of each Governmental
Authorization held by such Target Company;

 

(ii)           no event has occurred or circumstance exists, including the
execution and delivery of this Agreement and the consummation of the
Contemplated Transactions, that could reasonably be expected to (with or without
notice or lapse of time) (A) constitute or result in a violation of or a failure
to comply in any material respect with any term or requirement of any
Governmental Authorization held by a Target Company or (B) result, directly or
indirectly, in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization held by a
Target Company; and

 

(iii)          no Target Company has received within the last three years of
this Agreement any written notice, Order or other written communication from any
Person regarding (A) any actual, alleged, possible or potential violation of or
failure to comply in any material respect with any term or requirement of any
Governmental Authorization held by a Target Company or (B) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental Authorization held by a
Target Company.

 

 3.16        Legal Proceedings; Orders.

 

(a)           Except as set forth on Schedule 3.16(a) of the Seller Disclosure
Letter, there is no pending Proceeding:

 

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(i)            that has been commenced by or against any Target Company or that
otherwise relates to or could reasonably be expected to affect the Business or
any of the assets currently or previously owned, leased, operated or used by any
Target Company; or

 

(ii)           that has been commenced against any Rockwood Seller or any Target
Company that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.

 

To the Knowledge of Rockwood, (1) no such Proceeding has been threatened and (2)
no event has occurred or circumstance exists that could reasonably be expected
to give rise to or serve as a basis for the commencement of any such Proceeding.

 

(b)           Except as set forth on Schedule 3.16(b) of the Seller Disclosure
Letter:

 

(i)            there is no Order (A) to which any Target Company, the Business
or any of the assets owned or used by any Target Company, is subject or (B) that
challenges, or that could reasonably be expected to have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions; and

 

(ii)           to the Knowledge of Rockwood, no officer, director, agent, or
employee of any Target Company is subject to any Order that prohibits such
officer, director, agent or employee from engaging in or continuing any conduct,
activity, or practice on behalf of such Target Company.

 

(c)           Except as set forth on Schedule 3.16(c) of the Seller Disclosure
Letter:

 

(i)            each Target Company is, and during the last three years has been,
in all material respects in compliance with all of the terms and requirements of
each Order to which it, the Business or any of the assets owned or used by such
Target Company, is or has been subject;

 

(ii)           no event has occurred or circumstance exists that could
reasonably be expected to constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply in any material respect with
any term or requirement of any Order to which any Target Company, the Business
or any of the assets owned or used by any Target Company is subject; and

 

(iii)          no Target Company has received within the last three years any
written notice or other written communication from any Person regarding any
actual, alleged, possible, or potential violation of, or failure to comply in
any material respect with, any term or requirement of any Order to which any
Target Company, the Business or any of the assets owned or used by any Target
Company, is or has been subject.

 

 3.17        Absence of Certain Changes and Events.  Except as set forth in
Schedule 3.17 of the Seller Disclosure Letter, since December 31, 2009, the
Target Companies have conducted the Business in the Ordinary Course of Business
and there has not been any:

 

(a)           except as necessary to consummate the Reorganization or in
connection with any of the actions described in Section 5.3(b), change in any
Target Company’s authorized or issued

 

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share capital; grant of any share option or right to purchase shares of share
capital of any Target Company; issuance of any security convertible into such
share capital; grant of any registration rights; purchase, redemption,
retirement or other acquisition by any Target Company of any shares of any such
share capital; or declaration or payment of any non-cash dividend or other
non-cash distribution in respect of shares of share capital;

 

(b)           amendment to the Organizational Documents of any Target Company,
except in connection with any of the actions described in Section 5.3(b);

 

(c)           payment or increase by any Target Company of any bonuses, salaries
or other compensation to any Business Employee other than in the Ordinary Course
of Business or as required by any Material Contract or any Benefit Plan;

 

(d)           (i) material adverse change in the financial condition of any
Target Company Benefit Plan that is a pension plan within the meaning of Section
3(2) of ERISA, or change in the actuarial assumptions with respect to any such
Target Company Benefit Plan, which, either individually or in the aggregate,
would result in the current value of such Target Company Benefit Plan’s accrued
benefits exceeding the current value of all such Target Company Benefit Plan’s
assets, (ii) increase in benefits under or payments to any Target Company
Benefit Plan as a result of plan amendments, written interpretations or
announcements (whether written or not) issued by a Governmental Body or (iii)
adoption of any Benefit Plan or a pension scheme established in the U.K. (other
than the UK Plan) to which sections 32, 38, 43, 47, 52 or 58 of the PA04
applied;

 

(e)           physical damage to or destruction or loss of any asset or property
of the Business or any Target Company, whether or not covered by insurance, that
has had, or could reasonably be expected to have, a material adverse affect on
the Target Companies;

 

(f)            entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to any Target Company of at least
two hundred fifty thousand Dollars ($250,000);

 

(g)           other than the Reorganization or in the Ordinary Course of
Business, sale (other than sales of Inventory in the Ordinary Course of
Business), lease, license or other disposition of any material asset (including
the Intellectual Property Assets) or property of the Business or any Target
Company or mortgage, pledge, or imposition of any Lien (other than Permitted
Liens) on any asset or property of any Target Company;

 

(h)           cancellation or waiver of any claims or rights with a value to any
Target Company in excess of two hundred fifty thousand Dollars ($250,000);

 

(i)            change in the financial accounting methods used by any Target
Company, except as may be required by relevant accounting regulatory and
rule-making bodies; or

 

(j)            agreement, whether oral or written, by any Target Company to do
any of the foregoing.

 

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3.18         Contracts; No Defaults.

 

(a)           Schedule 3.18(a) of the Seller Disclosure Letter contains a
complete and accurate list, and the Sellers have delivered to the Purchasers
true and complete copies, of the following Contracts to which any Target Company
is a party as of the date of this Agreement (each such Contract required to be
set forth on such Schedule together with any Contract of the type described in
clauses (i) – (xv) below entered into by any Target Company after the date of
this Agreement, a “Material Contract”):

 

(i)            each Contract that involves performance of services or delivery
of goods or materials by one or more Target Companies of an amount or value in
excess of two hundred fifty thousand Dollars ($250,000);

 

(ii)           each Contract that involves expenditures or receipts by one or
more Target Companies in excess of two hundred fifty thousand Dollars
($250,000);

 

(iii)          each lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real or
personal property, (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate payments of
less than two hundred fifty thousand Dollars ($250,000) and with terms of less
than one year);

 

(iv)          each licensing agreement or other Contract with respect to
patents, trademarks, copyrights or other Intellectual Property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation, assignment, ownership, disclosure or non-disclosure
of any of the Intellectual Property Assets or any other Intellectual Property
and license agreements pursuant to which a third party grants to any Target
Company any license to use the Intellectual Property rights of such third party
(or their licensors);

 

(v)           each collective bargaining agreement and other Contract with
respect to or with any labor union or other employee representative of a group
of employees;

 

(vi)          each joint venture, partnership and other Contract (however named)
involving a sharing of profits, losses, costs or liabilities by any Target
Company with any other Person;

 

(vii)         each Contract containing covenants that in any way purport to
restrict the business activity of any Target Company or limit the freedom of any
Target Company to engage in any line of business or to compete with any Person
(other than confidentiality and similar agreements entered into in the Ordinary
Course of Business);

 

(viii)        each Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for goods;

 

(ix)           each power of attorney that is currently effective and
outstanding with respect to any Target Company;

 

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(x)            each Contract entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking by any Target
Company to be responsible for consequential damages;

 

(xi)           each Contract pursuant to which any Target Company agrees or
commits to make capital expenditures in excess of two hundred fifty thousand
Dollars ($250,000);

 

(xii)          each Contract that can be terminated upon a change in the direct
or indirect ownership or control of a Target Company or whose terms, in the
event of such a change of ownership or control, are different from those which
apply prior to such event;

 

(xiii)         each written warranty, guaranty or other similar undertaking with
respect to contractual performance extended by any Target Company other than in
the Ordinary Course of Business and other than guaranties of credit cards used
by officers and employees of the Target Companies in the Ordinary Course of
Business, excluding endorsements made for collection in the Ordinary Course of
Business;

 

(xiv)        each written employment agreement to which any Target Company is a
party; and

 

(xv)         each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.

 

(b)           Except as set forth in Schedule 3.18(b) of the Seller Disclosure
Letter, each Contract identified or required to be identified in Schedule
3.18(a) of the Seller Disclosure Letter is in full force and effect and is valid
and enforceable in accordance with its terms.

 

(c)           Except as set forth in Schedule 3.18(c) of the Seller Disclosure
Letter:

 

(i)            each Target Company is, and during the last three years has been,
in all material respects in compliance with all applicable terms and
requirements of each Material Contract under which such Target Company has or
had any obligation or liability or by which such Target Company or any of the
assets owned or used by such Target Company is or was bound;

 

(ii)           to the Knowledge of Rockwood, each other Person that has or had
any obligation or liability under any Material Contract under which any Target
Company has or had any rights is, and during the last three years has been, in
all material respects in compliance with all applicable terms and requirements
of such Material Contract;

 

(iii)          no event has occurred or circumstance exists that (with or
without notice or lapse of time) could reasonably be expected to contravene,
conflict with, or result in a material violation or breach of, or give any
Target Company the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Material Contract; and

 

(iv)          no Target Company has given to or received from any other Person
within the three years immediately prior to the date of this Agreement any
written notice or other

 

46

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written communication regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Material Contract.

 

(d)           There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to any
Target Company, under current or completed Material Contracts with any Person
and, to the Knowledge of Rockwood, no such Person has made written demand for
such renegotiation.

 

 3.19        Environmental Matters. Except as set forth in Schedule 3.19 of the
Seller Disclosure Letter:

 

(a)           Each Target Company is and has during the five years immediately
prior to the date of this Agreement been in material compliance with all
applicable Environmental Laws and has obtained, and is in compliance with, all
Governmental Authorizations required of them under applicable Environmental
Law.  There are no Claims by any Person pending, or to the Knowledge of
Rockwood, threatened, against the Target Companies under any Environmental Law
that have not been resolved.  No Target Company has assumed, either
contractually or by operation of law, the liability of any other Person under
any Environmental Law.  There are no facts, circumstances or conditions relating
to the Business or operations of the Target Companies or any of their respective
predecessors (including the disposal of any Hazardous Materials at any
location), or to any Real Property or Facility at any time owned, leased, or
operated by the Target Companies or any of their respective predecessors, which
could reasonably be expected to give rise to any Claim, or to any liability,
under any Environmental Law.

 

(b)           There are no pending or, to the Knowledge of Rockwood, Threatened
Encumbrances, or other restrictions of any nature, resulting from any
Environmental Liabilities or arising under or pursuant to any Environmental Law,
with respect to or affecting any of the Facilities or any other properties and
assets (whether real, personal or mixed) in which any Target Company has an
interest.

 

(c)           None of the Target Companies has any basis to expect, nor has any
of them or any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry, notice, Order, summons,
warning or other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual or potential violation or failure to comply
with any Environmental Law, or of any alleged, actual or potential obligation to
undertake or bear the cost of any Environmental Liabilities with respect to any
of the Facilities or any other properties or assets (whether real, personal or
mixed) used in connection with the Business in which any of the Rockwood Sellers
or any Target Company had an interest, or with respect to any real property to
which Hazardous Materials generated, manufactured, refined, transferred,
imported, used or processed by any Target Company or any other Person for whose
conduct they are or may be held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled or received.

 

(d)           None of the Target Companies, nor any other Person for whose
conduct they are or may be held responsible, has any Environmental Liabilities
with respect to the Facilities or, to the Knowledge of Rockwood, with respect to
any other properties and assets (whether real, personal or mixed) in which any
of the Rockwood Sellers or any Target Company (or any

 

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predecessor), has or had an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or assets.

 

(e)           There has been no Release or threatened Release of any Hazardous
Materials at or from the Real Property by any of the Rockwood Sellers or any
Target Company that could reasonably be expected to result in an Environmental
Liability.

 

(f)            The Sellers have delivered to the Purchasers complete and
accurate copies and results of any reports, studies, analyses or tests
(excluding those relating to routine monitoring, reporting and inspections) in
their possession or initiated by any of the Target Companies during the five
years immediately prior to the date of this Agreement pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Real Property, concerning
compliance by any of the Target Companies with Environmental Laws, or relating
to any known or potential Environmental Liabilities.

 

 3.20        Employees.

 

(a)           The Sellers will deliver to the Purchasers on the date hereof a
separate Schedule 3.20(a), which will contain a complete and accurate list as of
the date of this Agreement of the following information for each Business
Employee, including each such employee on leave of absence or layoff status (in
each case, indicating the reason for such absence or status): (i) employer; (ii)
name; (iii) job title; (iv) current base salary or wage rate; and (v) 2009
bonus.

 

(b)           To the Knowledge of Rockwood, no employee of any Target Company is
a party to, or is otherwise bound by, any agreement or arrangement, including
any confidentiality, noncompetition or proprietary rights agreement, between
such employee and any other Person (“Proprietary Rights Agreement”) that in any
way adversely affects or will adversely affect (i) the performance of his duties
as an employee of any Target Company or (ii) the ability of any Target Company
to conduct the Business as it is conducted on the date hereof, including any
Proprietary Rights Agreement with any Target Company and any such employee.

 

(c)           There are no terms or conditions under which any employee is
employed or engaged or was previously employed or engaged nor has anything
occurred or not occurred prior to Closing Date that may give rise to any claim
either under English, United Kingdom or European law whether by an employee or a
prospective employee.

 

(d)           As of the date hereof, no offer of employment or engagement has
been made by the Target Company that has not yet been accepted, or which has
been accepted but, as of the date hereof, the employment or engagement has not
yet started.

 

(e)           No Business Employee has any Proceeding pending against the Target
Companies, or to the Knowledge of Rockwood, no such Proceeding has been
threatened.

 

 3.21        Labor Relations; Compliance.

 

(a)           Each Target Company is, and during the last three years has been,
in compliance in all material respects with all Legal Requirements relating to
labor relations or employment matters, including equal employment opportunity,
nondiscrimination, immigration, wages, hours,

 

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working time, benefits, collective bargaining, information and consultation, the
payment of social security and similar Taxes, occupational safety and health,
and plant closing.  During the last three years, none of the Target Companies
have engaged in or are engaged in any unfair labor practice.  No Target Company
is liable for the payment of any compensation, damages, taxes, fines, penalties,
awards or other amounts, however designated, for failure to materially comply
with any of the foregoing Legal Requirements.

 

(b)           Except as disclosed in Schedule 3.21(b) of the Seller Disclosure
Letter, (i) no Target Company in the last three years has been, or is now, a
party to or negotiating any collective bargaining agreement, information and
consultation agreement or other labor Contract; (ii) in the last three years
there has not been, there is not presently pending or existing, and to the
Knowledge of Rockwood, there is not threatened, any strike, slowdown, picketing,
work stoppage or employee grievance process involving any Target Company; (iii)
to the Knowledge of Rockwood, no event has occurred  in the last three years or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute, claim or grievance; (iv) there is not pending or, to the
Knowledge of Rockwood, threatened against or affecting any Target Company any
Proceeding relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters or information and consultation, and to
the Knowledge of Rockwood, there is no organizational activity or other labor
dispute against or affecting any Target Company; (v) to the Knowledge of
Rockwood, no application or petition for an election of or for certification of
a collective bargaining agent or agreement or information and consultation
agreement is pending; (vi) to the Knowledge of Rockwood, no grievance or
arbitration Proceeding exists that might have an adverse effect upon any Target
Company or the conduct of the Business; (vii) there is no lockout of any
employees by any Target Company and no such action is contemplated by any Target
Company; and (viii) in the last three years there has been no charge or
complaint of discrimination filed against, or to the Knowledge of Rockwood,
threatened against any Target Company with any Governmental Body.

 

(c)           Except as set forth on the Schedule 3.21(c)(i) of the Seller
Disclosure Letter, in the last three years, none of the Target Companies has
been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of the federal U.S.
Worker Adjustment and Retraining Notification Act or any similar state, local or
foreign Legal Requirement (including any state laws relating to plant closings
or mass layoffs) (collectively, “WARN”).  Each Target Company is, and during the
last three years has been, in compliance in all material respects with WARN, and
no Target Company has incurred any material liability or obligation under WARN
which remains unsatisfied.  Except as set forth on Schedule 3.21(c)(ii) of the
Seller Disclosure Letter, no Business Employee employed or engaged in the
portion of the Business conducted in the United States has experienced an
“employment loss” (as defined under WARN or such similar term as used under
WARN) during the 90 day period ending on the date hereof or has been notified by
Rockwood Specialties Group or any of its Affiliates that he or she will
experience an “employment loss” on or after the Closing Date.

 

 3.22        Intellectual Property.

 

(a)           The term “Intellectual Property Assets” means all Intellectual
Property owned, used or held for use or licensed (as licensee) by the Target
Companies, including:

 

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(i)            all Purchased IP;

 

(ii)           any Target Company’s name, all Internet domain names, fictional
business names, trade names, trademarks, service marks, trade dress, logos, and
other indicia of origin, and all registrations and applications for registration
of any of the foregoing, together with goodwill associated therewith
(collectively, “Marks”);

 

(iii)          all patents and patent applications (collectively, “Patents”);

 

(iv)          all copyrights and all copyright registrations and applications
for registration of copyrights (collectively, “Copyrights”); and

 

(v)           Trade Secrets.

 

(b)           Schedule 3.22(b) of the Seller Disclosure Letter contains a
complete and accurate list as of the date of this Agreement of all Contracts
pursuant to which any material Intellectual Property Assets are licensed to or
by any Target Company, except for any license implied by the sale of a product
and perpetual, paid-up licenses for commonly available, off-the-shelf, software
programs with a one time or annual license fee of less than $25,000 under which
a Target Company is the licensee.  There are no outstanding and, to the
Knowledge of Rockwood, no threatened disputes or disagreements with respect to
any such Contract.  To the extent any Intellectual Property Assets are licensed
from or to a Target Company, no written notice of default has been sent or
received by such Target Company, which remains uncured, and the execution,
delivery or performance of such Target Company’s obligations hereunder will not
result in a material default under any such license.  Each Contract set forth on
Schedule 3.22(b) of the Seller Disclosure Letter is a legal, valid and binding
obligation of the parties thereto, enforceable in accordance with the terms
thereof, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar Legal Requirements affecting the enforcement of creditors’
rights generally and to general equitable principles.

 

(c)           Intellectual Property Necessary for the Business.

 

(i)            The Intellectual Property Assets constitute all Intellectual
Property necessary to operate the Business in all material respects in the
manner in which it is currently conducted. AlphaGary Corporation and AGL shall
transfer to Mexichem and Mexichem Amanco at the Closing good title to the
Purchased IP, free and clear of all Liens.  At the Closing one or more of the
Target Companies will hold the remaining Intellectual Property Assets free and
clear of all Liens.

 

(ii)           Except as set forth on Schedule 3.22(c)(ii) of the Seller
Disclosure Letter, all current employees and consultants of the Target Companies
whose work involves the design, development, authoring, or other creation of
Intellectual Property for the Business, have executed legal, valid, and binding
written Contracts with one or more of the Target Companies that assign to one or
more of the Target Companies all rights to any work product, inventions (whether
patentable or unpatentable and whether or not reduced to practice),
improvements, discoveries, information, published or unpublished works, software
designs and other Intellectual Property designed, developed, authored, or
otherwise created by such employee relating to the

 

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Business (except as to copyrightable original works of authorship which under
applicable Legal Requirements are deemed works for hire in the absence of such a
written assignment).

 

(iii)          To the Knowledge of Rockwood, no Target Company has during the
five years immediately prior to the date of this Agreement, violated, infringed,
misappropriated, misused, or otherwise conflicted with, and the conduct of the
Business does not in any material respect violate, infringe, misappropriate,
misuse, or otherwise conflict with, any Intellectual Property rights of any
other Person.  No Target Company has received during the five years immediately
prior to the date of this Agreement any written notice or Claim from any other
Person challenging its right to use any of the Intellectual Property Assets.

 

(iv)          To the Knowledge of Rockwood, no Person, or the good and services
of any Person, has violated, infringed, misappropriated, misused or otherwise
conflicted with any of the Intellectual Property Assets or the Targets
Companies’ rights to the Intellectual Property Assets.

 

(d)           Patents.

 

(i)            Schedule 3.22(d) of the Seller Disclosure Letter contains a
complete and accurate list of all Patents owned by the Target Companies as of
the date of this Agreement.  To the extent indicated on such schedule, such
Patents have been duly filed in or issued by the United States Patent and
Trademark Office and the appropriate offices in other jurisdictions, and each
such Patent remains valid, enforceable and in full force and effect as of the
Closing Date.  One or more of the Target Companies is the owner of all right,
title, and interest in and to each of the Patents listed on Schedule 3.22(d) of
the Seller Disclosure Letter.

 

(ii)           All of the Patents owned by the Target Companies are currently in
all material respects in compliance with applicable formal Legal Requirements
(including payment in full of filing, examination, and maintenance fees and
proofs of working or use).  Except as set forth in Schedule 3.22(d) of the
Seller Disclosure Letter, no action or payment is required to made to maintain
any of the scheduled Patents within 90 days following the Closing Date.

 

(iii)          To the Knowledge of Rockwood, as of the date of this Agreement no
Patent is now involved in any interference, reissue, reexamination, revocation,
invalidation or opposition Proceeding.

 

(iv)          The Rockwood Sellers have delivered to the Purchasers true and
complete copies of all licenses granted by the Target Companies relating to
Patents.  No written notice of a breach or default has been sent or received by
the Target Companies during the five years immediately prior to the date of this
Agreement under any such license that remains uncured nor, to the Knowledge of
Rockwood, is there any matter that would reasonably be expected to cause a
material breach or default under any such license.

 

(e)           Trademarks.

 

(i)            Schedule 3.22(e) of the Seller Disclosure Letter contains a
complete and accurate list of all material Marks owned by the Target Companies
as of the date of this Agreement, including all Marks that are the subject of a
registrations or a pending application for

 

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registration.  To the extent indicated on such schedule, such Marks have been
duly filed in or registered by the United States Patent and Trademark Office (or
the equivalent body in foreign jurisdictions) and the appropriate offices in
other jurisdictions, as the case may be, and each such Mark remains valid,
enforceable and in full force and effect as of the Closing Date.  One or more of
the Target Companies is the owner of all right, title, and interest in and to
each of the Marks owned by the Target Companies.

 

(ii)           All Marks owned by the Target Companies are currently in all
material respects in compliance with applicable formal Legal Requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications) and all registration, renewal and
other maintenance fees in respect thereof have been paid in full. Except as set
forth in Schedule 3.22(e) of the Seller Disclosure Letter, no action or payment
is required to made to maintain any of the scheduled Marks within 90 days
following the Closing Date.

 

(iii)          To the Knowledge of Rockwood, as of the date of this Agreement no
Mark is now involved in any opposition, invalidation, revocation or cancellation
Proceeding and, to the Knowledge of Rockwood, no such action is threatened with
the respect to any of the Marks.

 

(iv)          The Rockwood Sellers have delivered to the Purchasers true and
complete copies of all licenses granted by the Target Companies relating to
Marks.  No written notice of a breach or default has been sent or received by
the Rockwood Sellers or the Target Companies under any such license that remains
uncured nor, to the Knowledge of Rockwood, is there any matter that could
reasonably be expected to cause a material breach or default under any such
license.

 

(f)            Copyrights.

 

(i)            Schedule 3.22(f) of the Seller Disclosure Letter contains a
complete and accurate list of all material Copyrights as of the date of this
Agreement, including all copyright registrations and applications for
registration of copyrights, owned by the Target Companies.  Each scheduled
Copyright remains valid, enforceable and in full force and effect as of the
Closing Date.  One or more of the Target Companies is the owner of all right,
title, and interest in and to each Copyright owned by the Target Companies.

 

(ii)           Each Copyright owned by the Target Companies is currently in all
material respects in compliance with applicable formal Legal Requirements. 
Except as set forth in Schedule 3.22(f) of the Seller Disclosure Letter, no
action or payment is required to be made to maintain any of the scheduled
Copyrights within 90 days following the Closing Date.

 

(iii)          The Rockwood Sellers have delivered to the Purchasers true and
complete copies of all licenses granted by the Target Companies relating to
Copyrights.  No written notice of a breach or default has been sent or received
by the Rockwood Sellers or the Target Companies under any such license that
remains uncured nor, to the Knowledge of Rockwood, is there any matter that
could reasonably be expected to cause a material breach or default under any
such license.

 

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(g)           Trade Secrets.  The Target Companies have taken reasonable
precautions to protect the secrecy, confidentiality, and value of their Trade
Secrets.  To the Knowledge of Rockwood, none of the Trade Secrets of the Target
Companies is subject to any material adverse claim or has been challenged or
threatened in any way.

 

3.23        Product Liability.  Except as set forth in Schedule 3.23 of the
Seller Disclosure Letter, no Target Company has any liabilities resulting from
any defect or other deficiency (whether of design, materials, workmanship,
labeling, instructions or otherwise) with respect to any product designed,
manufactured, sold, leased, licensed or delivered, or any service provided by
any Target Company, whether such liability or Claim is incurred by reason of any
express or implied warranty (including any warranty of merchantability or
fitness), any doctrine of common law (tort, contract or other), any other Legal
Requirement or otherwise.  No event has occurred or circumstance exists that
(with or without notice or lapse of time) could reasonably be expected to result
in any liability of or Claim against any Target Company.  No Target Company has
received any written notice during the five years immediately prior to the date
of this Agreement from any Governmental Body alleging that any product designed,
manufactured, sold, leased, licensed or delivered by any Target Company is
defective or unsafe or fails to meet any product warranty or any standards
promulgated by any such Governmental Body.

 

3.24        Compliance with the Foreign Corrupt Practices Act and Export Control
and Anti-boycott Laws.

 

(a)           Each Target Company is in compliance with the U.S. Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder.

 

(b)           Each Target Company has at all times been in compliance with all
Legal Requirements relating to export control and trade embargoes.

 

3.25        Relationships with Related Persons. Except as set forth on Schedule
3.25 of the Seller Disclosure Letter, no Rockwood Seller, nor any Related Person
of the Rockwood Sellers or any Target Company has, or during the last three
completed fiscal years and the current fiscal year has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or related to the Business.  Except as set forth on Schedule 3.25 of the
Seller Disclosure Letter, no Rockwood Seller, nor any Related Person of the
Sellers and of any Target Company (other than the Target Companies) is, or
during the last three completed fiscal years and the current fiscal year has
owned (of record or as a beneficial owner), an equity interest or any other
financial or profit interest in, a Person (other than the Target Companies) that
has (i) had business dealings or a financial interest in any transaction with
any Target Company other than business dealings or transactions conducted in the
Ordinary Course of Business with such Target Company at substantially prevailing
market prices and on substantially prevailing market terms or (ii) engaged in
competition with any Target Company with respect to any line of the products or
services of such Target Company in any market presently served by such Target
Company.  Except as set forth on Schedule 3.25 of the Seller Disclosure Letter,
no Rockwood Seller, nor any Related Person of the Rockwood Sellers and of any
Target Company is a party to any Contract with, or has any claim or right
against, any Target Company.

 

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3.26        Brokers or Finders.  Except as set forth on Schedule 3.26 of the
Seller Disclosure Letter, the Rockwood Sellers, the Target Companies and their
respective Representatives have incurred no obligation or liability, contingent
or otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement.

 

3.27        Bank Accounts.  Schedule 3.27 of the Seller Disclosure Letter sets
forth, as of the date of this Agreement, an accurate and complete list showing
the name and address of each bank in which each Target Company has an account or
safe deposit box (other than accounts and safe deposit boxes which will be
closed or transferred to any Rockwood Seller or any of its Affiliates (other
than the Companies) prior to the Closing), the number of any such account or any
such box and the names of all Persons authorized to draw thereon or to have
access thereto.

 

3.28        REACH.  AGL is in compliance with all the requirements of REACH in
connection with the Business.

 

The parties hereby agree as follows:

 

3.29        NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT AND THE ANCILLARY
DOCUMENTS, THE ROCKWOOD SELLERS MAKE NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, WRITTEN OR ORAL, AND THE ROCKWOOD SELLERS HEREBY DISCLAIM TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS ANY SUCH
REPRESENTATION OR WARRANTY (INCLUDING WITHOUT LIMITATION ANY WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE), WHETHER BY THE ROCKWOOD
SELLERS, THE TARGET COMPANIES, THEIR AFFILIATES, OR ANY OF THEIR OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OR ANY OTHER PERSON, WITH
RESPECT TO THE TARGET COMPANIES, THE BUSINESS, THE PURCHASED IP, THE PURCHASED
EQUITY INTERESTS, THE LIABILITIES OF THE BUSINESS OR THE EXECUTION AND DELIVERY
OF THIS AGREEMENT OR THE ANCILLARY DOCUMENTS OR THE CONTEMPLATED TRANSACTIONS.

 

ARTICLE 4
Representations and Warranties of the Purchasers

 

Except as set forth in the Purchaser Disclosure Letter, the Purchasers jointly
and severally represent and warrant to the Rockwood Sellers as follows:

 

4.1          Organization and Good Standing.

 

(a)           Mexichem is a company (sociedad anónima de capital variable) duly
incorporated and validly existing under the laws of Mexico, with corporate power
and authority to conduct its business as it is now being conducted.

 

(b)           Mexichem UK is a company duly incorporated, validly existing and
in good standing (or the equivalent thereof) under the laws of England and
Wales, with corporate power and authority to conduct its business as it is now
being conducted.

 

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(c)           Mexichem Canada is a company duly incorporated, validly existing
and in good standing (or the equivalent thereof) under the laws of the Province
of Ontario, Canada, with corporate power and authority to conduct its business
as it is now being conducted.

 

(d)           Mexichem Amanco is a company (sociedad anónima de capital
variable) duly incorporated and validly existing under the laws of Mexico, with
corporate power and authority to conduct its business as it is now being
conducted.

 

4.2          Authority; No Conflict.

 

(a)           Each Purchaser has the corporate power and authority to execute
and deliver this Agreement and the Ancillary Documents to be executed and
delivered by such Purchaser as contemplated hereby. Each Purchaser has the
corporate power and authority to consummate the Contemplated Transactions.  The
execution, delivery and performance by each Purchaser of this Agreement and the
Ancillary Documents to be executed and delivered by such Purchaser as
contemplated hereby, and the consummation of the Contemplated Transactions, have
been duly authorized by such Purchaser’s board of directors (or equivalent
governing body) and, to the extent applicable, its shareholders, and no other
corporate action on the part of such Purchaser or its shareholders is necessary
to authorize the execution, delivery and performance of this Agreement and the
Ancillary Documents and the consummation of the Contemplated Transactions by
such Purchaser.  This Agreement has been duly executed and delivered by each
Purchaser, and the Ancillary Documents to be executed and delivered by such
Purchaser at the Closing will be duly executed and so delivered by such
Purchaser.  This Agreement constitutes, and at the Closing, each Ancillary
Document to be executed and delivered by the Purchasers will constitute, in each
case when delivered in accordance with the terms hereof and assuming the due
execution and delivery of this Agreement and each Ancillary Document by the
other parties hereto and thereto, valid and binding obligations of such
Purchaser, enforceable against such Purchaser in accordance with their terms,
except to the extent that their enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
similar Legal Requirements affecting the enforcement of creditors’ rights
generally and to general equitable principles.

 

(b)           Except as set forth in Schedule 4.2(b) of the Purchaser Disclosure
Letter, the execution and delivery by the Purchasers of this Agreement and the
Ancillary Documents to be executed and delivered by the Purchasers as
contemplated hereby and the consummation and performance of the Contemplated
Transactions by the Purchasers will not, directly or indirectly (with or without
notice or lapse of time):

 

(i)            contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of any Purchaser or (B) any resolution
adopted by the board of directors (or equivalent governing body) or the
shareholders or other equity holders of any Purchaser;

 

(ii)           contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Purchaser may be subject; or

 

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(iii)          contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Contract to which any Purchaser is a party or to which
any Purchaser or any of its assets is subject, except as would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Change with respect to the Purchasers.

 

(c)           Except for the (i) Consents set forth in Schedule 4.2(c) of the
Purchaser Disclosure Letter and (ii) compliance with and filings under the HSR
Act, none of the Purchasers is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
by the Purchasers of this Agreement or the Ancillary Documents to be executed
and delivered by the Purchasers or the consummation or performance by the
Purchasers of any of the Contemplated Transactions.

 

4.3          Certain Proceedings.  There is no pending Proceeding that has been
commenced against any Purchaser and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.  To the Purchasers’ Knowledge, no such Proceeding has
been threatened.

 

4.4          Brokers or Finders.  Except as set forth on Schedule 4.4 of the
Purchaser Disclosure Letter, the Purchasers and their respective Representatives
have incurred no obligation or liability, contingent or otherwise, for brokerage
or finders’ fees or agents’ commissions or other similar payment in connection
with this Agreement.

 

4.5          Experience.  Each Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of purchasing the Purchased IP and the Purchased Equity Interests.  Each
Purchaser confirms that the Rockwood Sellers have made available to the
Purchasers the opportunity to ask questions of the management employees of the
Business and to acquire such additional information about the Business and the
Target Companies as the Purchasers have requested.

 

ARTICLE 5
Covenants of the Sellers

 

5.1          Access and Investigation.

 

(a)           Between the date of this Agreement and the Closing Date, the
Sellers will, and will cause AlphaGary Canada and their respective
Representatives to, during normal business hours and upon reasonable prior
notice, (i) afford the Purchasers and their Representatives (collectively, the
“Purchasers’ Advisors”) reasonable access to the personnel, properties,
contracts, books and records, and other documents and data relating to the
Business (including those of each Target Company), (ii) make available to the
Purchasers and the Purchasers’ Advisors for inspection and copying all such
Contracts, books and records and other existing documents and data as the
Purchasers may reasonably request and (iii) furnish the Purchasers and the
Purchasers’ Advisors with such additional financial, operating and other data
and information as the Purchasers may reasonably request; provided, however,
that (x) the Purchasers and the Purchasers’ Advisors shall exercise their right
under this Section 5.1 in such a

 

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manner as to not unreasonably interfere with the operation of the Business and
(y) the Sellers may limit such access described in clauses (i) through
(iii) above to the extent such access (A) could, in the opinion of the Sellers’
counsel, violate or give rise to liability under applicable Legal Requirements
or (B) would require the Sellers or any of their Affiliates to waive any
attorney-client privilege. Notwithstanding any provision of this Agreement to
the contrary, the parties agree that no representation or warranty contained in
Sections 3.2, 3.8, 3.11, 3.15, 3.16, 3.18 or 3.22 or the covenant contained in
the last sentence of Section 5.3(a) shall be deemed to be breached as a
consequence of any confidentiality obligations to which the Sellers or any of
their Affiliates are bound as a result of any information provided to the
Purchasers or the Purchasers’ Advisors pursuant to this Section 5.1(a).  All
information provided to the Purchasers and the Purchasers’ Advisors by or on
behalf of the Sellers, the Target Companies, their Affiliates or their
representatives (whether pursuant to this Section 5.1 or otherwise) will be
governed and protected by the Confidentiality Agreement between Rockwood
Specialties Group and Mexichem Parent dated November 1, 2010.

 

(b)           Except as may be prohibited by Antitrust Laws, after the Closing
and until the date that is six years after the Closing Date, the Rockwood
Sellers will, and will cause their Representatives to, (i) afford the Purchasers
and their Representatives reasonable access during normal business hours to the
Rockwood Sellers’ personnel, properties, Contracts, books and records, and other
documents and data and will furnish the Purchasers and their Representatives
copies thereof, in each case which the Purchasers or their Representatives
reasonably request in connection with Claims or Proceedings (other than Claims
or Proceedings among the parties hereto) involving the Purchased IP, the Target
Companies or the ownership or operation of the Business prior to the Closing and
(ii) cause their employees, counsel and advisors to, at the expense of the
Purchasers, lend reasonable cooperation to the Purchasers and their
Representatives in their inquiries and investigations related to Claims or
Proceedings relating to the Business prior to the Closing (other than Claims or
Proceedings among the parties hereto). Any investigations pursuant to this
Section 5.1(b) shall be conducted in such manner as not to unreasonably
interfere with the conduct of the business of the Rockwood Sellers.  Any access
to the properties, Contracts, books and records of the Rockwood Sellers shall
not violate any Legal Requirement or any agreement to which any Rockwood Seller
is a party or jeopardize the attorney-client privilege or any other legal
privilege.  The Purchasers shall reimburse the Rockwood Sellers for all
reasonable out-of-pocket expenses (excluding internal costs) actually incurred
by the Rockwood Sellers and their Representatives in connection with the
compliance by the Rockwood Sellers of their obligations under this
Section 5.1(b).

 

5.2          Operation of the Business. Except as otherwise expressly permitted
or required by this Agreement, unless the Purchasers shall otherwise consent in
writing (which decision regarding consent will be promptly communicated and not
unreasonably delayed), between the date of this Agreement and the Closing Date,
the Sellers, to the extent not prohibited by applicable Antitrust Laws, will,
and will cause AlphaGary Canada to:

 

(a)           conduct the Business (including the business of each Target
Company) only in the Ordinary Course of Business;

 

(b)           use commercially reasonable efforts to consummate the
Reorganization, maintain in all material respects the Purchased IP and preserve
intact the Business, keep available the

 

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services of the current officers, employees and agents of the Target Companies
and maintain the Business’ present relations with suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with the Business;

 

(c)           reasonably confer with the Purchasers concerning course
operational matters that are of a material or non-ordinary nature;

 

(d)           otherwise reasonably report periodically to the Purchasers
concerning the status of the Business, including the cash management processes,
status of accounts payable, Accounts Receivable and the operations and finances
of the Business;

 

(e)           make no material changes in management personnel of the Business
except as otherwise agreed by the parties;

 

(f)            keep in full force and effect, without amendment, all material
rights relating to the Business;

 

(g)           keep all Material Contracts, Leases, permits and other agreements
affecting the Real Property in all material respects in good standing and free
from delinquency or default;

 

(h)           comply in all material respects with all Legal Requirements
applicable to the operations of the Business;

 

(i)            maintain the Real Property in all material respects in the same
state of condition and repair as existing on the date hereof;

 

(j)            refrain from (i) performing or allowing the performance of any
construction on the Real Property (except in the event of an emergency, notice
of which will be promptly given to the Purchasers) or (ii) entering into any new
Contracts affecting or binding upon the Real Property that would be binding upon
the Purchasers or any Target Company after the Closing other than in the
Ordinary Course of Business;

 

(k)           not amend, materially modify or terminate any Target Company
Benefit Plan without the express written consent of the Purchasers, other than
as required by applicable Legal Requirements, the terms of any Target Company
Benefit Plan or the terms of any Material Contract;

 

(l)            not prepare any Tax Returns in a manner that would not be
permitted pursuant to Section 9.1(a) of this Agreement;

 

(m)          not make any Tax election or settle or compromise any Tax
liability; incur any material liability for Taxes other than in the Ordinary
Course of Business; or file an amended Tax Return or a claim for refund of Taxes
with respect to the income, operations or property of Target Companies unless
such action (i) is required by an applicable Legal Requirement, (ii) is not
inconsistent with the past practices of any Target Company or (iii) would not
adversely affect the Tax liability of the Purchasers or any Related Persons of
any Purchaser (including the Target Companies after the Closing Date); and

 

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(n)           maintain in all material respects all books and records of the
Business and the Target Companies in the Ordinary Course of Business.

 

5.3          Negative Covenant.

 

(a)           Except as otherwise expressly permitted or required by this
Agreement, between the date of this Agreement and the Closing Date, each Seller,
to the extent not prohibited by applicable Antitrust Laws, will not, and will
cause AlphaGary Canada not to, without the prior written consent of the
Purchasers (which decision regarding consent will be promptly communicated and
not unreasonably delayed), (i) take any affirmative action, or fail to take any
reasonable action within their control, as a result of which any of the changes
or events listed in Section 3.17 is reasonably likely to occur, (ii) make any
modification to any material Governmental Authorization granted to any Target
Company, (iii) enter into any compromise or settlement of any Proceeding
involving any Target Company or directly or indirectly relating to the Business,
(iv) commit any Target Company to make any capital expenditures or any other
investments in excess of two hundred fifty thousand Dollars ($250,000),
(v) change any Target Company’s residence for Tax purposes, (vi) change its
accounting reference date, (vii) make any material change in the nature or
organization of any Target Company’s business, (viii) permit or allow any
violation of any material covenants, conditions and requirements set forth or
imposed by, related to or arising out of all statutes, laws, ordinances, rules,
regulations, plans and specifications, permits, agreements, Contracts,
authorizations or approvals related or applicable to any portions of the Real
Property or (ix) agree to any covenants, conditions, restrictions affecting, or
rezoning of, the Real Property that would prohibit, limit, restrict, or
materially change the current use and occupancy of the Real Property or
Improvements or limit or restrict the conduct of the Business of the respective
Target Companies.  In addition, the Sellers will not, and will cause AlphaGary
Canada not to, take any action or refrain from taking any action that would
result in the breach of any of the representations and warranties set forth in
Article 3.

 

(b)           Notwithstanding any provision of this Agreement to the contrary,
(i) at or prior to the Closing, the Target Companies may distribute some or all
of their cash, short-term investments and cash equivalents to their stockholders
or other equity holders and take such actions as may be required to effect the
foregoing, (ii) prior to the Closing, the Rockwood Sellers may continue to
manage the Target Companies’ cash through intercompany accounts and cash
management arrangements consistent with past practices and (iii) at or prior to
the Closing, the Rockwood Sellers and the Target Companies may take any of the
actions specified on Schedule 5.3 of the Seller Disclosure Letter.

 

5.4          Required Notifications and Approvals. Subject to the terms and
conditions hereof, the Rockwood Sellers will use their respective commercially
reasonable efforts (and to the extent necessary, will use their respective
commercially reasonable efforts to cause their Affiliates to use their
respective commercially reasonable efforts) to obtain, secure or make prior to
the earlier of the date required (if so required) or the Closing Date, any
Consents of or notices to any Governmental Bodies (subject to Section 6.4) set
forth on Schedule 3.2(c) of the Seller Disclosure Letter.  In furtherance of the
obligations of the Rockwood Sellers contained in this Section 5.4, (x) the
Sellers will as promptly as practicable, but in no event later than five
Business Days, following the execution and delivery of this Agreement, file or
cause to be filed with the Federal Trade Commission and the United States
Department of Justice the initial

 

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notification and report form under the HSR Act required for the transactions
contemplated hereby and will request early termination of the waiting period
under the HSR Act and (y) as promptly as reasonable practicable after the date
of this Agreement, but in no event later than 15 Business Days following the
execution of this Agreement, the Sellers will, and will cause AlphaGary Canada
to notify the transactions contemplated by this Agreement to the Brazilian
Administrative Council for Economic Defense (“CADE”), pursuant to Brazilian
Antitrust Law (together with filings made pursuant to the HSR Act, the “Required
Antitrust Filings”).  Between the date of this Agreement and the Closing Date,
the Sellers will, and will cause AlphaGary Canada to, cooperate with the
Purchasers, and furnish the Purchasers with such information and assistance as
may reasonably be requested by the Purchasers, with respect to the Required
Antitrust Filings.  The Sellers, on one hand, and the Purchasers, on the other
hand, shall each promptly pay one-half of any filing fees incurred in connection
with the Required Antitrust Filings.  The Sellers shall cooperate with the
Purchasers in responding promptly to any Request for Additional Information and
Documentary Material under the HSR Act or other request for further information
from any Governmental Body pursuant to any of the Required Antitrust Filings,
seek to terminate any waiting periods under the HSR Act and furnish the
Purchasers and the Purchaser’s counsel as promptly as practicable with all such
information and reasonable assistance as may be reasonably required in order to
effectuate the foregoing actions. Subject to applicable Legal Requirements, the
preservation of the attorney-client privilege and the instructions of any
Governmental Body, the Sellers shall keep the Purchasers informed of the status
of matters relating to the completion of the Contemplated Transactions,
including promptly furnishing the Purchasers with copies of notices or other
communications between the Sellers or any of their respective Affiliates (with
any competitively sensitive information being provided on an external counsel
basis only), and any third party and/or any Governmental Body with respect the
Contemplated Transactions.  The Sellers shall provide counsel for the Purchasers
with a reasonable opportunity to review in advance, and shall consider in good
faith the views of the Purchasers in connection with, any proposed written
communication to any Governmental Body with respect to the Contemplated
Transactions.  Each Seller agrees not to participate in any substantive meeting
or discussion, either in person or by telephone, with any Governmental Body in
connection with the Contemplated Transactions unless it consults with the
Purchasers in advance and, to the extent not prohibited by such Governmental
Body, gives the Purchasers’ outside counsel the opportunity to attend and
participate.

 

5.5          Notification.  Between the date of this Agreement and the Closing
Date, the Sellers’ Representative will promptly notify the Purchasers’
Representative in writing if any Rockwood Seller or any of the Target Companies
becomes aware of any fact or condition that causes or constitutes a breach of
any of the Rockwood Sellers’ representations and warranties as of the date of
this Agreement, or if the Rockwood Sellers or any of the Target Companies
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that could (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.  During the same period, the Sellers’ Representative
will promptly notify the Purchasers’ Representative if any Rockwood Seller or
any of the Target Companies becomes aware of the occurrence of any breach of any
covenant of the Sellers in this Article 5 or of the occurrence of any event that
may make the satisfaction of the conditions in Article 7 impossible or unlikely.

 

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5.6          Exclusivity.  Until the date on which this Agreement is terminated
pursuant to Section 11.1, the Sellers will not, and will cause each
Representative of the Sellers, AlphaGary Canada and each of their respective
Representatives not to, directly or indirectly take any action to, directly or
indirectly, encourage, initiate, solicit, or engage in discussions or
negotiations with, or provide any information to, any Person other than the
Purchasers (and their Representatives) concerning any Alternative Transaction. 
The Sellers’ Representative shall promptly notify the Purchasers’ Representative
in writing of any written offer that is made to any Rockwood Seller or any
Target Company relating, directly or indirectly, to an Alternative Transaction.

 

5.7          Use of Name.  Each Seller agrees that, from and after the Closing
Date, neither it nor its Affiliates shall have any right to use of the name
“AlphaGary” or any other names containing the name “AlphaGary” or any service
marks, trademarks, trade names, identifying symbols, logos, emblems, signs or
insignia related thereto or containing or comprising the foregoing, including
any name or mark confusingly similar thereto, and will not at any time hold
itself out as having any affiliation with the Target Companies or any of their
respective Affiliates.

 

5.8          Commercially Reasonable Efforts. Between the date of this Agreement
and the Closing Date, the Sellers will use their commercially reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
Contemplated Transactions including satisfaction of the conditions in
Article 7.  In furtherance and not in limitation of the covenants of the Sellers
contained in this Section 5.8, if any administrative or judicial Proceeding,
including any Proceeding by a private party, is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, the Sellers shall cooperate in all respects with
the Purchasers and shall use commercially reasonable efforts to contest and
resist any such Proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Contemplated Transactions.

 

5.9          Payment of Indebtedness; Releases.  The Rockwood Sellers shall
cause all Indebtedness owed to a Target Company by any Rockwood Seller or
Affiliate of any Rockwood Seller (other than the Target Companies) to be paid,
discharged, compromised, settled, terminated, contributed to the capital of the
applicable Target Company or otherwise satisfied in full prior to the Closing.
The Rockwood Seller shall cause the Guarantees and all Liens (other than
Permitted Liens) upon the assets of the Target Companies to be discharged,
terminated and released on or prior to the Closing.

 

5.10        Further Assurances.  At any time and from time to time after the
Closing Date without further consideration, the Rockwood Sellers shall, at the
reasonable request of the Purchasers, execute and deliver any other assurances
or documents (including such further instruments of conveyance, assignment,
assumption and transfer) and take such further action as may be necessary or
appropriate in order to (a) effectuate the intent of this Agreement, (b) perfect
or record title of the Purchasers in the Purchased IP and the Purchased Equity
Interests and (c) provide the Purchasers in all respects with the intended
benefits of this Agreement.

 

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5.11        Reporting Assistance Obligations of the Sellers.  After the Closing,
the Rockwood Sellers will (and will cause their Affiliates to) reasonably assist
the Purchasers and their Affiliates in preparing information for various
Governmental Bodies after the Closing to the extent that such information
relates to the Contemplated Transactions, the Business, the assets and/or the
liabilities of the Business. Such information includes information required by
the Purchasers and their Affiliates to comply with their financial reporting
requirements.  The Purchasers shall reimburse the Rockwood Sellers for all
reasonable out-of-pocket expenses (excluding internal costs) actually incurred
by the Rockwood Sellers and their Affiliates in connection with the compliance
by the Purchasers of their obligations under this Section 5.11.

 

ARTICLE 6
Covenants of the Purchasers

 

6.1          Approvals of Governmental Bodies. Subject to the terms and
conditions hereof, the Purchasers will use their respective commercially
reasonable efforts (and to the extent necessary, will use their respective
commercially reasonable efforts to cause their Affiliates to use their
respective commercially reasonable efforts) to obtain, secure or make prior to
the earlier of the date required (if so required) or the Closing Date, any
Consents set forth on Schedule 4.2(c) of the Purchaser Disclosure Letter.  In
furtherance of the obligations of the Purchasers contained in this Section 6.1,
(x) the Purchaser will as promptly as practicable, but in no event later than
five Business Days, following the execution and delivery of this Agreement, file
or cause to be filed with the Federal Trade Commission and the United States
Department of Justice the initial notification and report form under the HSR Act
required for the transactions contemplated hereby and will request early
termination of the waiting period under the HSR Act and (y) as promptly as
reasonably practicable after the date of this Agreement, but in no event later
than 15 Business Days following the execution of this Agreement, the Purchasers
will, and will cause each of its Related Persons to notify the transactions
contemplated by this Agreement to CADE pursuant to Brazilian Antitrust Law. 
Between the date of this Agreement and the Closing Date, the Purchasers will,
and will cause each Related Person to, cooperate with the Sellers, and furnish
the Sellers with such information and assistance as may reasonably be requested
by the Sellers, with respect to all consents identified in Schedule 3.2(c) of
the Seller Disclosure Letter and the Required Antitrust Filings. Notwithstanding
anything else to the contrary herein, this Agreement will not require the
Purchasers or any of their respective Affiliates to commit to any divestitures,
licenses or hold separate or similar arrangements or agree to limit its rights
of ownership with respect to any of their respective businesses or assets.  The
Purchasers shall cooperate with the Sellers in responding promptly to any
Request for Additional Information and Documentary Material under the HSR Act or
other request for further information from any Governmental Body pursuant to any
of the Required Antitrust Filings, seek to terminate any waiting periods under
the HSR Act and furnish the Sellers and the Sellers’ counsel as promptly as
practicable with all such information and reasonable assistance as may be
reasonably required in order to effectuate the foregoing actions.  Subject to
applicable Legal Requirements, the preservation of the attorney-client privilege
and the instructions of any Governmental Body, the Purchasers shall keep the
Sellers informed of the status of matters relating to the completion of the
Contemplated Transactions, including promptly furnishing the Sellers with copies
of notices or other communications between the Purchasers or any of their
respective Affiliates (with any competitively sensitive information being
provided on an external counsel basis only), and any third party and/or any
Governmental Body with respect the

 

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Contemplated Transactions.  The Purchasers shall provide counsel for the Sellers
with a reasonable opportunity to review in advance, and shall consider in good
faith the views of the Sellers in connection with, any proposed written
communication to any Governmental Body with respect to the Contemplated
Transactions. Each Purchaser agrees not to participate in any substantive
meeting or discussion, either in person or by telephone, with any Governmental
Body in connection with the Contemplated Transactions unless it consults with
the Sellers in advance and, to the extent not prohibited by such Governmental
Body, gives the Sellers’ outside counsel the opportunity to attend and
participate.

 

6.2          Commercially Reasonable Efforts. Except as otherwise provided in
Section 6.1, between the date of this Agreement and the Closing Date, the
Purchasers will use their respective commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the Contemplated
Transactions including satisfaction of the conditions in Article 8.  In
furtherance and not in limitation of the covenants of the Purchasers contained
in this Section 6.2, if any administrative or judicial Proceeding, including any
Proceeding by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of any
Antitrust Law, the Purchasers shall cooperate in all respects with the Sellers
and shall use commercially reasonable efforts to contest and resist any such
Proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Contemplated Transactions.

 

6.3          Use of Name.  Each Purchaser agrees that neither it nor its
Affiliates (including the Target Companies following the Closing) shall have any
right to use of the name “Rockwood” or any other names containing the name
“Rockwood” or any service marks, trademarks, trade names, identifying symbols,
logos, emblems, signs or insignia related thereto or containing or comprising
the foregoing, including any name or mark confusingly similar thereto, and will
not at any time hold itself out as having any affiliation with the Seller or any
of their Affiliates.  Following the Closing, each Purchaser agrees that if any
of the assets of the Target Companies, including any promotional materials or
printed forms, bear the “Rockwood” name (or any derivative thereof or anything
confusingly similar thereto), such Purchaser shall, prior to the use of such
assets, delete or cover the “Rockwood” name.

 

6.4          Notification.  Between the date of this Agreement and the Closing
Date, the Purchasers’ Representative will promptly notify the Sellers’
Representative in writing if any Purchaser becomes aware of any fact or
condition that causes or constitutes a breach of any of the Purchasers’
representations and warranties as of the date of this Agreement, or if any of
the Purchasers becomes aware of the occurrence after the date of this Agreement
of any fact or condition that could (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition.  During the same period, the Purchasers’
Representative will promptly notify the Sellers’ Representative in writing if
any Purchaser becomes aware of the occurrence of any breach of any covenant of
the Purchasers in this Article 6 or of the occurrence of any event that may make
the satisfaction of the conditions in Article 8 impossible or unlikely.

 

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6.5          Guarantees.  The Purchasers shall use commercially reasonable
efforts to obtain, as soon as practicable the release effective as of the
Closing Date of each of the obligations of the Rockwood Sellers (or any
Affiliate thereof, other than the Target Companies) to guarantee any liability
of any Target Company listed on Schedule 6.5 of the Seller Disclosure Letter not
otherwise constituting a breach of Article 3 of this Agreement and, to that end,
shall provide such guarantees or other credit support as shall be required to
obtain such release.  If the Purchasers fail to obtain any such release or the
terms of such release are unreasonable in the Rockwood Sellers’ good faith
judgment, one or more of the Purchasers shall enter into an agreement, in form
reasonably satisfactory to Seller, containing covenants to indemnify the
Rockwood Sellers in respect of any liability or any expense incurred by the
Rockwood Sellers (or any Affiliate thereof, other than the Target Companies) in
respect of any claim made in respect of any such liability or expense .

 

6.6          Access and Investigation. Except as may be prohibited by applicable
Antitrust Laws, after the Closing and until the date that is six years after the
Closing Date, the Purchasers will, and will cause their Representatives to,
(a) afford the Rockwood Sellers and their Representatives reasonable access
during normal business hours to the Purchasers’ and each Target Company’s
personnel, properties, Contracts, books and records, and other documents and
data and will furnish the Sellers and their Representatives copies thereof, in
each case which the Sellers or their Representatives reasonably request in
connection with Claims or Proceedings (other than Claims or Proceedings among
the parties hereto) involving the Purchased IP, the Target Companies or the
ownership or operation of the Business prior to the Closing and (b) cause their
employees, counsel and advisors to, at the expense of the Rockwood Sellers, lend
reasonable cooperation to the Rockwood Sellers and their Representatives in
their inquires and investigations related to Claims or Proceedings relating to
the Business prior to the Closing (other than Claims or Proceedings among the
parties hereto).  Any investigations pursuant to this Section 6.6 shall be
conducted in such manner as not to unreasonably interfere with the conduct of
the business of the Purchasers.  Any access to the properties, Contracts, books
and records of the Purchasers and each Target Company shall not violate any
Legal Requirement or any agreement to which any Purchaser or any Target Company
is a party or jeopardize the attorney-client privilege or any other legal
privilege.  The Rockwood Sellers shall reimburse the Purchasers for all
reasonable out-of-pocket expenses (excluding internal costs) actually incurred
by the Purchasers and their Representatives in connection with the compliance by
the Purchasers of their obligations under this Section 6.6.

 

6.7          Accounts Receivable Purchase.

 

(a)           The Purchaser shall, and shall cause the Target Companies to, use
commercially reasonable efforts to collect all Accounts Receivables included in
the calculation of Closing Date Working Capital.

 

(b)           The Purchasers shall have the right, by written notice (the
“Receivables Notice”) to the Rockwood Sellers given on any day between 120 and
180 days following the Closing Date (the “Repurchase Date”), to require the
Rockwood Sellers to purchase for cash and without recourse, within five Business
Days of the date of the Receivables Notice, all of the Accounts Receivable
reflected on the Closing Date Balance Sheet that are at the Repurchase Date
uncollected net of the reserve reflected on the Closing Date Balance Sheet for a
purchase price

 

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equal to their aggregate face value, and the Rockwood Sellers shall purchase and
pay for such Accounts Receivable as provided herein.

 

(c)           The Purchasers shall cause the Target Companies to execute and
deliver to the Rockwood Sellers all instruments as shall be reasonably necessary
to effectively vest in the Rockwood Sellers all of the right, title, and
interest of the Target Companies with respect to any uncollected Accounts
Receivable purchased by the Rockwood Sellers pursuant to Section 6.7(a), without
representation or recourse.

 

(d)           Any amounts subsequently collected by the Purchasers or the Target
Companies in respect of returned Accounts Receivables for which the Purchaser or
the Target Companies have received payment shall be paid promptly to the
Rockwood Sellers.  For the purposes of identifying returned Accounts
Receivables, any payment received from an account debtor will be applied against
Accounts Receivables specified by the account debtor or, if no such Accounts
Receivable are specified, the payment will be deemed to be payment with respect
to the oldest accounts receivable less than 120 days old of that account debtor.

 

6.8          Further Assurances.  At any time and from time to time after the
Closing Date without further consideration, the Purchasers shall, at the
reasonable request of the Rockwood Sellers, execute and deliver any other
assurances or documents and take such further action as may be necessary or
appropriate in order to (a) effectuate the intent of this Agreement and
(b) provide the Rockwood Sellers in all respects with the intended benefits of
this Agreement.

 

6.9          Employee Communications.  The Purchasers shall not, and shall cause
their respective Affiliates and Representatives not to, make any announcements
or communications to any Business Employees prior to the Closing Date, whether
or not in writing, regarding compensation or benefits or terms of employment
without the prior written consent of the Rockwood Sellers or their Affiliates. 
Notwithstanding any provision of this Agreement, the parties agree that no
representation, warranty, covenant or agreement contained herein or in the
Ancillary Documents shall be deemed to be breached as a direct consequence of
(x) the voluntary termination of employment with the Target Companies initiated
by any Business Employee occurring during the period between the date hereof and
the Closing Date and (y) the termination of employment with the Target Companies
for any reason of any Business Employee occurring following the Closing.

 

6.10        Reporting Assistance Obligations of the Purchasers.  After the
Closing, the Purchasers will (and will cause the Target Companies and their
other Affiliates to) reasonably assist the Rockwood Sellers and their Affiliates
in preparing information for various Governmental Bodies after the Closing to
the extent that such information relates to the Contemplated Transactions, the
Business, the assets and/or the liabilities of the Business.  Such information
includes information required by the Rockwood Sellers and their Affiliates to
comply with their financial reporting requirements. The Rockwood Sellers shall
reimburse the Purchasers for all reasonable out-of-pocket expenses (excluding
internal costs) actually incurred by the Purchasers and their Affiliates in
connection with the compliance by the Purchasers of their obligations under this
Section 6.10.

 

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ARTICLE 7
Conditions Precedent to the Purchasers’ Obligation to Close

 

The Purchasers’ obligation to purchase the Purchased IP and the Purchased Equity
Interests and to take the other actions required to be taken by the Purchasers
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by the Purchasers,
in whole or in part):

 

7.1          Accuracy of Representations.  Each and all of (a) the Rockwood
Sellers’ representations and warranties in this Agreement (other than the Seller
Fundamental Representations) shall be true and correct (to the extent giving
rise to Damages not discharged prior to the Closing) at and as of the date of
this Agreement and at and as of the Closing Date (without regard to any
qualifications therein as to materiality or Material Adverse Change), as though
made at and as of such date (or, if made as of a specific date, at and as of
such specific date), in each case, except for any such failures to be true and
correct that, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Change on the Target
Companies, (b) the Seller Fundamental Representations (other than those
contained in Section 3.1, clauses (ii) through (iv) of Section 3.2(b) and the
last sentence of Section 3.3 (the “Seller Specified Fundamental
Representations”)) shall be true and correct in all respects (to the extent
giving rise to Damages not discharged prior to the Closing) at and as of the
date of this Agreement and at and as of the Closing Date, as though made at and
as of such date (or, if made as of a specific date, at and as of such specific
date) and (c) the Seller Specified Fundamental Representations shall be true and
correct in all material respects (to the extent giving rise to Damages not
discharged prior to the Closing) at and as of the date of this Agreement and at
and as of the Closing Date, as though made at and as of such date (or, if made
as of a specific date, at and as of such specific date).

 

7.2          The Sellers’ Performance.

 

(a)           All of the covenants and obligations that the Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing shall have been duly performed and complied with in all material
respects.

 

(b)           Each document required to be delivered pursuant to
Section 2.5(a) shall have been delivered to the Purchasers.

 

7.3          Approvals.  All applicable waiting periods under the HSR Act shall
have expired or been terminated.

 

7.4          No Proceedings.  There shall not be any commenced or overtly
threatened Proceeding that remains unresolved that could in the Purchasers’
reasonable judgment have the effect of preventing, delaying, making illegal, or
otherwise interfering in any material respect with the Contemplated
Transactions.

 

7.5          No Injunction.  There shall not be in effect any Legal Requirement
or any injunction or other Order that (a) prohibits the sale of the Purchased IP
or the Purchased Equity Interests by the Sellers to the Purchasers and (b) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.

 

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7.6          No Material Adverse Change.  Since the date of this Agreement,
there shall have been no Material Adverse Change with respect to any Target
Company or the Business, and no events, facts or circumstances shall have
occurred which could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Change with respect to the Target Companies
taken as a whole or the Business.

 

7.7          Reorganization.  The Reorganization shall have occurred pursuant to
documentation, in form and substance reasonably satisfactory to the Purchasers.

 

7.8          Intra-Company Accounts.  All Indebtedness and intercompany accounts
between any of the Rockwood Sellers or any Related Persons of the Rockwood
Sellers (other than the Target Companies), on the one hand, and any Target
Company, on the other hand, shall have been settled.

 

7.9          Release of Security Interests.  The Seller shall have delivered to
the Purchasers appropriate releases, in form and substance reasonably
satisfactory to the Purchasers, with respect to any and all mortgages and other
Liens on any of the assets of the Target Companies, including specifically the
Purchased IP or the Purchased Equity Interests (in each case except for
Permitted Liens (other than those described in clause (e) of the definition of
Permitted Liens).

 

7.10        Release of Guarantees.  Each of the Target Companies shall be
released from all of its obligations under each of the Guarantees at the Closing
and evidence of each such release thereof (in form and substance reasonably
satisfactory to the Purchasers) shall have been delivered to the Purchasers.

 

7.11        Tax Certificate.  AlphaGary Corporation shall have obtained a
certificate of U.S. tax residency from the IRS on Form 6166.

 

ARTICLE 8
Conditions Precedent to the Sellers’ Obligation to Close

 

The Sellers’ obligation to transfer and sell the Purchased IP and the Purchased
Equity Interests and to take the other actions required to be taken by the
Sellers at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by the
Sellers, in whole or in part):

 

8.1          Accuracy of Representations.  Each and all of (a) the Purchasers’
representations and warranties in this Agreement (other than the Purchaser
Fundamental Representations) shall be true and correct (to the extent giving
rise to Damages not discharged prior to the Closing) at and as of the date of
this Agreement and at and as of the Closing Date (without regard to any
qualifications therein as to materiality or Material Adverse Change on the
Purchaser), as though made at and as of such date (or, if made as of a specific
date, at and as of such specific date), in each case, except for any such
failures to be true and correct that, individually or in the aggregate, has not
had and would not reasonably be expected to have a Material Adverse Change on
the Purchaser, (b) the Purchaser Fundamental Representations (other than those
contained in Section 4.1 and clauses (ii) and (iii) of Section 4.2(b) (the
“Purchaser Specified Fundamental

 

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Representations”)) shall be true and correct in all respects (to the extent
giving rise to Damages not discharged prior to the Closing) at and as of the
date of this Agreement and at and as of the Closing Date, as though made at and
as of such date (or, if made as of a specific date, at and as of such specific
date) and (c) the Purchaser Specified Fundamental Representations shall be true
and correct in all material respects (to the extent giving rise to Damages not
discharged prior to the Closing) at and as of the date of this Agreement and at
and as of the Closing Date, as though made at and as of such date (or, if made
as of a specific date, at and as of such specific date).

 

8.2          The Purchasers’ Performance.

 

(a)           All of the covenants and obligations that the Purchasers are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing, shall have been performed and complied with in all material
respects.

 

(b)           Each document required to be delivered pursuant to
Section 2.5(b) shall have been delivered to the Sellers.

 

8.3          HSR Act.  All applicable waiting periods under the HSR Act shall
have expired or been terminated.

 

8.4          No Proceedings.  There shall not be any commenced or overtly
threatened Proceeding that remains unresolved that could in the Sellers’
reasonable judgment have the effect of preventing, delaying, making illegal, or
otherwise interfering in any material respect with the Contemplated
Transactions.

 

8.5          No Injunction.  There shall not be in effect any Legal Requirement
or any injunction or other Order that (a) prohibits the sale of the Purchased IP
or the Purchased Equity Interests by the Sellers to the Purchasers and (b) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.

 

8.6          Estimated Purchase Price.  The Sellers’ Representative shall have
received the entire Estimated Purchase Price in accordance with Section 2.3(b).

 

ARTICLE 9
Tax Matters

 

9.1          Tax Returns.

 

(a)           The Rockwood Sellers shall have the authority and obligation to
prepare and timely file, or cause to be prepared and timely filed, all Tax
Returns of the Target Companies that are due with respect to any period ending
on or prior to the Closing Date.  Such authority shall include the determination
of the manner in which any items of income, gain, deduction, loss or credit
arising out of the income, properties and operations of the Target Companies
shall be reported or disclosed in such Tax Returns.  Such Tax Returns shall be
prepared in a manner consistent with the past practices of the Target Companies,
except to the extent (i) required by applicable Legal Requirements, (ii) there
would not be an adverse effect on the Tax liability of the Purchasers or their
Related Persons (including, after the Closing, the Target Companies) or
(iii) consented to by the Purchasers (such consent not to be unreasonably
withheld, delayed or

 

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conditioned).  The Purchasers shall cooperate in causing the Target Companies to
provide required signatures for such Tax Returns.  In addition, except as
provided in Section 9.11, the Rockwood Sellers shall pay on or prior to the due
date, any amount due and payable on such Tax Returns, except to the extent that
such amount was (A) deducted in the calculation of Closing Date Working Capital
or (B) is imposed as a result of (x) any action outside the Ordinary Course of
Business after the Closing effected by Purchasers or any Related Persons of any
Purchaser (including the Target Companies after the Closing Date) or (y) any Tax
election made by Purchasers or any Related Persons of any Purchaser (including
the Target Companies after the Closing Date) (other than the election described
in Section 9.8 or any such election directed by or consented to by the Rockwood
Sellers), in which case the Purchasers shall be responsible for any such
amount.  The Purchasers or any Related Person of any Purchaser (including the
Target Companies after the Closing Date) shall not file or cause to be filed any
amended Tax Return with respect to any Target Company for any Pre-Closing
Period, except to the extent there would not be an adverse effect on the Tax
liability of the Rockwood Sellers or their Related Persons (including the Target
Companies for Pre-Closing Periods).

 

(b)                                 To the extent permitted by applicable Legal
Requirements, Purchasers’ Representative, Sellers’ Representative and their
Related Persons shall cooperate in making any elections or taking any other
action that will result in taxable periods of the Target Companies that begin
prior to the Closing Date ending on or prior to the Closing Date. Except as
provided in Section 9.1(a), the Purchasers shall have the exclusive authority
and obligation to prepare and timely file, or cause to be prepared and timely
filed, all Tax Returns of the Target Companies; provided that with respect to
Tax Returns to be filed by the Purchasers pursuant to this Section 9.1 for
taxable periods beginning before the Closing Date and ending after the Closing
Date (the “Overlap Period”), such Tax Returns shall not be filed without the
prior written consent of the Rockwood Sellers, which consent shall not be
unreasonably withheld or delayed.  Such Tax Returns shall be prepared in a
manner consistent with the past practices of the Target Companies, except to the
extent required by applicable Legal Requirements.

 

9.2                             Overlap Period.  All Taxes of the Target
Companies for any Overlap Period shall be apportioned between the portion of the
Overlap Period ending on the Closing Date and the portion following the Closing
Date as follows: (i) in the case of Taxes other than income, profits, gains,
value added, stamp, sales and use and withholding Taxes, on a per-diem-basis and
(ii) in the case of income, profits, gains, value added, stamp, sales and use
and withholding Taxes, as determined from the books and records of each Target
Company as though the taxable year of such Target Company terminated at the
close of business on the Closing Date.  For the avoidance of doubt, all Taxes
and Tax liabilities attributable to the sale (or deemed sale under
Section 338(h)(10) of the Code) of the Purchased IP or the Purchased Equity
Interests pursuant to this Agreement shall be apportioned solely to the portion
of the Overlap Period ending on the Closing Date and be an obligation of the
Rockwood Sellers as provided below.  The Rockwood Sellers shall be liable for
Taxes with respect to the income, assets or operations of the Target Companies
or the ownership of the Purchased IP or the Purchased Equity Interests that are
attributable to the portion of the Overlap Period ending on and including the
Closing Date, and shall pay such amounts to the Purchasers on or before five
days prior to the due date of such Taxes, except as provided in Section 9.11 and
except to the extent that such amounts were paid prior to the Closing Date,
deducted in the calculation of Closing Date Working Capital or are imposed as a
result of any action outside the Ordinary Course of Business after the Closing

 

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effected by Purchasers or any Related Persons of any Purchaser (including the
Target Companies after the Closing Date) or any Tax election made by Purchasers
or any Related Persons of any Purchaser (including the Target Companies after
the Closing Date) (other than the election described in Section 9.8 or any such
election directed by or consented to by the Rockwood Sellers).

 

9.3                             Controversies.

 

(a)                                  The Purchasers’ Representative shall
promptly notify the Sellers’ Representative upon receipt by the Purchasers or
any Related Persons of any Purchaser (including the Target Companies after the
Closing Date) of written notice of any inquiries, claims, assessments, audits or
similar events with respect to Taxes relating to a taxable period ending on or
prior to the Closing Date for which the Rockwood Sellers may be liable under
this Agreement (any such inquiry, claim, assessment, audit or similar event, a
“Tax Matter”).  The Rockwood Sellers or the Sellers’ Representative, at their or
its sole expense, shall have the authority to represent the interests of the
Target Companies with respect to any Tax Matter before any Tax authority, other
Governmental Body or any court and shall have the sole right to control the
defense, compromise or other resolution of any Tax Matter, including responding
to inquiries, filing Tax Returns and contesting, defending against and resolving
any assessment for additional Taxes or notice of Tax deficiency or other
adjustment of Taxes of, or relating to, a Tax Matter; provided, however, that
neither the Rockwood Sellers nor any of their Related Persons shall enter into
any settlement of or otherwise compromise any Tax Matter that adversely affects
or may adversely affect the Tax liability of the Purchasers, any Subsidiaries of
the Purchasers, the Target Companies or any Related Persons of the foregoing for
any period ending after the Closing Date, including the portion of the Overlap
Period that is after the Closing Date, without the prior written consent of the
Purchasers, which consent shall not be unreasonably withheld or delayed.  The
Rockwood Sellers or the Sellers’ Representative shall keep the Purchasers fully
and timely informed with respect to the commencement, status and nature of any
Tax Matter that may affect the liability of the Target Companies for periods
after the Closing.  The Rockwood Sellers shall, in good faith, allow the
Purchasers to make comments to the Rockwood Sellers or Sellers’ Representative,
as the case may be, regarding the conduct of or positions taken in any such
proceeding that may affect the liability of the Target Companies for periods
after the Closing.

 

(b)                                 The Sellers’ Representative and the
Purchasers’ Representative shall jointly control the defense, compromise or
other resolution of any Tax Matter related to an Overlap Period, which control
shall be exercised reasonably and in good faith with due regard to the relative
Tax liability potentially incurred by either party.  The parties shall keep each
other fully and timely informed with respect to the commencement, status and
nature of any such Tax Matter.

 

(c)                                  The Purchasers shall have the sole right to
control any Tax Matter before any Governmental Body, initiate any claim for
refund or amend any Tax Return, and contest, resolve and defend against any
assessment for additional Taxes, notice of Tax deficiency or other adjustment of
Taxes of or relating to, the income, assets or operations of the Target
Companies or the ownership of the Purchased IP or the Purchased Equity Interests
for all taxable periods beginning after the Closing Date.

 

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9.4                             Transfer Taxes.  Except as provided in
Section 9.11, all transfer, sales and use, registration, stamp and similar Taxes
imposed in connection with the sale of the Purchased IP or Purchased Equity
Interests, or any other transaction that occurs pursuant to this Agreement shall
be borne solely by the Rockwood Sellers, jointly and severally.  The Rockwood
Sellers shall promptly reimburse the Purchasers in an amount equal to any such
Tax that any Purchaser is required to pay under any applicable Legal
Requirement.  Notwithstanding the foregoing, any Taxes paid by the Rockwood
Sellers pursuant to this Section 9.4, which are thereafter recovered by the
Purchasers shall be promptly paid by the recipient of such recovered Taxes to
the Rockwood Sellers.

 

9.5                             Amended Tax Returns; Tax Refunds.  The Sellers’
Representative (or its designee) will be entitled to retain, or receive prompt
payment from Purchasers or any Related Persons of any Purchaser (including the
Target Companies after the Closing Date) of, any refund or credit for
overpayment of Taxes for which the Rockwood Sellers are responsible pursuant to
this Article 9 plus any interest received or credited with respect thereto from
the relevant Governmental Body.  The Purchasers’ Representative will, if the
Sellers’ Representative reasonably requests and at the Sellers’ Representative’s
expense, cause Purchasers or any Related Persons of any Purchaser (including the
Target Companies after the Closing Date) to promptly file for and obtain any
refunds or credits to which the Sellers’ Representative is entitled under this
Section 9.5.  The Sellers’ Representative may prosecute any such claim for
refund and, when deemed appropriate by the Sellers’ Representative, will cause
the relevant entity to authorize, by appropriate power of attorney, such person
as the Sellers’ Representative may designate to represent such entity with
respect to such refund claim; provided, however, that the Sellers’
Representative shall not take any action that could reasonably be expected to
adversely affect the Tax liability of Purchasers or any Related Persons of any
Purchaser (including the Target Companies after the Closing Date) for taxable
periods after the Closing Date without the prior consent of Purchasers’
Representative (which consent shall not be unreasonably withheld or delayed). 
For purposes of this Section 9.5, a party will be deemed to have made prompt
payment of a refund or credit if such payment is made within 10 days of the
receipt by such party of such refund or of the use by such party of such credit.

 

9.6                             Prior Tax Agreements.  The Sellers shall
terminate or cause to be terminated any and all of the Tax sharing, allocation,
indemnification or similar Contracts in effect on the Closing Date as between
the Rockwood Sellers or any predecessor or Related Person thereof (other than
any Target Company), on the one hand, and any Target Company, on the other hand,
for all Taxes imposed by any Governmental Body, regardless of the period in
which such Taxes are imposed, and there shall be no continuing obligation to
make any payments under any such agreements, arrangements or undertakings.

 

9.7                             Indemnification for Taxes. Except as provided in
Section 9.11 and except to the extent that such Taxes (a) were deducted in the
calculation of Closing Date Working Capital or were paid prior to the Closing or
(b) are incurred as a result of any action outside the Ordinary Course of
Business after the Closing effected by Purchasers or any Related Persons of any
Purchaser (including the Target Companies after the Closing Date) or any Tax
election made by Purchasers or any Related Persons of any Purchaser (including
the Target Companies after the Closing Date) (other than the election described
in Section 9.8 or any such election directed by or consented to by the Rockwood
Sellers), the Rockwood Sellers shall indemnify and hold

 

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harmless the Purchasers and their Representatives, shareholders and their
Related Persons (the “Purchaser Indemnified Persons”), and will pay the
Purchaser Indemnified Persons for: (i) all Taxes (and, for purposes of this
Section 9.7 any Damages resulting from, arising from or in connection with, or
incurred with respect to, any claims that may be asserted by any Person based
on, attributable to, or resulting from the failure of any representation or
warranty made pursuant to Section 3.12 to be true and correct in all respects as
of the date of this Agreement and as of the Closing Date shall constitute Taxes)
imposed on the Target Companies for all Pre-Closing Periods, (ii) all Taxes
imposed on the Target Companies with respect to income of the Rockwood Sellers
or any of their Related Persons (other than the Target Companies) as a result of
the provisions of United States Treasury Regulations Section 1.1502-6 or the
analogous provisions of any state, local or foreign Legal Requirement, (iii) all
Taxes imposed on the Target Companies, or for which the Target Companies may be
liable, on the sale of the Purchased IP and the Reorganization and (v) any Taxes
imposed on the deemed sale resulting from the joint election under
Section 338(h)(10) of the Code to treat the sale of stock pursuant to this
Agreement as an asset sale for U.S. federal income tax purposes, and any
analogous provisions of state and local law.

 

9.8                             Section 338 Election.

 

(a)                                  Rockwood Holdings and Mexichem shall
jointly complete and make, or cause to be completed and made, a timely election
under Section 338(h)(10) of the Code (with respect to AlphaGary Corporation) on
Form 8023 or in such other manner as may be required by rule or regulation of
the IRS, and shall jointly make an election in the manner required under any
analogous joint election provisions of state or local law concerning the
transactions contemplated by this Agreement.  Mexichem shall, with the
assistance and cooperation of Rockwood Specialties Group and Rockwood
Specialties, prepare all such Section 338(h)(10) forms required as attachments
to Form 8023 (and all forms under analogous provisions of state or local law) in
accordance with applicable Tax Legal Requirements, and Mexichem shall deliver
such forms and related documents to Rockwood Specialties Group and Rockwood
Specialties at least 60 days prior to the due date of filing.  Rockwood
Specialties Group and Rockwood Specialties shall deliver to Mexichem, at least
30 days prior to the due date of filing, such duly executed completed forms as
are required to be filed under Section 338(h)(10) of the Code (and analogous
provisions of state or local law).

 

(b)                                 The Sellers agree that the Purchasers shall
perform or cause to be performed an initial valuation of assets and allocation
of purchase price of AlphaGary Corporation for purposes of Section 338 of the
Code.  The Purchasers shall provide the Rockwood Sellers with drafts of such
valuation of assets and allocation and computation of the aggregate deemed sale
price (as defined under Treasury Regulations Section 1.338-4) (which shall be
prepared on a basis consistent with Section 9.8(a)) within 120 days after the
Closing Date.  The Rockwood Sellers shall have 45 days to provide the Purchasers
with any objections to such drafts.  If the Rockwood Sellers shall object to the
computation or allocation by the Purchasers of such amounts, and the Purchasers
and the Rockwood Sellers shall not reach agreement on the computation or
allocation within 30 Business Days after notification by the Rockwood Sellers of
their objection, the Purchasers and the Rockwood Sellers shall submit the issue
to the Independent Accountant for resolution of the disagreement within 10 days
(it being agreed that the Purchasers and the Rockwood Sellers will jointly share
the fees and expenses of the

 

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Independent Accountant).  The valuations and allocations determined pursuant to
this Section 9.8(b) shall be used for purposes of all relevant Tax Returns,
reports and filings.

 

9.9                             Pre-Closing Tax Payments. Notwithstanding
anything to the contrary herein, any Taxes for a Pre-Closing Period or Overlap
Period or that the Rockwood Sellers are otherwise required to pay pursuant to
this Article 9, including any estimated Taxes, that are paid prior to the
Closing shall be credited against the Rockwood Sellers’ liability for Taxes
pursuant to this Article 9 and, to the extent such payments of Taxes exceed the
Rockwood Sellers’ liability for such Taxes pursuant to this Article 9, the
Purchasers shall pay the amount of such excess to the Rockwood Sellers within
five days after the filing of a Tax Return related to such Taxes or the taxable
period with respect to which such Taxes were paid.

 

9.10                       Tax Cooperation.  After the Closing Date, each of
Sellers’ Representative and Purchasers’ Representative shall, and shall cause
their respective Related Persons to, provide the other party (subject to
reimbursement by the other party for, and only for, any reasonable out-of-pocket
expenses), with such assistance as may reasonably be requested by the other
party in connection with the preparation of any return, report, or form with
respect to Taxes or any administrative or judicial proceeding relating to
liability for Taxes of the Target Companies (or any affiliated, consolidated,
combined or unitary group in which any of the Target Companies is included),
Sellers’ Representative, Purchasers’ Representative or any of their respective
Related Persons.  For the avoidance of doubt, Purchasers’ Representative shall
timely provide Sellers’ Representative with any information and assistance
reasonably required by Sellers’ Representative in connection with any IRS
Form 5471 that any Rockwood Seller is required to filed with respect to any
Target Company.  The parties further agree to retain and provide each other with
reasonable access to all books and records relevant to the liabilities of the
Target Companies or the Rockwood Sellers (or any of their Related Persons) for
Taxes for any periods (or portions thereof) prior to the Closing for at least
seven years after the Closing and to give each other notice and an opportunity
to receive such books or records prior to destroying or discarding any such
books or records.

 

9.11                       Mexican Taxes. Notwithstanding any provision to the
contrary in this Agreement, Rockwood Sellers shall not be required to pay or
indemnify Purchaser Indemnified Parties from and against, and Purchasers shall
be solely responsible for, any Taxes imposed upon the sale of the Purchased IP
and the Purchased Equity and any other transaction that occurs pursuant to this
Agreement that are imposed by Mexico or any political subdivision or taxing
authority thereof or therein.

 

ARTICLE 10
Employee Benefit Plan Matters

 

10.1                       Employee Benefit Plan Matters.

 

(a)                                  Employee Benefits.  Effective as of the
Closing, the Target Companies shall withdraw from participation in all Benefit
Plans other than Target Company Benefit Plans, and Rockwood Specialties shall
retain, and shall indemnify and hold harmless the Purchasers and the Target
Companies from and against, any and all liabilities and losses arising out of,
or relating to, any Benefit Plan that is not a Target Company Benefit Plan.  For
the avoidance of doubt, any

 

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indemnification in relation to the UK Plan is not covered in this
Section 10.1(a) but is dealt with pursuant to the provisions of Section 10.1(e).

 

(b)                                 COBRA.  Rockwood Specialties shall, or shall
cause one of its Affiliates (other than a Target Company) to, be responsible for
providing continuation of group health coverage required by COBRA or other
similar applicable Legal Requirements to any Business Employee employed or
engaged in the portion of the Business conducted in the United States
(collectively, “U.S. Business Employees”), any former employee of the Business
conducted in the United States or any “qualified beneficiary” (within the
meaning of Section 4980B of the Code) of any such U.S. Business Employee or
former employee of the Business conducted in the United States who incurs a
“qualifying event” (within the meaning of Section 4980B of the Code) prior to
the Closing Date.

 

(c)                                  Claims Incurred.  Rockwood Specialties
shall, or shall cause one of its Affiliates (other than a Target Company) to, be
responsible for any covered claims incurred (whether prior to or after the
Closing) by Business Employees under any Benefit Plan (other than under any
Target Company Benefit Plan).  For purposes of the foregoing, a claim shall be
deemed to be incurred at the time services, with respect to such claim, are
rendered and not at the time claim for payment is made.  Rockwood Specialties
will be responsible for any obligation to provide long-term disability benefits
to any Business Employee or any individual formerly employed by the Business who
is on long-term disability as of the Closing Date. Rockwood Specialties and the
Purchasers shall mutually cooperate in good faith to endeavor to provide
long-term disability benefits to any Business Employee who is on short-term
disability as of the Closing Date who subsequently qualifies for long-term
disability.

 

(d)                                 AlphaGary Pension Plan.  Prior to the
Closing Date, Rockwood Specialties shall, or shall cause one of its Affiliates
(other than a Target Company) to, assume sponsorship of, and all liabilities and
assets related to, the AlphaGary Corporation Union Employees Pension Plan and
any related trust.

 

(e)                                  UK Plan.

 

(i)                                     Rockwood Sellers shall cause Rockwood UK
to be responsible for and the Rockwood Sellers shall indemnify and hold the
Purchasers and each of the Target Companies harmless for and keep them
indemnified and held harmless against any liability arising from or otherwise
relating to the UK Plan, including (without limitation) (x) any debt that may
arise under Section 75 or Section 75A of the Pensions Act 1995 (“Section 75
debt”) at any time in relation to the UK Plan and (y) any liabilities arising
from any contribution notice or financial support direction that may be issued
pursuant to PA04 in relation to the UK Plan.  Notwithstanding any other
provision of this Agreement, the indemnity contained in this
Section 10.1(e) shall survive the Closing indefinitely.

 

(ii)                                  Notwithstanding the generality of
Section 10.1(e)(i), if any Section 75 debt arises as a result of the cessation
of participation of AGL in the UK Plan, the Rockwood Sellers shall cause
Rockwood UK, in its sole discretion, either:

 

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(A)                              to procure payment to the UK Plan of an amount
equal to any such debt (on the basis that any such payment satisfies the
obligation to make such payment by AGL);

 

(B)                                to enter into a withdrawal agreement
complying with Schedule 1A to the Occupational Pension Schemes (Employer Debt
Regulations) 2005 (“Employer Debt Regulations”) under which Rockwood UK
guarantees payment of Amount B (as determined in accordance with Paragraph 5 of
Schedule 1A of the Employer Debt Regulations); or

 

(C)                                make such other arrangements with the
trustees of the UK Plan by way of scheme apportionment arrangement in accordance
with the Employer Debt Regulations or otherwise as have the effect that AGL has
no liability for any such Section 75 debt that is not met by Rockwood UK under
Section 10.1(e)(i).

 

(iii)                               The Purchasers agree that they will (and
that following the Closing they will procure that AGL will) provide such
information in relation to AGL and/or assistance as Rockwood UK may reasonably
require in order to agree with the trustees of the UK Plan and/or the U.K.
Pensions Regulator any arrangements referred to in this Section 10.1(e) and
confirms that AGL will, if so required by Rockwood UK, enter into any such
agreement in such form as Rockwood UK may reasonably require in order to
implement those arrangements on the basis that (i) any amounts payable by AGL
under such agreement and (ii) any reasonable expenses of AGL in relation to the
entering into of such agreement, will be met by Rockwood UK in accordance with
the provisions of this Section 10.1(e).

 

(f)                                    German and French Employees.  The parties
hereto shall, or shall cause each of their applicable Affiliates to, cooperate
with each other with respect to the transfer of employment of the employee
located in Germany and the employee located in France that are listed on
Schedule 10.1(f) of the Seller Disclosure Letter.

 

(g)                                 Cooperation.  Upon request, Rockwood
Specialties shall provide to the Purchasers, and the Purchasers shall provide to
Rockwood Specialties, such documents, data and information as may reasonably be
necessary to implement the provisions of this Section 10.1 and to administer
their respective benefit plans.

 

(h)                                 General. Nothing herein expressed or implied
shall confer upon any of the employees of Rockwood Specialties, the Purchasers,
the Target Companies or any of their Affiliates, any rights or remedies,
including any right to benefits or employment, or continued benefits or
employment, for any specified period, of any nature or kind whatsoever by reason
of this Agreement.

 

ARTICLE 11
Termination

 

11.1                       Termination Events.  This Agreement may, by written
notice given prior to or at the Closing (such notice to include the reason for
termination), be terminated:

 

(a)                                  (i) by the Purchasers, if satisfaction of a
condition in Article 7 is or becomes impossible (other than through the failure
of the Purchasers to comply with their obligations under this Agreement); or
(ii) by the Sellers, if satisfaction of a condition in Article 8 is or

 

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becomes impossible (other than through the failure of the Sellers to comply with
their obligations under this Agreement);

 

(b)                                 by mutual consent of the Purchasers and the
Sellers; or

 

(c)                                  by either the Purchasers or the Sellers if
the Closing has not occurred (other than through the failure of the parties
seeking to terminate this Agreement to comply fully with their obligations under
this Agreement) on or before March 31, 2011 (the “Outside Date”) or such later
date as the parties may agree in writing.

 

11.2                       Effect of Termination. Except as otherwise set forth
in this Section 11.2, each party’s right of termination under Section 11.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies.  If
this Agreement is terminated pursuant to Section 11.1, all further obligations
of the parties under this Agreement will terminate, except that the obligations
in Section 5.4, Section 5.6, this Section 11.2 and Article 12 and Article 13
will survive; provided, however, that, unless otherwise set forth in
Section 12.1, if this Agreement is terminated by a party because of the breach
of the Agreement by the other party or because one or more of the conditions to
the terminating party’s obligations under this Agreement is not satisfied as a
result of the other party’s failure to comply with its obligations under this
Agreement, the terminating party’s right to pursue all legal remedies will
survive such termination unimpaired.

 

ARTICLE 12
Indemnification; Remedies

 

12.1                       Survival.  Except for (i) the representations and
warranties of the Rockwood Sellers contained in Section 3.1 (Organization and
Good Standing), Section 3.2 (Authority; No Conflict), Section 3.3
(Capitalization), Section 3.4(a) (Title to Purchased Equity Interests),
Section 3.7(a) (Title to Assets) and Section 3.26 (Brokers or Finders)
(collectively, the “Seller Fundamental Representations”), each of which shall
survive the Closing indefinitely, (ii) the representations and warranties of the
Rockwood Sellers contained in Section 3.12 (Tax Returns Filed and Taxes Paid),
which shall survive until 60 days after the expiration of the applicable statute
of limitations period (after giving effect to any waivers and extensions
thereof), and (iii) the representations and warranties of the Purchasers
contained in Section 4.1 (Organization and Good Standing), Section 4.2
(Authority; No Conflict) and Section 4.4 (Brokers or Finders) (collectively, the
“Purchaser Fundamental Representations”), each of which shall survive the
Closing indefinitely, the respective representations and warranties of the
Rockwood Sellers and the Purchasers contained in this Agreement or in any
Schedule, Exhibit or certificate delivered pursuant to this Agreement and any
obligation under clause (ii) of Section 12.2(a) to the extent arising from or in
connection any breach of the covenant contained in the last sentence of
Section 5.3(a) shall survive until the second anniversary of the Closing Date. 
Notwithstanding any other provision of this Agreement, the Rockwood Sellers’
obligations to indemnify and hold harmless any Purchaser Indemnified Person for
Damages for which indemnification would otherwise be available pursuant to
clause (iii) of Section 12.2(a) shall to the extent such Damages constitute
On-Site Environmental Liabilities terminate on the date that is four years after
the Closing Date.  The right to indemnification, reimbursement or other remedy
based upon such representations, warranties, covenants and obligations shall not
be affected by any investigation conducted with

 

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respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with any such representation, warranty, covenant or obligation.  The waiver of
any condition based upon the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, reimbursement or other remedy based upon
such representations, warranties, covenants and obligations.

 

12.2                       Indemnification and Payment by the Rockwood Sellers.

 

(a)                                  The Rockwood Sellers shall indemnify and
hold harmless the Purchaser Indemnified Persons, and will pay the Purchaser
Indemnified Persons for any loss, liability, Claim, damage and expense
(including costs of investigation and defense and reasonable attorneys’ fees and
expenses), whether or not involving a Third-Party Claim (collectively,
“Damages”), arising from or in connection with:

 

(i)                                     any failure of any representation or
warranty made by any Rockwood Seller in this Agreement or any Ancillary Document
delivered by any Seller (other than the representations and warranties contained
in Section 3.12 (Taxes), which are addressed in Section 9.7) to be true and
correct in all respects on and as of the date of this Agreement and on and as of
the Closing Date as if made on such date (other than those made on a specified
date, which shall be true and correct in all respects as of such specified
date);

 

(ii)                                  any breach of or failure to perform or
comply with any covenant or obligation of any Seller in this Agreement or in any
Ancillary Document delivered by any Seller;

 

(iii)                               Historic Contamination, whether or not
directly resulting from the operation or the conduct of the Business, and
including any action taken (or not taken), by the Rockwood Sellers or any Target
Company prior to the Closing Date;

 

(iv)                              any brokerage or finder’s fees or commissions
or similar payments based upon any agreement or understanding made, or alleged
to have been made, by any Person with any Seller (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions; and

 

(v)                                 the Reorganization.

 

(b)                                 Notwithstanding Section 12.2(a), (i) the
Rockwood Sellers shall not be required to indemnify any Purchaser Indemnified
Person for Damages with respect to any Claim for indemnification pursuant to
clauses (i) or (iii) of Section 12.2(a) (other than Damages relating to the
spill of liquid plasticizer in the vicinity of the former tank farm at 9635
Industrial Drive, Pineville, NC 28134 on February 17, 1988) or clause (ii) of
Section 12.2(a) to the extent arising from or in connection with a breach of the
covenant contained in the last sentence of Section 5.3(a) if the Damages
relating thereto (together with all Damages arising out of the same event or
occurrence or series of related events or occurrences or recurring Damages of a
similar nature) are less than twenty five thousand Dollars ($25,000) in the
aggregate (and such Claim shall be disregarded and shall not be aggregated for
purposes of clause (ii) of this Section 12.2(b)), (ii) the Rockwood Sellers
shall not be required to indemnify any Purchaser Indemnified Person for

 

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Damages with respect to any Claim for indemnification pursuant to clause (i) of
Section 12.2(a) or clause (ii) of Section 12.2(a)  to the extent arising from or
in connection with a breach of the covenant contained in the last sentence of
Section 5.3(a) unless and until the aggregate amount of all Damages against the
Rockwood Sellers under clause (i) of Section 12.2(a) exceeds on a cumulative
basis an amount equal to one million five hundred thousand Dollars ($1,500,000)
(the “Basket Amount”), in which case the Indemnified Person shall be entitled to
recover the Basket Amount, as well as the amount of Damages in excess of the
Basket Amount, (iii) the cumulative indemnification obligations of the Rockwood
Sellers under clause (i) of Section 12.2(a) and clause (iii) of Section 12.2(a)
(to the extent such Damages constitute On-Site Environmental Liabilities) and
clause (ii) of Section 12.2(a)  to the extent arising from or in connection with
a breach of the covenant contained in the last sentence of Section 5.3(a) shall
in no event in the aggregate exceed 30% of the Purchase Price, (iv) the
aggregate liability of the Rockwood Sellers for Damages under Section 12.2 shall
in no event exceed the Purchase Price and (v) without limitation of the other
clauses of this Section 12.2(b), the aggregate liability of the Rockwood Sellers
in respect of Damages described in clause (iii) of Section 12.9(c) shall be
limited to 50% of the otherwise indemnifiable Damages.  The limitation on
indemnification contained in clauses (i), (ii) and (iii) of this
Section 12.2(b) shall not apply to Damages that arise from a failure of the
Seller Fundamental Representations and the representations and warranties
contained in Section 3.14 (Employee Benefits) to be true and correct in all
respects on and as of the date of this Agreement and on and as of the Closing
Date as if made on such date (other than those made on a specified date, which
shall be true and correct in all respects as of such specified date).  In
addition, none of the limitations set forth in this Section 12.2(b) shall apply
to Damages that arise from fraud by an Indemnifying Person.

 

12.3                       Indemnification and Payment by the Purchasers.

 

(a)                                  The Purchasers shall indemnify and hold
harmless the Rockwood Sellers and their Representatives, shareholders or
members, as the case may be, and their Related Persons (the “Seller Indemnified
Persons”), and shall pay the Seller Indemnified Persons for any Damages arising
from or in connection with:

 

(i)                                     any failure of any representation or
warranty made by the Purchasers in this Agreement or in any Ancillary Document
delivered by the Purchasers to be true and correct in all respects on and as of
the date of this Agreement and on and as of the Closing Date as if made on such
date (other than those made on a specified date, which shall be true and correct
in all respects as of such specified date);

 

(ii)                                  any breach or failure to perform or comply
with any covenant or obligation of the Purchasers in this Agreement or in any
Ancillary Document delivered by the Purchasers; or

 

(iii)                               any brokerage or finder’s fees or
commissions or similar payments based upon any agreement or understanding made,
or alleged to have been made, by any Person with the Purchasers (or any Person
acting on the Purchasers’ behalf) in connection with any of the Contemplated
Transactions.

 

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(b)                                 Notwithstanding this Section 12.3(b),
(i) the Purchasers shall not be required to indemnify any Seller Indemnified
Person for Damages with respect to any Claim for indemnification pursuant to
clause (i) of Section 12.3(a): (A) if the Damages relating thereto (together
with all Damages arising out of the same event or occurrence or series of
related events or occurrences or recurring Damages of a similar nature) are less
than twenty five thousand Dollars ($25,000) in the aggregate (and such Claim
shall be disregarded and shall not be aggregated for purposes of clause
(i)(B) of this Section 12.3(b)) and (B) unless and until the aggregate amount of
all Claims against the Purchasers under clause (i) of Section 12.3(a) exceeds on
a cumulative basis an amount equal to the Basket Amount, in which case the
Indemnified Person shall be entitled to recover the Basket Amount, as well as
the amount of Claims in excess of the Basket Amount, (ii) the cumulative
indemnification obligations of the Purchasers under clause (i) of
Section 12.3(a) shall in no event in the aggregate exceed 30% of the Purchase
Price and (iii) the cumulative indemnifications of the Purchasers under Section
12.3(a) shall in no event exceed the Purchase Price.  The limitation on
indemnification contained in clauses (i) and (ii) of the preceding sentence
shall not apply to Damages that arise from a failure of the Purchaser
Fundamental Representations to be true and correct in all respects on and as of
the date of this Agreement and on and as of the Closing Date as if made on such
date (other than those made on a specified date, which shall be true and correct
in all respects as of such specified date).  In addition, none of the
limitations set forth in this Section 12.3(b) shall not apply to Damages that
arise from fraud by an Indemnifying Person.

 

12.4                       Third-Party Claims.

 

(a)                                  Promptly after receipt by a Person entitled
to indemnity under Section 12.2 or 12.3 (an “Indemnified Person”) of notice of
the assertion of a Claim by a Third Party (a “Third-Party Claim”) against it,
such Indemnified Person shall give written notice to the Person obligated to
indemnify under such Section (an “Indemnifying Person”) of the assertion of such
Third-Party Claim describing in reasonable detail the basis of such Claim,
provided that the failure to notify the Indemnifying Person will not relieve the
Indemnifying Person of any liability that it may have to any Indemnified Person,
except to the extent that the Indemnifying Person demonstrates that the defense
of such Third Party Claim is prejudiced by the Indemnified Person’s failure to
give such notice.

 

(b)                                 If an Indemnified Person gives notice to the
Indemnifying Person pursuant to Section 12.4(a) of the assertion of a
Third-Party Claim, the Indemnifying Person shall be entitled to participate in
the defense of such Third-Party Claim and, to the extent that it wishes (unless
the Indemnifying Person is also a Person against whom the Third-Party Claim is
made and the Indemnified Person determines in good faith that joint
representation would be inappropriate) with respect to such Third-Party Claim),
to assume the defense of such Third-Party Claim with counsel reasonably
satisfactory to the Indemnified Person.  After notice from the Indemnifying
Person to the Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person shall not, so long as it diligently
conducts such defense, be liable to the Indemnified Person under this Article 12
for any fees of other counsel or any other expenses with respect to the defense
of such Third-Party Claim, in each case subsequently incurred by the Indemnified
Person in connection with the defense of such Third-Party Claim.  If the
Indemnifying Person assumes the defense of a Third-Party Claim, (i) such
assumption will conclusively establish for purposes of this Agreement that the
claims made in that Third-Party

 

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Claim are within the scope of and subject to indemnification, and (ii) no
compromise or settlement of such Third-Party Claims may be effected by the
Indemnifying Person without the Indemnified Person’s consent unless (A) there is
no finding or admission of any violation of Legal Requirement or any violation
of the rights of any Person; (B) the sole relief provided is monetary damages
that are paid in full by the Indemnifying Person; and (C) the Indemnified Person
shall have no liability with respect to any such compromise or settlement of
such Third-Party Claims effected without its consent.  If notice is given to an
Indemnifying Person of the assertion of any Third-Party Claim and the
Indemnifying Person does not, within 30 days after notice is given to the
Indemnified Person, give notice to the Indemnified Person of its election to
assume the defense of such Third-Party Claim, the Indemnifying Person will be
bound by any determination made in such Third-Party Claim, or any compromise or
settlement effected, by the Indemnified Person with the prior consent of the
Indemnifying Person (which consent may not be unreasonably withheld, delayed or
conditioned), and will not be required to indemnify Purchaser Indemnified
Parties in respect of any such determination made or compromise or settlement
effected without such consent.

 

(c)                                  Notwithstanding the foregoing, if an
Indemnified Person determines in good faith that there is a reasonable
probability that a Third-Party Claim may adversely affect it or its Related
Persons other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnified Person may, by
notice to the Indemnifying Person, assume the exclusive right to defend,
compromise or settle such Third-Party Claim, but the Indemnifying Person will
not be bound by any determination of any Third-Party Claim so defended for the
purposes of this Agreement or any compromise or settlement effected without its
consent (which may not be unreasonably withheld, delayed or conditioned).

 

(d)                                 The Sellers hereby consent to the
non-exclusive jurisdiction of any court in which a Proceeding in respect of a
Third-Party Claim is brought against any Purchaser Indemnified Person for
purposes of any claim that a Purchaser Indemnified Person may have under this
Agreement with respect to such Proceeding or the matters alleged therein and
agree that process may be served on the Seller with respect to such a claim
anywhere in the world.

 

(e)                                  The Indemnified Person and the Indemnifying
Person, as the case may be, shall keep the other Person informed of the status
of such Third-Party Claim and any related Proceedings at all stages thereof
where such Person is not represented by its own counsel, and (ii) the parties
agree (each at its own expense) to render to each other such assistance as they
may reasonably require of each other and to cooperate in good faith with each
other in order to ensure the proper and adequate defense of any Third-Party
Claim.

 

(f)                                    The parties shall cooperate in such a
manner as to preserve in full (to the extent possible) the confidentiality of
all confidential information and the attorney-client and work-product
privileges.  In connection therewith, each party agrees that: (i) it will use
its commercially reasonable efforts, in respect of any Third-Party Claim in
which it has assumed or participated in the defense, to avoid production of
confidential information (consistent with applicable law and rules of
procedure), and (ii) all communications between any party hereto and counsel
responsible for or participating in the defense of any Third-Party Claim shall,
to the extent possible, be made so as to preserve any applicable attorney-client
or work-product privilege.

 

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12.5                       Other Claims.  A claim for indemnification for any
matter not involving a Third-Party Claim shall be asserted by written notice to
the party from whom indemnification is sought and shall be shall be made as
promptly as practicable after the time the Indemnified Person becomes aware of
the facts forming the basis of such claim.

 

12.6                       Indemnification in Case of Strict Liability or
Indemnitee Negligence.  The indemnification provisions in this Article 12 shall
be enforceable regardless of whether the liability of the person seeking
indemnification is based upon a claim of negligence or strict liability, and
regardless of whether any person (including the person from whom indemnification
is sought) alleges or proves the sole, concurrent, contributory or comparative
negligence of the person seeking indemnification or the sole or concurrent
strict liability imposed upon the person seeking indemnification.

 

12.7                       Interest.  In the event that any amount due to any
Purchaser Indemnified Person or Seller Indemnified Person, as the case may be,
under this Article 12 or Section 9.7 is not paid when due, the party required to
make payment shall pay interest on such amount at a rate of six percent (6%) per
annum, based on a 360-day year, from the date such amount is payable to the date
of actual payment.

 

12.8                       Exclusive Remedy.  The indemnity provided for in this
Article 12 and Section 9.7 shall constitute the parties’ sole and exclusive
remedy with respect to each other for any and all Claims for Damages (but not
specific performance or other equitable remedies) relating to this Agreement and
the Contemplated Transactions; provided that nothing herein shall limit in any
way any such party’s remedies in respect of fraud by the other party in
connection with the Contemplated Transactions.  In furtherance of but subject to
the foregoing, each party hereby waives, from and after the Closing, to the
fullest extent permitted under applicable Legal Requirement, any and all other
rights, claims and causes of action (other than fraud by the other party) that
it has against the other party (or any Related Person of the other party) in
connection with this Agreement or the Contemplated Transactions.

 

12.9                       Additional Limitations; Adjustments; Mitigation.

 

(a)                                  Any indemnity payment made by the
Purchasers on the one hand, or the Rockwood Sellers, on the other hand, pursuant
to this Article 12 and Section 9.7 in respect of any Damage shall be (a) reduced
by any insurance proceeds under applicable insurance policies actually received
by a party entitled to indemnification under this Agreement in respect of such
claim and (b) increased by (i) the aggregate cost of pursuing any related
insurance claims and (ii) any related increases in insurance premiums resulting
from insurance recoveries. The Purchasers and the Rockwood Sellers each agree
that they will (and cause their Affiliates to) use commercially reasonable
efforts to recover any such insurance proceeds under applicable insurance
policies to the extent such recoveries would reduce amounts required to be paid
by any party pursuant to this Article 12.  If a party receives any amounts under
applicable insurance policies, or from any other Person alleged to be
responsible for any Damages, subsequent to an indemnification payment, then such
party shall promptly reimburse the party required to provide indemnification for
any payment made or expense incurred by such party in connection with providing
such indemnification payment up to the amount received by such party, net of any
expenses incurred by such party in collecting such amount.    The Purchasers and

 

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the Rockwood Sellers shall cooperate with each other with respect to resolving
any Claim or liability with respect to which one party is obligated to indemnify
the other party hereunder, including by using reasonable efforts to minimize
Damages or resolve any such Claim or liability and acting in good faith in
responding to, defending against, settling or otherwise dealing with such Claim.

 

(b)                                 Notwithstanding any other provision of this
Agreement, the Rockwood Sellers’ obligations under clause (i) of the
Section 12.2(a) in respect of any asserted breach or inaccuracy of any
representation or warranty resulting from, arising out or in respect of
Environmental Liabilities and clause (iii) of Section 12.2(a) shall in all
circumstances be limited to the amount of the least stringent, lowest cost
approach necessary to achieve compliance with applicable Environmental Laws.

 

(c)                                  Notwithstanding any other provision of this
Agreement, the Rockwood Sellers shall not be responsible for any Damages for
which indemnification would otherwise be available pursuant to clause
(iii) of Section 12.2(a) or clause (i) of Section 12.2(a) (in respect of a
breach of a representation and warranty set forth in Section 3.19 (Environmental
Matters)) to the extent that such Damages would not have arisen but for
initiation of any communication with or notice to a Governmental Body or any
other Person, except to the extent such initiation of communication or notice
(i) is required by Environmental Law (including Governmental Authorizations
issued thereunder), other than any such requirement triggered by (A) the
expansion in any manner, the closure or the demolition after the Closing of any
part of any Facility owned or operated by a Target Company as of the Closing
Date, (B) any zoning or land use Legal Requirements imposed after the Closing
Date or (C) any change after the Closing in the use of any Facility, (ii) has
been approved in writing by the Sellers’ Representative or (iii) notwithstanding
clause (i), is required by applicable Environmental Law (including Governmental
Authorizations issued thereunder) to be made in connection with the expansion of
the Business’ Pineville, North Carolina facility.

 

12.10                 Application to Taxes. Notwithstanding anything to the
contrary herein, except for the survival period for indemnification claims for
Taxes set forth in Section 12.1, this Article 12 shall have no application with
respect to indemnification claims related to Taxes, which shall be covered
exclusively by Article 9.

 

ARTICLE 13
General Provisions

 

13.1                       Expenses.  Except as otherwise expressly provided in
this Agreement (including Section 9.4, Article 11 and this Section 13.1),
whether or not the Closing occurs, each party to this Agreement will bear its
respective expenses (and, in the case of the Rockwood Sellers, the expenses of
the Target Companies) incurred in connection with the preparation, execution and
performance of this Agreement and the Contemplated Transactions, including all
fees and expenses of its Representatives.  The Purchasers, on the one hand, and
Rockwood Sellers, on the other hand, will each pay one-half of the HSR Act
filing fee.  In the event of termination of this Agreement, the obligation of
each party hereto to pay its own expenses will be subject to any rights of such
party arising from a breach of this Agreement by another party, including
Article 11.

 

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13.2                       Public Announcements.  None of the Sellers and the
Purchasers shall, nor shall any of their respective Related Persons or
Representatives or Representatives of such Related Persons, without the prior
written consent of the other parties hereto, issue any press releases or
otherwise make any public statements with respect to this Agreement or the
Contemplated Transactions, except as may be required by applicable Legal
Requirements or by any securities exchange or Governmental Body (in which case
the party required (or whose Related Person or Representative is required) to
issue any press release or otherwise make any public statement shall allow the
other party reasonable time to comment on such press release or public statement
in advance of its issuance (the first party being under no obligation to accept
any such comments).

 

13.3                       Notices.  All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when delivered in person, or when
sent by facsimile transmission (with receipt confirmed), or on the third
business day after dispatch thereof by reputable international courier addressed
as follows (or at such other addresses as the parties may designate by written
notice in the manner aforesaid):

 

The Sellers:

 

Rockwood Specialties Group, Inc.
100 Overlook Center
Princeton, NJ 08540
Attention:  General Counsel
Telephone No.:  (609) 514-0300

Facsimile No.:  (609) 514-8722

 

with a copy to:

 

Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, NY  10004

Attention:  James Modlin, Esq.

Telephone No.: (212) 837-6012

Facsimile No.:  (212) 422-4726

 

The Purchasers:

 

Mexichem, S.A.B. de C.V.

Rio San Javier No 10 Fracc. Viveros Del Rio

Tlalnepantla, 54060

Mexico

Attention: Andrés Eduardo Capdepón A., General Counsel - Director Jurídico

Telephone No.: (52 55) 5366 4023

Facsimile No.: (52 55) 5397 8836

 

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13.4                       Governing Law.  This Agreement, including any
non-contractual obligations arising out of or in connection with this Agreement,
shall be governed by and construed and enforced in accordance with the laws of
the State of New York, without regard to the conflict of laws rules thereof.

 

13.5                       Arbitration.

 

(a)                                  Any dispute, controversy or claim arising
out of or relating to or in connection with this Agreement (other than disputes,
controversies or claims arising out of (i) Section 2.6(c) with respect to any
Contested Adjustments, (ii) Section 2.7 with respect any adjustment to Schedule
2.7 to reflect any difference between the Per Target Company Closing Date
Working Capital and the Per Target Company Target Working Capital as well as any
Closing Date Retained Cash and/or Closing Date Indebtedness of a Target Company
as finally determined in accordance with Section 2.6 and (iii) Section 9.8 with
respect to the computation or allocation of the aggregate deemed sale price (as
defined under Treasury Regulations Section 1.338-4) of the assets of AlphaGary
Corporation), including any dispute, controversy or claim involving Affiliates
of any party and any question regarding the existence, validity or termination
of, or regarding a breach of, this Agreement shall, subject to Section 13.5(e),
be finally resolved by arbitration administered by the International Centre for
Dispute Resolution under its International Arbitration Rules (“ICDR Rules”). 
Each party hereto consents to such arbitration as the sole and exclusive method
of resolving any such dispute, controversy or claim.

 

(b)                                 The arbitration will take place in the city
of New York, New York and will be conducted in the English language, in
accordance with the United States Arbitration Act.  The arbitration tribunal
will consist of three arbitrators. Each party shall nominate one arbitrator, and
the two party-appointed arbitrators shall appoint the chair, except that in the
event there are more than two parties in the arbitration the arbitration
tribunal shall be constituted in accordance with the ICDR Rules. Notwithstanding
Section 13.1, the prevailing party shall be entitled to recover the costs and
expenses of the arbitration and of any action for interim relief or enforcement
of the award, which costs and expenses shall include reasonable attorneys fees. 
The award of the arbitral tribunal shall be final and binding on the parties
thereto.  Judgment upon any award rendered by the arbitrators may be entered and
a confirmation order sought in any court having jurisdiction.

 

(c)                                  An arbitral tribunal constituted under this
Agreement may, unless consolidation would prejudice the rights of any party,
consolidate an arbitration hereunder with arbitration under any documents
entered into in connection with this Agreement if the arbitration proceedings
raise common questions of law and fact.  If two or more arbitral tribunals under
these agreements issue consolidation orders, the order issued first shall
prevail.

 

(d)                                 The parties undertake to keep confidential
all awards in their arbitration, together with all materials in the proceedings
created for the purpose of the arbitration and all other documents produced by
another party in the proceedings not otherwise in the public domain, save and to
the extent that disclosure may be required of a party by applicable Legal
Requirements or any self-regulatory or national securities exchange, to
potential lenders, investors or potential purchasers of all or any part of a
parties business, to protect or pursue a

 

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legal right or to enforce or challenge the arbitration agreement or an award in
legal proceedings before a court or other judicial authority.

 

(e)                                  Notwithstanding Section 13.5(a), the
parties hereto hereby acknowledge and agree that they may apply to any court
having jurisdiction for interim relief, including temporary restraining orders
or preliminary injunctions, in addition to any remedy to which the parties may
be entitled in any arbitration proceeding.

 

(f)                                    For purposes of any proceeding to enforce
or confirm an award of the arbitral tribunal pursuant to this Section 13.5 or
any action brought pursuant to Section 13.5(e), each party hereto hereby
expressly submits to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
Court sitting in the City of New York.  Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable Legal Requirements, any
objection which it may have or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.  Each party
hereto consents to process being served in any such proceeding by the mailing of
a copy thereof by registered or certified mail, postage prepaid, to its address
specified in Section 13.3 or in any other manner permitted by applicable Legal
Requirements.  EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION
OR PROCEEDING.

 

13.6                       Waiver.  The rights and remedies of the parties to
this Agreement are cumulative and not alternative.  Neither the failure nor any
delay by any party hereto in exercising any right, power, or privilege under
this Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege.  To the maximum extent permitted by applicable Legal Requirement,
(a) no claim or right arising out of this Agreement or the documents referred to
in this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.

 

13.7                       Entire Agreement and Modification.  This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter.  This Agreement may not be amended
except by a written agreement executed by the party hereto to be charged with
the amendment.

 

13.8                       Assignments, Successors, and No Third-Party Rights. 
No party hereto may assign any of its rights under this Agreement without the
prior consent of the other parties, which will not be unreasonably withheld. 
Subject to the preceding sentence, this Agreement will apply to,

 

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be binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties hereto. Except for Persons entitled to
indemnification under Article 12, a Person that is not a party hereto shall have
no right to under the Contract (Rights of Third Parties) Act of 1999 to enforce
any of the terms of this Agreement.

 

13.9                       Severability.  If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.  Any
provision of this Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.

 

13.10                 Joint and Several Obligations.  Any and all obligations or
duties of the Rockwood Sellers under this Agreement shall be joint and several
and any and all obligations or duties of the Purchasers under this Agreement
shall be joint and several.

 

13.11                 Section Headings, Construction.  The headings of Sections
in this Agreement are provided for convenience only and will not affect its
construction or interpretation.

 

13.12                 Representatives.  The Rockwood Sellers hereby appoint
Rockwood Specialties Group (the “Sellers’ Representative”) and the Purchasers
hereby appoint Mexichem Parent (the “Purchasers’ Representative”) and, by their
respective execution and delivery of the signature page of this Agreement,
Rockwood Specialties Group, on the one hand, and Mexichem Parent, on the other
hand, each hereby accept such appointment, to serve as the representative and
true and lawful attorney-in-fact and agent (a) in the case of the Rockwood
Sellers’ Representative, to act in each Rockwood Seller’s name, place and stead
and (b) in the case of the Purchasers’ Representative, to act in each
Purchaser’s name, place and stead, in each case, with respect to any and all
actions required or permitted to be taken under this Agreement, the other
instruments and agreements to be executed and delivered by the parties hereto as
contemplated hereby or otherwise in connection with or related to the
Contemplated Transactions on behalf of the Rockwood Sellers (in the case of the
Sellers’ Representative) or the Purchasers (in the case of the Purchasers’
Representative), as applicable, following the Closing, including:

 

(i)                                     investigating, defending, prosecuting or
settling any matter (including counterclaims, cross-claims or similar actions)
as to which indemnification may be sought by the Purchasers or the Purchaser
Indemnified Persons (in the case of the Sellers’ Representative) or the Rockwood
Sellers or the Seller Indemnified Persons (in the case of the Purchasers’
Representative), including to agree to, negotiate, and enter into settlements
and compromises with the Purchasers or the Rockwood Sellers, as the case may be,
to conduct the defense of any claims for indemnification in arbitration, to
comply with orders of courts and awards of arbitrators with respect to amounts
owed under this Agreement or in accordance with and subject to the limitations
set forth in this Agreement;

 

(ii)                                  providing and receiving notices on behalf
of the Rockwood Sellers (in the case of the Sellers’ Representative) or the
Purchasers (in the case of the Purchasers’ Representative), under this Agreement
or any other document delivered in connection herewith or therewith;

 

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(iii)                               entering into any amendment, waiver or
modification of this Agreement or any other document delivered in connection
herewith or therewith; and

 

(iv)                              taking any and all other actions necessary or
advisable in the judgment of the Sellers’ Representative or the Purchasers’
Representative, as applicable, to effectuate the terms and provisions of this
Agreement and the Contemplated Transactions for the benefit of the Rockwood
Sellers (in the case of the Sellers’ Representative) or the Purchasers (in the
case of the Purchasers’ Representative).

 

13.13                 Specific Performance.  The parties hereto agree that any
breach of the terms of this Agreement may give rise to irreparable harm for
which money damages would not be an adequate remedy, and accordingly agree that,
in addition to all other remedies available to it, each party shall be entitled
to enforce the terms of this Agreement by a decree of specific performance,
without the necessity of proving the inadequacy as a remedy of money damages.

 

13.14                 Counterparts.  This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.

 

 

MEXICHEM COMPUESTOS, S.A. DE C.V.

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MEXICHEM UK LIMITED

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MEXICHEM FLUOR CANADA, INC.

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MEXICHEM AMANCO HOLDING, S.A. DE C.V.

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

MEXICHEM, S.A.B. DE C.V.

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

[Signature Page 1 to Business Purchase Agreement]

 

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ALPHAGARY CORPORATION

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ALPHAGARY LIMITED

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ROCKWOOD ADDITIVES LIMITED

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ROCKWOOD SPECIALTIES INC.

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ROCKWOOD SPECIALTIES GROUP, INC.

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ROCKWOOD HOLDINGS, INC.

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

[Signature Page 2 to Business Purchase Agreement]

 

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