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EXHIBIT 10.6    
    

DATED                                  2000

LAPORTE:
PLC

and

K-L HOLDINGS, INC. 

ENVIRONMENTAL DEED

Slaughter
and May

35 Basinghall Street

London EC2V 5DB 

(EFK)

 
 

CONTENTS    
    

	CLAUSE
 
	 	PAGE

	1.	 	Interpretation	 	1
	2.	 	Warranties and indemnities	 	1
	3.	 	Financial limits: de minimis	 	2
	4.	 	Financial limits: thresholds	 	2
	5.	 	Time limits	 	2
	6.	 	Other limits and exclusions.	 	3
	7.	 	Control	 	4
	8.	 	Expert Procedure	 	5
	9.	 	Relationship with the Sale and Purchase Agreement	 	6
	10.	 	Back-to-Back Cover	 	7

THIS DEED is made                        2000 

BETWEEN: 

	1.
	LAPORTE PLC whose registered office is at Nations House, 103 Wigmore Street, London W1H 9AB (registered in England No.96356) (the
"Seller"); 

AND

	2.
	K-L HOLDINGS, INC., a company incorporated under the laws of the State of Delaware whose registered office is at
corporation Trust Center, 1209 Orange Street, Wilmington, County of Newcastle, Delaware, U.S.A. (the "Purchaser"). 

NOW THIS DEED witnesses as follows: 

1.     Interpretation  

	1.1
	In
this deed, words and expressions shall have the meaning given in Annex I.

	1.2
	Words
and expressions which are defined in the Sale and Purchase Agreement shall have the same meaning when used in this deed. 

2.     Warranties and indemnities  

	2.1
	The
warranties in this deed which are referred to in clause 11 of the Sale and Purchase Agreement as being given to the
Purchaser are as follows:

	(A)
	All
material Environmental Permits required by Environmental Laws in relation to the operation during the Relevant Period of the plant, machinery and processes used in the business of
the relevant member of the Group or in the Businesses (the "Operations") have been obtained and have been complied with in all material respects during
the Relevant Period and so far as the Seller is aware all material Environmental Permits required by Environmental Law in relation to Operations before the Relevant Period were obtained and complied
with in all material respects.

	(B)
	Each
member of the Group or, in relation to the Businesses, each member of the Retained Group, has carried on the Operations during the Relevant Period in compliance in all material
respects with Environmental Laws and Consent Orders and so far as the Seller is aware each member of the Group or, in relation to the Businesses, each member of the Retained Group, has carried on the
Operations before the Relevant Period in compliance in all material respects with Environmental Laws and Consent Orders.

	(C)
	No
member of the Group or, in relation to the Businesses, no member of the Retained Group, has received written notice of any material current or threatened claims, investigations or
other proceedings which are outstanding or which have been settled or compromised with any outstanding liability or obligation as at the date of this agreement against or involving that member of the
Group or of the Retained Group by any person (including any Relevant Authority) in respect of Environmental Matters under Environmental Laws or Environmental Agreements (other than in relation to
Former and Off-site Issues).

	2.2
	The
Seller covenants with the Purchaser to pay the Purchaser or, at the Purchaser's election, any Protected Person an amount equal to all Protected Losses of any Protected Person on
an after-Tax basis in relation to:

	(A)
	Site
Issues;

	(B)
	Former
and Off-site Issues; and

	(C)
	Excluded
Business and Property Issues. 

The
provisions of paragraphs 3 to 10 of this Deed shall apply to this covenant except the provisions of paragraphs 3, 4, 5, 6.2
and 6.3 shall not apply in respect of any claim for Former and Off-site Issues and Excluded Business and Property Issues. 

3.     Financial limits: de minimis  

	3.1
	The
Seller shall not be liable under this deed in respect of any Environmental Warranty Issue or Site Issue unless the liability of the Seller under this deed (but for this  paragraph 3) in respect of
the individual Protected Matter in respect of which the claim is made exceeds US$175,000.

	3.2
	For
the avoidance of doubt, this paragraph 3 does not apply to Former and Off Site Issues and Excluded Business and Property
Issues.

	4.
	Financial limits: thresholds

	4.1
	The
Seller shall not be liable for a claim under this deed in respect of Environmental Warranty Issues or Site Issues, unless the aggregate liability of the Seller under this deed
(but for this paragraph 4.1) in respect of all Environmental Warranty Issues and Site Issues exceeds US$5,000,000, in which case such liability
shall be limited to such excess.

	4.2
	For
the avoidance of doubt, this paragraph 4 does not apply to Former and Off-site Issues or Excluded Business and
Property Issues. 

5.     Time limits  

	5.1
	The
Purchaser shall not be entitled to claim under this deed unless the Purchaser has given notice to the Seller of its claim under this deed on or before:

	(A)
	the
second anniversary of the date of this deed, in relation to Environmental Warranty Issues;

	(B)
	the
fifth anniversary of the date of this deed in relation to Site Issues, 

such
notice to specify that a matter exists which gives rise to a claim, specifying (in reasonable detail) such matter and the amount of the Protected Losses (to the extent known or reasonably capable
of estimation) PROVIDED that the liability of the Seller in respect of such claim shall (subject to paragraph 6(A) of Schedule 4 of the Sale and Purchase Agreement) absolutely determine
(if such claim has not been previously satisfied, settled or withdrawn) if legal proceedings in respect of such claim shall not have been commenced by the Purchaser within nine months of the date of
this notice (or (a) if later, the date when Protected Losses are sufficiently well quantified for it to be reasonable to commence proceedings and for this purpose proceedings shall not be
deemed to have been commenced unless they shall have been properly issued and validly served upon the Seller. 

	5.2
	For
the avoidance of doubt, this paragraph 5 does not apply to Former and Off-site Issues or Excluded Business and
Property Issues. 

6.     Other limits and exclusions  

        The Seller shall not be liable for a claim under this deed in respect of any Protected Matters to the extent that such claim would not have arisen but for,
results from or is increased by: 

	6.1
	any
act or omission by or on behalf of any Protected Person after the date of this deed which is negligent;

	6.2
	in
relation to Environmental Warranty Issues and Site Issues (except for those Site Issues which are subject to a Consent Order at the Monitored Sites):

	(A)
	provisions
of any Environmental Permit which are not expressly required under Environmental Laws to be complied with on or before the date of this deed (except for any specific,
express and positive provision of an Environmental Permit which requires Works to be carried out in 

relation
to Site Issues (a "Site Issue Provision")), or the expiry, review, amendment, replacement or renewal of any Environmental Permit after the date
of this deed (except for any Site Issue Provision which is inserted in the amended, replacement or renewed Environmental Permit); 

	(B)
	laws
which come into force or become binding after the date of this deed except to the extent that they are not more onerous than those in force at the date of this deed or are laws
expressly identified in the definition of Environmental Laws; or

	(C)
	variations,
changes, modifications, additions or amendments after the date of this deed (whether under laws which are in force before, on or after the date of this deed) to applicable
standards, codes, criteria, guidance, policy or interpretations except to the extent that they are not more onerous than those in force at the date of this deed;

	6.3
	loss
of profits, loss of sales, loss of production, business interruption, reduction in value of any land or any other indirect or consequential loss or damage or internal cost of a
Protected Person; or

	6.4
	worker
health and safety issues (other than the exposure of workers to Controlled Materials);

	6.5
	for
the avoidance of doubt, any defective product supplied by or on behalf of any member of the Purchaser's Group on or before the date of this deed, except, to the extent expressly
provided in the definition of Former and Off-site Issues;

	6.6
	any
failure by any Protected Person to comply with this deed and/or with any Consent Order after the date of this deed, but only to the extent that such failure results in or
increases Protected Losses. 

7.     Control  

	7.1
	The
Purchaser shall ensure that the Seller shall be notified promptly in writing if any Protected Person becomes aware of any matter which is or might be, a Protected Matter. For the
avoidance of doubt, the Purchaser's right to make a claim under this deed shall not be affected by any alleged defect in or delay in providing notice under this paragraph 7.1, subject to the
time limit in paragraph 5 where applicable and except to the extent of any prejudice to the Seller resulting from such delay or defect.

	7.2
	The
Purchaser shall with effect from the date of this deed have control and conduct of any claim, action or proceedings or Work in relation to any Environmental Warranty Issue or Site
Issue ("Control"), subject to the right of the Seller to assume Control in relation to any Site Issues under  sub-paragraph 7.3. The Purchaser shall
procure that, in relation to any Protected Matter where the Purchaser has Control and subject
to subparagraph 7.5:

	(A)
	the
Seller shall be fully consulted with and any reasonable request of the Seller shall be complied with in relation to such matter (without prejudice to  sub-paragraph 7.2(C) in relation to matters
which are subject to Seller's prior written consent);

	(B)
	any
relevant claim, action or other proceedings against the relevant Purchaser or other Protected Person shall be vigorously defended and contested;

	(C)
	other
than in respect of Works, the prior written consent of the Seller shall be obtained before the Purchaser or any Protected Person:

	(i)
	agrees,
makes or offers any concession, admission or settlement (including any failure to appeal or decision not to do so);

	(ii)
	takes
any other step or action which could be material to or could increase or otherwise affect the Seller's liability under this deed, 

in
relation to such matter, such consent not to be unreasonably withheld or delayed. 

	(D)
	in
relation to Works, Annex II (to the extent applicable) shall apply.

	7.3
	The
Seller shall have the right at any time after the date of this deed to assume Control in relation to any Site Issues by giving written notice to the Purchaser and the Seller shall
have control of Former and Off-site Issues and Excluded Business and Property Issues. Where the Seller assumes or has Control, the Purchaser shall provide and shall procure that any
Protected Person shall provide all information, assistance and facilities to the Seller as the Seller shall reasonably require and shall ensure that no Protected Person takes any action in relation to
the any Former and Off-site Issues or Excluded Business and Property Issues which could conflict with the exercise of Control by the Seller.

	7.4
	If
the Seller assumes Control then the Seller shall ensure that the Purchaser shall be fully informed and consulted with and any reasonable representation of the Purchaser shall be
taken into consideration.

	7.5
	The
Purchaser shall procure that each Protected Person shall so far as reasonable avoid, reduce and mitigate any claim under this deed, provided that this  sub-paragraph 7.5 is subject to all of the
other provisions of this deed and neither this subparagraph
7.5, nor the obligations of the Purchaser under subparagraph 7.2(A) or (B) shall require any Protected Person to incur
(or entitle the Purchaser to claim in respect of) any cost or expense which is not recoverable when all of the other provisions of this deed have been applied.

	7.6
	Each
party shall comply with reasonable requests of the other party for arrangements to maintain confidentiality or privilege in relation to information or documents passing between
them under this paragraph 7.

	7.7
	The
Purchaser shall ensure that any Protected Person shall provide to the Seller on a timely basis all information, documents held by any Protected Person and other facilities as the
Seller may reasonably request in order to insure all or any of the liabilities which it may have under this deed. 

8.     Expert Procedure  

	8.1
	Where
a claim has been made by the Purchaser under this deed, and a dispute arises in relation to any technical or factual issues in relation to any Protected Matter then the
procedure in this paragraph 8 shall apply, provided that this paragraph 8 shall not apply
to any issue which is to be determined by the Relevant Authority in any Claim (if applicable).

	8.2
	The
Purchaser shall provide a report by an expert (the "Purchaser's Report" and the "Purchaser's
Expert") addressing any technical or factual issues in relation to any Protected Matter which are the subject of any dispute between the Seller and the Purchaser which is
unresolved within 10 days of the Seller or the Purchaser giving notice of the dispute referring to this paragraph 8 and identifying the
relevant issue (the "Initial Dispute Notice"). The Purchaser's Report shall be provided within 20 days of the date of the Initial Dispute Notice.

	8.3
	The
Seller shall within 30 days of having received the Purchaser's Report notify the Purchaser whether the Seller disputes any of the findings in the Purchaser's Report and, if
so, giving reasons as fully as the available information reasonably allows (the "Unresolved Dispute
Notice"). The Seller shall be entitled to provide the Purchaser with a report by an independent expert (the "Sellers' Report"
and the "Seller's Expert") giving such reasons. The Purchaser shall procure that the Seller and its advisers are provided with all facilities,
information and access as they may reasonably require in order to decide whether the Seller disputes any of the findings in the Purchaser's Report and to provide a Seller's Report.

	8.4
	If
the parties cannot resolve a dispute within 45 days of the Unresolved Dispute Notice (or such longer period as the Purchaser and the Seller may agree), then the dispute
shall be referred to an independent expert (the "Independent Expert"), the identity of such expert to be agreed by the Seller and the Purchaser or
(failing agreement between them within 20 days) to be appointed by the Chairman for the time being of the Institute of Environmental Assessment (or its nearest 

equivalent
in the relevant jurisdiction). The Independent Expert shall be required to have at least ten years' experience of advising in relation to matters of the same general description as the
relevant Protected Matter in the relevant jurisdiction (or, failing that, in other jurisdictions where relevant law and practice are similar). 

	8.5
	The
Independent Expert shall act as an expert and not as an arbitrator and the parties shall be bound by expert findings of the Independent Expert. The Independent Expert shall
determine the procedure for making findings, provided that the Independent Expert shall (i) invite each of the parties to make oral or written representations in relation to the particular
matter on or before 30 days after appointment of the Independent Expert; (ii) make findings on the basis of the information provided by the parties through the representations referred
to above and shall not be entitled to require that further Work are carried out before making findings (unless the parties agree that it is appropriate for further Work to be carried out before the
relevant findings are made); (iii) confine findings to the issues in the Unresolved Dispute Notice; and (iv) provide findings on or before 60 days after appointment.

	8.6
	The
costs and expenses of the Independent Expert (if appointed) shall be borne as the Independent Expert shall decide. 

9.     Relationship with the Sale and Purchase Agreement  

	9.1
	Clause 1 (Interpretation), paragraph 11 (Seller's Warranties and Undertakings) (in respect of the Environmental
Warranties only), paragraph 18 (Effect of Completion), paragraph 19 (Remedies and
Waivers), paragraph 20 (Assignment) (which shall be interpreted to apply to this deed), paragraph 21  (Further Assurance), paragraph 22 (Entire Agreement), paragraph 23
(Notices), paragraph 24 (Announcements), paragraph 25  (Confidentiality), paragraph 26
(Costs and Expenses), paragraph 27  (Counterparts), paragraph 28 (Invalidity), paragraph 29
(Seller as
Trustee), paragraph 30 (Payments), paragraph 32 (Choice of Governing Law),  paragraph 33 (Jurisdiction) and paragraph 34 (Agent for Service) shall apply to this deed.

	9.2
	In relation to Schedule 4 to the Sale and Purchase Agreement (Limitations on the Seller's Liability under the Warranties, the
Indemnity, the Tax Deed and the Environmental Covenant):

	(A)
	each
provision of that Schedule shall apply to the Environmental Warranties, except to the extent they are expressly excluded by  Paragraph 1(C) of that Schedule 4 from Paragraphs 1 (A) (iii), 4, 5 (B), 5 (C), 7, 9, 11 and 12  of that Schedule;

	(B)
	Paragraphs 1(A) (ii), 2, 3, 5(A), 6, 8 and 10 of that Schedule 4 shall apply to
claims under the Environmental Covenant;

	(C)
	Paragraphs l(A)(i), (iii) and (iv), 4, 5(B) and (C), 7, 9, 11 and 12 of that Schedule 4  shall
not apply to claims under the Environmental Covenant.

	9.3
	The
Purchaser (on behalf of itself and each Protected Person and for the benefit of the Seller and each member of the Retained Group) acknowledges and agrees that the rights of the
Purchaser under this deed constitute the only rights of any Protected Person to claim against the Seller or any member of the Retained Group in respect of Environmental Matters, except for claims for
fraud or any other claim where exclusion is not permitted by applicable law. Except for claims by the Purchaser under this deed, no Protected Person shall be entitled to claim against the Seller or
any member of the Retained Group in respect of Environmental Matters under this deed, any of the Warranties or any other provisions of the Sale and Purchase Agreement.

	9.4
	The
Purchaser (on behalf of itself and each Protected Person and for the benefit of the Seller and each member of the Retained Group) irrevocably releases and discharges the Seller
and each member of the Retained Group from any claims, causes of action, known or unknown, which any Protected Person may have against the Seller or the Retained Group whether based on statute or
other law in relation to Environmental Matters, except for claims under this deed and/or claims for fraud or any other claim where exclusion is not permitted by applicable law. 

	9.5
	In
the event of any inconsistency between this deed and the Sale and Purchase Agreement, this deed shall prevail.

	9.6
	For
the avoidance of doubt, the right of the Purchaser to claim in respect of any Protected Matter to which the covenant in  paragraph 2.2 applies shall not be affected by any disclosure of or reference
to that matter in the Disclosure Letter. 

10.   Back-to-Back Cover  

	10.1
	In
this clause 10:   

	"Back-to- Back Covenant"	 	means a covenant given by a member of the Purchaser's Group to a Back-to-Back Purchaser;
	
"Back-to- Back Group"	
 	

means the Back-to-Back Purchaser, its subsidiaries and subsidiary undertakings from time to time, any holding company of the Back-to-Back Purchaser and all other subsidiaries or subsidiary undertakings of any such holding company from time to
time;
	
"Back-to- Back Purchaser"	
 	

means the buyer or transferee in the first Transaction (if any) after the date of this deed in relation to any Relevant Property and/or any member of the Purchaser's Group (and, for the avoidance of doubt, not including any subsequent Transaction in
relation to such Relevant Property and/or member of the Purchaser's Group);
	
"Transaction"	
 	

means:

	(a)
	the
sale, transfer or other disposal of any asset (including, without limitation, the granting of any lease or other interest or right in relation to any property);

	(b)
	the
sale, transfer or other disposal of a majority holding of or a majority of voting rights in relation to shares in any person.

	10.2
	Except
for Protected Losses of a member of the Back-to-Back Group under a Back-to-Back Covenant, the Purchaser shall not be entitled
to claim under this deed in respect of any Protected Losses for which a Protected Person is or becomes liable to a third party under any indemnity, covenant, undertaking, warranty, assurance or other
contractual protection entered into or given by any member of the Purchaser's Group on or after the date of this deed or any other agreement or arrangement on or after the date of this deed designed
to give some person who is not a member of the Purchaser's Group the benefit of a claim by a member of the Purchaser's Group under this deed.

	10.3
	it
is a condition of any claim by the Purchaser in relation to Protected Losses of a member of the Back-to-Back Group that the Purchaser shall comply with and
shall procure that each member of the Back-to-Back Group shall comply with and in all respects be bound by the provisions of this deed.

	10.4
	For
the avoidance of doubt:

	(A)
	no
member of the Back-to-Back Group shall acquire any right against the Seller by virtue of this  clause 10;

	(B)
	the
Seller shall be entitled to deal solely with the Purchaser in relation to any claim involving Protected Losses of a member of the Back-to-Back Group;

	(C)
	this
clause 10 shall not extend or increase the Seller's liabilities under this deed;

	(D)
	no
assignment under clause 20 of the Sale and Purchase Agreement shall be deemed to be a Transaction. 

        IN
WITNESS whereof this document has been executed as a deed the day and year first before written. 

  

 
 

ANNEX I: DEFINITIONS    
    

	"Back-to-Back Covenant", "Back to Back Group" and "Back-to-Back Purchaser"	 	each has the respective meaning given in paragraph 10;
	

"Claim"	
 	

means a claim, action or proceedings;
	

"Consent Orders"	
 	

means any binding agreement with or order by the Relevant Authority in existence on or prior to the date of this deed;
	

"Controlled Materials"	
 	

means:
	

 	
 	

(i)	
 	

anything which alone or in combination with other things is capable of causing harm to the Environment; and
	

 	
 	

(ii)	
 	

any waste;
	

"Environment"	
 	

means:
	

 	
 	

(i)	
 	

land, including, without limitation, surface land, sub-surface strata, sea bed and river bed under water (as defined in paragraph (ii));
	

 	
 	

(ii)	
 	

water, including, without limitation, coastal and inland waters, surface waters, ground waters and water in drains and sewers;
	

 	
 	

(iii)	
 	

air, including, without limitation, air inside buildings and in other natural and man-made structures above or below ground; and
	

 	
 	

(iv)	
 	

any and all living organisms or systems supported by those media, including, without limitation, humans;
	

"Environmental Agreement"	
 	

means
	

 	
 	

(i)	
 	

any covenant, indemnity, warranty or representation existing and in force at Completion and given by a member of the Group or of the Retained Group in relation to the Businesses in relation to the disposal of a business or a Property which is not a
Relevant Property under which a member of the Group has or incurs obligations or liabilities in respect of Former or Off-site Issues;
	 	 	 	 	 

10

 

	

 	
 	

(ii)	
 	

in relation to Site Issues, any express, specific and positive requirement to carry out Works (which shall be deemed to include an express covenant to yield up the Relevant Property in a particular condition upon termination or expiry) in relation to
such Site Issue under (a) the terms of the lease pursuant to which the Relevant Property is occupied as at the date of this deed; and/or (b) under the terms of any settlement of a claim or other binding agreement which is in force and
binding on the relevant member of the Group as at the date of this deed;
	

"Environmental Warranty Issues"	
 	

means any matter which gives rise to a claim for breach of any of the warranties in paragraph 2.1 of this deed;
	

"Environmental Laws"	
 	

means all applicable statutes and subordinate legislation civil or criminal law, common law, regulations, statutory guidance, directives, orders, decrees, injunctions or judgements, or other public, European, national, federal, regional, state and
local laws under any of the above to the extent that they relate to Environmental Matters and are in force and binding on the relevant member of the Group or the Retained Group in relation to the Businesses at or prior to the date of the Sale and
Purchase Agreement or which are in force from time to time after the date of this deed to the extent that they are not more onerous than those in force and binding at the date of this deed, provided that in relation to Site Issues in Spain the above
shall be deemed to include the first full set of criteria or standards relating to contamination to be issued under Law 10/1998 of 21 April on Waste;
	

"Environmental Matters"	
 	

means:
	

 	
 	

(i)	
 	

the pollution or contamination of the Environment;
	

 	
 	

(ii)	
 	

the release, spillage, deposit, escape, discharge, leak, emission or presence of Controlled Materials; or
	

 	
 	

(iii)	
 	

the existence or effect of noise, vibration, radiation, dust, odour or common law or statutory nuisance;
	

 	
 	

(iv)	
 	

the exposure of workers or any other person to Controlled Materials; or
	 	 	 	 	 

11

 

	

 	
 	

(v)	
 	

other matters relating to the protection of the Environment arising out of the manufacturing, processing, treatment, keeping, handling, use, possession, supply, receipt, sale, purchase, import, export, disposal or transportation of Controlled
Materials;
	

 	
 	

provided that each of the above shall be deemed to exclude (a) the effect on buildings of landslip, subsidence, settling, heave or flooding and/or any naturally occurring phenomenon; and (b) the condition or state of repair of buildings in
either case except for Property Exposure Issues, which shall be deemed to be included in Environmental Matters;
	

"Environmental Permits"	
 	

means any permit, licence, consent or authorisation under Environmental Laws;
	

"Excluded Business and Property Issues"	
 	

means:
	

 	
 	

(i)	
 	

the transfer of part of the property at Walluf (Germany); the transfer of part of the property at Harrisburg (US); and the transfer by Laporte Pigments Inc. of a lease of land and buildings at Wilkes-Barre (US) (in each case to a member of the
Retained Group) as referred to in the Sale and Purchase Agreement
	

 	
 	

(ii)	
 	

the businesses to be excluded or transferred before Completion under Part 3 of Schedule 11 of the Sale and Purchase Agreement;
	

"Former and Off-site Issues"	
 	

means:
	

 	
 	

(i)	
 	

any pollution or contamination at or from any Property which was formerly owned, occupied or used by a member of the Group or the Retained Group in relation to the Businesses and which is not one of the Relevant Properties and/or any Environmental
Matter relating to any business or company sold or disposed of or previously owned by any member of the Group or the Retained Group in relation to the Businesses and which (a) was caused by any member of the Group or the Retained Group in
relation to the Businesses on or prior to the date of this deed; or (b) was in existence at or prior to the date of this deed and in relation to (a) or (b) in respect of which a Protected Person becomes liable as a result of this transaction;
and
	 	 	 	 	 

12

 

	

 	
 	

(ii)	
 	

any handling, transfer, treatment or disposal on or before the date of this deed by a member of the Group or the retained Group in relation to the Businesses or a third party contractor at any site which is not a Relevant Property of Controlled
Materials generated or controlled by a member of the Group or the Retained Group in relation to the Businesses.
	

 	
 	

(iii)	
 	

any leakage or escape on or prior to the date of this deed at or from a site which is not a Relevant Property of product supplied by a member of the Group or the Retained Group in relation to the Businesses to the extent such leakage or escape is due
to the negligence or fault of such member of the Group or the Retained Group in relation to the Businesses;
	

"Monitored Sites"	
 	

means the sites identified in Part A of Annex III;
	

"Property Exposure Issues"	
 	

means:
	

 	
 	

(i)	
 	

the presence of any building materials incorporated in the fabric, structure or foundations of a building (a "Building") which may be released into the atmosphere and affect human health;
	

 	
 	

(ii)	
 	

the presence of any building materials incorporated in a Building which may give rise to a release from such building materials of a pollutant or contaminant into the Environment;
	

 	
 	

(iii)	
 	

damage to a Building caused by the effect or action of any pollution or contamination which is present in the Environment at or about such building;
	

"Protected Losses"	
 	

means:
	

 	
 	

(i)	
 	

fines, penalties, damages or other liabilities which a Protected Person is obliged to pay to the person making or bringing the relevant Claim under the final decision or settlement of such Claim;
	

 	
 	

(ii)	
 	

in relation to Environmental Warranty Issues or Site Issues, the cost of Work which is carried out after the date of this deed by the Purchaser or the relevant Protected Person in accordance with this deed; and
	

 	
 	

(iii)	
 	

in relation to Former and Off Site Disposal Issues and Excluded Business and Property Issues the cost of any Works which the Purchaser or a relevant Protected Person are obliged to carry out;
	

 	
 	

(iv)	
 	

the reasonable costs and expenses (including the cost of legal or other professional advice which is provided to a Protected Person after the date of this deed) in relation to a Claim as referred to in (i) or Work as referred to in (ii) or (iii);
	 	 	 	 	 

13

 

	

 	
 	

to the extent actually incurred by or paid by the Protected Person after the date of this deed, including, for the avoidance of doubt, any of the above actually so incurred or paid by a member of the Backto-Back Group where such member is a Protected
Person;
	

"Protected Matters"	
 	

Environmental Warranty Issues, Site Issues, Former and Off-site Issues and Excluded Business and Property Issues;
	

"Protected Person"	
 	

means:
	

 	
 	

(i)	
 	

any member of the Purchaser's Group; and
	

 	
 	

(ii)	
 	

any member of the Back-to-Back Group, subject to paragraph 10;
	

"Reasonable Business Standards"	
 	

means standards and practices which are substantially equivalent to (and no more onerous or costly than) the standards and practices generally employed as at the date of this deed by reputable companies in the business of manufacturing products of
the same general description as the products manufactured at the Relevant Property;
	

"Relevant Authority"	
 	

means the relevant authority or regulator and, in relation to a Lease as referred to in the definition of "Environmental Agreement", in Annex II, paragraph 1.3 and paragraph 8.1, a
tribunal or Court under Environmental Laws;
	

"Relevant Period"	
 	

means the period commencing on the date three years prior to the date of this deed and ending on the date of this deed;
	

"Sale and Purchase Agreement"	
 	

means an agreement dated [    ] and made between the Seller (1) and the Purchaser (2) as amended, supplemented or novated from time to time;
	

"Site Issues"	
 	

means:
	

 	
 	

(i)	
 	

pollution or contamination of soil, surface water, sub-surface water or groundwater in existence at or from any Relevant Property at or prior to the date of this deed, including those issues which are subject to the Consent Orders at the Monitored
Sites;
	

 	
 	

(ii)	
 	

any emission or release of Controlled Materials into the atmosphere at or from any Relevant Property at or prior to the date of this deed ("Pre-Close Release"), but only to the extent of the effect which
any such Pre-Close Release may actually have on the Environment and not including any emission or release into the atmosphere after the date of this deed ("Post-Close Release") and/or Works in relation
to the reduction, abatement or prevention of Post-close Releases;
	

 	
 	

(iii)	
 	

Property Exposure Issues at any Relevant Property at or prior to the date of this deed;
	

"Transaction"	
 	

has the meaning given in paragraph 10;
	

"Work"	
 	

means any work in order to inspect, investigate, assess, audit, sample, monitor, remove, treat, remediate or contain a Protected Matter.

14

 
 
 

ANNEX II: WORKS AND SITE ISSUES    
    

	1.
	The
prior written consent of the Seller shall be obtained before the Purchaser or any Protected Person agrees or determines the scope of any Works in relation -:o an Environmental
Warranty Issue or a Site Issue which has (or should have been) notified under paragraph 7.1 above, Provided that:

	1.1.
	within
20 (days); or

	1.2.
	in
an emergency such shorter period (if any) which is reasonably practicable; or

	1.3.
	where
any time limit is imposed by any law, or Relevant Authority, within five (5) days before the end of the time limit, provided that in the case of (c) the Purchaser
has requested such consent as soon as practicable and in any event within ten (10) days before the end of such limit. 

the
Seller shall: 

	(A)
	give
consent for any Works provided that such Works are the minimum reasonably necessary to satisfy (i) the actual requirements of a Relevant Authority under Environmental
Laws; or (ii) an express, positive and specific requirement of an Environmental Permit or Environmental Laws or Consent Orders or Environmental Agreements which would be likely to be enforced
if the Relevant Authority were aware of the relevant issue (the "Minimum Requirement");

	(B)
	withhold
consent if the Seller bona fide believe that the information available to the Seller does not reasonably enable them to determine whether the scope of any Works meet the
Minimum Requirement; or

	(C)
	refuse
consent if the Seller bona fide believe the scope of any Works exceed the Minimum Requirement stating full reasons why they so believe. 

If
(B) or (C) applies, the Purchaser shall be entitled to refer the issue to an independent expert under paragraph 9.2 above. If no
such response is given in accordance with (A), (B) or (C) within (a) the time
period specified above; and (b) a further three (3) days following a further notice warning the Seller of the Purchaser's intention to rely on deemed consent, then consent is deemed to
be given. 

The
prior written consent of the Seller shall not be required in an emergency if 

	(yy)
	it
is not practicable to apply the procedure set out in this paragraph 1 above; and

	(zz)
	the
relevant Works are the minimum reasonably necessary to deal with the emergency, 

and
the provisions of paragraph 1 above shall apply for any further relevant Works. 

	2.
	The
cost of Work shall be determined on the basis of the least expensive of quotes obtained from three reputable and independent contractors and no costs shall be payable by the Seller
in relation to any particular Work until it has been carried out.

	3.
	The
Purchaser shall procure that the Seller (and/or its advisers) shall be given a reasonable opportunity to attend any site visits or meetings and to attend and inspect the carrying
out of any Work at any time whilst it is being carried out. The Seller shall be provided with split samples if it so requests.

	4.
	For
the avoidance of doubt, the Purchaser shall not be entitled to claim under this deed in respect of any Work which is in excess of the Minimum Requirement. 

15

 
	5.
	The
Purchaser shall not be entitled to claim under this deed in respect of the costs of demolition and disposal of redundant buildings or plant.

	6.
	[DELETED]

	7.
	The
Purchaser shall not be entitled to claim under this deed in respect of Works in relation to a Site Issue unless on or before the fifth anniversary of the date of this deed:

	7.1.
	a
Claim against a Protected Person in relation to or which result in such works has been made or expressly threatened in writing by the Relevant Authority or a third party under
Environmental Laws;

	7.2.
	there
is an express, specific and positive requirement under Environmental Laws or Environmental Permits or Consent Orders or Environmental Agreements (or by the Relevant Authority
under Environmental Laws or Environmental Permits) to carry out such Works in relation to such Site Issue and it is likely that such requirement would be enforced by the Relevant Authority if it were
aware of the relevant matter;

	7.3.
	there
is an imminent risk that unless such Works are carried out, serious harm to the Environment which it is reasonable for the relevant Protected Person to treat as an emergency
will occur or arise; and/or

	7.4.
	the
Seller has agreed in writing that such Works should be carried out (which agreement the Seller shall be entitled to withhold in its sole discretion, except as expressly provided
for in paragraph 1 above of this Annex II).

	8.
	The
Seller shall not be liable for a claim under this deed to the extent that such claim would not have arisen but for, results from or is increased by any of the following steps or
actions being carried out or taken after the date of this deed and before paragraph 7 of this Annex II  is satisfied in relation to the relevant Site
Issue:

	8.1.
	intrusive
investigation, sampling, monitoring or testing;

	8.2.
	notification,
report or disclosure to a third party (other than to a Protected Person or as reasonably necessary to third party professional advisers of a Protected Person or to
funders or insurers of a Protected Person including, for the avoidance of doubt, the disclosure of Phase I reports to such funders or insurers and/or in relation to a Backto-back Purchaser
and to funders or insurers in the context of a Transaction with a Back-to-Back Purchaser);

	8.3.
	any
other step or action by any Protected Person which accelerates or otherwise results in paragraph 7 of this  Annex II becoming satisfied (not
including the carrying out of the Phase I reports referred to immediately above), 

provided
that this paragraph 8 of this Annex II does not apply where such step or action: 

	(A)
	is
expressly required by the Relevant Authority under Environmental Laws; or

	(B)
	is
expressly, positively and specifically required by an Environmental Permit or Environmental Laws or Consent Orders or Environmental Agreements; or

	(C)
	is
(a) in the ordinary course of business; (b) does not comprise intrusive investigation, sampling, monitoring or testing which is primarily for the purpose of
identifying or assessing pollution or contamination (for the avoidance of doubt, not including any of the above solely for the purpose of assessing the structural integrity of drains, sewers or
sumps); (c) would have been carried out in the same manner and to the same extent (i) applying Reasonable Business Standards; and (ii) irrespective of the existence of this deed
and the potential availability of a claim by the Purchaser under it; or 

16

 

	(D)
	is
or relates to Internal Sale (as defined in sub-paragraph 9.1 below), Lease Termination (as defined in and subject
to sub-paragraph 9.2 below) or Current Business Sector Development (as defined in paragraph 10  below and subject to paragraph 10 below).

	9.
	The
Purchaser shall not be entitled to claim under this deed in relation a Site Issue to the extent that such claim would not have arisen but for, results from or is increased by:

	9.1.
	any
sale of or grant of any right or interest in relation to all or any part of the Relevant Property or any part of it, except for any such sale or grant to a
Back-to-Back Purchaser (the exception being referred to as an "Internal sale");

	9.2.
	any
termination or expiry (but not surrender) after the date of this deed of any lease or other agreement or arrangement under which any Protected Person occupies or uses the
Relevant Property or any part of it (a "Lease" and "Lease Termination") and such Lease has an unexpired
term of five years or more;

	9.3.
	closure
or cessation of operations at the Relevant Property or any part of it after the date of this deed, including the surrender of any Lease (but excluding in relation to the
Relevant Properties identified in Part 3 of Annex III, excluding temporary shutdowns and excluding any Lease Termination);

	9.4.
	change
of use or development at the Relevant Property or any part of it after the date of this deed which results in more onerous environmental standards applying than would apply in
relation to use for a business manufacturing products of generally the same description or purpose as those manufactured at the Relevant Property as at the date of this deed
("Current Business Sector").

	10.
	In
relation to development (including increase in production) at the Relevant Property or any part of it after the date of this deed in relation to a use in the Current Business
Sector and for the purposes of the business of the Group ("Current Business Sector Development") the exclusion in  paragraph 8 shall not apply,
provided that the Purchaser shall procure in relation to any Current Business Sector Development:

	10.1.
	there
shall be full prior consultation with the Seller where its interests as the potentially liable party under this deed may be affected;

	10.2.
	subject
to the proviso below, the development shall be designed, specified located and carried out so as to minimise any risk of any claim under this deed arising or being
increased; 

Provided
that (i) sub-paragraph 10 (B) shall not be applied to the extent that to do so would prevent the benefits to
the relevant Protected Person of carrying out the development from being achieved; and (ii) if applying sub-paragraph 10(B)  would result in increased cost to the relevant Protected Person in
carrying out or utilising the relevant development, then to that extent applying  sub-paragraph 10(B) shall be conditional upon the Seller agreeing to bear such increased cost. 

	11.
	The
Purchaser shall not be entitled to claim under this deed in respect of the Works referred to in Parts A or B of Annex III or the costs of carrying them out, excluding any change
to the nature or scope of such Works such that they become substantially more onerous than as at the date of this deed (including any such change from only monitoring to monitoring plus active
remediation). 

17

  

 
 

ANNEX III    
    

Part A  

	1.1
	In
relation to the Chemical Specialties Inc. site in Harrisburg, North Carolina, USA, the monitoring requirements under the Resource Conservation and Recovery Act required by
North Carolina Department of Environment and Natural Resources.

	1.2
	In
relation to the Chemische Werke Brockhues site in Hainhaussen, Germany, the works associated with the Settlement Agreement with the state authority in relation to environmental
problems identified at the site.

	1.3
	In
relation to the Chemicals Specialties Inc. site in Valdosta, USA, the works required under the consent order with GaDEP to operate a pump and treat system, including the
monitoring requirements associated with the site's classification as an active landfill.

	1.4
	In
relation to the Laporte Pigments Inc. site in Beltsville, USA, the works required under the consent order with the Maryland Department of the Environment to monitor
remediation of the identified chromium plume by natural attenuation.

	1.5
	In
relation to the Laporte Italia SPA site in Turin, Italy, the monitoring works currently conducted in respect of chromium groundwater contamination.

	1.6
	In
relation to the Soprelec SA site in Saint-Fromond, France, the monitoring works currently conducted in respect of the fluoride levels in the groundwater. 

Part B  

	2.
	In
relation to mineral extraction, the restoration of all or any part of the relevant site as required during or upon completion of or after the relevant phase of extraction, except to
the extent that restoration includes or is rendered more costly as a result of Controlled Materials (other than materials previously extracted in the extraction process) which may have been deposited
in or around the extraction site and would but for this paragraph 2 constitute a Site Issue for which the Seller is liable under this deed.

	3.
	In
relation to the Melton Mowbray site any works in relation to soil or subsoil accumulated there in the course of the development of the built area of the site (without prejudice to
the rights of the Purchaser under this deed in relation to the presence of any Controlled Materials which may have been deposited in or around such soil or subsoil and but for this  paragraph 3 would constitute a Site Issue for which the Seller is liable under this deed.) 

18

 
 
 

Part C    
    

	Division
 
	 	Site
	 	Tenure

	Additives	 	Littleborough	 	L/Hold
	

Silica wafer	
 	

Sulpher OK	
 	

L/Hold
	

Industrial Products	
 	

Glasgow	
 	

F/Hold
	

Industrial Products	
 	

Dublin	
 	

L/Hold
	

Water Tech	
 	

Ontario CA	
 	

L/Hold
	

Silicon wafer	
 	

San Jose CA	
 	

L/Hold

19

 

        IN
WITNESS WHEREOF this document has been executed as a deed the day and year first above written. 

	Signed as a deed by	 	)	 	 
	AMANDA WHALLEY	 	)	 	/s/ Amanda Whalley
	as attorney for LAPORTE PLC	 	)	 	 
	in the presence of:	 	)	 	(Signature of attorney)
	

Witness's signature:	
 	

 	
 	

    

	

Name (print):	
 	

 	
 	

    

	

Occupation:	
 	

 	
 	

    

	

Address:	
 	

 	
 	

    

	

Signed as a deed by	
 	

)	
 	

 
	SILKE SCHEIBER	 	)	 	/s/ Silke Scheiber
	as attorney for K-L HOLDINGS,	 	)	 	 
	INC.	 	)	 	 
	in the presence of:                        .	 	 	 	(Signature of attorney)
	

Witness's signature:	
 	

 	
 	

    

	

Name (print):	
 	

 	
 	

    

	

Occupation:	
 	

 	
 	

    

	

Address:	
 	

 	
 	

    

20

QuickLinks

EXHIBIT 10.6

CONTENTS

ANNEX I: DEFINITIONS

ANNEX II: WORKS AND SITE ISSUES

ANNEX III

Part CQuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.7    
    

 
 

FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT    
    

        This Management Stockholder's Agreement (this "Agreement") is entered into as of February 2, 2001 between
K-L Holdings, Inc., a Delaware corporation (the "Company"), and the undersigned person (the "Management
Stockholder") (the Company and the Management Stockholder being hereinafter collectively referred to as the "Parties"). All
capitalized terms not immediately defined are hereinafter defined in Section 7(b) hereof. 

        WHEREAS,
this Agreement is one of several other agreements ("Other Management Stockholders' Agreements") which have been, or which in the
future will be, entered into between the Company and other individuals who are or will be key employees of the Company or one of its subsidiaries (collectively, the "Other
Management Stockholders"); and 

        WHEREAS,
Management Stockholder has been selected by the Company to be permitted to contribute to the Company cash in exchange for shares of common stock, par value $0.01 per share, of
the Company (such common stock, together with any securities issued in respect thereof or in substitution therefor, in connection with any stock split, dividend or combination, or any
reclassification, reorganization, merger, consolidation, exchange or other similar reorganization, the "Common Stock"); 

        WHEREAS,
Management Stockholder has been selected by the Company, as of the date hereof, to receive an option to purchase shares of Common Stock (the
"Option") pursuant to the terms set forth below and the terms of the 2000 Stock Purchase and Option Plan of the Company and its Subsidiaries (the
"Option Plan") and the Stock Option Agreement dated as of February 2, 2001, entered into by and between the Company and the Management
Stockholder. 

        NOW
THEREFORE, to implement the foregoing and in consideration of the grant of Options and of the mutual agreements contained herein, the Parties agree as follows: 

        1.    Purchased Shares; Issuance of Options.    

        (a)   The
Management Stockholder shall, subject to the terms and conditions hereinafter set forth, on or about the Investment Date, be granted the opportunity to purchase, and
the Management Stockholder shall contribute [$AMOUNT«C»] to the Company in cash in exchange for
[NUMBER«D»] shares of Common Stock, at a per share purchase price of $5.00, which price is equal to the
per share purchase price paid by the KKR 1996 Fund L.P. and KKR Partners II, L.P. (together, the "KKR Fund") or any of its affiliates upon its
acquisition of the business of Rockwood Specialties (all such shares acquired by the Management Stockholder, the "Purchased Stock"). 

        (b)   Subject
to the terms and conditions hereinafter set forth and as set forth in the Option Plan, and upon receipt by the Company of the Management Stockholder's
contribution set forth in Section 1(a) and as of the Investment Date, the Company shall issue to the Management Stockholder an Option to acquire  [    times the number of Purchased
Stock«I»] shares of Common Stock, at an exercise price of
$5.00 per share, and the Parties shall execute and deliver to each other copies of the Stock Option Agreement concurrently with the issuance of the Option. Such Option shall vest over time as to 50%
of the shares of Common Stock subject to the Option and shall vest, as to the remaining 50%, over time and in the event and to the extent certain performance targets are achieved, in each case
pursuant to the terms set forth in the Stock Option Agreement and in accordance with the Option Plan. 

        (c)   The
Company shall have no obligation to sell any Purchased Stock to any person who (i) is a resident or citizen of a state or other jurisdiction in which the sale
of the Common Stock to him or her would constitute a violation of the securities or "blue sky" laws of such jurisdiction or (ii) is not an employee of the Company or any of its subsidiaries on
the date hereof. 

 

        2.    Management Stockholder's Representations, Warranties and Agreements.    

        (a)   The
Management Stockholder agrees and acknowledges that he will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(any such act being referred to herein as a "transfer") any shares of Purchased Stock and, at the time of exercise, the Common Stock issuable upon exercise of the Options
("Option Stock"; together with all Purchased Stock and any other Common Stock otherwise acquired and/or held by the Management Stockholder Entities,
"Stock"), except as otherwise provided for herein. If the Management Stockholder is a Rule 405 Affiliate, the Management Stockholder also agrees
and acknowledges that he will not transfer any shares of the Stock unless: 

        (i)    the
transfer is pursuant to an effective registration statement under the Securities Act of 1933, as amended, and the rules and regulations in effect thereunder (the
"Act"), and in compliance with applicable provisions of state securities laws or 

        (ii)   (A)
counsel for the Management Stockholder (which counsel shall be reasonably acceptable to the Company) shall have furnished the Company with an opinion, satisfactory
in form and substance to the Company, that no such registration is required because of the availability of an exemption from registration under the Act and (B) if the Management Stockholder is
a citizen or resident of any country other than the United States, or the Management Stockholder desires to effect any transfer in any such country, counsel for the Management Stockholder (which
counsel shall be reasonably satisfactory to the Company) shall have furnished the Company with an opinion or other advice reasonably satisfactory in form and substance to the Company to the effect
that such transfer will comply with the securities laws of such jurisdiction. 

Notwithstanding
the foregoing, the Company acknowledges and agrees that any of the following transfers are deemed to be in compliance with the Act and this Agreement and no opinion of counsel is
required in connection therewith: (x) a transfer made pursuant to Sections 3, 4, 5 or 6 hereof, (y) a transfer upon the death or Permanent Disability of the Management Stockholder to the
Management Stockholder's Estate, a conservator or guardian for the Management Stockholder or a transfer to the executors, administrators, testamentary trustees, legatees or beneficiaries of a person
who has become a holder of Stock in accordance with the terms of this Agreement, provided that it is expressly understood that any such transferee shall be bound by the provisions of this Agreement,
and (z) a transfer made after the Investment Date in compliance with the federal securities laws to an Management Stockholder's Trust, provided that such transfer is made expressly subject to
this Agreement and that the transferee agrees in writing to be bound by the terms and conditions hereof. 

        (b)   The
certificate (or certificates) representing the Stock shall bear the following legend: 

"THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT STOCKHOLDER'S AGREEMENT DATED AS OF FEBRUARY 2, 2001 BETWEEN K-L HOLDINGS, INC. (THE "COMPANY") AND THE EMPLOYEE
STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY). 

        (c)   The
Management Stockholder acknowledges that he has been advised that (i) a restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Stock and (ii) a notation shall be made in the appropriate records of the Company indicating that the Stock is subject to restrictions on transfer and appropriate
stop transfer restrictions will be issued to the Company's transfer agent with respect to the Stock. If the Management Stockholder is a Rule 405 

2

 

Affiliate,
the Management Stockholder also acknowledges that (1) the Stock must be held indefinitely and the Management Stockholder must continue to bear the economic risk of the investment in
the Stock unless it is subsequently registered under the Act or an exemption from such registration is available, (2) when and if shares of the Stock may be disposed of without registration in
reliance on Rule 144 of the rules and regulations promulgated under the Act, such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule and
(3) if the Rule 144 exemption is not available, public sale without registration will require compliance with some other exemption under the Act. 

        (d)   If
any shares of the Stock are to be disposed of in accordance with Rule 144 under the Act or otherwise, the Management Stockholder shall promptly notify the
Company of such intended disposition and shall deliver to the Company at or prior to the time of such disposition such documentation as the Company may reasonably request in connection with such sale
and, in the case of a disposition pursuant to Rule 144, shall deliver to the Company an executed copy of any notice on Form 144 required to be filed with the SEC. 

        (e)   The
Management Stockholder agrees that, if any shares of the Stock are offered to the public pursuant to an effective registration statement under the Act (other than
registration of securities issued under an employee plan), the Management Stockholder will not effect any public sale or distribution of any shares of the Stock not covered by such registration
statement from the time of the receipt of a notice from the Company that the Company has filed or imminently intends to file such registration statement to, or within 180 days after, the
effective date of such registration statement, unless otherwise agreed to in writing by the Company. 

        (f)    The
Management Stockholder represents and warrants that (i) with respect to the Stock he has received and reviewed the available information relating to the Stock
and (ii) he has been given the opportunity to obtain any additional information or documents and to ask questions and receive answers about such information, the Company and the business and
prospects of the Company which he deems necessary to evaluate the merits and risks related to his investment in the Stock and to verify the information contained in the information received as
indicated in this Section 2(e)(ii), and he has relied solely on such information. 

        (g)   The
Management Stockholder further represents and warrants that (i) his financial condition is such that he can afford to bear the economic risk of holding the
Stock for an indefinite period of time and has adequate means for providing for his current needs and personal contingencies, (ii) he can afford to suffer a complete loss of his or her
investment in the Stock, (iii) he understands and has taken cognizance of all risk factors related to the purchase of the Stock and (iv) his knowledge and experience in financial and
business matters are such that he is capable of evaluating the merits and risks of his purchase of the Stock as contemplated by this Agreement. 

        3.    Transferability of Stock.    The Management Stockholder agrees that he will not transfer any shares of the Stock
at any time commencing on the Investment Date and prior to the fifth anniversary of the Investment Date; provided, however, that the Management
Stockholder may transfer shares of the Stock during such time pursuant to one of the following exceptions: (a) transfers permitted by clauses (x), (y) and (z) of
Section 2(a); and (b) a sale of shares of Common Stock pursuant to an effective registration statement under the Act filed by the Company (excluding any registration on
Form S-8, S-4 or any successor or similar form) pursuant to Section 10 of this Agreement or (c) transfers permitted pursuant to the Sale Participation
Agreement entered into by and between the Management Stockholder and the KKR Fund as of February 2, 2001. No transfer of any such shares in violation hereof shall be made or recorded on the
books of the Company and any such transfer shall be void ab initio and of no effect. Notwithstanding anything in this Agreement to the contrary, this Section 3 shall terminate and be of no
further force or effect upon the occurrence of a Change of Control. 

3

 

        4.    Right of First Refusal.    If, at any time after the fifth anniversary of the Investment Date and prior to the
date of consummation of a Public Offering, the Management Stockholder receives a bona fide offer to purchase any or all of his Stock (the "Third Party
Offer") from a third party (the "Offeror"), which the Management Stockholder wishes to accept, the Management Stockholder shall
cause the Third Party Offer to be reduced to writing and shall notify the Company in writing of his wish to accept the Third Party Offer. The Management Stockholder's notice to the Company shall
contain an irrevocable offer to sell such Stock to the Company (in the manner set forth below) at a purchase price equal to the price contained in, and on the same terms and conditions of, the Third
Party Offer, and shall be accompanied by a copy of the Third Party Offer (which shall identify the Offeror). At any time within 30 days after the date of the receipt by the Company of the
Management Stockholder's notice, the Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the shares of Stock covered by the Offer, pursuant to
Section 4(b). 

        (a)   The
Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the shares of Stock covered by the Third Party Offer at the
same price and on substantially the same terms and conditions as the Third Party Offer (or, if the Third Party Offer includes any consideration other than cash, then at the sole option of the Company,
at the equivalent all cash price, determined in good faith by the Company's Board of Directors), by delivering a certified bank check or checks in the appropriate amount (or by wire transfer of
immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) (and any such non-cash consideration to be paid) to the Management
Stockholder at the principal office of the Company against delivery of certificates or other instruments representing the shares of Stock so purchased, appropriately endorsed by the Management
Stockholder. If at the end of the 30-day period, the Company has not tendered the purchase price for such shares in the manner set forth above, the Management Stockholder may, during the
succeeding 60-day period, sell not less than all of the shares of Stock covered by the Third Party Offer, to the Offeror on terms no less favorable to the Management Stockholder than those
contained in the Third Party Offer. Promptly after such sale, the Management Stockholder shall notify the Company of the consummation thereof and shall furnish such evidence of the completion and time
of completion of such sale and of the terms thereof as may reasonably be requested by the Company. If, at the end of 60 days following the expiration of the 30-day period during
which the Company is entitled hereunder to purchase the Stock, the Management Stockholder has not completed the sale of such shares of the Stock as aforesaid, all of the restrictions on sale, transfer
or assignment contained in this Agreement shall again be in effect with respect to such shares of the Stock. 

        (b)   Notwithstanding
anything in this Agreement to the contrary, this Section 4 shall terminate and be of no further force or effect upon the occurrence of a Change of
Control. 

        5.    The Management Stockholder's Right to Resell Stock and Options to the Company.    

        (a)   Except
as otherwise provided herein, if, prior to the fifth anniversary of the Investment Date, the Management Stockholder is still in the employ of the Company or any
subsidiary of the Company and the Management Stockholder either dies or becomes Permanently Disabled, then the applicable Management Stockholder Entity, shall, for sixty (60) days (the
"Put Period") following the sixth month and one day after date of death or Permanent Disability, have the right, with respect to the Stock (including
Option Stock held by the Management Stockholder Entity for at least six months prior to the date the Management Stockholder Entity exercises the right described herein) to sell to the Company, and the
Company shall be required to purchase, on one occasion, all of the shares of Stock then held by the applicable Management Stockholder Entities, at a per share price equal to the Fair Market Value Per
Share. With respect to any outstanding Options, all unexercisable Options held by the applicable Management Stockholder Entities shall terminate without payment immediately upon termination of
employment and all exercisable but unexercised Options shall terminate pursuant to the terms of Section 3.2(b) of the Stock Option Agreement. 

4

 

        (b)   In
the event the applicable Management Stockholder Entities intend to exercise their rights pursuant to Section 5(a), such Entities shall send written notice to
the Company, at any time during the Put Period, of their intention to sell shares of Stock in exchange for the payment referred in Section 5(a)(i) and/or to terminate such Options in
exchange for the payment referred to in Section 5(a)(ii) and shall indicate the number of shares of Stock to be sold and the number of Options to be terminated with payment in respect
thereof (the "Redemption Notice"). The completion of the purchase shall take place at the principal office of the Company on the tenth business day
after the giving of the Redemption Notice. The applicable Repurchase Price and any payment with respect to the Options as described above shall be paid by delivery to the applicable Management
Stockholder Entities, of a certified bank check or checks in the appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire transfer of immediately
available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions), against delivery of certificates or other instruments representing the Stock so purchased
and appropriate documents cancelling the Options so terminated appropriately endorsed or executed by the applicable Management Stockholder Entities or any duly authorized representative. 

        (c)   Notwithstanding
anything in Section 5(a) to the contrary and subject to Section 11(a), if there exists and is continuing a default or an event of default
on the part of the Company or any subsidiary of the Company under any loan, guarantee or other agreement under which the Company or any subsidiary of the Company has borrowed money or if the
repurchase referred to in Section 5(a) would result in a default or an event of default on the part of the Company or any subsidiary of the Company under any such agreement or if a repurchase
would not be permitted under the Delaware General Corporation Law (the "DGCL") or would otherwise violate the DGCL (or if the Company reincorporates in
another state, the business corporation law of such state) (each such occurrence being an "Event"), the Company shall not be obligated to repurchase any
of the Stock or the Options from the applicable Management Stockholder Entities, until the first business day which is 10 calendar days after all of the foregoing Events have ceased to exist (the
"Repurchase Eligibility Date"); provided, however, that (i) the number of shares of Stock subject
to repurchase under this Section 5(c) shall be that number of shares of Stock, and (ii) in the case of a repurchase pursuant to Section 5(a)(ii), the number of Exercisable Option
Shares for purposes of calculating the Option Excess Price payable under this Section 5(c) shall be the number of Exercisable Option Shares, specified in the Redemption Notice and held by the
applicable Management Stockholder Entities, at the time of delivery of a Redemption Notice in accordance with Section 5(b) hereof. All Options exercisable as of the date of a Redemption Notice,
in the case of a repurchase pursuant to Section 5(a), shall continue to be exercisable until the repurchase of such Options pursuant to such Redemption Notice, provided that to the extent any
Options are exercised after the date of such Redemption Notice, the number of Exercisable Option Shares for purposes of calculating the Option Excess Price shall be reduced accordingly. 

        (d)   The
Company shall use its reasonable best efforts to make payment in respect of the applicable Repurchase Price to be paid pursuant to this Section 5 at the
earliest date it can do so without such default or violation. Notwithstanding the foregoing, in the event payment of the Repurchase Price to be paid pursuant to Section 5(a) is delayed pursuant
to Section 5(c), the Company shall pay to the Management Stockholder, when payment of the Repurchase Price is made, interest on the amount of the Repurchase Price to the Management Stockholder,
which shall have accrued at the prime rate (as reported by The Chase Manhattan Bank at its principal location in New York, New York (the "Prime Rate")) plus one percent (or if not paid within one
year, three percent for the six month period after such one-year period). In the event that the Management Stockholder's right to receive the Repurchase Price pursuant to
Section 5(a) is delayed pursuant to the foregoing, a promissory note in a mutually agreed form shall be delivered by the Company to the Management Stockholder to evidence the obligation to pay
the Repurchase Price not later than the last day of the eighteenth month following the tenth business day after the giving of the Redemption Notice. The Company may prepay 

5

 

the
note at any time without premium or penalty. Notwithstanding the foregoing, the Company shall use its reasonable best efforts to make payment of the Repurchase Price immediately in the event the
total amount payable is equal to or less than $150,000, to the extent permitted by applicable law. 

        (e)   Notwithstanding
anything in this Agreement to the contrary, except for any payment obligation of the Company, which has arisen prior to such termination pursuant to this
Agreement, this Section 5 shall terminate and be of no further force or effect upon the occurrence of a Change of Control. 

        6.    The Company's Option to Purchase Stock and Options of Management Stockholder Upon Certain Terminations of
Employment.    

        (a)    Termination for Cause by the Company and other Call Events.    Except as otherwise provided herein, if, prior
to the fifth anniversary of the Investment Date, (i) the Management Stockholder's active employment with the Company (and/or, if applicable, its subsidiaries) is terminated by the Company (or
any subsidiary) for Cause, (ii) the beneficiaries of a Management Stockholder's Trust shall include any person or entity other than the Management Stockholder, his spouse (or
ex-spouse) or his lineal descendants (including adopted) or (iii) the Management Stockholder shall otherwise effect a transfer of any of the Stock other than as permitted in this
Agreement (other than as may be required by applicable law or an order of a court having competent jurisdiction) after notice from the Company of such impermissible transfer and a reasonable
opportunity to cure such transfer (each, a "Section 6(a) Call Event"): 

        (A)  with
respect to the Stock, the Company may purchase all of the shares of the Stock then held by the applicable Management Stockholder Entities at a per share purchase
price equal to the lesser of (A) the Base Price and (B) the Fair Market Value Per Share; and 

        (B)  with
respect to the Options, all Options (whether or not then exercisable) held by the applicable Management Stockholder Entities will terminate immediately without
payment in respect thereof. 

        (b)    Termination without Good Reason by the Management Stockholder.    Except as otherwise provided herein, if,
prior to the fifth anniversary of the Investment Date, the Management Stockholder's active employment with the Company (and/or, if applicable, its subsidiaries) is terminated by the Management
Stockholder without Good Reason (a "Section 6(b) Call Event"), then the Company may: 

        (i)    with
respect to the Stock, purchase all of the shares of the Stock then held by the applicable Management Stockholder Entities at a per share purchase price equal to the
Fair Market Value Per Share; and 

        (ii)   with
respect to the Options, if the Company exercises its right to repurchase the Stock granted under this Section 6(b), the Company shall purchase all of the
exercisable Options held by the applicable Management Stockholder Entities, for an amount equal to the product of (x) the excess, if any, of the Fair Market Value Per Share over the Option
Exercise Price and (y) the number of Exercisable Option Shares, in respect of the termination of the outstanding exercisable Options held by the applicable Management Stockholder Entity. In the
event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable stock options granted to the Management Stockholder under the Option Plan shall be automatically
terminated without any payment in respect thereof. All unexercisable Options held by the applicable Management Stockholder Entities shall also terminate without payment immediately upon termination of
employment, pursuant to the Stock Option Agreement. 

        (c)    Termination for Good Reason by Management Stockholder or without Cause by the Company.    Except as otherwise
provided herein, if, prior to the fifth anniversary of the Investment Date, the 

6

 

Management
Stockholder's employment is terminated as a result of a termination (i) by the Management Stockholder with Good Reason or (ii) by the Company without Cause (each, a
"Section 6(c) Call Event"), then the Company may: 

        (A)  with
respect to the Stock, purchase all of the shares of Stock then held by the applicable Management Stockholder Entities at a per share purchase price equal to the
Fair Market Value Per Share; and 

        (B)  with
respect to the Options, if the Company exercises its right to repurchase the Stock granted under this Section 6(c), the Company shall purchase all of the
exercisable Options held by the
applicable Management Stockholder Entities for an amount equal to the product of (x) the excess, if any, of the Fair Market Value Per Share over the Option Exercise Price and (y) the
number of Exercisable Option Shares in respect of the termination of all or any portion of the outstanding exercisable Options held by the applicable Management Stockholder Entity. In the event the
foregoing Option Excess Price is zero or a negative number, all outstanding exercisable stock options granted to the Management Stockholder under the Option Plan shall be automatically terminated
without any payment in respect thereof. All unexercisable Options held by the applicable Management Stockholder Entities shall also terminate without payment immediately upon termination of
employment, pursuant to the Stock Option Agreement. 

        In
addition, in the event the foregoing call is made by the Company and, within 90 days thereafter, (i) an initial Public Offering occurs, (ii) a Change of Control
occurs or (iii) a Stock Sale occurs, the Company will pay the Management Stockholder the excess, if any, of the amount that would have been paid pursuant to the foregoing clauses (A) and
(B) of this Section 6(c) if the price at which the Common Stock is sold in the Public Offering, Change of Control or Stock Sale, as applicable, was substituted for the Fair Market Value
Per Share above, over the Repurchase Price originally paid by the Company pursuant to this Section 6(c) when the call was made. 

        (d)    Termination for Death or Disability.    Except as otherwise provided herein, if, prior to the fifth anniversary
of the Investment Date, the Management Stockholder's employment is terminated as a result of the death or Permanent Disability of the Management Stockholder (each a
"Section 6(d) Call Event"), then the Company may: 

        (A)  with
respect to the Stock, purchase all of the shares of Stock then held by the applicable Management Stockholder Entities, at a per share price equal to the Fair Market
Value Per Share; and 

        (B)  with
respect to the Options, if the Company exercises its right to repurchase the Stock granted under this Section 6(d), then the Company shall purchase all of
the exercisable Options for an amount equal to the excess, if any, of the Fair Market Value Per Share over the Option Exercise Price, in respect of the termination of all outstanding exercisable
Options held by the applicable Management Stockholder Entity. In the event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable stock options granted to the
Management Stockholder under the Option Plan shall be automatically terminated without any payment in respect thereof. All unexercisable Options held by the applicable Management Stockholder Entities
shall also terminate without payment immediately upon termination of employment, pursuant to the Stock Option Agreement. 

In
addition, in the event the foregoing call is made by the Company and, within 90 days thereafter, (i) an initial Public Offering occurs, (ii) a Change of Control occurs or
(iii) a Stock Sale occurs, the Company will pay the Management Stockholder the excess, if any, of the amount that would have been paid pursuant to the foregoing clauses (A) and
(B) of this Section 6(c) if the price at which the Common Stock is sold in the Public Offering, Change of Control or Stock Sale, as applicable, was 

7

 

substituted
for the Fair Market Value Per Share above, over the Repurchase Price originally paid by the Company pursuant to this Section 6(d) when the call was made. 

        (e)    Call Notice.    The Company shall have a period of sixty (60) days from the date of any Call Event (or,
if later, with respect to a Section 6(a) Call Event, the date after discovery of, and the applicable cure period for, an impermissible transfer constituting a Section 6(a) Call Event),
in which to give notice in writing to the Management Stockholder of its election to exercise its rights and obligations pursuant to this Section 6 ("Repurchase
Notice"). The completion of the purchases pursuant to the foregoing shall take place at the principal office of the Company on the tenth business day after the giving of the
Call Notice. The applicable Repurchase Price and any payment with respect to the Options as described in this Section 6 shall be paid by delivery to the applicable Management Stockholder
Entities of a certified bank check or checks in the appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire transfer of immediately available
funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) against delivery of certificates or other instruments representing the Stock so purchased and
appropriate documents cancelling the Options so terminated, appropriately endorsed or executed by the applicable Management Stockholder Entities or its authorized representative. 

        (f)    Delay of Call.    Notwithstanding any other provision of this Section 6 to the contrary and subject to
Section 11(a), if there exists and is continuing any Event, the Company shall delay the repurchase of any of the Stock or the Options (pursuant to a Call Notice timely given in accordance with
Section 6(e) hereof) from the applicable Management Stockholder Entities until the Repurchase Eligibility Date; provided, however, that
(i) the number of shares of Stock subject to repurchase under this Section 6 shall be that number of shares of Stock, and (ii) in the case of a repurchase pursuant to
Section 6(b), Section 6(c) or 6(d), the number of Exercisable Option Shares for purposes of calculating the Option Excess Price payable under this Section 6 shall be the number of
Exercisable Option Shares, held by the applicable Management Stockholder Entities at the time of delivery of a Call Notice in accordance with Section 6(e) hereof. All Options exercisable as of
the date of a Repurchase Notice, in the case of a repurchase pursuant to Section 6(b), 6(c) or 6(d), shall continue to be exercisable until the repurchase of such Options pursuant to such Call
Notice, provided that to the extent that any Options are exercised after the date of such Call Notice, the number of Exercisable Option Shares for purposes of calculating the Option Excess Price shall
be reduced accordingly. 

8

   
        (g)   The Company shall use its reasonable best efforts to make payment in respect of the applicable Repurchase Price to be paid pursuant to this Section 6 at the
earliest date it can do so without such default or violation. Notwithstanding the foregoing, in the event payment of the applicable Repurchase Price is delayed, the Company shall pay to the Management
Stockholder, when payment of the applicable Repurchase Price is made, interest on the applicable Repurchase Price to be paid to the Management Stockholder, which shall have accrued at the Prime Rate
plus one percent (or if not paid within one year, three percent for the six month period after such one-year period). In the event that the Company's exercise of its call right is delayed
pursuant to the foregoing, a promissory note in a mutually agreed form shall be delivered by the Company to the Management Stockholder to evidence the obligation to pay the applicable Repurchase Price
not later than the last day of the eighteenth month following the tenth business day after the giving of the Call Notice. The Company may prepay the note at any time without premium or penalty. 

        (h)   Notwithstanding
anything in this Agreement to the contrary, this Section 6 shall terminate and be of no further force or effect upon the occurrence of a Change of
Control. 

        7.    Adjustment of Repurchase Price; Definitions.    

        (a)   Adjustment of Repurchase Price. In determining the applicable repurchase price of the Stock and Options, as provided for
in Sections 5 and 6, above, appropriate adjustments shall be made for any stock dividends, splits, combinations, recapitalizations or any other adjustment in the number of outstanding shares of Stock
in order to maintain, as nearly as practicable, the intended operation of the provisions of Sections 5 and 6. 

        (b)   Definitions. Terms used herein and as listed below shall be defined as follows: 

        "Act"
shall have the meaning set forth in Section 2(a)(i) hereof. 

        "Agreement"
shall have the meaning set forth in the introductory paragraph. 

        "Base
Price" shall, for purposes of this Agreement, be $5.00 per share. 

        "Call
Events" shall mean, collectively, Section 6(a) Call Events, Section 6(b) Call Events, Section 6(c) Call Events, and Section 6(d) Call Events. 

        "Call
Notice" shall have the meaning set forth in Section 6(e) hereof. 

        "Cause"
shall mean (i) the Management Stockholder's willful and continued failure to perform duties, which are within the control of the Management Stockholder and consistent with
such Management Stockholder's title and position, that is not cured within 15 days following written notice of such failure, (ii) conviction of or plea of guilty or no contest to a
(x) felony or (y) crime involving moral turpitude, (iii) willful malfeasance or misconduct which is injurious to the Company or its subsidiaries, other than in a manner that is
insignificant or inconsequential, (iv) a breach by Management Stockholder of the material terms of this Agreement concerning any non-compete, non-solicitation or
confidentiality provisions, following notice of such breach (which notice may be oral or written) or (v) any violation of any material written Company policy after written notice of such
breach, if such violation is shown by the Company to be reasonably expected to result in material injury to the business, reputation or financial condition of the Company. 

        "Change
of Control" means (i) sales of all or substantially all of the assets of the Company to a Person who is not KKR or an affiliate of KKR, (ii) a sale by KKR or any of
its respective affiliates resulting in more than 50% of the voting stock of the Company being held by a Person or group that does not include KKR or any of its respective affiliates or (iii) a
merger, consolidation, recapitalization or reorganization of the Company with or into another Person which is not an affiliate of KKR; if and only if as a result of any of the foregoing events in
(i)-(iii) the KKR Partnerships lose the ability, without the approval of a Person who is not an affiliate of KKR, to elect a majority of the Board of 

9

 

Directors
of the Company (or the resulting entity). Notwithstanding the foregoing, if any of the transactions described in (i)-(iii) of the preceding sentence shall occur and the other Person
involved in such transaction (or its ultimate parent entity) is an operating company controlled by KKR or an affiliate of KKR prior to such transaction (an "Alternate KKR
Entity"), then the determination of whether a change of control has occurred shall be made by measuring (i)-(iii) above (including the ability to elect a majority of the
Board) as if the Alternate KKR Entity was not an affiliate of KKR and by treating the voting power of the Alternate KKR Entity in the Company (or the resulting entity) as if it were held by a Person
unaffiliated with KKR. 

        "Common
Stock" shall have the meaning set forth in the second "whereas" paragraph. 

        "Company"
shall have the meaning set forth in the introductory paragraph. 

        "Confidential
Information" shall mean all non-public information concerning trade secret, know-how, software, developments, inventions, processes, technology,
designs, the financial data, strategic business plans or any proprietary or confidential information, documents or materials in any form or media, including any of the foregoing relating to research,
operations, finances, current and proposed products and services, vendors, customers, advertising and marketing, and other non-public, proprietary, and confidential information of the
Restricted Group. 

        "Custody
Agreement and Power of Attorney" shall have the meaning set forth in Section 10 hereof. 

        "DGCL"
shall have the meaning set forth in Section 5(c) hereof. 

        "Event"
shall have the meaning set forth in Section 5(c) hereof. 

        "Exercisable
Option Shares" shall mean the shares of Common Stock which, at the Repurchase Calculation Date, could be purchased by the Management Stockholder upon exercise of his or her
outstanding and exercisable Options. 

        "Fair
Market Value Per Share" shall mean, on the Repurchase Calculation Date, (i) prior to a Public Offering, the fair market value per share of the Common Stock, as applicable,
as determined by the Board of Directors of the Company in good faith (which value shall not be reduced to reflect the illiquidity or minority rights associated with any shares of Common Stock held by
the Management Stockholder) (the "Board Determination") or (ii) after a Public Offering, the price per share equal to (A) the average of
the last sale price of the Common Stock for the five trading days ending on the Repurchase Calculation Date on each stock exchange on which the Common Stock may at the time be listed or, (B) if
there shall have been no sales on any such exchanges on the Repurchase Calculation Date on any given day, the average of the closing bid and asked prices on each such exchange for the five trading
days ending on the Repurchase Calculation Date or, (C) if there is no such bid and asked price on the Repurchase Calculation Date, on the next preceding date when such bid and asked price
occurred or, (D) if the Common Stock shall not be so listed, the average of the closing sales prices as reported by NASDAQ for the five trading days ending on the Repurchase Calculation Date in
the over-the-counter market. 

        "Good
Reason" shall mean (i) a reduction in the Management Stockholder's base salary or annual bonus opportunity (other than a reduction in base salary that is offset by an
increase in bonus opportunity upon the attainment of reasonable financial targets, which reduction may not either exceed (x) 10% of the Management Stockholder's base salary in any
12 month period or (y) an aggregate of 20% of the Management Stockholder's base salary immediately prior to the Closing Date, (ii) a substantial reduction in Management
Stockholder's duties and responsibilities, which continues beyond 15 days after written notice by the purchaser to the Company of such reduction, (iii) the elimination or reduction of
Management Stockholder's eligibility to participate in the Company's benefit programs that is inconsistent with the eligibility of similarly situated employees of the Company to participate 

10

 

therein,
(iv) a transfer of the Management Stockholder's primary workplace by more than thirty-five (35) miles from the current workplace, (v) any serious chronic
mental or physical illness of an immediate family member that requires Management Stockholder to terminate his or he employment with the Company because of a substantial interference with his or her
duties at the Company or (vi) any failure by the Company to pay when due any payment owed to the Management Stockholder within 15 days after the date such payment becomes due. 

        "Investment
Date" shall mean February 2, 2001. 

        "KKR"
shall mean Kohlberg Kravis Roberts & Co. Ltd. 

        "KKR
Fund" shall have the meaning set forth in Section 1(a) hereof. 

        "Management
Stockholder" shall have the meaning set forth in the introductory paragraph. 

        "Management
Stockholder Entities" shall mean the Management Stockholder's Trust, the Management Stockholder and the Management Stockholder's Estate, collectively. 

        "Management
Stockholder's Estate" shall mean the conservators, guardians, executors, administrators, testamentary trustees, legatees or beneficiaries of the Management Stockholder. 

        "Management
Stockholder's Trust" shall mean a limited partnership, limited liability company, trust or custodianship, the beneficiaries of which may include only the Management
Stockholder, his spouse (or ex-spouse) or his lineal descendants (including adopted) or, if at any time after any such transfer there shall be no then living spouse or lineal descendants,
then to the ultimate beneficiaries of any such trust or to the estate of a deceased beneficiary. 

        "Maximum
Repurchase Amount" shall have the meaning set forth in Section 11(a) hereof. 

        "Non-Compete
Period" shall mean the period of time beginning on the effective date of the Management Stockholder's commencement of employment with the Company or a subsidiary
and ending on the date that is twelve months after the date of termination of employment of such Management Stockholder; provided, however, in the event
that the Management Stockholder's employment is terminated without Cause by the Company or for Good Reason by the Management Stockholder, the Non-Compete Period shall be for such period
(not to exceed twelve months) as the Company (x) pays the Management Stockholder not less than his or her annual rate of base salary and (y) provides, at the Company's expense, the
Management Stockholder with medical and dental benefits, in both cases of (x) and (y) as in effect immediately prior to the date of termination of employment. 

        "Notice"
shall have the meaning set forth in Section 10(b) hereof. 

        "Offeror"
shall have the meaning set forth in Section 4 hereof. 

        "Option
Excess Price" shall mean the aggregate amount paid by the Company in respect of Exercisable Option Shares pursuant to Section 5 or 6, as applicable. 

        "Option
Exercise Price" shall mean the exercise price of the shares of Common Stock covered by the applicable Option. 

        "Option"
shall have the meaning set forth in the third whereas paragraph. 

        "Option
Plan" shall mean the 2000 Stock Purchase and Option Plan of K-L Holdings, I I Inc. and its Subsidiaries. 

        "Option
Stock" shall have the meaning set forth in Section 2(a) hereof. 

        "Other
Management Stockholders" shall have the meaning set forth in the first whereas paragraph. 

11

 

        "Other
Management Stockholders' Agreements" shall have the meaning set forth in the first whereas paragraph. 

        "Parties"
shall have the meaning set forth in the introductory paragraph. 

        "Permanent
Disability" shall mean a determination, made at the request of the Management Stockholder or upon the reasonable request of the Company set forth in a notice to the Management
Stockholder, by a physician selected by the Company and the Management Stockholder, that the Management Stockholder is unable to perform his duties as an employee of the Company or its subsidiaries
and in all reasonable medical likelihood such inability will continue for a period in excess of 180 days. 

        "Person"
shall mean "person," as such term is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (or any successor section thereto). 

        "Prime
Rate" shall have the meaning set forth in Section 5(d) hereof. 

        "Proposed
Registration" shall have the meaning set forth in Section 10(b) hereof. 

        "Public
Offering" shall mean the sale of shares of Common Stock to the public subsequent to the date hereof pursuant to a registration statement under the Act which has been declared
effective by the SEC (other than a registration statement on Form S-4, Form S-8 or any other similar form). 

        "Purchased
Stock" shall have the meaning set forth in Section 1(a) hereof. 

        "Qualified
Public Offering" shall mean a Public Offering which results in an active trading market of 35% or more of the Common Stock. 

        "Repurchase
Calculation Date" shall mean the last day of the month preceding the later of (i) the month in which the event giving rise to the right to repurchase occurs and
(ii) the month in which the Repurchase Eligibility Date occurs. 

        "Repurchase
Eligibility Date" shall have the meaning set forth in Section 5(c) hereof. 

        "Repurchase
Price" shall mean the amount to be paid in respect of the Stock and Options to be purchased by the Company pursuant to Section 5(a), Section 6(a), 6(b), 6(c),
or 6(d), as applicable. 

        "Request"
shall have the meaning set forth in Section 10(b) hereof. 

        "Restricted
Group" shall mean, collectively, the Company, its subsidiaries, the KKR Fund and their respective affiliates. 

        "Rule 405
Affiliate" shall mean an affiliate of the Company as defined under Rule 405 of the rules and regulations promulgated under the Securities Act of 1993, as amended,
and as interpreted by the Board of Directors of the Company. 

        "SEC"
shall mean the Securities and Exchange Commission. 

        "Stock"
shall have the meaning set forth in Section 2(a) hereof. 

        "Stock
Sale" shall mean sale of Common Stock by the Company, KKR, or an affiliate of KKR to a third party. 

        "Third
Party Offer" shall have the meaning set forth in Section 4(a) hereof. 

        8.    Stock Issued to Management Stockholder Upon Exercise of Stock Options.    The Company may from time to time
grant to the Management Stockholder, in addition to the Options, options under the Option Plan to purchase shares of Common Stock at the Base Price or at a different option exercise price. 

12

 

        9.    The Company's Representations and Warranties.    

        (a)   The
Company represents and warrants to the Management Stockholder that (i) this Agreement has been duly authorized, executed and delivered by the Company and is
enforceable against the Company in accordance with its terms and (ii) the Stock, when issued and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and
nonassessable. 

        (b)   The
Company will file the reports required to be filed by it under the Act and the Securities Exchange Act of 1934, as amended and the rules and regulations adopted by
the SEC thereunder, to the extent required from time to time to enable the Management Stockholder to sell shares of Stock without registration under the Act within the limitations of the exemptions
provided by (A) Rule 144 under the Act, as such Rule may be amended from time to time, or (B) any similar rule or regulation hereafter adopted by the SEC, subject to the transfer
restrictions set forth in Section 3. Notwithstanding anything contained in this Section 9(b), the Company may de-register under Section 12 of the Exchange Act if it is
then permitted to do so pursuant to the Exchange Act and the rules and regulations thereunder and, in such circumstances, shall not be required hereby to file any reports which may be necessary in
order for Rule 144 or any similar rule or regulation under the Act to be available. Nothing in this Section 9(b) shall be deemed to limit in any manner the restrictions on sales of Stock
contained in this Agreement. 

        (c)   The
affirmative vote of 75% or more of the issued and outstanding voting stock of the Company approving the arrangements set forth in this and other related agreements
has been obtained prior to the execution and delivery of this Agreement, the Stock Option Agreement and the other agreements entered into in connection herewith and therewith in a manner that is
consistent with the provisions of Section 280G(b)(5)(B) of the Internal Revenue Code of 1986, as amended (the "Code"). Notwithstanding the
foregoing, in the event and to the extent that the exemption under Section 280G(b)(5)(B) of the Code is not available to exclude the benefits of this Agreement from inclusion in any excess
parachute excise tax calculation under Section 4999 of the Code, which results in any such excise tax liability being imposed upon the Management Stockholder Entities, the Company and the
Management Stockholder Entities shall use their reasonable best efforts to cooperate to reduce or eliminate any such excise tax liability. 

        10.    "Piggyback" Registration Rights.    Until the later of (i) one year after the occurrence of a
(A) Public Offering relating to sales by the KKR Fund and its affiliates or (B) Qualified Public Offering and (ii) the sixth anniversary of the Investment Date: 

        (a)   The
Management Stockholder hereby agrees to be bound by all of the terms, conditions and obligations of the Registration Rights Agreement entered into by and among the
Company and the KKR Fund (the "Registration Rights Agreement"), as in effect on the date hereof (subject to any amendments thereto to which the
Management Stockholder has agreed to be bound), and shall have all of the rights and privileges of the Registration Rights Agreement, in each case as if the Management Stockholder were an original
party (other than the Company) thereto, subject to applicable and customary underwriter restrictions; provided, however, that at no time shall the
Management Stockholder have any rights to request registration under Section 3 of the Registration Rights Agreement; and provided further, that
the Management Stockholder shall not be bound by any amendments to the Registration Rights Agreement unless the Management Stockholder consents thereto provided that such consent will not be
unreasonably withheld. All Stock purchased or held by the applicable Management Stockholder Entities pursuant to this Agreement shall be deemed to be "Registrable
Securities" as defined in the Registration Rights Agreement. 

        (b)   In
the event of a sale of Common Stock by the KKR Fund in accordance with the terms of the Registration Rights Agreement, the Company will promptly notify the Management
Stockholder in writing (a "Notice") of any proposed registration (a "Proposed Registration"). If within
15 days of the receipt by the Management Stockholder of such Notice, the Company receives from the applicable 

13

 

Management
Stockholder Entities a written request (a "Request") to register shares of Stock held by the applicable Management Stockholder Entities
(which Request will be irrevocable unless otherwise mutually agreed to in writing by the Management Stockholder and the Company), shares of Stock will be so registered as provided in this
Section 10; provided, however, that for each such registration statement only one Request, which shall be executed by the applicable Management
Stockholder Entities, may be submitted for all Registrable Securities held by the applicable Management Stockholder Entities. 

        (c)   The
maximum number of shares of Stock which will be registered pursuant to a Request will be the lowest of (i) the number of shares of Stock then held by the
Management Stockholder Entities, including all shares of Stock which the Management Stockholder Entities are then entitled to acquire under an unexercised Option to the extent then exercisable,
multiplied by a fraction, the numerator of which is the number of shares of Stock being sold by the KKR Fund and any investment partnerships and investment limited liability companies affiliated with
the KKR Fund and the denominator of which is the aggregate number of shares of Stock owned by the KKR Fund and any investment partnerships and investment limited liability companies affiliated with
the KKR Fund or (ii) the maximum number of shares of Stock which the Company can register in the Proposed Registration without adverse effect on the offering in the view of the managing
underwriters (reduced pro rata with all Other Management Stockholders) as more fully described in subsection (d) of this Section 10 or (iii) the maximum number of shares which the
Management Stockholder (pro rata based upon the aggregate number of shares of Stock the Management Stockholder and all Other Management Stockholders have requested to be registered) is permitted to
register under the Registration Rights Agreement. 

        (d)   If
a Proposed Registration involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of shares of
Stock requested to be included in the Proposed Registration exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of
the shares of Stock offered in such Public Offering as contemplated by the Company, then the Company will include in the Proposed Registration (i) first, 100% of the shares of Stock the Company
proposes to sell and (ii) second, to the extent of the number of shares of Stock requested to be included in such registration which, in the opinion of such managing underwriter, can be sold
without having the adverse effect referred to above, the number of shares of Stock which the "Holders" (as defined in the Registration Rights
Agreement), including, without limitation, the Management Stockholder, and all Other Management Stockholders have requested to be included in the Proposed Registration, such amount to be allocated pro
rata among all requesting Holders on the basis of the relative number of shares of Stock then held by each such Holder (including the exercisable Options) (provided that any shares thereby allocated
to any such Holder that exceed such Holder's request will be reallocated among the remaining requesting Holders in like manner). 

        (e)   Upon
delivering a Request the Management Stockholder will, if requested by the Company, execute and deliver a custody agreement and power of attorney in form and
substance satisfactory to the Company with respect to the shares of Stock to be registered pursuant to this Section 10 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among other things, that the Management Stockholder will deliver to and deposit in custody with the
custodian and attorney-in-fact named therein a certificate or certificates representing such shares of Stock (duly endorsed in blank by the registered owner or owners thereof
or accompanied by duly executed stock powers in blank) and irrevocably appoint said custodian and attorney-in-fact as the Management Stockholder's agent and
attorney-in-fact with full power and authority to act under the Custody Agreement and Power of Attorney on the Management Stockholder's behalf with respect to the matters
specified therein. 

        (f)    The
Management Stockholder agrees that he or she will execute such other agreements as the Company may reasonably request to further evidence the provisions of this
Section. 

14

 

        11.    Pro Rata Repurchases; Dividends.    (a) Notwithstanding anything to the contrary contained in
Section 4, 5 or 6, if at any time consummation of any purchase or payment to be made by the Company pursuant to this Agreement and the Other Management Stockholders Agreements would result in
an Event, then the Company shall make purchases from, and payments to, the Management Stockholder and Other Management Stockholders pro rata (on the basis of the proportion of the number of shares of
Stock each such Management Stockholder and all Other Management Stockholders have elected or are required to sell to the Company) for the maximum number of shares of Stock permitted without resulting
in an Event (the "Maximum Repurchase Amount"). The provisions of Section 5(c) and 6(f) shall apply in their entirety to payments and repurchases
with respect to shares of Stock which may not be made due to the limits imposed by the Maximum Repurchase Amount under this Section 11(a). Until all of such Stock is purchased and paid for by
the Company, the Management Stockholder and the Other Management Stockholders whose Stock is not purchased in accordance with this Section 11(a) shall have priority, on a pro rata basis, over
other purchases of Stock by the Company pursuant to this Agreement and Other Management Stockholders' Agreements. 

        (b)   No
dividends on the Common Stock are expected to be paid by the Company prior to a Public Offering. In the event any dividends are paid with respect to the Stock, the
Management Stockholder will be treated in the same manner as all other Management Stockholders with respect to shares of Stock then owned by the Management Stockholder, in accordance, as applicable,
with Sections 8 and 9 of the Option Plan. 

        12.    Rights to Negotiate Repurchase Price.    Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing, redeeming or otherwise acquiring for value shares of Stock or Options from the Management Stockholder, at any time, upon such terms and conditions, and for such price, as may
be mutually agreed upon between the Parties, whether or not at the time of such purchase, redemption or acquisition circumstances exist which specifically grant the Company the right to purchase
shares of Stock or any Options under the terms of this Agreement, provided that no such purchase, redemption or acquisition shall be consummated, and no
agreement with respect to any such purchase, redemption or acquisition shall be entered into, without the prior written consent of the Board of Directors of the Company. 

        13.    Covenant Regarding 83(b) Election.    Except as the Company may otherwise agree in writing, the Management
Stockholder hereby covenants and agrees that he will make an election provided pursuant to Treasury Regulation 1.83-2 with respect to the Stock, including without limitation, the
Stock to be acquired pursuant to Section 1(a) and the Stock to be acquired upon each exercise of the Management Stockholder's Stock Options; and Management Stockholder further covenants and
agrees that he will furnish the Company with copies of the forms of election the Management Stockholder files within 30 days after the date hereof, and within 30 days after each exercise
of Management
Stockholder's Stock Options and with evidence that each such election has been filed in a timely manner. 

        14.    Notice of Change of Beneficiary.    Immediately prior to any transfer of Stock to a Management Stockholder's
Trust, the Management Stockholder shall provide the Company with a copy of the instruments creating the Management Stockholder's Trust and with the identity of the beneficiaries of the Management
Stockholder's Trust. The Management Stockholder shall notify the Company as soon as practicable prior to any change in the identity of any beneficiary of the Management Stockholder's Trust. 

        15.    Recapitalizations, etc.    The provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Stock or the Options, to any and all shares of capital stock of the Company or any capital stock, partnership units or any other security evidencing ownership interests in any
successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or substitution of the Stock or the Options, by 

15

 

reason
of any stock dividend, split, reverse split, combination, recapitalization, liquidation, reclassification, merger, consolidation or otherwise. 

        16.    Management Stockholder's Employment by the Company.    The Company shall, or shall cause its subsidiary, to
provide the Management Stockholder, while employed, with the compensation and benefits set forth on Schedule I attached hereto. Notwithstanding the foregoing, nothing contained in this
Agreement or in any other agreement entered into by the Company and the Management Stockholder contemporaneously with the execution of this Agreement (i) obligates the Company or any subsidiary
of the Company to employ the Management Stockholder in any capacity whatsoever or (ii) prohibits or restricts the Company (or any such subsidiary) from terminating the employment of the
Management Stockholder at any time or for any reason whatsoever, with or without Cause, and the Management Stockholder hereby acknowledges and agrees that neither the Company nor any other person has
made any representations or promises whatsoever to the Management Stockholder concerning the Management Stockholder's employment or continued employment by the Company or any subsidiary of the
Company. 

        17.    State Securities Laws.    The Company hereby agrees to use its best efforts to comply with all state securities
or "blue sky" laws which might be applicable to the sale of the Stock and the issuance of the Options to the Management Stockholder. 

        18.    Binding Effect.    The provisions of this Agreement shall be binding upon and accrue to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and assigns. In the case of a transferee permitted under Section 2(a) or Section 3 hereof, such transferee
shall be deemed the Management Stockholder hereunder; provided, however, that no transferee (including without limitation,
transferees referred to in Section 2(a) or Section 3 hereof) shall derive any rights under this Agreement unless and until such transferee has delivered to the Company a valid
undertaking and becomes bound by the terms of this Agreement. 

        19.    Amendment.    This Agreement may be amended only by a written instrument signed by the Parties hereto and may
not be amended or modified in any event without the prior written approval of the Board of Directors of the Company. 

16

   
        20.    Closing.    Except as otherwise provided herein, the closing of each purchase and sale of shares of Stock,
pursuant to this Agreement shall take place at the principal office of the Company on the tenth business day following delivery of the notice by either Party to the other of its exercise of the right
to purchase or sell such Stock hereunder. 

        21.    Applicable Law; Jurisdiction; Arbitration; Legal Fees.    

        (a)   The
laws of the State of Delaware shall govern the interpretation, validity and performance of the terms of this Agreement, regardless of the law that might be applied
under principles of conflicts of law. 

        (b)   In
the event of any controversy among the parties hereto arising out of, or relating to, this Agreement which cannot be settled amicably by the parties, such controversy
shall be finally, exclusively and conclusively settled by mandatory arbitration conducted expeditiously in accordance with the American Arbitration Association rules, by a single independent
arbitrator. If the parties are unable to agree on the selection of an arbitrator, then any party may petition the American Arbitration Association for the appointment of the arbitrator, which
appointment shall be made within ten (10) days of the petition therefor. Either the Company or the Management Stockholder may institute such arbitration proceeding by giving written notice to
the other party. A hearing shall be held by the arbitrator in New York or New Jersey within thirty (30) days of his or her appointment. In preparation for their presentation of such hearing,
each party may depose a maximum of four people. Each such deposition shall last no more than six (6) hours. Each side may file with the arbitrator one brief not in excess of thirty
(30) pages, excluding exhibits. Each side shall have no more than eight (8) hours to present its position to the arbitrator. The hearing shall be no more than three (3) days in
length. The decision of the arbitrator shall be final and binding upon all parties hereto and shall be rendered pursuant to a written decision which contains a detailed recital of the arbitrator's
reasoning. Judgment upon the award rendered may be entered in any court having jurisdiction thereof. 

        (c)   Notwithstanding
the foregoing, the Management Stockholder acknowledges and agrees that the Company shall be entitled to injunctive or other relief in order to enforce
the covenant not to compete, covenant not to solicit and/or confidentiality covenants as set forth in Section 25(a) of this Agreement. 

        (d)   In
the event of any arbitration or other disputes with regard to this Agreement or any other document or agreement referred to herein, the party that does not prevail
shall pay the legal fees and disbursements of the prevailing party promptly upon presentation of invoices thereof. 

        22.    Assignability of Certain Rights by the Company.    The Company shall have the right to assign any or all of its
rights or obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof; provided, however, that the Company shall remain obligated to
perform its obligations notwithstanding such assignment in the event that such assignee fails to perform the obligations so assigned to it. 

        23.    Miscellaneous.    

        (a)   In
this Agreement all references to "dollars" or "$" are to United States dollars. 

        (b)   If
any provision of this Agreement shall be declared illegal, void or unenforceable by any court of competent jurisdiction, the other provisions shall not be affected,
but shall remain in full force and effect. 

        (c)   The
Company shall have the right to deduct from any cash payment made under this Agreement to the applicable Management Stockholder Entities any federal, state or local
income or other taxes required by law to be withheld with respect to such payment. 

        24.    Notices.    All notices and other communications provided for herein shall be in writing and shall be deemed to
have been duly given if delivered by hand (whether by overnight courier or 

17

 

otherwise)
or sent by registered or certified mail, return receipt requested, postage prepaid, or by overnight delivery or telecopy, to the Party to whom it is directed: 

        (a)   If
to the Company, to it at the following address: 

c/o
Kohlberg Kravis Roberts & Co.

Stirling Square

7 Carlton Gardens

London SW1Y 5AD

Attn: Todd Fisher 

with
a copy to: 

Simpson
Thacher & Bartlett

Citypoint

One Ropemaker St.

London, England

EC2Y 9HU

Attn: Michael Wolfson, Esq. 

        (b)   If
to the Management Stockholder, to him at the address set forth below under his signature; 

        or
at such other address as either party shall have specified by notice in writing to the other. 

        25.    Confidential Information; Covenant Not to Compete; Assignment of Inventions.    

        (a)   In
consideration of the Company entering into this Agreement with the Management Stockholder, the Management Stockholder hereby agrees effective as of the date of the
Management Stockholder's commencement of employment with the Company, without the Company's prior written consent, the Management Stockholder shall not, directly or indirectly, (i) at any time
during or after the Management Stockholder's employment with the Company, disclose any Confidential Information pertaining to the business of the Company or any of its subsidiaries, except when
required to perform his or her duties to the Company or one of its subsidiaries, by law or judicial process; or (ii) at any time during the Non-Compete Period, directly or
indirectly (A) be engaged in or have financial interest (other than an ownership position of less than 5% in any company whose shares are publicly traded or any non-voting
non-convertible debt securities in any company) in any business which competes with any business of the Company or any of its subsidiaries or (B) solicit or offer employment to any
person who has been employed by the Company or any of its subsidiaries at any time during the six months immediately preceding the termination of the Management Stockholder's employment. If the
Management Stockholder is bound by any other agreement with the Company regarding the use or disclosure of confidential information, the provisions of this Agreement shall be read in such a way as to
further restrict and not to permit any more extensive use or disclosure of confidential information. 

        (b)   Notwithstanding
clause (a) above, if at any time a court holds that the restrictions stated in such clause (a) are unreasonable or otherwise unenforceable
under circumstances then existing, the parties hereto agree that the maximum period, scope or geographic area determined to be reasonable under such circumstances by such court will be substituted for
the stated period, scope or area. Because the Management Stockholder's services are unique and because the Management Stockholder has had access to Confidential Information, the parties hereto agree
that money damages will be an inadequate remedy for any breach of this Agreement. In the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any
violations of, the provisions hereof (without the posting of a bond or other security). 

18

 

        IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. 

	 	 	K-L HOLDINGS, INC
	

 	
 	

By:	

 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

	

 	

MANAGEMENT STOCKHOLDER:
	

 	

	 	[NAME«1»]
	

 	

ADDRESS:
	

 	

	

 	

19

 
Schedule I 

	Annual Rate of Base Salary:	 	Initial base salary shall be not less than            , to be increased at the discretion of the Board of Directors of the Management Stockholder's
employer.
	

Annual Bonus Opportunity:	
 	

The Management Stockholder will be eligible to participate in an annual cash incentive plan, payable upon the achievement of certain performance targets to be established by the Board of Directors of the Company.
	

Employee Benefits:	
 	

The Management Stockholder will be eligible to participate in the welfare and other employee benefit plans (including perquisites) generally available to similarly situated employees of Rockwood Specialties

20

QuickLinks

EXHIBIT 10.7

FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT

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