Document:

Exhibit
10.4

 

STOCK SUBSCRIPTION
AGREEMENT

 

STOCK SUBSCRIPTION
AGREEMENT, dated as of April 7, 2004, between CDRV Investors, Inc., a Delaware
corporation (the “Company”), and Clayton, Dubilier & Rice Fund VI
Limited Partnership, a Cayman Islands exempted limited partnership (together
with any other investment vehicle managed by Clayton, Dubilier & Rice,
Inc., the “Purchaser”).

 

W I  T  N  E  S
S  E  T  H:

 

WHEREAS, pursuant to a
Stock Purchase Agreement, dated as of February 15, 2004, as amended from time
to time (the “Stock Purchase Agreement”), among Merck KGaA, Merck
Holding GmbH, VWR International Holding Europe GmbH, EMD Chemicals Inc. and
CDRV Acquisition Corporation, an indirect, wholly-owned subsidiary of the
Company (“AcquisitionCo”), AcquisitionCo has agreed to acquire all of
the outstanding capital stock of VWR International Corporation, a Delaware
corporation (“VWR”), and all of the outstanding equity ownership
interests of VWR International Immobilien GmbH, a German private limited
liability company, not held directly or indirectly by VWR (such transaction,
the “Acquisition”);

 

WHEREAS, concurrently
with the closing of the Acquisition, the Company will issue 4,800,000 shares of
its common stock, par value $0.01 per share (the “Common Stock”), to the
Purchaser, and up to an aggregate of 700,000 shares of Common Stock to certain
co-investors of the Purchaser (the “Co-Investors”), pursuant to stock
subscription agreements between the Company, on the one hand, and each of the
Purchaser and the Co-Investors, on the other hand (collectively, the “Stock
Subscription Agreements”);

 

WHEREAS, the Purchaser
desires to subscribe for and purchase, and the Company desires to sell to the
Purchaser, not less than 4,800,000 shares of Common Stock, at a subscription price
of $100.00 per share;

 

NOW, THEREFORE, to
implement the foregoing and in consideration of the mutual agreements contained
herein, the parties hereto hereby agree as follows:

 

1.                                      
Purchase and Sale
of Common Stock.

 

(a)                                 
Purchase of Common
Stock. 
Subject to all of the terms and conditions of this Agreement, the Purchaser
hereby subscribes for and shall purchase, and the Company shall sell to the
Purchaser, 4,800,000 shares of Common Stock (the “Shares”), at a
subscription price of $100.00 per Share, at the Closing provided for in Section
2(a) hereof.

 

(b)                                
Consideration.  Subject to all of the terms and
conditions of this Agreement, the Purchaser shall deliver to the Company at the
Closing referred to in Section 2(a) hereof immediately available funds in the
amount of $480,000,000.

 

2.                                      
Closing.

 

(a)                                 
Time and Place.  Except as otherwise mutually
agreed by the Company and the Purchaser, the Closing (the “Closing”) of
the transaction contemplated by this Agreement shall be held at the offices of
Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York at 9:00 a.m.
(New York time) on April 7, 2004.

 

(b)                                
Delivery by the
Company.  At
the Closing, the Company shall deliver to the Purchaser a stock certificate
registered in such Purchaser’s name and representing the Shares, which
certificate shall bear the legend set forth in Section 4(b).

 

(c)                                 
Delivery by the
Purchaser. 
At the Closing, the Purchaser shall deliver to the Company the consideration
referred to in Section 1(b).

 

3.                                      
Management Rights.  For so long as the Purchaser owns
any shares of the Common Stock of the Company and there has not been an
underwritten public offering of the Common Stock (other than a Special
Registration, as such term is defined in the Registration and Participation
Agreement referred to in Section 4(g)):

 

(a)                                 
Election of
Directors. 
The Company shall vote, or shall cause the shares of its subsidiaries to be
voted, for the election of persons designated by the Purchaser (“Purchaser’s
Designees”) to serve as directors of the Company and each of CDRV Holdings,
Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Holdings”),
AcquisitionCo, CDRV Delaware, Inc., a Delaware corporation and wholly-owned subsidiary
of Holdings, CDRV International Holdings I, Inc., a Delaware corporation and
wholly-owned subsidiary of Holdings (to be renamed CDRV International Holdings,
Inc.) and CDRV International Holdings II, Inc., a Delaware corporation and
wholly-owned subsidiary of AcquisitionCo (to be renamed VWR International
Holdings, Inc.) and their respective subsidiaries and successors in interest
(collectively, the “VWR Companies”).  If at any time a vacancy is
created on the Board of Directors of the Company or any of the VWR Companies,
by reason of the death, removal or resignation of any of Purchaser’s Designees,
the Company shall take such action as may be required promptly to fill such
vacancy with, and shall vote, or shall cause the shares of its subsidiaries to
be voted, for the election of, a person designated by the Purchaser to fill
such position.

 

(b)                                
Right of
Consultation. 
The Purchaser shall have the right, and the Company shall, and shall cause each
of the VWR Companies to, grant to the Purchaser the right, to consult with and
advise the management of the Company

 

and each of the VWR Companies, at any time or from
time to time, on all matters relating to the business, assets and operations of
the Company and the VWR Companies, including, without limitation, significant
changes in management personnel and compensation or employee benefits,
introduction of new products or new lines of business, expansion into new
geographical regions, acquisitions of any corporation, partnership or other
business entity or any division thereof or equity interest therein, important
acquisitions or dispositions of property, plant and equipment, significant
research and development programs, the purchase or sale of important patents,
trademarks, licenses and concessions, and the proposed compromise of any
significant litigation.

 

(c)                                 
Observation Rights.  The Purchaser shall have the
right, and the Company shall, and shall cause each of the VWR Companies to,
grant to the Purchaser the right, to have its representatives (in addition to
its representatives that are directors of such entities) attend meetings of the
Boards of Directors of the Company and each of the VWR Companies, and any
committees of any such Boards of Directors.  The Company shall give, or
shall cause each of the VWR Companies to give, as appropriate, to the Purchaser
(i) at least three days’ notice of each regular meeting of the Board of
Directors of the Company and each of the VWR Companies, (ii) such notice
as is necessary under the circumstances to enable the Purchaser’s
representatives to attend each special or emergency meeting of the Board of
Directors of the Company and each of the VWR Companies, (iii) on or
prior to the date of each meeting of the Board of Directors of the Company and
each of the VWR Companies, all information given to the directors at such
meeting and (iv) within 90 days following each meeting of the Board of
Directors of the Company and each of the VWR Companies, copies of the minutes
of such meeting.

 

(d)                                
Inspection and
Access.  The
Company shall provide to the Purchaser true and correct copies of all monthly,
quarterly and annual financial and operating reports and budgets prepared by or
on behalf of the Company and each of the VWR Companies, and such other
documents, reports, financial data and other information as the Purchaser may
reasonably request.  The Company shall permit any authorized
representatives designated by the Purchaser to visit and inspect any of the
properties of the Company or any of its subsidiaries, including its and their
books of account (and to make copies and take extracts therefrom), and to
discuss its and their affairs, finances and accounts with its and their
officers and their current and prior independent public accountants (and by
this provision the Company authorizes such accountants to discuss with such
representatives the affairs, finances and accounts of the Company and its
subsidiaries, whether or not a representative of the Company is present), all
at such reasonable times and as often as the Purchaser may reasonably request.

 

4.                                      
Purchaser’s
Representations, Warranties and Covenants.

 

(a)                                 
Investment
Intention. 
The Purchaser represents and warrants that it is acquiring the Shares solely
for its own account for investment and not with a view to or for sale in
connection with any distribution thereof in any transaction or series of
transactions that would be in violation of the securities laws of the United
States or any state thereof.  The Purchaser agrees that it will not,
directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any of the Shares (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of any Shares), except in compliance with
the Securities Act of 1933, as amended (the “Securities Act”), and the
rules and regulations of the Securities and Exchange Commission (the “Commission”)
thereunder, and in compliance with applicable state securities or “blue sky”
laws.  The Purchaser further understands, acknowledges and agrees that
none of the Shares may be transferred, sold, pledged, hypothecated or otherwise
disposed of unless (i) (A) such disposition is pursuant to an
effective registration statement under the Securities Act, (B) the
Purchaser shall have delivered to the Company an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Company, to the
effect that such disposition is exempt from the provisions of Section 5 of the
Securities Act, or (C) a no-action letter from the Commission,
reasonably satisfactory to the Company, shall have been obtained with respect
to such disposition and (ii) such disposition is pursuant to
registration under any applicable state securities laws or an exemption
therefrom.

 

(b)                                
Legend.  The Purchaser acknowledges that
the certificate or certificates representing the Shares shall bear the
following legend:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES
LAWS AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN OPINION OF
COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF SUCH ACT OR (C) A NO-ACTION LETTER FROM THE

 

SECURITIES AND EXCHANGE COMMISSION, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT
TO SUCH DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
THEREFROM.”

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
ENTITLED TO THE BENEFITS OF AND ARE BOUND BY THE OBLIGATIONS SET FORTH IN A
REGISTRATION AND PARTICIPATION AGREEMENT, DATED AS OF APRIL 7, 2004, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF WHICH IS LOCATED AT
THE PRINCIPAL OFFICE OF THE COMPANY.”

 

(c)                                 
Securities Law
Matters. 
The Purchaser acknowledges receipt of advice from the Company that (i)
the Shares have not been registered under the Securities Act or qualified under
any state securities or “blue sky” laws, (ii) it is not anticipated that
there will be any public market for the Shares, (iii) the Shares must be
held indefinitely and the Purchaser must continue to bear the economic risk of
the investment in the Shares unless the Shares are subsequently registered
under the Securities Act and such state laws or an exemption from registration
is available, (iv) Rule 144 promulgated under the Securities Act (“Rule
144”) is not presently available with respect to the sales of any
securities of the Company and the Company has made no covenant to make Rule 144
available, (v) when and if the Shares may be disposed of without
registration in reliance upon Rule 144, such disposition can be made only in
limited amounts in accordance with the terms and conditions of such Rule, if
the Purchaser is deemed to be an “affiliate” of the Company within the meaning
of Rule 144, (vi) the Company does not plan to file reports with the
Commission or make public information concerning the Company available unless
required to do so by law or by the terms of its financing agreements, (vii)
if the exemption afforded by Rule 144 is not available, sales of the Shares may
be difficult to effect because of the absence of public information concerning
the Company, (viii) a restrictive legend in the form heretofore set
forth shall be placed on the certificates representing the Shares and (ix)
a notation shall be made in the appropriate records of the Company indicating
that the Shares are subject to restrictions on transfer set forth in this
Agreement and, if the Company should in the future engage the services of a
stock transfer agent, appropriate stop-transfer restrictions will be issued to
such transfer agent with respect to the Shares.

 

(d)                                
Compliance with
Rule 144. 
If any of the Shares are to be disposed of in accordance with Rule 144, the
Purchaser shall transmit to the Company an executed copy of Form 144 (if
required by Rule 144) no later than the time such form is required to be
transmitted to the Commission for filing and such other documentation as the
Company may reasonably require to assure compliance with Rule 144 in connection
with such disposition.

 

(e)                                 
Ability to Bear
Risk.  The
Purchaser represents and warrants that (i) the financial situation of
the Purchaser is such that it can afford to bear the economic risk of holding
the Shares for an indefinite period and (ii) the Purchaser can afford to
suffer the complete loss of its investment in the Shares.

 

(f)                                   
Access to
Information. 
The Purchaser represents and warrants that (i) it has participated in
the preparation and negotiation of the Acquisition Agreement and has carefully
reviewed all of the materials furnished to it in connection with the
transactions contemplated thereby and hereby, (ii) it has been granted
the opportunity to ask questions of, and receive answers from, representatives
of the Company concerning the terms and conditions of the purchase of the
Shares and to obtain any additional information that it deems necessary to
verify the accuracy of the information contained in such material, and (iii)
its knowledge and experience in financial and business matters is such that it
is capable of evaluating the risks of the investment in the Shares.

 

(g)                                
Registration and
Participation Agreement.  The Purchaser acknowledges and agrees that it shall be entitled
to the rights and subject to the obligations created under the Registration and
Participation Agreement, dated as of the date hereof, among the Company, the
Purchaser, the Co-Investors and the other parties thereto (the “Registration
and Participation Agreement”), and that the Shares shall constitute
Registrable Securities (as defined in the Registration and Participation
Agreement) thereunder.  The Purchaser agrees that, in the event that the
Company files a registration statement under the Securities Act with respect to
an underwritten public offering of any shares of its capital stock, the
Purchaser will not effect any public sale or distribution of any shares of the
Common Stock (other than as part of such underwritten public offering) during
the Holdback Period (as defined in the Registration and Participation
Agreement).

 

5.                                      
Representations
and Warranties of the Company.  The Company represents and warrants to the
Purchaser that (a) the Company has been duly incorporated and is in good
standing under the laws of State of Delaware, (b) this Agreement has
been duly authorized, executed and delivered by the Company and constitutes a
valid and legally binding obligation of the Company enforceable against the
Company in accordance with its terms, (c) the Shares, when issued and
delivered in accordance with the terms hereof, will be duly authorized, validly
issued, fully paid and nonassessable, and free and clear of any liens or
encumbrances other than those created pursuant to this Agreement or otherwise
in connection with the transactions contemplated hereby and (d) the
authorized capital stock of the Company consists of 7,000,000 shares of Common

 

Stock, of which 5,500,000 shares of Common Stock will
be issued and outstanding upon the consummation of the transactions
contemplated by the Stock Subscription Agreements.  The Company fully
anticipates that the Acquisition will be consummated promptly following the
Closing.

 

6.                                      
Covenants of the
Company.

 

(a)                                 
Rule 144.  The Company agrees that at all
times after it has filed a registration statement pursuant to the requirements
of the Securities Act or Section 12 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), relating to any class of equity securities
of the Company (other than (i) the registration of equity securities of
the Company and/or options in respect thereof to be offered primarily to
directors and members of management and employees of the Company or its direct
or indirect subsidiaries, or (ii) the registration of equity securities
and/or options in respect thereof solely on Form S-4 or S-8 or any successor
form), it will file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder (or, if the Company is not required to file such reports,
it will, upon the request of the Purchaser, make publicly available such
information as necessary to permit sales pursuant to Rule 144 under the
Securities Act), and will take such further action as the Purchaser may
reasonably request, all to the extent required from time to time to enable the
Purchaser to sell Shares without registration under the Securities Act within the
limitation of the exemptions provided by (x) Rule 144, as such Rule may
be amended from time to time, or (y) any successor rule or regulation
hereafter adopted by the Commission.

 

(b)                                
State Securities
Laws.  The
Company agrees to use its best efforts to comply with all state securities or
“blue sky” laws applicable to the sale of the Shares to the Purchaser.

 

(c)                                 
Expenses.  Whether or not the Closing
occurs, the Company hereby agrees to pay all expenses relating to this
Agreement, including but not limited to (i) the cost of printing,
reproducing and distributing this Agreement, the Shares and any associated
documents, (ii) the Purchaser’s reasonable out-of-pocket expenses
incurred in connection with this Agreement, the Shares and any associated
documents, (iii) the reasonable fees and disbursements of the
Purchaser’s counsel, (iv) the cost of delivering the Shares purchased at
the Closing, insured to the satisfaction of the Purchaser, to such address as
the Purchaser shall designate, (v) all reasonable out-of-pocket expenses
relating to any amendment or modification of, or any waiver, consent or
preservation of rights under, this Agreement and (vi) all other
expenses, including counsel’s fees, incurred by the Company in connection with
the transactions contemplated by this Agreement or any other agreements or
documents entered into in connection with the Acquisition.

 

7.                                      
Miscellaneous.

 

(a)                                 
Notices.  All notices, demands and other
communications made in connection with this Agreement shall be in
writing.  Any notice or other communication in connection herewith shall
be deemed duly given to any party (i) two business days after it is sent
by express, registered or certified mail, return receipt requested, postage
prepaid or (ii) one business day after it is sent by overnight courier
guaranteeing next day delivery, in each case, to the addresses set forth below:

 

(i)                                    
if to the Company,
to:

 

CDRV Investors, Inc.

1403 Foulk Road, Suite 106

Wilmington, Delaware  19803

Attention:  Secretary

 

(ii)                                 
if to the Purchaser,
to:

 

Clayton, Dubilier & Rice

Fund VI Limited Partnership

1403 Foulk Road, Suite 106

Wilmington, Delaware  19803

Attention:  General Partner

 

Copies of any notice or other communication given
under this Agreement shall also be given to:

 

(i)                                    
Clayton, Dubilier
& Rice, Inc.

375 Park Avenue

New York, New York  10152

Telephone:  (212) 407-5200

Facsimile:  (212) 407-5252

Attention:  Richard J. Schnall

 

and

 

(ii)                                 
Debevoise &
Plimpton LLP

919 Third Avenue

New York, New York  10022

Telephone:  (212) 909-6000

Facsimile:  (212) 909-6836

Attention:  Franci J. Blassberg, Esq.

 

 

(b)                                
Binding Effect;
Benefits. 
This Agreement shall be binding upon and inure to the benefit of the parties to
this Agreement and their respective successors and assigns.  Nothing in
this Agreement, express or implied, is intended or shall be construed to give
any person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.

 

(c)                                 
Waiver; Amendment.

 

(i)                                    
Waiver.  Either party hereto may by
written notice to the other (A) extend the time for the performance of
any of the obligations or other actions of the other under this Agreement, (B)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement and (C) waive or modify performance of any of the
obligations of the other under this Agreement.  Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of either party, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants or agreements contained
herein.  The waiver by either party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any preceding
or succeeding breach and no failure by either party to exercise any right or
privilege hereunder shall be deemed a waiver of such party’s rights or
privileges hereunder or shall be deemed a waiver of such party’s rights to
exercise the same at any subsequent time or times hereunder.

 

(ii)                                 
Amendment.  This Agreement may be amended,
modified or supplemented only by a written instrument executed by the Purchaser
and the Company.

 

(d)                                
Assignability.  Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by the Company or the Purchaser without the prior written
consent of the other party.  Notwithstanding anything to the contrary in
the immediately preceding sentence, the Company may assign this Agreement in
connection with a merger, reorganization or sale, transfer or contribution of
all or substantially all of the assets or stock of the Company to any of its
subsidiaries or affiliates, and, upon the consummation of any such merger,
reorganization, sale, transfer or contribution, such subsidiary or affiliate
shall automatically and without further action assume all of the obligations
and succeed to all the rights of the Company under this Agreement.

 

(e)                                 
Applicable Law.  This Agreement shall be governed
by and construed in accordance with the law of the State of New York,
regardless of the law that might be applied under principles of conflict of
laws to the extent such principles would require or permit the application of
the laws of another jurisdiction.

 

(f)                                   
Section and Other
Headings, etc. 
The section and other headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.

 

(g)                                
Counterparts.  This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall constitute one and the same instrument.

 

[The remainder of
this page is intentionally left blank.]

  

IN WITNESS WHEREOF, the
Company and the Purchaser have duly executed this Agreement by their authorized
representatives as of the date first above written.

 

	
   

  	
  CDRV INVESTORS, INC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ RICHARD J. SCHNALL

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Richard J. Schnall

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CLAYTON, DUBILIER &
  RICE

  FUND VI LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  CD&R Associates VI
  Limited Partnership,

  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  CD&R Investment
  Associates VI, Inc.,

  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ THERESA A. GORE

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Theresa A. Gore

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President,
  Treasurer, and Assistant SecretaryExhibit
10.5

 

VWR
International, Inc. Directors Compensation Policy

 

•                                         
Compensation
Generally. 
For each full calendar year of participation on the Board of Directors (the “Board”) of VWR
International, Inc., an Eligible Director will receive (i) Seventy
Thousand Dollars ($70,000) per year (“Base Compensation”), payable quarterly in
arrears half in cash and half in shares of Common Stock of CDRV Investors,
Inc., the indirect parent of VWR International, (as such terms are defined the
CDRV Investors, Inc. Stock Incentive Plan (the “Plan”)), (ii) Fifteen Thousand
Dollars ($15,000) per year, payable in cash annually in arrears, for service as
the chairperson of the Audit Committee of the Board, and (iii) Ten
Thousand Dollars ($10,000) per year, payable in cash annually in arrears, for
service as the chairperson of any other committee established by the Board,
including but not limited to the Compensation Committee, the Executive
Committee, and the Nominating and Governance Committee.   Any cash
payable to an Eligible Director hereunder shall be paid as soon as reasonably
practicable after the close of the applicable period.  All shares of
Common Stock shall be subject to the terms and conditions of this Policy and
the Plan (including, without limitation, Article VII thereof) and, in the event
of a conflict between any term of this Policy and the terms of the Plan, the
terms of this Policy shall control.

•                                         
Definition of
Eligible Director. 
For purposes of this Policy, an “Eligible Director” shall mean a director of
the Company (i) who is neither an officer nor an employee of the
Company, (ii) if a consulting agreement with Clayton Dubilier &
Rice, Inc. (“CD&R”)
or one of its affiliates is then in effect, who is not an employee of CD&R,
and (iii) in each case, who is not serving as a director of the Company
at the request of his or her employer.

•                                         
Partial Year
Service.  In
the event that an Eligible Director’s service to the Board or any committee
commences or terminates after the beginning of a calendar year, such Eligible
Director will only be entitled to receive a pro rata portion of his or her
annual compensation under this Policy.

•                                         
Deferral Elections.  An Eligible Director may elect to
defer receipt of a percentage in excess of 50% up to a maximum of 100% of any
Base Compensation payable in respect of such Eligible Director’s future
services (a “Deferral
Election”) and, in lieu thereof, receive additional shares
represented by Common Shares that shall be subject to the terms and conditions
of this Policy and the Plan.

•                                         
Timing of Deferral
Elections. 
A Deferral Election may be made (i) on or before December 31 of any
calendar year in respect of the calendar year following the year in which such
election is made, and (ii) for any Eligible Director who becomes a
director after the beginning of a calendar year, within 30 days following an
Eligible Director’s election as a director with respect to Base Compensation to
be earned in any calendar quarter within the calendar year in which such
Eligible Director becomes a director and subsequent to the calendar quarter in
which such Eligible Director becomes a director.

 

1

 

•                                         
Form and Duration
of Deferral Election. 
A Deferral Election shall be made by written notice delivered to the
Company.  Such Deferral Election shall continue in effect unless and until
the Eligible Director revokes or modifies such Deferral Election by written
notice delivered to the Company.  Any such revocation or modification of a
Deferral Election shall become effective as of the end of the calendar year in
which such notice is given and only with respect to any compensation to be
payable to such Eligible Director in respect of such Director’s services in
subsequent calendar years; provided that no Deferral Election and no revocation
or modification of a Deferral Election shall be effective if it is delivered
within six months of any prior Deferral Election or revocation or modification
of a Deferral Election.  Common Shares credited to the Eligible Director’s
Stock Account (as defined below) prior to the effective date of any such
revocation or modification of a Deferral Election shall not be affected by such
revocation or modification and shall be distributed only in accordance with the
otherwise applicable terms of this Policy or the Plan.  An Eligible
Director who has revoked a Deferral Election may deliver to the Company a new
Deferral Election to defer Base Compensation no sooner than in the calendar
year following the year in which such new Deferral Election is delivered. 
The Company reserves the right to change the ability of Eligible Directors to
revoke or modify their Deferral Elections.

•                                         
Stock Accounts.  Any shares of Common Stock
received by an Eligible Director under the terms of this Policy (including any
Base Compensation deferred pursuant to a Deferral Election) shall be credited,
in whole or in part, to a memorandum account (the “Stock Account”)
established to record the number of shares of Common Stock (as defined in the
Plan) payable to an Eligible Director under this Policy.  The number of
shares of Common Stock credited to an Eligible Director’s Stock Account as of
the close of each calendar quarter shall, as determined by the Board or the
Nominating and Governance Committee, be equal to the quotient of (x) the
amount of Base Compensation so deferred as of the end of such quarter divided
by (y) the Fair Market Value (as such term is defined in the Plan)
of one share of Common Stock as of the end of such quarter.  Each Eligible
Director shall receive from the Company on an annual basis (or more frequently
as may be determined by the Board or the Nominating and Governance Committee),
an accounting of such Eligible Director’s Stock Account.  An Eligible Director
shall be fully vested in his or her Common Stock and Stock Account at all
times.

•                                         
Dividends/Distributions;
Other Adjustments. 
Whenever a dividend other than a dividend payable in the Company’s capital
stock is declared with respect to the Common Stock, the number of shares of
Common Stock in the Eligible Director’s Stock Account shall be increased by the
number of shares of Common Stock, as determined on the related dividend record
date, equal to the quotient of (x) the product of (A) the
number of shares of Common Stock in the Eligible Director’s Stock Account and (B) the
amount of any cash dividend declared by the Company on a share of Common Stock
(or, in the case of any dividend distributable in property other than the
Company’s capital stock, the per share value of such 

 

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dividend, as
determined by the Company for purposes of income tax reporting), divided by (y) the
Fair Market Value.  In the case of any dividend declared on the Common
Stock which is payable in the Company’s capital stock, the Eligible Director’s
Stock Account shall be increased by the number of shares of Common Stock, as
determined on the related dividend payment date, equal to the product of (i) the
number of shares of Common Stock previously credited to the Eligible Director’s
Stock Account and (ii) the number of shares of the Company’s
capital stock (including any fraction thereof) distributable as a dividend on
one share of Common Stock.  In the event of any change in the number or
kind of outstanding shares by reason of any recapitalization, reorganization,
merger, consolidation, stock split or any similar change affecting the shares,
other than a stock dividend as provided above, the Board or the Nominating and
Governance Committee shall make an appropriate adjustment in the number of
shares of Common Stock credited to the Eligible Director’s Stock Account. 
Fractional Units shall be credited, but shall be rounded to the nearest whole
share, with amounts equal to or greater than 0.5 rounded up and amounts less
than 0.5 rounded down.

•                                         
Distribution from
Stock Account Upon Termination of Service as a Director.  Distributions from an Eligible
Director’s Stock Account shall occur on or as soon as reasonably practicable
after the six-month anniversary of the date on which the Eligible Director
ceases to be a director of the Company.  Distributions from such Stock
Account shall be made in one lump-sum payment in the form of the greatest
number of whole shares of Common Stock having a Fair Market Value at such time
equal to or less than the aggregate value of the Common Stock to be distributed
at such time (with any fractional interest payable in cash).  Unless and
until the Company issues a certificate or certificates to an Eligible Director
representing shares of Common Stock in respect of his or her Common Stock, the
Common Stock (or the Stock Account) may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated.  Any attempt by a
Participant, directly or indirectly, to offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any Common Stock (or his or her Stock
Account) or any interest therein or any rights relating thereto without
complying with the provisions of the Policy or the Plan shall be void and of no
effect.

•                                         
Termination for
Cause.  In
the event that an Eligible Director’s service as a director of the Company is
terminated for Cause (as such term is defined in the Plan), all Common Stock
credited to such Eligible Director shall terminate and be canceled immediately
upon such termination of service.

 

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