Document:

COLLATERAL AGENCY AGREEMENT

     COLLATERAL  AGENCY AGREEMENT dated as of April 11, 2006 (this  "Agreement")
among  THE  BANK  OF  NEW  YORK,  a New  York  banking  corporation,  not in its
individual  capacity  but  solely as trustee  under the  Indenture  (as  defined
herein) (the "Trustee), U.S. Bank National Association, as collateral agent (the
"Collateral  Agent"),  and,  solely for the  purposes  of Sections 2, 5, 6 and 8
hereof, Kronos International, Inc. (the "Issuer").

                                    RECITALS

     The Issuer and the Trustee have  entered into an indenture  dated as of the
date  hereof (as  amended,  amended  and  restated,  supplemented  or  otherwise
modified  from time to time,  the  "Indenture")  pursuant to which the Issuer is
issuing  (euro)400,000,000  in aggregate  principal amount at maturity of 6 1/2%
Senior Secured Notes due 2013 (the "Notes"); and

     To secure the obligations under the Indenture and the Notes, the Issuer has
agreed,  among other  things,  to execute and  deliver the  following  documents
listed on Exhibit A and any such other  agreements  as may be entered  into from
time to time with respect to the collateral  located in Denmark,  France and the
Federal Republic of Germany (the "Collateral"),  collectively referred to herein
as the ("Collateral Documents"); and

     The Issuer has  selected  and desires  the  Trustee to jointly  appoint the
Collateral  Agent,  and the Collateral Agent desires to act, as collateral agent
and/or beneficiary pursuant to the Collateral Documents.

     NOW, THEREFORE,  in consideration of the premises, the parties hereto agree
as follows:

     SECTION 1.  DEFINITIONS.  Capitalized  terms used herein and not  otherwise
defined herein shall have the meaning given to such terms in the Indenture.

     SECTION 2. APPOINTMENT OF COLLATERAL AGENT: SUCCESSOR COLLATERAL AGENT.

          (a) The Issuer and the Trustee hereby  appoint the  Collateral  Agent,
and the Collateral Agent hereby accepts such appointment,  pursuant to the terms
of this Agreement, as collateral agent to act on behalf of the Trustee under the
Indenture  for  the  benefit  of the  Holders,  but  solely  in  respect  of the
Collateral  Documents and the Collateral  covered thereby.  The Collateral Agent
shall be  authorized  to exercise  such rights,  powers and  discretions  as are
reasonably  necessary or incidental to its obligations as Collateral Agent under
this Agreement and as collateral agent and/or  beneficiary  under the Collateral
Documents.

          (b) The Collateral  Agent is an independent  contractor and shall have
no authority to act for or represent  the Trustee  except as expressly set forth
herein.  Notwithstanding any provision to the contrary elsewhere, the Collateral
Agent shall not have any duties or responsibilities,  except those expressly set
forth in the  Collateral  Documents to which it is a party and those arising out
of its acceptance and  administration  of this Agreement.  The Collateral  Agent
does not owe  fiduciary  duties to the Trustee or any other person in connection
with the performance  its duties  hereunder.  At the expense of the Issuer,  the
Collateral Agent may retain counsel and other experts, and may rely conclusively
on the  advice  of such  counsel  and other  experts.  The  Collateral  Agent is
entitled to refrain from taking any action hereunder, including, but not limited
to,  beginning  any legal action or proceeding or taking any steps to enforce or
realize upon any security interest created by the Collateral  Documents,  unless
the  Collateral  Agent has received such security or  indemnification  as it may
require  (whether by way of payment in advance or otherwise)  against all costs,
claims, expenses (including legal fees) and liabilities it will or may expend or
incur in taking such action.

          (c) The  Collateral  Agent may  resign  at any time by giving  written
notice thereof to the Issuer and the Trustee and may be removed any time with or
without cause by written notice by the Issuer. Prior to the effectiveness of any
such  resignation  or  removal,  the  Trustee  shall have the right to appoint a
successor Collateral Agent which shall be a bank or trust company or the foreign
equivalent  thereof  incorporated  under  the  laws of any  member  state of the
European Union or the United States or any political  subdivision thereof having
combined  capital  and  surplus  of at  least  US$50,000,000  or the  equivalent
thereof.  If in respect of the resignation of the Collateral  Agent no successor
Collateral  Agent  shall have been so  appointed  by the  Trustee and shall have
accepted such appointment  within 30 days after the retiring  Collateral Agent's
giving of notice of resignation, then the retiring Collateral Agent shall, prior
to the  effectiveness  of its resignation,  on behalf of the Trustee,  appoint a
successor  Collateral  Agent,  which  shall  be a bank or trust  company  or the
foreign  equivalent  thereof  incorporated under the laws of any member state of
the European  Union or the United  States or any political  subdivision  thereof
having  a  combined  capital  and  surplus  of at  least  US$50,000,000  or  the
equivalent  thereof.  Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring  Collateral Agent, and the retiring  Collateral Agent
shall be discharged from its duties and obligations under this Agreement.  After
any retiring  Collateral Agent's  resignation or removal hereunder as Collateral
Agent,  the  provisions of this  Agreement  shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was  Collateral  Agent under
this  Agreement and the Collateral  Documents.  Any  corporation  into which the
Collateral  Agent may be merged,  or with which it may be  consolidated,  or any
corporation  resulting from any merger or  consolidation to which the Collateral
Agent shall be a party,  shall be Collateral Agent under this Agreement  without
the  execution  or  filing of any  paper or any  further  act on the part of the
parties hereto.

          (d) Beyond the exercise of reasonable care in the custody thereof, the
Collateral  Agent shall have no duty as to any  Collateral in its  possession or
control  or in the  possession  or  control of any agent or bailee or any income
thereon  or as to  preservation  of rights  against  prior  parties or any other
rights pertaining  thereto and the Collateral Agent shall not be responsible for
filing any  financing or  continuation  statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting or
maintaining  the  perfection  of any security  interest in the  Collateral.  The
Collateral  Agent  shall be  deemed  to have  exercised  reasonable  care in the
custody of the  Collateral  in its  possession  if the  Collateral  is  accorded
treatment  substantially  equal to that which it accords  its own  property  and
shall not be liable or  responsible  for any loss or  diminution in the value of
any of the  Collateral,  by  reason  of the  act  or  omission  of any  carrier,
forwarding  agency or other agent or bailee selected by the Collateral  Agent in
good faith.

     SECTION 3.  RESPONSIBILITIES  OF COLLATERAL  AGENT.  The obligations of the
Collateral Agent under this Agreement shall be to:

          (a)  duly  execute  and  deliver  and  act as  beneficiary  under  the
Collateral Documents on behalf of the Trustee under the Indenture;

          (b) upon the  occurrence  of an Event of Default,  take such action as
requested by written  instructions of the Trustee under the Indenture,  provided
that such  action  does not  contradict  applicable  law.  In this  regard,  the
Collateral  Agent  shall be  entitled  to rely and act upon,  and shall be fully
protected  in relying and acting upon,  any note,  writing,  resolution,  notice
consent, certificate,  request, demand, direction, instruction, waiver, receipt,
agreement,  affidavit,  letter, statement,  order or written document or written
communication  reasonably  believed  by it to be genuine and correct and to have
been  signed,  sent or made by the proper  Person or Persons and upon advice and
statements  of legal  counsel  and other  experts  retained  or  employed by the
Collateral Agent in its reasonable discretion;

          (c) be  deemed  to  have  actual,  constructive,  direct  or  indirect
knowledge or notice of the  occurrence of any Event of Default only upon receipt
by the Collateral  Agent of a written notice or a certificate  from the Trustee,
stating that an Event of Default has occurred.  The Collateral  Agent shall have
no obligation  whatsoever either prior to or after receiving such written notice
or certificate  to inquire  whether an Event of Default has in fact occurred and
shall be  entitled  to rely  conclusively,  and shall be fully  protected  in so
relying, on any notice or certificate so furnished to it;

          (d) remit  according  to the written  instructions  of the Trustee any
proceeds recovered from enforcement of the Collateral  Documents,  provided that
all  necessary  approvals  are  obtained  from  appropriate  authorities  in the
jurisdiction where the Collateral is located; and

          (e) take such other  actions  requested  by the Trustee in  accordance
with this Agreement.

     SECTION 4. COLLATERAL AGENT'S INDIVIDUAL CAPACITY.

     The Collateral Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Issuer or any of
their  affiliates  or  subsidiaries  as if it were  not  performing  the  duties
specified herein,  and may accept fees and other  consideration  from the Issuer
for services in connection  with the Agreement and otherwise  without  having to
account  for the same to the  Trustee  or to the  holders  of Notes from time to
time.

     SECTION 5. TERM FEES, ETC.

     The term of this  Agreement  shall  commence on the Issue Date and,  unless
earlier terminated pursuant to Section 2(c), shall terminate upon the release of
the Collateral  pursuant to the Collateral  Documents.  For services rendered as
Collateral Agent under this Agreement, the Issuer shall pay the Collateral Agent
$13,000 on the Issue Date and,  during  the term of this  agreement,  $10,000 on
each anniversary of the Issue Date, or such other  compensation as may be agreed
to from time to time in writing between the Collateral Agent and the Issuer. The
Issuer  agrees  to pay the  fees,  expenses  and other  amounts  payable  of the
Collateral Agent under this Agreement,  in addition to any other fees,  expenses
and other amounts payable that may arise under the Collateral Documents (as such
term is defined in the Indenture).

     SECTION 6. INDEMNIFICATION: DISCLAIMERS, ETC.

          (a) The Issuer shall be liable for and shall  reimburse  and indemnify
the Collateral Agent and hold the Collateral Agent harmless from and against any
and all claims,  losses,  liabilities,  costs,  damages or  expenses  (including
reasonable attorney's fees and expenses)  (collectively,  "Losses") arising from
or in connection  with or related to this  Agreement or being  Collateral  Agent
hereunder  (including but not limited to Losses incurred by the Collateral Agent
in connection with its successful  defense, in whole or in part, of any claim of
gross negligence or willful  misconduct on its part),  provided,  however,  that
nothing  contained  herein shall require the Collateral  Agent to be indemnified
for Losses caused by its own gross negligence or willful misconduct.

          (b) No provision of this Agreement and the Collateral  Documents shall
require the Collateral  Agent to expend or risk its own funds or otherwise incur
any financial  liability in the  performance  of any of its duties  hereunder or
under  the  Collateral  Documents  or in the  exercise  of any of its  rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate  indemnity  against such risk or  liability is not  reasonably
assured to it.

          (c) THE COLLATERAL AGENT SHALL HAVE NO LIABILITY  (WHETHER SOUNDING IN
TORT,  CONTRACT OR OTHERWISE) FOR LOSSES IN CONNECTION WITH,  ARISING OUT OF, OR
IN ANY WAY  RELATED TO,  PERFORMANCE  BY THE  COLLATERAL  AGENT UNDER ANY OF THE
COLLATERAL DOCUMENTS AND/OR THE RELATIONSHIP  ESTABLISHED BY THIS AGREEMENT,  OR
ANY ACT,  OMISSION OR EVENT  OCCURRING  IN  CONNECTION  THEREWITH,  UNLESS IT IS
DETERMINED  BY A FINAL AND  NONAPPEALABLE  JUDGMENT OF A COURT OF THE  COMPETENT
JURISDICTION  THAT IS BINDING ON THE COLLATERAL  AGENT THAT SUCH LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT OR ITS OFFICERS,
DIRECTORS,  AGENTS, EMPLOYEES AND REPRESENTATIVES  CONSTITUTING GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.

          (d) WITHOUT  PREJUDICE  TO ANY OTHER  PROVISION OF THIS SECTION 6, THE
COLLATERAL  AGENT AND THE ISSUER AGREE THAT THE TRUSTEE  SHALL HAVE NO LIABILITY
TO THE COLLATERAL  AGENT OR THE ISSUER  (WHETHER  SOUNDING IN TORT,  CONTRACT OR
OTHERWISE)  HEREUNDER,  EXCEPT IN ITS CAPACITY AS TRUSTEE UNDER, AND AS PROVIDED
FOR IN, THE INDENTURE.

     SECTION 7. ILLEGALITY; NO INCONSISTENCY.

     Nothing in this  Agreement or the  Collateral  Documents  shall require the
Collateral  Agent to take any  action  which  may be  inconsistent  with,  or in
violation of: (i) any laws,  rules or regulations  in force in the  jurisdiction
where the  Collateral  Agent is located,  or (ii) any other  agreement  that the
Collateral Agent has entered into pursuant to this Agreement.

     SECTION 8. MISCELLANEOUS PROVISIONS.

          (a) Notices. All notices, approvals,  comments or other communications
required or desired to be given  hereunder  shall be in writing and delivered in
person or mailed by certified  mail or courier,  postage  prepaid,  addressed as
follows, or by facsimile transmission, and shall be deemed given when received:

         If to the Trustee:

         The Bank of New York
         101 Barclay Street
         New York, New York  10286
         Attention: Global Finance Unit
         Fax:  (212) 235-2530

         If to the Collateral Agent:

         U.S. Bank National Association 555 S.W. Oak Street Portland, Oregon
         97204 Attention: Cheryl Nelson Fax: (503) 275-5738

         If to the Issuer:

         Kronos International, Inc.
         5430 LBJ Freeway
         Suite 1700
         Dallas, Texas  75420
         Attention:  Robert D. Graham
         Fax:  (972) 450-4289

          (b) Severability.  The provisions of this Agreement are severable, and
if any clause or provision shall be held invalid,  illegal or  unenforceable  in
whole or in part in any jurisdiction,  then such invalidity or  unenforceability
shall  affect in that  jurisdiction  only  such  clause  or  provision,  or part
thereof,  and shall not in any manner  affect  such clause or  provision  in any
other  jurisdiction  or any other clause or  provision of this  Agreement in any
jurisdiction.

          (c) Headings.  The headings in this  Agreement  have been inserted for
convenience of reference  only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.

          (d) Counterpart Originals. This Agreement may be signed in two or more
counterparts,  each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement.

          (e) Amendments.  This Agreement may be changed, waived,  discharged or
terminated only by an instrument in writing signed by all of the parties hereto.

          (f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER  THE  LAWS OF THE  STATE  OF NEW  YORK  AND ANY  DISPUTE  ARISING  OUT OF,
CONNECTED  WITH,  RELATED  TO, OR  INCIDENTAL  TO THE  RELATIONSHIP  ESTABLISHED
BETWEEN THE TRUSTEE AND THE COLLATERAL  AGENT IN CONNECTION WITH THIS AGREEMENT,
AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE  WITH  THE  INTERNAL  LAWS  (AS  OPPOSED  TO THE  CONFLICTS  OF  LAWS
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.

          (g) Submission to Jurisdiction. Any suit, action or proceeding against
the Trustee, the Issuer or the Collateral Agent or their respective  properties,
assets or revenues with respect to this Agreement (a "Related  Proceeding")  may
be brought in any federal or state court in the  Borough of  Manhattan,  City of
New York,  State of New  York,  and any  appellate  court  thereof.  Each of the
Issuer, the Trustee and the Collateral Agent hereby irrevocably  consents to the
jurisdiction of each such court for the purposes of any Related Proceeding,  and
irrevocably waives, to the fullest extent it may effectively and lawfully do so,
any objection to the laying of venue of any Related Proceeding in any such court
and the  defense of an  inconvenient  forum to the  maintenance  of any  Related
Proceeding in any such court. Each of the Issuer, the Trustee and the Collateral
Agent  further  submits to the  jurisdiction  of the courts of its own corporate
domicile in any Related Proceeding.

          (h)  Incorporation  by Reference.  All of the rights,  protections and
privileges  granted to the  Trustee  under the  Indenture  are  incorporated  by
reference  herein and shall inure to the benefit of the Collateral Agent herein;
provided,  however,  that in the event  there is an  inconsistency  or  conflict
between this Agreement and the Indenture,  this Agreement shall govern (it being
understood  that this proviso is intended  solely to resolve  conflicts  between
this  Agreement and the Indenture  with respect to the rights of the  Collateral
Agent  under  this  Agreement,  and shall  not in any way  modify,  diminish  or
otherwise affect the rights,  protections and privileges  granted to the Trustee
under the Indenture).

                           [Signature Pages to Follow]

<PAGE>

          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.

                                      THE BANK OF NEW YORK,
                                      Not in its  individual  capacity but
                                      solely as Trustee under the Indenture

                                      By:/s/ Luis Perez
                                         --------------------------
                                      Name:  Luis Perez
                                      Title: Assistant Vice President

                                      U.S. Bank National Association
                                      as Collateral Agent

                                      By:/s/ Cheryl K. Nelson
                                             --------------------
                                      Name:  Cheryl K. Nelson
                                      Title:  Vice President

                                      Solely for the purposes of Sections 2, 5,
                                      6 and 8 hereof:

                                      KRONOS INTERNATIONAL, INC.,
                                      as Issuer

                                      By:  /s/ John St. Wrba
                                           -----------------
                                           Name:  John St. Wrba
                                           Title:  Vice President and
                                                   Assistant TreasurerSECURITY OVER SHARES AGREEMENT

THIS AGREEMENT is made on 11 April 2006

BETWEEN

(1)  THE BANK OF NEW YORK of 101 Barclay  Street,  21W, New York, New York 1028,
     U.S.A.  and fax number +1 212 235 2541,  as trustee  for the Holders on the
     terms and conditions set out in the Indenture and the Notes (the "Trustee",
     which  expression  shall include any person for the time being appointed as
     trustee, or as an additional trustee, for the purposes of the Indenture and
     the Notes); and

(2)  KRONOS INTERNATIONAL,  INC. (the "Chargor") having its registered office at
     2711 Centreville Road, Suite 400, Wilmington, Delaware 19808, U.S.A.

IT IS AGREED as follows:

1.   DEFINITIONS AND INTERPRETATION

1.1  In this Agreement:

     "Additional Notes" has the meaning given to it in the Indenture.

     "Articles"  means the articles of association  of the Company  delivered to
     the Trustee or to solicitors acting for the Trustee on or about the date of
     execution of this Agreement.

     "Business  Day"  means a day (other  than a Saturday  or a Sunday) on which
     banks are open for general business in London and New York.

     "Charged Portfolio" means the Shares and the Related Assets.

     "Collateral Agent Agreement" has the meaning given to it in the Indenture.

     "Collateral  Rights"  means all rights,  powers and remedies of the Trustee
     provided by this Agreement or, in connection with this Agreement, by law.

     "Company" means Kronos Limited, a company incorporated in England and Wales
     (registered  no.  02442679)  whose  registered  office is at Barons  Court,
     Manchester Road, Wilmslow, Cheshire SK9 1BQ.

     "Current  Shares" means the shares in the share capital of the Company held
     by the Chargor as identified in Schedule 1 to this Agreement.

     "Event of Default" has the meaning given to it in the Indenture.

     "High Yield Documents" means the Purchase Agreement,  the Indenture and the
     Notes,  together  with  all  other  documents  issued  or  entered  into in
     connection therewith including, without limitation, the Security Documents,
     the Collateral Agent Agreement and the Registration Rights Agreement.

     "Holders" has the meaning given to it in the Indenture.

     "Indenture"  means an indenture dated 11 April 2006 between the Trustee and
     the Chargor.

     "Initial  Purchaser" means Deutsche Bank AG London as initial  purchaser of
     the Notes under the terms of the Purchase Agreement.

     "New Shares" means any shares in the share capital of the Company which are
     held by, or held to the order or on behalf  of the  Chargor  excluding  any
     Current Shares and any shares which are Related Assets.

     "Notes" means the 6.5% Senior  Secured Notes due 2013 issued by the Chargor
     under the  Indenture,  any global or other notes issued in exchange for the
     Notes  under  the  terms  of the  Registration  Rights  Agreement  and  the
     Additional Notes (if any).

     "Pensions  Notice"  means a  contribution  notice  or a  financial  support
     direction issued by the Pensions Regulator under the Pensions Act 2004.

     "Purchase  Agreement"  means an  agreement  dated 5 April 2006  between the
     Chargor and the Initial Purchaser.

     "Registration  Rights  Agreement"  has  the  meaning  given  to it  in  the
     Indenture.

     "Related Assets" means all dividends,  interest and other monies payable in
     respect  of the Shares  and all other  rights,  benefits  and  proceeds  in
     respect of or derived from the Shares (whether by way of redemption, bonus,
     preference, option, substitution, conversion or otherwise).

     "Secured  Obligations" means all obligations owing by the Chargor under the
     High Yield Documents to the Holders or to the Trustee  (whether for its own
     account  or as  trustee  for  the  Holders),  whether  principal,  premium,
     interest or otherwise,  present or future (and  including any obligation in
     respect of any further advances made thereunder), actual or contingent (and
     whether incurred by the Chargor alone or jointly,  and whether as principal
     or surety or in some other capacity).

     "Security Documents" has the meaning given to it in the Indenture.

     "Shares"  means the  Current  Shares and any New Shares in respect of which
     the Chargor has delivered the share certificates relating thereto and blank
     stock transfer forms pursuant to Clause 3.3.

1.2  In this Agreement:

     (a)  Unless a contrary  indication appears, a term defined in the Indenture
          has the same meaning when used in this Agreement.

     (b)  The rules of  construction  contained  in the  Indenture  apply to the
          construction of this Agreement.

     (c)  Unless otherwise stated, a "Clause" is a reference to a Clause of this
          Agreement.

     (d)  A reference  to any  agreement  or  instrument  is a reference to that
          agreement or instrument as amended, supplemented or varied.

     (e)  Any  reference  to a "person"  includes  any  person,  firm,  company,
          corporation,   government,   state  or   agency  of  a  state  or  any
          association,  trust or  partnership  (whether  or not having  separate
          legal personality) or two or more of the foregoing.

     (f)  Any  reference to a provision of law is a reference to that  provision
          as amended or re-enacted.

1.3  A  person  who is not a party to this  Agreement  has no  right  under  the
     Contracts  (Rights of Third  Parties)  Act 1999 to enforce any term of this
     Agreement.

2.   COVENANT AND CHARGE

2.1  Pursuant to the terms of the Indenture,  the Chargor shall on demand of the
     Trustee discharge and pay to the Trustee (when due and payable) each of the
     Secured Obligations.

2.2  The Chargor charges the Charged Portfolio, with full title guarantee and by
     way of first  fixed  charge,  in favour of the  Trustee for the payment and
     discharge of all of the Secured Obligations.

3.   DEPOSIT OF CERTIFICATES AND NOTICES

3.1  The Chargor shall on the date of this  Agreement  deposit (or procure there
     to be deposited) with the Trustee or solicitors  acting for the Trustee all
     certificates and other documents of title to the Current Shares,  and stock
     transfer  forms  (executed  in blank by or on  behalf  of the  Chargor)  in
     respect of the Current Shares.

3.2  The Chargor shall, promptly upon the accrual, offer or issue of any Related
     Assets (in the form of stocks,  shares,  warrants or other  securities)  in
     which the Chargor has a  beneficial  interest,  procure the delivery to the
     Trustee or solicitors  acting for the Trustee of (a) all  certificates  and
     other  documents of title  representing  those Related  Assets and (b) such
     stock transfer forms or other instruments of transfer (executed in blank by
     or on behalf of the  Chargor)  in  respect of those  Related  Assets as the
     Trustee may request.

3.3  To the extent  necessary to comply with its  obligations  under Clause 5.3,
     the Chargor  shall  procure that all  certificates  and other  documents of
     title  relating  to any New Shares and such stock  transfer  forms or other
     instruments of transfer  (executed in blank by or on behalf of the Chargor)
     as the Trustee may request in respect of such New Shares are  delivered  to
     the Trustee or solicitors acting for the Trustee.

3.4  The Chargor shall procure that:

     (a)  (save with the Trustee's  prior  written  consent) any increase in the
          issued share capital of the Company  after the date of this  Agreement
          is issued to the Chargor; and

     (b)  promptly upon any such issue,  to the extent  necessary to comply with
          its  obligations  under Clause 5.3, such Related  Assets or New Shares
          (as  the  case  may  be) are  charged  in  favour  of the  Trustee  in
          accordance with Clause 3.2 or Clause 3.3, respectively.

3.5  The Chargor shall procure that:

     (a)  a notice  substantially in the form set out in Schedule 2 is delivered
          to the  Company  (a) on the date of  execution  of this  Agreement  in
          respect of the  Current  Shares and (b) on the date of every  occasion
          when New  Shares  are  charged in favour of the  Trustee  pursuant  to
          Clause 3.3 in respect of such New Shares; and

     (b)  the Company delivers  acknowledgement of receipt of such notice to the
          Trustee on the date hereof (in the case of the notice  relating to the
          Current Shares) and within 5 Business Days of receiving such notice in
          relation to any New Shares.

4. VOTING RIGHTS AND DIVIDENDS

     4.1  At any time whilst there is no Event of Default outstanding unremedied
          or unwaived, the Chargor shall be entitled to:

          (a)  receive all dividends, interest and other monies arising from the
               Charged Portfolio; and

          (b)  exercise all voting  rights in relation to the Charged  Portfolio
               provided  that the Chargor  shall not exercise such voting rights
               in any manner,  or otherwise permit or agree to any (i) variation
               of the rights attaching to or conferred by all or any part of the
               Charged  Portfolio,  or (ii) increase in the issued share capital
               of the  Company,  which in the  opinion  of the  Trustee  (acting
               reasonably)  would  prejudice the value of, or the ability of the
               Trustee to realise, the security created by this Agreement.

4.2  At any time whilst there is an Event of Default  outstanding  unremedied or
     unwaived,  the Trustee may, at its discretion,  (in the name of the Chargor
     or  otherwise  and  without  any  further  consent  or  authority  from the
     Chargor):

     (a)  exercise (or refrain from  exercising) any voting rights in respect of
          the Charged Portfolio;

     (b)  apply all  dividends,  interest  and  other  monies  arising  from the
          Charged  Portfolio as though they were the proceeds of sale under this
          Agreement;

     (c)  transfer the Charged Portfolio into the name of such nominee(s) of the
          Trustee as it shall require; and

     (d)  exercise (or refrain from  exercising) the powers and rights conferred
          on or  exercisable  by the legal or  beneficial  owner of the  Charged
          Portfolio,  including the right, in relation to the Company, to concur
          or participate in:

          (i)  the reconstruction,  amalgamation,  sale or other disposal of the
               Company  or any of  its  assets  or  undertaking  (including  the
               exchange,  conversion or reissue of any shares or securities as a
               consequence thereof);

          (ii) the  release,   modification   or  variation  of  any  rights  or
               liabilities attaching to such shares or securities; and

          (iii) the  exercise,  renunciation  or  assignment  of  any  right  to
                subscribe for any shares or securities,

          in each case in the manner and on the terms the  Trustee  thinks  fit,
          and the  proceeds  of any such  action  shall form part of the Charged
          Portfolio.

4.3  Waiver of voting rights by Trustee

     (a)  The Trustee may, in its absolute discretion and without any consent or
          authority  from the Chargor,  by notice to the Chargor  (which  notice
          shall be  irrevocable)  elect to give up the  right  to  exercise  (or
          refrain from  exercising)  all voting rights in respect of the Charged
          Portfolio  conferred  or to be  conferred  on the Trustee  pursuant to
          Clause 4.2.

     (b)  Once a notice has been issued by the Trustee  under  paragraph  (a) of
          this Clause 4.3, on and from the date of such notice the Trustee shall
          cease to have the rights to exercise or refrain from exercising voting
          rights  in  respect  of  the  Charged  Portfolio  conferred  or  to be
          conferred on it pursuant to Clause 4.2 or any other  provision of this
          Agreement and all such rights will be exercisable by the Chargor.  The
          Chargor  shall be  entitled  on and from the date of such  notice,  to
          exercise  all  voting  rights in  relation  to the  Charged  Portfolio
          subject only to the proviso contained in Clause 5.5.

5.   CHARGOR'S REPRESENTATIONS AND UNDERTAKINGS

5.1  Except with the  Trustee's  prior  written  consent,  the Chargor shall not
     (save as permitted under the High Yield Documents):

     (a)  assign or dispose of all or any part of the Charged Portfolio;

     (b)  create, grant or permit to exist (a) any security interest over or (b)
          any restriction on the ability to transfer or realise, all or any part
          of the Charged  Portfolio,  save for: (i) the Company's lien on unpaid
          shares conferred by Regulation 8 of Table A of the Companies (Tables A
          to F)  Regulations  1985 (as in force at the date of this  Agreement);
          and (ii) the  ability of the  directors  of the  Company to decline to
          register  a  transfer  of  shares  as set  out in  article  7.1 of the
          Articles,  provided  that  article 7.2 of the  Articles  continues  to
          apply; or

     (c)  do or (to the extent  within its control)  permit to be done any other
          act which, in the opinion of the Trustee,  would adversely  affect the
          Collateral Rights.

5.2  The Chargor  represents  and warrants to the Trustee and undertakes for the
     duration of this Agreement  that (save as specified or permitted  under the
     High Yield Documents):

     (a)  it is, and will be, the sole legal and beneficial owner of the Charged
          Portfolio  free from any security  interest  except as created by this
          Agreement;

     (b)  it has not sold or  disposed  of, and will not sell or dispose of, the
          benefit of all or any of its rights, title and interest in the Charged
          Portfolio;

     (c)  it has and will have the  necessary  power to enable it to enter  into
          and perform its obligations under this Agreement;

     (d)  this Agreement constitutes its legal, valid and binding obligation;

     (e)  all necessary authorisations to enable it to enter into this Agreement
          have been obtained and are, and will remain, in full force and effect;
          and

     (f)  the  authorised  share capital of the Company as at the date hereof is
          (pound)51,000  and the issued  share  capital of the Company as at the
          date hereof consists of 50,032 ordinary shares of (pound)1.00 each and
          all such shares are fully paid.

5.3  The Chargor  represents  and warrants to the Trustee and undertakes for the
     duration of this Agreement to ensure that, at all times during the duration
     of the  Agreement,  the Charged  Portfolio  represents  65% (to the nearest
     share) but at no time more than 65% of the issued and voting share  capital
     of the Company.

5.4  The Chargor  represents  to the Trustee  that the Shares are fully paid and
     undertakes to pay all calls or other payments due in respect of any part of
     the Charged  Portfolio.  If the Chargor  fails to make any such payment the
     Trustee may make that payment on behalf of the Chargor and any sums so paid
     by the Trustee shall be reimbursed by the Chargor on demand,  together with
     interest on those sums. Such interest shall be calculated from the due date
     up to the actual date of payment (after, as well as before, judgement) at a
     rate equal to 1% per annum in excess of the interest rate applicable to the
     Notes at such time (or if no interest rate is applicable at such time,  the
     most recent interest rate applicable to the Notes).

5.5  The Chargor shall not exercise its voting rights in relation to the Charged
     Portfolio  in any  manner,  or  otherwise  permit or agree to, or concur or
     participate in any (i) variation of the rights attaching to or conferred by
     all or any part of the Charged  Portfolio (ii) increase in the issued share
     capital of any company whose shares are charged  pursuant to this Agreement
     (iii)  exercise,  renunciation  or assignment of any right to subscribe for
     any shares or  securities  or (iv)  reconstruction,  amalgamation,  sale or
     other  disposal  of  any  company  or  any of  the  assets  of any  company
     (including the exchange,  conversion or reissue of any shares or securities
     as a consequence  thereof)  whose shares are charged under this  Agreement,
     which in the opinion of the Trustee  would  prejudice  the value of, or the
     ability of the Trustee to realise,  the security  created by this Agreement
     provided  that the  proceeds  of any such  action  shall  form  part of the
     Charged Portfolio.

5.6  The  Charger  shall  immediately  notify  the  Trustee  if it or any of its
     Subsidiaries receives a Pension Notice.

6.   FURTHER ASSURANCE

6.1  The Chargor shall promptly execute all documents (including  transfers) and
     do all things (including the delivery,  transfer,  assignment or payment of
     all or part of the Charged Portfolio to the Trustee or its nominee(s)) that
     the Trustee may  reasonably  specify for the purpose of (a)  exercising the
     Collateral Rights or (b) securing and perfecting its security over or title
     to all or any part of the Charged Portfolio.

6.2  At any  time  after  the  occurrence  of an  Event  of  Default,  which  is
     continuing  unremedied or unwaived,  the Chargor shall upon demand from the
     Trustee (a) procure the transfer of the Charged  Portfolio into the name of
     the Trustee or its nominee(s), agents or such purchasers as it shall direct
     and (b) execute all  documents and do all other things that the Trustee may
     require to facilitate the realisation of the Charged Portfolio.

6.3  The Trustee  shall only be entitled to transfer or request the  transfer of
     the Charged  Portfolio whilst an Event of Default is continuing  unremedied
     or unwaived.

7.   POWER OF ATTORNEY

7.1  The Chargor, by way of security, irrevocably appoints the Trustee to be its
     attorney and in its name, on its behalf and as its act and deed to execute,
     deliver and perfect all documents  (including  any stock transfer forms and
     other  instruments  of  transfer)  and do all things  that the  Trustee may
     consider to be necessary for (a) carrying out any obligation imposed on the
     Chargor under this Agreement; (b) exercising any of the rights conferred on
     the Trustee by this  Agreement  or by law,  (including,  after the security
     constituted by this Agreement has become  enforceable,  the exercise of any
     right of a legal or a beneficial  owner of the Charged  Portfolio);  or (c)
     preserving the rights conferred on the Trustee by this Agreement or by law.
     The Chargor  shall  ratify and  confirm  all things done and all  documents
     executed by the Trustee in the exercise of that power of attorney.

8.   POWER OF SALE

8.1  After  the  occurrence  of an  Event  of  Default  and  whilst  the same is
     continuing unremedied or unwaived,  the Trustee shall be entitled,  without
     prior notice to the Chargor or prior  authorisation from any court, to sell
     or otherwise  dispose of all or any part of the Charged  Portfolio  (at the
     times, in the manner and on the terms it thinks fit).  Subject to Clause 12
     (Subsequent Interest and Accounts), the Trustee shall apply the proceeds of
     that sale or other  disposal  in paying the costs of that sale or  disposal
     and in or towards the  discharge of the Secured  Obligations  in accordance
     with the terms of the Indenture.

8.2  The power of sale or other  disposal  in  Clause  8.1  shall  operate  as a
     variation and extension of the statutory power of sale under Section 101 of
     the Law of Property Act 1925. The restrictions contained in Sections 93 and
     103 of the Law of Property Act 1925 shall not apply to this Agreement or to
     any  exercise by the Trustee of its right to  consolidate  mortgages or its
     power of sale.

8.3  A  certificate  in writing by an officer or agent of the  Trustee  that any
     power of sale or other  disposal  has  arisen and is  exercisable  shall be
     conclusive  evidence of that fact,  in favour of a purchaser  of all or any
     part of the Charged Portfolio.

9.   RECEIVER

9.1  The Trustee may by writing  (acting  through an  authorised  officer of the
     Trustee)  without  notice to the Chargor  appoint one or more persons to be
     receiver  of the  whole or any part of the  Charged  Portfolio  (each  such
     person  being (a) entitled to act  individually  as well as jointly and (b)
     for all purposes deemed to be the agent of the Chargor) if:

     (a)  an Event of Default is continuing unremedied or unwaived;

     (b)  a  petition  or   application  is  presented  for  the  making  of  an
          administration order in relation to the Chargor;

     (c)  the  Chargor  gives  written  notice of its  intention  to  appoint an
          administrator  to the Chargor;  or any person (other than the Chargor)
          gives written notice of its intention to appoint an  administrator  to
          the Chargor and, in the reasonable opinion of the Trustee,  such other
          person is not acting frivolously or vexatiously in so doing; or

     (d)  the Chargor requests the appointment of a receiver.

9.2  In addition to the powers of the  Trustee  conferred  by Clause 8 (Power of
     Sale), each person appointed pursuant to Clause 9.1 shall have, in relation
     to the part of the Charged  Portfolio in respect of which he was appointed,
     all the powers (a)  conferred by the Law of Property Act 1925 on a receiver
     appointed  under that Act,  (b) of an  administrative  receiver  set out in
     Schedule 1 to the  Insolvency  Act 1986  (whether  or not such person is an
     administrative  receiver)  and (c) (if  such  person  is an  administrative
     receiver) all the other powers exercisable by an administrative receiver in
     relation to the Chargor by virtue of the Insolvency Act 1986.

10.  EFFECTIVENESS OF COLLATERAL

10.1 The collateral  constituted  by this  Agreement and the  Collateral  Rights
     shall be cumulative, in addition to and independent of every other security
     which the Trustee may at any time hold for the Secured  Obligations  or any
     rights,  powers and remedies provided by law. No prior security held by the
     Trustee  over the whole or any part of the  Charged  Portfolio  shall merge
     into the collateral constituted by this Agreement.

10.2 This  Agreement  shall  remain  in full  force and  effect as a  continuing
     arrangement unless and until the Trustee discharges it.

10.3 No failure to  exercise,  nor any delay in  exercising,  on the part of the
     Trustee,  any  Collateral  Right shall  operate as a waiver,  nor shall any
     single or partial  exercise of a  Collateral  Right  prevent any further or
     other exercise of that or any other Collateral Right.

10.4 If, at any time,  any  provision of this  Agreement is or becomes  illegal,
     invalid or unenforceable in any respect under the law of any  jurisdiction,
     neither  the  legality,   validity  or   enforceability  of  the  remaining
     provisions of this Agreement nor the legality,  validity or  enforceability
     of such provision under the law of any other  jurisdiction  will in any way
     be affected or impaired.

10.5 The  Trustee  shall,  at the request  and cost of the  Chargor,  cancel the
     security granted by this Agreement,  and execute a release, in each case in
     respect of:

     (a)  any portion of the Charged Portfolio upon the disposal of such portion
          of the Charged  Portfolio,  provided  that such  disposal is permitted
          under the terms of the Indenture;

     (b)  the whole of the Charged Portfolio upon the Secured  Obligations being
          discharged in full; and

     (c)  the  whole  of the  Charged  Portfolio  in the  event  of the  Secured
          Obligations being defeased in full in accordance with section 8 of the
          Indenture,

     (d)  any  such  release  to  be  without   recourse  to,  and  without  any
          representations or warranties by, the Trustee.

10.6 None of the Trustee,  its nominee(s) or any receiver  appointed pursuant to
     this Agreement shall be liable by reason of (a) taking any action permitted
     by this  Agreement  or (b) any  neglect or default in  connection  with the
     Charged Portfolio or (c) the taking possession or realisation of all or any
     part of the Charged  Portfolio,  except in the case of gross  negligence or
     wilful default upon its part.

11.  RIGHT OF APPROPRIATION

     To the extent  that any of the  Charged  Portfolio  constitutes  "financial
     collateral" and this Agreement and the obligations of the Chargor hereunder
     constitute a "security financial  collateral  arrangement" (in each case as
     defined in, and for the purposes of, the Financial Collateral  Arrangements
     (No. 2) Regulations 2003 (SI 2003 No. 3226) (the "Regulations") the Trustee
     shall  have the  right  to  appropriate  all or any part of such  financial
     collateral  in or towards  discharge of the Secured  Obligations.  For this
     purpose,  the parties agree that the value of such financial  collateral so
     appropriated  shall be the  market  price of the Shares  determined  by the
     Trustee by  reference  to a public  index or by such  other  process as the
     Trustee may select, including independent valuation. The parties agree that
     the method of valuation  provided for in this Agreement shall  constitute a
     commercially  reasonable  method  of  valuation  for  the  purposes  of the
     Regulations.

12.  SUBSEQUENT INTERESTS AND ACCOUNTS

12.1 If the  Trustee at any time  receives  notice of any  subsequent  mortgage,
     assignment,  charge  or  other  interest  affecting  all or any part of the
     Charged  Portfolio,  all payments made by the Chargor to the Trustee or any
     of the Holders  after that time shall be treated as having been credited to
     a new account of the Chargor and not as having been applied in reduction of
     the Secured Obligations as at the time when the Trustee received notice.

12.2 All monies  received,  recovered  or  realised  by the  Trustee  under this
     Agreement (including the proceeds of any conversion of currency) may in its
     discretion  be credited to and held in any suspense or  impersonal  account
     (bearing  a  commercially   reasonable  rate  of  interest)  pending  their
     application  from time to time in or towards  the  discharge  of any of the
     Secured Obligations in accordance with the terms of the Indenture.

13.  COSTS AND EXPENSES

     The  Chargor  shall,  within 3  Business  Days of  demand  by the  Trustee,
     reimburse  the  Trustee  on a full  indemnity  basis  for  all  losses  and
     reasonable  costs and expenses  (including legal fees, stamp duties and any
     value added tax)  incurred in  connection  with (a) the  execution  of this
     Agreement or otherwise in relation to it, (b) the perfection or enforcement
     of the collateral  constituted by this Agreement or (c) the exercise of any
     Collateral Right, together with interest from the date the Trustee notified
     the  Chargor  of the costs and  expenses  to the date of  payment at a rate
     equal to 1% per annum in  excess of the  interest  rate  applicable  to the
     Notes at such time (or if no interest rate is applicable at such time,  the
     most recent interest rate applicable to the Notes).

14.  CURRENCY CONVERSION

     For  the  purpose  of or  pending  the  discharge  of any  of  the  Secured
     Obligations  the  Trustee  may convert  any money  received,  recovered  or
     realised  or  subject to  application  by it under  this  Agreement  to the
     currency in which the Secured Obligations are due to be discharged: and any
     such  conversion  shall be effected at the Trustee's  spot rate of exchange
     for the time  being  for  obtaining  such  other  currency  with the  first
     currency.

15.  NOTICES

     Any  communication  to be  made  by  one  person  to  another  under  or in
     connection  with this Agreement shall be made in writing in accordance with
     those  terms of the  Notices  provision  in section  13.2 of the  Indenture
     applicable to notices and  communications to persons other than Holders and
     shall be deemed to have been duly given in accordance  with the  provisions
     of such section 13.2 within the times prescribed in such section 13.2.

16.  SUCCESSORS

     This Agreement  shall remain in effect despite any  amalgamation  or merger
     (however effected)  relating to the Trustee;  and references to the Trustee
     shall  include any  assignee or  successor  in title of the Trustee and any
     person  who,  under  the  laws  of its  jurisdiction  of  incorporation  or
     domicile,  has assumed the rights and obligations of the Trustee under this
     Agreement or to which,  under such laws,  those rights and obligations have
     been transferred.

17.  GOVERNING LAW AND JURISDICTION

17.1 Governing Law

     This Agreement is governed by English law.

17.2 Jurisdiction

     (a)  The  courts of  England  have  exclusive  jurisdiction  to settle  any
          dispute arising out of or in connection with this Agreement (including
          a dispute  regarding the  existence,  validity or  termination of this
          Agreement).

     (b)  This Clause 17.2 is for the benefit of the Trustee only.

<PAGE>

IN WITNESS  WHEREOF this  Agreement has been signed on behalf of the Trustee and
executed as a deed by the Chargor and is intended to be and is hereby  delivered
by it as a deed on the date specified above.

The Trustee

THE BANK OF NEW YORK

By:                      /s/ Luis Perez
                         ----------------------------

Name:                     Luis Perez

Title:                   Assistant Vice President

The Chargor

EXECUTED as a DEED

by KRONOS INTERNATIONAL, INC.

By:                      /s/ John St. Wrba
                         ----------------------------

Name:                    John St. Wrba

Title:                   Vice President and Assistant Treasurer

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