Document:

<PAGE>
                                                                    Exhibit 4.02

================================================================================

                              UNITHOLDERS AGREEMENT

                            Dated as of April 9, 2004

                                  By and Among

                                     KH LLC,

                             KINETIC SYSTEMS, INC.,

                              CELERITY GROUP, INC.

                                       and

                            THE UNITHOLDERS OF KH LLC

================================================================================

<PAGE>

                              UNITHOLDERS AGREEMENT

                  UNITHOLDERS AGREEMENT (this "Agreement"), dated as of April 9,
2004, by and among KH LLC, a Delaware limited liability company (the "Company"),
Kinetic Systems, Inc., a California Corporation ("KSI") for purposes of Sections
2.6 and 2.7 and Articles III, IV, V, VI and VII, Celerity Group, Inc. formerly
known as Kinetics Holdings Corporation, a Delaware corporation, ("KHC") for
purposes of Sections 2.6 and 2.7, Articles IV, V, VI and VII, MidOcean Capital
Investors, L.P., formerly DB Capital Investors, L.P., a Delaware limited
partnership ("MIDOCEAN CAPITAL"), MIDOCEAN CELERITY INVESTMENT PARTNERS, L.P., A
DELAWARE LIMITED PARTNERSHIP ("MIDOCEAN CELERITY" AND, TOGETHER WITH MIDOCEAN
CAPITAL, "MidOcean"). Behrman Capital III L.P., a Delaware limited partnership
("Behrman"), United States Filter Corporation, a Delaware corporation ("USF"),
the Senior Unitholders, as listed on Schedule I-A attached hereto, the Backstop
Unitholders, as listed on Schedule I-B attached hereto, the TCP Unitholders, as
listed on Schedule I-C attached hereto, the Ares Unitholders listed on Schedule
I-D attached hereto, the Other Financial Investors, as listed on Schedule II
attached hereto, the 2001 Investors, as listed on Schedule III-A attached
hereto, the 2002 Investors, as listed on Schedule III-B attached hereto,
(MidOcean, Behrman, USF, the Senior Unitholders, the Backstop Unitholders, the
TCP Unitholders, the Ares Unitholders, the Other Financial Investors, the 2001
Investors and the 2002 Investors, collectively, the "Financial Investors"), the
Management Holders, as listed on Schedule IV attached hereto, the Profits Units
Holders, as listed on Schedule V hereto, Intervivos Trust Dated 10/76 Jerry and
Nancie L. Crowley UA 1976 ("Crowley") and Milan Mandaric, an individual residing
in Miami, Florida ("Mandaric" and, together with the Financial Investors, the
Management Holders, the Profits Units Holders and Crowley, the "Unitholders").
References herein to the "date hereof" or similar references to the date of this
Agreement are to April 9, 2004.

                              W I T N E S S E T H :

                  WHEREAS, the Unitholders were previously securityholders of
KHC and/or are contributing debt obligations for Units;

                  WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of March 31, 2004, by and among KHC and Knight Acquisition Corporation, which is
a direct, wholly-owned subsidiary of the Company ("Merger Sub"), Merger Sub will
merge with and into KHC, and, in the merger, holders of Common Stock, Series A
Preferred Stock, Series A-1 Preferred Stock, and Series B-1 Preferred Stock of
KHC will be converted as a matter of law into holders of Common Units, Class A
Units, Class A-1 Units, and Class B-1 Units, respectively, of the Company, and
upon effectiveness of such merger, the holders of such capital stock will become
Members, and the Company will become the owner of all of the issued and
outstanding capital stock of KHC (the "Merger");

                  WHEREAS, (i) the holders of warrants to purchase KHC
securities have agreed to contribute their warrants to the Company in exchange
for Class A-1 Units, Class B-1 Units, Common Units, Common A Units and/or Common
B Units pursuant to the terms of those certain exchange agreements with the
Company, dated the date hereof, (ii) USF has agreed to contribute

                                       1
<PAGE>

KHC's 11% Junior Subordinated Note and KHC's 11% Convertible Junior Subordinated
Note to the Company in exchange for Class C-1 Units and Class C Units,
respectively, pursuant to the terms of that certain exchange agreement dated the
date hereof, between USF and the Company, (iii) the holders of KHC's 15%
Convertible Senior Subordinated Notes have agreed to contribute such notes to
the Company in exchange for Class D Units pursuant to the terms of that certain
exchange agreement dated the date hereof, between such holders and the Company,
and (iv) the holders of KSI's 12.5% Junior Subordinated Instruments (as may be
(i) amended from time to time or (ii) assumed by, or exchanged for substantially
similar notes with, KGI, the "Junior Subordinated Instruments") have entered
into an exchange option agreement (the "Option Agreement") dated the date hereof
pursuant to which each such holder will have the option to contribute all or
part of such instruments to the Company in exchange for Class E Units;

                  WHEREAS, the Merger and such exchanges are part of a broader
reorganization of KHC and its Subsidiaries (the "Reorganization"), which
includes a distribution of the capital stock of KSI to the Company as the
stockholder of KHC, a restructuring of certain indebtedness of KHC and its
Subsidiaries in connection with the initial Public Offering of KHC, and certain
other related transactions, all as more fully described in that certain
Restructuring Agreement dated the date hereof (the "Restructuring Agreement");

                  WHEREAS, KHC has agreed to issue to KSI shares of common stock
of KHC with an aggregate fair market value on the date of issuance of $65
million, or such other amount as determined in accordance with the Restructuring
Agreement (the "KHC Shares of KSI") in exchange for KSI's assumption of $65
million of certain liabilities of the KHC and its Subsidiaries, including the
TCP1 Notes and Mezzanine1 Notes (as such terms are defined in the Restructuring
Agreement) (the "KSI Debt");

                  WHEREAS, in connection with the Reorganization and the
agreement to issue the KHC Shares of KSI, each of KHC and KSI is granting
certain registration rights with respect to shares of its capital stock as set
forth in this Agreement;

                  WHEREAS, KHC and certain of the Unitholders have previously
entered into the Fourth Amended and Restated Shareholders Agreement dated August
30, 2000, as amended from time to time, governing various rights as
securityholders of KHC (as amended, the "Shareholders Agreement");

                  WHEREAS, the Company and the Unitholders each desire to enter
into this Agreement to, inter alia, regulate and limit certain rights relating
to the Equity Securities of the Company and to limit the sale, assignment,
transfer, encumbrance or other disposition of such Equity Securities and to
provide for the consistent and uniform management of the Company as set forth
herein; and

                  WHEREAS, upon completion of the Merger, the parties to the
Shareholders Agreement intend to terminate such agreement.

                  NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                                       2
<PAGE>

                                    ARTICLE I

                               CERTAIN DEFINITIONS

                  Section 1.1 Certain Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:

                  "2001 Investors" means the parties listed on Schedule II-A
attached to this Agreement.

                  "2001 Investors Filing Date" means (i) with respect to KSI,
the later of (x) the second anniversary of the date on which the registration
statement filed in connection with the initial Public Offering of KSI was
declared effective and (y) the date of the first distribution of KSI Capital
Stock by the Company to Members and (ii) with respect to KHC, the latest of (A)
the KSI Termination Date, (B) the date of the first distribution of KHC Capital
Stock by the Company to Members and (C) the second anniversary of the date on
which the registration statement filed in connection with the initial Public
Offering of KHC was declared effective.

                  "2002 Investors" means the parties listed on Schedule III-B
attached to this Agreement.

                  "2002 Investors Filing Date" means (i) with respect to KSI,
the later of (x) the second anniversary of the date on which the registration
statement filed in connection with the initial Public Offering of KSI was
declared effective, and (y) the date of the first distribution of KSI Capital
Stock by the Company to Members and (ii) with respect to KHC, the latest of (A)
the KSI Termination Date, (B) the date of the first distribution of KHC Capital
Stock to Members and (C) the second anniversary of the date on which the
registration statement filed in connection with the initial Public Offering of
KHC was declared effective.

                  "Additional Designated Director" shall have the meaning set
forth in Section 5.1(i).

                  "Additional Units Side Agreement" means the Additional Units
Side Agreement, dated as of the date hereof, by and among (1) the Company; (2)
Ares Corporate Opportunities Fund, L.P., for itself and as Mezzanine Agent for
the benefit of each of the purchasers under the Senior Subordinated Purchase
Agreement ("ACOF"), Ares Leveraged Investment Fund II, L.P., Ares III CLO, Ltd.,
Ares IV CLO, Ltd., Ares VII CLO Ltd., Ares VIII CLO Ltd. and Ares Total Value
Fund, L.P.; (3) Tennenbaum Capital Partners, LLC, Special Value Absolute Return
Fund, LLC, Special Value Bond Fund, LLC, Special Value Bond Fund II, LLC, J.B.
Fuqua Family Charitable Lead Annuity Trust -- 2000, and Massachusetts Mutual
Life Insurance Company; (4) MidOcean Celerity; (5) Behrman; and (6) Gryphon.

                  "Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or

                                       3
<PAGE>

cause the direction of the management or policies of such Person, whether
through the ownership of Voting Securities, by agreement or otherwise.

                  "Agreement" shall have the meaning set forth in the preamble
to this Agreement.

                  "Applicable Law" means, with respect to any Person, all
provisions of laws, statutes, ordinances, rules, regulations, permits or
certificates of any Governmental Authority applicable to such Person or any of
its assets or property, and all judgments, injunctions, orders and decrees of
all courts, arbitrators or Governmental Authorities in proceedings or actions in
which such Person is a party or by which any of its assets or properties are
bound.

                  "Acquiring Person" means a holder or holders of stock or
equivalent equity interests of the entity that: (i) merges or combines with the
Company in a Combination Transaction or (ii) owns or controls a majority of the
voting power of the outstanding securities of another entity that merges or
combines with the Company in a Combination Transaction.

                  "Ares Unitholder Observer" shall have the meaning set forth in
Section 6.2(b) of this Agreement.

                  "Ares Unitholders" means the parties listed on Schedule I-D
attached hereto and their Permitted Transferees.

                  "Ares Unitholder Filing Date" means with respect to KSI, the
later of (i) three hundred sixty-five (365) days after the date the registration
statement filed in connection with an initial Public Offering of KSI was
declared effective and (ii) the date of the first distribution of KSI Capital
Stock by the Company to Members.

                  "Ares Units" means the Units, including Derivative Units, of
the Company held by Ares Unitholders.

                  "Associated Equity Securities" has the meaning set forth in
the definition of Permitted Debt Securities.

                  "Backstop Units" means, collectively, the Common Units issued
by the Company upon the exchange of warrants issued to the Backstop Unitholders
in connection with the obligation of MidOcean Capital, Behrman and their
respective Affiliates to purchase the 15% Convertible Subordinated Notes of KHC
in December 2002.

                  "Backstop Unitholders" means the parties listed on Schedule
I-B attached hereto and their Permitted Transferees.

                  "Behrman" shall have the meaning set forth in the preamble to
this Agreement.

                  "Behrman Group" shall have the meaning set forth in Section
2.3(b) of this Agreement.

                  "Behrman Investor Group" means, collectively, Behrman,
Crowley, Mandaric and SEF III.

                                       4
<PAGE>

                  "Business Day" means any day except a Saturday, a Sunday and
any day which in New York, New York shall be a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.

                  "Capital Stock" means the issued and outstanding shares of
capital stock of KHC and KSI that are held by the Company as a result of the
Merger and the Reorganization (subject to stock dividends, stock splits,
recapitalizations and other similar events) and by Members upon distribution of
such capital stock by the Company.

                  "Capital Stock Equivalents" means for each of KHC and KSI, at
any time, (i) shares of Common Stock issued and outstanding (other than Common
Stock issued upon the exercise of Incentive Securities), (ii) with respect to
Shares of Series A Preferred Stock issued and outstanding, the number of shares
of Common Stock into or for which such shares of Series A Preferred Stock may be
converted at such time, (iii) with respect to shares of Series A-1 Preferred
Stock issued and outstanding, the number of shares of Common Stock into or for
which such shares of Series A-1 Preferred Stock may be converted at such time,
(iv) with respect to shares of Series B-1 Preferred Stock issued and
outstanding, the number of shares of Common Stock into or for which such shares
of Series B-1 Preferred Stock may be converted at such time, and (v) with
respect to other Derivative Capital Stock which is then exercisable,
exchangeable or convertible at an exercise price per share equal to or less than
the fair market value of a share of Common Stock at such time, the number of
shares of Common Stock, if any, into or for which such derivative Capital Stock
may be exercised, exchanged or converted at such time.

                  "Certificate of Formation" means the Certificate of Formation
of the Company filed on March 5, 2004, as amended from time to time.

                  "Class" means each class of Units of the Company identified in
this Agreement, together with each future class of Units (if any) that is
authorized by the Company Board, permitted by the LLC Agreement, and designated
by the Company Board as a separate class. Without limiting the foregoing, as of
the date hereof, the Units have been divided into eleven (11) classes,
designated respectively the "Class A Units," the "Class A-1 Units," the "Class
B-1 Units," the "Class C Units," the "Class C-1 Units," the "Class D Units," the
"Class E Units," the "Common A Units," the "Common B Units," the "Common Units"
and the "Profits Units".

                  "Class Amendment Consent" means (i) with respect to a Class of
Preferred Units, the consent of the Required Unitholders of such Class, (ii)
with respect to the Common Units, the consent of the holders of a majority of
the Voting Securities, (iii) with respect to each of the Class C Units, the
Class C-1 Units, Profits Units and each Class of Derivative Units, the consent
of the holders of a majority of the Units of each such Class, (iv) with respect
to the Class D Units, the consent of the holders of 66-2/3% of the outstanding
Class D Units and (v) with respect to the Class E Units, the Class E Amendment
Consent.

                  "Class A Unit" means a Class A Unit of the Company.

                  "Class A-1 Unit" means a Class A-1 Unit of the Company.

                  "Class B-1 Unit" means a Class B-1 Unit of the Company.

                                       5
<PAGE>

                  "Class C Unit" means a Class C Unit of the Company.

                  "Class C-1 Unit" means a Class C-1 Unit of the Company.

                  "Class D Unit" means a Class D Unit of the Company.

                  "Class E Amendment" means any amendment to this agreement
that, pursuant to the terms hereof, must be submitted to the vote of the holders
of Class E Units (including, without limitation, any such amendment that
requires the consent of the holders of Class E Units, voting as a separate
class).

                  "Class E Amendment Consent" means the consent of (i) the
holders of Class E Units representing a majority of the Class E Unreturned
Capital as of the time of determination and (ii) each holder of Class E Units
whose applicable Reference Junior Subordinated Instrument(s) had an original
principal amount of at least $3,000,000; provided that, notwithstanding the
foregoing, until such time as all of the Junior Subordinated Instruments have
been exchanged for Class E Units pursuant to the Option Agreement, all Class E
Amendments shall be submitted to a vote of the holders of Class E Units
outstanding and the holders of Junior Subordinated Instruments outstanding,
voting together as a single class on a Deemed Exchanged Basis, and the Class E
Amendment Consent shall be the consent of (x) the holders of Class E Units and
the holders of Junior Subordinated Instruments representing a majority of the
Class E Unreturned Capital (measured on a Deemed Exchanged Basis) as of the time
of determination, (y) each holder of Class E Units whose applicable Reference
Junior Subordinated Instrument(s), together with any Junior Subordinated
Instruments then held by such holder, had an original principal amount of at
least $3,000,000 and (z) each holder of Junior Subordinated Instruments (other
than a holder of both Junior Subordinated Instruments and Class E Units) whose
Junior Subordinated Instruments had an original principal amount of at least
$3,000,000.

                  "Class E Unit" means a Class E Unit of the Company.

                  "Class E Unreturned Capital" means, with respect to a Class E
Unit, at any time, (i) the Class E Base Value of such Unit (as defined in the
LLC Agreement) less (ii) the aggregate amount of Distributions (as defined in
the LLC Agreement) previously made by the Company in respect of such Class E
Unit, pursuant to Section 8.3(a)(2) or Section 8.4(a)(2) of the LLC Agreement.

                  "Combination Transaction" means a reorganization,
recapitalization, consolidation, merger, acquisition or similar transaction or
series of related transactions in which the Company is a constituent entity or
is a party.

                  "Common A Unit" means a Common A Unit of the Company.

                  "Common B Unit" means a Common B Unit of the Company.

                  "Common Stock" means for KHC and KSI, as applicable, Common
Stock, $0.0001 par value per share, of such company.

                  "Common Unit" means a Common Unit of the Company.

                                       6
<PAGE>

                  "Common Unit Equivalents" means, at any time, (i) the number
of Common Units issued and outstanding, (ii) with respect to Class A Units
issued and outstanding, the number of Common Units to which such Class A Units
are deemed to be equivalent pursuant to Section 5.2 of the LLC Agreement at such
time, (iii) with respect to Class A-1 Units issued and outstanding, the number
of Common Units to which such Class A-1 Units are deemed to be equivalent to
pursuant to Section 5.2 of the LLC Agreement at such time, (iii) with respect to
Class B-1 Units issued and outstanding, the number of Common Units to which such
Class B-1 Units are deemed to be equivalent pursuant to the provisions of
Section 5.2 of the LLC Agreement at such time, (iv) with respect to Class C
Units issued and outstanding, the number of Common Units into which such Class C
Units are convertible pursuant to Section 5.3 of the LLC Agreement at such time,
(vi) with respect to Class D Units issued and outstanding, the number of Common
Units into or for which such Class D Units are convertible pursuant to Section
5.4 of the LLC Agreement at such time, (vii) with respect to the Derivative
Units, the number of Common Units such Derivative Units are deemed to be
equivalent to pursuant to Article VI of the LLC Agreement at such time, and
(viii) with respect to Vested Profits Units (other than for purposes of
determinations of voting rights), one Common Unit.

                  "Company" shall have the meaning set forth in the preamble to
this Agreement.

                  "Company Board" means the Board of Directors of the Company.

                  "Company Owners" shall have the meaning set forth in Section
5.1(i) of this Agreement.

                  "Credit Documents" means the following and all documents
entered into in connection therewith: (i) the Credit Agreement, dated as of
August 30, 2000, among KHC, KGI, the subsidiary guarantors party thereto from
time to time, the lenders party thereto from time to time, Bank One, N.A., as
Administrative Agent and as Collateral Agent for the secured parties, Deutsche
Bank Americas, as Syndication Agent, The Bank of Nova Scotia, as Documentation
Agent, Deutsche Bank Securities, Inc., as Lead Arranger and Book Manager, and
Banc One Capital Markets, Inc., as Co-Arranger, as amended (the "Senior Credit
Agreement"), (ii) the Senior Subordinated Purchase Agreement, (iii) the TCP
Purchase Agreement, (iv) any amendment, restatement, extension, replacement,
supplement, restructuring or other modification or refinancing from time to time
of the Senior Credit Agreement, the TCP Purchase Agreement or the Senior
Subordinated Credit Agreement (in whole or in part without limitation as to
terms, extensions of maturities, increasing the amount of borrowings or other
conditions or covenants), and (v) all documents entered into in connection with
any of the documents referred to in clauses (i) through (iv).

                  "Crowley" shall have the meaning set forth in the preamble to
this Agreement.

                  "Current Credit Facility" shall have the meaning set forth in
the definition of Primary Bank Facility.

                  "Deemed Converted Basis" means, (i) with respect to a
Derivative Unit, that number of Common Units to which such Unit is deemed to be
equivalent in accordance with Section 6.1 of the LLC Agreement, (ii) with
respect to a Vested Profits Unit, one Common Unit

                                       7
<PAGE>

for purposes of any fully diluted calculation and not for voting purposes and
(iii) with respect to a Preferred Unit, that number of Common Units into which
such Unit is deemed to be convertible in accordance with Section 5.2 of the LLC
Agreement. A Profits Unit that is not a Vested Profits Unit shall not be deemed
to be equivalent to any Common Units.

                  "Deemed Exchanged Basis" means, for purposes of determining
voting rights of a holder of Junior Subordinated Instruments for purposes of
determining the Class E Amendment Consent, at any time, the number of Class E
Units that such holder of Junior Subordinated Instruments would have held
and/or, as applicable, the Unreturned Capital and Unpaid Class E Preferred
Return of such Class E Units, had such holder exchanged all of such holder's
outstanding Junior Subordinated Instruments for Class E Units, pursuant to the
terms of the Option Agreement, immediately prior to such time of determination.

                  "Derivative Capital Stock" means with respect to KHC OR KSI,
all shares of capital stock, all securities at any time convertible into or
exchangeable for shares of capital stock, and all options, warrants, and other
rights to purchase or otherwise acquire shares of such capital stock, or
securities convertible into or exchangeable for shares of such capital stock, of
such company.

                  "Derivative Securities" shall have the meaning set forth in
the definition of New Securities.

                  "Derivative Unit" means a Common A Unit or a Common B Unit.

                  "Designated Proxy Agent" means, (i) for purposes of Section
2.6, MidOcean (if MidOcean initially voted in favor of calling such special
meeting or action by written consent to effect such Sale of the Subsidiary
Business) or, if MidOcean did not initially vote in favor of calling such
special meeting or action by written consent to effect such Sale of the
Subsidiary Business, by Behrman or Gryphon, as designated by the Required
Investors and (ii) for purposes of Section 2.7, MIDOCEAN (IF MIDOCEAN INITIALLY
VOTED IN FAVOR OF CALLING SUCH SPECIAL MEETING OF STOCKHOLDERS TO EFFECT SUCH
SALE OF THE SUBSIDIARY BUSINESS) OR, IF MIDOCEAN DID NOT INITIALLY VOTE IN FAVOR
OF CALLING SUCH SPECIAL MEETING OF STOCKHOLDERS TO EFFECT SUCH SALE OF THE
SUBSIDIARY BUSINESS, BY BEHRMAN OR GRYPHON, AS DESIGNATED BY THE REQUIRED
INVESTORS.

                  "Duly Convened Meeting" means any meeting (including a
telephonic meeting): (y) called in accordance with the governing document of
such entity (which shall be the LLC Agreement for the Company) and (z) if such
Person is entitled to designate at least one director pursuant to Section
5.1(a), in which at least one (1) director designated by each of MidOcean,
Behrman and Gryphon (excluding, in the case of a Public Kinetics Entity, any
Additional Designated Director) participate; provided that if none of the
directors designated by any of MidOcean, Behrman or Gryphon attends or
participates in such meeting after receiving notice of such meeting in
accordance with the applicable governing document (excluding any Additional
Designated Directors), the Company shall reschedule such meeting to a later date
and send notice to the directors designated by such non-participant of such
rescheduled meeting and, if after receiving such notice of such rescheduled
meeting none of such directors designated by the non-participant (excluding any
Additional Designated Directors) attends or participates in such

                                       8
<PAGE>

rescheduled meeting, then such rescheduled meeting shall be a "Duly Convened
Meeting" notwithstanding the failure of any such directors to attend or
participate in such meeting.

                  "Equity Securities" means all Units of the Company, all
securities at any time convertible into or exchangeable for Units of the
Company, and all warrants, and other rights to purchase or otherwise acquire
from the Company the Units, or securities convertible into or exchangeable for
Units or other equity interests of the Company.

                  "Excess New Securities" shall have the meaning set forth in
Section 2.8(a) of this Agreement.

                  "Excess Transferable Securities" shall have the meaning set
forth in Section 2.4(b) of this Agreement.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.

                  "Financial Investors" shall have the meaning set forth in the
preamble to this Agreement.

                  "Governmental Authority" means any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or any foreign country.

                  "Gryphon" means, collectively, Gryphon Partners II, L.P., a
Delaware limited partnership, and Gryphon Partners II-A, L.P., a Delaware
limited partnership, and any references to Unitholder, Financial Investor, 2001
Investor, and any similar reference herein to holders of Common Unit Equivalents
or Equity Securities shall, with respect to Gryphon, include both Gryphon
Partners II, L.P. and Gryphon Partners II-A, L.P. together, and the Common Unit
Equivalents or Equity Securities, respectively, held by such entities shall be
counted together and aggregated for all purposes under this Agreement.

                  "Incentive Securities" means (i) all Stock Options and (ii)
all shares of common stock issued upon the exercise of Stock Options.

                  "Junior Subordinated Instruments" shall have the meaning set
forth in the recitals to this Agreement.

                  "KHC" shall have the meaning set forth in the preamble to this
Agreement.

                  "KHC Common Stock" means the common stock, $.0001 par value,
of KHC.

                  "KHC Demand Notice" shall have the meaning set forth in
Section 4.1(b) of this Agreement.

                  "KHC Demand Request" shall have the meaning set forth in
Section 4.1(a) of this Agreement.

                                       9
<PAGE>

                  "KHC Equity Securities" means all shares of capital stock of
KHC (including, without limitation, all shares of Capital Stock of KHC), all
securities at any time convertible into or exchangeable for capital stock of
KHC, and all options, warrants, and other rights to purchase or otherwise
acquire from KHC the capital stock, or securities convertible into or
exchangeable for capital stock, of KHC.

                  "KHC Holders' Counsel" shall have the meaning set forth in the
definition of KHC Registration Expenses.

                  "KHC Incidental Registration" shall have the meaning set forth
in Section 4.2(a) of this Agreement.

                  "KHC Registrable Securities" means, at any time:

                           (i)      any outstanding shares of KHC Common Stock
         held by a party hereto and any shares of KHC Common Stock issued or
         issuable upon exercise, exchange or conversion of any KHC Equity
         Securities; and

                           (ii)     any securities issued or issuable in respect
         of shares of KHC Common Stock held by a party hereto (including,
         without limitation, by way of stock dividend, stock split,
         distribution, exchange, combination, merger, recapitalization,
         reorganization or otherwise).

                  As to any particular KHC Registrable Securities once issued,
such KHC Registrable Securities shall cease to be KHC Registrable Securities:

                           (i)      when a registration statement with respect
         to the sale of such securities shall have become effective under the
         Securities Act and such securities shall have been disposed of in
         accordance with such registration statement;

                           (ii)     when such securities shall have been
         distributed by the holder thereof to the public pursuant to Rule 144
         under the Securities Act (or any successor provision); or

                           (iii)    when such securities shall have ceased to be
         outstanding.

                  "KHC Registrable Securities of KSI" means KHC Shares of KSI as
long as they are KHC Registrable Securities.

                  "KHC Registration" means each KHC Required Registration and
each KHC Incidental Registration.

                  "KHC Registration Expenses" means, with respect to KHC, all
expenses incident to KHC's performance of or compliance with Article IV
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the KHC Registrable Securities), expenses of printing certificates for the KHC
Registrable Securities in a form eligible for deposit with the Depository Trust
Company,

                                       10
<PAGE>

messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), and fees and disbursements of counsel for KHC and
its independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by or
incident to such performance and compliance), securities acts liability
insurance (if KHC elects to obtain such insurance), the reasonable fees and
expenses of any special experts retained by KHC in connection with such
registration, fees and expenses of other Persons retained by KHC, the fees and
expenses of one (1) counsel (the "KHC Holders' Counsel") for the holders of KHC
Registrable Securities to be included in the relevant KHC Registration, selected
by the holders of a majority of the KHC Registrable Securities to be included in
such KHC Registration (except that, where a KHC Registration is a KHC Required
Registration, such selection may only be made by holders holding a majority of
the KHC Registrable Securities set forth in the relevant KHC Demand Request);
but not including any underwriting fees, discounts or commissions attributable
to the sale of securities or fees and expenses of counsel representing the
holders of KHC Registrable Securities included in such KHC Registration (other
than the KHC Holders' Counsel and applicable local counsel) incurred in
connection with the sale of KHC Registrable Securities.

                  "KHC Required Registration" shall have the meaning set forth
in Section 4.1(a) of this Agreement.

                  "KHC Shares of KSI" shall have the meaning set forth in the
recitals to this Agreement.

                  "KSI" shall have the meaning set forth in the preamble to this
Agreement.

                  "KSI Common Stock" means the common stock, $.0001 par value,
of KSI.

                  "KSI Debt" shall have the meaning set forth in the recitals to
this Agreement.

                  "KSI Debt Repayment" has the meaning set forth in Section
7.1(a) of this Agreement.

                  "KSI Demand Notice" shall have the meaning set forth in
Section 3.1(c) of this Agreement.

                  "KSI Demand Request" shall have the meaning set forth in
Section 3.1(b) of this Agreement.

                  "KSI Equity Securities" means all shares of capital stock of
KSI (including, without limitation, all shares of Capital Stock of KSI), all
securities at any time convertible into or exchangeable for capital stock of
KSI, and all options, warrants, and other rights to purchase or otherwise
acquire from KSI the capital stock, or securities convertible into or
exchangeable for capital stock of KSI.

                  "KSI Holders" means the holders of KHC Registrable Securities
of KSI.

                                       11
<PAGE>

                  "KSI Holders' Counsel" shall have the meaning set forth in the
definition of KSI Registration Expenses.

                  "KSI Incidental Registration" shall have the meaning set forth
in Section 3.2(a) of this Agreement.

                  "KSI Registrable Securities" means, at any time:

                           (i)      any outstanding shares of KSI Common Stock
         held by a party hereto and any shares of KSI Common Stock issued or
         issuable upon exercise, exchange or conversion of any KSI Equity
         Securities; and

                           (ii)     any securities issued or issuable in respect
         of shares of KSI Common Stock held by a party hereto (including,
         without limitation, by way of stock dividend, stock split,
         distribution, exchange, combination, merger, recapitalization,
         reorganization or otherwise).

                  As to any particular KSI Registrable Securities once issued,
such KSI Registrable Securities shall cease to be KSI Registrable Securities:

                           (i)      when a registration statement with respect
         to the sale of such securities shall have become effective under the
         Securities Act and such securities shall have been disposed of in
         accordance with such registration statement;

                           (ii)     when such securities shall have been
         distributed by the holder thereof to the public pursuant to Rule 144
         under the Securities Act (or any successor provision); or

                           (iii)    when such securities shall have ceased to be
         outstanding.

                  "KSI Registration" means each KSI Required Registration and
each KSI Incidental Registration.

                  "KSI Registration Expenses" means, with respect to KSI, all
expenses incident to KSI's performance of or compliance with Article III
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the KSI Registrable Securities), expenses of printing certificates for the KSI
Registrable Securities in a form eligible for deposit with the Depository Trust
Company, messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), fees and disbursements of counsel for KSI and its
independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by or
incident to such performance and compliance), securities acts liability
insurance (if KSI elects to obtain such insurance), the reasonable fees and
expenses of any special experts retained by KSI in connection with such
registration, fees and expenses of other Persons retained by KSI, the fees and
expenses of one (1) counsel (the "KSI Holders' Counsel") for the holders of KSI
Registrable Securities to be included in the relevant KSI Registration, selected
by the holders of a majority of the KSI

                                       12
<PAGE>

Registrable Securities to be included in such KSI Registration (except that,
where a KSI Registration is a KSI Required Registration, such selection may only
be made by holders holding a majority of the KSI Registrable Securities set
forth in the relevant KSI Demand Request); but not including any underwriting
fees, discounts or commissions attributable to the sale of securities or fees
and expenses of counsel representing the holders of KSI Registrable Securities
included in such KSI Registration (other than the KSI Holders' Counsel and
applicable local counsel) incurred in connection with the sale of KSI
Registrable Securities.

                  "KSI Required Registration" shall have the meaning set forth
in Section 3.1(b) of this Agreement.

                  "KSI Termination Date" means, in the event the KHC Registrable
Securities of KSI have been issued, the date on which KHC shall have received
evidence reasonably satisfactory to it that either there are no KHC Registrable
Securities of KSI or that the holders of 66-2/3% of the KHC Registrable
Securities of KSI have consented to the proposed sale of the KHC Registrable
Securities held by the Company or any Unitholders.

                  "Liquidation Preference Amount" means, for any Preferred Unit
as of any date, the sum of (i) the Unreturned Capital of such Preferred Unit,
plus (ii) the Unpaid Preferred Return on such Preferred Unit, each as defined in
the LLC Agreement.

                  "LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement of the Company dated as of the date hereof, as
amended, modified, supplemented or restated from time to time.

                  "Magnolia" means Magnolia Tree, LLC, a Delaware limited
liability company.

                  "Magnolia Pledge Agreement" means that certain pledge
agreement, dated as of June 4, 2001, made by Magnolia in favor of KHC.

                  "Management Holders" means the parties listed on Schedule IV
attached hereto.

                  "Mandaric" shall have the meaning set forth in the preamble to
this Agreement.

                  "Member" means a member of the Company

                  "Merger" shall have the meaning set forth in the recitals to
this Agreement.

                  "Merger Sub" shall have the meaning set forth in the recitals
to this Agreement.

                  "MidOcean" shall have the meaning set forth in the preamble to
this Agreement and any references to Unitholder, Financial Investor, 2001
Investor, 2002 Investor, and any similar reference herein to holders of Common
Unit Equivalents or Equity Securities shall, with respect to MidOcean, include
both MidOcean Capital and MidOcean Celerity together, and the Common Unit
Equivalents or Equity Securities, respectively, held by such entities shall be
counted together and aggregated for all purposes under this Agreement.

                                       13
<PAGE>

                  "Midocean Capital" SHALL HAVE THE MEANING SET FORTH IN THE
PREAMBLE TO THIS AGREEMENT.

                  "Midocean Celerity" SHALL HAVE THE MEANING SET FORTH IN THE
PREAMBLE TO THIS AGREEMENT.

                  "Midocean Entity" MEANS EACH OF MIDOCEAN CAPITAL AND MIDOCEAN
CELERITY.

                  "MidOcean Group" shall have the meaning set forth in Section
2.3(b) of this Agreement.

                  "Nasdaq" means The Nasdaq Stock Market, Inc.

                  "New Mezzanine Warrants" means those warrants issued pursuant
to, or otherwise contemplated as a condition to closing under, the Senior
Subordinated Purchase Agreement, together with Units issued upon contribution of
the New Mezzanine Warrants to the Company.

                  "New Securities" means any Common Unit Equivalents, whether
authorized now or in the future, and any rights, options or warrants to purchase
any Common Unit Equivalents ("Derivative Securities"), and securities of any
type whatsoever (including, without limitation, (x) debt obligations (whether or
not convertible into Common Unit Equivalents or Derivative Securities), (y)
contractual rights to receive payments, such as "phantom" stock or stock
appreciation rights, where the amount thereof is determined by reference to fair
market or equity value of the Company or any Units), including any which may
become convertible into or exchangeable for any Common Unit Equivalents or
Derivative Securities and (z) debt obligations of the Company owing to any
holder of more than 10% of the Common Unit Equivalents); provided that "New
Securities" shall not include (i) Common Units, Class A Units, Class A-1 Units,
Class B-1 Units, Class C Units, Class C-1 Units, Class D Units, Derivative Units
or Profits Units issued by the Company on or prior to the date hereof (and
Common Units issued upon the direct or indirect conversion or exercise of any
securities issued by the Company on or prior to the date hereof), (ii) Equity
Securities issued as consideration in any merger of the Company issued to any
Third Party, (iii) Equity Securities issued as consideration for the acquisition
of another Person or all or substantially all of the assets of another Person,
(iv) any issuance of Equity Securities to any Third Party that is determined by
the Company Board to be strategically beneficial to the Company or any of its
Subsidiaries for one or more reasons independent of such Third Party's cash
investment into the Company or its Subsidiaries, (v) Class E Units issuable upon
the conversion of the Junior Subordinated Instruments, (vi) the New Mezzanine
Warrants, New TCP Warrants and Equity Securities issued in connection with
antidilution provisions of the New Mezzanine Warrants and New TCP Warrants,
(vii) Units and other limited liability company interests in the Company issued
in accordance with the Additional Units Side Agreement and (viii) Associated
Equity Securities issued to any Third Party.

                  "New Securities Price" shall have the meaning set forth in
Section 2.8(a) of this Agreement.

                                       14
<PAGE>

                  "New TCP Warrants" means those warrants issued in connection
with the TCP Purchase Agreement and Units issued upon contribution of the New
TCP Warrants to the Company.

                  "Non-Qualified Person" means any Person who is (i) directly or
indirectly engaged in any business which the Company Board determines, in good
faith, to be directly competing with any business of the Company or any of its
Subsidiaries (provided that the passive investment by a financial investor of
(x) one percent (1%) or less of any class of securities of any Person whose
securities are registered under the Exchange Act or (y) three percent (3%) or
less of any class of securities of any other Person shall not be deemed to be a
competing interest for purposes of this clause (i)), (ii) an adverse party in
any significant (as determined in good faith by the Company Board) legal or
arbitration proceeding with the Company or any of its Subsidiaries, and (iii)
other than for purposes of Section 2.2(a)(iii)(x), an Affiliate of any Person
described in clauses (i) or (ii). For purposes of this definition, a financial
investor shall have made a "passive investment" in another Person if such
financial investor does not (x) actively manage the business or affairs of such
Person, (y) have the right to nominate or appoint one or more directors to the
board of directors of such Person, or (z) have a board observation right with
respect to meetings of the board of directors of such Person.

                  "Offered Securities" shall have the meaning set forth in
Section 2.3(a) of this Agreement.

                  "Other Financial Investors" means the parties listed on
Schedule II attached hereto.

                  "Other Unitholders" shall have the meaning set forth in
Section 2.4(a) of this Agreement.

                  "Option Agreement" has the meaning set forth in the recitals
to this Agreement.

                  "Participant" shall have the meaning set forth in Section
2.4(b) of this Agreement.

                  "Permitted Debt Securities" means (i) debt securities of KGI
or other indebtedness for borrowed money of the Company or KGI, and (ii) Equity
Securities of the Company and/or equity securities of KGI issued in connection
with such debt securities or other indebtedness for borrowed money ("Associated
Equity Securities"); provided that such indebtedness or debt or Associated
Equity Securities (a) is issued as "permitted indebtedness" under the Senior
Subordinated Purchase Agreement or (b) IS in ANY amount AND IS issued or
incurred at any time in a transaction or series of related transactions WHICH a
Third Party (or multiple Third Parties) acquire(s) or fund(s), as applicable, at
least 50% by value of the aggregate amount of Associated Equity Securities
and/or debt securities being issued and/or indebtedness being incurred in such
transaction or series of related transactions.

                  "Permitted TCP Purchase Agreement Amendment" means an
amendment to the TCP Purchase Agreement permitting the issuance of up to an
additional $15,000,000 in indebtedness and/or Associated Equity Securities.

                                       15
<PAGE>

                  "Permitted Transfer" shall have the meaning set forth in
Section 2.2(a) of this Agreement.

                  "Permitted Transferee" shall have the meaning set forth in
Section 2.2(a) of this Agreement.

                  "Person" or "Persons" means any individual, general
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture, firm, corporation, association, trust, or other
enterprise or any governmental or political subdivision or any agency,
department or instrumentality thereof.

                  "Preemptive Exercise Notice" shall have the meaning set forth
in Section 2.8(a) of this Agreement.

                  "Preemptive Notice" shall have the meaning set forth in
Section 2.8(a) of this Agreement.

                  "Preferred Stock" means Series A Preferred Stock, Series A-1
Preferred Stock, Series B-1 Preferred Stock, and any other series of Preferred
Stock authorized or designated by the Board of Directors of KHC or KSI,
respectively.

                  "Preferred Units" means Class A Units, Class A-1 Units, Class
B-1 Units, and any other class of Preferred Units authorized or designated by
the Company Board pursuant to the LLC Agreement.

                  "Primary Bank Facility" means the credit facility relating to
the Credit Agreement dated August 30, 2000, as amended and restated as of
December 10, 2002, among The Bank of Nova Scotia, KHC and other named parties,
as amended or waived from time to time (the "Current Credit Facility"), or any
credit facility resulting from any refinancing or replacement of the Current
Credit Facility from commercial banks or other senior lenders that are Third
Parties, as may be amended or waived from time to time.

                  "Primary Sell-Down Event" means the first to occur of (i) the
date on which the Company together with MidOcean, Behrman and Gryphon cease to
own, in the aggregate, at least 25% of the outstanding Voting Securities of such
Public Kinetics Entity and (ii) the date on which Behrman, Gryphon and MidOcean
cease to own, in the aggregate, at least 50% of Voting Securities held by them
as of the date of this Agreement.

                  "Profits Units" means a Profit Unit of the Company.

                  "Profits Units Holders" means the parties listed on Schedule V
attached hereto.

                  "Public Kinetics Entity" means a Subsidiary of the Company
that has consummated its initial Public Offering and has securities registered
pursuant to the Exchange Act.

                                       16
<PAGE>

                  "Public Offering" means a widely distributed sale of common
stock of an issuer in an underwritten public offering pursuant to an effective
registration statement filed with the SEC.

                  "Qualified Public Offering" means the consummation of a Public
Offering, in which the aggregate public offering price (before deduction of
underwriters' discounts and commissions) equals or exceeds one hundred million
dollars ($100,000,000).

                  "Reference Junior Subordinated Instrument" means, with respect
to each Class E Unit, the Junior Subordinated Instrument in exchange for which
such Class E Unit was issued pursuant to the Option Agreement.

                  "Reorganization" shall have the meaning set forth in the
recitals to this Agreement.

                  "Required Class A/A-1 Holder" means, at any time of
determination, a Holder that (i) held at least 33-1/3% of the outstanding Class
A Units and Class A-1 Units (measured as a single class) on the date hereof and
(ii) on the date of determination holds at least fifty percent (50%) of the
Class A Units and Class A-1 Units such Holder held on the date hereof.

                  "Required Investors" means at least two of the following: (i)
Behrman; (ii) Gryphon; and (iii) MidOcean, for so long as the they own, in the
aggregate (whether held directly or as a Unitholder), (x) with respect to
consent rights, approval rights and other rights of the Required Investors in
respect of the Company, at least 50% of Voting Securities of the Company held by
them as of the date of this Agreement or (y) with respect to consent rights,
approval rights and other rights of the Required Investors in respect of KSI or
KHC, an amount of Voting Securities of KSI or KHC, as applicable, that is at
least equal to 50% of the amount of Voting Securities that they are deemed to
own as of the date of this Agreement through their ownership of the Company; and
after such time, such consents and approvals shall no longer be required and
such rights shall terminate and be of no further force and effect.

                  "Required Unitholders" means, (i) with respect to the Class A
Units and the Class A-1 Units, the holders of 66-2/3 % of the outstanding Class
A Units and Class A-1 Units, voting together as a single class and any Required
Class A/A-1 Holder and (ii) with respect to the Class B-1 Units, the holders of
66-2/3% of the outstanding Class B-1 Units, voting as a separate class.

                  "Requisite Holders" means, at any time, and with respect to
any registration and related public offering, the holders of at least a majority
of the KSI Registrable Securities or KHC Registrable Securities, as applicable,
proposed to be included in such Public Offering before giving effect to any
cut-back provisions contained herein.

                  "Response Deadline" shall have the meaning set forth in
Section 2.4(b) of this Agreement.

                  "Restricted Combination Transaction" means a Combination
Transaction in which, as a result of such Combination Transaction, the Voting
Securities of the Company that are outstanding immediately prior to the
Consummation of such Combination Transaction (other than any such securities
that are held by an Acquiring Person) do not represent, or are not

                                       17
<PAGE>

converted into, securities of the surviving entity of such Combination
Transaction (or such surviving entity's parent entity if the surviving entity is
owned by the parent entity) that, immediately after the Consummation of such
Combination Transaction, together possess more than fifty percent (50%) of the
total voting power of all securities of such surviving entity (or its parent
entity, if applicable) that are outstanding immediately after the consummation
of such Combination Transaction.

                  "Restructuring Agreement" has the meaning set forth in the
recitals to this Agreement.

                  "Sale Notice" shall have the meaning set forth in Section
2.3(a) of this Agreement.

                  "Sale of the LLC" means any transaction or series of
transactions that constitutes a Restricted Combination Transaction or sale of
all or substantially all the assets of the Company.

                  "Sale of the Subsidiary Business" means any transaction or
series of transactions (whether structured as an equity sale, merger,
consolidation, reorganization, asset sale or otherwise), which results in,
directly or indirectly, the sale or transfer of more than a majority of the
assets of KSI or KHC (determined based on value), respectively, or of beneficial
ownership or control of a majority of the outstanding capital stock of KSI or
KHC, respectively, to a Third Party, other than through a Sale of the LLC.

                  "SEC" means, at any time, the Securities and Exchange
Commission or any other federal agency at such time administering the Securities
Act.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.

                  "Secondary Sell-Down Event" means the first to occur of (i)
the date on which Company together with MidOcean, Behrman and Gryphon cease to
own, in the aggregate, at least 15% of the outstanding Voting Securities of such
Public Kinetics Entity and (ii) the date on which Behrman, Gryphon and MidOcean
cease to own, in the aggregate, at least 15% of Voting Securities held by them
as of the date of this Agreement.

                  "SEF III" means Strategic Entrepreneur Fund III L.P.

                  "Selling Group" shall have the meaning set forth in Section
2.5(a) of this Agreement.

                  "Senior Credit Agreement" shall have the meaning set forth in
the definition of Credit Documents.

                  "Senior Subordinated Purchase Agreement" means the Amended and
Restated Securities Purchase Agreement dated as of April 9, 2004 by and among
KGI, KHC, KSI, Ares Corporate Opportunities Fund, L.P., Special Value Absolute
Return Fund, LLC, Special Value Bond Fund, LLC, Special Value Bond Fund II, LLC
and the other parties named therein that

                                       18
<PAGE>

memorializes certain rights and understandings with respect to the senior
subordinated notes due 2006 issued by KGI and warrants issued in connection
therewith.

                  "Senior Unitholders" means the parties listed on Schedule I-A
attached hereto and their Permitted Transferees.

                  "Senior Unitholder Filing Date" means (i) with respect to KSI,
the later (x) of the second anniversary of the date on which the registration
statement filed in connection with the initial Public Offering of KSI was
declared effective, and the (y) date of the first distribution of KSI Capital
Stock by the Company to Members and (ii) with respect to KHC, the latest of (A)
the KSI Termination Date, (B) the date of the first distribution of KHC Capital
Stock by the Company to Members and (C) the second anniversary of the date on
which the registration statement filed in connection with the initial Public
Offering of KHC was declared effective.

                  "Senior Units" means the Common B Units held by the Senior
Unitholders.

                  "Series A Preferred Stock" means for KHC and KSI, as
applicable, Series A Preferred Stock, $0.0001 par value per share.

                  "Series A-1 Preferred Stock" means for KHC and KSI, as
applicable, Series A-1 Preferred Stock, $0.0001 par value per share.

                  "Series B-1 Preferred Stock" means for KHC and KSI, as
applicable, Series B-1 Preferred Stock, $0.0001 par value per share.

                  "Shareholders Agreement" shall have the meaning set forth in
the recitals to this Agreement.

                  "Shimmon" means (i) David A. Shimmon, an individual residing
in Woodside, California, (ii) any member of David A. Shimmon's immediate family,
(iii) any trust or other legal entity for the benefit of David A. Shimmon and
his immediate family and (iv) Magnolia for so long as it owned by David A.
Shimmon and/or his immediate family.

                  "Shimmon Pledge Agreement" means that certain pledge
agreement, dated as of June 4, 2001, made by Shimmon in favor of KHC.

                  "State of Michigan" means the State Treasury department of the
State of Michigan, custodian of the Michigan Public Schools Employees'
Retirement System, State Employees' Retirement System and Michigan State Police
Retirement System.

                  "State of Michigan Observer" shall have the meaning set forth
in Section 6.2(c) of this Agreement.

                  "Stock Options" means all options to purchase Common Stock
granted to non-management members of the board of directors, members of
management and key employees of KHC and/or KSI pursuant to the Kinetics Holdings
Corporation 2000 Stock Option Plan and the Celerity Group, Inc. 2002 Stock
Option Plan B, Kinetics Systems, Inc. 2004 Stock Option Plan or any successor or
similar plan.

                                       19
<PAGE>

                  "Stockholder" means each Unitholder that receives shares of
Capital Stock of KHC or KSI, as the case may be, upon a distribution by the
Company.

                  "Subsidiary" means, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the managers of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at such time.

                  "TCP Purchase Agreement" means that certain purchase agreement
dated September 26, 2003 between KGI, KHC, TCP and certain other parties, as
amended and restated on April 9, 2004 among KGI, KHC and the parties named
therein.

                  "TCP Unitholder Observer" shall have the meaning set forth in
Section 6.2(a) of this Agreement.

                  "TCP Unitholders" means the parties listed on Schedule I-C
attached hereto and their Permitted Transferees (but which in any event shall
exclude the Ares Unitholders).

                  "TCP Unitholder Filing Date" means with respect to KSI, the
later of (x) three hundred sixty-five (365) days after the date the registration
statement filed in connection with an initial Public Offering of KSI was
declared effective and (y) the date of the first distribution of KSI Capital
Stock by the Company to Members.

                  "TCP Units" means the Units, including Derivative Units, of
the Company held by TCP Unitholders.

                  "Third Party" means any Person that is not (i) an Affiliate of
the Company, (ii) a holder of Units that beneficially owns more than ten percent
(10%) of the Company's COMMON UNIT EQUIVALENTS, or (iii) an Affiliate of such a
holder; provided, however, that, notwithstanding the foregoing definition, (i)
Deutsche Bank AG or any of its subsidiaries that is primarily engaged in the
business of lending money, including Deutsche Bank Americas and Deutsche Bank AG
Cayman Islands Branch and (ii) any lender pursuant to the Primary Bank Facility,
if at the time the lender first advances funds under the Primary Bank Facility
such lender is a Third Party, and any of such lender's Affiliates that would not
be a Third Party due solely to such lender's ownership of capital stock or
Equity Securities of the Company or any of its Subsidiaries, shall be deemed to
be a Third Party.

                  "TIAA" shall have the meaning set forth in Section 6.2(d) of
this Agreement.

                  "TIAA Observer" shall have the meaning set forth in Section
6.2(d) of this Agreement.

                  "Transfer" shall have the meaning set forth in Section 2.1(a)
of this Agreement.

                                       20
<PAGE>

                  "Transfer Notice" shall have the meaning set forth in Section
2.4(a).

                  "Unit" means any Common Unit, Class A Unit, Class A-1 Unit,
Class B-1 Unit, Class C Unit, Class C-1 Unit, Class D Unit, Class E Unit, Common
A Unit, Common B Unit, Profits Unit and any other unit representing equity
interests in the Company created from time to time pursuant to the LLC
Agreement.

                  "Unitholder" shall have the meaning set forth in the preamble
to this Agreement and includes any other Person that becomes a Unitholder
pursuant to Section 2.2(b) of this Agreement.

                  "USF" shall have the meaning set forth in the preamble to this
Agreement.

                  "USF Common B Units" means the Common B Units held by USF.

                  "Vested Profits Unit" means any outstanding Profits Unit that
has vested (i) in accordance with the Profits Unit purchase agreement pursuant
to which such Profits Unit, or security exchanged for a Profits Unit, was
issued, (ii) pursuant to the terms of any applicable Profits Unit plan adopted
by the Company Board or (iii) pursuant to the LLC Agreement.

                  "Voting Securities" means, (i) with respect to the Company,
collectively, at any time, the Units entitled to vote at such time pursuant to
Section 4.3 of the LLC Agreement (which, in no event, shall include any Profits
Unit) and (ii) with respect to any other entity, collectively, at any time, the
securities of such entity entitled to vote at such time pursuant to the
governing documents of such entity.

                  "Whitney" means, collectively, J. H. Whitney Mezzanine Fund,
L.P., a Delaware limited partnership, and any successor thereof.

                                   ARTICLE II

                         TRANSFER OF EQUITY SECURITIES

                  Section 2.1 Transfer Restrictions. (a) No Unitholder shall,
directly or indirectly, sell, assign, pledge or in any manner transfer any
Equity Securities or any right or interest therein to any Person (each such
action, a "Transfer"), except in compliance with the requirements of (and
subject to the limitations contained in) the LLC Agreement and this Agreement.

                  (b)      All certificates or other instruments (if any)
representing Equity Securities shall bear a legend which shall substantially
state as follows:

         "The securities represented by this certificate are subject to a
         Limited Liability Company Agreement and Unitholders Agreement of the
         issuer, each dated as of April 9, 2004, as the same may be amended from
         time to time, pursuant to the terms of which the transfer of such
         securities is restricted. Such agreements also provide for various
         other limitations and obligations, and all of the terms thereof are
         incorporated by reference herein. A copy of each such agreement will be
         furnished without charge by the issuer to the holder hereof upon
         written request."

                                       21
<PAGE>

                  (c)      In addition to the legend required by Section 2.1(b)
above, all certificates or other instruments (if any) representing Equity
Securities shall bear a legend which shall substantially state as follows:

         "The securities represented by this certificate have not been
         registered under the Securities Act of 1933, as amended, or any state
         securities laws and may not be offered for sale, sold, pledged,
         transferred or otherwise disposed of until the holder hereof provides
         evidence reasonably satisfactory to the issuer (which, in the
         discretion of the issuer, may include an opinion of counsel reasonably
         satisfactory to the issuer) that such offer, sale, pledge, transfer or
         other disposition will not violate applicable federal or state
         securities laws."

                  (d)      Without limiting the foregoing, no Unitholder shall,
directly or indirectly, Transfer any Equity Securities, except pursuant to a
Permitted Transfer.

                  (e)      The Company agrees that it will not cause or permit
any Transfer of any Equity Securities to be made on its books unless such
Transfer is permitted by this Agreement and the LLC Agreement and has been made
in accordance with the terms hereof and the LLC Agreement.

                  (f)      Each Unitholder agrees that it will not effect any
Transfer of Equity Securities unless such Transfer is made in accordance with
any applicable federal or state securities laws.

                  Section 2.2 Permitted Transfers. (a) Subject to Section 2.1
and the requirements of the LLC Agreement regarding Transfers of Units by
Members, a holder of Units may at any time effect any of the following Transfers
(each a "Permitted Transfer," and each transferee of such Unitholder in respect
of such Transfer, a "Permitted Transferee"):

                  (i) any Transfer of any or all Equity Securities held by a
         Unitholder who is an individual following such Unitholder's death by
         will or intestacy to such Unitholder's legal representative, heir or
         legatee;

                  (ii) any Transfer of any or all Equity Securities held by a
         Unitholder who is an individual as a gift or gifts during such
         Unitholder's lifetime to such Unitholder's spouse, children,
         grandchildren or a trust or other legal entity for the benefit of such
         Unitholder or any of the foregoing;

                  (iii) any Transfer of any or all Equity Securities by a
         Financial Investor to any Affiliate of such Person; provided that the
         transferee of any such Financial Investor is a Person who (x) is not a
         Non-Qualified Person, and (y) is a "qualified institutional buyer", an
         "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
         under the Securities Act) or an entity in which all of the equity
         owners are "accredited investors" (as defined in Rule 501(a)(1), (2),
         (3) or (7) under the Securities Act); and, provided further that any
         such Affiliate shall Transfer such Equity Securities to the Unitholder
         from whom the Equity Securities were originally received or acquired
         within five (5) days after ceasing to be an Affiliate of such
         transferring Unitholder;

                                       22
<PAGE>

                  (iv) any Transfer by a MidOcean Entity (y) so long as Section
         2.4 is complied with or (z) upon any liquidation or any other
         distribution to the partners or any other holder of a direct or
         indirect beneficial interest of such MidOcean Entity; provided that, in
         each case, such Person is a "qualified institutional buyer" or an
         "accredited investor" (as defined in Rule 501(a) under the Securities
         Act);

                  (v) any Transfer of any or all Equity Securities held by a
         Unitholder to any Person which is made in connection with (x) Section
         2.4, (y) Section 2.5 or (z) Section 2.6 of this Agreement;

                  (vi) any Transfer by Behrman or SEF III upon any liquidation
         or any other distribution to the partners or any other holder of a
         direct or indirect beneficial interest of Behrman or SEF III; provided
         that, in each case, such Person is a "qualified institutional buyer" or
         an "accredited investor" (as defined in Rule 501(a) under the
         Securities Act);

                  (vii) any Transfer by (w) USF of the USF Common B Units, Class
         C Units and Class C-1 Units, and (x) the Senior Unitholders of the
         Senior Units, in each case to any Person who (A) is not a Non-Qualified
         Person and (B) is a "qualified institutional buyer", an "accredited
         investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
         Securities Act) or an entity in which all of the equity owners are
         "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)
         under the Securities Act);

                  (viii) any Transfer not described in any of clauses (i)
         through (vii) above or (ix) through (xix) below if permitted by a
         majority of the members of the Company Board who are not officers,
         directors, managers or employees of, or partners in, the Person that
         proposes such Transfer or the proposed Transferee;

                  (ix) any Transfer of any or all of the Equity Securities held
         by the State of Michigan to any successor or additional trustee or
         custodian of the assets of the State of Michigan as may be duly
         appointed and qualified under the laws of such State;

                  (x) a Transfer of Equity Securities by Magnolia pursuant to
         the Magnolia Pledge Agreement;

                  (xi) a Transfer of Equity Securities by Shimmon pursuant to
         the Shimmon Pledge Agreement;

                  (xii) any Transfer by Gryphon upon any liquidation or any
         other distribution to the partners or any other holder of a direct or
         indirect beneficial interest of Gryphon; provided that, in each case,
         such Person is a "qualified institutional buyer" or an "accredited
         investor" (as defined in Rule 501(a) under the Securities Act);

                  (xiii) any Transfer of an indirect interest in those Equity
         Securities held by MidOcean Capital to MidOcean Celerity and the
         partners in MidOcean Celerity;

                  (xiv) any Transfer by a TCP Unitholder of TCP Units to any
         Person who (A) is not a Non-Qualified Person and (B) is a "qualified
         institutional buyer", an "accredited investor" (as defined in Rule
         501(a)(1), (2), (3) or (7) under the Securities Act) or an

                                       23
<PAGE>

         entity in which all of the equity owners are "accredited investors" (as
         defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act);

                  (xv) any Transfer by a TCP Unitholder or an Ares Unitholder
         pursuant to a pledge, lien or other encumbrance or any guaranty or
         realization thereof;

                  (xvi) any Transfer by a TCP Unitholder upon any liquidation or
         any other distribution to the partners or any other holder of a direct
         or indirect beneficial interest of such TCP Unitholder; provided that,
         in each case, such Person is a "qualified institutional buyer" or an
         "accredited investor" (as defined in Rule 501(a) under the Securities
         Act);

                  (xvii) any Transfer by an Ares Unitholder of Ares Units to any
         Person who (A) is not a Non-Qualified Person and (B) is a "qualified
         institutional buyer", an "accredited investor" (as defined in Rule
         501(a)(1), (2), (3) or (7) under the Securities Act) or an entity in
         which all of the equity owners are "accredited investors" (as defined
         in Rule 501(a)(1), (2), (3) or (7) under the Securities Act);

                  (xviii) any Transfer by an Ares Unitholder upon any
         liquidation or any other distribution to the partners or any other
         holder of a direct or indirect beneficial interest of such Ares
         Unitholder; provided that, in each case, such Person is a "qualified
         institutional buyer" or an "accredited investor" (as defined in Rule
         501(a) under the Securities Act);

                  (xix) any transfer of any or all Equity Securities which is
         made pursuant to an effective registration statement filed pursuant to
         the Securities Act or pursuant to Rule 144 under the Securities Act in
         an unsolicited brokerage transaction to the public; and

                  (xx) any Transfer by the Senior Unitholders upon any
         liquidation or any other distribution to the partners or any other
         holder of a direct or indirect beneficial interest of the Senior
         Unitholders; provided that, in each case, such Person is a "qualified
         institutional buyer" or an "accredited investor" (as defined in Rule
         501(a) under the Securities Act).

                  (b)      In any Transfer referred to above in Section 2.2(a),
(other than clauses (iv) (y) (to the extent such Transfer is made as part of a
transaction with is a Sale of the LLC), (v)(y), (v)(z) and (xix) thereof), the
Permitted Transferee shall agree in writing to be bound by all the provisions of
this Agreement and the LLC Agreement and shall execute and deliver to the
Company a counterpart to this Agreement and the LLC Agreement. Each Permitted
Transferee (other than a Permitted Transferee who received the relevant Equity
Securities in a Transfer pursuant to clauses (iv) (y) (to the extent such
Transfer is made as part of a transaction with is a Sale of the LLC), (v)(y),
(v)(z) or (xix) thereof) shall hold such shares of Equity Securities subject to
the provisions of this Agreement as a "Unitholder" which may become a Unitholder
hereunder as if such Permitted Transferee were an original signatory hereto and
shall be deemed to be a party to this Agreement.

                  (c)      In any Transfer, in its capacity as such, by a
Management Holder, a Profits Units Holder, a Senior Unitholder, TCP Unitholder,
Ares Unitholder or USF to a Permitted Transferee who is subject to Section
2.2(b), such Permitted Transferee shall thereafter be a

                                       24
<PAGE>

"Management Holder," "Profits Units Holder," "Senior Unitholder," "TCP
Unitholder," "Ares Unitholder" or, as the case may be, "USF" for purposes of
this Agreement with respect to the Units so Transferred; provided that this
provision shall not apply to the right of USF to be subject to the provisions of
Section 8.11 with respect to non-public information received by it prior to
August 30, 2000, in each case to the extent such Permitted Transferee is not an
Affiliate of USF. In any Transfer by MidOcean or, as the case may be, Behrman or
SEF III to a Permitted Transferee which is made pursuant to Section 2.2(a)(iii),
Section 2.2(a)(iv), Section 2.2(a)(vi) or part of a transaction which is a Sale
of the LLC, such Permitted Transferee shall thereafter be referred to
collectively with MidOcean (so long as MidOcean holds any Equity Securities
after such Transfer) as "MidOcean" or, as the case may be, referred to
collectively with Behrman (so long as Behrman holds any Equity Securities after
such Transfer) as "Behrman" or "SEF III", respectively. Any employee or director
of the Company or any of its Subsidiaries who holds Incentive Securities shall,
if requested, agree in writing to be bound by all the provisions of this
Agreement and shall execute and deliver to the Company a counterpart to this
Agreement and shall be deemed to be a "Management Holder" for purposes of this
Agreement. Any employee or director of the Company or any of its Subsidiaries
who holds Profits Units shall, if requested, agree in writing to be bound by all
the provisions of this Agreement and shall execute and deliver to the Company a
counterpart to this Agreement and shall be deemed to be a "Profits Units Holder"
for purposes of this Agreement.

                  Section 2.3 Right of First Refusal. (a) Prior to any Transfer
by USF pursuant to Section 2.2(a)(vii)(w) to any Person of Equity Securities
held by it from time to time, USF shall give written notice (the "Sale Notice")
to the Company, MidOcean and the Behrman Investor Group. The Sale Notice shall
(x) disclose in reasonable detail the identity of the prospective Transferee(s),
the number and type of Equity Securities to be Transferred (collectively, the
"Offered Securities"), and the terms and conditions of the proposed Transfer,
(y) have attached to it a copy of the bona fide written offer pursuant to which
the proposed Transfer is to be consummated and (z) confirm that the offer to
purchase such Offered Securities is irrevocable for a period of at least thirty
(30) days. Subject to Sections 2.3(b) and (c), USF shall not consummate any
Transfer until thirty (30) days after the Sale Notice has been given to the
Company, MidOcean and the Behrman Investor Group.

                  (b)      The Company may elect to purchase all, or any
portion, of the Offered Securities to be Transferred upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to USF and to MidOcean and the Behrman Investor Group within
ten (10) days after the Sale Notice has been delivered to the Company. If the
Company has not elected to purchase all of the Offered Securities to be
Transferred, MidOcean or its designees (the "MidOcean Group") and the Behrman
Investor Group or its designees (the "Behrman Group") may elect to purchase
their respective pro rata share (based on Common Unit Equivalents owned) of all
or any portion of the Offered Securities not purchased by the Company upon the
same terms and conditions as those set forth in the Sale Notice by giving
written notice of such election to USF within twenty (20) days after the Sale
Notice has been delivered to MidOcean and the Behrman Investor Group.

                  (c)      If the Company, the MidOcean Group and the Behrman
Group have not collectively given notice pursuant to Section 2.3(b) of their
intent to purchase all of the Offered Securities specified in the Sale Notice,
USF shall be entitled to Transfer, during the sixty (60) day

                                       25
<PAGE>

period beginning on the earlier of (i) the date that is twenty-one (21) days
after the date USF delivered the Sale Notice and (ii) the date on which USF has
been advised by the Company, the MidOcean Group and/or the Behrman Group that
they have collectively elected to purchase less than all of the Offered
Securities, all of the Offered Securities, to any Person who (x) is not a
Non-Qualified Person, and (y) is a "qualified institutional buyer" or an
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) at a price and on terms no more favorable to the Transferee(s)
thereof than those specified in the Sale Notice and the bona fide written offer
attached thereto. If the Offered Securities are not so Transferred during such
sixty (60) day period, they shall again be subject to the provisions of this
Section 2.3 upon a subsequent proposed Transfer by USF.

                  (d)      If the Company, the MidOcean Group and/or the Behrman
Group have agreed to purchase all of the Offered Securities pursuant to Section
2.3(b), the closing of such purchase shall occur within ten (10) Business Days
from the date the Company, the MidOcean Group and/or the Behrman Group have
notified USF of their intention to purchase all of the Offered Securities.

                  2.4 Sales by MidOcean Subject to Tag-Along Rights. (a) Subject
to Section 2.4(g), in the event that MidOcean proposes to effect a Transfer
(other than a Permitted Transfer described in Section 2.2(a)(iii), Section
2.2(a)(iv)(z), Section 2.2(a)(v)(y) or (z), Section 2.2(a)(xiii) or Section
2.2(a)(xix)), MidOcean shall promptly give written notice (the "Transfer
Notice") to the Company, the Behrman Investor Group, the Senior Unitholders, the
Ares Unitholders, the TCP Unitholders, the Profits Units Holders and each other
Unitholder owning at least one and one half percent (1.5%) of the then
outstanding Common Unit Equivalents (each such Unitholder, together with the
Behrman Investor Group, the Senior Unitholders, the Ares Unitholders, the TCP
Unitholders and the Profits Units Holders, the "Other Unitholders") at least
twenty (20) days prior to the closing of such Transfer. The Transfer Notice
shall (i) describe in reasonable detail the proposed Transfer including, without
limitation, the class and number of Equity Securities to be sold, the identity
of the prospective Transferee, the number of Common Unit Equivalents (assuming
all Derivative Units included in the Transfer constitute Common Unit
Equivalents) represented thereby, the purchase price of each such Equity
Security to be sold and the date such proposed sale is expected to be
consummated and (ii) have attached thereto an executed copy of the agreement
pursuant to which the proposed Transfer is to be consummated.

                  (b)      Each of the Other Unitholders shall have the right,
exercisable upon delivery of an irrevocable written notice to MidOcean within
ten (10) Business Days after receipt of the Transfer Notice (the "Response
Deadline"), to participate in such proposed Transfer on the same terms and
conditions that apply to MidOcean as set forth in the Transfer Notice including,
without limitation, the same price on a Common Unit Equivalent basis, the making
of all representations and warranties (provided that the Senior Unitholders, the
TCP Unitholders, the Ares Unitholders, USF, the Other Financial Investors, the
2001 Investors and the 2002 Investors shall only be required to make
representations and warranties concerning their respective existence and
authority to participate in such Sale of the LLC, their ownership of their
respective Equity Securities and their ability to Transfer such Equity
Securities free and clear of all liens and other encumbrances and, unless there
is a reasonable basis to believe that such representations and warranties would
not be true, the enforceability of terms pursuant to which such Sale of the LLC
is to be conducted against them and the compliance of such Sale of the

                                       26
<PAGE>

LLC under laws applicable to them and all agreements to which they or their
assets may be subject) and the granting of all indemnifications and the
execution of all agreements (including participating in any escrow arrangements)
to the extent of their respective "pro rata portion" (as defined in clause (c)
below) in the Transfer of such Equity Securities; provided that (x) the
indemnification obligation of MidOcean and each Participant (as defined below)
provided to the proposed transferee with respect to the breach of any
representation or warranty concerning the Company (other than the breach of
those representations and warranties that are not subject to any "cap" as
provided for in the sale agreement) shall be limited to the gross proceeds
received by each such Unitholder in connection with the Transfer and (y) the
liability of each Participant to the proposed transferee for the failure of such
Transfer to be consummated shall be limited to the last arms-length purchase
price paid for the Equity Securities proposed to be sold pursuant to this
Section 2.4, if the reason for the failure of such proposed Transfer to be
consummated does not in any manner result from a breach by such Participant of
any of its obligations or representations and warranties; and provided further
that USF, the Ares Unitholders, the TCP Unitholders and Shimmon shall not be
required to become a party to any non-competition arrangement or agreement. Each
Other Unitholder electing to participate in the Transfer described in the
Transfer Notice (each, a "Participant") shall indicate in its notice of election
to MidOcean the number of Common Unit Equivalents it desires to Transfer up to
the maximum amount allowed. MidOcean and each Other Unitholder shall be entitled
to Transfer a number of Common Unit Equivalents equal to the amount obtained
when the amount of Common Unit Equivalents to be Transferred, as set forth in
the Transfer Notice, is multiplied by a fraction, the numerator of which is the
number of Common Unit Equivalents held by such Unitholder immediately prior to
the Transfer proposed in the Transfer Notice and the denominator of which is the
total number of Common Unit Equivalents held by MidOcean and all Other
Unitholders immediately prior to the Transfer proposed in the Transfer Notice.
In the event that any Other Unitholder elected to not participate in such
Transfer or any Participant elected to Transfer less than the maximum number of
Common Unit Equivalents it was eligible to Transfer pursuant to the immediately
preceding sentence (the total number of Common Unit Equivalents that such Other
Unitholder or, as the case may be, Participant has declined to Transfer are
referred to collectively as "Excess Transferable Securities"), then MidOcean
and, as the case may be, each Participant who indicated in its notice of
election that it desired to Transfer the maximum number of Common Unit
Equivalents it was eligible to Transfer pursuant to the immediately preceding
sentence shall be entitled to sell an additional number of Common Unit
Equivalents equal to the amount obtained when the amount of Excess Transferable
Shares is multiplied by a fraction, the numerator of which is the number of
Common Unit Equivalents held by MidOcean or, as the case may be, such
Participant immediately prior to the Transfer proposed in the Transfer Notice
and the denominator of which is the total number of Common Unit Equivalents held
by MidOcean and all such Participants immediately prior to the Transfer proposed
in the Transfer Notice. No holder of Equity Securities (other than Common Unit
Equivalents) shall be entitled to sell Equity Securities (other than Common Unit
Equivalents) pursuant to this Section 2.4.

                  (c)      Each Participant shall effect its participation in
the Transfer by delivering to MidOcean at least three (3) Business Days prior to
the date scheduled for such Transfer as set forth in the Transfer Notice, one or
more certificates or other instruments, as applicable, in proper form for
transfer, which represent the number of Common Unit Equivalents which such
Participant is entitled to Transfer in accordance with Section 2.4(b). Such
certificate or

                                       27
<PAGE>

certificates or other instruments, as applicable, shall be delivered by MidOcean
to such Permitted Transferee on the date scheduled for such Transfer in
consummation of the Transfer pursuant to the terms and conditions specified in
the Transfer Notice and such Permitted Transferee shall remit to each such
Participant its pro rata portion of the net sale proceeds (taking into account
any transaction costs and expenses incurred by MidOcean in connection with such
Transfer including, without limitation, the fees described in Section 2.4(d)) to
which such Participant is entitled by reason of its participation in such sale.
For purposes of Section 2.4(b) and this Section 2.4(c), "pro rata portion" shall
mean for each Participant a fraction, the numerator of which is the number of
Common Unit Equivalents to be Transferred by such Participant pursuant to this
Section 2.4 and the denominator of which is the total number of Common Unit
Equivalents to be Transferred pursuant to this Section 2.4.

                  (d)      It is understood and agreed that in consideration of
investment banking services provided by an investment banking group (which may
consist of or include MidOcean or any of its Affiliates) a reasonable fee may be
paid in an amount that is customary and equivalent to a fee arrangement
negotiated on an "arms-length" basis.

                  (e)      The exercise or non-exercise of the rights of any of
the Other Unitholders hereunder to participate in one or more Transfers of
Equity Securities made by MidOcean shall not adversely affect their rights to
participate in subsequent Transfers of Equity Securities subject to this Section
2.4.

                  (f)      Notwithstanding anything contained in this Section
2.4 to the contrary, there shall be no liability on the part of MidOcean (or any
of its Affiliates and Permitted Transferees) to any Other Unitholder in the
event no Common Unit Equivalents are sold even if the provisions of this Section
2.4 have been triggered.

                  (g)      Notwithstanding any other provision contained in this
Agreement, the provisions of this Section 2.4 shall terminate upon the
consummation of an initial Public Offering of any of the Company, KSI or KHC.

                  Section 2.5 Grant to Selling Group of Drag-Along Rights for
Sale of the LLC. (a) At any time at the written request of the Required
Investors (for purposes of this Section 2.5, the "Selling Group"), each other
Unitholder agrees to vote all of its Voting Securities, at any meeting of
Unitholders or by written consent in lieu of a meeting, and shall sell its
Equity Securities in an amount proportionate to the total Equity Securities to
be sold in such Sale of the LLC transaction based upon its percentage ownership
of such Equity Securities along with the Selling Group, in connection with a
Sale of the LLC. In order to effect the foregoing covenant, each other
Unitholder hereby grants to the Selling Group with respect to all of such
holder's Voting Securities, an irrevocable proxy (which is deemed to be coupled
with an interest) for the term of this Section 2.5 with respect to any vote or
action by written consent of Members solely to effect such Sale of the LLC in
compliance with this Section 2.5.

                  (b)      The Company and the other Unitholders each hereby
agree to reasonably cooperate (including by waiving any appraisal rights to
which such Unitholder may be entitled under Applicable Law and each such
Unitholder does hereby waive all such appraisal rights) with the Selling Group
and the purchaser in any such Sale of the LLC and, to execute and deliver

                                       28
<PAGE>

all documents (including purchase agreements) and instruments as the Selling
Group and such purchaser reasonably request to effect such Sale of the LLC
including, without limitation, the making of all representations and warranties
(provided that the Senior Unitholders, the TCP Unitholders, the Ares
Unitholders, USF, the Other Financial Investors, the 2001 Investors and the 2002
Investors shall only be required to make representations and warranties
concerning their respective existence and authority to participate in such Sale
of the LLC, their ownership of their respective Equity Securities and their
ability to Transfer such Equity Securities free and clear of all liens and other
encumbrances and, unless there is a reasonable basis to believe that such
representations and warranties would not be true, the enforceability of terms
pursuant to which such Sale of the LLC is to be conducted against them and the
compliance of such Sale of the LLC under laws applicable to them and all
agreements to which they or their assets may be subject) the granting of all
indemnifications and the execution of all agreements (including participating in
any escrow arrangements) to the extent of their respective "pro rata portion" of
the proceeds based upon amounts received by such parties pursuant to Section 8.3
or 8.4, as applicable, of the LLC Agreement with respect to the net proceeds
received from such Sale of the LLC; provided that the indemnification obligation
of the Unitholder provided to the proposed transferee with respect to the breach
of any representation or warranty concerning the Company shall be limited to no
more than 15% of the net proceeds received by each such Unitholder in connection
with such Sale of the LLC; provided further that USF, Shimmon, the TCP
Unitholders and the Ares Unitholders shall not be required to become party to
any non-competition arrangement or agreement; and provided further that no
Financial Investor holding less than five percent (5%) of the then outstanding
Common Unit Equivalents shall be required to become party to any non-competition
arrangement or agreement if (i) such Financial Investor would be in violation of
such non-competition arrangement or agreement upon its execution due to other
investments held by such Financial Investor on the date of such Sale of the
Subsidiary Business, respectively or (ii) the execution of such non-competition
arrangement or agreement would unreasonably impede the ability of such Financial
Investor to make future non-controlling equity investments in accordance with
its investment policies and procedures. Upon such Sale of the LLC, each
Unitholder shall receive such amounts as it is entitled to receive pursuant to
Article VIII of the LLC Agreement from the net proceeds after any transaction
costs and expenses incurred by the Company, MidOcean, Behrman or Gryphon, in
connection with such Sale of the LLC including, without limitation, the fees
described in Section 2.5(c) and, except as otherwise set forth in this Section
2.5(b), such sale shall be on the same terms and conditions as afforded to
MidOcean, Behrman or Gryphon, as the case may be. Notwithstanding anything to
the contrary in this Section 2.5, the holders of Class A Units, Class A-1 Units,
and Class B-1 Units shall not be obligated to participate, vote in favor of or
consent to any Sale of the LLC transaction in compliance with this Section 2.5
unless the terms and conditions of such transaction provide that the holders of
such Class of Preferred Units receive an amount that is equal to or greater than
the respective Liquidation Preference Amount applicable to such class of Units,
as set forth in the LLC Agreement.

                  (c)      It is understood and agreed that in consideration of
investment banking services provided by an investment banking group (which may
consist of or include MidOcean, Behrman and Gryphon or any of their Affiliates)
a reasonable fee may be paid in an amount that is customary and equivalent to a
fee arrangement negotiated on an "arms-length" basis.

                                       29
<PAGE>

                  (d)      Notwithstanding anything contained in this Section
2.5 to the contrary, there shall be no liability on the part of the Selling
Group (or their respective Affiliates and Permitted Transferees) to any other
Unitholder in the event no Equity Securities are sold even if the provisions of
this Section 2.5 have been triggered.

                  (e)      Notwithstanding any other provision contained in this
Agreement, the provisions of this Section 2.5 shall terminate upon the
consummation of an initial Public Offering of any of the Company, KSI or KHC.

                  2.6 Sale of the Subsidiary Business by the Company. (a) The
Required Investors may cause the Company Board to consider for approval, and as
necessary under the LLC Agreement or Applicable Law, to cause a vote of Members
by meeting or action by written consent, as necessary, on or after August 30,
2006 for the purpose of effecting a Sale of the Subsidiary Business. Each holder
of Voting Securities agrees to vote all of its Voting Securities at any meeting
of Members, or by written consent in lieu of a meeting, in connection with such
Sale of the Subsidiary Business. In order to effect the foregoing covenant, each
Unitholder hereby grants to the Designated Proxy Agent with respect to all of
such holder's Voting Securities an irrevocable proxy (which is deemed to be
coupled with an interest) for the term of this Agreement (subject to Section
2.6(e)) with respect to any vote or action by written consent of Members solely
to effect such Sale of the Subsidiary Business in compliance with this Section
2.6.

                  (b)      The Company, KSI and the Unitholders each hereby
agree to reasonably cooperate (including by waiving any appraisal rights to
which such holder may be entitled under Applicable Law and such holder does
hereby waive all such appraisal rights) with the Designated Proxy Agent and the
purchaser in any such Sale of the Subsidiary Business and to execute and deliver
all documents (including purchase agreements) and instruments as the Designated
Proxy Agent and such purchaser reasonably request to effect such Sale of the
Subsidiary Business including, without limitation, the granting of all
indemnifications and the execution of all agreements (including participating in
any escrow arrangements) to the extent of their respective "pro rata portion" of
the proceeds based upon amounts received by such parties pursuant to Section 8.3
or 8.4, as applicable, of the LLC Agreement with respect to the net proceeds
received from such Sale of the Subsidiary Business; provided that the
indemnification obligation of the Designated Proxy Agent, the Company, KSI and
each other Unitholder provided to the proposed transferee with respect to the
breach of any representation or warranty concerning the Company shall be limited
to the net proceeds received by the Company, KSI or each such Unitholder in
connection with such Sale of the Subsidiary Business; provided further that USF,
Shimmon, the TCP Unitholders and the Ares Unitholders shall not be required to
become party to any non-competition arrangement or agreement; and provided
further that no Financial Investor holding less than five percent (5%) of the
then outstanding Common Unit Equivalents shall be required to become party to
any non-competition arrangement or agreement if (i) such Financial Investor
would be in violation of such non-competition arrangement or agreement upon its
execution due to other investments held by such Financial Investor on the date
of such Sale of the Subsidiary Business, respectively or (ii) the execution of
such non-competition arrangement or agreement would unreasonably impede the
ability of such Financial Investor to make future non-controlling equity
investments in accordance with its investment policies and procedures. Upon such
Sale of the Subsidiary Business, each Unitholder shall receive such amounts as
it is entitled to receive

                                       30
<PAGE>

pursuant to Article VIII of the LLC Agreement from the net proceeds after any
transaction costs and expenses incurred by the Company, MidOcean, Behrman or
Gryphon, in connection with such Sale of the Subsidiary Business including,
without limitation, the fees described in Section 2.6(c) and, except as
otherwise set forth in this Section 2.6(b), such sale shall be on the same terms
and conditions as afforded to MidOcean, Behrman or Gryphon, as the case may be.
Notwithstanding anything to the contrary in this Section 2.6, the holders of
Class A Units, Class A-1 Units, and Class B-1 Units shall not be obligated to
participate, vote in favor of or consent to any Sale of the Subsidiary Business
transaction in compliance with this Section 2.6 unless the terms and conditions
of such transaction provide that the holders of such series of Preferred Units
receive an amount that is equal to or greater than the respective Liquidation
Preference Amount applicable to such class of Units, as set forth in the LLC
Agreement.

                  (c)      It is understood and agreed that in consideration of
investment banking services provided to the Company, KSI or KHC by an investment
banking group (which may consist of any one or more of or include MidOcean,
Behrman, Gryphon or any of their respective Affiliates) a reasonable fee may be
paid by the Company, KSI or KHC in an amount that is customary and equivalent to
a fee arrangement negotiated on an "arms-length" basis.

                  (d)      Notwithstanding anything contained in this Section
2.6 to the contrary, there shall be no liability on the part of the Designated
Proxy Agent (or its Affiliates and Permitted Transferees) to any other
Unitholder or recipient of Voting Securities in a distribution by the Company in
the event that no Sale of the Subsidiary Business occurs even if the provisions
of this Section 2.6 have been triggered.

                  (e)      Notwithstanding any other provision contained in this
Agreement, upon the consummation of an initial Public Offering of KSI or KHC,
sales by the Company of Capital Stock of the Public Kinetics Entity shall not be
deemed to be a Sale of the Subsidiary Business, and the provisions of this
Section 2.6 shall terminate with respect to such Public Kinetics Entity.

                  Section 2.7 Sale of the Subsidiary Business by Stockholders.
(a) Following a distribution of KHC Capital Stock or KSI Capital Stock to the
Unitholders in accordance with the LLC Agreement, the Required Investors may
cause the Board of Directors of KHC or KSI, as applicable, to call a special
meeting of Stockholders of such entity to be held on August 30, 2006 or to
distribute a written consent in lieu of a meeting for the purpose of effecting a
Sale of the Subsidiary Business, and each Stockholder agrees to vote all of its
shares of capital stock at such special meeting of Stockholders or by written
consent in lieu of a meeting and shall sell the "pro rata portion" of its
Derivative Capital Stock in connection with such Sale of the Subsidiary
Business. In order to effect the foregoing covenant, each other Stockholder
hereby grants to the Designated Proxy Agent with respect to all of such
Stockholder's shares of capital stock an irrevocable proxy (which is deemed to
be coupled with an interest) for the term of this Agreement with respect to any
stockholder vote or action by written consent solely to effect such Sale of the
Subsidiary Business in compliance with this Section 2.7.

                  (b)      KHC or KSI, as the case may be, and the other
Stockholders each hereby agree to reasonably cooperate (including by waiving any
appraisal rights to which such Stockholder may be entitled under Applicable Law
and each such Stockholder does hereby waive all such appraisal rights) with the
Designated Proxy Agent and the purchaser in any such

                                       31
<PAGE>

Sale of the Subsidiary Business and to execute and deliver all documents
(including purchase agreements) and instruments as the Designated Proxy Agent
and such purchaser reasonably request to effect such Sale of the Subsidiary
Business including, without limitation, the making of all representations and
warranties (provided that the Senior Unitholders, the TCP Unitholders, the Ares
Unitholders, USF, the Other Financial Investors, the 2001 Investors and the 2002
Investors shall only be required to make representations and warranties
concerning their respective existence and authority to participate in such Sale
of the Subsidiary Business, their ownership of their respective Derivative
Capital Stock and their ability to Transfer such Derivative Capital Stock free
and clear of all liens and other encumbrances and, unless there is a reasonable
basis to believe that such representations and warranties would not be true, the
enforceability of terms pursuant to which such Sale of the Subsidiary Business
is to be conducted against them and the compliance of such Sale of the
Subsidiary Business under laws applicable to them and all agreements to which
they or their assets may be subject) and the granting of all indemnifications
and the execution of all agreements (including participating in any escrow
arrangements) to the extent of their respective "pro rata portion"; provided
that the indemnification obligation of the Designated Proxy Agent and each other
Stockholder provided to the proposed transferee with respect to the breach of
any representation or warranty concerning KHC or KSI, as the case may be, shall
be limited to the net proceeds received by each such Stockholder in connection
with such Sale of the Subsidiary Business; provided further that USF, Shimmon,
the TCP Unitholders and the Ares Unitholders shall not be required to become
party to any non-competition arrangement or agreement; and provided further that
no Financial Investor holding less than five percent (5%) of the then
outstanding Common Stock Equivalents shall be required to become party to any
non-competition arrangement or agreement if (i) such Financial Investor would be
in violation of such non-competition arrangement or agreement upon its execution
due to other investments held by such Financial Investor on the date of such
Sale of the Subsidiary Business or (ii) the execution of such non-competition
arrangement or agreement would unreasonably impede the ability of such Financial
Investor to make future non-controlling equity investments in accordance with
its investment policies and procedures. MidOcean, Behrman and Gryphon agree that
upon such Sale of the Subsidiary Business each Stockholder shall receive its
"pro rata portion" of the net proceeds (taking into account (x) the exercise or
conversion price of any Equity Security to be Transferred and (y) any
transaction costs and expenses incurred by MidOcean, Behrman or Gryphon, in
connection with such Sale of the Subsidiary Business including, without
limitation, the fees described in Section 2.7(c)) and, except as otherwise set
forth in this Section 2.7(b), such sale shall be on the same terms and
conditions as afforded to MidOcean, Behrman or Gryphon, as the case may be. For
purposes of Sections 2.7(a) and (b), "pro rata portion" shall mean for each
Stockholder a fraction, the numerator of which is the number of Capital Stock
Equivalents held by such Stockholder immediately prior to such Sale of the
Subsidiary Business and the denominator of which is the total number of Capital
Stock Equivalents outstanding immediately prior to such Sale of the Subsidiary
Business that are held by parties bound by this Agreement or who otherwise
participate in such Sale of the Subsidiary Business transaction. For purposes of
this Section 2.7(b), the computation of Common Stock Equivalents shall include
Equity Securities that would become Common Stock Equivalents in accordance with
their terms immediately after the consummation of the transactions contemplated
by this Section 2.7. Notwithstanding anything to the contrary in this Section
2.7, the holders of Series A Preferred Stock, Series A-1 Preferred Stock and
Series B-1 Preferred Stock shall not be obligated to participate, vote in favor

                                       32
<PAGE>

of or consent to any Sale of the Subsidiary Business transaction in compliance
with this Section 2.7 unless the terms and conditions of such transaction
provide that the holders of such series of Preferred Stock receive an amount
that is equal to or greater than the liquidation preference applicable to the
such series of Preferred Stock, as set forth in the certificate of incorporation
of KHC or KSI, as applicable.

                  (c)      It is understood and agreed that in consideration of
investment banking services provided by an investment banking group (which may
consist of any one or more of or include MidOcean, Behrman, Gryphon or any of
their respective Affiliates) a reasonable fee may be paid in an amount that is
customary and equivalent to a fee arrangement negotiated on an "arms-length"
basis.

                  (d)      Notwithstanding anything contained in this Section
2.7 to the contrary, there shall be no liability on the part of the Designated
Proxy Agent (or its Affiliates and Permitted Transferees) to any other
Stockholder in the event no Equity Securities are sold even if the provisions of
this Section 2.7 have been triggered.

                  (e)      Notwithstanding any other provision contained in this
Agreement, upon the consummation of an initial Public Offering of KSI or KHC,
sales by the Stockholders of Capital Stock of the Public Kinetics Entity shall
not be deemed to be a Sale of the Subsidiary Business, and the provisions of
this Section 2.7 shall terminate with respect to such Public Kinetics Entity.

                  Section 2.8 Grant of Preemptive Rights to Unitholders. (a) In
the event that, at any time, the Company shall decide to undertake an issuance
of New Securities, the Company shall at such time deliver to the Behrman
Investor Group, the Senior Unitholders, the Ares Unitholders, the TCP
Unitholders and each other Unitholder (other than USF) holding at such time
Common Unit Equivalents representing not less than one percent (1%) of all
Common Unit Equivalents, written notice of the Company's decision, describing
the amount, type and terms (including the exercise price and expiration date
thereof in the case of any Derivative Securities) of such New Securities, the
purchase price per New Security (the "New Securities Price") to be paid by the
purchasers of such New Securities and the other terms upon which the Company has
decided to issue the New Securities including, without limitation, the expected
timing of such issuance which will in no event be more than sixty (60) days or
less than thirty (30) days after the date upon which such notice is given (the
"Preemptive Notice"). Each such Unitholder (other than USF) shall have fifteen
(15) days from the date on which it receives the Preemptive Notice to agree by
written notice to the Company (a "Preemptive Exercise Notice") to purchase up to
its proportional share of such New Securities at the New Securities Price and
upon the general terms specified in the Preemptive Notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased by any such Unitholder. In the event that in connection with such a
proposed issuance of New Securities, such Unitholder shall for any reason fail
or refuse to give such written notice to the Company within such fifteen (15)
day period, such Unitholder shall, for all purposes of this Section 2.8, be
deemed to have refused (in that particular instance only) to purchase any of
such New Securities and to have waived (in that particular instance only) all of
its rights under this Section 2.8 to purchase any of such New Securities. For
purposes of this Section 2.8, a Unitholder's "proportional share" means, at any
time, the quotient obtained by dividing the number of Common Unit Equivalents
held by such

                                       33
<PAGE>

Unitholder at such time by the aggregate number of Common Unit Equivalents held
by all Unitholders entitled to preemptive rights under this Section 2.8(a) at
such time. In the event that any such Unitholder does not elect to purchase all
of its respective proportional share, the New Securities which were available
for purchase by such non-electing Unitholders (the "Excess New Securities")
shall automatically be deemed to be accepted for purchase by such Unitholders
who indicated in their Preemptive Exercise Notice a desire to participate in the
purchase of New Securities in excess of their proportional share. Unless
otherwise agreed by all such Unitholders participating in the purchase, each
Unitholder who indicated to purchase more than its proportional share shall
purchase a number of Excess New Securities equal to the lesser of (i) the number
of Excess New Securities indicated in the Preemptive Exercise Notice, if any,
and (ii) an amount equal to the product of (x) the number of Excess New
Securities and (y) a fraction, the numerator of which is the number of Common
Unit Equivalents held at such time by such Unitholder and the denominator of
which is the aggregate number of Common Unit Equivalents held at such time by
all Unitholders who participate in the purchase of Excess New Securities.

                  (b)      In the event and to the extent that, subsequent to
the procedure set forth in Section 2.8(a), any New Securities to be issued by
the Company are not subject to an agreement by and between the Company and any
Unitholder to purchase such New Securities, the Company shall be free to issue
such New Securities to any Person, provided that (i) the price per New Security
at which such New Securities are being issued to and purchased by such Person is
not less than the New Securities Price and (ii) the other terms and conditions
pursuant to which such Person purchases such New Securities are substantially
equivalent to the terms set forth in the Preemptive Notice. Any New Securities
not issued or sold within one hundred eighty (180) days after the date of the
Preemptive Notice shall again be subject to the provisions of this Section 2.8.

                                   ARTICLE III

                             KSI REGISTRATION RIGHTS

                  Section 3.1 KSI Required Registration.

                  (a)      Company Demand Rights. Prior to the completion of the
initial Public Offering of KSI, the Company has the right to compel a Public
Offering of KSI at its discretion at any time.

                  (b)      Post-IPO Demand Rights. If a written request shall be
made to KSI, which request shall specify the KSI Registrable Securities to be
sold and the intended method of disposition thereof (a "KSI Demand Request"), at
any time after the date that is

                  (i) after the date the registration statement filed in
connection with an initial Public Offering of KSI was declared effective, by the
Company, or

                  (ii) if KSI Capital Stock has been distributed by the Company
to Members,

                                       34
<PAGE>

                           (A) one hundred eighty (180) days after the date the
registration statement filed in connection with an initial Public Offering of
KSI was declared effective, by MidOcean, or Behrman,

                           (B) the Senior Unitholder Filing Date, by the Senior
Unitholders holding a majority of then outstanding Senior Units on a Deemed
Converted Basis,

                           (C) the TCP Unitholder Filing Date, by the TCP
Unitholders holding a majority of then outstanding TCP Units on a Deemed
Converted Basis,

                           (D) the Ares Unitholder Filing Date, by the Ares
Unitholders holding a majority of then outstanding Ares Units on a Deemed
Converted Basis,

                           (E) the 2001 Investors Filing Date, by the 2001
Investors holding a majority of then outstanding aggregate Class A Units and
Class A-1 Units on a Deemed Converted Basis held by the 2001 Investors, or

                           (F) the 2002 Investors Filing Date, by the 2002
Investors holding a majority of then outstanding Class B-1 Units on a Deemed
Converted Basis held by the 2002 Investors,

to effect a registration under the Securities Act of KSI Registrable Securities
held by such Unitholders (each, a "KSI Required Registration"), then KSI shall
promptly use its reasonable efforts to effect such KSI Required Registration;
provided that each of MidOcean and Behrman may only make one (1) KSI Demand
Request for a "long-form" KSI Required Registration and one (1) KSI Demand
Request for a "short form" KSI Required Registration; provided further that in
lieu of the KSI Demand Request for a "long form" KSI Required Registration, each
of MidOcean and Behrman may instead elect to have an additional "short form" KSI
Required Registration; provided further that the Senior Unitholders may not make
a KSI Demand Request for a "long-form" KSI Required Registration and may only
make one (1) KSI Demand Request for a "short form" KSI Required Registration and
only if, at any time after the Senior Unitholder Filing Date, any Senior
Unitholder is unable to sell all of its KSI Common Stock received in connection
with its ownership of Senior Units pursuant to Rule 144 under the Securities Act
free of the volume restrictions thereof; provided further that the TCP
Unitholders may not make a KSI Demand Request for a "long-form" KSI Required
Registration and may only make one (1) KSI Demand Request for a "short form" KSI
Required Registration unless KSI is not then eligible to effect a "short form"
KSI Required Registration, in which case the TCP Unitholders may make a KSI
Demand Request for a "long-form" KSI Required Registration; provided further
that the Ares Unitholders may not make a KSI Demand Request for a "long-form"
KSI Required Registration and may only make one (1) KSI Demand Request for a
"short form" KSI Required Registration unless KSI is not then eligible to effect
a "short form" KSI Required Registration, in which case the Ares Unitholders may
make a KSI Demand Request for a "long-form" KSI Required Registration; provided
further that the 2001 Investors may not make a KSI Demand Request for a
"long-form" KSI Required Registration and may only make two (2) KSI Demand
Requests for a "short form" KSI Required Registration and only if, at any time
after the 2001 Investor Filing Date, each 2001 Investor is unable to sell all of
its KSI Common Stock received in a distribution by the Company with respect to
its ownership of Class A or Class A-1

                                       35
<PAGE>

Units pursuant to Rule 144 under the Securities Act free of the volume
restrictions thereof; provided further that the 2002 Investors may not make a
KSI Demand Request for a "long-form" KSI Required Registration and may only make
one (1) KSI Demand Request for a "short form" KSI Required Registration and only
if, at any time after the 2002 Investor Filing Date, each 2002 Investor is
unable to sell all of its KSI Common Stock received in a distribution from the
Company with respect to its ownership of Class B-1 Units pursuant to Rule 144
under the Securities Act free of the volume restrictions thereof; provided
further that the registration rights of the 2002 Investors shall be in addition
to the registration rights granted to Behrman and MidOcean under Section
3.1(b)(ii); and provided further that KSI shall not be required to comply with
more than two (2) KSI Demand Requests during any twelve (12) month period.

                  (c)      Piggyback Rights. Upon receipt by KSI of any KSI
Demand Request, other than in respect of its initial Public Offering, KSI shall
deliver a written notice (a "KSI Demand Notice") to the Company and to each
Unitholder who holds KSI Registrable Securities obtained through a distribution
of such securities by the Company who did not make such KSI Demand Request
stating that KSI intends to comply with a KSI Demand Request and informing the
Company and each such Unitholder of its right to include KSI Registrable
Securities in such KSI Required Registration. Within ten (10) Business Days
after receipt of a KSI Demand Notice, the Company and each such Unitholder shall
have the right to request in writing that KSI include all or a specific portion
of the KSI Registrable Securities held by the Company or such Unitholder in such
KSI Required Registration.

                  (d)      Postponement. KSI may postpone any KSI Required
Registration for a reasonable period of time, not to exceed one hundred eighty
(180) days, if the KSI Board of Directors determines in good faith that such KSI
Required Registration would (i) require the disclosure of a material transaction
or other matter and such disclosure would be disadvantageous to KSI or (ii)
adversely affect a material financing, acquisition, disposition of assets or
stock, merger or other transaction to which KSI may enter into; provided that
KSI may postpone a KSI Required Registration only once during any twelve (12)
month period.

                  (e)      Time for Filing and Effectiveness. On or before the
date which is sixty (60) days after the KSI Demand Request, KSI shall file with
the SEC the KSI Required Registration with respect to all KSI Registrable
Securities to be so registered, and shall use its reasonable efforts to cause
such KSI Required Registration to become effective as promptly as practicable
after the filing thereof, but in no event later than the day which is one
hundred twenty (120) days after the date of the KSI Demand Request.

                  (f)      Selection of Underwriters. In the event that the KSI
Registrable Securities to be registered pursuant to a KSI Required Registration
are to be disposed of in an underwritten Public Offering, the underwriters of
such Public Offering shall be one or more underwriting firms of nationally
recognized standing selected by KSI and reasonably acceptable to the Company and
Unitholders that together hold a majority of the KSI Registrable Securities to
be included in such KSI Required Registration.

                  (g)      Priority on KSI Required Registrations. In the event
that, in the case of any KSI Required Registration, the managing underwriter for
the Public Offering contemplated by Section 3.1(f) shall advise KSI in writing
(with a copy to each holder of KSI Registrable

                                       36
<PAGE>

Securities requesting sale) that, in such underwriter's opinion, the amount of
securities requested to be included in such KSI Required Registration would
adversely affect the Public Offering and sale (including pricing) of such KSI
Registrable Securities (such writing to state the basis of such opinion and the
approximate number of KSI Registrable Securities that may be included in such
Public Offering without such effect), KSI will include in such KSI Required
Registration the number of KSI Registrable Securities that KSI is so advised can
be sold in such Public Offering in the following amounts:

                           (i) first, all KSI Registrable Securities requested
         to be sold by the Company,

                           (ii) second, pro rata among MidOcean, the Behrman
         Investor Group, the 2001 Investors, the 2002 Investors, the Senior
         Unitholders, the TCP Unitholders, the Ares Unitholders and the holders
         of Profits Units on the basis of the number of KSI Registrable
         Securities requested to be registered by such holders;

                           (iii) third, all KSI Registrable Securities requested
         to be sold by all other holders of KSI Registrable Securities pursuant
         to this Section 3.1 pro rata among such holders on the basis of the
         number of KSI Registrable Securities requested to be registered by such
         holders; provided however that if such managing underwriter shall
         advise KSI that, in such underwriter's opinion, the inclusion of KSI
         Registrable Securities held by Management Holders would adversely
         affect the Public Offering and sale (including pricing) of such
         securities, then the number of KSI Registrable Securities held by such
         Management Holders (other than Shimmon) to be included in such Public
         Offering may be disproportionately reduced to avoid such adverse
         result; and

                           (iv) fourth, securities proposed to be sold by KSI
         for its own account or for other holders of KSI Equity Securities with
         registration rights with respect to such securities.

                  (h)      Additional KSI Demand Requests. In the event that KSI
postpones any KSI Required Registration in accordance with Section 3.1(d) by
more than sixty (60) days, the KSI Demand Request pursuant to which such KSI
Required Registration was to have been made may be withdrawn by the Unitholder
who initiated such KSI Demand Request and shall not be deemed to be a KSI Demand
Request pursuant to Section 3.1(b).

                  Section 3.2  KSI Incidental Registration.

                  (a)      Filing of Registration Statement. If KSI proposes to
register any of its securities (x) for its own account in its initial Public
Offering and includes in such registration any securities to be sold for the
account of any other Person; or (y) for its own account or for the account of
any other Person at any time after its initial Public Offering (other than a KSI
Required Registration) (any such proposed registration being a "KSI Incidental
Registration") under the Securities Act (other than pursuant to a registration
statement on Form S-4, Form S-8, or Form S-3 in the case of a registration
solely for resale of securities issued as consideration in an acquisition of a
Person by KSI, or any successor forms thereto or Section 3.1 hereof) for sale in
a Public Offering, it will at each such time give prompt written notice to the
holders of all KSI

                                       37
<PAGE>

Registrable Securities of its intention to do so, which notice shall be given at
least thirty (30) days prior to the date that a registration statement relating
to such registration is proposed to be filed with the SEC. Upon the written
request of the Company or any Unitholder holding KSI Registrable Securities to
include KSI Registrable Securities held by it under such registration statement
(which request shall (i) be made within fifteen (15) days after the receipt of
any such notice, and (ii) specify the KSI Registrable Securities intended to be
included by such holder), KSI will use its reasonable efforts to effect the
registration of all KSI Registrable Securities that KSI has been so requested to
register; provided however that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, KSI shall
determine for any reason to terminate such registration statement and not to
register such securities, KSI may, at its election, give written notice of such
determination to each such holder and, thereupon, shall be relieved of its
obligation to register any KSI Registrable Securities of such Persons in
connection with such registration.

                  (b)      Selection of Underwriters. Notice of KSI's intention
to register such securities shall designate the proposed underwriters of such
Public Offering (which shall be one or more underwriting firms of nationally
recognized standing) and shall contain KSI's agreement to use its reasonable
efforts, if requested to do so, to arrange for such underwriters to include in
such underwriting the KSI Registrable Securities that KSI has been so requested
to sell pursuant to this Section 3.2, it being understood that the holders of
KSI Registrable Securities shall have no right to select different underwriters
for the disposition of their KSI Registrable Securities.

                  (c)      Priority on KSI Incidental Registrations. If the
managing underwriter for the Public Offering contemplated by this Section 3.2
shall advise KSI in writing that, in such underwriter's opinion, the number of
securities requested to be included in such KSI Incidental Registration would
adversely affect the Public Offering and sale (including pricing) of such
securities (such writing to state the basis of such opinion and the approximate
number of securities that may be included in such Public Offering without such
effect), KSI shall include in such KSI Incidental Registration the number of
securities that KSI is so advised can be sold in such Public Offering, in the
following amounts and order of priority:

                  (i) first, securities proposed to be sold by KSI for its own
         account and any securities proposed to be offered by KSI for the
         account of such Person who has exercised its demand registration rights
         other than pursuant to this Agreement, as the case may be; provided
         that such other Person is not an owner of ten percent (10%) or more of
         the KSI Equity Securities or an Affiliate of KSI, in which case such
         other Person's priority shall be governed by clause (iii) below;
         provided further that for the purposes of this Section 3.2, any
         underwriter acting in its capacity as such shall not be deemed an
         Affiliate of KSI;

                  (ii) second, the KSI Registrable Securities requested to be
         registered by the Company pursuant to this Section 3.2;

                  (iii) third, the KSI Registrable Securities requested to be
         registered by the Unitholders pro rata among such Unitholders on the
         basis of the number of KSI Registrable Securities requested to be sold
         by such Unitholders pursuant to this Section

                                       38
<PAGE>

         3.2; provided however that if such managing underwriter shall advise
         KSI that, in such underwriter's opinion, the inclusion of KSI
         Registrable Securities held by Management Holders would adversely
         affect the Public Offering and sale (including pricing) of such
         securities, then the number of KSI Registrable Securities held by such
         Management Holders (other than Shimmon) to be included in such Public
         Offering may be disproportionately reduced to avoid such adverse
         result; and

                  (iv) fourth, pro rata among all other holders of KSI Equity
         Securities having registration rights with respect to such securities.

                  Section 3.3 Registration Procedures. KSI will use its
reasonable efforts to effect each KSI Required Registration pursuant to Section
3.1 and each KSI Incidental Registration pursuant to Section 3.2, and to
cooperate with the sale of such KSI Registrable Securities in accordance with
the intended method of disposition thereof as quickly as possible, and KSI will
as expeditiously as possible:

                  (a)      subject, in the case of a KSI Incidental
Registration, to the proviso to Section 3.2(a), prepare and file with the SEC
the registration statement and use its reasonable efforts to cause the
Registration to become effective; provided however that, to the extent
practicable, at least ten (10) Business Days prior to filing any registration
statement or prospectus or any amendments or supplements thereto, KSI will
furnish to the holders of the KSI Registrable Securities covered by such
registration statement and their counsel, copies of all such documents proposed
to be filed and any such holder shall have the opportunity to comment on any
information pertaining solely to such holder and its plan of distribution that
is contained therein and KSI shall make the corrections reasonably requested by
such holder with respect to such information prior to filing any such
registration statement or amendment;

                  (b)      subject, in the case of a KSI Incidental
Registration, to the proviso to Section 3.2(a), prepare and file with the SEC
such amendments and post-effective amendments to any registration statement and
any prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all KSI Registrable Securities
covered by such registration statement until such time as all of such KSI
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement and cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;

                  (c)      furnish, upon request, to each holder of KSI
Registrable Securities to be included in such KSI Registration and the
underwriter or underwriters, if any, without charge, one signed copy of the
registration statement and any post-effective amendment thereto, and such number
of conformed copies thereof and such number of copies of the prospectus
(including each preliminary prospectus and each prospectus filed under Rule 424
under the Securities Act), any amendments or supplements thereto and any
documents incorporated by reference therein, as such holder or underwriter may
reasonably request in order to facilitate the disposition of the KSI Registrable
Securities being sold by such holder (it being understood that KSI consents to
the use of the prospectus and any amendment or supplement thereto by each

                                       39
<PAGE>

holder of KSI Registrable Securities covered by such registration statement and
the underwriter or underwriters, if any, in connection with the Public Offering
and sale of the KSI Registrable Securities covered by the prospectus or any
amendment or supplement thereto);

                  (d)      notify each holder of the KSI Registrable Securities
to be included in such KSI Registration and the underwriter or underwriters, if
any:

                           (i) of any stop order or other order suspending the
         effectiveness of any registration statement, issued or threatened by
         the SEC in connection therewith, and take all reasonable actions
         required to prevent the entry of such stop order or to remove it or
         obtain withdrawal of it at the earliest possible moment if entered;

                           (ii) when such registration statement or any
         prospectus used in connection therewith, or any amendment or supplement
         thereto, has been filed and, with respect to such registration
         statement or any post-effective amendment thereto, when the same has
         become effective;

                           (iii) of any written request by the SEC for
         amendments or supplements to such registration statement or prospectus;
         and

                           (iv) of the receipt by KSI of any notification with
         respect to the suspension of the qualification of any KSI Registrable
         Securities for sale under the applicable securities or blue sky laws of
         any jurisdiction;

                  (e)      if requested by the managing underwriter or
underwriters or any holder of KSI Registrable Securities to be included in such
KSI Registration in connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement or post-effective
amendment such information relating to such underwriting as the managing
underwriter or underwriters or such holder reasonably requests to be included
therein; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such prospectus supplement or post-effective amendment;

                  (f)      on or prior to the date on which a KSI Registration
is declared effective, use its reasonable efforts to register or qualify, and
cooperate with the holders of KSI Registrable Securities to be included in such
KSI Registration, the underwriter or underwriters, if any, and their counsel in
connection with the registration or qualification of the KSI Registrable
Securities covered by such KSI Registration, for offer and sale under the
securities or "blue sky" laws of each state and other jurisdiction of the United
States as any such holder or underwriter reasonably requests in writing; use its
reasonable efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective; and do any and all
other acts or things necessary or advisable to enable the disposition of the KSI
Registrable Securities in all such jurisdictions reasonably requested to be
covered by such KSI Registration; provided however that KSI shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;

                                       40
<PAGE>

                  (g)      in connection with any sale pursuant to a KSI
Registration, cooperate with the holders of KSI Registrable Securities to be
included in such KSI Registration and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities to be sold under such
KSI Registration, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
such holders may request;

                  (h)      use its reasonable efforts to cause the KSI
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities within the United States and having
jurisdiction over KSI, the Company or any Subsidiary as may be necessary to
enable the seller or sellers thereof or the underwriter or underwriters, if any,
to consummate the disposition of such securities;

                  (i)      use its reasonable efforts to obtain:

                           (A) at the time of effectiveness of each KSI
         Registration, a "cold comfort letter" from KSI's independent certified
         public accountants covering such matters of the type customarily
         covered by "cold comfort letters" as the holders of a majority of the
         KSI Registrable Securities to be included in such KSI Registration and
         the underwriters reasonably request; and

                           (B) at the time of any underwritten sale pursuant to
         the registration statement, a "bring-down comfort letter," dated as of
         the date of such sale, from KSI's independent certified public
         accountants covering such matters of the type customarily covered by
         "bring-down comfort letters" as the Requisite Holders and the
         underwriters reasonably request;

                  (j)      use its reasonable efforts to obtain, at the time of
effectiveness of each KSI Registration and at the time of any sale pursuant to
each KSI Registration, an opinion or opinions addressed to the holders of the
KSI Registrable Securities to be included in such KSI Registration and the
underwriter or underwriters, if any, in customary form and scope from counsel
for KSI (who may be its internal counsel);

                  (k)      notify each seller of KSI Registrable Securities
covered by such KSI Registration, upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in such KSI
Registration, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and promptly prepare and file
with the SEC and furnish to such seller or holder a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers or prospective purchasers of
such securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they are made;

                  (l)      otherwise comply with all applicable rules and
regulations of the SEC, and make generally available to its security holders (as
contemplated by Section 11(a) under the Securities Act) an earnings statement
satisfying the provisions of Rule 158 under the Securities

                                       41
<PAGE>

Act no later than ninety (90) days after the end of the twelve (12) month period
beginning with the first month of KSI's first fiscal quarter commencing after
the effective date of the registration statement, which statement shall cover
said twelve (12) month period;

                  (m)      provide and cause to be maintained a transfer agent
and registrar for all KSI Registrable Securities covered by each KSI
Registration from and after a date not later than the effective date of such KSI
Registration;

                  (n)      use its reasonable efforts to cause all KSI
Registrable Securities covered by each KSI Registration to be listed subject to
notice of issuance, prior to the date of first sale of such KSI Registrable
Securities pursuant to such KSI Registration, on each securities exchange on
which the KSI Common Stock is then listed, and admitted to trading on Nasdaq, if
the KSI Common Stock or any such other securities of KSI are then admitted to
trading on Nasdaq; and

                  (o)      enter into such agreements (including underwriting
agreements in customary form) and take such other actions as the Requisite
Holders shall reasonably request in order to expedite or facilitate the
disposition of such KSI Registrable Securities. KSI may require each holder of
KSI Registrable Securities that will be included in such KSI Registration to
furnish KSI with such information in respect of such holder as KSI may
reasonably request in writing and as is required by Applicable Law.

                  Section 3.4 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement
registering KSI Registrable Securities under the Securities Act, KSI shall give,
upon reasonable notice and during normal business hours, the holders of such KSI
Registrable Securities so registered, their underwriters, if any, and their
respective counsel and accountants access to its books and records and an
opportunity to discuss the business of KSI with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' or such underwriters' to conduct a
reasonable investigation within the meaning of Section 11(b)(3) of the
Securities Act.

                  Section 3.5 Rights of Requesting Holders. Each holder of KSI
Registrable Securities to be included in a KSI Registration which makes a
written request therefor in Section 3.1 or 3.2, as the case may be, shall have
the right to receive within thirty (30) days of receipt by KSI of such request
copies of the information, notices and other documents described in Section
3.3(l) and Section 3.3(o).

                  Section 3.6 KSI Registration Expenses. KSI will pay all KSI
Registration Expenses in connection with each registration of KSI Registrable
Securities, including, without limitation, any such registration not effected by
KSI; provided first if the Ares Unitholders make a KSI Demand Request at any
time that the Ares Unitholders own three percent (3%) or less of the KSI Common
Stock and are able to immediately sell all of its KSI Common Stock pursuant to
Rule 144 under the Securities Act free of volume restrictions, then the Ares
Unitholders shall be required to pay for their proportionate share of all KSI
Registration Expenses; and provided second if the TCP Unitholders make a KSI
Demand Request at any time that the TCP Unitholders own three percent (3%) or
less of the KSI Common Stock and are able to

                                       42
<PAGE>

immediately sell all of its KSI Common Stock pursuant to Rule 144 under the
Securities Act free of volume restrictions, then the TCP Unitholders shall be
required to pay for their proportionate share of all KSI Registration Expenses.

                  Section 3.7 Indemnification; Contribution. (a) KSI shall
indemnify, to the fullest extent permitted by law, each holder of KSI
Registrable Securities, its officers, directors, partners, employees and agents,
if any, and each Person, if any, who controls such holder within the meaning of
Section 15 of the Securities Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act or common law or otherwise), joint or several, resulting from any
violation by KSI of the provisions of the Securities Act or any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus (and as amended or supplemented if amended or
supplemented) or any preliminary prospectus or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any prospectus, in
light of the circumstances under which they were made) not misleading, except to
the extent that such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any untrue statement or alleged
untrue statement contained in or by any omission or alleged omission from
information concerning any holder of KSI Registrable Securities furnished in
writing to KSI by such holder expressly for use therein. If the Public Offering
pursuant to any registration statement provided for under this Article III is
made through underwriters, no action or failure to act on the part of such
underwriters (whether or not such underwriter is an Affiliate of any holder of
KSI Registrable Securities) shall affect the obligations of KSI to indemnify any
holder of KSI Registrable Securities or any other Person pursuant to the
preceding sentence. If the Public Offering pursuant to any registration
statement provided for under this Article III is made through underwriters, KSI
agrees to enter into an underwriting agreement in customary form with such
underwriters and KSI agrees to indemnify such underwriters, their officers,
directors, employees and agents, if any, and each Person, if any, who controls
such underwriters within the meaning of Section 15 of the Securities Act to the
same extent as herein before provided with respect to the indemnification of the
holders of KSI Registrable Securities; provided that KSI shall not be required
to indemnify any such underwriter, or any officer, director or employee of such
underwriter or any Person who controls such underwriter within the meaning of
Section 15 of the Securities Act, to the extent that the loss, claim, damage,
liability (or proceedings in respect thereof) or expense for which
indemnification is claimed results from such underwriter's failure to send or
give a copy of an amended or supplemented final prospectus to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of KSI Registrable
Securities to such Person if such statement or omission was corrected in such
amended or supplemented final prospectus prior to such written confirmation and
the underwriter was provided with such amended or supplemented final prospectus.

                  (b)      In connection with any registration statement in
which a holder of KSI Registrable Securities is participating, each such holder,
severally and not jointly, shall indemnify, to the fullest extent permitted by
law, KSI, each underwriter and their respective officers, directors, employees
and agents, if any, and each Person, if any, who controls KSI or such
underwriter within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses resulting from any untrue statement or alleged untrue statement of a
material fact, or any omission or alleged

                                       43
<PAGE>

omission of a material fact required to be stated in the registration statement
or prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case of any
prospectus, in light of the circumstances under which they were made) not
misleading, but only to the extent that such untrue statement is contained in or
such omission is from information so concerning a holder furnished in writing by
such holder expressly for use therein; provided that such holder's obligations
hereunder shall be limited to an amount equal to the net proceeds to such holder
of the KSI Registrable Securities sold pursuant to such registration statement;
and provided further that, without such holder's consent, such holder shall not
be required to indemnify KSI, any such underwriter, or any of their officers,
directors or employees or any Person who controls KSI or such underwriter within
the meaning of Section 15 of the Securities Act, to the extent that the loss,
claim, damage, liability (or proceedings in respect thereof) or expense for
which indemnification is claimed results from such underwriter's failure to send
or give a copy of an amended or supplemented final prospectus to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of KSI Registrable
Securities to such Person if such statement or omission was corrected in such
amended or supplemented final prospectus prior to such written confirmation and
the underwriter was provided with such amended or supplemented final prospectus.

                  (c)      Any Person entitled to indemnification under the
provisions of this Section 3.7 shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, permit such indemnifying party to assume the defense of such claim, with
counsel reasonably satisfactory to the indemnified party; and if such defense is
so assumed, such indemnifying party shall not enter into any settlement without
the consent of the indemnified party if such settlement attributes liability to
the indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent (which shall not be
unreasonably withheld); and any underwriting agreement entered into with respect
to any registration statement provided for under this Article III shall so
provide. In the event an indemnifying party shall not be entitled, or elects
not, to assume the defense of a claim, such indemnifying party shall not be
obligated to pay the fees and expenses of more than one counsel or firm of
counsel for all parties indemnified by such indemnifying party in respect of
such claim, unless in the reasonable judgment of any such indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties in respect to such claim.

                  (d)      If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other or (ii) if the allocation provided by clause (i)
above is not permitted by Applicable Law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no holder of KSI Registrable

                                       44
<PAGE>

Securities shall be required to contribute any amount in excess of the amount
such holder would have been required to pay to an indemnified party if the
indemnity under Section 3.7(b) was available. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The obligation of any Person to contribute
pursuant to this Section 3.7 shall be several and not joint.

                  (e)      An indemnifying party shall make payments of all
amounts required to be made pursuant to the foregoing provisions of this Section
3.7 to or for the account of the indemnified party from time to time promptly
upon receipt of bills or invoices relating thereto or when otherwise due or
payable.

                  (f)      The indemnity and contribution agreements contained
in this Section 3.7 shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of KSI Registrable
Securities, its officers, directors, members, agents or any Person, if any, who
controls such holder as aforesaid, and shall survive the Transfer of Equity
Securities by such holder and the termination of this Agreement.

                  Section 3.8 Holdback Agreements; Registration Rights to
Others. In the event and to the extent requested by the managing underwriter or,
if the KSI Registrable Securities are not being disposed of in an underwritten
Public Offering, if requested by KSI, the Company and each Unitholder agrees not
to sell, make any short sale of, grant any option for the purchase of, or
otherwise dispose of any securities other than those KSI Registrable Securities
included in such KSI Registration pursuant to Section 3.1(a), 3.1(b) or 3.2(a)
for the thirty (30) days prior to and up to one hundred eighty (180) days after
the effectiveness of the registration statement pursuant to which such Public
Offering shall be made (or such shorter period of time as is sufficient and
appropriate, in the opinion of the managing underwriter or, as the case may be,
KSI in order to complete the sale and distribution of the securities included in
such Public Offering); provided that the limitations contained in this Section
3.8 shall not apply to the extent a Unitholder is prohibited by Applicable Law
from so withholding such securities from sale during such period; provided,
further, that in the event that the underwriters or KSI, as the case may be,
release the Company, MidOcean, any member of the Behrman Group or Gryphon from
the restrictions set forth in this Section 3.8, each of the other holders of KSI
Registrable Securities distributed by the Company with respect to Preferred
Units, pro rata on a Deemed Converted Basis (assuming all such Units were
convertible), shall be similarly released with respect to the percentage of
securities that is equal to the percentage of securities as to which the
Company, MidOcean, any such member of the Behrman Group or Gryphon, as the case
may be, was released (as determined by dividing the number of securities
released by the aggregate number of securities held by such holder).

                  Section 3.9 Availability of Information. Following KSI's
initial Public Offering, KSI shall comply with the reporting requirements of
Sections 13 and 15(d) of the Exchange Act and with all other public information
reporting requirements of the SEC as from time to time in effect, and cooperate
with the Company and Members who are holders of KSI Registrable Securities, so
as to permit disposition of the KSI Registrable Securities pursuant to an
exemption from the Securities Act for the sale of any KSI Registrable Securities
(including, without limitation, the current public information requirements of
Rule 144(c) and Rule 144A under the

                                       45
<PAGE>

Securities Act). KSI shall cooperate with holders of any KSI Registrable
Securities in supplying such information as may be necessary for such holder to
complete and file any information reporting forms presently or hereafter
required by the SEC as a condition to the availability of an exemption from the
Securities Act for the sale of any KSI Registrable Securities.

                                   ARTICLE IV
                             KHC REGISTRATION RIGHTS

                  Section 4.1 KHC Required Registration. (a) If a written
request shall be made to KHC, which request shall specify the KHC Registrable
Securities to be sold and the intended method of disposition thereof (a "KHC
Demand Request"), at any time (subject to any contractual lock-up restrictions
entered into by such holder of KHC Registrable Securities) after the date that
is

                  (i) the date on which the registration statement filed in
connection with an initial Public Offering of KHC was declared effective, by the
holders of a majority of the KHC Registrable Securities of KSI then outstanding,

                  (ii) the later of (x) the KSI Termination Date and (y) the
date on which the registration statement filed in connection with an initial
Public Offering of KHC was declared effective, by the Company, or

                  (iii) after distribution of KHC Capital Stock by the Company
to its Members, (A) the later of (x) the KSI Termination Date and (y) one
hundred eighty (180) days after the date the registration statement filed in
connection with an initial Public Offering of KHC was declared effective, by
MidOcean, or Behrman, or (B) the Senior Unitholder Filing Date, by the Senior
Unitholders holding a majority of then outstanding Senior Units on a Deemed
Converted Basis; (C) by the TCP Unitholders holding a majority of then
outstanding TCP Units on a Deemed Converted Basis, (D) by the Ares Unitholders
holding a majority of then outstanding Ares Units on a Deemed Converted Basis,
(E) the 2001 Investors Filing Date, by the 2001 Investors holding a majority of
then outstanding Class A Units and Class A-1 Units on a Deemed Converted Basis
held by the 2001 Investors, or (F) the 2002 Investors Filing Date, by the 2002
Investors holding a majority of then outstanding Class B-1 Units on a Deemed
Converted Basis held by the 2002 Investors, to effect a registration under the
Securities Act of KHC Registrable Securities held by such Unitholders (each, a
"KHC Required Registration"), then KHC shall promptly use its reasonable efforts
to effect such KHC Required Registration; provided that the holders of KHC
Registrable Securities of KSI may collectively only make one (1) KHC Demand
Request for a "long-form" KHC Required Registration and one (1) KHC Demand for a
"short-form" KHC Required Registration; provided further than such holders of
KHC Registrable Securities of KSI may in lieu of the KHC Demand Request for a
"long-form" KHC Required Registration request an additional KHC Demand Request
for a "short-form" KHC Required Registration; provided further that the Company
may only make two (2) KHC Demand Requests for a "long-form" KHC Required
Registration and an unlimited number of KHC Demand Requests for a "short-form"
KHC Required Registration; provided further, that each of MidOcean and Behrman
may only make one (1) KHC Demand Request for a "long-form" KHC Required
Registration and one (1) KHC Demand Request for a "short form" KHC Required
Registration; provided further that in lieu of the KHC Demand Request for a
"long form" KHC Required Registration, each of MidOcean and Behrman may instead
elect to have an additional "short form" KHC Required

                                       46
<PAGE>

Registration; and provided further that the Senior Unitholders may not make a
KHC Demand Request for a "long-form" KHC Required Registration and may only make
one (1) KHC Demand Request for a "short form" KHC Required Registration and only
if, at any time after the Senior Unitholder Filing Date, any Senior Unitholder
is unable to sell all of its KHC Common Stock received in a distribution by the
Company with respect to its ownership of Senior Units pursuant to Rule 144 under
the Securities Act free of the volume restrictions thereof; provided further
that the TCP Unitholders may not make a KHC Demand Request for a "long-form" KHC
Required Registration and may only make one (1) KHC Demand Request for a "short
form" KHC Required Registration unless KHC is not then eligible to effect a
"short form" KHC Required Registration, in which case the TCP Unitholders may
make a KHC Demand Request for a "long-form" KHC Required Registration; provided
further that the Ares Unitholders may not make a KHC Demand Request for a
"long-form" KHC Required Registration and may only make one (1) KHC Demand
Request for a "short form" KHC Required Registration unless KHC is not then
eligible to effect a "short form" KHC Required Registration, in which case the
Ares Unitholders may make a KHC Demand Request for a "long-form" KHC Required
Registration; provided further that the 2001 Investors may not make a KHC Demand
Request for a "long-form" KHC Required Registration and may only make two (2)
KHC Demand Requests for a "short form" KHC Required Registration and only if, at
any time after the 2001 Investor Filing Date, each 2001 Investor is unable to
sell all of its KHC Common Stock received in a distribution by the Company with
respect to its ownership of Class A or Class A-1 Units pursuant to Rule 144
under the Securities Act free of the volume restrictions thereof; provided
further that the 2002 Investors may not make a KHC Demand Request for a
"long-form" KHC Required Registration and may only make one (1) KHC Demand
Request for a "short form" KHC Required Registration and only if, at any time
after the 2002 Investor Filing Date, each 2002 Investor is unable to sell all of
its KHC Common Stock received in a distribution by the Company with respect to
its ownership of Class B-1 Units pursuant to Rule 144 under the Securities Act
free of the volume restrictions thereof; provided further that the registration
rights of the 2002 Investors shall be in addition to the registration rights
granted to Behrman and MidOcean under Section 4.1(a)(ii); and provided further
that KHC shall not be required to comply with more than two (2) KHC Demand
Requests during any twelve (12) month period.

                  (b)      Piggyback Rights. Upon receipt by KHC of any KHC
Demand Request, KHC shall deliver a written notice (a "KHC Demand Notice") to
the Company and to each Unitholder who holds KHC Registrable Securities obtained
through a distribution of such securities by the Company who did not make such
KHC Demand Request stating that KHC intends to comply with a KHC Demand Request
and informing the Company and each such Unitholder of its right to include KHC
Registrable Securities in such KHC Required Registration. Within ten (10)
Business Days after receipt of a KHC Demand Notice, the Company and each such
Unitholder shall have the right to request in writing that KHC include all or a
specific portion of the KHC Registrable Securities held by the Company or such
Unitholder in such KHC Required Registration.

                  (c)      Postponement. KHC may postpone any KHC Required
Registration for a reasonable period of time, not to exceed one hundred eighty
(180) days, if the KHC Board of Directors determines in good faith that such KHC
Required Registration would (i) require the disclosure of a material transaction
or other matter and such disclosure would be disadvantageous to KHC or (ii)
adversely affect a material financing, acquisition, disposition of

                                       47
<PAGE>

assets or stock, merger or other transaction to which KHC may enter into;
provided that KHC may postpone a KHC Required Registration only once during any
twelve (12) month period.

                  (d)      Time for Filing and Effectiveness. On or before the
date which is sixty (60) days after the KHC Demand Request, KHC shall file with
the SEC the KHC Required Registration with respect to all KHC Registrable
Securities to be so registered, and shall use its reasonable efforts to cause
such KHC Required Registration to become effective as promptly as practicable
after the filing thereof, but in no event later than the day which is one
hundred twenty (120) days after the date of the KHC Demand Request.

                  (e)      Selection of Underwriters. In the event that the KHC
Registrable Securities to be registered pursuant to a KHC Required Registration
are to be disposed of in an underwritten Public Offering, the underwriters of
such Public Offering shall be one or more underwriting firms of nationally
recognized standing selected by KHC and reasonably acceptable to the Company and
Unitholders that together hold a majority of the KHC Registrable Securities to
be included in such KHC Required Registration.

                  (f)      Priority on KHC Required Registrations. In the event
that, in the case of any KHC Required Registration, the managing underwriter for
the Public Offering contemplated by Section 4.1(e) shall advise KHC in writing
(with a copy to each holder of KHC Registrable Securities requesting sale) that,
in such underwriter's opinion, the amount of securities requested to be included
in such KHC Required Registration would adversely affect the Public Offering and
sale (including pricing) of such KHC Registrable Securities (such writing to
state the basis of such opinion and the approximate number of KHC Registrable
Securities that may be included in such Public Offering without such effect),
KHC will include in such KHC Required Registration the number of KHC Registrable
Securities that KHC is so advised can be sold in such Public Offering in the
following amounts:

                           (i) first, prior to the KSI Termination Date, all KHC
         Registrable Securities of KSI requested to be sold by KSI;

                           (ii) second, all KHC Registrable Securities requested
         to be sold by the Company;

                           (iii) third, pro rata among MidOcean, the Behrman
         Investor Group, the 2001 Investors, the 2002 Investors, the Senior
         Unitholders, the TCP Unitholders, the Ares Unitholders and the holders
         of Profits Units on the basis of the number of KHC Registrable
         Securities requested to be registered by such holders;

                           (iv) fourth, all KHC Registrable Securities requested
         to be sold by all other holders of KHC Registrable Securities pursuant
         to this Section 4.1 pro rata among such holders on the basis of the
         number of KHC Registrable Securities requested to be registered by such
         holders; provided however that if such managing underwriter shall
         advise KHC that, in such underwriter's opinion, the inclusion of KHC
         Registrable Securities held by Management Holders would adversely
         affect the Public Offering and sale (including pricing) of such
         securities, then the number of KHC Registrable Securities

                                       48
<PAGE>

         held by such Management Holders (other than Shimmon) to be included in
         such Public Offering may be disproportionately reduced to avoid such
         adverse result; and

                           (v) fifth, securities proposed to be sold by KHC for
         its own account or for other holders of KHC Equity Securities with
         registration rights with respect to such securities.

                  (g)      Additional KHC Demand Requests. In the event that KHC
postpones any KHC Required Registration in accordance with Section 4.1(c) by
more than sixty (60) days, the KHC Demand Request pursuant to which such KHC
Required Registration was to have been made may be withdrawn by the Unitholder
who initiated such KHC Demand Request and shall not be deemed to be a KHC Demand
Request pursuant to Section 4.1(a).

                  Section 4.2 KHC Incidental Registration.

                  (a)      Filing of Registration Statement. If KHC proposes to
register any of its securities (x) for its own account in its initial Public
Offering and includes in such registration any securities to be sold for the
account of any other Person; or (y) for its own account or for the account of
any other Person at any time after its initial Public Offering (other than a KHC
Required Registration) (any such proposed registration being a "KHC Incidental
Registration") under the Securities Act (other than pursuant to a registration
statement on Form S-4, or Form S-8, or Form S-3 in the case of a registration
solely for resale of securities issued as consideration in an acquisition of a
Person by KHC, or any successor forms thereto or Section 4.1 hereof) for sale in
a Public Offering, it will at each such time give prompt written notice to the
holders of all KHC Registrable Securities of its intention to do so, which
notice shall be given at least thirty (30) days prior to the date that a
registration statement relating to such registration is proposed to be filed
with the SEC. Upon the written request of the Company or any Unitholder holding
KHC Registrable Securities to include KHC Registrable Securities held by it
under such registration statement (which request shall (i) be made within
fifteen (15) days after the receipt of any such notice, and (ii) specify the KHC
Registrable Securities intended to be included by such holder), KHC will use its
reasonable efforts to effect the registration of all KHC Registrable Securities
that KHC has been so requested to register; provided however that if, at any
time after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, KHC shall determine for any reason to terminate such
registration statement and not to register such securities, KHC may, at its
election, give written notice of such determination to each such holder and,
thereupon, shall be relieved of its obligation to register any KHC Registrable
Securities of such Persons in connection with such registration.

                  (b)      Selection of Underwriters. Notice of KHC's intention
to register such securities shall designate the proposed underwriters of such
Public Offering (which shall be one or more underwriting firms of nationally
recognized standing) and shall contain KHC's agreement to use its reasonable
efforts, if requested to do so, to arrange for such underwriters to include in
such underwriting the KHC Registrable Securities that KHC has been so requested
to sell pursuant to this Section 4.2, it being understood that the holders of
KHC Registrable Securities shall have no right to select different underwriters
for the disposition of their KHC Registrable Securities.

                                       49
<PAGE>

                  (c)      Priority on KHC Incidental Registrations. If the
managing underwriter for the Public Offering contemplated by this Section 4.2
shall advise KHC in writing that, in such underwriter's opinion, the number of
securities requested to be included in such KHC Incidental KHC Registration
would adversely affect the Public Offering and sale (including pricing) of such
securities (such writing to state the basis of such opinion and the approximate
number of securities that may be included in such Public Offering without such
effect), KHC shall include in such KHC Incidental Registration the number of
securities that KHC is so advised can be sold in such Public Offering, in the
following amounts and order of priority:

                           (i) first, securities proposed to be sold by KHC for
         its own account and any securities proposed to be offered by KHC for
         the account of such Person who has exercised its demand registration
         rights other than pursuant to this Agreement; provided that such other
         Person is not an owner of ten percent (10%) or more of the KHC Equity
         Securities or an Affiliate of KHC, in which case such other Person's
         priority shall be governed by clause (iv) below; provided further that
         for the purposes of this Section 4.2, any underwriter acting in its
         capacity as such shall not be deemed an Affiliate of KHC;

                           (ii) second, if prior to the KSI Termination Date,
         the KHC Registrable Securities of KSI proposed to be registered by the
         KSI Holders pro rata among such KSI Holders on the basis of the number
         of KHC Registrable Securities of KSI requested to be sold by such
         stockholders pursuant to this Section 4.2, then the KHC Registrable
         Securities requested to be registered by the Company pursuant to this
         Section 4.2;

                           (iii) third, the KHC Registrable Securities requested
         to be registered by the Unitholders pro rata among such Unitholders on
         the basis of the number of KHC Registrable Securities requested to be
         sold by such Unitholders pursuant to this Section 4.2; provided however
         that if such managing underwriter shall advise KHC that, in such
         underwriter's opinion, the inclusion of KHC Registrable Securities held
         by Management Holders would adversely affect the Public Offering and
         sale (including pricing) of such securities, then the number of KHC
         Registrable Securities held by such Management Holders (other than
         Shimmon) to be included in such Public Offering may be
         disproportionately reduced to avoid such adverse result; and

                           (iv) fourth, pro rata among all other holders of KHC
         Equity Securities with registration rights with respect to such
         securities.

                  Section 4.3 Registration Procedures. KHC will use its
reasonable efforts to effect each KHC Required Registration pursuant to Section
4.1 and each KHC Incidental Registration pursuant to Section 4.2, and to
cooperate with the sale of such KHC Registrable Securities in accordance with
the intended method of disposition thereof as quickly as possible, and KHC will
as expeditiously as possible:

                  (a)      subject, in the case of a KHC Incidental
Registration, to the proviso to Section 4.2(a), prepare and file with the SEC
the registration statement and use its reasonable efforts to cause the KHC
Registration to become effective; provided however that, to the extent
practicable, at least ten (10) Business Days prior to filing any registration
statement or prospectus or any amendments or supplements thereto, KHC will
furnish to the holders of the

                                       50
<PAGE>

KHC Registrable Securities covered by such registration statement and their
counsel, copies of all such documents proposed to be filed and any such holder
shall have the opportunity to comment on any information pertaining solely to
such holder and its plan of distribution that is contained therein and KHC shall
make the corrections reasonably requested by such holder with respect to such
information prior to filing any such registration statement or amendment;

                  (b)      subject, in the case of a KHC Incidental
Registration, to the proviso to Section 4.2(a), prepare and file with the SEC
such amendments and post-effective amendments to any registration statement and
any prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all KHC Registrable Securities
covered by such registration statement until such time as all of such KHC
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement and cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;

                  (c)      furnish, upon request, to each holder of KHC
Registrable Securities to be included in such KHC Registration and the
underwriter or underwriters, if any, without charge, one signed copy of the
registration statement and any post-effective amendment thereto, and such number
of conformed copies thereof and such number of copies of the prospectus
(including each preliminary prospectus and each prospectus filed under Rule 424
under the Securities Act), any amendments or supplements thereto and any
documents incorporated by reference therein, as such holder or underwriter may
reasonably request in order to facilitate the disposition of the KHC Registrable
Securities being sold by such holder (it being understood that KHC consents to
the use of the prospectus and any amendment or supplement thereto by each holder
of KHC Registrable Securities covered by such registration statement and the
underwriter or underwriters, if any, in connection with the Public Offering and
sale of the KHC Registrable Securities covered by the prospectus or any
amendment or supplement thereto);

                  (d)      notify each holder of the KHC Registrable Securities
to be included in such KHC Registration and the underwriter or underwriters, if
any:

                           (i) of any stop order or other order suspending the
         effectiveness of any registration statement, issued or threatened by
         the SEC in connection therewith, and take all reasonable actions
         required to prevent the entry of such stop order or to remove it or
         obtain withdrawal of it at the earliest possible moment if entered;

                           (ii) when such registration statement or any
         prospectus used in connection therewith, or any amendment or supplement
         thereto, has been filed and, with respect to such registration
         statement or any post-effective amendment thereto, when the same has
         become effective;

                           (iii) of any written request by the SEC for
         amendments or supplements to such registration statement or prospectus;
         and

                                       51
<PAGE>

                           (iv) of the receipt by KHC of any notification with
         respect to the suspension of the qualification of any KHC Registrable
         Securities for sale under the applicable securities or blue sky laws of
         any jurisdiction;

                  (e)      if requested by the managing underwriter or
underwriters or any holder of KHC Registrable Securities to be included in such
KHC Registration in connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement or post-effective
amendment such information relating to such underwriting as the managing
underwriter or underwriters or such holder reasonably requests to be included
therein; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such prospectus supplement or post-effective amendment;

                  (f)      on or prior to the date on which a KHC Registration
is declared effective, use its reasonable efforts to register or qualify, and
cooperate with the holders of KHC Registrable Securities to be included in such
KHC Registration, the underwriter or underwriters, if any, and their counsel in
connection with the registration or qualification of the KHC Registrable
Securities covered by such KHC Registration, for offer and sale under the
securities or "blue sky" laws of each state and other jurisdiction of the United
States as any such holder or underwriter reasonably requests in writing; use its
reasonable efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective; and do any and all
other acts or things necessary or advisable to enable the disposition of the KHC
Registrable Securities in all such jurisdictions reasonably requested to be
covered by such KHC Registration; provided however that KHC shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;

                  (g)      in connection with any sale pursuant to a KHC
Registration, cooperate with the holders of KHC Registrable Securities to be
included in such KHC Registration and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities to be sold under such
KHC Registration, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
such holders may request;

                  (h)      use its reasonable efforts to cause the KHC
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities within the United States and having
jurisdiction over KHC or any Subsidiary as may be necessary to enable the seller
or sellers thereof or the underwriter or underwriters, if any, to consummate the
disposition of such securities;

                  (i)      use its reasonable efforts to obtain:

                           (A) at the time of effectiveness of each KHC
         Registration, a "cold comfort letter" from KHC's independent certified
         public accountants covering such matters of the type customarily
         covered by "cold comfort letters" as the holders of a

                                       52
<PAGE>

         majority of the KHC Registrable Securities to be included in such KHC
         Registration and the underwriters reasonably request; and

                           (B) at the time of any underwritten sale pursuant to
         the registration statement, a "bring-down comfort letter," dated as of
         the date of such sale, from KHC's independent certified public
         accountants covering such matters of the type customarily covered by
         "bring-down comfort letters" as the Requisite Holders and the
         underwriters reasonably request;

                  (j)      use its reasonable efforts to obtain, at the time of
effectiveness of each KHC Registration and at the time of any sale pursuant to
each KHC Registration, an opinion or opinions addressed to the holders of the
KHC Registrable Securities to be included in such KHC Registration and the
underwriter or underwriters, if any, in customary form and scope from counsel
for KHC (who may be its internal counsel);

                  (k)      notify each seller of KHC Registrable Securities
covered by such KHC Registration, upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in such KHC
Registration, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and promptly prepare and file
with the SEC and furnish to such seller or holder a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers or prospective purchasers of
such securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they are made;

                  (l)      otherwise comply with all applicable rules and
regulations of the SEC, and make generally available to its security holders (as
contemplated by Section 11(a) under the Securities Act) an earnings statement
satisfying the provisions of Rule 158 under the Securities Act no later than
ninety (90) days after the end of the twelve (12) month period beginning with
the first month of KHC's first fiscal quarter commencing after the effective
date of the registration statement, which statement shall cover said twelve (12)
month period;

                  (m)      provide and cause to be maintained a transfer agent
and registrar for all KHC Registrable Securities covered by each KHC
Registration from and after a date not later than the effective date of such KHC
Registration;

                  (n)      use its reasonable efforts to cause all KHC
Registrable Securities covered by each KHC Registration to be listed subject to
notice of issuance, prior to the date of first sale of such KHC Registrable
Securities pursuant to such KHC Registration, on each securities exchange on
which the KHC Common Stock is then listed, and admitted to trading on Nasdaq, if
the KHC Common Stock or any such other securities of KHC are then admitted to
trading on Nasdaq; and

                                       53
<PAGE>

                  (o)      enter into such agreements (including underwriting
agreements in customary form) and take such other actions as the Requisite
Holders shall reasonably request in order to expedite or facilitate the
disposition of such KHC Registrable Securities.

KHC may require each holder of KHC Registrable Securities that will be included
in such KHC Registration to furnish KHC with such information in respect of such
holder as KHC may reasonably request in writing and as is required by Applicable
Law.

                  Section 4.4 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement
registering KHC Registrable Securities under the Securities Act, KHC shall give,
upon reasonable notice and during normal business hours, the holders of such KHC
Registrable Securities so registered, their underwriters, if any, and their
respective counsel and accountants access to its books and records and an
opportunity to discuss the business of KHC with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' or such underwriters' to conduct a
reasonable investigation within the meaning of Section 11(b)(3) of the
Securities Act.

                  Section 4.5 Rights of Requesting Holders. Each holder of KHC
Registrable Securities to be included in a KHC Registration which makes a
written request therefor in Section 4.1 or 4.2, as the case may be, shall have
the right to receive within thirty (30) days of receipt by KHC of such request
copies of the information, notices and other documents described in Section
4.3(l) and Section 4.3(o).

                  Section 4.6 KHC Registration Expenses. KHC will pay all KHC
Registration Expenses in connection with each registration of KHC Registrable
Securities, including, without limitation, any such registration not effected by
KHC; provided first if the Ares Unitholders make a KHC Demand Request at any
time that the Ares Unitholders own three percent (3%) or less of the KHC Common
Stock and is able to immediately sell all of its KHC Common Stock pursuant to
Rule 144 under the Securities Act free of volume restrictions, then the Ares
Unitholders shall be required to pay for their proportionate share of all KHC
Registration Expenses; and provided second if the TCP Unitholders make a KHC
Demand Request at any time that the TCP Unitholders own three percent (3%) or
less of the KHC Common Stock and is able to immediately sell all of its KHC
Common Stock pursuant to Rule 144 under the Securities Act free of volume
restrictions, then the TCP Unitholders shall be required to pay for their
proportionate share of all KHC Registration Expenses.

                  Section 4.7 Indemnification; Contribution. (a) KHC shall
indemnify, to the fullest extent permitted by law, each holder of KHC
Registrable Securities, its officers, directors, partners, employees and agents,
if any, and each Person, if any, who controls such holder within the meaning of
Section 15 of the Securities Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act or common law or otherwise), joint or several, resulting from any
violation by KHC of the provisions of the Securities Act or any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus (and as amended or supplemented if amended or
supplemented) or any preliminary prospectus or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements

                                       54
<PAGE>

therein (in the case of any prospectus, in light of the circumstances under
which they were made) not misleading, except to the extent that such losses,
claims, damages, liabilities (or proceedings in respect thereof) or expenses are
caused by any untrue statement or alleged untrue statement contained in or by
any omission or alleged omission from information concerning any holder of KHC
Registrable Securities furnished in writing to KHC by such holder expressly for
use therein. If the Public Offering pursuant to any registration statement
provided for under this Article IV is made through underwriters, no action or
failure to act on the part of such underwriters (whether or not such underwriter
is an Affiliate of any holder of KHC Registrable Securities) shall affect the
obligations of KHC to indemnify any holder of KHC Registrable Securities or any
other Person pursuant to the preceding sentence. If the Public Offering pursuant
to any registration statement provided for under this Article IV is made through
underwriters, KHC agrees to enter into an underwriting agreement in customary
form with such underwriters and KHC agrees to indemnify such underwriters, their
officers, directors, employees and agents, if any, and each Person, if any, who
controls such underwriters within the meaning of Section 15 of the Securities
Act to the same extent as herein before provided with respect to the
indemnification of the holders of KHC Registrable Securities; provided that KHC
shall not be required to indemnify any such underwriter, or any officer,
director or employee of such underwriter or any Person who controls such
underwriter within the meaning of Section 15 of the Securities Act, to the
extent that the loss, claim, damage, liability (or proceedings in respect
thereof) or expense for which indemnification is claimed results from such
underwriter's failure to send or give a copy of an amended or supplemented final
prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of KHC Registrable Securities to such Person if such
statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was provided
with such amended or supplemented final prospectus.

                  (b)      In connection with any registration statement in
which a holder of KHC Registrable Securities is participating, each such holder,
severally and not jointly, shall indemnify, to the fullest extent permitted by
law, KHC, each underwriter and their respective officers, directors, employees
and agents, if any, and each Person, if any, who controls KHC or such
underwriter within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses resulting from any untrue statement or alleged untrue statement of a
material fact, or any omission or alleged omission of a material fact required
to be stated in the registration statement or prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein (in the case of any prospectus, in light of the
circumstances under which they were made) not misleading, but only to the extent
that such untrue statement is contained in or such omission is from information
so concerning a holder furnished in writing by such holder expressly for use
therein; provided that such holder's obligations hereunder shall be limited to
an amount equal to the net proceeds to such holder of the KHC Registrable
Securities sold pursuant to such registration statement; and provided further
that, without such holder's consent, such holder shall not be required to
indemnify KHC, any such underwriter, or any of their officers, directors or
employees or any Person who controls KHC or such underwriter within the meaning
of Section 15 of the Securities Act, to the extent that the loss, claim, damage,
liability (or proceedings in respect thereof) or expense for which
indemnification is claimed results from such underwriter's failure to send or
give a copy of an amended or supplemented final

                                       55
<PAGE>

prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of KHC Registrable Securities to such Person if such
statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was provided
with such amended or supplemented final prospectus.

                  (c)      Any Person entitled to indemnification under the
provisions of this Section 4.7 shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, permit such indemnifying party to assume the defense of such claim, with
counsel reasonably satisfactory to the indemnified party; and if such defense is
so assumed, such indemnifying party shall not enter into any settlement without
the consent of the indemnified party if such settlement attributes liability to
the indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent (which shall not be
unreasonably withheld); and any underwriting agreement entered into with respect
to any registration statement provided for under this Article IV shall so
provide. In the event an indemnifying party shall not be entitled, or elects
not, to assume the defense of a claim, such indemnifying party shall not be
obligated to pay the fees and expenses of more than one counsel or firm of
counsel for all parties indemnified by such indemnifying party in respect of
such claim, unless in the reasonable judgment of any such indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties in respect to such claim.

                  (d)      If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other or (ii) if the allocation provided by clause (i)
above is not permitted by Applicable Law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no holder of KHC Registrable Securities shall be required to
contribute any amount in excess of the amount such holder would have been
required to pay to an indemnified party if the indemnity under Section 4.7(b)
was available. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The obligation of any Person to contribute pursuant to this
Section 4.7 shall be several and not joint.

                  (e)      An indemnifying party shall make payments of all
amounts required to be made pursuant to the foregoing provisions of this Section
4.7 to or for the account of the indemnified party from time to time promptly
upon receipt of bills or invoices relating thereto or when otherwise due or
payable.

                                       56
<PAGE>

                  (f)      The indemnity and contribution agreements contained
in this Section 4.7 shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of KHC Registrable
Securities, its officers, directors, members, agents or any Person, if any, who
controls such holder as aforesaid, and shall survive the Transfer of Equity
Securities by such holder and the termination of this Agreement.

                  Section 4.8 Holdback Agreements; Registration Rights to
Others. (a) In the event and to the extent requested by the managing underwriter
or, if the KHC Registrable Securities are not being disposed of in an
underwritten Public Offering, if requested by KHC, the Company, the KSI Holders
and each Unitholder agrees not to sell, make any short sale of, grant any option
for the purchase of, or otherwise dispose of any securities other than those KHC
Registrable Securities included in such KHC Registration pursuant to Section
4.1(a), 4.1(b) or 4.2(a) for the thirty (30) days prior to and up to one hundred
eighty (180) days after the effectiveness of the registration statement pursuant
to which such Public Offering shall be made (or such shorter period of time as
is sufficient and appropriate, in the opinion of the managing underwriter or, as
the case may be, KHC in order to complete the sale and distribution of the
securities included in such Public Offering); provided that the limitations
contained in this Section 4.8 shall not apply to the extent a Unitholder is
prohibited by Applicable Law from so withholding such securities from sale
during such period; provided, further, that in the event that the underwriters
or KHC, as the case may be, release the Company, MidOcean, any member of the
Behrman Group or Gryphon from the restrictions set forth in this Section 4.8,
each of the holders of KHC Registrable Securities distributed by the Company
with respect to Preferred Units, pro rata on a Deemed Converted Basis, shall be
similarly released with respect to the percentage of securities that is equal to
the percentage of securities as to which the Company, MidOcean, any such member
of the Behrman Group or Gryphon, as the case may be, was released (as determined
by dividing the number of securities released by the aggregate number of
securities held by such holder).

                  (b)      At such time as no KHC Registrable Securities of KSI
remain outstanding or issuable, the restrictions set forth in Section 4.1(a) for
the benefit of the KSI Holders shall terminate; provided that nothing herein
shall be deemed to affect any security interest or pledge on the KHC Registrable
Securities.

                                       57
<PAGE>

                  Section 4.9 Availability of Information. Following KHC's
initial Public Offering, KHC shall comply with the reporting requirements of
Sections 13 and 15(d) of the Exchange Act and with all other public information
reporting requirements of the SEC as from time to time in effect, and cooperate
with the Company and Members who are holders of KHC Registrable Securities, so
as to permit disposition of the KHC Registrable Securities pursuant to an
exemption from the Securities Act for the sale of any KHC Registrable Securities
(including, without limitation, the current public information requirements of
Rule 144(c) and Rule 144A under the Securities Act). KHC shall cooperate with
holders of any KHC Registrable Securities in supplying such information as may
be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the SEC as a condition to the
availability of an exemption from the Securities Act for the sale of any KHC
Registrable Securities.

                                    ARTICLE V

                 BOARD OF DIRECTORS OF THE COMPANY, KSI AND KHC

                  Section 5.1 Board of Directors. (a) Subject to Applicable Law,
each holder of Voting Securities agrees to vote, at any time and from time to
time, all of the Voting Securities held by such Person and all other Voting
Securities over which he or it has voting control and shall take all other
necessary or desirable action within his or its control (whether in his or its
capacity as a Member, director or officer of the Company or otherwise), and the
Company shall take all necessary or desirable action within its control, in
order to elect and maintain a twelve (12) member Company Board, which shall
include: (i) three (3) directors designated by MidOcean, (ii) three (3)
directors designated by Behrman, (iii) one (1) director who is a member of
senior management of the Company designated from time to time by Persons owning
a majority of Voting Securities issued and outstanding held by all Members, (iv)
three (3) directors designated by Gryphon, (v) unless waived by the TCP
Unitholders, one (1) director selected by the TCP Unitholders and (vi) unless
waived by the Ares Unitholders, one (1) director selected by the Ares
Unitholders. If any of MidOcean, Behrman or Gryphon cease to hold at least 6.5%,
but holds more than 4.5% of the Voting Securities, such Person shall only
designate two (2) directors and the director that ceases to be designed by such
Person shall be designated by a majority of the then current directors. If any
of MidOcean, Behrman or Gryphon cease to hold at least 4.5%, but holds more than
1% of the Voting Securities, such Person shall only designate one director and
the directors that cease to be designated by such Person shall designated by a
majority of the then current directors. If any of MidOcean, Behrman, Gryphon,
the TCP Unitholders or the Ares Unitholders ceases to hold at least 1% of the
Voting Securities, such person shall not be allowed to designate any director
and the directors that cease to be designated by such person shall be designated
by a majority of the then current directors. Any change in the number of
directors of the Company Board shall require approval of a majority of directors
then constituting the entire Company Board, so long as such number does not
conflict with the representation requirements of this Section 5.1.

                  (b)      In the event that any director designated by
MidOcean, Behrman, Gryphon, TCP Unitholders or Ares Unitholders ceases to serve
as a director during his or her term of office, the resulting vacancy on the
Company Board shall be filled by a director

                                       58
<PAGE>

designated by MidOcean, Behrman, Gryphon, TCP Unitholders or Ares Unitholders,
as applicable.

                  (c)      So long as MidOcean, Behrman, Gryphon, the TCP
Unitholders or the Ares Unitholders, as the case may be, are entitled to
designate directors pursuant to Section 5.1(a), the removal of any director
designated by MidOcean, Behrman, Gryphon, the TCP Unitholders or the Ares
Unitholders, as the case may be, the Members may be only at the written request
of MidOcean, Behrman, Gryphon, the TCP Unitholders or the Ares Unitholders, as
applicable.

                  (d)      Notwithstanding anything in the Certificate of
Formation or LLC Agreement to the contrary, any action taken by the Company
Board shall only be effective if (i) taken at a Duly Convened Meeting, (ii) for
so long as each of MidOcean, Behrman and Gryphon has the right to designate at
least one board seat pursuant to Section 5.1(a), at least a majority of the
directors designated by at least two (2) of the following three (3) entities
voted in favor of such action or resolution: (A) MidOcean, (B) Behrman and (C)
Gryphon, and (iii) at least a majority of all directors (or such greater number
as shall be required by the Certificate of Formation or LLC Agreement or
Applicable Law) vote in favor of such action or resolution.

                  (e)      The Company Board may, from time to time, delegate to
one or more Persons (including through the creation and establishment of one or
more committees) such authority and duties as the Company Board may deem
advisable in compliance with Applicable Law. Any delegation pursuant to this
Section 5.1(e) may be revoked at any time. Unless otherwise waived by the TCP
Unitholders or the Ares Unitholders, as applicable, the composition of any
committee of the Company Board (including the Executive Committee) shall, for so
long as the TCP Unitholders or the Ares Unitholders, as applicable, have a right
to designate a director pursuant to Section 5.1, include the directors
designated by the TCP Unitholders and the Ares Unitholders.

                  (f)      The Company Board shall (i) create a special board
committee to manage the sale of KSI, which committee shall satisfy the
requirements of Section 5.1(e); (ii) form a special board committee to hire a
Chief Financial Officer of KSI, which committee shall satisfy the requirements
of Section 5.1(e); and (iii) cause the Company to retain an outside consultant
or advisor recommended by a majority of the TCP Unitholders and the Ares
Unitholders holding a majority of the TCP Units and Ares Units, respectively,
voting together as a class, and that is reasonably acceptable to the Company,
who shall report to the Company Board and advise management on cash-flow
forecasting.

                  (g)      The Company Board shall convene meetings at least
quarterly.

                  (h)      The Company Board will, and each Member holding
Voting Securities of KSI or KHC, as applicable, agrees to, exercise its voting
power over the securities of each Subsidiary (other than a Public Kinetics
Entity) to cause the composition of the Board of Directors of each such
Subsidiary to replicate the composition of the Company Board (as determined in
accordance with the terms of this Article V, which for the avoidance of doubt
include a director designated by the TCP Unitholders and a director designated
by the Ares

                                       59
<PAGE>

Unitholders) and, in addition to the foregoing provisions of this Section 5.1,
the following shall also apply (other than with respect to a Public Kinetics
Entity):

                           (i) All decisions and determinations relating to the
         compensation, responsibilities and other employment matters of (i) any
         officer of KHC or KSI or any of their respective Subsidiaries or (ii)
         any employee of KHC or KSI or any of their respective Subsidiaries
         earning in excess of $175,000 per annum, including, without limitation,
         decisions whether to hire or terminate the employment of any such
         Person, shall be made by a majority of the members of the Board of the
         Directors of KHC or KSI, as applicable.

                           (ii) As consideration for their agreement to serve as
         members of a Board of Directors of KSI and/or KHC, the entity for which
         such individual serves as a director may pay to each director who is
         not an employee of KSI, KHC or any of its respective Subsidiaries an
         annual fee, in an amount determined from time to time by the Board of
         Directors of such entity, and shall reimburse each member of the Board
         of Directors for such entity for its reasonable, documented out of
         pocket expenses in connection with attending meetings of such Board of
         Directors.

                  (i)      Upon the consummation of an initial Public Offering
with respect to KHC or KSI, (1) the foregoing provisions of this Section 5.1
shall cease to apply to such Public Kinetics Entity and (2) the following
provisions shall thereafter apply to such Public Kinetics Entity to the extent
permitted by Applicable Law and the applicable listing standards of Nasdaq or
any such other exchange or quotation service on which the Public Kinetics
Entity's securities are listed or quoted:

                                    (i) For so long as MidOcean, Behrman and
         Gryphon have a right to appoint one or more directors to the Board of
         Directors of a Public Kinetics Entity, the size of the Board of
         Directors of such Public Kinetics Entity shall be no fewer than six
         members and no more than nine members, without the consent of MidOcean,
         Behrman and Gryphon.

                                    (ii) The Company will exercise its voting
         power over the Public Kinetics Entity to approve the election of
         members of the Board of Directors of KSI or KHC, respectively,
         designated as nominees as set forth in this Section 5.1(i).

                                    (iii) At any time prior to a complete
         distribution of KSI or KHC securities to the Unitholders,

                                             (1) subject to Section
         5.1(i)(iii)(2), at any time prior to a Primary Sell-Down Event, such
         Public Kinetics Entity shall take all reasonably necessary action
         within its control, to nominate for election by such Public Kinetics
         Entity stockholders a Board of Directors, which shall include: (i) two
         (2) directors designated by MidOcean, (ii) two (2) directors designated
         by Behrman, and (iii) two (2) directors designated by Gryphon, one
         designee from each of these entities qualifying as an individual who is
         "independent" and qualified to serve as a member of the Audit Committee
         of the Public Kinetics Entity (but not requiring such individual to
         qualify to be determined to be an "audit committee financial expert")
         as defined under the listing

                                       60
<PAGE>

         standards promulgated under Nasdaq listing standards, the SEC rules
         promulgated pursuant to Section 301 Sarbanes-Oxley Act of 2002, and
         Rule 10A-3(b)(1) of the Exchange Act, as amended, or any successor rule
         or regulation (such designee, the "Additional Designated Director"),
         and

                                             (2) at any time after a Primary
         Sell-Down Event but prior to a Secondary Sell-Down Event, such Public
         Kinetics Entity shall take all reasonably necessary action within its
         control, to nominate for election by such Public Kinetics Entity
         stockholders a Board of Directors, which shall include one director
         designated by each of MidOcean, Behrman and Gryphon.

                                    (iv) At any time following a complete
         distribution of KSI or KHC securities to the Unitholders, such Public
         Kinetics Entity shall take all reasonably necessary action within its
         control, so that:

                                             (1) subject to Section
         5.1(i)(iv)(2), until such time as MidOcean, Behrman and Gryphon,
         respectively, cease hold at least 10% of the outstanding Voting
         Securities of the Public Kinetics Entity, two (2) directors designated
         by MidOcean, Behrman Gryphon, as applicable (one designee from each of
         these entities qualifying as an Additional Designated Director), and

                                             (2) for so long as MidOcean,
         Behrman and Gryphon, respectively, hold at least 5% but less than 10%
         of the outstanding Voting Securities of the Public Kinetics Entity, one
         director designated by MidOcean, Behrman and Gryphon, as applicable.

                                    (v) In the event that any director of the
         Public Kinetics Entity designated by MidOcean, Behrman, or Gryphon for
         any reason ceases to serve as a director during his or her term of
         office, the resulting vacancy on such Board of Directors shall be
         filled by the Board of Directors of the Public Kinetics Entity, with
         the approval of the director designated by MidOcean, Behrman, Gryphon,
         as applicable.

                                    (vi) So long as MidOcean, Behrman, Gryphon
         or, as the case may be, the Members are entitled to designate director
         nominees pursuant to this Section 5.1(i), the removal of any director
         designated by MidOcean, Behrman, Gryphon or, as the case may be, the
         Members shall be initiated at the written request of MidOcean, Behrman,
         or Gryphon and the Public Kinetics Entity shall use its commercially
         reasonable efforts to effect the removal or replacement of any such
         Investor Designee.

                  Section 5.2 Major Management Decisions; Consent. (a) The
following acts, expenditures, decisions and obligations made or incurred by the
Company or any Subsidiary of the Company (other than a Public Kinetics Entity or
any Subsidiary of a Public Kinetics Entity) shall require the prior approval of
the Board of Directors of such entity and the Required Investors (it being
understood that approval by a majority of the members of the Board of Directors
designated by at least two (2) of Behrman, MidOcean or Gryphon at a meeting or
by written consent shall constitute the approval of the Required Investors for
the purposes of this Section 5.2) at a Duly Convened Meeting:

                                       61
<PAGE>

                  (i)      the acquisition of any Person (whether by
consolidation, merger or similar combination of the Company or any of its
Subsidiaries, with or into such Person) which increases the consolidated gross
assets of the Company (computed on a book basis) or annualized consolidated
gross revenue of the Company by more than twenty percent (20%);

                  (ii)     the sale, conveyance, transfer or other disposition
of any type, in one transaction or in a series of related transactions, by the
Company or any of its Subsidiaries, of any assets or property (other than
inventory in the ordinary course of business) that constitute more than twenty
percent (20%) of the consolidated gross assets of the Company (computed on a
book basis) or contribute more than twenty percent (20%) to the annualized
consolidated gross revenue of the Company;

                  (iii)    the Company or any of its Subsidiaries entering into
any line of business that is unrelated to the business of the Company or its
Subsidiaries on the date hereof; and

                  (iv)     in addition to the provisions of the LLC Agreement,
whether or not subject to clause (ii) above, the Transfer of securities held by
the Company, including without limitation, KSI Capital Stock or KHC Capital
Stock held by the Company, and also including without limitation, a distribution
to Members of such securities, except Transfers contemplated by the
Restructuring Agreement (including, but not limited to, the Support Agreement
(as defined therein)).

         (b)      After the initial Public Offering of KSI or KHC, respectively,
but only for so long as MidOcean, Behrman or Gryphon have a right to designate a
director pursuant to Section 5.1(i)(iii) or Section 5.1(i)(iv), after which time
this Section 5.2(b) shall terminate, the following acts, expenditures, decisions
and obligations made or incurred by each Public Kinetics Entity shall require
the prior approval of the Board of Directors of such entity, including (1) while
each of Behrman, MidOcean and Gryphon are entitled pursuant to this Agreement to
designate directors, at least two (2) of the directors designated by Behrman,
MidOcean and Gryphon who are not Additional Designated Directors, (2) while two
of Behrman, MidOcean and Gryphon are entitled pursuant to this Agreement to
designate directors, at least one (1) of the directors designated by Behrman,
MidOcean and Gryphon who are not Additional Designated Directors, and (3) while
one of Behrman, MidOcean and Gryphon is entitled pursuant to this Agreement to
designate directors, such one (1) director designated by Behrman, MidOcean and
Gryphon who is not an Additional Designated Director:

                  (i)      the acquisition of any Person (whether by
consolidation, merger or similar combination of such Public Kinetics Entity or
any of its Subsidiaries, with or into such Person) which increases the
consolidated gross assets of the Public Kinetics Entity (computed on a book
basis) or annualized consolidated gross revenue of the Public Kinetics Entity by
more than twenty percent (20%); and

                  (ii)     the sale, conveyance, transfer or other disposition
of any type, in one transaction or in a series of related transactions, by the
Public Kinetics Entity or any of its Subsidiaries, of any assets or property
(other than inventory in the ordinary course of business) that constitute more
than twenty percent (20%) of the consolidated gross assets of the Public

                                       62
<PAGE>

Kinetics Entity (computed on a book basis) or contribute more than twenty
percent (20%) to the annualized consolidated gross revenue of the Public
Kinetics Entity.

                                   ARTICLE VI

                                 OTHER COVENANTS

                  Section 6.1 Financial Statements and Other Information. Each
of KSI and KHC agree to, at any time until such company files periodic financial
statements with the SEC pursuant to the Exchange Act, deliver or cause to be
delivered, to (i) the Behrman Investor Group, (ii) each Senior Unitholder and
(iii) each other Unitholder holding at such time one percent (1%) or more of the
Common Unit Equivalents:

                  (a)      within forty five (45) days after the end of each
fiscal month of such company other than the last such month of any fiscal
quarter of such company, consolidated statements of earnings, stockholders'
equity and cash flows of each such company for such fiscal month and
consolidated balance sheets of such company as of the end of such fiscal month,
certified by the chief financial officer or controller of such company;

                  (b)      within forty five (45) days after the end of each of
the first three (3) quarterly accounting periods in each fiscal year,
consolidated statements of earnings, stockholders' equity and cash flows of such
company for such fiscal quarter and consolidated balance sheets of such company
as of the end of such fiscal quarter, certified by the chief financial officer
or controller of such company;

                  (c)      within one hundred twenty (120) days after the end of
each fiscal year, audited consolidated statements of earnings, stockholders'
equity and cash flows of such company for such fiscal year, and consolidated
balance sheets of each such company as of the end of such fiscal year
accompanied by the opinion of a nationally recognized independent accounting
firm selected by such company; and

                  (d)      within sixty (60) days after the commencement of each
fiscal year of such company, a consolidated annual budget of each such company
and its Subsidiaries for such fiscal year (such annual budget to include,
without limitation, budgeted statements of earnings and sources and uses of cash
and balance sheets) accompanied by a certificate of the chief financial officer
or controller of each such company to the effect that, to the best of his or her
knowledge, such budget is a reasonable estimate for the period covered thereby.

                  Section 6.2 Board Observation Rights. (a) So long as the TCP
Unitholders on such date hold at least a majority of the Common Unit Equivalents
issued to them on the date hereof or at least a majority of the TCP Loans made
by them pursuant to the TCP Purchase Agreement, the holders of a majority of the
outstanding TCP Units (or Common Unit Equivalents issued on conversion thereof),
in each case considered on a Deemed Converted Basis, shall be entitled to
designate one (1) observer (the "TCP Unitholder Observer") to attend, as a
non-voting observer, all meetings (including participation in telephonic
meetings) of the Company Board, the Boards of Directors of each Subsidiary of
the Company and each committee thereof unless the TCP Unitholders have appointed
a director to such board or committee. The TCP Unitholder

                                       63
<PAGE>

Observer shall be either a principal of or a more senior employee of TCP or a
Person who is reasonably acceptable to the Company at the time of such
observer's appointment as the TCP Unitholder Observer.

                  (b)      So long as the Ares Unitholders on such date hold at
least a majority of the Common Unit Equivalents issued to them on the date
hereof or at least a majority of the Ares Loans made by them pursuant to the
Senior Subordinated Purchase Agreement, the holders of a majority of the
outstanding Ares Units (or Common Unit Equivalents issued on conversion
thereof), in each case considered on a Deemed Converted Basis, shall be entitled
to designate one (1) observer (the "Ares Unitholder Observer") to attend, as a
non-voting observer, all meetings (including participation in telephonic
meetings) of the Company Board, the Boards of Directors of each Subsidiary of
the Company and each committee thereof unless the Ares Unitholders have
appointed a director to such board or committee. The Ares Unitholder Observer
shall be either a principal of or a more senior employee of Ares Management LLC
or a Person who is reasonably acceptable to the Company at the time of such
observer's appointment as the Ares Unitholder Observer.

                  (c)      So long as the State of Michigan holds at least a
majority of the Common Unit Equivalents issued to it on the date hereof, the
State of Michigan shall be entitled to designate one (1) observer (the "State of
Michigan Observer") to attend, as a non-voting observer, all meetings (including
participation in telephonic meetings) of the Company Board and the Boards of
Directors of KSI and KHC. The State of Michigan Observer shall be a Person who
is reasonably acceptable to the Company.

                  (d)      So long as the Teachers Insurance and Annuity
Association of America ("TIAA") holds at least a majority of the Common Unit
Equivalents issued to it on the date of this Agreement, TIAA shall be entitled
to designate one (1) observer (the "TIAA Observer") to attend, as a non-voting
observer, all meetings (including participation in telephonic meetings) of the
Company Board and the Boards of Directors of KSI and KHC. Behrman shall have the
right, in its reasonable discretion and upon prior written notice to TIAA, to
require TIAA to substitute another Person as the TIAA Observer for a Person
previously designated by TIAA as the TIAA Observer.

                  (e)      Each of the Company, KSI and KHC, respectively, shall
provide the TCP Unitholder Observer, the Ares Unitholder Observer the State of
Michigan Observer and the TIAA Observer (such rights being inclusive, and not
duplicative, of rights granted pursuant to the TCP Purchase Agreement and the
Senior Subordinated Purchase Agreement) with (i) notice of all meetings of its
respective Board of Directors and (ii) all information delivered to the members
of such Board of Directors prior to such meetings at the same time such notice
and information is delivered to the members of its Board of Directors.
Notwithstanding the foregoing, the Company, KSI and KHC shall be entitled to (x)
excuse (i) the TCP Unitholder Observer and the Ares Unitholder Observer from any
portion of a Board of Directors meeting when the Board of Directors discusses
any matters directly relating to the Senior Subordinated Credit Agreement and/or
the TCP Purchase Agreement and/or the TCP Loans and/or the TCP Units and/or the
Ares Units and (ii) the TCP Unitholder Observer, the Ares Unitholder Observer,
the State of Michigan Observer and/or the TIAA Observer from any portion of a
Board of Directors meeting if their participation in such meeting would affect
the attorney/client privilege

                                       64
<PAGE>

of such company and its legal advisors and (y) withhold information from the TCP
Unitholder, the Ares Unitholder Observer, the State of Michigan Observer and/or
the TIAA Observer delivered to the Board of Directors prior to a meeting of the
Board of Directors if such company believes there is a reasonable likelihood
that the receipt of such information by (i) the TCP Unitholder Observer would
create a conflict of interest for the TCP Unitholder Observer, (ii) the Ares
Unitholder Observer would create a conflict of interest for the Ares Unitholder
Observer or (iii) the TCP Unitholder Observer, State of Michigan Observer and/or
the TIAA Observer would affect the attorney/client privilege of such company and
its legal advisors.

                  (f)      Upon the consummation of an initial Public Offering
with respect to KHC or KSI, the Board of Director observation rights set forth
in this Section 6.2 shall cease to apply to such Public Kinetics Entity, other
than with respect to the TCP Unitholder Observer and the Ares Unitholder
Observer.

                  Section 6.3 Director and Officer Insurance. The Company, KSI
and KHC shall purchase and maintain customary D&O indemnification insurance
coverage for each of its directors and officers at least for so long as any
provisions of Section 5.1 remain in effect with respect to such entity.

                                   ARTICLE VII

                               LIQUIDITY COVENANTS

                  Section 7.1 The Company agrees to:

                  (a)      as promptly as practicable following the initial
Public Offering of KHC, use its commercially reasonable efforts to cause KHC to
consummate a Public Offering of the KHC Registrable Securities of KSI and, upon
consummation of such Public Offering, cause KSI to use the net proceeds thereof
to repay the KSI Debt (the "KSI Debt Repayment");

                  (b)      as promptly as practicable following the KSI Debt
Repayment, (i) use its commercially reasonable efforts to cause KHC to
consummate one or more Public Offerings of KHC Registrable Securities held by
the Company to the extent necessary to generate net proceeds therefrom in an
amount at least equal to the distributions required to cause the Class C Units,
Class C-1 Units, Class D Units and Class E Units to be fully repaid and retired
and cancelled in accordance with the terms of the LLC Agreement, (ii) distribute
such net proceeds to the Members in accordance with the LLC Agreement and (iii)
retire and cancel the Class C Units, Class C-1 Units, Class D Units and Class E
Units in accordance with the terms of the LLC Agreement (the "Senior Units
Repayment"); and

                  (c)      immediately following the Senior Units Repayment (but
subject to pledges of these shares in favor of the lenders, if any), use its
commercially reasonable efforts to distribute to the Members the KHC Equity
Securities held by the Company in accordance with the terms of the LLC
Agreement.

                                       65
<PAGE>

                  Section 7.2 Each Unitholder agrees to, and agrees to use its
commercially reasonable efforts to cause its director nominees of the Company
Board to, take all actions necessary to cause the Company to carry out the
actions set forth in Section 7.1.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  Section 8.1 Entire Agreement; Termination of Shareholders
Agreement. This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
arrangements or understandings (whether written or oral) with respect thereto,
except to the extent such matters are otherwise specifically addressed in the
LLC Agreement. Upon effectiveness of the Merger, the Shareholders Agreement
shall be terminated and shall no longer be in force and effect.

                  Section 8.2 Captions. The Article and Section captions used
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

                  Section 8.3 Counterparts. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by the parties
hereto and each such executed counterpart shall be deemed to be an original
instrument.

                  Section 8.4 Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be validly given, made or served, if in
writing and delivered by personal delivery, overnight courier, telecopier or
registered or certified mail, return-receipt requested and postage prepaid
addressed as follows:

                  If to the Company, to:

                  KH LLC
                  2805 Mission College Boulevard
                  Santa Clara, California 95054
                  Attention:  General Counsel
                  Facsimile:    (408) 567-0196

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Fenwick & West LLP
                  Two Palo Alto Square
                  Palo Alto, CA 94306
                  Attention:  Daniel J. Winnike
                  Facsimile:  (650) 494-1417

                  If to KSI, to:

                                       66
<PAGE>

                  Kinetic Systems, Inc.
                  2805 Mission College Boulevard
                  Santa Clara, California 95054
                  Attention:  General Counsel
                  Facsimile:   (408) 567-0196

                  If to KHC, to:

                  Celerity Group, Inc.
                  2805 Mission College Boulevard
                  Santa Clara, California 95054
                  Attention:  General Counsel
                  Facsimile:  (408) 567-0196

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Fenwick & West LLP
                  Two Palo Alto Square
                  Palo Alto, CA 94306
                  Attention:  Daniel J. Winnike
                  Facsimile:  (650) 494-1417

                                       67
<PAGE>

                  If to MidOceanCapital, to:

                  MidOcean Capital Investors, L.P.
                  c/o MidOcean Capital Partners
                  320 Park Avenue - 17th Floor
                  New York, NY 10022
                  Attention:  Frank Schiff
                  Facsimile:  (212) 497-1373

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Kirkland & Ellis LLP
                  655 Fifteenth Street, N.W.
                  Washington, D.C. 20005-5793
                  Attention:  Mark D. Director, Esq.
                  Facsimile:  (202) 879-5200

                  If to MidOcean Celerity, to:

                  MidOcean Celerity Investment Partners, LP
                   c/o MidOcean Capital Partners
                  320 Park Avenue - 17th Floor
                  New York, NY 10022
                  Attention:  Frank Schiff
                  Facsimile:  (212) 497-1373

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Kirkland & Ellis LLP
                  655 Fifteenth Street, N.W.
                  Washington, D.C. 20005-5793
                  Attention:  Mark D. Director, Esq.
                  Facsimile:  (202) 879-5200

                  If to Behrman, to:

                  Behrman Capital III L.P.
                  c/o Behrman Capital
                  Four Embarcadero Center, Suite 3640
                  San Francisco, CA  94111
                  Attention:  William Matthes
                  Facsimile:  (415) 434-7310

                                       68
<PAGE>

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Latham & Watkins
                  135 Commonwealth Drive
                  Menlo Park, CA  94025
                  Peter F. Kerman, Esq.
                  Facsimile:  (650) 463-2600

                  If to Gryphon, to:

                  Gryphon Partners II, L.P.
                  c/o Gryphon Investors
                  One Embarcadero Center, Suite 2750
                  San Francisco, CA  94111
                  Attention:  Jeff L. Ott
                  Facsimile:  (415) 217-7447

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Gibson, Dunn & Crutcher LLP
                  333 South Grand Avenue
                  Los Angeles, CA  90071
                  Attention:  Kenneth M. Doran, Esq.
                  Facsimile:  (213) 229-6537

                  If to USF, to:

                  United States Filter Corporation
                  40-004 Cook Street
                  Palm Desert, CA  92111
                  Attention:  General Counsel
                  Facsimile:  (760) 346-4024

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  O'Melveny & Myers, L.L.P.
                  610 Newport Beach Drive, 17th Floor
                  Newport Beach, CA  92660
                  Attention:  Thomas Leary, Esq.
                  Facsimile:  (949) 823-6994

                                       69
<PAGE>

                  If to Crowley, to:

                  Jerry Crowley
                  Treehouse Ltd.
                  444 Castro Street #403
                  Mountain View, CA  94041
                  Facsimile:

                  If to Mandaric, to:

                  Milan Mandaric
                  NationsBank Tower
                  100 S.E. 2nd Street, Suite 3320
                  Miami, FL  33131
                  Facsimile:

                  If to the TCP Unitholders:
                  11100 Santa Monica Blvd
                  Suite 210
                  Los Angeles, CA 90025
                  Attention:  David Hollander
                  Facsimile: (310) 566-1010

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Milbank, Tweed, Hadley & McCloy LLP
                  5 Palo Alto Square, 7th Floor
                  3000 El Camino Real
                  Palo Alto, CA 94306
                  Attention:  Doug Tanner, Esq.
                  Facsimile: (650) 739-7000

                  If to the Ares Unitholders:

                  1999 Avenue of the Stars
                  Suite 1900
                  Los Angeles, CA 90067
                  Attention:  Eric Beckman
                  Facsimile: (310) 201-4170

                  with a copy (which shall not constitute notice) to its
                  counsel:

                  Milbank, Tweed, Hadley & McCloy LLP
                  601 S. Figueroa Street
                  30th Floor
                  Los Angeles, CA 90064
                  Attention:  Deborah Ruosch, Esq.
                  Facsimile: (213) 629-5063

                                       70
<PAGE>

and if to any of the Senior Unitholders, any of the Backstop Unitholders, any of
the Other Financial Investors, any 2001 Investor, any 2002 Investor, any of the
Management Holders or to any Profits Units Holder, to the addresses set forth
opposite each of their names on Schedule I-A, Schedule I-B, Schedule I-C,
Schedule I-D, Schedule II, Schedule III-A, Schedule III-B, Schedule IV or
Schedule V, respectively, attached hereto, or to such other address as any such
party hereto may, from time to time, designate in writing to all other parties
hereto, and any such communication shall be deemed to be given, made or served
as of the date so delivered or, in the case of any communication delivered by
mail, as of the date so received.

                  Section 8.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Company, KHC, KSI, the Unitholders
and their respective successors, assigns and Permitted Transferees. Any or all
of the rights of a Unitholder under this Agreement may be assigned or otherwise
conveyed by any Unitholder only in connection with a Transfer of Equity
Securities which is in compliance with this Agreement and the LLC Agreement or
if such assignment is otherwise agreed to by the Company Board. Assignment,
conveyance or transfer of Equity Securities will not result in such assignee,
recipient or transferee automatically becoming a member of the Company and shall
require such person to make an "Admission Event" pursuant to the terms of the
LLC Agreement.

                  Section 8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO SUCH STATE'S CHOICE OF LAW PROVISIONS.

                  Section 8.7 Submission to Jurisdiction. (a) Each of the
parties hereto hereby irrevocably acknowledges and consents that any legal
action or proceeding brought with respect to any of the obligations arising
under or relating to this Agreement may be brought in the courts of the State of
New York, County of New York, or if it has or can acquire jurisdiction in the
United States District Court for the Southern District of New York, as the party
bringing such action or proceeding may elect, and each of the parties hereto
hereby irrevocably submits to and accepts with regard to any such action or
proceeding, for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Each
party hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such party, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Agreement or the transactions
contemplated hereby brought in any of the aforesaid courts, that any such court
lacks jurisdiction over such party. Each party irrevocably consents to the
service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party, at its
address for notices set forth in Section 8.4, such service to become effective
ten (10) days after such mailing. Each party hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees
not to plead or claim in any action or proceeding commenced hereunder or under
any other documents contemplated hereby that service of process was in any way
invalid or ineffective. Subject to Section 8.7(b), the foregoing shall not limit
the rights of any party to serve process in any other manner permitted by law.
The foregoing consents to jurisdiction shall not constitute general consents to
service of process in the State of New York for any purpose except as provided

                                       71
<PAGE>

above and shall not be deemed to confer rights on any Person other than the
respective parties to this Agreement.

                  (b)      Each of the parties hereto hereby waives any right it
may have under the laws of any jurisdiction to commence by publication any legal
action or proceeding with respect to this Agreement. To the fullest extent
permitted by Applicable Law, each of the parties hereto hereby irrevocably
waives the objection which it may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement in any of the courts referred to in Section 8.7(a) and hereby further
irrevocably waives and agrees not to plead or claim that any such court is not a
convenient forum for any such suit, action or proceeding.

                  (c)      The parties hereto agree that any judgment obtained
by any party hereto or its successors or assigns in any action, suit or
proceeding referred to above may, in the discretion of such party (or its
successors or assigns), be enforced in any jurisdiction, to the extent permitted
by Applicable Law.

                  (d)      The parties hereto agree that the remedy at law for
any breach of this Agreement may be inadequate and that should any dispute arise
concerning any matter hereunder, this Agreement shall be enforceable in a court
of equity by an injunction or a decree of specific performance. Such remedies
shall, however, be cumulative and nonexclusive, and shall be in addition to any
other remedies which the parties hereto may have.

                  (e)      Notwithstanding the foregoing provisions of this
Section 8.7, the State of Michigan shall not be deemed to have made any
particular irrevocable submission to jurisdiction, waiver or, as the case may
be, consent in the event that the State of Michigan has delivered to the Company
prior to the date hereof a certificate of an officer of its plan administrator
stating that any such irrevocable submission to jurisdiction, waiver or consent,
as the case may be, would constitute a violation of Applicable Law.

                  Section 8.8 Benefits Only to Parties. Nothing expressed by or
mentioned in this Agreement is intended or shall be construed to give any
Person, other than persons indemnified pursuant to Section 3.7 or Section 4.7,
the parties hereto and their respective successors or assigns and Permitted
Transferees, any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. This Agreement and all
conditions and provisions hereof are intended to be and are for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns and Permitted Transferees, and for the benefit of no other Person.

                  Section 8.9 Termination. Except for Article III, Article IV
and as otherwise expressly provided in this Agreement as to certain provisions
hereof, this Agreement shall terminate upon the termination of the Company.

                  Section 8.10 Publicity. Except as otherwise required by
Applicable Law none of the parties hereto shall issue or cause to be issued any
press release or make or cause to be made any other public statement in each
case relating to or connected with or arising out of this Agreement or the
matters contained herein, without obtaining the prior written consent of
MidOcean,

                                       72
<PAGE>

Behrman, Gryphon and the Company to the contents and the manner of presentation
and publication thereof.

                  Section 8.11 Confidentiality. Each of the parties hereto
hereby agrees that throughout the term of this Agreement it shall keep (and
shall cause its directors, officers, general and limited partners, employees,
representatives and outside advisors and its Affiliates to keep) all non-public
information received as a Unitholder relating to the Company and any of its
Subsidiaries (including any such information received prior to the date hereof;
provided that, in the case of USF, such information received by it prior to
August 30, 2000 shall not be subject to this Section 8.11) confidential except
information which (a) becomes known to such Unitholder from a source, other than
the Company, its directors, officers, employees, representatives or outside
advisors, which source is not obligated to the Company to keep such information
confidential or (b) becomes generally available to the public through no breach
of this Agreement by any party hereto. Each of the parties hereto agrees that
(i) such non-public information may be communicated to the directors, officers,
general and limited partners, employees, representatives, outside advisors and
Affiliates of any of the parties and (ii) it will cause its directors, officers,
general and limited partners, employees, representatives, outside advisors or
Affiliates to keep such non-public information confidential and will not, and
will cause its directors, officers, general and limited partners, employees,
representatives, outside advisors and Affiliates not to, use such non-public
information to either to compete with the Company and any of its Subsidiaries or
to conduct itself in a manner inconsistent with the antitrust laws of the United
States or any state. Notwithstanding the foregoing, a party hereto may disclose
non-public information if required to do so upon request for disclosure pursuant
to a federal or state freedom of information statute or by a court of competent
jurisdiction or by any governmental agency (including, but not limited to,
insurance regulators); provided however that prompt notice of such required
disclosure be given to the Company and MidOcean prior to the making of such
disclosure so that the Company and/or MidOcean may seek a protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, the party hereto required to disclose the non-public
information will disclose only that portion which such party is advised by
opinion of counsel is legally required to be disclosed and will request that
confidential treatment be accorded such portion of the non-public information.
Notwithstanding the foregoing, (1) so long as a TCP Unitholder holds notes
evidencing the TCP Loans, such TCP Unitholder shall, in lieu of the foregoing
confidentiality provision, be subject to the confidentiality provisions set
forth in the TCP Purchase Agreement and (2) so long as a Ares Unitholder holds
notes evidencing the Ares Loans, such Ares Unitholder shall, in lieu of the
foregoing confidentiality provision, be subject to the confidentiality
provisions set forth in the TCP Purchase Agreement and/or the Senior
Subordinated Purchase Agreement, as applicable to the applicable Ares Loan. A
Unitholder may disclose confidential information to a prospective transferee
only if such prospective transferee enters into a confidentiality agreement with
the Company on terms satisfactory to the Company.

                  Section 8.12 Expenses. The Company shall reimburse each of the
respective members of its Board who are not employees of the Company or any of
its Subsidiaries, the TCP Unitholder Observer and the Ares Unitholder Observer
for their travel and reasonable out-of-pocket expenses incurred in connection
with their serving on the Board or, as the case may be, attending Board meetings
as an observer. Employees of the Company or any of its Subsidiaries who incur
expenses in connection with their attendance of meetings of the Board in the

                                       73
<PAGE>

performance of their duties shall also be reimbursed in accordance with the
Company's or such Subsidiary's, as applicable, usual expense reimbursement
policies.

                  Section 8.13 Amendments; Waivers. (a) Except as otherwise
expressly provided in this Agreement, no provision of this Agreement may be
amended, modified or waived without the prior written consent of the holders of
more than two thirds of the Voting Securities, voting as a single class on a
Deemed Converted Basis; provided that, in each case, no such amendment,
modification or waiver shall (A) disproportionately adversely affect the right
of any Member or Class of Units hereunder without the prior written consent of
each such Member or Class Amendment Consent of such Class or amend this clause
(A) with respect to any Member without the prior consent of such Member, (B)
amend any right specifically granted to such Unitholder but not to all other
Unitholders without the prior written consent of such Unitholder to which such
right is specifically granted, (C) amend the rights of MidOcean, Behrman and
Gryphon specifically granted to them in Sections 2.5, 2.6, 5.1 and Section 5.2
unless such Unitholder ceases to own 6.5% of the Voting Securities, (D) amend
Article VII without the prior written consent of (i) MidOcean, (ii) Behrman,
(iii) Gryphon, (iv) the Ares Unitholders holding a majority of then outstanding
Ares Units on a Deemed Converted Basis and (v) the TCP Unitholders holding a
majority of then outstanding TCP Units on a Deemed Converted Basis, (E) amend
Section 4.1(a)(iii)(D) or the eighth proviso to Section 4.1(a)(iii) without the
prior written consent of the Ares Unitholders holding a majority of then
outstanding Ares Units on a Deemed Converted Basis, (F) amend Section
4.1(a)(iii)(C) or the seventh proviso to Section 4.1(a)(iii) without the prior
written consent of the TCP Unitholders holding a majority of then outstanding
TCP Units on a Deemed Converted Basis; provided, however, that no amendment,
modification or waiver shall adversely affect the rights or obligations of KSI
contained in Section 2.6, Section 2.7, or Articles III, V or VI unless approved
by KSI, and provided further that no amendment, modification or waiver shall
adversely affect the rights or obligations of KHC contained in Section 2.6,
Section 2.7, or Articles IV, V or VI unless approved by KHC. Any amendment to
this Section 8.13 shall require the approval of the holders of more than two
thirds of the Voting Securities, voting as a single class on a Deemed Converted
Basis, and the approval provided for by each Class by the Class Amendment
Consent. Notwithstanding the foregoing, the addition of parties to this
Agreement in accordance with its terms shall not be deemed to be an amendment,
modification or waiver requiring the consent of any Member and may be amended as
set forth in clause (b).

                  (b)      Notwithstanding the foregoing, (1) any provision of
this Agreement that requires the approval of Members holding a percentage of the
voting power of all outstanding Voting Securities that is greater than a
two-thirds of the voting power of all outstanding Voting Securities may be
amended only upon the approval of Members holding at least that percentage of
the voting power of all outstanding Voting Securities, (2) any amendment to this
Agreement that expressly by its terms amends or is in direct contravention of
any provision of the LLC Agreement shall be effective only if approved in the
manner set forth in the LLC Agreement and (3) this Agreement may be amended by
the Company Board without the consent of any Member (i) to correct any printing
or clerical error or omissions and (ii) to amend the Schedules to this Agreement
to reflect a transfer permitted by this Agreement and the LLC Agreement.

                                       74
<PAGE>

                  (c)      As to the TCP Unitholders, the consent or approval by
the holders of a majority of Common Unit Equivalents then held by all TCP
Unitholders shall be sufficient to amend, modify or waive any provision of this
Agreement for which their approval is required.

                  (d)      As to the Ares Unitholders, the consent or approval
by the holders of a majority of Common Unit Equivalents then held by all Ares
Unitholders shall be sufficient to amend, modify or waive any provision of this
Agreement for which their approval is required.

                  (e)      As to the Profits Units Holders, the consent or
approval by the holders of a majority of Profits Units then held by all Profits
Units Holders shall be sufficient to amend, modify or waive any provision of
this Agreement for which their approval is required.

                  Section 8.14 Other Business. MidOcean, Behrman, Gryphon and
any of their respective Affiliates may engage in or possess an interest in any
other business venture of any kind, nature or description, independently or with
others, whether or not such ventures are competitive with the Company,
notwithstanding that representatives of MidOcean, Behrman, Gryphon or any of
their respective Affiliates are serving on the Company Board. Nothing in this
Agreement shall be deemed to prohibit MidOcean, Behrman, Gryphon or any of their
respective Affiliates or Shimmon from dealing, or otherwise engaging in
business, with Persons transacting business with the Company. Neither the
Company nor any Unitholder shall have any rights or obligations by virtue of
this Agreement, in or to any independent venture of MidOcean, Behrman, Gryphon
or any of their respective Affiliates, or the income or profits or losses or
distributions derived therefrom, and such ventures shall not be deemed wrongful
or improper even if competitive with the business of the Company.

                                  [END OF PAGE]

                            [SIGNATURE PAGES FOLLOW]

                                       75
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.

                                    KH LLC

                                    By: /s/ John Goodman
                                       _________________________________
                                    Name:
                                    Title:

                                    For purposes of the provisions set forth in
                                    Sections 2.6 and 2.7 and Articles III, IV,
                                    V, VI and VII hereof:

                                    KINETIC SYSTEMS, INC.

                                    By: /s/ John Goodman
                                       _________________________________
                                    Name:
                                    Title:

                                    For purposes of the provisions set forth in
                                    Sections 2.6 and 2.7 and Articles IV, V, VI
                                    and VII hereof:

                                    CELERITY GROUP, INC.

                                    By: /s/ John Goodman
                                       _________________________________
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
            Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>
                                    MIDOCEAN CAPITAL INVESTORS, L.P.

                                    By: MidOcean Capital Partners, LP
                                    Its: General partner

                                    By:/s/ Frank Schiff
                                       ____________________________
                                    Name:
                                    Title:
                                    MIDOCEAN CELERITY INVESTMENT PARTNERS, LP

                                    By: MidOcean Celerity Holdings, LLC
                                    Its: General partner

                                    By:/s/ Frank Schiff
                                       ____________________________
                                    Name:
                                    Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    BEHRMAN CAPITAL III, L.P.

                                    By: Behrman Brothers III, LLC
                                    Its: General Partner

                                    By: /s/ William Matthes
                                        ________________________
                                    Name: William Matthes
                                    Title: Managing Member

                                    STRATEGIC ENTREPRENEUR FUND III, L.P.

                                    By: /s/ William Matthes
                                        ________________________
                                    Name: William Matthes
                                    Title: General Partner

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    UNITED STATES FILTER CORPORATION

                                    By: /s/ Stephen Stanciak
                                       ---------------------------------
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    J. H. WHITNEY MEZZANINE FUND, L.P.

                                    By: Whitney GP, LLC
                                    Its: General Partner

                                    By: /s/ Kevin Curley
                                       _________________________________
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    THE NORTHWESTERN MUTUAL LIFE
                                    INSURANCE COMPANY

                                    By: /s/ Mark E. Kishler
                                       ---------------------------------
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    ALBION ALLIANCE MEZZANINE FUND, L.P.

                                    By: Albion Alliance LLC, its general partner

                                    By: /s/ James C. Pendergast
                                       _________________________________
                                    Name:
                                    Title:

                                    ALBION ALLIANCE MEZZANINE FUND II, L.P.

                                    By: AA MEZZ II GP, LLC, its general partner
                                    By: Albion Alliance, LLC, its sole member

                                    By: /s/ James C. Pendergast
                                       _________________________________
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    SIGLER & CO, AS NOMINEE FOR
                                    GOLDENTREE HIGH YIELD OPPORTUNITIES
                                    I, L.P.

                                    By: GoldenTree Asset Management, L.P., as
                                    agent

                                    By: /s/ Thomas H. Shandell
                                        ______________________________________
                                    Name:
                                    Title:

                                    GOLDENTREE HIGH YIELD PARTNERS, L.P.

                                    By: GoldenTree Asset Management, L.P., as
                                    agent

                                    By: /s/ Thomas H. Shandell
                                        ______________________________________
                                    Name:
                                    Title:

                                    DB STRUCTURED PRODUCTS, INC.

                                    By: GoldenTree Asset Management, L.P., as
                                    agent

                                    By: /s/ Thomas H. Shandell
                                        ______________________________________
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    SPECIAL VALUE ABSOLUTE RETURN FUND, LLC,
                                    as Purchaser

                                    By: SVAR/MM, LLC
                                    Its: Managing Member
                                    By: Tennenbaum Capital Partners, LLC
                                    Its: Managing Member
                                    By: Tennenbaum & Co., LLC
                                    Its: Managing Member

                                    By: /s/ Michael E. Tennenbaum
                                        ______________________________________
                                    Name: Michael E. Tennenbaum
                                    Title:   Managing Partner

                                    SPECIAL VALUE BOND FUND, LLC, as Purchaser

                                    By: SVIM/MSM, LLC
                                    Its: Manager
                                    By: Tennenbaum & Co., LLC
                                    Its: Managing Member

                                    By: /s/ Michael E. Tennenbaum
                                        ______________________________________
                                    Name: Michael E. Tennenbaum
                                    Title:   Managing Partner

                                    SPECIAL VALUE BOND FUND II, LLC,
                                    as Purchaser

                                    By: SVIM/MSM II, LLC
                                    Its: Managing Member
                                    By: Tennenbaum & Co., LLC
                                    Its: Managing Member

                                    By: /s/ Michael E. Tennenbaum
                                        ______________________________________
                                    Name: Michael E. Tennenbaum
                                    Title: Managing Partner

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    J.B. FUQUA FAMILY CHARITABLE LEAD
                                    ANNUITY TRUST - 2000

                                    By: /s/ Michael E. Tennebaum
                                        --------------------------------------
                                    Name:
                                    Title:

                                    MASSACHUSETTS MUTUAL LIFE
                                    INSURANCE COMPANY

                                    By: /s/ Richard E. Spencer, II
                                        --------------------------------------
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    ARES LEVERAGED INVESTMENT FUND II,
                                    L.P.

                                    By:_________________________________
                                    Name:
                                    Title:

                                    ARES CORPORATE OPPORTUNITY FUND,
                                    L.P.

                                    By: /s/ Karen Frankal
                                       _________________________________
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    STATE TREASURER OF THE STATE OF MICHIGAN,
                                    CUSTODIAN OF THE MICHIGAN PUBLIC SCHOOLS
                                    EMPLOYEES' RETIREMENT SYSTEM, STATE
                                    EMPLOYEES' RETIREMENT SYSTEM AND MICHIGAN
                                    STATE POLICE RETIREMENT SYSTEM

                                    By: Stockwell Fund, L.P., by power of
                                    attorney

                                    By: Stockwell Managers, LLC, its general
                                    partner

                                    By:  /s/ Thomas L. Hufnagel
                                        _____________________________
                                        Name: Thomas L. Hufnagel
                                        Title: Vice President

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    CENTURY PARK CAPITAL PARTNERS, L.P.

                                    By: /s/ Charles W. Ruellig
                                       ---------------------------------
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    /s/ E. C. Grayson
                                    -------------------------------------
                                    ELLISON C. GRAYSON

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    GRYPHON PARTNERS II, L.P.

                                    By: Gryphon GenPar II, L.L.C., a Delaware
                                    limited liability company
                                    Its: General Partner

                                    By: /s/ Jeffrey L. Ott
                                        _________________________
                                    Name: Jeffrey L. Ott
                                    Title: Member and Principal

                                    GRYPHON PARTNERS II-A, L.P.

                                    By: Gryphon GenPar II, L.L.C., a Delaware
                                    limited liability company
                                    Its:  General Partner

                                    By: /s/ Jeffrey L. Ott
                                        _________________________
                                    Name: Jeffrey L. Ott
                                    Title: Member and Principal

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    TEACHERS INSURANCE AND ANNUITY
                                    ASSOCIATION OF AMERICA

                                    By: /s/ Holly Holtz
                                       _________________________________
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    INTERVIVOS TRUST DATED 10/76 JERRY
                                    AND NANCIE L. CROWLEY UA 1976

                                    By:_________________________________
                                    Name:
                                    Title: Trustee

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    1999 MILAN MANDARIC REVOCABLE TRUST

                                    By: /s/ Milan Mandaric
                                       ---------------------------------
                                    Name: Milan Mandaric
                                    Title: Trustee

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    /s/ David Shimmon
                                    ------------------------------------
                                    DAVID SHIMMON

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    MAGNOLIA TREE, LLC

                                    By: /s/ David Shimmon
                                       ---------------------------------
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>
                                     /s/ John Holtz
                                    ____________________________________
                                    JOHN HOLTZ

                                    /s/ Roxanne Holtz
                                    ____________________________________
                                    ROXANNE HOLTZ

                                    ____________________________________
                                    PATRICK DUNN

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    OAKSTONE VENTURES PARTNERS FUND III,
                                    L.P.

                                    By: /s/ Pete Hawkins
                                       _________________________________
                                    Name:
                                    Title:

[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
           Inc., Celerity Group, Inc. and The Unitholders of KH LLC]

<PAGE>

                                    UNITHOLDER:

                                    By: /s/ Mark Kishler
                                       _________________________________
                                    Name:

<PAGE>

                                  Schedule I-A

                               SENIOR UNITHOLDERS

<TABLE>
<CAPTION>
               Unitholder                                 Notice Address
               ----------                                 --------------
<S>                                                <C>
J. H. Whitney Mezzanine Fund, L.P.                 177 Broad Street
                                                   Stamford, CT 06901
                                                   Attn: Daniel J. O'Brien
                                                         Kevin J. Curley, Esq.
                                                   Fax: (203) 973-1522

J.H. Whitney IV, L.P.                              177 Broad Street
                                                   Stamford, CT 06901
                                                   Attn: Daniel J. O'Brien
                                                         Kevin J. Curley, Esq.
                                                   Fax: (203) 973-1522

The Northwestern Mutual Life Insurance             720 East Wisconsin Avenue
Company                                            Milwaukee, WI 53202
                                                   Attn: Securities Department
                                                   Fax: (414) 665-7124

Albion Alliance Mezzanine Fund, L.P.               1345 Avenue of the Americas
                                                   37th Floor
                                                   New York, NY 10105
                                                   Attn: James Pendergast
                                                   Fax: (212) 969-6659

Albion Alliance Mezzanine Fund II, L.P.            1345 Avenue of the Americas
                                                   37th Floor
                                                   New York, NY 10105
                                                   Attn: James Pendergast
                                                   Fax: (212) 969-6659

Sigler & Co, as Nominee for Goldentree High        300 Park Avenue, 25th Floor
Yield Opportunities I, L.P.                        New York, NY 10022
                                                   Attn: Tom Shandell
Goldentree High Yield Partners, L.P.               300 Park Avenue, 25th Floor
                                                   New York, NY 10022
                                                   Attn: Tom Shandell

DB Structured Products, Inc.                       300 Park Avenue
                                                   25th Floor
                                                   New York, NY 10022
                                                   Attn: Tom Shandell
</TABLE>

<PAGE>

                                  Schedule I-B

                              BACKSTOP UNITHOLDERS

<TABLE>
<CAPTION>
               Unitholder                                 Notice Address
               ----------                                 --------------
<S>                                                <C>
MidOcean Capital Investors, L.P.                   MidOcean Capital Investors, L.P.
                                                   c/o MidOcean Capital Partners, LP
                                                   320 Park Avenue 17th Floor
                                                   New York, NY  10022
                                                   Attention:  Frank Schiff
                                                   Facsimile:  (212) 336-0875

Behrman Capital III L.P.                           Behrman Capital III L.P.
                                                   c/o Behrman Capital
                                                   Four Embarcadero Center, Suite 3640
                                                   San Francisco, CA  94111
                                                   Attention:  William Matthes
                                                   Facsimile:  (415) 434-7310

Strategic Entrepreneur Fund III L.P.               Strategic Entrepreneur Fund III L.P.
                                                   c/o Behrman Capital
                                                   Four Embarcadero Center, Suite 3640
                                                   San Francisco, CA  94111
                                                   Attention:  William Matthes
                                                   Facsimile:  (415) 434-7310
</TABLE>

<PAGE>

                                  Schedule I-C

                                 TCP UNITHOLDERS

<TABLE>
<CAPTION>
               Unitholder                                 Notice Address
               ----------                                 --------------
<S>                                                <C>
SPECIAL VALUE ABSOLUTE                             11100 Santa Monica Blvd.,
RETURN FUND, LLC                                   Suite 210
                                                   Los Angeles, CA 90025

SPECIAL VALUE BOND FUND,                           11100 Santa Monica Blvd.,
LLC                                                Suite 210
                                                   Los Angeles, CA 90025

SPECIAL VALUE BOND FUND II,                        11100 Santa Monica Blvd.,
LLC                                                Suite 210
                                                   Los Angeles, CA 90025

J.B. FUQUA FAMILY                                  11100 Santa Monica Blvd.,
CHARITABLE LEAD ANNUITY                            Suite 210
TRUST - 2000                                       Los Angeles, CA 90025

MASSACHUSETTS MUTUAL LIFE                          c/o DL Babson
INSURANCE COMPANY                                  1500 Main Street
                                                   Suite 2200
                                                   Springfield, MA 01115

NYLIM MEZZANINE PARTNERS                           c/o NYLCAP Manager LLC
PARALLEL FUND, LP                                  51 Madison Avenue, Room 3009,
                                                   NY, NY 10010
                                                   Attention: Thomas Haubenstricker

NEW YORK LIFE INVESTMENT                           c/o NYLCAP Manager LLC
MANAGEMENT MEZZANINE                               51 Madison Avenue, Room 3009,
PARTNERS, LP                                       NY, NY 10010
                                                   Attention: Thomas Haubenstricker

UNITED INSURANCE COMPANY OF                        1 East Wacker Drive
AMERICA                                            Chicago, IL 60601
                                                   Attention: Eric J. Draut
</TABLE>

<PAGE>

                                  Schedule I-D

                                ARES UNITHOLDERS

<TABLE>
<CAPTION>
               Unitholder                                 Notice Address
               ----------                                 --------------
<S>                                                <C>
ARES LEVERAGED INVESTMENT                          1999 Avenue of the Stars,
FUND II, L.P.                                      Suite 1900
                                                   Los Angeles, CA 90067

ARES CORPORATE OPPORTUNITY                         1999 Avenue of the Stars,
FUND, L.P.                                         Suite 1900
                                                   Los Angeles, CA 90067
ARES III CLO LTD.                                  1999 Avenue of the Stars,
                                                   Suite 1900
                                                   Los Angeles, CA 90067
ARES IV CLO LTD.                                   1999 Avenue of the Stars,
                                                   Suite 1900
                                                   Los Angeles, CA 90067
ARES VII CLO LTD.                                  1999 Avenue of the Stars,
                                                   Suite 1900
                                                   Los Angeles, CA 90067
ARES VIII CLO LTD.                                 1999 Avenue of the Stars,
                                                   Suite 1900
                                                   Los Angeles, CA 90067
ARES TOTAL VALUE FUND, L.P.                        1999 Avenue of the Stars,
                                                   Suite 1900
                                                   Los Angeles, CA 90067
</TABLE>

<PAGE>

                                   Schedule II

                            OTHER FINANCIAL INVESTORS

<TABLE>
<CAPTION>
               Unitholder                                 Notice Address
               ----------                                 --------------
<S>                                                <C>
1999 Milan Mandaric Revocable Trust                c/o Plancorp, Inc.
                                                   Brian Wiedermann
                                                   1350 Timberlake Manor
                                                   Parkway, Suite 100
                                                   Chesterfield, MO 63017

State Treasurer of the State of                    U.S. Mail:
Michigan, custodian of the Michigan                Treasury Building
Public Schools Employees'                          P.O. Box 15128
Retirement System, State Employees'                Lansing, MI 48901
Retirement System and Michigan                     Attn: Thomas L. Hufnagel
State Police Retirement System                     Fax: (517) 335-3668

                                                   Overnight Mail:
                                                   2501 Coolidge Road
                                                   Suite 400
                                                   East Lansing, MI 48823

Century Park Capital Partners, L.P.                1930 Century Park West
                                                   Los Angeles, CA 90067
                                                   Attn: Martin Jelenko
                                                   Fax: (310) 712-6585

E.C. Grayson                                       Spencer Stuart
                                                   ATTN: E.C. Grayson
                                                   525 Market Street, Suite 3700
                                                   San Francisco, CA 94105-
                                                   2745
                                                   Attn: E.C. Grayson
                                                   Fax: (415) 576-3872

MidOcean Celerity Investment                       MidOcean Celerity Holdings,
Partners, L.P.                                     LLC
                                                   MidOcean Capital Partners
                                                   320 Park Avenue 17th Floor
                                                   New York, NY 10022
                                                   Attention: Frank Schiff
                                                   Facsimile: (212) 497-1375
</TABLE>

<PAGE>

                                 Schedule III-A

                                 2001 Investors

<TABLE>
<CAPTION>
               Unitholder                                 Notice Address
               ----------                                 --------------
<S>                                                <C>
Gryphon Partners II, L.P.                          c/o Gryphon Investors
                                                   One Embarcadero Center
                                                   Suite 2750
                                                   San Francisco, CA 94111
                                                   Attn: Jeff L. Ott
                                                   Fax: 415-217-7447

Gryphon Partners II, L.P.                          c/o Gryphon Investors
                                                   One Embarcadero Center
                                                   Suite 2750
                                                   San Francisco, CA 94111
                                                   Attn: Jeff L. Ott
                                                   Fax: 415-217-7447

Teachers Insurance and Annuity                     TIAA-CREF
Association of America                             730 Third Avenue
                                                   New York, New York 10017
                                                   Attn: Holly Holtz
                                                   Fax: 212-907-2454

MidOcean Capital Investors, L.P.                   MidOcean Capital Investors,
                                                   L.P.
                                                   c/o MidOcean Capital Partners
                                                   320 Park Avenue 17th Floor
                                                   New York, NY 10022
                                                   Attention: Frank Schiff
                                                   Facsimile: (212) 497-1375

Behrman Capital III L.P.                           Behrman Capital III L.P.
                                                   c/o Behrman Capital
                                                   Four Embarcadero Center, Suite
                                                   3640
                                                   San Francisco, CA 94111
                                                   Attention: William Matthes
                                                   Facsimile: (415) 434-7310

Century Park Capital Partners, L.P.                1930 Century Park West
                                                   Los Angeles, CA 90067
                                                   Attn: Martin Jelenko
                                                   Fax: (310) 712-6585
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
               Unitholder                                 Notice Address
               ----------                                 --------------
<S>                                                <C>
Strategic Entrepreneur Fund III L.P.               Strategic Entrepreneur Fund III L.P
                                                   c/o Behrman Capital
                                                   Four Embarcadero Center, Suite 36
                                                   San Francisco, CA 94111
                                                   Attention: William Matthes
                                                   Facsimile: (415) 434-7310

The Northwestern Mutual Life                       Beth M. Berger
Insurance                                          Assistant General Counsel
                                                   The Northwestern Mutual Life
                                                   Insurance Company
                                                   720 East Wisconsin Avenue
                                                   Milwaukee, WI 53202
                                                   Attn: Beth Berger
                                                   Fax: 414-625-4311

John Holtz                                         Mr. John Holtz
                                                   7100 SW Norwood Road
                                                   Tualatin, OR 97062
                                                   Fax: 503-625-4989

Roxanne Holtz                                      Roxanne Holtz
                                                   7100 SW Norwood Road
                                                   Tualatin, OR 97062
                                                   Fax: 503-625-4989

Patrick A. Dunn                                    Mr. Patrick A. Dunn
                                                   15545 NW Norwich Circle
                                                   Beaverton, OR 97006
                                                   Fax: 503-625-4989

Oakstone Ventures Partners Fund III,               Oakstone Ventures Partners Fund
L.P.                                               III, L.P.
                                                   Pete Hawkins, Managing Director
                                                   260 Sheridan Ave., Suite 400
                                                   Palo Alto, CA 94306
                                                   Fax: 925-937-3303
</TABLE>

<PAGE>

                                 Schedule III-B

                                 2002 Investors

<TABLE>
<CAPTION>
               Unitholder                          Notice Address
               ----------                          --------------
<S>                                                <C>
MidOcean Capital Investors, L.P.                   Midocean Capital Investors, L.P.
                                                   c/o MidOcean Capital Partners,
                                                   LP
                                                   320 Park Avenue 17th Floor
                                                   New York, NY 10022
                                                   Attention: Frank Schiff
                                                   Facsimile: (212) 497-1375

Behrman Capital III L.P.                           Behrman Capital III L.P.
                                                   c/o Behrman Capital
                                                   Four Embarcadero Center, Suite
                                                   3640
                                                   San Francisco, CA 94111
                                                   Attention: William Matthes
                                                   Facsimile: (415) 434-7310

Strategic Entrepreneur Fund III L.P.               Strategic Entrepreneur Fund III
                                                   L.P.
                                                   c/o Behrman Capital
                                                   Four Embarcadero Center, Suite
                                                   3640
                                                   San Francisco, CA 94111
                                                   Attention: William Matthes
                                                   Facsimile: (415) 434-7310
</TABLE>

<PAGE>

                                   Schedule IV

                             MANAGEMENT SHAREHOLDERS

Name and Notice Address

Albert Ooi (a/k/a) Hong Chuan Ooi
1463 Centre Pointe Drive
Milpitas, CA  95035

Anthony B. Johnson
6925 Windcrest Lane # 1421
Fort Worth. TX 76133-6424

Anthony Contino
723 Country Lane
Morton, PA 19070

Benjamin Putman III
6476 Hanna Drive
Mechanicsville, VA 23111

Bill D. Wright
697 Silver Avenue
Half Moon Bay, CA 94019

Billy Wayne Stephens
33225 Western Avenue
Union City, CA 94587

Brad Sander
200-C Parker Drive, Suite 600
Austin, TX 78728

Charlene Brown
649 Salberg Avenue
Santa Clara, CA 95051

Charles E. Sanders
5126 West Mercer Lane
Glendale, AZ 85304-4236

Daniel Jackson
3001 Vinson Lane
Plano, TX  75093

<PAGE>

Name and Notice Address

David J. Shimmon
2805 Mission College Blvd.
Santa Clara, CA  95054

David Thomas
3314 Treadsoft Cove
Austin, TX 78748-1851

Dillon Sanders
7618 SW Loust Street
Portland, OR 97223

Donna Schreiber
2420 Edith Avenue
Redwood City, CA  94061-1220

Eberhard Bader
Am Dillhof 5
Eschau-Hobbach, Bavaria 63863
Germany

Ed O'Kelly
3548 Lakeview Blvd
Lake Oswego, OR 97035

Eric K. Salys
534 Tanner Trail
Pflugerville, TX 78660-3845

Frank Knoll
5 Chipley Run
Voorhees, NJ 08043

Ian Maclaren
33225 Western Avenue
Union City, CA 94587

<PAGE>

Name and Notice Address

Intervivos Trusted Dated 10/76 - Jerry and Nancie L. Crowley UA 1976
Jerry and Nancie L. Crowley
24747 Olive Tree Lane
Los Altos, CA 94024

James Dougherty
303 Oakhill Lane
Newtown Square, PA 19073

Jeffrey Baran
3754 S. Shiloh Way
Gilbert, AZ 85297-9370

John Ferron
2805 Mission College Blvd
Santa Clara, CA  95054

John Goodman
2805 Mission College Blvd
Santa Clara, CA  95054

John Lamirande
2391 Crestview Drive
Laguna Beach, CA 92651

John O. Elder, Jr.
P.O. Box 1167
Alvarado, TX 76009

John Thomas Land
Tom Land
4350 Fawnhollow Road
Dallas, TX

John Yale
42054 North 109th Place
Scottsdale, AZ 85262

Joseph Cestari
49 Woodland Loop
Round Rock, TX 78664

<PAGE>

Name and Notice Address

Joseph Foster
1463 Centre Pointe Drive
Milpitas, CA 95035

Judy L. Rodgers and Lee J. Rodgers, as JT TEN
17487 Belletto Drive
Morgan Hill, CA 95037

Julien Frost
5637 Lindsey Drive
Plano, Texas 75093

Kimberly Howe
2907 Hill View Cove
Round Rock, TX 78644

Kurt Gilson
534 Hillcrest Way
Redwood City, CA 94062

Magnolia Tree LLC
David J. Shimmon
2805 Mission College Blvd.
Santa Clara, CA 9054

Mark Hutson
405 San Leanna Drive
Austin, TX 78748

Mark Shustock
2805 Mission College Blvd.
Santa Clara, CA 95054

Mark Thomas
1622 Petri Place
San Jose, CA 95118

Mel Decarli
28 Coyote Lane
Garden Valley, ID 83622-6006

<PAGE>

Name and Notice Address

Michael Cables
870 Pleasant Creek Road
Rogue River, OR 97537

Michael Lynch
252 Miller Avenue
Mill Valley, CA

Michael McCabe
110 Willow Park Avenue
Glasnevin, Dublin 11
Ireland

Michael Ray Gonzales
17410 N 85th Lane
Peoria, AZ

Michael Thomas
806 Dewberry Drive
Cedar Park, TX

Patrick Dunn
12621 NW Majestic Sequoia Way
Portland, OR 97229

Patrick Minnihan
17600 Chateau Court
Castro Valley, CA 94552

Paul Palfey
28255 S. Moon Ridge Road
Colton, OR 97017-9507

Paul Seppanen
18779 Vogel Farm Trail
Eden Prairie, MN 55347

Paul Thomas
715 Cimity Court
San Jose, CA 95124

Peter Melucci
16669 North Boxcar Drive
Fountain Hills, AZ 85268

<PAGE>

Name and Notice Address

Ray Pfeifer
2805 Mission College Blvd
Santa Clara, CA 95054

Richard Markle
585 Bourne Lane
Danville, Ca 94506

Richard Smoke
26055 SW Canyon Creek Rd.
Wilsonville, OR  97070

Robert Bader
1850 Chatauqua Trail
Malvern, PA 19355-8516

Robert P.F. Bryan
11830 Foothill Avenue
Gilroy, CA 95020-9226

Robert Pragada
4226 Surles Court, Suite 500
Durham, NC  27703

Rodgers Family Trust u/t/a  February 10,1988
c/o Ronald Rodgers
7719 W Acoma
Peoria, AZ 85381

Roy Shepard
P.O. Box 2419
Gilbert, AZ 85299

Russ Douglass
4310 North 29th Way
Phoenix, AZ 85016

Shimmon Bart
12 Hagesher st.
Hod Hasharon  45266
Israel

<PAGE>

Name and Notice Address

Steve Mankus
13 Becket Street
Lake, Oswego, OR 97075

Taylor N. Thomson, Jr.
65 Suominen Ln
Ulster Park, NY 12487

The James and Roberta Hawthorne Family Trust dated August 31, 1999
Jim Hawthorne
620 Price Avenue
Redwood City, CA 94063

Tony La Rosa
1463 Centre Pointe Drive
Milpitas, CA 95035

<PAGE>

                                   Schedule V

                              PROFITS UNITS HOLDERS

<TABLE>
<CAPTION>
            Name                                     Notice Address
            ----                                     --------------
<S>                                      <C>
David J. Shimmon                         2805 Mission College Blvd.
                                         Santa Clara, CA 95054

Milan Mandaric                           c/o Plancorp, Inc.
                                         Brian Wiedermann
                                         1350 Timberlake Manor Parkway, Suite 100
                                         Chesterfield, MO  63017
John Goodman                             2805 Mission College Blvd.
                                         Santa Clara, CA 95054
</TABLE>

                                       1<PAGE>
                                                                   Exhibit 10.02

                              CELERITY GROUP, INC.
                             2000 STOCK OPTION PLAN

                            AMENDED AS OF MAY 9, 2002

                   AMENDED AND RESTATED AS OF NOVEMBER 6, 2003

         1.       Purposes. The purposes of the Celerity Group, Inc. Stock
Option Plan, formerly known as the Kinetics Holdings Corporation 2000 Stock
Option Plan, are:

                  (a)      To further the growth, development and success of the
Company and its Affiliates by enabling the executive and other employees and
directors of, and consultants to, the Company and its Affiliates to acquire a
continuing equity interest in the Company, thereby increasing their personal
interests in such growth, development and success and motivating such employees,
directors and consultants to exert their best efforts on behalf of the Company
and its Affiliates; and

                  (b)      To maintain the ability of the Company and its
Affiliates to attract and retain employees, directors and consultants of
outstanding ability by offering them an opportunity to acquire a continuing
equity interest in the Company and its Affiliates which will reflect the growth,
development and success of the Company and its Affiliates.

Toward these objectives, the Committee may grant Options to such employees,
directors and consultants, all pursuant to the terms and conditions of the Plan.

         2.       Definitions. As used in the Plan, the following capitalized
terms shall have the meanings set forth below:

                  (a)      "AFFILIATE" - other than the Company, (i) any
corporation or limited liability company in an unbroken chain of corporations or
limited liability companies ending with the Company if each corporation or
limited liability company owns stock or membership interests (as applicable)
possessing more than fifty percent (50%) of the total combined voting power of
all classes of stock in one of the other corporations or limited liability
companies in such chain; (ii) any corporation, trade or business (including,
without limitation, a partnership or limited liability company) which is more
than fifty percent (50%) controlled (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by the Company or one of its
Affiliates; or (iii) any other entity, approved by the Committee as an Affiliate
under the Plan, in which the Company or any of its Affiliates has a material
equity interest.

                  (b)      "AGREEMENT" - a written stock option agreement
evidencing an Option, as described in Section 3(e).

                  (c)      "BOARD" - the Board of Directors of the Company.

                  (d)      "CAUSE" - the occurrence of any one of the following
as determined by the Committee: (i) the Optionee breaches his or her employment
agreement, if any, with the

<PAGE>

Company or any Affiliate; (ii) the Optionee violates any confidentiality,
intellectual property or restrictive covenant or agreement of the Optionee with
the Company or an Affiliate; (iii) the Optionee violates any material written
policy of the Company or any Affiliate, including, but not limited to, its
employment manuals, rules and regulations, after one written warning regarding
such violation; (iv) the commission by or indictment of the Optionee of any
felony committed in connection with or related to his or her employment with the
Company or any Affiliate; (v) the conviction of the Optionee of any felony; (vi)
the commission by or indictment of the Optionee of any crime or other activity
involving dishonesty or moral turpitude committed in connection with or related
to his employment with the Company or any Affiliate; (vii) the conviction of the
Optionee of any crime or other activity involving dishonesty or moral turpitude;
(viii) the commission by or indictment of the Optionee of any act of fraud,
misappropriation or similar misfeasance committed in connection with or related
to his employment with the Company or any Affiliate; or (ix) the conviction of
the Optionee of any crime of fraud, misappropriation or similar misfeasance.

                  (e)      "CHANGE IN CONTROL" - an event described in clause
(i), (ii) or (iii) of Section 11(c).

                  (f)      "CODE" - the Internal Revenue Code of 1986, as it may
be amended from time to time, including regulations and rules thereunder and
successor provisions and regulations and rules thereto.

                  (g)      "COMMITTEE" - the Compensation Committee of the
Board, or such other Board committee as may be designated by the Board to
administer the Plan.

                  (h)      "COMPANY" - Celerity Group, Inc., formerly known as
Kinetics Holdings Corporation, a Delaware corporation, or any successor entity.

                  (j)      "DISABILITY" - the meaning given such term in the
Company's long-term disability plan, or, in the absence thereof, an inability to
perform duties and services as an employee, director or consultant, as the case
may be, of the Company or an Affiliate by reason of a medically determinable
physical or mental impairment, supported by medical evidence, which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than six (6) months, as determined by the
Committee in its good faith discretion; provided, however, that for purposes of
Incentive Stock Options granted under the Plan, "Disability" shall mean
"permanent and total disability" as set forth in Section 22(e)(3) of the Code.

                  (k)      "FAIR MARKET VALUE" - of a share of Stock as of a
given date shall be: (i) the mean of the closing price for a share of Stock, on
the principal exchange on which the Stock is then listed or admitted to trading,
for such date, or, if no such prices are reported for such date, the most recent
day for which such prices are available shall be used; (ii) if the Stock is not
then listed or admitted to trading on a stock exchange, the mean of the closing
representative bid and asked prices for the Stock on such date as reported by
Nasdaq National Market (or any successor or similar quotation system regularly
reporting the market value of the Stock in the over-the-counter market), or, if
no such prices are reported for such date, the most recent day for which such
prices are available shall be used; or (iii) in the event neither of the
valuation methods

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 2 of 17
<PAGE>

provided for in clauses (i) and (ii) above are practicable, the fair market
value determined by such other reasonable valuation method as the Committee
shall, in its discretion, select and apply in good faith as of the given date;
provided, however, that for purposes of paragraphs (a) and (h) of Section 6,
such fair market value shall be determined subject to Section 422(c)(7) of the
Code.

                  (l)      "ISO" or "INCENTIVE STOCK OPTION" - a right to
purchase Stock granted to an Optionee under the Plan in accordance with the
terms and conditions set forth in Section 6 and which conforms to the applicable
provisions of Section 422 of the Code.

                  (m)      "NOTICE" - written notice actually received by the
Company at its executive offices on the day of such receipt, if received on or
before 1:30 p.m., on a day when the Company's executive offices are open for
business, or, if received after such time, such notice shall be deemed received
on the next such day, which notice may be delivered in person to the Company's
Chief Financial Officer or sent by facsimile to the Company at (408) 567-0196,
or sent by certified or registered mail or overnight courier, prepaid, addressed
to the Company at 2805 Mission College Blvd., Santa Clara, California 95054,
Attention: General Counsel.

                  (n)      "OPTION" - a right to purchase Stock granted to an
Optionee under the Plan in accordance with the terms and conditions set forth in
Section 6. Options may be either ISOs or stock options other than ISOs.

                  (o)      "OPTIONEE" - an individual who is eligible pursuant
to Section 5, and who has been selected, pursuant to Section 3(c), to
participate in the Plan, and who holds an outstanding Option granted to such
individual under the Plan in accordance with the terms and conditions set forth
in Section 6.

                  (p)      "PLAN" - this Celerity Group, Inc. Stock Option Plan.

                  (q)      "SECURITIES ACT" - the Securities Act of 1933, as it
may be amended from time to time, including the regulations and rules
promulgated thereunder and successor provisions and regulations and rules
thereto.

                  (r)      "STOCK" - the Common Stock of the Company, $0.0001
par value per share.

                  (s)      "SUBSIDIARY" - any present or future corporation
which is or would be a "subsidiary corporation" of the Company as the term is
defined in Section 424(f) of the Code.

         3.       Administration of the Plan. (a) The Committee shall have
exclusive authority to operate, manage and administer the Plan in accordance
with its terms and conditions. Notwithstanding the foregoing, in its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights, duties and responsibilities of the Committee under the Plan, including,
but not limited to, establishing procedures to be followed by the Committee,
except with respect to matters which under any applicable law, regulation or
rule, are required to be determined in the sole discretion of the Committee. If
and to the extent that no Committee exists which has the authority to administer
the Plan, the functions of the Committee shall be exercised by the Board.

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 3 of 17
<PAGE>

                  (b)      The Committee shall be appointed from time to time by
the Board, and the Committee shall consist of not less than two members of the
Board. Appointment of Committee members shall be effective upon their acceptance
of such appointment. Committee members may be removed by the Board, at any time,
either with or without cause, and such members may resign at any time by
delivering notice thereof to the Board. Any vacancy on the Committee, whether
due to action of the Board or any other reason, shall be filled by the Board.

                  (c)      The Committee shall have full authority to grant,
pursuant to the terms of the Plan, Options to those individuals who are eligible
to receive Options under the Plan. In particular, the Committee shall have
discretionary authority, in accordance with the terms of the Plan, to: determine
eligibility for participation in the Plan; select, from time to time, from among
those eligible, the employees, directors and consultants to whom Options shall
be granted under the Plan, which selection may be based upon information
furnished to the Committee by the Company's or an Affiliate's management;
determine whether an Option shall take the form of an ISO or an Option other
than an ISO; determine the number of shares of Stock to be included in any
Option and the periods for which Options will be outstanding; establish and
administer any terms, conditions, performance criteria, restrictions,
limitations, forfeiture, vesting or exercise schedule, and other provisions of
or relating to any Option; grant waivers of terms, conditions, restrictions and
limitations under the Plan or applicable to any Option, or accelerate the
vesting or exercisability of any Option; amend or adjust the terms and
conditions of any outstanding Option and/or adjust the number and/or class of
shares of Stock subject to any outstanding Option; at any time and from time to
time after the granting of an Option, specify such additional terms, conditions
and restrictions with respect to any such Option as may be deemed necessary or
appropriate to ensure compliance with any and all applicable laws or rules,
including, but not limited to, terms, restrictions and conditions for compliance
with applicable securities laws, regarding an Optionee's exercise of Options by
tendering shares of Stock or under any "cashless exercise" program established
by the Committee, and methods of withholding or providing for the payment of
required taxes; offer to buy out an Option previously granted, based on such
terms and conditions as the Committee shall establish with and communicate to
the Optionee at the time such offer is made; and, permit, under the applicable
Agreement, the transfer of an Optionee's Option by instrument to an inter vivos
or testamentary trust in which the Option is to be passed to beneficiaries upon
the death of the settlor, or by gift to "immediate family" (as defined in 17
C.F.R. 240.16a-1(e)) of the Optionee (other than any such transfer which would
cause any ISO to fail to qualify as an "incentive stock option" under Section
422 of the Code).

                  (d)      The Committee shall have all authority that may be
necessary or helpful to enable it to discharge its responsibilities with respect
to the Plan. Without limiting the generality of the foregoing sentence or
Section 3(a), and in addition to the powers otherwise expressly designated to
the Committee in the Plan, the Committee shall have the exclusive right and
discretionary authority to interpret the Plan and the Agreements; construe any
ambiguous provision of the Plan and/or the Agreements and decide all questions
concerning eligibility for and the amount of Options granted under the Plan. The
Committee may establish, amend, waive and/or rescind rules and regulations and
administrative guidelines for carrying out the Plan and may correct any errors,
supply any omissions or reconcile any inconsistencies in the Plan and/or any
Agreement or any other instrument relating to any Options. The Committee shall
have the authority to adopt such procedures and subplans and grant Options on
such terms and conditions as the Committee determines necessary or appropriate
to permit participation in the Plan by

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 4 of 17
<PAGE>

individuals otherwise eligible to so participate who are foreign nationals or
employed outside of the United States, or otherwise to conform to applicable
requirements or practices of jurisdictions outside of the United States; and
take any and all such other actions it deems necessary or advisable for the
proper operation and/or administration of the Plan. The Committee shall have
full discretionary authority in all matters related to the discharge of its
responsibilities and the exercise of its authority under the Plan. Decisions and
actions by the Committee with respect to the Plan and any Agreement shall be
final, conclusive and binding on all persons having or claiming to have any
right or interest in or under the Plan and/or any Agreement.

                  (e)      Each Option shall be evidenced by an Agreement, which
shall be executed by the Company and the Optionee to whom such Option has been
granted, unless the Agreement provides otherwise; two or more Options granted to
a single Optionee may, however, be combined in a single Agreement. An Agreement
shall not be a precondition to the granting of an Option; no person shall have
any rights under any Option, however, unless and until the Optionee to whom the
Option shall have been granted (i) shall have executed and delivered to the
Company an Agreement or other instrument evidencing the Option, unless such
Agreement provides otherwise, and (ii) has otherwise complied with the
applicable terms and conditions of the Option. The Committee shall prescribe the
form of all Agreements, and, subject to the terms and conditions of the Plan,
shall determine the content of all Agreements. Any Agreement may be supplemented
or amended in writing from time to time as approved by the Committee; provided
that the terms and conditions of any such Agreement as supplemented or amended
are not inconsistent with the provisions of the Plan.

                  (f)      A majority of the members of the entire Committee
shall constitute a quorum and the actions of a majority of the members of the
Committee in attendance at a meeting at which a quorum is present, or actions by
a written instrument signed by all members of the Committee, shall be the
actions of the Committee.

                  (g)      The Committee may consult with counsel who may be
counsel to the Company. The Committee may, with the approval of the Board,
employ such other attorneys and/or consultants, accountants, appraisers, brokers
and other persons as it deems necessary or appropriate. In accordance with
Section 12, the Committee shall not incur any liability for any action taken in
good faith in reliance upon the advice of such counsel or other persons.

                  (h)      In serving on the Committee, the members thereof
shall be entitled to indemnification as directors of the Company, and to any
limitation of liability and reimbursement as directors with respect to their
services as members of the Committee.

                  (i)      Except to the extent prohibited by applicable law or
the applicable rules of a stock exchange, the Committee may, in its discretion,
allocate all or any portion of its responsibilities and powers under this
Section 3 to any one or more of its members and/or delegate all or any part of
its responsibilities and powers under this Section 3 to any person or persons
selected by it; provided, however, that the Committee may not delegate its
authority to correct errors, omissions or inconsistencies in the Plan. Any such
authority delegated or allocated by the Committee under this paragraph (i) of
Section 3 shall be exercised in accordance with the terms and conditions of the
Plan and any rules, regulations or administrative guidelines

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 5 of 17
<PAGE>

that may from time to time be established by the Committee, and any such
allocation or delegation may be revoked by the Committee at any time.

         4.       Shares of Stock Subject to the Plan. (a) The shares of stock
subject to Options granted under the Plan shall be shares of Stock. Such shares
of Stock subject to the Plan may be either authorized and unissued shares (which
will not be subject to preemptive rights) or previously issued shares acquired
by the Company or any Subsidiary. The total number of shares of Stock that may
be delivered pursuant to Options granted under the Plan is 73,100,000 shares of
Stock.

                  (b)      Notwithstanding any of the foregoing limitations set
forth in this Section 4, the number of shares of Stock specified in this Section
4 shall be adjusted as provided in Section 10.

                  (c)      Any shares of Stock subject to an Option which for
any reason expires or is terminated or forfeited without having been fully
exercised, may again be granted pursuant to an Option under the Plan, subject to
the limitations of this Section 4.

                  (d)      Any shares of Stock delivered under the Plan in
assumption or substitution of outstanding stock options, or obligations to grant
future stock options, under plans or arrangements of an entity other than the
Company or an Affiliate in connection with the Company or an Affiliate acquiring
such another entity, or an interest in such an entity, or a transaction
otherwise described in Section 6(j), shall not reduce the maximum number of
shares of Stock available for delivery under the Plan; provided, however, that
the maximum number of shares of Stock that may be delivered pursuant to
Incentive Stock Options granted under the Plan shall be the number of shares set
forth in paragraph (a) of this Section 4, as adjusted pursuant to paragraphs (b)
and (c) of this Section 4.

         5.       Eligibility. Executive employees and other employees,
including officers, of the Company and the Affiliates, directors (whether or not
also employees), and consultants of the Company and the Affiliates, shall be
eligible to become Optionees and receive Options in accordance with the terms
and conditions of the Plan, subject to the limitations on the granting of ISOs
set forth in Section 6(h).

         6.       Terms and Conditions of Stock Options. All Options to purchase
Stock granted under the Plan shall be either ISOs or Options other than ISOs. To
the extent that any Option does not qualify as an ISO (whether because of its
provisions or the time or manner of its exercise or otherwise), such Option, or
the portion thereof which does not so qualify, shall constitute a separate
Option other than an ISO. Each Option shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith as the Committee
shall determine and which are set forth in the applicable Agreement. Options
need not be uniform as to all grants and recipients thereof.

                  (a)      The option exercise price per share of shares of
         Stock subject to each Option shall be determined by the Committee and
         stated in the Agreement; provided, however, that, subject to paragraph
         (j) of this Section 6, if applicable, (i) such option exercise price
         applicable to any Option shall not be less than one hundred percent
         (100%)

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 6 of 17
<PAGE>

         of the Fair Market Value of a share of Stock at the time that the
         Option is granted, and (ii) if the Option is granted to an Optionee who
         owns (within the meaning of Section 424(d) of the Code), at the time
         the Option is granted, more than ten percent (10%) of the total
         combined voting power of all classes of stock of the Company or a
         Subsidiary or any "parent corporation" of the Company within the
         meaning of Section 424(e) of the Code, such option exercise price shall
         be not less than one hundred ten percent (110%) of the Fair Market
         Value of a share of Stock on the date such Option is granted.

                  (b)      Each Option shall be exercisable in whole or in such
         installments, at such times and under such conditions, as may be
         determined by the Committee in its discretion in accordance with the
         Plan and stated in the Agreement; provided, however, that (i) except in
         the case of Options granted to officers, directors or consultants of
         the Company or an Affiliate, each Option shall become exercisable at a
         rate of not less than twenty percent (20%) of the shares covered
         thereby per year over five (5) years from the date the Option is
         granted, subject to the conditions described in paragraph (f) of this
         Section 6 and similar provisions of the Agreement, and (ii) no Option
         may be exercised after the expiration of ten (10) years from the date
         such Option was granted, subject to paragraph (h)(C) of this Section 6.

                  (c)      An Option shall not be exercisable with respect to a
         fractional share of Stock or the lesser of one hundred (100) shares and
         the full number of shares of Stock then subject to the Option. No
         fractional shares of Stock shall be issued upon the exercise of an
         Option.

                  (d)      Each Option may be exercised by giving Notice to the
         Company specifying the number of shares of Stock to be purchased, which
         shall be accompanied by payment in full including applicable taxes, if
         any, in accordance with Section 9. Payment shall be in any manner
         permitted by applicable law and prescribed by the Committee, in its
         discretion, and set forth in the Agreement, including, in the
         Committee's discretion, and subject to such terms, conditions and
         limitations as the Committee may prescribe, payment in accordance with
         a "cashless exercise" program (through broker accommodation)
         established by the Committee and/or in Stock owned by the Optionee or
         by the Optionee and his or her spouse jointly.

                  (e)      No Optionee or other person shall become the
         beneficial owner of any shares of Stock subject to an Option, nor have
         any rights to dividends or other rights of a shareholder with respect
         to any such shares until he or she has exercised his or her Option in
         accordance with the provisions of the Plan and the applicable
         Agreement.

                  (f)      An Option may be exercised only if at all times
         during the period beginning with the date of the granting of the Option
         and ending on the date of such exercise, the Optionee was an employee,
         director or consultant of the Company or an Affiliate, as applicable;
         provided, however, that the Committee may determine in its discretion
         that an Option may be exercised prior to expiration of such Option
         following termination of such continuous employment, directorship or
         consultancy, whether or not exercisable at the time of such
         termination, to the extent provided in the applicable Agreement.
         Notwithstanding the immediately foregoing sentence to the contrary, in
         the

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 7 of 17
<PAGE>

         event an Optionee's continuous employment or other service with the
         Company or an Affiliate terminates other than for Cause, the Option or
         Options held by the Optionee shall, to the extent exercisable in
         accordance with the Plan and the Agreement as of the date of such
         termination, remain exercisable for (i) at least thirty (30) days from
         the date of such termination of employment or other service if such
         termination was caused by other than death or Disability, or (ii) at
         least six (6) months from the date of such termination of employment or
         other service if such termination was caused by Disability or death;
         provided, however, that in no event may any Option be exercised after
         ten (10) years from the date it was originally granted.

                  (g)      Subject to the terms and conditions and within the
         limitations of the Plan, the Committee may modify, extend or renew
         outstanding Options granted under the Plan, or accept the surrender of
         outstanding Options (up to the extent not theretofore exercised) and
         authorize the granting of new Options in substitution therefor (to the
         extent not theretofore exercised).

                  (h)      (A) Each Agreement relating to an Option shall state
         whether such Option will or will not be treated as an ISO. No ISO shall
         be granted unless such Option, when granted, qualifies as an "incentive
         stock option" under Section 422 of the Code. No ISO shall be granted to
         any individual otherwise eligible to participate in the Plan who is not
         an employee of the Company or a Subsidiary on the date of granting of
         such Option. Any ISO granted under the Plan shall contain such terms
         and conditions, consistent with the Plan, as the Committee may
         determine to be necessary to qualify such Option as an "incentive stock
         option" under Section 422 of the Code. Any ISO granted under the Plan
         may be modified by the Committee to disqualify such Option from
         treatment as an "incentive stock option" under Section 422 of the Code.

                           (B) Notwithstanding any intent to grant ISOs, an
                  Option granted under the Plan will not be considered an ISO to
                  the extent that it, together with any other "incentive stock
                  options" (within the meaning of Section 422 of the Code, but
                  without regard to subsection (d) of such Section) under the
                  Plan and any other "incentive stock option" plans of the
                  Company, any Subsidiary and any "parent corporation" of the
                  Company within the meaning of Section 424(e) of the Code, are
                  exercisable for the first time by any Optionee during any
                  calendar year with respect to Stock having an aggregate Fair
                  Market Value in excess of $100,000 (or such other limit as may
                  be required by the Code) as of the time the Option with
                  respect to such Stock is granted. The rule set forth in the
                  preceding sentence shall be applied by taking Options into
                  account in the order in which they were granted.

                           (C) Any ISO granted to an Optionee who owns (within
                  the meaning of Section 424(d) of the Code), at the time the
                  ISO is granted, more than ten percent (10%) of the total
                  combined voting power of all classes of stock of the Company
                  or a Subsidiary or any "parent corporation" of the Company
                  within the meaning of Section 424(e) of the Code shall not by
                  its terms be exercisable after the expiration of five (5)
                  years from the date such ISO is granted.

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 8 of 17
<PAGE>

                  (i)      An Option and any shares of Stock received upon the
         exercise of an Option shall be subject to such other transfer and/or
         ownership restrictions and/or legending requirements as the Committee
         may establish in its discretion and which are specified in the
         Agreement and may be referred to on the certificates evidencing such
         shares of Stock. The Committee may require an Optionee to give prompt
         Notice to the Company concerning any disposition of shares of Stock
         received upon the exercise of an ISO within: (i) two (2) years from the
         date of granting such ISO to such Optionee or (ii) one (1) year from
         the transfer of such shares of Stock to such Optionee or (iii) such
         other period as the Committee may from time to time determine. The
         Committee may direct that an Optionee with respect to an ISO undertake
         in the applicable Agreement to give such Notice described in the
         preceding sentence, at such time and containing such information as the
         Committee may prescribe, and/or that the certificates evidencing shares
         of Stock acquired by exercise of an ISO refer to such requirement to
         give such Notice.

                  (j)      In the event that a transaction described in Section
         424(a) of the Code involving the Company or a Subsidiary is
         consummated, such as the acquisition of property or stock from an
         unrelated corporation, individuals who become eligible to participate
         in the Plan in connection with such transaction, as determined by the
         Committee, may be granted Options in substitution for stock options
         granted by another corporation that is a party to such transaction. If
         such substitute Options are granted, the Committee, in its discretion
         and consistent with Section 424(a) of the Code, if applicable, and the
         terms of the Plan, though notwithstanding paragraph (a) of this Section
         6, shall determine the option exercise price and other terms and
         conditions of such substitute Options.

         7.       Transfer, Leave of Absence. A transfer of an employee from the
Company to an Affiliate (or, for purposes of any ISO granted under the Plan, a
Subsidiary), or vice versa, or from one Affiliate to another (or in the case of
an ISO, from one Subsidiary to another), and a leave of absence, duly authorized
in writing by the Company or a Subsidiary or Affiliate, shall not be deemed a
termination of employment of the employee for purposes of the Plan or with
respect to any Option (in the case of ISOs, to the extent permitted by the
Code).

         8.       Rights of Employees and Other Persons. (a) No person shall
have any rights or claims under the Plan except in accordance with the
provisions of the Plan and the applicable Agreement.

                  (b)      Nothing contained in the Plan or in any Agreement
shall be deemed to (i) give any employee or director the right to be retained in
the service of the Company or any Affiliate nor restrict in any way the right of
the Company or any Affiliate to terminate any employee's employment or any
director's directorship at any time with or without cause, or (ii) confer on any
consultant any right of continued relationship with the Company or any
Affiliate, or alter any relationship between them, including any right of the
Company or an Affiliate to terminate its relationship with such consultant.

2000 Stock Option Plan Amended & Restated 11.6.03

                                  Page 9 of 17
<PAGE>

                  (c)      The adoption of the Plan shall not be deemed to give
any employee of the Company or any Affiliate or any other person any right to be
selected to participate in the Plan or to be granted an Option.

                  (d)      Nothing contained in the Plan or in any Agreement
shall be deemed to give any employee the right to receive any bonus, whether
payable in cash or in Stock, or in any combination thereof, from the Company or
any Affiliate, nor be construed as limiting in any way the right of the Company
or any Affiliate to determine, in its sole discretion, whether or not it shall
pay any employee bonuses, and, if so paid, the amount thereof and the manner of
such payment.

         9.       Tax Withholding Obligations. (a) The Company and/or any
Affiliate are authorized to take whatever actions are necessary and proper to
satisfy all obligations of Optionees (including, for purposes of this Section 9,
any other person entitled to exercise an Option pursuant to the Plan or an
Agreement) for the payment of all Federal, state, local and foreign taxes in
connection with any Options (including, but not limited to, actions pursuant to
the following paragraph (b) of this Section 9).

                  (b)      Each Optionee shall (and in no event shall Stock be
delivered to such Optionee with respect to an Option until), no later than the
date as of which the value of the Option first becomes includible in the gross
income of the Optionee for income tax purposes, pay to the Company in cash, or
make arrangements satisfactory to the Company, as determined in the Committee's
discretion, regarding payment to the Company of, any taxes of any kind required
by law to be withheld with respect to the Stock or other property subject to
such Option, and the Company and any Affiliate shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to such Optionee. Notwithstanding the above, the Committee may, in
its discretion and pursuant to procedures approved by the Committee, permit the
Optionee to (i) elect withholding by the Company of Stock otherwise deliverable
to such Optionee pursuant to his or her Option (provided, however, that the
amount of any Stock so withheld shall not exceed the amount necessary to satisfy
the Company's or any Affiliate's required Federal, state, local and foreign
withholding obligations using the minimum statutory withholding rates for
Federal, state and local tax purposes, including payroll taxes, that are
applicable to supplemental taxable income) and/or (ii) tender to the Company
Stock owned by such Optionee (or by such Optionee and his or her spouse jointly)
and acquired more than six (6) months prior to such tender in full or partial
satisfaction of such tax obligations, based, in each case, on the Fair Market
Value of the Stock on the payment date as determined by the Committee.

         10.      Changes in Capital. (a) The existence of the Plan and any
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company or an
Affiliate, any issue of debt, preferred or prior preference stock ahead of or
affecting Stock, the authorization or issuance of additional shares of Stock,
the dissolution or liquidation of the Company or its Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding.

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 10 of 17
<PAGE>

                  (b)(i) Upon changes in the outstanding Stock by reason of a
stock dividend, stock split, reverse stock split, subdivision, recapitalization,
reclassification, merger, consolidation (whether or not the Company is a
surviving corporation), combination or exchange of shares of Stock, separation,
or reorganization, or in the event of an extraordinary dividend, "spin-off,"
liquidation, other substantial distribution of assets of the Company or
acquisition of property or stock or other change in capital of the Company, or
the issuance by the Company of shares of its capital stock without receipt of
full consideration therefor, or rights or securities exercisable, convertible or
exchangeable for shares of such capital stock, or any similar change affecting
the Company's capital structure, the aggregate number, class and kind of shares
of stock available under the Plan as to which Options may be granted and the
number, class and kind of shares under each outstanding Option and the exercise
price per share applicable to any such Options shall be appropriately adjusted
by the Committee in its discretion to preserve the benefits or potential
benefits intended to be made available under the Plan or with respect to any
outstanding Options or otherwise necessary to reflect any such change.

                           (ii)     Fractional shares of Stock resulting from
         any adjustment in Options pursuant to Section 10(b)(i) shall be
         aggregated until, and eliminated at, the time of exercise of the
         affected Options. Notice of any adjustment shall be given by the
         Committee to each Optionee whose Option has been adjusted and such
         adjustment (whether or not such Notice is given) shall be effective and
         binding for all purposes of the Plan.

                  (c)      In the event of (i) a stock sale, merger,
consolidation, combination, reorganization or other transaction (other than
through a public offering of common stock of the Company) resulting in less than
fifty percent (50%) of the combined voting power of the surviving or resulting
entity being owned by the shareholders of the Company immediately prior to such
transaction, (ii) the liquidation or dissolution of the Company or the sale or
other disposition of all or substantially all of the assets or business of the
Company (other than, in the case of either clause (i) or (ii) above, in
connection with any employee benefit plan of the Company or an Affiliate), or
(iii) an initial public offering of the Stock pursuant to a registration
statement declared effective under the Securities Act:

                           (1) In its discretion and on such terms and
         conditions as it deems appropriate, the Committee may provide, either
         by the terms of the Agreement applicable to any Option or by a
         resolution adopted prior to the occurrence of the Change in Control,
         that any outstanding Option shall be accelerated and become immediately
         exercisable as to all or a portion of the shares of Stock covered
         thereby, notwithstanding anything to the contrary in the Plan or the
         Agreement.

                           (2) In its discretion, and on such terms and
         conditions as it deems appropriate, the Committee may provide, either
         by the terms of the Agreement applicable to any Option or by resolution
         adopted prior to the occurrence of the Change in Control, that any
         outstanding Option shall be adjusted by substituting for Stock subject
         to such Option stock or other securities of the surviving corporation
         or any successor corporation to the Company, or a parent or subsidiary
         thereof, or that may be issuable by another corporation that is a party
         to the transaction resulting in the Change in Control, whether or not
         such stock or other securities are publicly traded, in which event the
         aggregate

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 11 of 17
<PAGE>

         exercise price shall remain the same and the amount of shares or other
         securities subject to the Option shall be the amount of shares or other
         securities which could have been purchased on the closing date or
         expiration date of such transaction with the proceeds which would have
         been received by the Optionee if the Option had been exercised in full
         (or with respect to a portion of such Option, as determined by the
         Committee, in its discretion) prior to such transaction or expiration
         date and the Optionee exchanged all of such shares in the transaction.

                           (3) In its discretion, and on such terms and
         conditions as it deems appropriate, the Committee may provide, either
         by the terms of the Agreement applicable to any Option or by resolution
         adopted prior to the occurrence of the Change in Control, that any
         outstanding Option shall be converted into a right to receive cash on
         or following the closing date or expiration date of the transaction
         resulting in the Change in Control in an amount equal to the highest
         value of the consideration to be received in connection with such
         transaction for one share of Stock, or, if higher, the highest Fair
         Market Value of the Stock during the thirty (30) consecutive business
         days immediately prior to the closing date or expiration date of such
         transaction, less the per share exercise price of such Option,
         multiplied by the number of shares of Stock subject to such Option, or
         a portion thereof.

                           (4) The Committee may, in its discretion, provide
         that an Option cannot be exercised after such a Change in Control, to
         the extent that such Option is or becomes fully exercisable on or
         before such Change in Control or is subject to any acceleration,
         adjustment or conversion in accordance with the foregoing paragraphs
         (1), (2) or (3) of this Section 10.

No Optionee shall have any right to prevent the consummation of any of the
foregoing acts affecting the number of shares of Stock available to such
Optionee. Any actions or determinations of the Committee under this subsection
10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
identically. Notwithstanding the foregoing adjustments, in no event may any
Option be exercised after ten (10) years from the date it was originally
granted, and any changes to ISOs pursuant to this Section 10 shall, unless the
Committee determines otherwise, only be effective to the extent such adjustments
or changes do not cause a "modification" (within the meaning of Section
424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such
ISOs.

         11.      Miscellaneous Provisions. (a) The Plan shall be unfunded. The
Company shall not be required to establish any special or separate fund or to
make any other segregation of assets to assure the issuance of shares of Stock
or the payment of cash upon exercise or payment of any Option. Proceeds from the
sale of shares of Stock pursuant to Options granted under the Plan shall
constitute general funds of the Company.

                  (b)      Except as otherwise provided in this paragraph (b) of
Section 11 or by the Committee in accordance with paragraph (c) of Section 3, an
Option by its terms shall be personal and may not be sold, transferred, pledged,
assigned, encumbered or otherwise alienated or hypothecated otherwise than by
will or by the laws of descent and distribution and shall be exercisable during
the lifetime of the Optionee only by him or her. An Agreement may permit

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 12 of 17
<PAGE>

the exercise or payment of an Optionee's Option (or any portion thereof) after
his or her death by or to the beneficiary most recently named by such Optionee
in a written designation thereof filed with the Company, or, in lieu of any such
surviving beneficiary, as designated by the Optionee by will or by the laws of
descent and distribution. In the event any Option is exercised by the executors,
administrators, heirs or distributees of the estate of a deceased Optionee, or
such an Optionee's beneficiary, or the transferee of an Option, in any such case
pursuant to the terms and conditions of the Plan and the applicable Agreement
and in accordance with such terms and conditions as may be specified from time
to time by the Committee, the Company shall be under no obligation to issue
Stock thereunder, unless and until the Committee is satisfied that the person or
persons exercising such Option is the duly appointed legal representative of the
deceased Optionee's estate or the proper legatee or distributee thereof or the
named beneficiary of such Optionee, or the valid transferee of such Option, as
applicable.

                  (c)      (i) If at any time the Committee shall determine, in
its discretion, that the listing, registration and/or qualification of shares of
Stock upon any securities exchange or under any state or Federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
shares of Stock hereunder, no Option may be granted, exercised or paid in whole
or in part unless and until such listing, registration, qualification, consent
and/or approval shall have been effected or obtained, or otherwise provided for,
free of any conditions not acceptable to the Committee.

                  (ii)     If at any time counsel to the Company shall be of the
         opinion that any sale or delivery of shares of Stock pursuant to an
         Option is or may be in the circumstances unlawful or result in the
         imposition of excise taxes on the Company or any Affiliate under the
         statutes, rules or regulations of any applicable jurisdiction, the
         Company shall have no obligation to make such sale or delivery, or to
         make any application or to effect or to maintain any qualification or
         registration under the Securities Act, or otherwise with respect to
         shares of Stock or Options and the right to exercise any Option shall
         be suspended until, in the opinion of such counsel, such sale or
         delivery shall be lawful or will not result in the imposition of excise
         taxes on the Company or any Affiliate.

                  (iii)    Upon termination of any period of suspension under
         this Section 11(c), any Option affected by such suspension which shall
         not then have expired or terminated shall be reinstated as to all
         shares available before such suspension and as to the shares which
         would otherwise have become available during the period of such
         suspension, but no suspension shall extend the term of any Option.

                  (d)      (i) The Committee may require each person receiving
Stock in connection with any Option under the Plan to represent and agree with
the Company in writing that such person is acquiring the shares of Stock for
investment without a view to the distribution thereof. The Committee, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares of Stock purchasable or otherwise receivable by
any person under any Option as it deems appropriate.

                  (ii)     Upon the voluntary or involuntary termination of an
         Optionee's employment or other period of service with the Company or an
         Affiliate under any circumstances (including, without limitation, death
         or Disability), the Company shall

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 13 of 17
<PAGE>

         have the right, but not the obligation, to purchase from the Optionee
         (or any transferee thereof) any of the shares of Stock issued pursuant
         to any Option granted to such Optionee. The purchase price for the
         shares of Stock to be repurchased shall be not less than the fair
         market value of such shares on the date of such termination of
         employment, and such repurchase right shall terminate when the Stock
         becomes publicly traded. Notwithstanding the immediately preceding
         sentence to the contrary, the Committee may determine that the purchase
         price for the shares of Stock to be repurchased shall be the original
         purchase price (the option exercise price) paid for such shares of
         Stock by the Optionee; provided that the Company's right to repurchase
         such shares at such original purchase price shall lapse at the rate of
         at least twenty percent (20%) of the shares per year over five (5)
         years from the date of grant of the Option; provided further, however,
         that the purchase price for any such shares as to which the Company's
         repurchase right has lapsed in accordance with the immediately
         preceding proviso shall be the Fair Market Value of such shares. Such
         repurchase right must be exercised by the Company within ninety (90)
         days of termination of the Optionee's employment with the Company or an
         Affiliate (or, in the case of any shares issued upon exercise of an
         Option after the date of such termination, within ninety (90) days
         after the date of such exercise) for cash or cancellation of purchase
         money indebtedness for the shares of Stock. The Committee may also
         provide that the Company shall have the right, but not the obligation,
         to purchase any shares of Stock issued pursuant to an Option if the
         Committee determines, in its discretion, that such repurchase is
         necessary to prevent the Company from being subject to the reporting
         requirements of the Securities Exchange Act of 1934, as amended;
         provided that (1) the purchase price for such shares of Stock to be
         repurchased shall be not less than the fair market value of such shares
         on the date the Company delivers notice of such purchase, and (2) such
         repurchase right shall terminate when the Stock becomes publicly
         traded. Notwithstanding the foregoing provisions of this paragraph
         (d)(ii) of Section 11, the Committee may require such a repurchase
         right in such other circumstances and subject to such other terms and
         conditions as the Committee, in its discretion, may determine in the
         case of any shares of Stock held by an officer, director or consultant
         of the Company or an Affiliate.

                  (iii)    Any restrictions described in this paragraph (d) of
         Section 11 shall be set forth in the applicable Agreement, and the
         certificates evidencing such shares may include any legend that the
         Committee deems appropriate to reflect any such restrictions.

                  (e)      By accepting any benefit under the Plan, each
Optionee and each person claiming under or through such Optionee shall be
conclusively deemed to have indicated their acceptance and ratification of, and
consent to, all of the terms and conditions of the Plan and any action taken
under the Plan by the Committee, the Company or the Board, in any case in
accordance with the terms and conditions of the Plan.

                  (f)      In the discretion of the Committee, an Optionee may
elect irrevocably (at a time and in a manner determined by the Committee) prior
to exercising an Option that delivery of shares of Stock upon such exercise
shall be deferred until a future date and/or the occurrence of a future event or
events, specified in such election. Upon the exercise of any such Option and
until the delivery of any shares under this paragraph (f) of Section 11, the
number of shares otherwise issuable to the Optionee shall be credited to a
memorandum account in the records of

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 14 of 17
<PAGE>

the Company or its designee and any dividends or other distributions payable on
such shares shall be deemed reinvested in additional shares of Stock, in a
manner determined by the Committee, until all shares of Stock credited to such
Optionee's memorandum account shall become issuable pursuant to the Optionee's
election.

                  (g)      The Committee may, in its discretion, extend one or
more loans to Optionees who are directors, key employees or consultants of the
Company or an Affiliate in connection with the exercise or receipt of an Option
granted to any such individual. The terms and conditions of any such loan shall
be established by the Committee.

                  (h)      The Committee may, in its discretion, provide in the
terms of any Agreement that (i) any proceeds, gains or other economic benefit
actually or constructively received by an Optionee upon any receipt or exercise
of an Option, or upon the receipt or resale of any Stock underlying the Option,
must be paid to the Company, and (ii) the Option shall terminate and any
unexercised portion of the Option (whether or not vested) shall be forfeited, if
(1) the Optionee ceases the performance of services for the Company or any
Affiliate prior to a specified date, or within a specified time period following
receipt or exercise of the Option, or (2) the Optionee at any time, or during a
specified time period, engages in any activity in competition with the Company
or any Affiliate, or which is adverse, contrary or harmful to the interests of
the Company or any Affiliate, or the Optionee ceases the performance of services
for the Company or any Affiliate for Cause.

                  (i)      Neither the adoption of the Plan nor anything
contained herein shall affect any other compensation or incentive plans or
arrangements of the Company or any Affiliate, or prevent or limit the right of
the Company or any Affiliate to establish any other forms of incentives or
compensation for their directors, employees or consultants or grant or assume
options or other rights otherwise than under the Plan.

                  (j)      The Plan shall be governed by and construed in
accordance with the laws of the State of California, without regard to such
State's choice of law provisions, and, in any event, except as superseded by
applicable Federal law.

                  (k)      The words "Section," "subsection" and "paragraph"
herein shall refer to provisions of the Plan, unless expressly indicated
otherwise. Wherever any words are used in the Plan or any Agreement in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

                  (l)      The Company shall bear all costs and expenses
incurred in administering the Plan, including expenses of issuing Stock pursuant
to any Options granted hereunder.

         12.      Limits of Liability. (a) Any liability of the Company or an
Affiliate to any Optionee with respect to any Option shall be based solely upon
contractual obligations created by the Plan and the Agreement.

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 15 of 17
<PAGE>

                  (b)      None of the Company, any Affiliate, any member of the
Committee or the Board or any other person participating in any determination of
any question under the Plan, or in the interpretation, administration or
application of the Plan, shall have any liability, in the absence of bad faith,
to any party for any action taken or not taken in connection with the Plan,
except as may expressly be provided by statute.

         13.      Amendments and Termination. (a) The Board may, at any time and
with or without prior notice, amend, alter, suspend or terminate the Plan,
retroactively or otherwise; provided, however, unless otherwise required by law
or specifically provided herein, no such amendment, alteration, suspension or
termination shall be made which would materially impair the previously accrued
rights of any holder of an Option theretofore granted without his or her written
consent, or which, without first obtaining approval of the stockholders of the
Company (where such approval is necessary to satisfy (i) with regard to ISOs,
any requirements under the Code relating to ISOs or (ii) any applicable law,
regulation or rule), would:

                  (1)      except as is provided in Section 10, increase the
                           maximum number of shares of Stock which may be sold
                           or awarded under the Plan;

                  (2)      except as is provided in Section 10, decrease the
                           minimum option exercise price requirements of Section
                           6(a);

                  (3)      change the class of persons eligible to receive
                           Options under the Plan; or

                  (4)      extend the duration of the Plan or the period during
                           which Options may be exercised under Section 6(b).

                  (b)      The Committee may amend the terms of any Option
theretofore granted, including any Agreement, retroactively or prospectively,
but no such amendment shall materially impair the previously accrued rights of
any Optionee without his or her written consent.

         14.      Duration. Following the adoption of the Plan by the Board, the
Plan shall become effective as of the date on which it is approved by the
holders of a majority of the Company's outstanding Stock which is present and
voted at a meeting, or by written consent in lieu of a meeting, which approval
must occur within the period ending twelve (12) months after the date the Plan
is adopted by the Board. The Plan shall terminate upon the earliest to occur of:

                  (a)      the effective date of a resolution adopted by the
                           Board terminating the Plan in accordance with Section
                           13;

                  (b)      the date all shares of Stock subject to the Plan are
                           delivered pursuant to the Plan's provisions; or

                  (c)      ten (10) years from the date the Plan is approved by
                           the Company's shareholders.

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 16 of 17
<PAGE>

No Option may be granted under the Plan after the earliest to occur of the
events or dates described in the foregoing paragraphs (a) through (c) of this
Section 14; however, Options theretofore granted may extend beyond such date.

                  No such termination of the Plan shall affect the previously
accrued rights of any Optionee hereunder and all Options previously granted
hereunder shall continue in force and in operation after the termination of the
Plan, except as they may be otherwise terminated in accordance with the terms of
the Plan or the Agreement.

         15.      Information to Optionees. To the extent required by Sections
260.140.41 and 260.140.46 of the California Code of Regulations, or any
successor or similar regulation or rule, the Company shall provide to each
Optionee, not less frequently than annually, during the period such Optionee has
one or more Options outstanding, and, in the case of an individual who acquires
shares of Stock pursuant to the Plan, during the period such individual owns
such shares of Stock, copies of the annual financial statements of the Company.
The Company shall not be required to provide any such financial statements to
key employees of the Company whose duties in connection with the Company assure
their access to equivalent information.

2000 Stock Option Plan Amended & Restated 11.6.03

                                 Page 17 of 17
<PAGE>

                              CELERITY GROUP, INC.
                             2000 STOCK OPTION PLAN

                          STOCK OPTION AWARD AGREEMENT

This Stock Option Award Agreement (this "AGREEMENT") is made by and between
Celerity Group, Inc., a Delaware corporation, formerly Kinetics Holdings
Corporation (the "COMPANY") and the Optionee as named on the Notice of Stock
Option Award attached hereto ("NOTICE"). All capitalized terms used herein that
are not defined in the text of this Agreement or in Section 16 of this Agreement
shall have the respective meanings given to such terms in the Celerity Group,
Inc. 2000 Stock Option Plan (the "PLAN").

                              W I T N E S S E T H:

         1.       Grant of Option. The Company hereby grants to the Optionee,
subject to the terms and conditions of the Plan and this Agreement, the right
and option to purchase from the Company up to an aggregate of the number of
shares of Common Stock of the Company, $0.0001 par value per share, set forth in
the Notice (the "SHARES"), at a per share purchase price (the "PURCHASE PRICE")
as set forth in the Notice (the "OPTION"), such Option to be exercisable as
hereinafter provided. If designated as an "incentive stock option" set forth in
the Notice, the Option is intended to qualify as an "incentive stock option"
("ISO") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "CODE").

         2.       Terms and Conditions. It is understood and agreed that the
Option evidenced hereby is subject to the following terms and conditions:

                  (a)      Expiration Date. The Option shall expire ten (10)
years after the Award Date set forth in the Notice.

                  (b)      Exercise of Option.

                           (i)      The Option will become vested and
exercisable pursuant to the Vesting Schedule set forth in the Notice, provided
that the Optionee has been continuously employed by, or providing services to,
the Company since the Award Date (subject to any approved absences or
interruptions in such employment or services) and on such dates.

                           (ii)     Notwithstanding the foregoing provisions of
this Section 2(b), in the event of a Change in Control, the Option shall
immediately become vested and exercisable to the extent provided by the
Committee, in its sole discretion, in a resolution adopted prior to and in
connection with such Change in Control.

                           (iii)    In connection with the exercise of all or
any part of the Option, the Optionee will be required to deliver to the Company
the completed and signed Option Exercise Form, attached hereto as Schedule I,
specifying the number of Shares as to which the Option is being exercised. Upon
the valid exercise of all or any part of the Option, a certificate (or
certificates) for the number of Shares with respect to which the Option is
exercised shall be issued in the name of the Optionee, subject to the other
terms and conditions of this Agreement

                                      -1-
<PAGE>

and the Plan, subject to the other terms and conditions of this Agreement and
the Plan, and delivered to the Optionee.

                  (c)      Consideration. At the time of any exercise of the
Option, the Optionee must deliver to the Company the aggregate Purchase Price of
the Shares as to which the Option is exercised as follows: (i) in United States
dollars by personal check, bank draft or money order; (ii) if permitted by
applicable law and approved by the Committee in accordance with the Plan, with
other shares of the Company's Common Stock, duly endorsed for transfer to the
Company, already owned by the Optionee (or by the Optionee and his spouse
jointly) for at least six (6) months prior to the tender thereof and not used
for another such exercise during such six (6) month period, having a total Fair
Market Value on the date of such exercise of the Option, equal to such Purchase
Price of such Shares; (iii) if permitted by applicable law and approved by the
Committee in accordance with the Plan, in accordance with a cashless exercise or
broker-assisted exercise procedure approved by the Committee permitting the
Optionee to authorize a broker or dealer to sell the Shares (or a sufficient
portion of such Shares) that may be acquired upon exercise of the Option and pay
to the Company in cash a portion of the sale proceeds equal to such Purchase
Price of the Shares for which the Option is so exercised and any taxes required
to be paid as a result of such exercise; or (iv) a combination of the
consideration provided for in the foregoing clauses (i) through (iii).

                  (d)      Exercise Upon Death, Disability or Termination of
Employment. The Option shall terminate upon the termination, for any reason, of
the Optionee's employment with the Company or a Subsidiary, and no Shares may
thereafter be purchased under the Option except as follows:

                           (i)      In the event of the death of the Optionee
while an employee of the Company or a Subsidiary, the Option, to the extent the
Option is exercisable in accordance with Section 2(b) hereof as of the date of
death, may be exercised after his death by his designated beneficiary, his heir,
the legal representative of the Optionee's estate or by the legatee of the
Optionee under his last will for a period of one (1) year from the date of his
death or until the expiration of the stated period of the Option, whichever
period is the shorter.

                           (ii)     If the Optionee's employment with the
Company or a Subsidiary shall terminate by reason of Disability, the Option, to
the extent exercisable in accordance with Section 2(b) hereof as of the date of
such termination of employment, or, if such termination occurs after the first
anniversary of the date of this Agreement, scheduled to become exercisable under
Section 2(b)(i) hereof on the last day of the calendar month in which such
termination occurs, may be exercised after such termination but may not be
exercised after the expiration of the period of one (1) year from the date of
such termination of employment or of the stated period of the Option, whichever
period is the shorter.

                           (iii)    If the Optionee voluntarily terminates his
employment with the Company or a Subsidiary or the Company or such Subsidiary
terminates the Optionee's employment, and, in any case, such termination of
employment is not for Cause, the Option, to the extent exercisable in accordance
with Section 2(b) hereof as of the date of such termination, may thereafter be
exercised but may not be exercised after the expiration of the period of three

                                      -2-
<PAGE>

(3) months from the date of such termination of employment or of the stated
period of the Option, whichever period is the shorter.

                           (iv)     If the Optionee's employment with the
Company or a Subsidiary is terminated by reason of the Optionee's retirement
after attaining both (A) five (5) years of continuous service as an employee of
the Company and/or a Subsidiary and (B) 59-1/2 years of age, the Option, to the
extent exercisable in accordance with Section 2(b) hereof as of the date of such
retirement, may be exercised after such retirement, but may not be exercised
after the expiration of the period of two (2) years from the date of such
retirement or of the stated period of the Option, whichever period is the
shorter, provided, that any exercise after three months following a termination
for retirement shall be deemed the exercise of a non-qualified stock option.

                           (v)      If the Optionee dies after termination of
his employment with the Company and/or a Subsidiary under paragraph (ii), (iii)
or (iv) of this Section 2(d) above during the one-year, three-month or two-year
period following such termination specified, respectively, in such paragraphs,
the Option, to the extent the Option would have been exercisable in accordance
with such applicable paragraph (ii), (iii) or (iv) as of the date of the
Optionee's death, may be exercised after his death by his designated
beneficiary, his heir, the legal representative of his estate or by the legatee
of the Optionee under his last will until the expiration of the period of one
(1) year from the date of his death or of the stated period of the Option,
whichever period is the shorter, provided, that any exercise after three months
following a termination other than for death or Disability or one year following
a termination for Disability, shall be deemed the exercise of a non-qualified
stock option.

                           (vi)     If the Optionee's employment is terminated
by the Company or a Subsidiary for Cause, the Option shall automatically,
without any further action required by the Company, terminate on the date of
such termination of employment and no Shares may thereafter be purchased under
the Option.

                  (e)      Nontransferability. The Option shall not be
transferable otherwise than by will or the laws of descent and distribution, and
is exercisable, during the lifetime of the Optionee, only by him; provided that
the Option may be exercised after the Optionee's death by the beneficiary most
recently named by the Optionee in a written designation thereof filed by the
Optionee with the Company, in accordance with the Plan.

                  (f)      Withholding Taxes. Prior to the issuance of the
Shares upon the exercise of all or any part of the Option, the Optionee shall be
required to pay to the Company in cash (or make other arrangements, in
accordance with Section 9 of the Plan, for the satisfaction of) any taxes of any
kind required by law to be withheld with respect to such Shares; provided,
however, such tax withholding obligations may be met, in whole or in part,
pursuant to procedures, if any, approved by the Committee in its discretion and
in accordance with applicable law, by (i) the withholding by the Company of
Shares otherwise deliverable to the Optionee pursuant to the Option with a Fair
Market Value on the date of such exercise equal to such tax liability (provided,
however, that the amount of any Shares so withheld shall not exceed the amount
necessary to satisfy required Federal, state and local tax withholding
obligations using the minimum statutory withholding rates that are applicable to
supplemental taxable income) and/or

                                      -3-
<PAGE>

(ii) tendering to the Company shares of the Company's Common Stock, duly
endorsed for transfer to the Company, owned by the Optionee (or by the Optionee
and his spouse jointly) and acquired more than six (6) months prior to such
tender with a Fair Market Value on the date of such exercise equal to such tax
liability. In no event shall the Shares be delivered to the Optionee until the
Optionee has paid to the Company in cash, or made arrangements satisfactory to
the Company regarding the payment of, the amount of any taxes of any kind
required by law to be withheld with respect to the Shares subject to the Option,
and the Company shall have the right to deduct any such taxes from any payment
of any kind otherwise due to the Optionee.

                  (g)      No Rights as Stockholder. Neither the Optionee nor
any other person shall become the beneficial owner of the Shares subject to the
Option, nor have any rights to dividends or other rights as a shareholder with
respect to any such shares, until the Optionee has exercised the Option in
accordance with the provisions hereof and of the Plan.

                  (h)      No Right to Continued Employment. Neither the Option
nor any terms contained in this Agreement shall confer upon the Optionee any
express or implied right to be retained in the service of the Company or an
Affiliate for any period or at all, nor restrict in any way the right of the
Company or any Affiliate, which right is hereby expressly reserved, to terminate
his employment at any time with or without cause. The Optionee acknowledges and
agrees that any right to exercise the Option is earned only by continuing as an
employee of the Company and the Subsidiaries at the will of the Company or any
such Subsidiary, or satisfaction of any other applicable terms and conditions
contained in this Agreement and the Plan, and not through the act of being
hired, being granted the Option or acquiring Shares hereunder.

                  (i)      Inconsistency with Plan. Notwithstanding any
provision herein to the contrary, the Option provides the Optionee with no
greater rights or claims than are specifically provided for under the Plan. If
and to the extent that any provision contained in this Agreement is inconsistent
with the Plan, the Plan shall govern.

                  (j)      Compliance with Laws and Regulations. This Agreement
is intended to comply with Section 25102(o) of the California Corporations Code
and any regulations relating thereto. Any provision of this Agreement that is
inconsistent with Section 25102(o) or any regulations relating thereto shall,
without further act or amendment by the Company or the Board of Directors of the
Company, be reformed to comply with the requirements of Section 25102(o) and any
regulations relating thereto. The exercise of the Option and the issuance and
transfer of Shares shall be subject to compliance by the Company and the
Participant with all applicable requirements of U.S. federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. The Participant understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance. If at any time the Company shall
determine, in its discretion, that the listing, registration or qualification of
the Shares upon any national securities exchange or under any state or Federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable, the Company shall not be required to deliver any
certificates for the Shares to the Optionee or any other person unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Company.

                                      -4-
<PAGE>

         3.       Investment Representation. If at the time of exercise of all
or part of the Option the Shares are not registered under the Securities Act
and/or there is no current prospectus in effect under the Securities Act with
respect to the Shares, the Optionee shall execute, prior to the issuance of any
Shares to the Optionee by the Company, an agreement (in such form as the
Committee may specify) in which the Optionee, among other things, represents,
warrants and agrees that the Optionee is purchasing or acquiring the shares
acquired under this Agreement for the Optionee's own account, for investment
only and not with a view to the resale or distribution thereof, that the
Optionee has knowledge and experience in financial and business matters, that
the Optionee is capable of evaluating the merits and risks of owning any Shares
purchased or acquired under this Agreement, that the Optionee is a person who is
able to bear the economic risk of such ownership and that any subsequent offer
for sale or distribution of any of such shares shall be made only pursuant to
(i) a registration statement on an appropriate form under the Securities Act,
which registration statement has become effective and is current with regard to
the shares being offered or sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, it being understood that to the
extent any such exemption is claimed, the Optionee shall, prior to any offer for
sale or sale of such shares, obtain a prior favorable written opinion, in form
and substance satisfactory to the Committee, from counsel for or approved by the
Committee, as to the applicability of such exemption thereto.

         4.       Lock-Up Period. The Optionee hereby agrees that, if so
requested by the Company or any representative of the underwriters (the
"MANAGING UNDERWRITER") in connection with any registration of the offering of
any securities of the Company under the Securities Act, the Optionee shall not
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
Shares or other securities of the Company or enter into any swap, hedging or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any Shares or other securities of the
Company (each such action, "TRANSFER") for the thirty (30) days prior to, and
the one hundred-eighty (180) days after (the "MARKET STANDOFF PERIOD"), the
effectiveness of the registration statement pursuant to which such offering
shall be made (or such shorter period of time as is sufficient and appropriate,
in the opinion of the Managing Underwriter, in order to complete the sale and
distribution of the securities included in such offering). Such restriction
shall apply only to the first two registration statements of the Company to
become effective under the Securities Act which includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.

         5.       Company's Repurchase Right.

                  (a)      Upon the termination, for any reason, of the
Optionee's employment with the Company or an Affiliate, the Company shall have
the right, but not the obligation, to purchase any or all of the Shares (the
"REPURCHASE RIGHT") which the Optionee, such other person, or any permitted
donee of such Shares, under Section 6 hereof, then holds by delivering notice
and making payment, by check or checks to the record holder of such Shares
against delivery of a certificate or certificates representing such Shares in
proper form for transfer and/or this Agreement, as the case may be, for such
shares to the Optionee and/or such donee of the

                                      -5-
<PAGE>

Shares, as applicable, within the later of (i) ninety (90) calendar days after
such termination of the Optionee's employment or (ii) ninety (90) calendar days
after the exercise of such Option, at the greater of (A) the aggregate Fair
Market Value of the Shares on the date of Optionee's termination as determined
in good faith by the Committee (without discount for lack of marketability or
minority interest), which may be based upon an appraisal prepared by an
independent appraisal company, or such other reasonable valuation method as the
Committee shall select and apply, as of the given date or (B) the aggregate
Purchase Price originally paid by the Optionee for such Shares. During
Optionee's employment, the Company shall also have a Repurchase Right with
regard to the Shares (at a purchase price per Share as determined in the manner
set forth in this Section 5(a) above and with payment for such Shares being made
within ninety (90) calendar days following notice to the Optionee of the
Company's intent to exercise such Repurchase Right), if the Committee
determines, in its discretion, that such repurchase is necessary to prevent the
Company from being subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended. The Company's Repurchase Right, as described
in this Section 5(a), shall lapse at such time as the Company's Common Stock is
publicly traded; provided, however, that, the Company shall continue to have the
Repurchase Right as set forth in Section 5(b) below.

                  (b)      Regardless of whether the Company's Common Stock is
publicly traded, if the provisions of Section 9(A) through (D) hereof apply to
the Optionee, then the Company shall have a Repurchase Right as set forth in
Section 5(a) above, provided, however, that the purchase price for such Shares
shall be the aggregate Purchase Price originally paid by the Optionee for such
Shares. If the Optionee is not an officer, director or consultant of the Company
or an Affiliate, the Company's Repurchase Right with respect to such Shares at
the purchase price specified in the immediately preceding sentence shall lapse
at the rate of twenty percent (20%) of the Shares per year over five years from
the date of this Agreement.

                  (c)      In connection with any exercise by the Company of its
Repurchase Right, such record holder shall warrant in writing to the Company
good and marketable title to the Shares, free and clear of all claims, liens,
charges, encumbrances and security interests of any nature whatsoever except
those under this Agreement.

                  (d)      None of the Shares shall be transferred on the
Company's books nor shall the Company recognize any such purported Transfer of
any such shares or any interest therein unless and until all applicable
provisions of Sections 4, 5, 6 and 7 of this Agreement have been complied with
in all respects. The certificates evidencing the Shares shall bear legends to
the following effect:

         "The shares represented by this certificate are subject to certain
         restrictions against transfer set forth in a Stock Option Award
         Agreement between the Optionee to whom the shares were originally
         issued and Celerity Group, Inc., a Delaware corporation (the
         "Company"), as may be amended from time to time. Such shares are also
         subject to a limited call option of the Company as described in Section
         5 and certain drag-along rights as described in Section 7, in each case
         of such Stock Option Award Agreement.

         The shares represented by this certificate have not been registered
         under the Securities Act of 1933, as amended (the "Securities Act"),
         and such shares may not be offered, sold,

                                      -6-
<PAGE>

         pledged or otherwise transferred except (1) pursuant to an exemption
         from, or in a transaction not subject to, the registration requirements
         under the Securities Act or (2) pursuant to an effective registration
         statement under the Securities Act, in each case in accordance with any
         applicable securities laws of any State of the United States."

         6.       Restrictions on Transfer of Stock. The Optionee shall not
Transfer any Shares received by the Optionee (or any interest or right in such
shares) except: (a) to the Company; (b) pursuant to a registration statement
filed pursuant to the Securities Act or, at any time after the initial Public
Offering of the Company, pursuant to Rule 144 under the Securities Act in an
unsolicited brokerage transaction to the public; (c) following his death, by
will or intestacy to the Optionee's beneficiary, legal representative, heir or
legatee; (d) as a gift or gifts during the Optionee's lifetime to the Optionee's
spouse, children or grandchildren, or to a trust, partnership or other legal
entity for the benefit of, or in which the only partners or members are, the
Optionee and/or any of the foregoing, provided that the donee of such shares
agrees to be bound by the terms, conditions and restrictions of this Agreement;
or (e) pursuant to Section 7 of this Agreement.

         7.       Drag-Along Rights.

                  (a)      Each time the stockholders of the Company meet, or
act by written consent in lieu of a meeting, for purposes of approving a Sale of
the Business, the Optionee agrees to (i) vote all of his or her Shares at such
meeting of stockholders of the Company or by written consent in lieu of a
meeting and (ii) sell the pro rata portion of the Optionee's Shares along with
the Selling Group, in connection with the Sale of the Business. In order to
effect the foregoing covenant, the Optionee shall grant to the Selling Group, or
to MidOcean Capital Investors, L.P. ("MIDOCEAN"), upon the written request of
MidOcean if MidOcean votes in favor of such Sale of the Business, or Behrman and
Gryphon, upon the written request of Behrman or Gryphon if MidOcean does not
vote in favor of such Sale of the Business and Behrman and Gryphon vote in favor
of such Sale of the Business, with respect to all of his Shares an irrevocable
proxy (which is deemed to be coupled with an interest) with respect to any
stockholder vote or action by written consent solely to effect such Sale of the
Business as described in this Section 7.

                  (b)      Optionee agrees to cooperate fully (including by
waiving any appraisal rights to which Optionee may be entitled under applicable
law, rule or regulation) with the Selling Group, MidOcean, Behrman and Gryphon,
as the case may be, and the purchaser in any such Sale of the Business and to
execute and deliver all documents (including purchase agreements) and
instruments as the Selling Group, MidOcean, Behrman or Gryphon, as the case may
be, and such purchaser request to effect such Sale of the Business, including,
without limitation, the making of all representations and warranties and the
granting of all indemnifications and the execution of all agreements (including,
without limitation, participating in any escrow arrangements to the extent of
Optionee's "pro rata portion") and similar arrangements which the Selling Group,
MidOcean, Behrman or Gryphon, as the case may be, is making or executing. Upon
such Sale of the Business, Optionee shall receive his or her "pro rata portion"
of the net proceeds (taking into account the exercise or conversion of any
Equity Security to be transferred and any transaction costs and expenses
incurred by the Selling Group, MidOcean, Behrman and Gryphon, as the case may
be, in connection with such Sale of the Business, including, without limitation,
the fees described in Section 7(c) hereof), and such sale

                                      -7-
<PAGE>

shall be on the same terms and conditions as those afforded to the Selling
Group, MidOcean, Behrman or Gryphon, as the case may be. For purposes of this
Section 7(b), "pro rata portion" shall mean a fraction, the numerator of which
is the number of Common Stock Equivalents held by Optionee immediately prior to
such Sale of the Business and the denominator of which is the total number of
Common Stock Equivalents outstanding immediately prior to such Sale of Business.
For purposes of this Section 7(b), the computation of Common Stock Equivalents
shall include Equity Securities that would become Common Stock Equivalents in
accordance with their terms immediately after the consummation of the
transactions contemplated by this Section 7.

                  (c)      Optionee understands and agrees that in consideration
of investment banking services provided by an investment banking group (which
may consist of or include MidOcean, Behrman, Gryphon or any of their respective
Affiliates (as defined in the Shareholders Agreement)) a reasonable fee may be
paid in an amount that is customary and equivalent to a fee arrangement
negotiated on an "arms-length" basis.

                  (d)      Notwithstanding anything contained in this Section 7
to the contrary, there shall be no liability on the part of the MidOcean,
Behrman or Selling Group (or their respective Affiliates and Permitted
Transferees (as defined in the Shareholders Agreement)) to Optionee in the event
no Equity Securities are sold even if the provisions of this Section 7 have been
triggered.

         8.       Certain Other Representations and Covenants of the Optionee.

                  (a)      The Optionee hereby acknowledges receipt of a copy of
the Plan and represents that he is familiar with the terms and provisions
thereof. The Optionee hereby represents and acknowledges that he has reviewed
the Plan and this Agreement in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Agreement and fully understands
all provisions of the Plan and this Agreement. The Optionee hereby agrees to be
bound by all of the terms and provisions of the Plan and this Agreement;
provided that any Shares acquired under the Option shall carry equal voting
rights with the common stock or similar equity securities of the Company not
acquired under the Plan; and provided further that any provision contained in
this Agreement the enforcement of which would violate the securities laws of the
State of California shall not apply. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions and interpretations of the Committee
or the Board upon any questions arising under the Plan, this Agreement or
otherwise relating to the Option.

                  (b)      If the Option is an ISO, and if the Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (i) the date two (2) years after the Date of Grant, and (ii)
the date one (1) year after transfer of such Shares to the Optionee upon
exercise of the Option, the Optionee shall immediately notify the Company in
writing of such disposition. The Optionee agrees that the Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee from the early disposition by payment in cash or out
of the current wages or other compensation payable to the Optionee.

                                      -8-
<PAGE>

         9.       Forfeiture. Notwithstanding any other provisions of this
Agreement to the contrary, if (A) during the term of the Optionee's employment
with the Company or an Affiliate or during the one (1) year period thereafter,
the Optionee, directly or indirectly, solicits for employment or the services of
any employee of the Company or any Affiliate as of the date of this Agreement,
or who shall subsequently become an employee of the Company or any Affiliate;
(B) the Optionee breaches or violates any confidentially, intellectual property
or restrictive covenant or agreement of the Optionee with the Company or an
Affiliate; (C) the Optionee takes any action to disparage or criticize any of
the products or services of the Company or any Affiliate to any third parties or
commits any other action that injures or hinders the business relationships of
the Company and/or any Affiliate during the term of the Optionee's employment
with the Company or any Affiliate or at any time thereafter; or (D) the
Optionee's employment is terminated by the Company or an Affiliate for Cause,
then the Option shall thereupon automatically terminate and cease to thereafter
be exercisable with respect to any Shares without any further action required by
the Company, and (ii) the Company may exercise its Repurchase Right to purchase
any Shares held by Optionee pursuant to Section 5(b).

         10.      Tax Consequences. Set forth below is a brief summary as of the
effective date of the Plan of some of the U.S. federal and California state tax
consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE SHARES.

                  (a)      Exercise of ISO. If the Option qualifies as an ISO,
there will be no regular U.S. federal or California state income tax liability
upon the exercise of the Option, although the excess, if any, of the aggregate
Fair Market Value of the Shares on the date of exercise over the aggregate
Purchase Price of the Shares will be treated as a tax preference item for
federal alternative minimum tax purposes and may subject the Optionee to the
alternative minimum tax in the year of exercise.

                  (b)      Exercise of Nonqualified Stock Option. If the Option
does not qualify as an ISO, there may be regular U.S. federal and California
state income tax liability upon the exercise of the Option. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the aggregate Fair Market Value of the
Shares on the date of exercise over the aggregate Purchase Price of the Shares.
If the Optionee is a current or former employee of the Company, the Company may
be required to withhold from the Optionee's compensation or collect from the
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.

                  (c)      Disposition of Shares. The following tax consequences
may apply upon disposition of the Shares.

                           (i)      Incentive Stock Options. If the Shares are
held for more than twelve (12) months after the date of purchase of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the Award Date set forth in the Notice, any gain realized on disposition
of the Shares will be treated as long term capital gain for U.S. federal and

                                      -9-
<PAGE>

California state income tax purposes. If Shares purchased under an ISO are
disposed of within either of the applicable one (1) year or two (2) year holding
periods, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates in the year of the disposition) to the
extent of the excess, if any, of the aggregate Fair Market Value of the Shares
on the date of exercise over the aggregate Purchase Price of the Shares.

                           (ii)     Nonqualified Stock Options. If the Shares
are held for more than twelve (12) months after the date of purchase of the
Shares pursuant to the exercise of an NQSO, any gain realized on disposition of
the Shares will be treated as long-term capital gain.

                           (iii)    Withholding. The Company may be required to
withhold from the Optionee's compensation or collect from the Optionee and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income.

         11.      Notices. Any notice or other communication required or
permitted hereunder shall be in writing, and, if to the Company, shall be
delivered in accordance with the Plan, and, if to the Optionee, shall be
addressed to him at the address set forth below his signature hereon, subject to
the right of either party to designate at any time hereafter in writing some
other address.

         12.      Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, applicable to contracts executed and to be performed entirely within
such State, without regard to such State's choice of law provisions.

         13.      Severability. If any of the provisions of this Agreement
should be deemed unenforceable, the remaining provisions shall remain in full
force and effect.

         14.      Modification. Except as otherwise permitted by the Plan, this
Agreement may not be modified or amended, nor may any provision hereof be
waived, in any way except in writing signed by the parties hereto.

         15.      Counterparts. This Agreement may be executed in two
counterparts, each of which shall constitute one and the same instrument.

         16.      Definitions.

                  "Behrman" means Behrman Capital III, L.P., a Delaware limited
partnership.

                  "Common Stock Equivalents" means, at any time, (i) with
respect to each share of Common Stock issued and outstanding (other than Common
Stock issued upon the exercise of the Initial Warrants (as defined in the
Shareholders Agreement, dated as of August 30, 2000, by and among the Company
and the Stockholders Signatory Thereto, as such agreement may be amended from
time to time (the "SHAREHOLDERS AGREEMENT") or Incentive Securities), one (1)
and (ii) with respect to any other Equity Security which is then exercisable,
exchangeable or convertible at an exercise price equal to or less than the fair
market value of the Common Stock at such time, an amount equal to the number of
shares of Common Stock, if any, into or for which such Equity Security may be
exercised, exchanged or converted at such time.

                                      -10-
<PAGE>

                  "Equity Securities" means all shares of capital stock of the
Company, all securities convertible into or exchangeable for shares of capital
stock of the Company, and all options, warrants, and other rights to purchase or
otherwise acquire from the Company shares of such capital stock, or securities
convertible into or exchangeable for shares of such capital stock; provided that
the Initial Warrants (and any shares of capital stock issued upon the exercise
thereof) and Incentive Securities shall be deemed not to be "Equity Securities."

                  "Gryphon" means Gryphon Partners II, L.P., a Delaware limited
partnership.

                  "Incentive Securities" mean and include, at any time, all
options to purchase Stock granted pursuant to the Plan or any similar or
successor plan and all shares of Common Stock issued upon the exercise of such
options.

                  "Public Offering" means a widely distributed sale of Common
Stock in an underwritten public offering pursuant to an effective registration
statement filed with the Securities and Exchange Commission.

                  "Sale of the Business" means any transaction or series of
transactions (whether structured as a stock sale, merger, consolidation,
reorganization, asset sale or otherwise), which results in the sale or transfer
of more than a majority of the assets of the Company and its Subsidiaries (as
defined in the Shareholders Agreement) (determined based on value) or of a
majority of the capital stock of the Company to a person other than MidOcean or
any of its Affiliates (as defined in the Shareholders Agreement).

                  "Selling Group" means, at any time, two of MidOcean, Behrman
and Gryphon, for so long as the requesting holders and such other holders who
desire to sell, collectively own in excess of fifty percent (50%) of the Common
Stock Equivalents at such time.

                                      -11-
<PAGE>

                  IN WITNESS WHEREOF, Celerity Group, Inc. has caused this
Agreement to be executed by a duly authorized officer, and the Optionee through
his/her execution of the notice of Award of Stock Options, has likewise agreed
to be bound by its terms, both effective as of the Award Date set forth in the
Notice.

                                     CELERITY GROUP, INC.

                                     By__________________________
                                       David J. Shimmon
                                       Chief Executive Officer

Revised 11.6.03 Stock Option Award Agreement
<PAGE>

                                                                      Schedule I

                              OPTION EXERCISE FORM

Please fill out the information below to exercise your Option and purchase any
of the vested Shares subject thereto.

EMPLOYEE NAME:
(PLEASE PRINT)         _____________________________________________________

SOCIAL SECURITY # OR COMPANY ID#:___________________________________

NUMBER OF SHARES
BEING PURCHASED:  _________________

Please complete the information below with your current information:

Street Address:  ________________________________

City: ___________________________     State: ________________________ Zip: _____

Home Phone: _____________________     Work Phone: ______________________________

Indicate the method of payment for the shares. (Please check one)

                                   Check (attached):                  _____
                                   Cashless exercise (if available)   _____

Sign and date below, and send this "OPTION EXERCISE FORM" along with a check for
the purchase of your shares (if you have chosen that payment method) to:

         Celerity Group, Inc.
         Attn: Stock Plan Administrator
         2805 Mission College Blvd.
         Santa Clara, CA 95054

Please allow 7-10 days for processing your request:

                                  ______________________________________________
                                    Signature

                                  ______________________________________________
                                    Date

                                      -13-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]