10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number  333-109686

Rockwood Specialties Group, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	52-2277390
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

7101 Muirkirk Road, Beltsville, Maryland 20705

(Address of principal executive offices) (Zip Code)

(301) 470-3366

(Registrant’s telephone number, including area code)

100 Overlook Center, Princeton, New Jersey 08540

(Former address of principal executive offices) (Zip Code)

(609) 514-0300

(Registrant’s former telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to section 12(g) of the Act:

None

(Title of class)

The Registrant meets the conditions set forth in General Instructions I (1) (a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format as permitted.

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes  x No

IndicatebycheckmarkiftheRegistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.oYes  xNo

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes  o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  x	Smaller reporting company  o
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes   x  No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter.

Not applicable.

The Registrant’s common stock, par value $0.01 per share, is not publicly traded. As of March 6, 2009, there were 382,000 outstanding shares of common stock of the Registrant, all of which is held by its parent company Rockwood Specialties International, Inc.

TABLE OF CONTENTS

FORM 10-K

		Page No.
PART I
Item 1	Business	3
Item 1A	Risk Factors	21
Item 1B	Unresolved Staff Comments	30
Item 2	Properties	30
Item 3	Legal Proceedings	33
Item 4	Submission of Matters to a Vote of Security Holders	33
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
Item 6	Selected Financial Data	34
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	66
Item 8	Financial Statements and Supplementary Data	68
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	123
Item 9A(T)	Controls and Procedures	123
Item 9B	Other Information	125
PART III
Item 10	Directors, Executive Officers and Corporate Governance	125
Item 11	Executive Compensation	125
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	125
Item 13	Certain Relationships and Related Transactions, and Director Independence	125
Item 14	Principal Accounting Fees and Services	125
PART IV
Item 15	Exhibits, Financial Statement Schedules	126

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PART I

Forward-Looking Statements

This document contains forward-looking statements. Forward-looking statements are not statements of historical fact and may involve a number of risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events and estimates of amounts not yet determinable. We have used the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “predict,” “could,” “may” and other words and terms of similar meaning, including references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those expressed in or implied by these forward-looking statements. In particular, these factors include, among other things:

·our business strategy;

·changes in the general economic conditions in North America and Europe and in other locations in which we currently do business;

·competitive pricing or product development activities affecting demand for our products;

·fluctuations in interest rates, exchange rates and currency values;

·availability and pricing of raw materials;

·fluctuations in energy prices;

·changes in the end-use markets in which our products are sold;

·our ability to access capital markets;

·technological changes affecting production of our materials;

·governmental and environmental regulations and changes in those regulations;

·hazards associated with chemicals manufacturing;

·our high level of indebtedness;

·risks associated with negotiating, consummating and integrating acquisitions;

·risks associated with competition and the introduction of new competing products, especially in the Asia-Pacific region; and

·risks associated with international sales and operations.

You should keep in mind that any forward-looking statements made by us in this document or elsewhere speak only as of the date on which we make them. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 1. Business.

Unless we indicate otherwise or the context otherwise requires, any references to “we,” “our,” “us,” the “Company,” “Group” or “Rockwood” refer to Rockwood Specialties Group, Inc. and its consolidated subsidiaries.

Unless otherwise noted, all balances which are denominated in euros are converted at the December 31, 2008 exchange rate of €1.00 = $1.3971.

General

Rockwood is a global developer, manufacturer and marketer of high value-added specialty chemicals and advanced materials used for industrial and commercial purposes. Rockwood was incorporated in Delaware in October 2000 in connection with an acquisition of certain assets, stock and businesses from Laporte plc (“Laporte”) on November 20, 2000 (the “KKR Acquisition”) by affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”). The businesses acquired focused on specialty compounds, iron-oxide pigments, timber-treatment chemicals, clay-based additives, pool and spa chemicals and electronic chemicals in semiconductors and printed circuit boards.

On July 31, 2004, we acquired the specialty chemicals and advanced materials businesses of Dynamit Nobel (the “Dynamit Nobel Acquisition”), which focused on highly specialized markets and consisted of surface treatment and lithium chemicals, advanced ceramics and titanium dioxide pigments.  Through this acquisition, we created a further diversified portfolio of distinct specialty chemicals and advanced materials businesses, combining two companies with similar service-driven cultures focused on high margins; expertise in inorganic chemistry; stable profitability; growth platforms; and proven management teams. In addition, we believe the Dynamit Nobel Acquisition bolstered our leading competitive positions by enhancing our ability to develop innovative products and solutions for our customers, expanding our technological knowledge and further reducing our exposure to any particular raw material or end-use market.

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On January 9, 2007, we completed the sale of our Groupe Novasep subsidiary, which focused on the custom synthesis and production of active ingredients for pharmaceuticals and the development of purifications solutions; on December 31, 2007, we completed the sale of our Electronics business, excluding our European wafer reclaim business; and on October 10, 2008, we completed the sale of our pool and spa chemicals business.  In the financial statements contained herein, the Groupe Novasep subsidiary, the Electronics business, excluding the wafer reclaim business, and the pool and spa chemicals business are presented as discontinued operations.    Prior period financial statements have been reclassified to reflect discontinued operations for all periods presented.  The Groupe Novasep subsidiary and the Electronics business, including the wafer reclaim business, represented two of our reportable segments.  See Note 2, “Discontinued Operations,” for further details.

On September 1, 2008, we completed the formation of a venture with Kemira Oyj (“Kemira”) that focuses on specialty titanium dioxide pigments.  This venture combines the Company’s titanium dioxide pigments and functional additives business and Kemira’s titanium dioxide business. The Company has consolidated this venture and has reported Kemira’s interest as minority interest in the consolidated financial statements. See Note 4, “Acquisitions,” for further details of this venture and other bolt-on acquisitions made in 2008.

Our products consist primarily of inorganic chemicals and solutions and engineered materials. They are often customized to meet the complex needs of our customers and to enhance the value of their end products by improving performance, providing essential product attributes, lowering costs and/or making them more environmentally friendly. We generally compete in niche markets in a wide range of end-use markets, including metal treatment and general industry, automotive, construction, chemicals and plastics, electronics and telecommunications, and life sciences (including pharmaceutical and medical markets). No single end-use market accounted for more than 17% of our 2008 net sales.

We have a number of growth businesses, which are complemented by a diverse portfolio of businesses that historically have generated stable revenues.  Our high margins, diverse customer and end-use market base, capital discipline and ongoing productivity improvements provide us with a platform to capitalize on market growth opportunities.

We operate globally, manufacturing our products in 96 facilities in 26 countries and selling our products and providing our services to more than 60,000 customers, including some of the world’s preeminent companies. We believe our products are generally critical to our customers’ products’ performance, but account for a small percentage of the total cost of their products. No single customer accounted for more than 2% of our 2008 net sales. For a geographic description of the origin of our net sales and location of our long-lived assets, see Note 3, “Segment Information,” in the accompanying consolidated financial statements.

On August 22, 2005, Rockwood Holdings, Inc. (“Holdings”), our ultimate parent, completed an initial public offering (“IPO”) of 23,469,387 shares of its common stock, which included 3,061,224 shares issued and sold as a result of the underwriters’ exercise of the over-allotment option. Net proceeds of approximately $435.7 million were primarily used to reduce indebtedness.

We operate our business through the following five business segments: (1) Specialty Chemicals; (2) Performance Additives; (3) Titanium Dioxide Pigments; (4) Advanced Ceramics and (5) Specialty Compounds. The following table sets forth net sales of each segment, and the percentage of our net sales for the year ended December 31, 2008, as well as our principal products and our principal end-use markets. For financial information about each segment, see Note 3, “Segment Information.”

	2008 Net Sales
	$ in		% of
Segment	Millions		Total		Principal Products		Principal End-Use Markets
Specialty Chemicals	$	1,232.6	36	%	· · · ·	Lithium compounds and chemicals Metal surface treatment chemicals including corrosion protection/prevention oils Synthetic metal sulfides Maintenance chemicals	·   Automotive pre-coating metal treatment and car body pre-treatment ·   Steel and metal working ·   Life sciences (pharmaceutical synthesis and polymers) ·   Polymerization initiators for elastomers ·   Steel and metal working ·   Batteries ·   Disc brakes ·   Aircraft industry

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Performance Additives	$	835.6	25	%	·   Iron-oxide pigments ·   Wood protection products ·   Inorganic chemicals ·   Synthetic and organic thickeners ·   Flocculants	·   Residential and commercial construction, coatings and plastics ·   Coatings ·   Personal care, paper manufacturing, foundries ·   Water treatment
Titanium Dioxide Pigments	$	534.8	16	%	·   Titanium dioxide pigments ·   Barium compounds ·   Zinc compounds	·   Synthetic fibers for clothing ·   Plastics ·   Paper ·   Paints and coatings ·   Pharmaceutical contrast media
Advanced Ceramics	$	505.9	15	%	·   Ceramic-on-ceramic ball head and liner components used in hip joint prostheses systems ·   Ceramic tapes ·   Cutting tools ·   Wear and corrosion	·   Medical (hip replacement surgery) ·   Industrial ·   Electronics ·   Automotive ·   Defense (vehicle protection)
Specialty Compounds	$	261.5	8	%	·   High specification compounds such as polyvinyl chloride (PVC) and thermoplastic elastomer (TPE)	·   Voice and data transmission ·   Cables ·   Food and beverage ·   Packaging ·   Medical applications ·   Footwear ·   Automotive
Corporate and other (a)	$	9.7	—	%	·   Wafer recycling and repair	·   Semiconductors manufacturing
	$	3,380.1	100	%

(a)Represents our European wafer reclaim business that was not included as part of the sale of our Electronics business in December 2007. Our wafer reclaim business provides semiconductor wafer reclaim services, wafer thinning/grinding services and wafer supply services. This business works on silicon and sapphire substrates with semiconductor and solar cells manufacturers.

Diverse Customer and End-Use Market Base. We operate a diverse portfolio of distinct specialty chemicals and advanced materials businesses. We have more than 60,000 customers worldwide that cover a wide variety of industries and geographic areas. Of our 2008 net sales, 54% were shipments to Europe, 29% to North America (predominantly the United States) and 17% to the rest of the world. No customer accounted for more than 2% of such net sales, and our top ten customers represented only approximately 8% of such net sales. Our largest end-use market represented approximately 17% of such net sales.

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The following chart provides a breakdown of our 2008 net sales by end-use markets:

Within these end-use markets, there is further diversification by sector, product and region. For example, within the construction end-use market, our Performance Additives segment companies provide materials for new construction as well as companies that focus on remodeling and renovation. In addition, we serve construction materials clients in both the residential and commercial sectors located in North America, Europe and Asia. Within the life sciences end-use market, we serve a number of sectors, including the medical applications sector through our Specialty Compounds and Advanced Ceramics segments and the pharmaceutical sector through our Specialty Chemicals segment.

Operating Segments

The following describes each of our operating segments, as well as the principal products or principal divisions within each segment.

Specialty Chemicals (36% of 2008 net sales)

Our Specialty Chemicals segment operates under the Chemetall brand name and develops and manufactures metal surface treatment products and services, lithium chemicals and fine chemicals for a wide range of industries and end markets. This segment is comprised of two business lines: (1) Surface Treatment, which supplies surface treatment products and solutions for metal processing industries; and (2) Fine Chemicals, which supplies lithium products across the entire value chain from raw materials to specialty lithium compounds and advanced metal-based specialty chemicals to niche markets. Our Specialty Chemicals segment generated net sales of $1,232.6 million, $1,082.9 million and $918.3 million for the years ended December 31, 2008, 2007 and 2006, respectively. See Note 3, “Segment Information,” for additional financial information regarding our Specialty Chemicals segment.

Surface Treatment

We believe that our Surface Treatment business line is a leading global supplier of surface treatment products and solutions. Surface Treatment’s products are used for a variety of applications and serve the automotive, aerospace and general industrial markets, including steel and metal-working industries. This business line supplies more than 5,000 different products, many of which are based on proprietary formulations and extensive application know-how, to over 50,000 customers and operates in different locations for either production or research and development in over 20 countries. Surface Treatment operates in the following core end-markets: Automotive Technologies, Automotive Components, Cold Forming and Coil Coating, General Industry and Aerospace Technologies.

In Surface Treatment, we develop and supply products and solutions for the chemical pre-treatment of metals and other substrates, some of which are customized for individual customers and applications. Our products and solutions are critical to many areas of the metal processing industry because they protect metals from corrosion, facilitate forming and machining, allow parts to be processed in a clean and grease-free environment and ensure good coating adhesion. Other products are used in the cleaning and maintenance of

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aircraft. As an integrated part of the business, we also offer a full range of customer services, including process control and analysis of chemical baths at clients’ facilities.

Surface Treatment competes in markets characterized by significant barriers to entry, proprietary manufacturing technologies and know-how, demanding product-handling requirements, rigorous product quality and performance standards and specifications and longstanding service-intensive customer relationships. In order to remain competitive, we are focused on developing new products, improving process technologies, expanding our customer base and broadening our technology capabilities in existing and new markets through internal research and development and bolt-on acquisitions.  For example, in 2008, we increased our marketing efforts in Central/Eastern Europe and Asia (especially by our joint ventures in China and India), increased our market share in European, Japanese and Korean automotive original equipment manufacturers (“OEM”), grew in General Industry segments and improved our position in the Aerospace OEM Industry.  In September 2008, we acquired Nalco’s Finishing Technologies business that provided chemicals and services for pre-treating of metal for customers primarily in the General Industry market. This acquisition, as well as an acquisition in December 2007 of a business focused on the pre-treatment of metal surfaces for customers primarily in the coil market, have increased our technology and customer base, predominantly in North America.  In 2008, we also undertook a number of research and development projects with industrial partners and scientific institutes that help us fulfill our needs for more cost efficient and environmentally compatible technologies.  As a result, new products and improved technologies were launched in 2008 and more are expected in the near future.

The core end-markets that Surface Treatment operates in are as follows:

Automotive Technologies. We provide surface treatment products and solutions for automotive OEMs, including an entire range of products and services for use in the “paint shop” step of car-body manufacture. The products and services we provide typically represent a low percentage of total car body production costs, but have high value in terms of corrosion protection and surface quality. Major applications include car-body treatment (zinc-phosphating) and paint coagulation. Our services typically include intensive process control and chemical management in the customer’s production processes.

Automotive Components. We offer cleaning and pre-treatment products and services to automotive parts manufacturers for use in the making of automotive parts, such as axles, seats and other metal components. We believe that products for the treatment of steel and aluminum wheels, including a new generation of products based on self-assembling molecules, represent an attractive growth area in this market.

Cold Forming and Coil Coating. We provide products and services used to facilitate the cold forming of tubes, wire drawing and cold extrusion of metal. We provide products and services used in forming, cleaning and pre-treating metal sheets used in the production of steel and aluminum coil.

General Industry. General industry includes the largest number of customers among the Surface Treatment businesses.  We offer a range of products and services to a broad range of industrial end-markets that have metal surface treatment applications, including cleaning, activation, conversion coating and final rinsing. Our products include cleaners, iron phosphates, coolants, paint strippers and flocculants.   The acquisition of Nalco’s Finishing Technologies business in September 2008 expanded our product range in North America and China, with products in the field of metalworking fluids.  Over the last two years, we have introduced a new generation of iron-phosphating products in the U.S. market, which we expect will provide growth in the next few years, and began offering silane or oxsilan-based systems. The markets in General Industry include household appliances manufacturing, can producers, heating, ventilation, aluminum finishing and other diverse end-markets.

Aerospace Technologies. We provide products and services for Aerospace OEMs, airlines and maintenance companies. Aerospace Technologies focuses on four major application areas: cleaning; corrosion protection; maintenance chemicals; and sealants. Cleaning products, including our Ardox products, are used for the interior and exterior cleaning of airplanes and range from daily cleaning to complete aircraft overhaul. Corrosion protection products include waxes used to protect airframes. Maintenance chemicals for aircraft engines and turbines include high performance cleaners and products for non-destructive testing of engines, while aircraft sealants provide high technology sealing solutions for airplanes and are expected to contribute significantly to growth in the next few years. In the last few years, we introduced further variances of low-density sealants in the market place.  This strategy was expanded in 2007 and 2008, resulting in obtaining additional market share for this product range at major aerospace manufacturers.  A new production line for sealants was established in 2008 to fulfill increasing demand.  Also, we acquired a business in March 2008 that focuses on the non-destructive testing of engines, primarily in the Aerospace business.  In addition, we produce specialty products, which are similar to metal surface treatment products, but are used on the glass substrates for glass manufacturers, including specialty cleaners, polishing products, cutting oils and cooling lubricants.

Competition

We believe that the top five competitors in the global metal surface treatment market held an estimated market share of more than 50% in 2008. We believe that Henkel Surface Technologies is the global market leader, followed by us. The remaining top competitors include Nihon Parkerizing, PPG and Nippon Paint Co., Ltd. Competition in this market is based primarily on customer

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service, product quality and technological capabilities.

Customers

Surface Treatment serves a large customer base that is dependent on the industry served and its specific customer needs. Surface Treatment’s largest customers include Daimler AG, ArcelorMittal, Volkswagen AG and European Aeronautic Defense and Space (EADS). The composition of the customer base varies widely among product groups and industries served. The Automotive Technologies business division serves approximately 20 customers, primarily global OEMs, and the Automotive Components business division serves approximately 500 small to large customers. The Cold Forming and Coil Coating business division serves approximately 800 mid-size to large customers and the General Industry business division serves approximately 45,000 small to large customers in a broad range of industries worldwide. The Aerospace Technologies business division serves approximately 4,500 small to large customers worldwide.

Fine Chemicals

Our Fine Chemicals business line consists of our lithium, special metals and metal sulfides product lines. We believe that our Fine Chemicals business line is the leading global producer of basic and specialty lithium compounds and chemicals and advanced metal-based specialty chemicals.

Fine Chemicals develops and manufactures a broad range of basic lithium compounds, including lithium carbonate, lithium hydroxide, lithium nitrate, lithium chloride, and value added lithium specialties and reagents, including butyllithium and lithium aluminum hydride. Lithium is a key component in products and processes used in a variety of applications and industries, which range from lithium batteries, high performance greases, thermoplastic elastomers for car tires, rubber soles and plastic bottles to intermediates in the pharmaceutical industry. In our Fine Chemicals business, we operate our lithium business along the following four business divisions reflecting its core end-markets: (1) Specialities; (2) Lithium Salts; (3) Butyllithium/Lithium Metal and (4) Battery Products.

In addition to developing and supplying lithium compounds, we provide technical service, including training of customers’ employees, relating to the handling of reactive lithium products. We also offer our customers recycling services for lithium containing by-products resulting from synthesis with organolithium products, lithium metal and other reagents. We plan to continue to focus on the development of new products and applications. Currently, we are in the process of developing lithium compounds for several near- to medium-term, new and potentially high growth products for various applications, such as pharmaceuticals and batteries for electric vehicles.

Fine Chemicals also develops and manufactures advanced metal-based specialty chemicals along two business divisions based on its principal product groups: (1) Metal Sulfides, which develops and manufactures natural and synthetic metal sulfides used in brake pads and clutch facings and cutting and grinding wheels and (2) Special Metals, which develops and manufactures cesium products for the chemical and pharmaceutical industries and zirconium, barium and titanium products for various pyrotechnical applications, including airbag igniters. Currently, we are a major supplier of natural and synthetic metal sulfides for use in friction materials. In addition, we hold several key patents, which, we believe gives us a competitive advantage in the fast growing synthetic metal sulfides market.  Fine Chemicals is also a major commercial producer of certain cesium compounds which are used for X-ray image intensifiers and displays for digital X-ray technology.  In order to further strengthen our competitive position in the metal-based specialty chemicals market, we are focused on the production of new variations of synthetic metal sulfides and new cesium products for organic synthesis. We also continuously monitor our customers’ industries for potential new applications for our products. In addition, we plan to expand our business by penetrating growth areas such as India and China.

We believe that demand for synthetic metal sulfides will increase further in the future as a result of the continuing substitution for asbestos-based friction linings, transition from natural sulfides to synthetic sulfides spurred in part by environmental concerns and the transition from drum to disk brakes in Asia and the Americas. We also believe that the market for cesium compounds will grow as a result of new applications being developed in the chemicals industry, the pharmaceutical industry, the defense industry and for use in catalytic applications. As a result of our competitive strengths as a supplier of cesium products for established markets, we believe we are well positioned to take advantage of this market trend.

Principal Business Divisions

Lithium

Specialities. We develop and manufacture lithium compounds and other products for life science applications, such as special reagents for the synthesis of drug intermediates as well as for the flavor and fragrances industry. The two principal products in this business division are butyllithium and lithium aluminum hydride, for which we believe we hold leading market positions. We also produce various other compounds which include lithium metal, grignard reagents and alkoxides. Our research and development team often works closely with research and development departments of pharmaceutical companies, especially in the European market, in order to develop products and solutions tailored for their needs. In addition, broad variations of our specialities are designed to produce

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liquid crystals for flat screens.

Lithium Salts. We develop and manufacture basic lithium compounds, which serve a wide range of industries and applications. Our products include (1) lithium carbonate, for which the leading application is the production of thin, light weight lithium-ion batteries.  It is also used as a fluxing agent for enamels, glass and ceramic production to lower process temperature in aluminum electrolysis, and as a cement additive for construction applications; (2) lithium hydroxide, which is principally used in high performance greases for automotive and industrial applications; (3) lithium nitrate, which is principally used in the rubber industry and (4) lithium chloride, which is principally used in gas and air treatment.

Butyllithium/Lithium Metal. Our main product, butyllithium, is used as a polymerization initiator for synthetic rubber and thermoplastic elastomers and as a reagent for the synthesis of active pharmaceutical ingredients (“API’s”) and Agrochemicals. Lithium metal is used in organic synthesis processes, primarily in the area of steroid chemistry and vitamins.  Generally, these products require a high degree of handling, transport and application know-how and customer service due to their high reactivity. We benefit from being a major supplier with butyllithium manufacturing facilities in the United States, Germany and Taiwan.

Battery products. We develop and manufacture lithium products for electronic applications, mainly for the primary (disposable) and secondary (rechargeable) battery industries. Our major product is battery grade lithium metal, which is used as anode material for primary batteries. Lithium ion-based batteries are used extensively in consumer electronics, such as mobile phones, camcorders and laptops. We are currently developing a new generation of conductive lithium salts used for the battery market, which, we believe, has the potential to drive significant growth in the future.

Metal-based Specialty Chemicals

Metal Sulfides. This business division has two major product lines: friction stabilizers and abrasive additives. Friction stabilizers enhance the power and performance of brake pads and clutch facings and primarily serve the automotive supplier industry while abrasive additives are additive compounds.  The demand for metal sulfides is driven primarily by the demand in the automotive supplier industry.

Special Metals. We develop and manufacture a unique range of products based on special metal compounds derived from cesium, zirconium, titanium, barium and rubidium. These products are used in highly specialized, technology-driven end-applications such as X-ray diagnostic systems, airbags and vacuum lamps and serve various end-markets, such as chemical, pharmaceutical, metallurgical, automotive, electronics and pyrotechnical industries.

Competition

Lithium. We believe the global lithium market consists of three major producers and a number of other small producers mainly from China. We believe that we are the global market leader in the lithium market. While we offer a diverse range of products from raw materials to specialty lithium compounds, FMC Corporation offers mainly specialty lithium compounds, and Sociedad Quimica y Minera de Chile S.A. (“SQM”) offers a more limited product line focused on basic lithium compounds. Competition in this market is based on product quality, reliability of products and customer service.

Metal-based Specialty Chemicals. We believe that in the metal-based specialty chemicals business, Fine Chemicals holds a leading market position in its niche markets. We have a leading position in friction materials and are the only supplier offering a full product range of friction stabilizers and abrasive additives based on metal sulfides.  Key competitors include: Dow Corning Corporation, Catalise Brasil and American Minerals, Inc. in the Metal Sulfides division and Cabot Corporation and Sigma Aldrich-APL in the Special Metals division. Competition in the metal-based specialty chemicals markets in which Fine Chemicals competes is based on product quality and product diversity.

Customers

Fine Chemicals serves approximately 1,000 customers worldwide in its lithium business and 700 customers worldwide in its metal-based specialty chemicals products business. Fine Chemicals’ customers of lithium products include Bayer CropScience, Kraton Polymers U.S. LLC, Energizer Holdings, Inc. and DSM N.V.

Performance Additives (25% of 2008 net sales)

Our Performance Additives segment consists of business lines which develop and manufacture a range of specialty chemicals used in industrial and consumer products and processes to enhance performance or create unique characteristics. This segment manufactures and markets products that are based on a focused research and development effort and a strong technology base. Our Performance Additives segment generated net sales of $835.6 million, $798.5 million and $724.8 million for the years ended December 31, 2008, 2007 and 2006, respectively. See Note 3, “Segment Information,” for additional financial information regarding our Performance Additives segment.

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Color Pigments and Services

Our Color Pigments and Services business line is a global producer of synthetic iron-oxide and other inorganic pigments in a wide range of yellow, red, orange, ultramarine blue, black, manganese violet or blended shades, and serves the construction, paints and coatings, plastics, and specialty application markets with powder, granular and liquid grades. Color Pigments and Services focuses on developing and manufacturing high value-added inorganic pigments. The business also offers a number of unique pigment dispensing systems. Color Pigments and Services generates sales from construction applications, which include colorings for concrete products such as paving stones, bricks, concrete blocks, roofing tiles, ready mix, stucco and mortar, paints and coatings and plastics, paper and rubber and for specialty applications including security inks, toners for printers and copiers, catalysts and cosmetics.  Our Color Pigments and Services business line has been driven by product innovation, our brand names and our customer and technical service, including customer-specific color blending.

In 2007, we acquired the global color pigments business of Elementis plc, which included its color pigments and specialty paint driers business in North America, Europe and China.  In August 2008, we acquired Holliday Pigments, a leading global manufacturer of technical grade ultramarine blue and manganese violet pigments which are used for a wide range of applications, including plastics, cosmetics, coatings and inks.  See Note 4, “Acquisitions,” for additional information on these acquisitions.

Principal Products

Construction Color Pigments and Services. We develop and manufacture principally iron-oxide pigments for manufacturers of construction products for use in the coloring of concrete products, including paving stones, bricks, concrete blocks, roofing tiles, stucco and mortar. Color Pigments and Services’ major U.S. brand is Davis Colors and its key products include Granufin/Granumat, Hydrotint, Mix-Ready and Chameleon. Granufin is a unique, dry, microgranulated pigment that combines the flow characteristics of a liquid with the storage and handling advantages of a powder. The Granumat dispensing system offers a variety of configurations and features designed to accommodate the varying requirements and budgets of concrete product manufacturers. Granufin pigments and the Granumat system improve product handling and color consistency for our customers.  However, the patent on the granulation technology used in Granufin expired in 2007. Our Chameleon system, which works in combination with our liquid pigments, automatically weighs, blends and conveys colors into a ready-mix truck using a standard personal computer and custom-developed Windows-based software. Color Pigments and Services has an agreement pursuant to which an affiliate of W.R. Grace & Co. sells admixtures and fibers, distributes our liquid pigments and Chameleon dispensing systems to ready-mix and pre-cast producers in the concrete industry. Our combined efforts provide ready mix and pre-cast customers with added value in the form of colored, ready-mix concrete.

Paints, Coatings and Colorants. We also develop and manufacture color pigments for the paints, coatings, plastics, paper and rubber end-use markets including the brands Ferroxide, Trans-oxide and Colourplex. We produce a wide variety of pigments for these markets that include synthetic iron-oxides, corrosion inhibitor pigments, complex inorganic color pigments and process natural pigments such as burnt umbers and siennas. The largest application for these products is colorant used in architectural, industrial and special purpose paints and coatings. Color, ease of dispersion and chemical stability are the primary characteristics of our products, which can be used in a wide variety of both solvent and water-borne systems. We believe that a number of Color Pigments and Services’ products are considered industry standards in the markets in which we compete, such as our Mapico yellow and Copperas red pigments for architectural and industrial applications and our heat stable tans, which can tolerate applications requiring high temperature processing, such as plastic compounding and roofing granules.

Specialties. Our iron-oxide pigments are also used in a wide variety of specialty applications such as toner for large printers and copiers, security inks used to print bank notes, catalysts for styrene production and cosmetics. Each of these markets requires specialized pigments with unique properties which are often as important as the coloring characteristics. For example, printer toners require specific magnetic properties whereas pigments used in cosmetics require color and purity.

Competition

We believe that there are a significant number of producers of iron-oxide pigments across the globe at both the pigment synthesis and finishing levels with whom we compete. We believe these producers include Lanxess Corporation, Cathay Pigments, Interstar, Yipin Pigments as well as other producers in Japan and China. Competition in this segment is based on customer service, product attributes, such as product form and quality and price. Product quality is critical in the higher end of the business on which Color Pigments and Services focuses, as inconsistent product quality can have an adverse impact on the color consistency of the end-product.

Customers

Color Pigments and Services’ key customers include Akzo Nobel, Oldcastle (CRH plc), Pavestone Company, The Sherwin-Williams Company, Evonik Degussa, and WR Grace & Co., each of which has been our customer for at least ten years. Color Pigments and Services’ customer base is highly fragmented.

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Timber Treatment Chemicals

The Timber Treatment Chemicals business line is a manufacturer of wood protection products primarily in North America and we market these products through our joint venture with Rohm and Haas Company formed in 2007. Wood protection products enhance the performance of wood by increasing its longevity through protection from decay and fungal or insect attack. Our specialty timber chemicals also add water repellency, fire retardancy, mold inhibition and other properties to wood products. Timber Treatment Chemicals’ products include wood protection products based on our alkaline copper quaternary, or ACQ technology, which was awarded the Environmental Protection Agency (“EPA”) Presidential Green Chemistry Challenge Award in 2002, Ecolife, our new non-metallic wood preservative technology and chromated copper arsenate, or CCA.  In 2008, we commercialized our newest Ecolife system which utilizes Ecovance, a high-performance non-metallic preservative with enhanced environmental benefits. Ecovance was approved for use for wood protection by the EPA in January 2008. We expect Ecolife to take advantage of market desire for non-metallic wood protection products and the growth potential in the development and commercialization of the next generation of wood protection products.  Other products include Clearwood, our wood protection product for wood windows and doors, as well as a range of specialty additives with fire retardant, water repellent or moldicide properties. Applications for our products include wood protection products used for decking, fencing, playground equipment, garden furniture, house construction materials, utility poles, and other wood constructions.

In addition, Timber Treatment Chemicals provides a broad range of technical expertise and services to its customers. In particular, Timber Treatment Chemicals works closely with its customers to assist them in reducing the total cost of their manufacturing process by supplying timber treatment chemicals as well as treatment equipment along with technical support.  We believe that Timber Treatment Chemicals is a leading provider in North America of new generation alternative timber treatment chemicals, such as ACQ and Ecolife, which provide enhanced environmental benefits as they do not contain chrome or arsenic.

Our Timber Treatment Chemicals business also manufactures inorganic chemicals such as nitrates and chlorides for various industrial applications including chemicals that are added to concrete as curing accelerants and corrosion inhibitors, chemicals that are used for odor control in water treatment, galvanizing fluxes, micronutrients, pesticides and catalysts used in the manufacture of textile resins.

Many of our Timber Treatment products are registered pesticides and subject to extensive regulation. In February 2002, the EPA announced a voluntary decision by CCA manufacturers, including our subsidiary, to amend their registrations for CCA to limit use of CCA-treated lumber in most residential settings. The EPA amended CCA registrations, effective December 31, 2003, to prohibit CCA-treated wood for use in most residential settings, including play structures, decks, picnic tables, landscaping timbers, residential fencing, patios, walkways and boardwalks. Similar initiatives were enacted in Canada by the Pest Management Regulatory Agency, which imposed similar limitations on the use of CCA-treated wood. The EPA conducted a risk assessment of CCA-treated wood in existing structures and issued a final report in 2008 that concluded there are no unacceptable risks to the public for existing CCA-treated wood being used around homes. The use of ACQ and other formulations has increased following the industry-wide voluntary transition to non-arsenic chrome-based wood protection products discussed above.

Likewise, in Japan, the use of arsenic-based chemicals, such as those used in the manufacture of CCA wood protection products, is restricted through legislation limiting the levels of arsenic allowed in rainwater runoff from outdoor wood product storage areas. This legislation created an opportunity for us to supply a significant portion of the Japanese timber treatment chemicals market through our ACQ product line. In European Union markets, restrictions were enacted in mid-2004.

Principal Products

We develop and manufacture a broad range of wood protection products, fire retardant and specialty chemicals for use in residential and industrial wood applications. In addition, we provide treatment equipment, which facilitates the handling and treatment of wood and chemicals and we provide comprehensive technical support services to our customers. Timber Treatment Chemicals’ key brands include Ecolife, Preserve, Preserve Plus, Ultrawood, D-Blaze, Clearwood and SupaTimber.

We also develop and manufacture inorganic metallic chemicals for certain specialty markets. These include zinc chloride-based products, other chlorides, and a range of nitrates and other chemicals. Some of these products are manufactured using by-products from other large chemical companies.

Competition

We believe that Timber Treatment Chemicals was one of the leading manufacturers of wood protection products in North America in 2008, along with Arch Chemicals, Inc., Osmose, Inc. and PhibroTech Inc.  BASF Group, Kurt Obermeier GmbH & Co. KG and Rutgers AG are other competitors, particularly in Europe. Competition for wood protection products is mainly based on price, customer support services, innovative technology and product range. In the inorganic chemicals market, we operate in niche areas, and therefore have few competitors overall. Competition in the inorganic chemicals market is mainly based on quality, customer support services and price.

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Customers

Timber Treatment Chemicals sells its products primarily to wood processors who pressure-treat wood. Major customers include Coos Head Forest Products, Inc., Culpeper Wood Preservers, Envirofor Preservers Ltd., Georgia Pacific Corporation, Jeld-Wen, Inc., Koshii Preserving Co. Ltd., Spartanburg Forest Products, Inc. and Sunbelt Forest Products Corporation. Customers of our inorganic chemicals product line include Evonik Degussa AG, Rohm and Haas Company, Nalco Company and W.R. Grace & Co. Most of these companies have been our customers for at least ten years.

Clay-based Additives

Our Clay-based Additives business develops and manufactures a range of specialty rheology modifiers and additives. These products are used in a wide variety of applications to modify viscosity, thickness and flow characteristics, and keep solids in suspension. End products in which these additives are used include industrial and architectural coatings, oilfield drilling fluids, inks, household care products and composites.

Principal Products

Coatings and Inks. We offer a comprehensive line of additives which modify the viscosity, flow and suspension properties of coatings and inks, including Claytone for the manufacture of industrial and special purpose coatings, such as bridge, marine and maintenance paints, architectural coatings and associative thickeners; Optigel clays for water-based coatings and Laponite for the manufacture of automotive coatings. Our Garamite additives are used in the manufacture of high solids, low volatile organic content epoxy coatings for industrial applications.

Paper. We serve the paper industry with a product line that includes bentonite retention aids, which are used in the paper-making process to reduce fiber losses and aid in water drainage from the sheet and an additive, which provides fade-resistant color for carbonless copy paper. We also produce a grade of Laponite which is used in the production of clear, flexible and moisture-resistant films and coatings with conductive, anti-static and anti-sticking properties, that are used in the manufacture of specialty photographic and anti-static papers, ink jet papers and anti-static packaging.  Our Fulacolor clay product range is used in the color developing system for carbonless copy paper.

Consumer and Household Care Products. We develop and manufacture a wide range of natural clay-based rheology modifiers, including Gelwhite and Bentolite, for the consumer and household care markets. In addition, Laponite also has functional properties that improve the performance of a wide range of consumer products, such as personal care products, creams, lotions, cosmetics and hard surface household cleaning products for the kitchen and bathroom.

Oilfield. We offer a line of Claytone organoclays, which are a type of specially treated clays, for use in diesel and synthetic oilfield drilling fluids, which help to control viscosity and flow properties. These additives also help to suspend the cuttings in the fluid, so that they can be expelled from the well efficiently. We recently introduced a Garamite additive for use in deep well drilling that requires higher performance.

Composites. We developed and introduced the Cloisite range of clays for the manufacture of nanocomposite plastics and composites. While the majority of our customers purchase Cloisite for developmental products and applications, a key commercial development in 2007 was the introduction of a new, high-strength, lightweight plastic by Yamaha for personal watercraft hulls and deck lids utilizing Cloisite nanoclay.  The acquisition of Süd-Chemie’s Nanofil business extended our range of product offerings for nanocomposites, and brings valuable know-how and intellectual property for flame retardant applications. Our Garamite range of clays is used in the manufacture of fiberglass composites.

Water Chemistry. We are a leading manufacturer of polyaluminium chloride, or PAC, and polyaluminium nitrate-based flocculants in Central Europe. Flocculants are added to water to improve its purity before, during and after its use in industrial, commercial and municipal applications. PAC flocculants are widely used in public, industrial and swimming pool water treatment and as a process agent in the paper industry.  As discussed, we completed the formation of the Titanium Dioxide Pigments venture in September 2008.  The water treatment business, formerly part of the Titanium Dioxide Pigments segment, is now being reported in Clay-based Additives.

Competition

Clay-based Additives operates in specialty markets, and competes based on its research and development capabilities, its ability to produce innovative high-value product solutions and its sales and technical support. Our direct competitors in these markets include Elementis plc, Laviosa Chimica Mineraria S.p.A., R.T. Vanderbilt Company, Inc., Cytec, Amcol, Feralco AB, Arkema SA and Israel Chemical Ltd.  We also compete with manufacturers who produce non-clay-based alternatives to our end-users.

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Customers

We supply major coatings manufacturers such as International Paint Limited, BASF Group, E.I. duPont de Nemours and Company, PPG Industries Inc., and The Sherwin-Williams Company; paper chemical and paper-making companies such as Mitsubishi Hi Tec Paper, Sappi Limited, Akzo Nobel, Brenntag AG, LEIPA Georg Leinfelder GmbH and Stora Enso Oyj; ink-makers such as Sun Chemical Corporation and oil drilling and services companies such as M-I SWACO L.L.C.

Titanium Dioxide Pigments (16% of 2008 net sales)

Our Titanium Dioxide Pigments segment operates under the Sachtleben brand name and is a leading producer of high quality chemical products with a unique range of small inorganic particles that add significant value to customers’ products and reduce the cost of customers’ production processes. Titanium Dioxide Pigments comprises two business lines: (1) Titanium Dioxide; and (2) Functional Additives. Our Titanium Dioxide Pigments segment generated net sales of $534.8 million, $442.9 million and $409.1 million for the years ended December 31, 2008, 2007 and 2006, respectively. See Note 3, “Segment Information,” for additional financial information regarding our Titanium Dioxide Pigments segment.

In September 2008, we completed the formation of a venture with Kemira Oyj (“Kemira”) that focuses on producing and marketing specialty titanium dioxide pigments for the synthetic fiber, packaging inks, cosmetics, pharmaceutical and food industries.  This venture combines our existing titanium dioxide pigments and functional additives business and Kemira’s titanium dioxide business.  See Note 4, “Acquisitions,” for further details.

Titanium Dioxide

Our Titanium Dioxide business line through the venture is a leading producer of specialty grade titanium dioxide (“TiO2”), serving a wide variety of customers in the synthetic fibers, plastics, paints, packaging inks, coatings, cosmetics, pharmaceuticals and paper industries. TiO2 is a fine white powder that derives its value from its unparalleled whitening strength and opacifying ability, which is commonly referred to as hiding power. Our Titanium Dioxide business line’s principal products include TiO2 in anatase grade, TiO2 in rutile grade and titanium specialties. This business line also provides recycling services for sulfuric waste acid.

There are two ways of producing TiO2: the sulfate process and the chloride process. The chloride process permits production of only rutile TiO2 and is primarily suited for large volume production of standard TiO2 grades.  We believe most of the globally installed TiO2 capacity uses the chloride process as opposed to the sulfate process.  Unlike the chloride process, the sulfate process is capable of producing both the rutile and anatase grade of TiO2.  We employ the sulfate process for TiO2 production and thus, the output from most of the globally installed TiO2 production capacity does not compete with our anatase products.

We believe that we have a competitive advantage in fiber anatase production and special sophisticated anatase applications based on our strong technological capabilities, long-term customer relationships and extensive test runs with regular monitoring of product and process parameters. Although it represents a negligible part of the fiber material cost, TiO2 application know-how and a longstanding application track record of homogeneous anatase crystals, both of which avoid production interruptions and excessive wear or breakdown of our customers’ equipment, are critical to our customers. We intend to focus our rutile business on selected markets and applications and to further develop our titanium specialties business. We expect this segment to benefit from sales of newly introduced nano-particle titanium dioxide pigments that are used to provide ultraviolet light protection for cosmetics, plastics and coatings.  We also operate a waste sulfuric acid recycling plant in our production facility in Duisburg, Germany.

Principal Products

TiO2 in Anatase Grade. We develop and manufacture high quality anatase TiO2 pigments. These pigments are sold primarily to the global synthetic fiber industry, as well as paper, food and pharmaceutical industries. We believe our anatase pigment, sold under the brand name  Hombitan , is a leading global selling TiO2 product for applications in the synthetic fiber industry.

TiO2 in Rutile Grade. We develop and manufacture rutile TiO2 pigments, which are mainly used in special applications such as selected coatings, paints, packaging inks, plastics and laminated paper production processes. In this product area, we are geographically focused on the European market. Rutile-based TiO2 pigments generally possess performance characteristics different from anatase-based pigments. Rutile-based pigments significantly improve the weatherability and durability of polymer products by providing protection against yellowing and preventing embrittlement of the material. Our rutile grades are state of the art products and are used in applications with high technical requirements.

Titanium Specialties. Our titanium specialties products primarily include “nano-particles,” which are exceptionally fine-particled, transparent and easy-to-use pigment formulations that are used across a large and diverse range of applications in small volumes. For example, the specialty grade TiO2 products are used as UV-absorbers in sun protection cosmetics. In addition, the new nano-particles form the basis for innovative wood-protection products and innovative color variations by the paints and coatings industry. Other uses include catalysts, gas cleansing, photocatalysts and intermediates for special ceramics.

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Competition

Titanium Dioxide Pigments’ key competitors include: (1) Fuji Titanium Industry Co., Ltd. and Kronos Worldwide, Inc. for anatase-based TiO2; (2) DuPont Titanium Technologies, Millennium Chemicals, Inc., Tronox Corporation, and Huntsman LLC for rutile-based TiO2; and (3) Tayca Corporation, Ishihara Corporation and Evonik Degussa for TiO2 specialties. Competition in the markets in which Titanium Dioxide competes is generally based on technological capabilities, product quality, price in rutile grade and customer service.

Customers

Titanium Dioxide Pigments’ customers include leading manufacturers of paints, such as BASF Group and E.I. duPont de Nemours and Company; fibers, such as Nan Ya Plastics Corporation and Invista Inc.; plastics, such as Ampacet Corporation and Ineos and paper, such as Munksjo GmbH and Papierfabrik August Koehler AG.

Functional Additives

Our Functional Additives business line is a leading global manufacturer of barium-based and zinc-based inorganic fine white pigments and additives. The main function of these products is to improve brilliance of colors and shine of coatings, improve the mechanical strength of plastic parts and prevent degradation due to exposure to light. Our Functional Additives business line serves diverse end-markets, including the plastics industry, the coatings industry and the pharmaceutical industry.

Principal Products

Barium-based Additives. We produce highly dispersed powders of barium sulfate and are the largest global producer of precipitated synthetic barium sulfates (Blanc Fixe). We provide a unique range of barium-based additives customized for applications in coatings, plastic, colorants, lubricants, PVC stabilizers and thermoplastics, fibers and paper to improve optical, chemical and mechanical properties. We also produce an X-ray-grade barium sulfate used as a contrast agent in medical applications, such as X-rays for the stomach and intestine area.

Zinc-based Additives. We believe we are also a leading producer of pure zinc sulfide pigments, mainly used in glass fiber reinforced plastic parts and coatings and a leading supplier of Lithopone, a white zinc sulfide pigment which is used in plastics and coatings.

Competition

Key competitors for barium-based additives include Solvay S.A., Gruppo Chimico Dalton S.p.A., Sakai Chemical Industry Co., Ltd. and Chinese barium-producers. Key competitors for zinc-based additives include Chinese Lithopone producers. Competition in the functional additives market is primarily based on application know-how, brand recognition, product quality and, to a certain extent, price.

Customers

Functional Additives’ customers include E.I. duPont de Nemours and Company, Ampacet Corporation, BASF Group, Akzo Nobel Coatings and A. Schulman Plastics.

Advanced Ceramics (15% of 2008 net sales)

Our Advanced Ceramics segment operates under the CeramTec brand name and is a leading global producer of high-performance advanced ceramics materials and products. Advanced Ceramics serves four principal end-markets: (1) medical; (2) electronics; (3) industrial; and (4) automotive, with strong market positions in various niche markets such as medical products, cutting tools and mechanical applications. Our Advanced Ceramics segment generated net sales of $505.9 million, $452.5 million and $389.6 million for the years ended December 31, 2008, 2007 and 2006, respectively. See Note 3, “Segment Information,” for additional financial information regarding our Advanced Ceramics segment.

The global ceramics market comprises products and components based on inorganic, non-metallic, microcrystalline materials that are manufactured at high temperatures. The global ceramics market can be divided into traditional ceramics, such as bricks, tiles and white ware, and high-performance ceramics, which are ceramic materials and products optimized for special purposes. High performance ceramics have superior physical, electrical, chemical or biological properties as compared to traditional ceramics and competing materials, like metals or plastics. Accordingly, they have increasingly replaced plastics and metals as key engineering materials. We compete in the high-performance ceramics segment of the market, offering a wide range of high-performance ceramics products from sealing discs for sanitary fittings to ceramic components for hip joint prostheses. These products serve the market’s needs for materials that are light, strong, corrosion-resistant and capable of performing in high-temperature environments.

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High-performance ceramics materials include ceramic powders, ceramic additives, structural ceramics and functional ceramics. Ceramic powders and ceramic additives are inputs to the manufacturing processes of structural and functional ceramics. Structural ceramics, also called engineering ceramics, take advantage of the mechanical properties such as hardness and wear-resistance to produce load-bearing or engineered components. Due to their resistance to corrosion and heat properties, structural ceramics are also used to perform under special chemical conditions or at high temperatures.  Functional ceramics, also referred to as electronic ceramics, focus on the unique electrical and magnetic properties of ceramics. Ceramic applications in electronic components, such as integrated circuit packages, capacitors and inductors account for the majority of today’s high-performance ceramic materials. We believe that increasing demand for electronic components will continue to offer significant growth opportunities for high-performance ceramics, such as piezo ceramics. As a leading supplier of electronic ceramics materials, we believe we are well positioned to take advantage of these growth opportunities.

We believe that we have achieved success in the Advanced Ceramics segment as a result of our focus on selected segments of the high-performance ceramics market and our close customer relationships. Almost all of Advanced Ceramics’ products are made to order, taking into account specific customer requirements. In many cases, our engineers work in close cooperation with our customers during the design and development phase of new products to ensure highest quality and customer satisfaction. Through its extensive experience, Advanced Ceramics has gained detailed expertise and know-how in its applications areas.

Principal Products

Medical. We currently serve the medical applications market with two product groups - ceramic components for hip joint prostheses, such as ball heads and inserts and ceramic glove formers for high-quality latex gloves. The ceramic components for hip joint prostheses are mainly supplied to orthopedic implant manufacturers in the United States and Europe. Besides their high wear resistance and good friction behavior, high-performance ceramics are biologically inert, making them one of the few materials that are durable and stable enough to withstand the corrosive effects of bodily fluids. As a result, we expect high-performance ceramics will increasingly become more common for medical applications, such as for repair and replacement of hips, knees and other human body parts.

We believe that ceramic-on-ceramic hip implants benefit from additional substitution effects as young people and more active elderly people are better suited to use ceramic implants given their numerous attractive properties. Currently, the penetration rate for ceramic-on-ceramic hip implants in Europe is significantly higher than in North America because the first Food and Drug Administration (“FDA”) approval for ceramic-on-ceramic hip joint prostheses systems was granted in 2003. However, given the relative superior performance and positive early acceptance levels in the United States, we expect the market for ceramic-on-ceramic hip joint prostheses systems to grow significantly in future years. We believe we are well positioned to take advantage of the growing market as we are currently the only manufacturer of ceramic-on-ceramic hip implant components used in FDA-approved hip joint prostheses systems in the United States. Given the difficulties and time involved in obtaining an FDA approval, we believe that we will be the sole supplier in the intermediate term. We also enjoy strong relationships with the largest U.S. and European orthopedics implant manufacturers and are also expanding our focus to possible new applications in knee joint and intervertebral disc replacements.

Electronics. We develop and manufacture substrates, electrical resistor cores and ceramic tapes as carriers for electronic circuits. Substrates are ceramic plates with electrical, thermal and mechanical properties that serve as carriers in electronic applications. These highly specialized products are used in a wide range of industries, such as the automotive, consumer electronics, aeronautics and telecommunications industries. The demand for these products is driven, in large part, by the activity levels of the semiconductor market as well as a positive substitution effect for ceramic applications.

Cutting Tools. We develop and manufacture products used in cutting tools, other tools and tooling systems. Ceramic material properties such as high melting points, excellent hardness and good wear resistance make ceramics an excellent high-speed cutting tool material.  In addition, the longer life and faster cutting speeds possible with ceramic tools allow customers to save costs by increasing their throughput and reducing the downtimes for replacing their cutting tools.  We believe we are a leading supplier of ceramic cutting tools, other tools and tooling systems for high speed processing in the automotive, metalworking and mechanical engineering industries with automotive OEMs and their suppliers being our main customers.

Mechanical Applications and Systems. We also develop and manufacture high performance ceramic components that are used in mechanical applications and systems. Key product groups in mechanical applications include cutting blades, drawing and forming tools, drawing cones and capstans, guide elements, precision parts, pre-forms, friction discs, ceramic discs and cartridges for faucets. We primarily supply the general industrial, machinery, metalworking, automotive and textile industries with a large number of products customized to the customer requirements. Mechanical systems include products used in the sanitary fittings and automotive supplier industries in areas where fluids are pumped, compressed or stirred. such as bushings, face seal rings, pump components and valve shims and discs.

Other products. We also produce products used for applications in certain niche markets, such as electrical/thermal and ceramic metal connections and pre-forms for the casting process of piston engines, mainly for diesel engines. Other products, such as piezo ceramic

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components, may experience growth over the next few years, primarily in the automotive sector. In October 2008, we acquired a business that focuses on solutions for wear and corrosion protection in industrial plants and armor components used in vehicle protection.

Competition

Advanced Ceramics’ key competitors are Kyocera Corporation, CoorsTek, Inc., Saint Gobain, The Morgan Crucible Company plc, Ceradyne Corporation and NGK Ceramics Europe S.A. However, each of these competitors has either a different geographical focus or product strategy with respect to small niche applications. Competition in the high performance ceramics market is primarily based on product quality, product specifications and customer service.

Customers

Advanced Ceramics’ key customers include Robert Bosch GmbH, Stryker Corporation, EPCOS AG, Siemens AG, De Puy Orthodics, Vishay Europe GmbH, Ideal Standard and Zimmer.

Specialty Compounds (8% of 2008 net sales)

Our Specialty Compounds segment develops and manufactures thermoplastic materials possessing specialized characteristics, such as fire and smoke retardance, reduced weight or barrier properties which are tailored to the specific needs of each customer. These products are grouped into several key end-product areas: wire and cable, consumer performance products, medical applications and regulated packaging. Our Specialty Compounds segment had net sales of $261.5 million, $276.6 million and $251.0 million for the years ended December 31, 2008, 2007 and 2006, respectively. See Note 3, “Segment Information,” for additional financial information regarding our Specialty Compounds segment.

Our Specialty Compounds segment focuses on sales of higher margin products and operates as a global specialty performance plastic compounding business. We developed and commercialized SmokeGuard, our specialty compound for use in high-end data and video communication wire and cable, which must meet stringent fire retardant and low smoke generation standards. We also developed a compound for beverage closure seals and caps.  This compound prevents ozone from attacking the seal and does not affect the taste of water and carbonated beverages, therefore significantly increasing the shelf life of these beverages. We also focus on thermoplastic elastomer, or TPE, compounds in our consumer performance and automotive products areas. In addition to our product offerings, we provide strong, comprehensive customer service and technical expertise by developing innovative products to satisfy our customers’ unique needs.

We have invested in next generation plastic compounding technologies, including the development of fluoropolymer materials and the improvement of our production of zero halogen materials. Specialty Compounds has worked closely with our Clay-based Additives business to create a patented composite material that exhibits superior flame retardancy for wire and cable jacketing and sheathing.

Principal Products

Wire and Cable Compounds. We develop and manufacture low-smoke vinyl and flouropolymer alloys, such as SmokeGuard, which are used in high-end data and video communication, fiber optic and fire alarm wire and cable; halogen-free plastics, such as Megolon, which are used in industrial, aerospace, shipboard or oil rig cables as well as in communication cables and a variety of TPE compounds, such as Garaflex, which are used in flexible cords, tray cables, booster cables, welding cables and automotive wiring. We believe that there is significant growth potential for the wire and cable product line in Europe as a result of the evolution of a common market standard with higher specifications for wire and cable compounds. European wire and cable standards dictating certain safety specifications such as fire and smoke resistance are expected to be implemented within the next several years, providing significant new market opportunities for the SmokeGuard and Megolon product lines. Megolon is the trade name for a variety of halogen-free wire and cable products and is the leading brand name for such products in Europe.

Consumer Performance Products. We develop and manufacture custom-made plastic compounds for use in products such as moldings, sealing gaskets, tool handles, writing instruments and ladder feet as well as other TPE-based products. Our product line includes Garaflex, Garaflex V, Garaflex E, GE Series and GM Series. We have also developed a soft-touch compound, Evoprene, that has been approved for a number of applications, including seals for consumer storage devices. We also develop and manufacture compounds for interior and exterior automotive applications such as airbag covers, steering wheel covers, gear shift knobs and boots, handle grips, body side molding and window gaskets. In addition, we develop and manufacture a broad range of compounds for unit soles, uppers, mid-soles, slippers and heels for the diverse requirements of the footwear market.

Medical Applications Compounds. We develop and manufacture a series of high-quality polyvinyl chloride, or PVC, compounds which are used to manufacture products such as tubing, disposable masks, and extraction resistant compounds used to make products to handle blood and bodily fluids.

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Regulated Packaging. Under the Alphaseal trademark, we develop and manufacture specialty closure materials for soft drinks, beer, bottled water, juice, and other beverage applications which improve purity in taste and odor and provide reliable carbonation retention.

Competition

Specialty Compounds’ key competitors are Colorite Plastics Co., ACTEGA DS, European Vinyls Corporation, Georgia Gulf Corporation, Norsk Hydro ASA, PolyOne Corporation, Teknor Apex Company and W.R. Grace & Co., most of which serve only a subset of Specialty Compounds’ markets. We believe that only Teknor Apex is active in all of Specialty Compounds’ markets. Competition in Specialty Compounds occurs primarily on the basis of quality, product innovation and the ability to meet demanding customer and regulatory specifications.

Customers

Specialty Compounds sells products to a wide range of customers, including Alcoa Inc., Belden/CDT Inc., BerkTek Consolidated, Coleman Worldwide Corporation, CommScope/Systimax, Inc., Corning Incorporated and Judd Wire Inc. Each of these companies has been our customer for at least ten years.

Raw Materials

We purchase raw materials and chemical intermediates from a large number of third parties. We have a broad raw material base with the cost of no single raw material representing more than 3% of our cost of products sold in 2008. Raw materials constituted approximately 52% of our 2008 cost of products sold. The table below lists the ten most significant raw materials in 2008 (in terms of dollars) and the principal products for which the materials were used.

Raw Material	Segment	Products
Titanium-bearing slag	Titanium Dioxide Pigments	Titanium Dioxide
Quaternary amines (“quat”)	Performance Additives	Organoclays, wood protection products
Plasticizers	Specialty Compounds	Compounds
Tin	Specialty Chemicals	Metal sulfides
Copper	Performance Additives	Wood protection products
Phosphoric acid	Specialty Chemicals	Metal surface treatment
Iron-oxide	Performance Additives	Iron-oxide pigments
PVC resin	Specialty Compounds	Compounds
Monoethanolamine	Performance Additives	Wood protection products
Zinc/Zinc oxide	Specialty Chemicals, Titanium Dioxide Pigments, Performance Additives	Conversion coating zinc, zinc-based pigments, zinc phosphate, tan iron-oxide

Titanium-bearing slag, our largest raw material, is the most important raw material used in the production of specialty grade titanium dioxide in our Titanium Dioxide business line of our Titanium Dioxide Pigments segment. We purchase Titanium-bearing slag primarily from two suppliers under long-term contracts.

In our Clay-based Additives business line of our Performance Additives segment, quaternary amine is sourced under a long-term contract, which expires at the end of 2009 and is subject to monthly adjustment for the price of tallow, the base component of quat. In our Timber Treatment Chemicals business, we predominantly source quat under a contract that expires in late 2009, with automatic annual renewals subject to termination by either party.

In our Specialty Compounds segment, the plasticizers that are used are generic and considered a commodity product, while other materials are specific and considered specialty products. Our supply contracts for plasticizers do not specify a fixed price, and most of them contain market price and discount adjustments.

In our Specialty Chemicals segment, tin is used in the production of metal sulfides and is purchased from two suppliers under annual supply agreements.

In our Timber Treatment Chemical business, we source copper, a commodity, from several sources. Prices for our copper purchases are tied to market conditions. However, we expect the commercialization of next generation wood protection products to reduce our exposure to copper prices.

Phosphoric acid is used in our Specialty Chemicals segment and is purchased from various global sources.  This raw material is used for metal surface treatment chemicals in our Surface Treatment business.  Currently, there are no long-term purchase contracts for this raw material.

Historically, we have received iron-oxide from multiple sources and have not experienced any significant supply shortages. Iron-oxide

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is used in our Color Pigments and Services business within our Performance Additives segment and is purchased from suppliers in China as a supplement to our iron-oxide production.

PVC resin is a commodity product used in our Specialty Compounds segment and its pricing is directly related to the price of ethylene and chlorine as well as PVC industry operating rates and energy prices.

We source the monoethanolamine used in our Timber Treatment Chemical business from two suppliers under contracts that expire in December 2009 and December 2010, each of which automatically renew on an annual basis, subject to termination by either party.

In our Performance Additives segment, zinc oxide is used in the production of tan iron-oxide and zinc phosphate. In our Specialty Chemicals segment, zinc and zinc oxide are purchased from a few suppliers in Europe and the United States, and we have not experienced any supply shortages. Prices for these purchases are tied to market conditions. In our Titanium Dioxide Pigments segment, zinc is used to produce zinc-based pigments and is purchased from a number of suppliers under long-term contracts. There are no long-term zinc purchase contracts in our Specialty Chemicals or Performance Additives segments.

In addition, lithium brine is a primary raw material source for all lithium chemicals and is found in only a small number of locations, including most significantly for us, the Atacama Desert in Chile. We have a long-term contract with the Chilean government to mine lithium brine in the Atacama Desert in Chile, which we believe provides a secure long-term access to lithium.

Major requirements for our key raw materials and energy are typically satisfied pursuant to contractual agreements and/or medium- or long-term relationships with suppliers. We are not generally dependent on any one supplier for a major part of our raw material requirements, but certain important raw materials are obtained from a few major suppliers. In general, where we have limited sources of raw materials, we have developed contingency plans to minimize the effect of any interruption or reduction in supply, such as sourcing from different facilities and multiple suppliers and utilizing alternative formulations.

Temporary shortages of raw materials may occasionally occur and cause temporary price increases. In recent years, these shortages have not resulted in unavailability of raw materials. However, the continuing availability and price of raw materials are affected by unscheduled plant interruptions occurring during periods of high demand, domestic and world market and political conditions, as well as the direct or indirect effect of governmental regulations. During periods of high demand, our raw materials are subject to significant price fluctuations, and, in the past, such fluctuations have had an adverse impact on the results of operations of our business.  The impact of any future raw material shortages on our business as a whole or in specific geographic regions cannot be accurately predicted.

Intellectual Property

Our business is dependent to a large extent on our intellectual property rights, including patents and other intellectual property, trademarks and trade secrets. We believe that our intellectual property rights play an important role in maintaining our competitive position in a number of the markets we serve. We rely on technological know-how and formulation and application expertise in many of our manufacturing processes in order to develop and maintain our market positions. Where appropriate, we protect our new technology, applications and manufacturing processes by seeking patent protection. We have more than 3,000 patents and patent applications in key strategic markets worldwide, reflecting our commitment to invest in technology and covering many aspects of our products and processes for making those products. We also own and register in multiple jurisdictions numerous trade names and trade marks applicable to our business and products which we believe are important to our business. In addition, we have entered into agreements, pursuant to which we license intellectual property from third parties for use in our business and we license certain intellectual property to third parties. For example, we commercialized Ecolife, our next generation timber treatment preservative from our Timber Treatment Chemicals business, through our joint venture with Rohm and Haas Company. We also develop intellectual property with third parties as discussed below in “Research and Development.”

Research and Development

We are committed to further investing in our businesses, through research and development. Our research and development costs were approximately 2% of our net sales in 2008, which include certain expenses related to modifications and improvements in current products. We allocate our research and development resources selectively based on the need and requirements of each business line to develop innovative products. Research and development costs are charged to expense, as incurred. Such costs were $51.7 million, $44.0 million and $39.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.

The objective of our research and development effort is to develop innovative chemistries and technologies with applications relevant within targeted key markets. Research and development efforts are generally focused on both process development, which is the stage at which products move from development to manufacturing and new product development. Each business line, however, also has selected long-term strategic projects with the aim to develop new competencies and technologies.

Each of our business lines manages its own research and development effort and has separate research and development facilities dedicated to its specific area. However, where technologically applicable, advances and findings are shared between business lines to foster greater cross-fertilization of ideas and applications.

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In certain cases, we conduct research and development efforts with third parties, including universities, customers and other entities. We endeavor to obtain ownership of or license to, on terms favorable to us, the intellectual property developed with a third party.

Seasonality

There is a seasonal effect on a portion of our sales due to the end-use of some of our products. Our Color Pigments and Services and Timber Treatment Chemicals business lines of our Performance Additives segment show some seasonality related to the outdoor construction market. As such, the first quarter has historically been the quarter where we experience the lowest sales. During this quarter, we typically build inventory for our construction related businesses, in anticipation of increased sales during the spring and summer months. Thus, the first quarter is usually the quarter with the highest working capital requirements for us. Other than these seasonal trends in certain end-use markets, our overall results of operations tend to show few seasonal effects.

International Operations

The following table presents net sales based on geographic area (attributed based on seller’s location):

	Year ended December 31,
($ in millions)	2008		2007		2006
Net sales:
Germany	$	1,371.0	$	1,298.6	$	1,140.6
United States	890.2		852.5		842.1
Rest of Europe	799.3		655.1		515.1
Rest of World	319.6		259.0		216.9
	$	3,380.1	$	3,065.2	$	2,714.7

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for further details.

The following table presents our long-lived assets located in the regions indicated:

	December 31,
($ in millions)	2008		2007
Long-lived assets:
Germany	$	791.5	$	798.7
Rest of Europe	456.9		261.5
United States	293.4		239.1
Rest of World	210.4		209.2
	$	1,752.2	$	1,508.5

Sales and Marketing

We sell our products and services globally primarily by using our direct sales forces, although we also sell through distributors in certain of our business lines, such as Color Pigments and Services and Clay-based Additives of our Performance Additives segment or by using third party sales representatives. Each of our direct sales forces is responsible for marketing only one of our business lines, and is administered pursuant to policies established by the management of that business line. Within each business line, these direct sales forces are organized based on geographic regions, end-use applications or sub-business divisions within the business line. As of February 1, 2009, our in-house sales forces consisted of approximately 1,700 personnel worldwide.

Our direct sales forces interact with our customers to provide both purchasing advice and technical assistance. In general, our sales forces arrange and coordinate contact between our customers and our research and development or technical personnel to provide quality control and new product solutions. In certain of our businesses, such as the Surface Treatment and Fine Chemicals business lines of our Specialty Chemicals segment, most sales managers have a chemical engineering background with advanced degrees and significant technical experience in applying our products, and they play a critical role in developing client relationships and acquiring new clients. Our close interaction with our customers and tailored solutions have allowed us to develop and maintain strong customer relationships as well as focus our sales efforts on those customers who we believe will provide us with higher profit margins in recognition of our superior products, service and technical support.

Sales in each of our business lines are generally made on a purchase order basis. However, longer-term arrangements have been established with certain key customers.

Our marketing strategy is generally aimed at working directly with customers to gauge the success of our products, evaluate the need

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for improvements in product and process technology, and identify opportunities to develop new product solutions for our customers and their end-use markets. We also use media activities and lectures and participate in tradeshows as part of our sales and marketing effort.

FDA Regulation

Our Advanced Ceramics segment and to a lesser extent, our Specialty Chemicals segment, are subject to regulation by the FDA with respect to certain products we produce, including pharmaceutical intermediates and ceramic-on-ceramic ball head and liner components used in hip joint prostheses systems. Foreign, state, local and other authorities also may regulate us and our products. Regulatory agencies have established requirements that apply to the design, manufacture and marketing of pharmaceutical and medical device products. We sell our pharmaceutical intermediates and ceramic-on-ceramic components to other companies that also may be regulated by such authorities.

Premarket Approval. While we are not required to seek FDA approvals for our pharmaceutical intermediates, the customers to whom we supply such products may be subject to FDA approval requirements prior to testing a new drug on humans as well as marketing a new drug for commercial use in the United States. Our customers with FDA approval for a finished drug may also be required to obtain FDA approval of design, manufacturing or labeling changes to the pharmaceutical intermediates used in their finished products.

Medical devices also are subject to extensive regulation by the FDA prior to commercial distribution in the United States, including premarket approval, or PMA, which is required for devices deemed to pose the greatest risk and certain other devices. Our Advanced Ceramics segment currently supplies ceramic-on-ceramic ball head and liner components to manufacturers for incorporation into their total hip prostheses systems, which are subject to the FDA’s PMA requirements. In addition, our Advanced Ceramics business or our customers who have obtained PMA approval may be required to obtain FDA approval for changes to the design, manufacturing or labeling of our ceramic-on-ceramic ball head and liner components. Also, any other medical devices which our Advanced Ceramics segment seeks to produce in the future, such as knee replacement products, would likely require FDA approval for sales in the United States.

Compliance Requirements. Once on the market, drug manufacturers and medical device manufacturers are subject to numerous post-market regulations.

Finished device manufacturers such as our customers who manufacture hip prostheses systems are subject to the FDA’s Quality System Regulation, or QSR, which requires quality assurance practices and procedures that address, among other things: management responsibility; audits and training; design controls; purchasing controls; identification and traceability of components; production and process controls; acceptance activities; handling of nonconforming products; the initiation of corrective and preventive actions; labeling and packaging controls; handling, storage and distribution of products and complaint handling and record keeping. The FDA does not directly require component suppliers of finished medical devices to comply with the QSR. However, because our ceramic-on-ceramic ball head and liner components are critical elements of hip joint prostheses systems, our customers may require us to comply with some or all of the QSR. Moreover, the FDA may in the future take the position that the types of components that we supply meet the definition of a finished device and are thus subject to the QSR. Our current contracts with our customers of ceramic-on-ceramic ball head and liner components require us to comply or assist our customers in complying with various FDA regulatory requirements.

The FDA’s inspectional authority extends to component suppliers. Pursuant to this authority, the FDA has the ability to conduct and has conducted inspections at our facilities at which we manufacture our ceramic-on-ceramic ball head and liner components.

If we or our customers violate FDA or other governmental regulatory requirements during either the pre- or post-marketing stages, there may be various adverse consequences. For example, in the United States, the FDA has the authority to impose fines, injunctions, and civil penalties; recall or seize products; impose operating or import restrictions, partial suspension or total shutdown of production; delay its approval or refuse to grant approval of new products; or withdraw the submission of the approved product from the market.

Safety, Health and Environmental Matters

See Note 17, “Commitments and Contingencies,” for a discussion of our safety, health and environmental matters.

Employees

As of February 1, 2009, we had approximately 10,200 employees, with 67% located in Europe, 18% in the United States and the remaining 15% located in the rest of the world. Of our employees, approximately 3,100, or 30%, are subject to either collective bargaining agreements or other similar arrangements.

We observe local customs, legislation and practice in labor relations and, where applicable, in negotiating collective bargaining agreements. Management believes that its relations with employees and their representatives are good. We have not suffered any

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material work stoppages or strikes in our worldwide operations in the last five years.

Available Information

Rockwood Specialties Group, Inc. files annual, quarterly and current reports and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any documents we file at the SEC’s public reference room at Room 1580, 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the public reference room. The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers file electronically with the SEC. The SEC’s website is www.sec.gov.

The Company’s website is www.rocksp.com. We have made available, free of charge through our website, our annual report on Form 10-K, and will make available our quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

Item 1A. Risk Factors.

You should carefully consider these risk factors in evaluating our business. In addition to the following risks, there may also be risks that we do not yet know of or that we currently think are immaterial that may also affect our business. If any of the following risks occur, our business, results of operations, cash flows or financial condition could be adversely affected.

Substantial Leverage—Our available cash and access to additional capital may be limited by our substantial leverage

We are highly leveraged and have significant debt service obligations. As of December 31, 2008, we had $2,811.2 million of indebtedness outstanding and total stockholder’s equity of $810.4 million. This level of indebtedness could have important negative consequences to us and you, including:

·we may have difficulty obtaining financing in the future for working capital, capital expenditures, acquisitions or other purposes;

·we will need to use a substantial portion of our available cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities;

·some of our debt, including borrowings under the senior secured credit facilities, have variable rates of interest, which will expose us to the risk of increased interest rates;

·our debt level increases our vulnerability to general economic downturns and adverse industry conditions;

·our debt level could limit our flexibility in planning for, or reacting to, changes in our business and in our industry in general;

·our substantial amount of debt and the amount we need to pay to service our debt obligations could place us at a competitive disadvantage compared to our competitors that have less debt; and

·our failure to comply with the financial and other restrictive covenants in our debt instruments which, among other things, require us to maintain specified financial ratios and limit our ability to incur debt and sell assets, could result in an event of default that, if not cured or waived, could cause our lenders to terminate commitments under our debt agreements, declare all amounts, including accrued interest, due and payable, and enforce their rights in respect of collateral.

Our cash interest expense for the year ended December 31, 2008 was $164.0 million. At December 31, 2008, we had $2,007.9 million of variable rate debt. After including the notional amounts of variable to fixed interest rate swaps, the variable amount was $699.5 million. A 1% increase in the average interest rate would increase future interest expense by approximately $7.0 million per year. As of December 31, 2008, our debt service for 2009, which represents expected principal payments of our long-term debt and estimated scheduled cash interest payments, was expected to be $242.6 million.  See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Liquidity — Contractual Obligations” for years beyond 2009.

Additional Borrowings Available—Despite our substantial leverage, we and our subsidiaries may be able to incur more indebtedness. This could further exacerbate the risks described above, including our ability to service our indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the senior secured credit facilities and the indenture governing the senior subordinated notes due 2014 (the “2014 Notes”) contain restrictions on the incurrence

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of additional indebtedness, such restrictions are subject to a number of qualifications and exceptions, and under certain circumstances indebtedness incurred in compliance with such restrictions could be substantial. For example, in connection with the formation of a venture with Kemira in September 2008, the Titanium Dioxide Pigments venture borrowed €250.0 million ($349.3 million) under a term loan facility agreement. As of December 31, 2008, the revolving credit facility under the senior secured credit facilities provided for additional borrowings of up to $225.2 million, after giving effect to $24.8 million of letters of credit issued on our behalf and the revolving credit facility under the Titanium Dioxide Pigments venture provided for additional borrowings of €30.0 million ($41.9 million). There are no outstanding borrowings under these revolving credit facilities as of December 31, 2008. In addition, the term loans and the availability under the revolving credit facility under the senior secured credit facilities may be increased by up to $250.0 million in the aggregate, subject to certain exemptions and provided that we procure lender commitments for such increase. To the extent new debt is added to our debt levels, the substantial leverage risks described above would increase.

Restrictive Covenants in Our Debt Instruments—Our debt instruments contain a number of restrictive covenants which may limit our ability to finance future operations or capital needs or engage in other business activities that may be in our interest.

Our senior secured credit agreement and indenture governing the 2014 Notes and the Titanium Dioxide Pigment’s venture facility agreement impose, and the terms of any future indebtedness may impose, operating and other restrictions on us. Such restrictions will affect, and in many respects limit or prohibit, among other things, our ability to take certain actions. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” section for further details. In addition, our senior secured credit facilities require us and the Titanium Dioxide Pigment’s venture facility requires the venture to achieve certain financial and operating results and maintain compliance with specified financial ratios. Our ability to comply with these ratios may be affected by events beyond our control such as a prolonged economic downturn. The restrictions and financial covenants contained in our senior secured credit agreement and indenture governing the 2014 Notes and the Titanium Dioxide Pigment’s venture facility could adversely affect our ability to finance our operations, acquisitions, investments or strategic plans or other capital needs or to engage in other business activities that would be in our interest.

A breach of any of these covenants or our inability to comply with the required financial ratios could result in a default under the facilities described above. If an event of default occurs under any of these facilities, which includes an event of default under the indenture governing the 2014 Notes, the lenders could elect to:

·declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and payable;

·require us to apply all of our available cash to repay the borrowings; or

·prevent us from making any principal, premium or interest payments;

any of which would result in an event of default. The lenders will also have the right in these circumstances to terminate any commitments they have to provide further financing. If we were unable to repay or otherwise refinance these borrowings when due, our lenders could sell the collateral securing the senior secured credit facilities, which constitutes substantially all of our and our subsidiaries’ assets.

Downturns in certain industries and general economic conditions could adversely affect our profitability and liquidity.

In the event that the volatile conditions affecting worldwide financial markets persist or result in a prolonged economic downturn or recession, our results of operations, cash flows and financial position could be materially and adversely affected. Under such circumstances, the demand for our products could decrease, which would adversely affect our results of operations. In addition, our products are used in certain industries, such as the automotive, data and communications and construction industries. Prolonged downturns or bankruptcies in one or more of these industries could severely reduce demand for our products. For example, sales in our Performance Additives business have been adversely impacted by downward trends in commercial and residential construction, housing starts and trends in residential repair and remodeling. Further, a downturn in the automotive industry, particularly in Europe, may adversely affect the results of operations of our Surface Treatment business in our Specialty Chemicals segment. Moreover, if the value of one or more of our businesses deteriorates, we may be required to record additional impairment charges that could adversely affect our results of operations. If we are unable to successfully anticipate or respond to changing economic conditions, our results of operations and financial position may be materially and adversely affected.

Further, a prolonged economic downturn or recession or further market disruption in the capital and credit markets may adversely impact our future cash flows from operations and our liquidity. For example, the recent deterioration of these markets has had a material and adverse impact on our pension plan assets, which may require us to make certain payments into these plans in the form of a one-time payment or over an extended period, and any further deterioration in the capital markets may require us to fund additional amounts in the future. In addition, if our operating results deteriorate, we may need to use some or all of our available cash to reduce our leverage in order to comply with the leverage ratios in our debt agreements. Any such payments may materially and adversely impact our liquidity. If our sources of liquidity are insufficient to meet our needs, we may need to use other means available to us, such as reduce or delay capital expenditures or other cost cutting measures or seek additional sources of capital such as through

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additional borrowings, equity issuances or other sources, to satisfy our liquidity needs. The recent unprecedented adverse conditions in the global capital and credit markets may limit our ability to secure capital or obtain it on terms and conditions that are acceptable to us. We cannot predict with any certainty the impact of this or any further disruption in these markets or our ability to access these markets in the future.

Risks Associated with Acquisitions—We may not be able to successfully integrate completed acquisitions or consummate acquisitions we may seek to make in the future.

The process of combining or acquiring businesses with Rockwood involves risks. We may face difficulty completing the integration of the new operations, technologies, products and services of acquisitions or combinations, and may incur unanticipated expenses related to those integrations. The difficulties of combining operations may be magnified by integrating personnel with differing business backgrounds and corporate cultures. Failure to successfully manage and integrate acquisitions with our existing operations could lead to the potential loss of customers of the acquired business, the potential loss of employees who may be vital to the new operations, the potential loss of business opportunities or other adverse consequences that could affect our financial condition and results of operations. Even if integration occurs successfully, failure of any future acquisition or combination to achieve levels of anticipated sales growth, profitability or productivity comparable with those achieved by our existing operations, or otherwise not perform as expected, may adversely impact our financial condition and results of operations. In addition, certain acquisitions may trigger regulations designed to monitor competition and would therefore require regulatory approval. We cannot predict whether such authorities will approve acquisitions we seek to accomplish in the future.

Currency Fluctuations—Because a significant portion of our operations is conducted in foreign currencies, fluctuations in currency exchange rates may adversely impact our financial condition and results of operations and may affect the comparability of our results between financial periods.

Our operations are conducted by subsidiaries in many countries. The results of their operations and financial condition are reported in the local currency and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements. The exchange rates between some of these currencies and the dollar in recent years have fluctuated significantly and may continue to do so in the future. A significant portion of our net sales and cost of products sold is denominated in euros. Approximately 54% of our 2008 net sales were derived from subsidiaries whose local currency is the euro. This increases the impact of the fluctuation of the euro against the U.S. dollar.

Furthermore, because a portion of our debt is denominated in euros, which as of December 31, 2008 equaled an aggregate of €1,069.2 million ($1,493.8 million), we are subject to fluctuation in the exchange rate between the U.S. dollar and the euro. For example, the dollar-euro noon buying rate announced by the Federal Reserve Bank of New York increased from $1.00 = €1.065 on December 31, 2000 to $1.00 = €0.7158 on December 31, 2008. Being subject to this currency fluctuation may have an adverse effect on the carrying value of our debt and may also affect the comparability of our results of operations between financial periods. As of December 31, 2008, a weakening or strengthening of the euro against the U.S. dollar by $0.01 would decrease or increase, respectively, by $10.7 million the U.S. dollar equivalent of our total euro-denominated debt of €1,069.2 million. In addition, because our consolidated financial statements are reported in U.S. dollars, the translation effect of such fluctuations has in the past significantly impacted, and may in the future, significantly impact the carrying value of our debt and results of operations and may affect the comparability of our results between financial periods. We also incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the local currency of the transacting entity. We may not be able to effectively manage our currency translation and/or transaction risks and volatility in currency exchange rates may have a material adverse effect on the carrying value of our debt and results of operations.

Regulation of Our Raw Materials, Products and Facilities—Our business could be adversely affected by regulation to which our raw materials, products and facilities are subject.

Some of the raw materials we handle, and our products and facilities, are subject to government regulation. These regulations affect the manufacturing processes, uses and applications of our products.

In addition, some of our subsidiaries’ products contain raw materials, such as arsenic pentoxide, carbon disulfide, lithium carbonate, tetrahydrofuran, copper, chromic acid, silica, zinc chromate and lead that are deemed hazardous materials in certain situations. The use of these materials is regulated and some of these regulations require product registrations, which also are subject to renewal and potential revocation. These regulations may affect our ability to market certain chemicals we produce.

There is also a risk that other key raw materials or one or more of our products may be found to have, or be recharacterized as having, a toxicological or health-related impact on the environment or on our customers or employees. If such a discovery or recharacterization occurs, the relevant materials, chemicals or products, including products of our customers incorporating our materials or chemicals, may be recalled or banned or we may incur increased costs in order to comply with new regulatory requirements. Change in regulations, or their interpretation, may also affect the marketability of certain of our products.  We cannot predict how these and other findings from regulatory agencies may affect our cash flows or results of operations.

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Manufacturing Hazards—Hazards associated with chemical manufacturing could adversely affect our results of operations.

Due to the nature of our business, we are exposed to the hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes in our manufacturing facilities or our distribution centers, such as fires, explosions and accidents. These hazards could lead to an interruption or suspension of operations and have an adverse effect on the productivity and profitability of a particular manufacturing facility or on our company as a whole. Other hazards include piping and storage tank leaks and ruptures, mechanical failure, employee exposure to hazardous substances, chemical spills and other discharges or releases of toxic or hazardous substances or gases, inclement weather and natural disasters. These hazards may cause personal injury and loss of life, damage to property and contamination of the environment, which could lead to government fines or work stoppage injunctions and lawsuits by injured persons. For example, our subsidiaries were named as defendants in a wrongful death suit filed by the family of an employee who was fatally injured in an accident in our Clay-based Additives facility in Gonzales, Texas. While we are unable to predict the outcome of this case and other such cases, if determined adversely to us, we may not have adequate insurance to cover such claims and, if not, we may not have sufficient cash flow to pay for such claims. Such outcomes could adversely affect our customer goodwill, cash flow and results of operations.

Raw Materials—Fluctuations in costs of our raw materials or, our access to supplies of our raw materials could adversely affect our results of operations.

Although no single raw material represented more than 3% of our cost of products sold in 2008, raw material costs generally account for a high percentage of our total costs of products sold. In 2008, raw materials constituted approximately 52% of our cost of products sold. We generally purchase raw materials based on supply agreements linked to market prices and therefore our results of operations are subject to short-term fluctuations in raw materials prices. These fluctuations limit our ability to accurately forecast future raw material costs and hence our profitability.

Many of the raw materials we use are commodities, and the price of each can fluctuate widely for a variety of reasons, including changes in availability, major capacity additions or reductions or significant facility operating problems. Historically, there have been some price increases we have not been able to pass through to our customers. This trend may continue in the future. In addition, titanium-bearing slag used in our Titanium Dioxide Pigments segment, is our largest raw material (in terms of dollars) and is sourced primarily from two suppliers. If one of our suppliers is unable to meet its obligations under our present supply agreement or we are unable to enter into new supply arrangements on competitive terms when our existing short-term supply arrangements expire, we may be forced to pay higher prices to obtain these necessary raw materials. Furthermore, certain of our raw materials, such as cesium and lithium salts, are sourced from countries where political, economic and social conditions may be subject to instability. In addition, one of our raw materials, lithium brine, requires a period of gestation before it can be used to produce lithium compounds. In the event there is an increase in market demand for lithium products, or unfavorable weather conditions at the lithium ponds, as we experienced in early 2006, we may not be able to respond to such market demand on a timely basis. Any interruption of supply or any price increase of raw materials could result in our inability to meet demand for our products, loss of customer goodwill and higher costs of producing our products.

Energy Costs—Fluctuations in energy costs could have an adverse effect on our results of operations.

Energy purchases in 2008 constituted approximately 7% of Rockwood’s cost of products sold. Fluctuations in the price of energy limit our ability to accurately forecast future energy costs and consequently our profitability. For example, natural gas prices were volatile and continued to increase in 2008, due in part to global political conditions and weather conditions. Rising energy costs may increase our raw material costs and negatively impact our customers and the demand for our products. These risks will be heightened if our customers or production facilities are in locations experiencing severe energy shortages. For example, our lithium facility in Chile has experienced a shortage of natural gas due to the Argentine government’s decision to ration its supply of natural gas to Chile. If energy prices fluctuate significantly, or we experience severe energy shortages, our business, in particular, our Titanium Dioxide segment, or results of operations may be adversely affected.

Environmental, Health and Safety Regulation—Compliance with extensive environmental, health and safety laws could require material expenditures or changes in our operations.

Our operations are subject to extensive environmental, health and safety laws and regulations at national, international and local levels in numerous jurisdictions. In addition, our production facilities and a number of our distribution centers require operating permits that are subject to renewal. The nature of the chemicals industry exposes us to risks of liability under these laws and regulations due to the production, storage, transportation, disposal and sale of chemicals and materials that can cause contamination or personal injury if released into the environment. In 2008, our capital expenditures for safety, health and environmental matters (“SHE”) were $28.1 million. For 2009, we estimate capital expenditures for compliance with SHE laws to be at similar levels. We may be materially impacted in the future by the Registration, Evaluation and Authorization of Chemicals, or REACH, legislation which became effective in the European Union (“EU”) on June 1, 2007. We estimate our cost of compliance with REACH to be approximately $5.0 million in 2009 and 2010 and approximately $3.0 million per year from 2011 through 2018, although we may incur additional costs.

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Compliance with environmental laws generally increases the costs of registration/approval requirements, the costs of transportation and storage of raw materials and finished products, as well as the costs of the storage and disposal of wastes, and could have a material adverse effect on our results of operations. We may incur substantial costs, including fines, damages, criminal or civil sanctions and remediation costs, or experience interruptions in our operations, for violations arising under these laws or permit requirements. Furthermore, environmental laws are subject to change and have tended to become stricter over time. Such changes in environmental laws or their interpretation, or the enactment of new environmental laws, could result in materially increased capital expenditures and compliance costs.

In addition, the discovery of contamination arising from historical industrial operations at some of our former and present properties has exposed us, and in the future may continue to expose us, to cleanup obligations and other damages. For example, soil and groundwater contamination is known to exist at several of our facilities. At December 31, 2008, we had approximately $55.1 million in reserves for estimated environmental liabilities and estimated the potential range of exposure for such liabilities to be between $55.1 million and $96.6 million.

Environmental Indemnities—We may be subject to environmental indemnity claims relating to properties we have divested.

The discovery of contamination arising from properties that we have divested may expose us to indemnity obligations under the sale agreements with the buyers of such properties or cleanup obligations and other damages under applicable environmental laws. For example, we have obligations to indemnify the buyers of the former explosives business and automotive ignition systems business of Dynamit Nobel for certain environmental matters. Under such sale agreements, these indemnities are not limited as to amount. In addition, we agreed to indemnify the buyers of our Groupe Novasep subsidiary for three years for certain known and unknown environmental actions which may arise in the future, and the buyer of our former Electronics business for five and seven years, for on-site and off-site environmental liabilities, respectively, related to such business. We may not have adequate insurance coverage or cash flows to make such indemnity payments. Such payments may be costly and may adversely affect our financial condition and results of operations.

Product Liability—Due to the nature of our business and products, we may be liable for damages arising out of product liability claims.

The sale of our products involves the risk of product liability claims. For example, some of the chemicals or substances that are used in our businesses, such as arsenic pentoxide, have been alleged to represent potentially significant health and safety concerns. Class action suits had been filed in Louisiana, Florida and Arkansas, for example, naming one of our subsidiaries and a number of competitors of our Timber Treatment Chemicals business line in our Performance Additives segment, as well as treaters and retailers, as defendants.

In addition, our subsidiary has been named as a defendant in personal injury suits in several jurisdictions with retailers and treaters named as other defendants. Furthermore, there are other similar suits, including putative class actions, pending against retailers, treaters and other formulators to which we may be eventually named as a defendant. These suits allege, among other things, product liability claims in connection with the use of timber products treated with CCA, which utilizes arsenic pentoxide as a raw material. Other legal actions in which we participate or which relate to our business include the following:

·a subsidiary in our Advanced Ceramics segment has been named as a defendant in several product liability lawsuits in Europe relating to broken artificial hip joints, which allege negligent manufacturing by our subsidiary of ceramic components used in the production of artificial hip joints.

·a subsidiary in our Specialty Compounds segment has been named in lawsuits relating to compounds we supplied our customers to produce medical products and packaging materials. The suits allege, among other things, contract and tort causes of action.

·our customer has been named in a class action lawsuit in New Jersey relating to a prosthesis hip replacement system using ceramic components. The lawsuit alleges a violation of the Consumer Fraud Act, design defect, breach of warranty and negligence based on our customer’s design and manufacture of hip implant systems.

·a subsidiary in our Specialty Chemicals segment has been named as a defendant in several lawsuits in the United States regarding exposure to solvents and other chemicals contained in some of our products.

Also, because many of our products are integrated into our customers’ products, we may be requested to participate in or share in the costs of a product recall conducted by a customer. For example, some of our businesses, including those within our Specialty Chemicals, Advanced Ceramics and Specialty Compounds segments, supply products to customers in the automotive industry. In the event one of these customers conducts a product recall that it believes is related to one of our products, we may be asked to participate in or fund in whole or in part such a recall.

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We are unable to estimate our exposure, if any, to the above-mentioned lawsuits at this time. We may be subject to future claims with regard to these suits or others like them and we may not be able to avoid significant product liability exposure. A successful product liability claim or series of claims against us for which we are not otherwise indemnified or insured could materially increase our operating costs or prevent such operating subsidiary from satisfying its financial obligations. For example, for policies renewed on or after November 2002, our insurers excluded CCA from our insurance coverage under our general liability policies. We may not have sufficient cash flow from operations or assets to pay a judgment resulting from a product liability claim or product recall, if any, for which there is no or inadequate insurance coverage. Any such judgment or product recall could materially increase our operating costs or prevent such operating subsidiary from satisfying its financial obligations.

Product Liability—Due to the nature of our business and products, we may be liable for damages arising out of certain indemnity claims.

We may be subject to indemnity claims for product liability lawsuits relating to products we have sold. For example, our Timber Treatment Chemicals business has entered into indemnity agreements with various customers who purchased CCA-based wood protection products. Pursuant to those agreements, one of our subsidiaries agreed to defend and hold harmless those customers for certain causes of action, based on domestic mammalian, and in some cases, human toxicity, caused by our CCA-based wood protection products, subject to certain conditions. Our Timber Treatment Chemicals business, and several of our customers were named as defendants in several suits, including putative class actions, relating to CCA-based wood protection products. Our Timber Treatment Chemicals business has received and may in the future receive claims for indemnity from customers in connection with litigation relating to CCA-based wood protection products and may be required to pay indemnity claims under such agreements to one or more of its customers. If our Timber Treatment Chemicals business is required to pay one or more indemnity claims, insurance or indemnity arrangements from Evonik Degussa (the successor to Laporte, from which the specialty chemicals business lines that formed Rockwood in the KKR Acquisition were acquired) may not cover such claims and, if not, our subsidiary may not have sufficient free cash flow to pay such claims. We are unable to estimate our exposure, if any, to these claims and lawsuits at this time.

In addition, our Specialty Chemicals segment’s subsidiary that formerly manufactured sealants for insulating glass and resins for laminated glass has been named as a defendant in several lawsuits relating to alleged negligent manufacturing of those products. Pursuant to the sale and purchase agreement with respect to the divested “glass” business, this subsidiary may be required to pay indemnity claims, mainly re-glazing costs.  Our insurance may not cover such claims and, in such a case, our subsidiary may not have sufficient cash flow to pay these claims. One or more of these claims could adversely affect our financial condition or results of operations.

FDA Regulation—Some of our manufacturing processes and facilities, pharmaceutical customers and medical device customers are subject to regulation by the FDA or similar foreign agencies. These requirements could adversely affect our results of operations.

Regulatory requirements of the FDA are complex. Any failure to comply with them could subject us and/or our customers to fines, injunctions, civil penalties, lawsuits, recall or seizure of products, total or partial suspension of production, denial of government approvals, withdrawal of marketing approvals and criminal prosecution. Any of these actions could adversely impact our net sales, undermine goodwill established with our customers, damage commercial prospects for our products and materially adversely affect our results of operations.

The manufacture and supply of ceramic-on-ceramic ball head and liner components for hip joint prostheses systems by our Advanced Ceramics segment may be subject to the FDA’s Quality System Regulation, which imposes current Good Manufacturing Practice requirements on the manufacture of medical devices. Certain lithium compounds manufactured by our Fine Chemicals business line of our Specialty Chemicals segment are subject to FDA regulation.

In addition, medical device customers of our Advanced Ceramics segment to whom we supply our ceramic-on-ceramic ball head and liner components are subject to FDA regulation, including pre-market approval of their products and post market compliance requirements. The FDA may take three years or longer to grant pre-market approval, if at all. Once approved, our customers’ total hip prostheses systems may be withdrawn from the market either voluntarily by our customers or as a result of the FDA’s or a foreign equivalent’s withdrawal of marketing approval or removal of such products for a number of reasons including safety, current Good Manufacturing Practice or Quality System Regulation problems with our products or our customers’ final products. For example, a customer in our Advanced Ceramics segment initiated a voluntary recall in January 2008 of its hip implant system. These factors could significantly limit our net sales generated by our Advanced Ceramics segment and may have a material adverse effect on our financial condition and results of operations.

Competition—Our industry is highly competitive. The end-use markets in which we compete are also highly competitive. This competition may adversely affect our results of operations.

We face significant competition from major international producers as well as smaller regional competitors. Our most significant

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competitors include major chemicals and materials manufacturers and diversified companies, a number of which have revenues and capital resources exceeding ours. In addition, there is increasing competition from market participants in China.

Within the end-use markets in which we compete, competition between products is intense. Substitute products also exist for many of our products. Therefore, we face substantial risk that certain events, such as new product development by our competitors, changing customer needs, production advances for competing products, price changes in raw materials, our failure to secure patents or the expiration of patents, could result in declining demand for our products as our customers switch to substitute products or undertake manufacturing of such products on their own. If we are unable to develop and produce or market our products to effectively compete against our competitors, our results of operations may materially suffer.

We believe that our customers are increasingly looking for strong, long-term relationships with a few key suppliers that help them improve product performance, reduce costs, or support new product development. To satisfy these growing customer requirements, our competitors have been consolidating within product lines through mergers and acquisitions. We may also need to invest and spend more on research and development and marketing costs to strengthen existing customer relationships, as well as attract new customers. As a result, our substantial debt level could limit our flexibility to react to these industry trends and our ability to remain competitive.

Product Innovation—If we are not able to continue our technological innovation and successful commercial introduction of new products, our profitability could be adversely affected.

Our industries and the end-use markets into which we sell our products experience periodic technological change and product improvement. Manufacturers periodically introduce new generations of products or require new technological capacity to develop customized products. Our future growth will depend on our ability to gauge the direction of the commercial and technological progress in all key end-use markets and upon our ability to fund and successfully develop, manufacture and market products in such changing end-use markets. We will have to continue to identify, develop and market innovative products on a timely basis to replace or enhance existing products in order to maintain our profit margins and our competitive position. We may not be successful in developing new products and/or technology, either alone or with third parties, or licensing intellectual property rights from third parties on a commercially competitive basis. Our new products may not be accepted by our customers. If we fail to keep pace with the evolving technological innovations in our end-use markets on a competitive basis, our business, financial condition and results of operations could be adversely affected.

Dependence on Intellectual Property—If our intellectual property were copied by competitors, or if they were to develop similar intellectual property independently, our results of operations could be negatively affected.

Our success depends to a significant degree upon our ability to protect and preserve our intellectual property rights, which rights we own or use pursuant to licenses granted to us by third parties. The confidentiality and patent assignment agreements we enter into with most of our key employees and third parties to protect the confidentiality, ownership and use of intellectual property may be breached, may not be enforceable, or may provide for joint ownership or ownership by a third party. In addition, we may not have adequate remedies for a breach by the other party, which could adversely affect our intellectual property rights. The use of our intellectual property rights or intellectual property similar to ours by others or our failure to protect such rights could reduce or eliminate any competitive advantage we have developed, adversely affecting our net sales. If we must sue to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in significant costs and diversion of company resources and management attention, and we may not prevail in such action.  We are currently involved in a few actions related to misappropriation of our intellectual property by former employees.  In addition, when our patents expire, competitors or new market entrants may manufacture products substantially similar to our products previously protected by a patent. For example, our patent in ACQ technology expired in May 2007 and as a result, there has been a new entrant into this market.

We conduct research and development activities with third parties and license certain intellectual property rights from third parties and we plan to continue to do so in the future. For example, in our Timber Treatment Chemicals business, we commercialized Ecolife, our next generation timber treatment preservative from our Timber Treatment Chemicals business, through our joint venture with Rohm and Haas Company. We endeavor to license or otherwise obtain intellectual property rights on terms favorable to us. However, we may not be able to license or otherwise obtain intellectual property rights on such terms or at all. Our inability to license or otherwise obtain such intellectual property rights could have a material adverse effect on our ability to create a competitive advantage and create innovative solutions for our customers, which will adversely affect our net sales and our relationships with our customers.

The steps we take to protect our intellectual property may not provide us with any competitive advantage and may be challenged by third parties. We have been and currently are subject to oppositions of our patents and trademarks by third parties before regulatory bodies in certain jurisdictions. Our failure to defend these patents or registered trademarks may limit our ability to protect the intellectual property rights that these applications were intended to cover. In addition, a failure to obtain and defend our trademark registrations may impede our marketing and branding efforts and competitive position. A failure to protect our intellectual property rights could have a material adverse effect on demand for our products and our net sales.

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Risk of Intellectual Property Litigation—Our products or processes may infringe the intellectual property rights of others, which may cause us to pay unexpected litigation costs or damages or prevent us from selling our products.

Although it is our intention to avoid infringing or otherwise violating the intellectual property rights of others, our processes and products may infringe or otherwise violate the intellectual property rights of others. We may be subject to legal proceedings and claims, including claims of alleged infringement by us or our licensees of the patents, trademarks and other intellectual property rights of third parties. Intellectual property litigation is expensive and time-consuming, regardless of the merits of any claim, and could divert our management’s attention from operating our businesses. If we were to discover or be notified that our processes or products potentially infringe or otherwise violate the intellectual property rights of others, we may need to obtain licenses from these parties or substantially re-engineer our products and processes in order to avoid infringement. We might not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to re-engineer our products successfully. Moreover, if we are sued for infringement and lose the suit, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products or technology. Any of the foregoing could cause us to incur significant costs and prevent us from selling our products.

International Operations—As a global business, we are exposed to local business risks in different countries which could have a material adverse effect on our financial condition or results of operations and reputation.

We have significant operations in many countries, including manufacturing facilities, research and development facilities, sales personnel and customer support operations. Currently, we operate, or others operate on our behalf, facilities in countries such as Brazil, Chile, China, Czech Republic, India, Malaysia, Poland, Portugal, Singapore, South Africa, South Korea, Taiwan and Turkey. Of our total net sales in 2008 of $3,380.1 million, approximately 71% were generated by shipments to countries outside North America. Our operations are affected directly and indirectly by global regulatory, economic and political conditions, including:

·new and different legal and regulatory requirements in local jurisdictions;

·managing and obtaining support and distribution for local operations;

·increased costs of, and availability of, transportation or shipping;

·credit risk and financial conditions of local customers and distributors;

·potential difficulties in protecting intellectual property;

·risk of nationalization of private enterprises by foreign governments;

·potential imposition of restrictions on investments;

·potentially adverse tax consequences, including imposition or increase of withholding and other taxes on remittances and other payments by subsidiaries;

·capital controls; and

·local political, economic and social conditions, including the possibility of hyperinflationary conditions and political instability in certain countries.

In addition, our facilities may be targets of terrorist activities that could result in full or partial disruption of the activities of such facilities. We may not succeed in developing and implementing policies and strategies to counter the foregoing factors effectively in each location where we do business. Our failure to do so could limit our ability to sell products, compete or receive payments for products sold in such locations.

Furthermore, our subsidiaries are subject to the export controls and economic embargo rules and regulations of the United States, violations of which may carry substantial penalties. These regulations limit the ability of our subsidiaries to market, sell, distribute or otherwise transfer their products or technology to prohibited countries or persons. Failure to comply with these regulations could subject our subsidiaries to fines, enforcement actions and/or have an adverse affect on our reputation.

Retention of Key Personnel—If we lose certain key personnel or are unable to hire additional qualified personnel, we may not be able to execute our business strategy.

Our success depends, in part, upon the continued services of our highly skilled personnel involved in management, research, production, sales and distribution, and, in particular, upon the efforts and abilities of our executive officers and key employees. Although we believe that we are adequately staffed in key positions and that we will be successful in retaining key personnel, we may not be able to retain such personnel on acceptable terms or at all. Furthermore, if we lose the service of any executive officers or key

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employees, we may not be able to execute our business strategy. We do not have key-person life insurance covering any of our employees.

Relations with Employees—We are subject to stringent labor and employment laws in certain jurisdictions in which we operate, and our relationship with our employees could deteriorate, which could adversely impact our operations.

A majority of our full-time employees are employed outside the United States, particularly in Germany where many of our businesses are located. In certain jurisdictions where we operate, particularly in Germany, labor and employment laws are relatively stringent and, in many cases, grant significant job protection to certain employees, including rights on termination of employment. In addition, in certain countries where we operate, including Germany, our employees are members of unions or are represented by a works council as required by law. We are often required to consult and seek the consent or advice of these unions and/or respective works’ councils. These regulations and laws coupled with the requirement to consult with the relevant unions or works’ councils could significantly limit our flexibility in managing costs and responding to market changes.

Furthermore, with respect to our employees that are subject to collective bargaining arrangements or similar arrangements (approximately 30% of our full-time employees as of February 1, 2009), we may not be able to negotiate labor agreements on satisfactory terms and actions by our employees may disrupt our business. If these workers were to engage in a strike, work stoppage or other slowdown, we could experience a significant disruption of our operations and/or higher ongoing labor costs. In addition, if our other employees were to become unionized, we could experience a significant disruption of our operations and/or higher ongoing labor costs.

Tax Liabilities—If mg technologies ag (now known as GEA Group Aktiengesellschaft) or Degussa UK Holdings, Ltd. fail to satisfy their contractual obligations, we may be subject to increased tax exposure resulting from pre-acquisition periods.

Under the terms of certain purchase agreements, third party sellers have agreed to substantially indemnify us for tax liabilities pertaining to the pre-acquisition periods. To the extent such companies fail to indemnify or satisfy their obligations, or if any amount is not covered by the terms of the indemnity, we would be required to record an adjustment to goodwill to satisfy any such liabilities and could be negatively impacted in future periods through increased tax expense.

Net Loss—We have experienced losses in the past and may experience losses in the future and cannot be certain that our net operating loss carryforwards will continue to be available to offset our tax liability.

We have incurred net losses in the past and we may incur net losses in the future. We may not generate cash flow sufficient to meet debt service obligations and other capital requirements, such as working capital and maintenance capital expenditures. As of December 31, 2008, we had deferred tax assets of $53.1 million related to worldwide net operating loss carryforwards. Additionally, at December 31, 2008, we had a total valuation allowance of $84.9 million. If our operating performance deteriorates in the future in certain tax jurisdictions, we may be unable to realize these net operating loss carryforwards and we may be required to record an additional valuation allowance.

Anticipated Capital Expenditures—Our required capital expenditures may exceed our estimates.

Our capital expenditures, excluding capital leases, for the year ended December 31, 2008 were $224.0 million, which consisted of expenditures to maintain and improve existing equipment and substantial investments in new equipment. For 2009, we expect capital expenditures to be below 2008 levels. However, future capital expenditures may be significantly higher, depending on the investment requirements of each of our business lines, and may also vary substantially if we are required to undertake actions to compete with new technologies in our industry. We may not have the capital necessary to undertake these capital investments. If we are unable to do so, we may not be able to effectively compete in some of our markets.

Control—A conflict may arise between our interests and those of KKR.

Affiliates of KKR own approximately 29.9% of the common stock of our ultimate parent, Rockwood Holdings, Inc. on an undiluted basis. Although affiliates of KKR no longer hold a majority of Holdings’ outstanding common stock, they continue to have a significant impact on the vote in any election of directors. In addition, representatives of KKR occupy two of the seven seats on Holdings’ board of directors. As a result, even though representatives of KKR do not occupy a majority of the seats on Holdings’ board of directors, affiliates of KKR have substantial influence over our decisions to enter into any corporate transaction and whether any transaction that requires the approval of the stockholders is approved. For example, affiliates of KKR could seek to cause us to sell revenue-generating assets, which could impair our long-term ability to declare dividends or grow our business. Additionally, KKR is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. They may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.

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Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We are an international business, serving customers worldwide. To service our customers efficiently, we maintain 96 manufacturing facilities in 26 countries around the world with a strategy of global, regional and local manufacturing to optimize our service offering and minimize production cost to our customers. We believe these facilities are suitable and adequate for their intended use. The table below presents summary information with respect to these facilities:

Segment	Country	Locations	Leased/Owned	Major Applications/Industry
Specialty Chemicals
Surface Treatment	Australia	Bayswater North	Owned	Automotive and other pre-treatment technologies
		Girraween	Leased	Aerospace and general industry
	Brazil	Diadema-Săo Paulo	Leased	Automotive and other pre-treatment technologies
	Canada	Bramalea, Ontario	Owned	Pre-treatment technologies and aerospace
	China	Changchun (JV)	Leased	Automotive and other pre-treatment technologies
		Chongqing (JV)	Leased	Automotive and other pre-treatment technologies
		Shanghai (JV)	Leased	Automotive and other pre-treatment technologies
	France	Sens	Owned	Automotive and other pre-treatment technologies
		Soissons	Owned	Aerospace
	Germany	Mönchengladbach	Owned	General industry
		Langelsheim (1)	Owned	Automotive technologies, other pre-treatment technologies and aerospace (sealants)
	India	Chennai (JV)	Leased	Automotive and other pre-treatment technologies
		Kalyan (JV)	Owned	Automotive and other pre-treatment technologies
		Pune (JV)	Owned	Automotive and other pre-treatment technologies
	Italy	Giussano	Owned	Automotive and other pre-treatment technologies
		Roveredo in Piano	Leased	General industry
	Mexico	El Marqués, Querétaro	Leased	Automotive technologies, other pre-treatment technologies and aerospace
	The Netherlands	Oss	Owned	Automotive and other pre-treatment technologies
	Poland	Warsaw	Leased	Automotive and other pre-treatment technologies
	Singapore	Singapore	Leased	Advanced technologies and non-automotive pre-treatment technologies
	South Africa	Boksburg	Owned	Automotive and other pre-treatment technologies
	Spain	Canovelles	Owned	Automotive and other pre-treatment technologies
	Sweden	Bålsta	Owned	Automotive and other pre-treatment technologies
	Switzerland	Dintikon	Leased	Pre-treatment technologies

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	Turkey	Gebze	Owned	Automotive and other pre-treatment technologies
	United Kingdom	Bletchley	Owned	Automotive technologies, other pre-treatment technologies and aerospace
	United States	Jackson, MI	Owned	General industry
		La Mirada, CA	Leased	Pre-treatment technologies and aerospace
		Romulus, MI	Owned	Automotive technologies, other pre-treatment technologies and aerospace
Fine Chemicals	Austria	Arnoldstein	Leased	Metal sulfides
	Chile	La Negra	Owned	Lithium-carbonate and lithium chloride
		Salar de Atacama	Owned	Lithium brine and Potash
	Germany	Langelsheim (1)	Owned	Butyllithium, lithium-chloride, specialty products, lithium metal, lithium-hydrides, cesium, and special metals
	Taiwan	Taichung	Owned	Butyllithium
	United States	Kings Mountain, NC	Owned	Metal and battery
		New Johnsonville, TN	Owned	Butyllithium and specialty products
		Pasadena, TX	Owned	Butyllithium
		Phoenix, AZ	Leased	Zirconium products
		Silver Peak, NV	Owned	Lithium-carbonate and lithium hydroxide
Performance Additives
Color Pigments and Services	China	Shenzhen	Owned	Coatings and construction
		Taicang	Owned	Coatings and specialties
		Xinzhuang, Changshu	Leased	Construction
	France	Comines	Owned	Coatings
	Germany	Hainhausen	Owned	Construction and coatings
		Walluf	Owned	Construction and coatings
	Italy	Turin	Owned	Coatings, specialties and construction
	United Kingdom	Birtley	Owned	Driers
		Kidsgrove	Owned	Coatings and specialties
		Sudbury	Owned	Coatings and specialties
	United States	Beltsville, MD	Owned	Coatings, specialties and construction
		Cartersville, GA	Owned	Construction
		East St. Louis, IL	Owned	Specialties
		Easton, PA	Owned	Coatings, specialties and construction
		Harleyville, SC	Owned	Construction
		King of Prussia, PA	Owned	Construction
		Los Angeles, CA	Owned	Coatings, specialties and construction
		Ocala, FL	Owned	Coatings, specialties and construction
		St. Louis, MO	Owned	Coatings, specialties and construction
Timber Treatment Chemicals	United Kingdom	Barrow-in-Furness	Leased	Wood protection products and treatment
	United States	Freeport, TX	Owned	Construction and other industrial markets
		Harrisburg, NC	Owned	Wood protection products and treatment
		Valdosta, GA	Owned	Wood protection products and treatment
Clay-based Additives	Germany	Duisburg (2)	Owned	Flocculants

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		Ibbenbueren	Leased	Flocculants
		Moosburg	Leased	Paints and inks
		Schwarzheide	Leased	Flocculants
	United Kingdom	Widnes, Cheshire	Owned	Paper-making, consumer and household care and coatings and paper
	United States	Gonzales, TX	Owned	Paints, inks and oilfields and paper-making
		Louisville, KY	Owned	Paints and inks
Titanium Dioxide Pigments
Titanium Dioxide	Finland	Pori	Owned	Plastics, paints, packaging inks, coatings and paper
	Germany	Duisburg (2) (3)	Owned	Fibers, plastics, paints, coatings and paper
		Oberhausen	Leased	Cosmetics
	United States	Lawrence, MA	Leased	Cosmetics
		Northvale, NJ	Leased	Cosmetics
Functional Additives	Germany	Duisburg (2) (3)	Owned	Coatings, plastics, fibers, paper, pharmaceuticals, PVC stabilizers and glass fiber reinforced plastics
Advanced Ceramics
	Brazil	Nova Odessa	Leased	Automotive
	China	Suzhou	Leased	General industry
	Czech Republic	Sumperk	Owned	General industry
		Dolni Rychnov	Owned	Electronics
	Germany	Ebersbach	Owned	Automotive and general industry
		Lauf	Owned	Automotive, electronics and general industry
		Lohmar	Owned, partly leased	Ballistic protection, wear/corrosion protection
		Marktredwitz	Owned	Electronic, automotive, medical and general industry
		Plochingen	Owned	Medical, automotive and general industry
		Wilhermsdorf	Leased	Automotive
		Wittlich	Leased	General industry
	Malaysia	Seremban	Owned	Medical and general industry
	Mexico	Puebla	Owned	Automotive
	Poland	Gorzyce	Leased	Automotive
	South Korea	Suwon	Leased	Electronics
	United Kingdom	Colyton	Owned	Electronics
	United States	Birmingham, AL	Owned	Wear/corrosion protection
		Laurens, SC	Owned	Automotive, electronics and general industry
Specialty Compounds
	Canada	Stoney Creek, Ontario	Owned	Footwear, automotive and consumer products
	Italy	Azeglio	Owned	Rubber compounds
	United Kingdom	Melton Mowbray	Owned	TPE/Consumer products, packaging, medical, automotive and wire and cable sheathing products
	United States	Leominster, MA	Owned	Wire and cable sheathing, consumer goods, footwear, automotive and industrial products

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		Pineville, NC	Owned	Wire and cable sheathing, packaging, medical, consumer goods, footwear, automotive and industrial products
Corporate and other
Wafer Reclaim	France	Greasque	Owned	Wafer reclaim

(1)	This facility is shared by both business divisions of the Specialty Chemicals segment.
(2)	This facility is shared by both the Performance Additives segment and the Titanium Dioxide Pigments segment.
(3)	This facility is shared by the two business divisions of the Titanium Dioxide Pigments segment.

Item 3. Legal Proceedings.

We are involved in legal proceedings from time to time in the ordinary course of our business, including with respect to product liability, intellectual property and environmental matters. In addition, we may be required to make indemnity payments in connection with certain product liability and environmental claims. See Item 1, “Business,” and Item 1A, “Risk Factors,” “Environmental Indemnities—We may be subject to environmental indemnity claims relating to properties we have divested”; “Product Liability— Due to the nature of our business and products, we may be liable for damages arising out of product liability claims”; and “Product Liability—Due to the nature of our business and products, we may be liable for damages arising out of certain indemnity claims.” However, we do not believe that there is any other individual, governmental, legal proceeding or arbitration that is likely to have a material adverse effect on our business, results of operations, cash flows or financial condition.  We cannot predict the outcome of any litigation or the potential for future litigation.

In April 2005, Hospira Incorporated filed suit in Mecklenburg County, North Carolina Superior Court against one of our wholly-owned subsidiaries in our Specialty Compounds segment alleging claims for negligence, negligent misrepresentation, estoppel, fraud, third party beneficiary breach of contract and unfair trade practices as a result of our subsidiary providing PVC compound to its customer. Hospira is seeking damages of approximately $16.0 million for costs allegedly related to its recall and destruction of intravenous administration kits that incorporated components made with this compound, and further seeks treble damages of approximately $48.0 million, plus attorneys’ fees and interest, under the North Carolina unfair trade practice statute. The Court dismissed Hospira’s negligence and estoppel claims, but initially denied our subsidiary’s motion to dismiss the other claims. Following discovery, our subsidiary filed a motion for summary judgment to dismiss the remaining claims and, on November 9, 2007, the trial court granted our motion for summary judgment and dismissed all of the plaintiff’s claims. The plaintiff appealed this decision and, in early 2009, the appellate court affirmed on all counts with the exception of the negligence claim, which it reversed and remanded to the trial court. We will continue to vigorously defend this matter. While we believe our subsidiary has meritorious defenses against Hospira’s claims and do not believe that resolution of this matter will have a material adverse effect on our business or financial condition, we cannot predict the ultimate outcome of this litigation and resolution of this claim may have a material adverse effect on our results of operations or cash flows in any quarterly or annual reporting period.

In addition, a subsidiary in our Specialty Chemicals segment that formerly manufactured sealants for insulating glass and resins for laminated glass has been named as a defendant in several lawsuits in Europe relating to alleged negligent manufacturing of those products. Pursuant to the sale and purchase agreement with respect to the divested “glass” business, this subsidiary may be required to pay indemnity claims related to these lawsuits. Although we expect our subsidiary to have coverage under its product liability insurance policies should damages ultimately be awarded or agreed to, in such an event, its insurance may not cover such claims and, if not, our subsidiary may not have sufficient cash flow to pay these claims. Although we do not believe that resolution of these matters will have a material adverse effect on our business or financial condition, we cannot predict the ultimate outcome of this litigation, and the resolution of one or more of these claims may have a material adverse effect on our results of operations or cash flows in any quarterly or annual reporting period.

Item 4. Submission of Matters to a Vote of Security Holders.

Omitted.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

All of our common stock is owned by our parent company, Rockwood Specialties International, Inc. There is no established public trading market for our common stock. We did not declare dividends on our common stock during the past three fiscal years. Our ability to pay dividends on our common stock is restricted by our senior secured credit facilities, indenture governing the 2014 Notes and certain other agreements governing our indebtedness. See Note 9, “Long-Term Debt,” for further details. Any determination to pay dividends in the future will be at the discretion of Holdings’ board of directors and will be dependent upon our results of

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operations, financial condition, financial condition, contractual obligations and other factors deemed relevant by Holdings’ board of directors.

Item 6. Selected Financial Data.

The following selected consolidated financial data of the Company’s five most recent years ended December 31, 2008 should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8, “Financial Statements and Supplementary Data.” The Statement of Operations data set forth below with respect to the three years in the period ended December 31, 2008 and the Balance Sheet data as of December 31, 2008 and 2007, are derived from the Company’s audited financial statements included elsewhere in this document. The Statement of Operations data for the years ended December 31, 2005 and 2004 and the Balance Sheet data as of December 31, 2006, 2005 and 2004 are derived from audited consolidated financial statements not included herein.  As previously discussed, all periods presented have been reclassified to account for the sale of the Groupe Novasep segment, the Electronics business sold, excluding the European wafer reclaim business, and the sale of the pool and spa chemicals business as discontinued operations.

	Year Ended December 31,
($ in millions, except per share data; shares in thousands)	2008			2007			2006			2005			2004
Statement of operations data:
Net sales:
Specialty Chemicals	$	1,232.6		$	1,082.9		$	918.3		$	842.0		$	321.1
Performance Additives	835.6			798.5			724.8			648.9			586.0
Titanium Dioxide Pigments	534.8			442.9			409.1			399.2			162.2
Advanced Ceramics	505.9			452.5			389.6			369.6			146.3
Specialty Compounds	261.5			276.6			251.0			237.5			200.4
Corporate and other	9.7			11.8			21.9			24.4			28.0
Total net sales	3,380.1			3,065.2			2,714.7			2,521.6			1,444.0
Cost of products sold	2,365.8			2,089.1			1,859.0			1,723.4			1,047.2
Gross profit	1,014.3			976.1			855.7			798.2			396.8
Selling, general and administrative expenses	661.3			597.6			540.4			481.6			276.9
Impairment charges (1)	809.5			—			2.2			0.4			11.0
Restructuring and other severance costs (2)	35.3			12.0			4.9			15.2			1.1
Management services agreement termination fee (3)	—			—			—			10.0			—
Gain on sale of assets and other (4)	(2.4		)	(4.7		)	(0.3		)	(4.4		)	—
Operating (loss) income	(489.4		)	371.2			308.5			295.4			107.8
Other expenses, net:
Interest expense (5)	(231.1		)	(219.3		)	(199.9		)	(196.4		)	(130.6		)
Interest income	6.0			11.5			2.4			9.9			2.0
Gain (loss) on early extinguishment of debt (6)	4.0			(18.6		)	—			(12.9		)	—
Refinancing expenses (7)	—			(0.9		)	—			(1.0		)	(26.0		)
Foreign exchange (loss) gain (8)	(32.3		)	7.8			8.6			100.8			(111.6		)
Other, net (9)	0.7			—			1.8			2.6			(2.8		)
Other expenses, net	(252.7		)	(219.5		)	(187.1		)	(97.0		)	(269.0		)
(Loss) income from continuing operations before taxes and minority interest	(742.1		)	151.7			121.4			198.4			(161.2		)
Income tax (benefit) provision	(23.9		)	62.3			61.3			55.6			2.1
(Loss) income from continuing operations before minority interest	(718.2		)	89.4			60.1			142.8			(163.3		)
Minority interest in continuing operations (10)	83.6			(7.9		)	—			—			—
Net (loss) income from continuing operations	(634.6		)	81.5			60.1			142.8			(163.3		)
Income (loss) from discontinued operations, net of tax (11)	3.3			25.3			48.1			(23.0		)	15.1
Gain on sale of discontinued operations, net of tax (12)	34.3			180.6			—			—			—
Minority interest in discontinued operations (13)	—			(0.1		)	(5.2		)	3.0			—
Net (loss) income	$	(597.0	)	$	287.3		$	103.0		$	122.8		$	(148.2	)
Cash flow data:
Net cash provided by operating activities	$	301.9		$	368.6		$	305.0		$	264.8		$	162.6
Net cash (used in) provided by investing activities	(295.5		)	377.6			(248.8		)	(276.6		)	(2,232.9		)
Net cash provided by (used in) financing activities	102.6			(413.3		)	(102.8		)	(2.5		)	2,133.4
Effect of exchange rate changes on cash	12.8			(10.3		)	(13.8		)	1.0			5.6
Net increase (decrease) in cash and cash equivalents	$	121.8		$	322.6		$	(60.4	)	$	(13.3	)	$	68.7

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	Year Ended December 31,
($ in millions)	2008			2007			2006			2005			2004
Other data:
Depreciation and amortization	$	258.9		$	211.7		$	174.4		$	156.7		$	90.3
Capital expenditures, excluding capital leases	224.0			193.2			165.1			159.4			73.9
EBITDA (14)	(258.1		)	571.2			493.3			541.6			57.7
Non-cash charges and (gains) included in EBITDA (15)	841.8			(3.7		)	(6.4		)	(98.3		)	136.7
Other special charges included in EBITDA (16)	55.2			34.9			19.0			35.9			78.7

	As of December 31,
($ in millions)	2008		2007		2006		2005		2004
Balance sheet data:
Cash and cash equivalents	$	468.7	$	346.9	$	25.9	$	96.4	$	91.2
Working capital (17)	970.6		808.2		860.6		782.7		938.4
Property, plant and equipment, net	1,752.2		1,508.5		1,296.3		1,156.8		1,236.8
Total assets	5,177.4		5,511.8		5,221.2		4,817.8		5,377.6
Total long-term debt, including current portion	2,811.2		2,581.4		2,838.7		2,761.2		3,024.0
Stockholder’s equity	810.4		1,565.3		1,118.6		832.9		904.0

(1)As part of our annual goodwill impairment review, we recorded a goodwill impairment charge of $809.5 million in the fourth quarter of 2008 (See Note 7, “Goodwill,” for further details).  We recorded impairment charges of $2.2 million related to the write-down of property, plant and equipment in 2006 within our Specialty Chemicals segment and $0.4 million related to the write-down of property, plant and equipment in 2005 within our Performance Additives segment. As part of our impairment testing in 2004, we determined that there were goodwill impairments of $4.0 million in the wafer reclaim business in our former Electronics segment. We also determined that there was a property, plant and equipment impairment of $7.0 million in 2004 in the wafer reclaim business in our former Electronics segment.

(2)Restructuring and other severance costs include certain expenses incurred in connection with severance charges and asset write-offs related to consolidations and cessations of certain of our operations.  In 2008, we recorded $35.3 million of restructuring and other severance costs primarily related to headcount reductions throughout the Company.  See Note 14, “Restructuring And Other Severance Costs,” for further details.

(3)In connection with the IPO, we recorded an expense of $10.0 million in the third quarter of 2005 to terminate the management services agreement with affiliates of KKR and DLJMB.

(4)We recorded net gains of $2.4 million, $4.7 million, $0.3 million and $4.4 million for the years ended December 31, 2008, 2007, 2006 and 2005, respectively, related to asset sales. The gain recorded for the year ended December 31, 2008 primarily relates to the sale of land that was acquired as part of the acquisition of Dynamit Nobel in 2004, partially offset by the liquidation of a joint venture in the Titanium Dioxide Pigments segment. The gain recorded for the year ended December 31, 2007 primarily relates to the sale of the U.S. wafer reclaim business that was part of the former Electronics segment.

(5)For the years ended December 31, 2008, 2007, 2006, 2005 and 2004, interest expense included (losses) gains of $(51.5) million, $(32.2) million, $7.2 million, $22.4 million and $6.0 million, respectively, representing the movement in the mark-to-market valuation of our interest rate and cross-currency swaps for the periods. In addition, for the years ended December 31, 2008, 2007, 2006, 2005 and 2004, interest expense, net includes $9.6 million, $9.2 million, $9.5 million, $9.5 million and $5.4 million, respectively, of amortization expense related to deferred financing costs.

(6)In the fourth quarter of 2008, we redeemed €11.0 million of our 2014 Notes at a discount and recorded a gain of $4.0 million. In the second quarter of 2007, we paid a redemption premium of $14.5 million and wrote off $4.1 million of deferred financing costs associated with the redemption of the 2011 Notes on May 15, 2007. In the third quarter of 2005, we paid a redemption premium of $10.8 million to redeem long-term debt and wrote off $2.1 million of deferred financing costs associated with the debt repaid in connection with the IPO.

(7)In March 2007, we expensed $0.9 million related to the fourth amendment of the senior secured credit agreement to refinance all outstanding borrowings under the tranche F term loans with new tranche G term loans. In December 2005, we expensed $1.0 million in connection with the third amendment under the senior secured credit facilities. In 2004, we wrote off $26.0 million of deferred financing costs in connection with debt repayment and refinancing.

(8)Foreign exchange (loss) gain represents the translation impact on non-operating euro denominated transactions and intercompany financing arrangements. In 2004, this amount also included a $10.9 million mark-to-market realized loss on foreign currency derivative agreements that we entered into in connection with the Dynamit Nobel Acquisition.

(9)The Company recorded $1.8 million of income in 2006 primarily related to the correction of an error related to a previously unrecorded asset in the Titanium Dioxide Pigments segment. The effect of this adjustment to our consolidated financial statements for the year ended December 31, 2005 is not material. In 2005, we recorded $2.6 million of income primarily related

35

to the reversal of a bad debt reserve of $2.9 million related to a note receivable from the buyer in connection with the sale of a business by Dynamit Nobel prior to the Dynamit Nobel Acquisition for which the cash was collected from the buyer in 2005. In 2004, the loss of $2.8 million primarily relates to a stamp duty tax paid on certain assets transferred in the United Kingdom in connection with the KKR Acquisition.

(10)Minority interest in continuing operations represents the total of the minority party’s interest in certain investments (principally the Viance, LLC joint venture and the Titanium Dioxide Pigments venture).  In 2008, minority interest includes the goodwill impairment charge recorded in the Titanium Dioxide Pigments venture.

(11)As noted above, we sold our Groupe Novasep subsidiary in January 2007, our Electronics business, excluding our European wafer reclaim business, in December 2007 and our pool and spa chemicals business in October 2008.  The results of these businesses have been accounted for as discontinued operations in the accompanying Consolidated Statements of Operations for all periods presented (see Note 2, “Discontinued Operations,” for further details).

An impairment charge of $44.7 million was recorded in 2005 primarily related to the write-down of property, plant and equipment in conjunction with the downsizing of the Rohner facility within our former Groupe Novasep segment. In addition, in March 2006, we sold Rohner AG and recorded a pre-tax loss of $11.5 million.  These items were recorded in discontinued operations.

(12)Primarily related to a gain of $34.3 million (net of tax) in 2008 on the sale of the pool and spa chemicals business and gains in 2007 of $115.6 million (net of tax) on the sale of Groupe Novasep and $65.0 million (net of tax) on the sale of the Electronics business.

(13)Represents the minority interest in discontinued operations related to the Groupe Novasep subsidiary.

(14)EBITDA is defined as net income (loss) plus interest expense, net, income tax provision (benefit) and depreciation and amortization. EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net income (loss) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements.

The amounts shown for EBITDA differ from the amounts calculated under the definition of consolidated EBITDA used in our debt agreements. The definition of EBITDA used in our debt agreements permits further adjustments for certain cash and non-cash charges and gains; the indenture governing the 2014 Notes and the facility agreement governing the Titanium Dioxide Pigments venture exclude certain adjustments permitted under the senior secured credit agreement. Consolidated EBITDA as adjusted (“Adjusted EBITDA”) is used in our debt agreements to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain payments. In addition to covenant compliance, our management also uses Adjusted EBITDA to assess our operating performance and to calculate performance-based cash bonuses and determine whether certain performance-based stock options vest, as both such bonuses and options are tied to Adjusted EBITDA targets. For a discussion of the adjustments, uses and the limitations on the use of Adjusted EBITDA, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Which Affect Our Results of Operations—Special Note Regarding Non-GAAP Financial Measures.”

The following table sets forth a reconciliation of net income (loss) to EBITDA for the periods indicated:

	Year Ended December 31,
($ in millions)	2008			2007			2006			2005			2004
Net (loss) income	$	(597.0	)	$	287.3		$	103.0		$	122.8		$	(148.2	)
(Income) loss from discontinued operations, net of tax	(3.3		)	(25.3		)	(48.1		)	23.0			(15.1		)
Gain on sale of discontinued operations, net of tax	(34.3		)	(180.6		)	—			—			—
Minority interest in discontinued operations	—			0.1			5.2			(3.0		)	—
Net (loss) income from continuing operations	(634.6		)	81.5			60.1			142.8			(163.3		)
Minority interest in continuing operations (a)	(83.6		)	7.9			—			—			—
(Loss) income from continuing operations before minority interest	(718.2		)	89.4			60.1			142.8			(163.3		)
Income tax (benefit) provision	(23.9		)	62.3			61.3			55.6			2.1
Interest expense	231.1			219.3			199.9			196.4			130.6
Interest income	(6.0		)	(11.5		)	(2.4		)	(9.9		)	(2.0		)
Depreciation and amortization	258.9			211.7			174.4			156.7			90.3
EBITDA	$	(258.1	)	$	571.2		$	493.3		$	541.6		$	57.7

(a)Minority interest in continuing operations represents the total of the minority party’s interest in certain investments (principally the Viance, LLC joint venture and the Titanium Dioxide Pigments venture).

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(15)EBITDA, as defined above, contains the following non-cash charges and gains for which we believe adjustment is permitted under our senior secured credit agreement, each of which is described under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Which Affect Our Results of Operations—Special Charges and Credits”:

	Year Ended December 31,
($ in millions)	2008		2007			2006			2005			2004
Impairment charges	$	809.5	$	—		$	2.2		$	0.4		$	11.0
Write-off of deferred debt issuance costs	—		4.1		(a)	—			2.1		(a)	25.0
Foreign exchange loss (gain)	32.3		(7.8		)	(8.6		)	(100.8		)	100.7
	$	841.8	$	(3.7	)	$	(6.4	)	$	(98.3	)	$	136.7

(a)Represents pre-tax charges of $4.1 million related to the write-off of deferred debt issuance costs associated with the redemption of the 2011 Notes in May 2007 and pre-tax charges of $2.1 million related to the write-off of deferred debt issuance costs associated with debt repaid with IPO proceeds in 2005.  These amounts are reported in “loss on early extinguishment of debt” in the Consolidated Statements of Operations.

(16)In addition to non-cash charges and gains, our EBITDA contains the following other special charges and gains for which we believe adjustment is permitted under our senior secured credit agreement, each of which is described under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Which Affect Our Results of Operations—Special Charges and Credits”:

	Year Ended December 31,
($ in millions)	2008			2007			2006			2005			2004
Restructuring and other severance costs (a)	$	35.3		$	12.0		$	5.3		$	15.7		$	1.1
Systems/organization establishment expenses	12.9			4.2			10.7			3.9			4.8
Acquisition and disposal costs	1.7			2.3			1.9			1.1			0.3
Stamp duty tax	—			—			—			—			4.0
Inventory write-up charges	6.9			5.7			1.1			—			53.8
Long-term debt redemption (discount) premium	(4.0		)	14.5			—			10.8			—
Refinancing expenses	—			0.9			—			1.0			1.0
Management services agreement termination fee	—			—			—			10.0			—
Gain on sale of assets and other	(2.4		)	(4.7		)	(0.3		)	(4.4		)	—
Acquired in-process research and development	2.9			—			—			—			—
Foreign exchange loss on foreign currency derivatives	—			—			—			—			10.9
Other	1.9			—			0.3			(2.2		)	2.8
	$	55.2		$	34.9		$	19.0		$	35.9		$	78.7

(a)Includes inventory write-downs of $0.4 million and $0.5 million recorded in cost of products sold for the years ended December 31, 2006 and 2005, respectively.

(17)Working capital is defined as current assets less current liabilities.

The EBITDA amounts in the above tables do not include $1.8 million, $68.3 million, $51.9 million and $20.6 million for the years ended December 31, 2007, 2006, 2005 and 2004, respectively, of Adjusted EBITDA from the former Groupe Novasep segment which was sold on January 9, 2007; $37.6 million, $35.3 million, $28.9 million and $28.2 million for the years ended December 31, 2007, 2006, 2005 and 2004, respectively, of Adjusted EBITDA from the Electronics business sold on December 31, 2007; and $5.4 million, $12.0 million, $12.0 million, $10.9 million and $10.5 million for the years ended December 31, 2008, 2007, 2006, 2005 and 2004, respectively, of Adjusted EBITDA from the pool and spa chemicals business sold on October 10, 2008.

37

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In 2008, we completed the sale of our pool and spa chemicals business and in 2007, we completed the sale of our Groupe Novasep and Electronics segments, excluding our European wafer reclaim business. As a result, our consolidated financial statements have been reclassified to reflect these segments as discontinued operations for all periods presented. See Note 2, “Discontinued Operations,” for further details.

The following discussion contains forward-looking statements that involve numerous risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements as a result of these risks and uncertainties, including those set forth under Item 1, “Business—Forward-Looking Statements” and Item 1A, “Risk Factors.” You should read the following discussion and analysis together with Item 6, “Selected Financial Data,” our consolidated financial statements and the notes to those statements that appear elsewhere in this Annual Report. Amounts may not recalculate due to rounding differences.

Unless otherwise noted, all balances which are denominated in euros are converted at the December 31, 2008 exchange rate of €1.00 = $1.3971.

General

We are a global developer, manufacturer and marketer of technologically advanced, high value-added specialty chemicals and advanced materials. We serve more than 60,000 customers across a wide variety of industries and geographic areas. We operate through five business segments: (1) Specialty Chemicals; (2) Performance Additives; (3) Titanium Dioxide Pigments; (4) Advanced Ceramics; and (5) Specialty Compounds.

Our net sales consist of sales of our products, net of sales discounts, product returns and allowances. In addition, net sales include shipping and handling costs billed to customers. Sales are primarily made on a purchase order basis.

Our cost of products sold consists of variable and fixed components. Our variable costs are proportional to volume and consist principally of raw materials, packaging and related supplies, certain energy costs, and certain distribution costs including inbound, outbound, and internal shipping and transfer costs. Our fixed costs are not significantly impacted by production volume and consist principally of certain fixed manufacturing costs and other distribution network costs, including warehousing. Fixed manufacturing costs comprise headcount-related costs and overhead, including depreciation, periodic maintenance costs, purchasing and receiving costs, inspection costs and certain energy costs.

Our selling, general and administrative expenses include research and development costs, sales and marketing, divisional management expenses and corporate services including cash management, legal, benefit plan administration and other administrative and professional services.

We are focused on growth, productivity, cost reduction, margin expansion, bolt-on acquisitions, divestment of non-core businesses and debt reduction. In connection with this focus, among other things:

·We have cut costs, reduced overhead and eliminated duplicative positions in both acquired and existing businesses. In 2007, we closed two U.K. facilities acquired in a 2006 acquisition by our Specialty Compounds segment.  We also implemented a restructuring plan in March 2008 in our Color Pigments and Services business in connection with the business acquired from Elementis plc.  This included the reorganization and relocation of the North American Finance and IT services and the closure of three manufacturing facilities. In the fourth quarter of 2008, a restructuring plan was implemented in our Surface Treatment business within our Specialty Chemicals segment which included headcount reductions and the closure of two manufacturing facilities by mid 2009.

·In the fourth quarter of 2008, we reduced overhead and eliminated duplicative positions throughout the Company as part of our global cost control initiatives.

·We acquired the global color pigments business of Elementis plc in August 2007 that is included in our Color Pigments and Service business within our Performance Additives segment. In August 2008, we acquired Holliday Pigments, which is also included in our Color Pigments and Service business, and in September 2008, we acquired Nalco’s Finishing Technologies business which is included in our Specialty Chemicals segment;

·We completed the Titanium Dioxide Pigments venture with Kemira in September 2008. See Note 4, “Acquisitions,” for further details; and

·We completed the sale of our Groupe Novasep segment in January 2007 and our United States wafer reclaim business in February 2007.  In December 2007, we completed the sale of our Electronics business, excluding our European wafer reclaim business and in October 2008, we completed the sale of our pool and spa chemicals business.

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Factors Which Affect Our Results of Operations

Our Markets

Because the businesses in our segments generally serve many unrelated end-use markets, we discuss the principal market conditions on a segment basis rather than a consolidated basis. The principal market conditions in our segments and regions in which we operate that impacted our results of operations during the periods presented include the following:

Specialty Chemicals

·Demand for Surface Treatment products in our Specialty Chemicals segment generally follows the activity levels of metal processing manufacturers, including the automotive supply, steel and aerospace industries. Sales growth in the Surface Treatment business occurred in 2007 and continued in 2008 in most markets and regions served, primarily aerospace, general industrial and European automotive industries. This growth was driven by price increases and the impact of bolt-on acquisitions made in December 2007 and September 2008 that offset raw material cost increases and lower volumes from a slowdown in the automotive markets.  Results in 2009 could be negatively impacted by economic downturns in all business sectors and regions.

·Demand for our lithium products in the Fine Chemicals business line of our Specialty Chemicals segment is generally driven by demand for lithium carbonate in industrial applications, the aluminum business, glass ceramics, cement and the general demand in China. Sales of lithium products specifically used in life science applications depend on the trends in drug development and growth in pharmaceuticals markets as well as generic competition. Growth in the Fine Chemicals business occurred in 2007 and continued in 2008 in most market segments, driven by price increases and higher sales volumes of lithium applications.  However, the economic downturn could have a negative impact on our results in 2009.

Performance Additives

·Generally, a trend towards the increased use of colored concrete products in the North American construction market has historically had a positive effect on our Color Pigments and Services business line. However, a general slowdown in the construction market negatively impacted North American construction sales beginning in 2007. North American volumes were lower in 2008 and are expected to be down again in 2009 due to the severe contraction in the construction industry. Sales in our Color Pigments and Services business in North America were favorably impacted in 2008 by the acquisition of the global color pigments business of Elementis plc in August 2007 and the acquisition of Holliday Pigments in August 2008, as well as higher selling prices implemented to help recover raw material and energy cost increases. Unlike North America, construction volumes in Europe in our Color Pigments and Services business increased slightly in 2007. However, weaker economic conditions in Europe resulted in a reduction in European construction volumes in 2008 and we expect this trend to continue in 2009.

·The change in the market to environmentally advanced wood treatment chemical products, such as alkaline copper quaternary, or ACQ, and the phase out of chromated copper arsenate, or CCA, for residential use previously had a positive impact on the Timber Treatment Chemicals business, which is a leading supplier of these higher margin products. However, the market position of ACQ was negatively impacted in 2007 and 2008 by customer shifts to substitute products, a general slowdown in the construction market and the use of wood substitutes. These trends are expected to continue in 2009. The expiration of the ACQ patent in May 2007 had a negative impact on our results of operations, as at least one new competitor has entered the market and others may follow.  We recently introduced our newest Ecolife system which utilizes Ecovance, a high-performance non-metallic preservative with enhanced environmental benefits. Commercialization began in 2008, but did not have a significant impact in 2008 and is not expected to have a significant impact in 2009.

·In the Clay-based Additives business, sales were up slightly in 2007 and continued to increase in 2008 as increased selling prices and volumes for oilfield applications and increased selling prices of coatings and inks were partially offset by lower volumes of coatings and carbonless applications.  As a result of the economic slowdown, sales volumes are expected to be lower in 2009.

·Raw material costs have increased in general in the Performance Additives segment, in particular, iron oxide for Color Pigments and Services, quaternary amine (“quat”) for Clay-based Additives and monoethanolamine (“MEA”) for Timber Treatment Chemicals. Our ability to pass on additional selling price increases for raw material increases in 2009 is uncertain in these businesses.

Titanium Dioxide Pigments

·Demand for our titanium dioxide products in anatase grade is driven mainly by demand in the synthetic fiber industry, while demand for titanium dioxide products in rutile grade and our functional additives is driven by demand in the coatings, construction, cosmetics, pharmaceutical, food, paper and plastics industries. Market conditions, including pricing pressure and

39

current industry overcapacity, have continued to negatively impact this segment. Volumes and selling prices in the fiber anatase business decreased in 2007 and continued to decline in 2008.  While sales of titanium dioxide products in rutile grade were up slightly in 2007 on increased volumes, sales of these products were down in 2008 due to lower selling prices, partially offset by slightly higher volumes.  Our functional additives business increased in 2007 on higher selling prices and volumes, but was down in 2008 on lower volumes.  The economic downturn could have a negative impact on the results of these applications in 2009.

·As discussed in Note 4, “Acquisitions,” we completed the formation of a venture with Kemira on September 1, 2008 that focuses on producing and marketing specialty titanium dioxide pigments for the synthetic fiber, packaging inks, cosmetics, pharmaceutical and food industries.

Advanced Ceramics

·Demand for our ceramic medical devices is mainly tied to the aging population in Europe and the United States. Although the volume of our products used in medical device applications sold experienced double-digit growth each year from 2001 through 2005, in 2006 some customers in the U.S. reduced their demand due to high inventory levels and delayed approvals resulting in lower volumes. However, sales of our medical device applications increased in 2007 on higher volumes and continued to increase in 2008. We expect this trend to continue throughout 2009.

·Despite the negative impact of pricing pressure from Asian competitors, sales of ceramic products for use in cutting tool products were higher in 2007 due to volume increases and new customer projects. Volumes of cutting tool applications were up slightly in 2008.  Sales of mechanical systems and applications were up in 2007, but were lower in 2008 on decreased volumes. Sales of electronic applications were lower in 2007 primarily on decreased volumes and continued to decrease in 2008 on lower selling prices and volumes.  Sales of our multi-functional applications were higher in 2007 from increased volumes, but were down in 2008 from lower volumes and selling prices.

Volumes for these applications, particularly cutting tools, electronics and multi-functional, are expected to be lower in 2009 as they are negatively impacted by the economic downturn, particularly in the automotive industry.

Specialty Compounds

·Our largest product line in the Specialty Compounds segment is wire and cable compounds. Sales within this product line are dependent upon the telecommunications market and related sectors, specifically demand for high-end voice and data communication wire and cable, for which our Specialty Compounds segment is a significant provider of sheathing materials. Newly developed non-halogen products for wire and cable data communication, military and other applications have expanded business in North America for those applications and created opportunities in Europe. Although sales of wire and cable products were up slightly in 2007, sales growth was due to the acquisition of the Megolon division of Scapa Group, plc. As a result of a general downturn in the wire and cable market, volumes of wire and cable products were down slightly in 2008 and are expected to decline in 2009.

·Most of the other end-use markets for which Specialty Compounds’ products are used generally track growth of gross domestic product, but many are also application specific, such as automotive. We are focusing more of our efforts towards increasing high margin specialty products, in particular, thermoplastic elastomers, and less of our efforts in automotive and footwear. Our net sales in consumer/industrial thermoplastic elastomers were up in 2007, but were flat in 2008.  Net sales of regulated packaging were lower in 2007 and 2008 and are expected to continue to decline in 2009.

·Raw material prices for polyvinyl chloride (“PVC”) resin and plasticizers, key raw materials used in the production of wire and cable products, were slightly lower in 2007, but were up in 2008.  We expect the prices of PVC resin and plasticizers to be lower in 2009.

Global Exposure

We operate a geographically diverse business. Of our 2008 net sales, 54% were shipments to Europe, 29% to North America (predominantly the United States) and 17% to the rest of the world. For a geographic description of the origin of our net sales and location of our long-lived assets, see Note 3, “Segment Information.”

We estimate that we sold to customers in more than 60 countries during this period. Currently, we serve our diverse and extensive customer base with 96 manufacturing facilities in 26 countries. Consequently, we are exposed to global economic and political changes, particularly currency fluctuations that could impact our profitability and demand for our products.

Our sales and production costs are mainly denominated in U.S. dollars or euros. Our results of operations and financial condition have been historically impacted by the fluctuation of the euro against our reporting currency, the U.S. dollar. For the year ended

40

December 31, 2008, the average exchange rate of the euro against the U.S. dollar was higher compared to 2007. As a result, our net sales, gross profit and operating income were positively impacted. Historically, however, our operating margins have not been significantly impacted by currency fluctuations because, in general, sales and costs of products sold are generated or incurred in the same currency, subject to certain exceptions.

Raw Materials

Raw materials constituted approximately 52% of our 2008 cost of products sold. We have a broad raw material base, with the cost of no single raw material representing more than 3% of our cost of products sold in 2008. Nonetheless, the significant price fluctuations our raw materials have experienced in the past during periods of high demand have had an adverse impact on our results of operations. In particular, higher prices for iron-oxide used in the Color Pigments business of our Performance Additives segment had a negative impact on results in 2007 and 2008.  We cannot accurately predict the impact of any future price increases for raw materials or any raw material shortages on our business as a whole or in specific geographic regions. In addition, we may not be able to pass on raw material price increases to our customers.  See details of our ten most significant raw materials (in terms of dollars) in Item 1, “Business — Raw Materials.”

Energy Costs

In 2008, energy purchases represented approximately 7% of our cost of products sold. However, within certain business lines, such as our Titanium Dioxide Pigments segment and the Color Pigments and Services and Clay-based Additives businesses of our Performance Additives segment, energy costs are more significant. The cost of products sold for certain of our businesses, including Color Pigments and Services and Clay-based Additives, increases when the price of natural gas in North America rises. Natural gas prices in North America were relatively stable in 2007, but were higher during 2008.  Natural gas prices in Europe, where our Titanium Dioxide Pigments segment is located, have historically been relatively stable, although prices were higher in 2007 and 2008 compared to prior years.

Income Taxes

As of December 31, 2008, the Company has U.S. federal and foreign corporate tax loss carryforwards (excluding state and local amounts) of approximately $197.6 million, of which $43.5 million expire in years 2009 through 2028 and of which $154.1 million have no current expiration date. Included in the U.S. federal and foreign carryforwards are U.S. federal tax loss carryforwards of $24.1 million that expire in years through 2027, of which $1.2 million are subject to limitations. The Company also has state and local tax loss carryforwards of approximately $204.5 million expiring in years 2009 through 2028.

The worldwide valuation allowance decreased by $6.7 million to $84.9 million at December 31, 2008. Of this amount, $50.7 million was a charge to income tax expense, $16.3 million represents a decrease to other comprehensive income, $35.4 million was reversed primarily as a result of the reduction in U.S. deferred tax assets due to the sale of the pool and spa chemicals business and $2.8 million represents a decrease recorded to goodwill. The remainder related to foreign currency translation adjustments and other balance sheet items.

Acquisitions

During the periods presented, we made certain selective acquisitions and strategic transactions pursuant to our business strategy of achieving profitable growth. See Note 4, “Acquisitions,” for further details.

Special Charges and Credits

During the periods presented, we incurred certain special charges that included goodwill impairment charges, systems/organization establishment expenses, restructuring and other severance costs, foreign exchange gains and losses and inventory write-up charges. See “Items excluded from Adjusted EBITDA” section in Note 3, “Segment Information,” for a discussion of special charges and credits recorded in the years ended December 31, 2008, 2007 and 2006.

Special Note Regarding Non-GAAP Financial Measures

A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. From time to time in this management’s discussion and analysis, we disclose non-GAAP financial measures, primarily Adjusted EBITDA, as defined below.

Definition of Adjusted EBITDA

The presentation of consolidated Adjusted EBITDA contained in this report is calculated using the definition set forth in the senior

41

secured credit agreement as a basis and reflects management’s interpretations thereof. Adjusted EBITDA, which is referred to under the senior secured credit agreement as “Consolidated EBITDA,” is defined in the senior secured credit agreement as consolidated earnings (which, as defined in the senior secured credit agreement, equals income (loss) before the deduction of income taxes of the Company and our Restricted Subsidiaries (as such term is defined in the senior secured credit agreement), excluding extraordinary items) plus:

·interest expense;

·depreciation expense;

·amortization expense, including amortization of deferred financing fees;

·extraordinary losses and non-recurring charges;

·non-cash charges;

·losses on asset sales;

·restructuring charges or reserves (including severance, relocation costs and one-time compensation charges and costs relating to the closure of facilities);

·expenses paid by us or any of our subsidiaries in connection with the Dynamit Nobel Acquisition, the senior secured credit agreement, the granting of liens under the security documents (as such term is defined in the senior secured credit agreement), the indenture governing the 2014 Notes and the offering of the 2014 Notes and any other related transactions;

·any expenses or charges incurred in connection with any issuance of debt or equity securities;

·any fees and expenses related to permitted acquisitions;

·any deduction for minority interest expense; and

·items arising in connection with CCA litigation related to our Timber Treatment Chemicals business of our Performance Additives segment;

less:

·extraordinary gains and non-recurring gains;

·non-cash gains; and

·gains on asset sales,

in all cases, subject to certain exclusions.

For presentation purposes within this report, we use the computation set forth in our senior secured credit agreement as a basis which reflects management’s interpretations thereof. Management has determined that stock-based compensation costs, which are non-cash charges, will not be an adjustment in calculating Adjusted EBITDA as these costs will be an ongoing recurring cost to the Company. These costs are recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. Specifically, the calculation of Adjusted EBITDA according to the indenture underlying our 2014 Notes and the facility agreement governing our Titanium Dioxide Pigments venture excludes certain adjustments prescribed within the senior secured credit agreement. Given that borrowings under the senior secured credit agreement are secured by most of our assets and given that the calculation does not materially differ from the calculation of Adjusted EBITDA for performance measurement purposes, we believe this is the most appropriate computation of Adjusted EBITDA to present.

Management’s Uses

We use Adjusted EBITDA on a consolidated basis to assess our operating performance. We believe this financial measure on a consolidated basis is helpful in highlighting trends in our overall business because the items excluded in calculating Adjusted EBITDA have been deemed by management to have little or no bearing on our day-to-day operating performance. It is also the most significant criterion in our calculation of performance-based cash bonuses and our determination of whether certain performance-based stock options and restricted stock units vest, all of which are tied to Adjusted EBITDA targets.

We also use Adjusted EBITDA on a consolidated basis as a liquidity measure. We believe this financial measure on a consolidated basis is important in analyzing our liquidity because our senior secured credit agreement and indenture governing the 2014 Notes contain financial covenants that are determined based on Adjusted EBITDA. These covenants are material terms of these agreements, because they govern substantially all of our long-term debt, which in turn represents a substantial portion of our capitalization. Non-compliance with these financial covenants under our senior secured credit facilities—our maximum total leverage ratio and our minimum interest coverage ratio, in particular—could result in the lenders requiring us to immediately repay all amounts borrowed. Any such acceleration could also lead to the noteholders accelerating the maturity of the 2014 Notes. In addition, if we cannot satisfy these financial covenants in the indenture governing the 2014 Notes, we cannot engage in certain activities, such as incurring additional indebtedness or making certain payments. Consequently, Adjusted EBITDA is critical to our assessment of our liquidity.

We also use Adjusted EBITDA on a segment basis as the primary measure used by our chief operating decision maker, our Chief Executive Officer, to evaluate the ongoing performance of our business segments and reporting units. On a segment basis, we define Adjusted EBITDA as operating income excluding depreciation and amortization, certain non-cash gains and charges, certain other

42

special gains and charges determined by our senior management to be non-recurring gains and charges and certain items deemed by our senior management to have little or no bearing on the day-to-day operating performance of our business segments and reporting units. The adjustments made to operating income directly correlate with the adjustments to net income in calculating Adjusted EBITDA on a consolidated basis pursuant to the senior secured credit agreement, which reflects management’s interpretations thereof.

Limitations

Adjusted EBITDA has limitations as an analytical tool, and should not be viewed in isolation and is not a substitute for U.S. GAAP measures of earnings and cash flows. Material limitations associated with making the adjustments to our earnings and cash flows to calculate Adjusted EBITDA, and using this non-GAAP financial measure as compared to the most directly comparable U.S. GAAP financial measures, include:

·the cash portion of interest expense, net, income tax provision (benefit), and restructuring as well as non-recurring charges related to securities issuance, acquisition activities, and systems/organization establishment, generally represent charges (gains) which may significantly affect funds available to use in our operating, investing and financing activities;

·non-operating foreign exchange gains (losses), although not immediately affecting cash used in investing activities, may affect the amount of funds needed to service our debt if those currency impacts remain in place as we meet our future principal repayment obligations; and

·depreciation, amortization, non-cash (gains) charges and impairment charges, though not directly affecting our current cash position, represent the wear and tear and/or reduction in value of the plant, equipment and intangible assets which permit us to manufacture and/or market our products; these items may be indicative of future needs for capital expenditures, for development or acquisition of intangible assets or relevant trends causing asset value changes.

An investor or potential investor may find any one or all of these items important in evaluating our performance, results of operations, financial position and liquidity. Management compensates for the limitations of using non-GAAP financial measures by using them only to supplement our U.S. GAAP results to provide a more complete understanding of the factors and trends affecting our business.

Adjusted EBITDA is not an alternative to net income (loss) or income (loss) from continuing operations before taxes and minority interest or operating income or cash flows from operating activities as calculated and presented in accordance with U.S. GAAP. You should not rely on Adjusted EBITDA as a substitute for any such U.S. GAAP financial measures. We strongly urge you to review the reconciliations of Adjusted EBITDA to U.S. GAAP financial measures and other financial information, in each case included elsewhere in this Annual Report. We also strongly urge you not to rely on any single financial measure to evaluate our business. Our measure of Adjusted EBITDA may not be comparable to those of other companies.

Results of Operations

Actual Results of Operations

The following table presents the major components of our operations on an actual basis and Adjusted EBITDA (the reconciliation to net (loss) income is set forth in—Reconciliation of Net (Loss) Income to Adjusted EBITDA for the years ended December 31, 2008, 2007 and 2006), including as a percentage of net sales, for the periods presented. See Note 3, “Segment Information,” for segment information and a reconciliation to income (loss) from continuing operations before taxes and minority interest to Adjusted EBITDA on a segment basis.

43

	Year ended December 31,
($ in millions)	2008			2007			2006
Statement of operations data:
Net sales:
Specialty Chemicals	$	1,232.6		$	1,082.9		$	918.3
Performance Additives	835.6			798.5			724.8
Titanium Dioxide Pigments	534.8			442.9			409.1
Advanced Ceramics	505.9			452.5			389.6
Specialty Compounds	261.5			276.6			251.0
Corporate and other	9.7			11.8			21.9
Total net sales	3,380.1			3,065.2			2,714.7
Gross profit	1,014.3			976.1			855.7
	30.0		%	31.8		%	31.5		%
Selling, general and administrative expenses	661.3			597.6			540.4
	19.6		%	19.5		%	19.9		%
Impairment charges	809.5			—			2.2
Restructuring and other severance costs	35.3			12.0			4.9
Gain on sale of assets and other	(2.4		)	(4.7		)	(0.3		)
Operating income (loss):
Specialty Chemicals	223.7			206.9			155.0
	18.1		%	19.1		%	16.9		%
Performance Additives	(438.5		)	81.5			79.7
	(52.5		)%	10.2		%	11.0		%
Titanium Dioxide Pigments	(229.0		)	38.4			45.8
	(42.8		)%	8.7		%	11.2		%
Advanced Ceramics	96.6			83.8			68.0
	19.1		%	18.5		%	17.5		%
Specialty Compounds	(83.9		)	22.0			21.9
	(32.1		)%	8.0		%	8.7		%
Corporate and other	(58.3		)	(61.4		)	(61.9		)
Total operating (loss) income	(489.4		)	371.2			308.5
Other expenses, net:
Interest expense	(231.1		)	(219.3		)	(199.9		)
Interest income	6.0			11.5			2.4
Gain (loss) on early extinguishment of debt	4.0			(18.6		)	—
Refinancing expenses	—			(0.9		)	—
Foreign exchange (loss) gain, net	(32.3		)	7.8			8.6
Other, net	0.7			—			1.8
Other expenses, net	(252.7		)	(219.5		)	(187.1		)
(Loss) income from continuing operations before taxes and minority interest	(742.1		)	151.7			121.4
Income tax (benefit) provision	(23.9		)	62.3			61.3
(Loss) income from continuing operations before minority interest	(718.2		)	89.4			60.1
Minority interest in continuing operations, net of tax	83.6			(7.9		)	—
Net (loss) income from continuing operations	(634.6		)	81.5			60.1
Income from discontinued operations, net of tax	3.3			25.3			48.1
Gain on sale of discontinued operations, net of tax	34.3			180.6			—
Minority interest in discontinued operations, net of tax	—			(0.1		)	(5.2		)
Net (loss) income	$	(597.0	)	$	287.3		$	103.0
Adjusted EBITDA:
Specialty Chemicals	$	313.0		$	262.2		$	206.6
	25.4		%	24.2		%	22.5		%
Performance Additives	107.1			150.7			128.7
	12.8		%	18.9		%	17.8		%
Titanium Dioxide Pigments	83.1			82.7			81.9
	15.5%			18.7		%	20.0		%
Advanced Ceramics	150.2			128.1			104.8
	29.7		%	28.3		%	26.9		%
Specialty Compounds	34.0			34.3			31.7
	13.0		%	12.4		%	12.6		%
Corporate and other	(48.5		)	(55.6		)	(47.8		)
Total Adjusted EBITDA (a)	$	638.9		$	602.4		$	505.9

(a)This amount does not include $1.8 million and $68.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the former Groupe Novasep segment which was sold on January 9, 2007; $37.6 million and $35.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the Electronics business sold on December 31, 2007; and $5.4 million, $12.0 million and $12.0 million for the years ended December 31, 2008, 2007 and 2006, respectively, of Adjusted EBITDA from the pool and spa chemicals business sold on October 10, 2008.

44

The following table presents the changes in the major components of our operations on a historical basis in dollars and percentages:

	Change: 2008 versus 2007											Change: 2007 versus 2006
						Constant			Constant								Constant			Constant
				%		Currency			Currency						%		Currency			Currency
($ in millions)	Total			Change		Effect (a)			Basis			Total			Change		Effect (a)			Basis
Statement of operations data:
Net sales:
Specialty Chemicals	$	149.7		13.8	%	$	53.0		$	96.7		$	164.6		17.9	%	$	63.7		$	100.9
Performance Additives	37.1			4.6		3.8			33.3			73.7			10.2		22.9			50.8
Titanium Dioxide Pigments	91.9			20.7		32.9			59.0			33.8			8.3		36.7			(2.9		)
Advanced Ceramics	53.4			11.8		35.7			17.7			62.9			16.1		34.7			28.2
Specialty Compounds	(15.1		)	(5.5	)	(3.1		)	(12.0		)	25.6			10.2		9.1			16.5
Corporate and other	(2.1		)	(17.8	)	0.7			(2.8		)	(10.1		)	(46.1	)	0.9			(11.0		)
Total net sales	314.9			10.3		123.0			191.9			350.5			12.9		168.0			182.5
Gross profit	38.2			3.9		45.9			(7.7		)	120.4			14.1		55.8			64.6
Selling, general and administrative expenses	63.7			10.7		25.5			38.2			57.2			10.6		33.8			23.4
Impairment charges	809.5								809.5			(2.2		)						(2.2		)
Restructuring and other severance costs	23.3								23.3			7.1								7.1
Gain on sale of assets and other	2.3								2.3			(4.4		)						(4.4		)
Total operating expenses	898.8			148.6		25.5			873.3			57.7			10.5		33.8			23.9
Operating income (loss):
Specialty Chemicals	16.8			8.1		9.1			7.7			51.9			33.5		10.3			41.6
Performance Additives	(520.0		)	(638.0	)	1.1			(521.1		)	1.8			2.3		1.7			0.1
Titanium Dioxide Pigments	(267.4		)	(696.4	)	1.8			(269.2		)	(7.4		)	(16.2	)	3.2			(10.6		)
Advanced Ceramics	12.8			15.3		8.8			4.0			15.8			23.2		7.4			8.4
Specialty Compounds	(105.9		)	(481.4	)	0.3			(106.2		)	0.1			0.5		0.4			(0.3		)
Corporate and other	3.1			5.0		(0.7		)	3.8			0.5			0.8		(1.0		)	1.5
Total	(860.6		)	(231.8	)	20.4			(881.0		)	62.7			20.3		22.0			40.7
Other income (expenses):
Interest expense	(11.8		)	5.4		0.9			(12.7		)	(19.4		)	(9.7	)	(2.2		)	(17.2		)
Interest income	(5.5		)	(47.8	)	(0.3		)	(5.2		)	9.1			379.2		(0.8		)	9.9
Gain (loss) on early extinguishment of debt	22.6											(18.6		)
Refinancing expenses	0.9											(0.9		)
Foreign exchange (loss) gain, net	(40.1		)									(0.8		)
Other, net	0.7											(1.8		)
(Loss) income from continuing operations before taxes and minority interest
Specialty Chemicals	1.1											55.3
Performance Additives	(533.1		)									(7.5		)
Titanium Dioxide Pigments	(272.3		)									(12.5		)
Advanced Ceramics	10.4											14.5
Specialty Compounds	(104.6		)									(0.7		)
Corporate and other	4.7											(18.8		)
Total	(893.8		)									30.3
Income tax (benefit) provision	(86.2		)									1.0
(Loss) income from continuing operations before minority interest	(807.6		)									29.3
Minority interest in continuing operations, net of tax	91.5											(7.9		)
Net (loss) income from continuing operations	(716.1		)									21.4
Income from discontinued operations, net of tax	(22.0		)									(22.8		)
Gain on sale of discontinued operations, net of tax	(146.3		)									180.6
Minority interest in discontinued operations, net of tax	0.1											5.1
Net (loss) income	$	(884.3	)									$	184.3
Adjusted EBITDA:
Specialty Chemicals	$	50.8		19.4	%	$	11.7		$	39.1		$	55.6		26.9	%	$	13.4		$	42.2
Performance Additives	(43.6		)	(28.9	)	2.0			(45.6		)	22.0			17.1		4.2			17.8
Titanium Dioxide Pigments	0.4			0.5		5.2			(4.8		)	0.8			1.0		6.9			(6.1		)
Advanced Ceramics	22.1			17.3		12.0			10.1			23.3			22.2		10.6			12.7
Specialty Compounds	(0.3		)	(0.9	)	—			(0.3		)	2.6			8.2		0.9			1.7
Corporate and other	7.1			12.8		(0.8		)	7.9			(7.8		)	(16.3	)	(0.8		)	(7.0		)
Total Adjusted EBITDA	$	36.5		6.1	%	$	30.1		$	6.4		$	96.5		19.1	%	$	35.2		$	61.3

(a)The constant currency effect is the translation impact calculated based on the change in the applicable rate, primarily the euro, to the U.S. dollar exchange rate for the applicable period.

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Year ended December 31, 2008 compared to year ended December 31, 2007

Overview

Net sales increased $314.9 million for the year ended December 31, 2008 compared with the prior year primarily due to the impact of bolt-on acquisitions, the positive impact of currency changes of $123.0 million and increased selling prices of $115.6 million. See further discussion by segment below.

Operating income decreased $860.6 million for the year ended December 31, 2008 compared with the prior year due to a goodwill impairment charge of $809.5 million, lower sales volumes, higher raw material and energy costs in all businesses and restructuring and other severance costs recorded in 2008 primarily related to cost control measures. The positive impact of currency changes of $20.4 million, increased selling prices and lower corporate costs due to decreased incentive compensation-related costs and professional fees had a favorable impact on operating income.

Adjusted EBITDA increased $36.5 million for the year ended December 31, 2008 primarily due to the positive impact of currency changes of $30.1 million, the selling price increases noted above and decreased corporate costs.

Net income from continuing operations decreased $716.1 million compared with the prior year primarily from the goodwill impairment charge, higher interest expense recorded in the year ended December 31, 2008 due to an increase in mark-to-market losses on our interest rate hedging instruments and increased foreign exchange losses on financing activities recorded in 2008.  This was partially offset by the increases noted above and costs of $18.6 million incurred in 2007 to redeem our 2011 Notes.

Minority interest in continuing operations, net of tax increased $91.5 million primarily related to the goodwill impairment charge recorded in the Titanium Dioxide Pigments venture in the fourth quarter of 2008.

Income from discontinued operations, net of tax was $3.3 million for the year ended December 31, 2008 and was comprised of income from operating the pool and spa chemicals business that was sold in October 2008. In the year ended December 31, 2007, income from discontinued operations, net of tax was $25.3 million and was primarily comprised of income from operating the pool and spa chemicals business and the Electronics business which was sold in December 2007.

The gain on sale of discontinued operations, net of tax for the year ended December 31, 2008 of $34.3 million is primarily related to the sale of the pool and spa chemicals business in October 2008. For the year ended December 31, 2007, the gain on sale of discontinued operations of $180.6 million is related to gain of $115.6 million (net of taxes) on the sale of Groupe Novasep and the gain of $65.0 million (net of taxes) on the sale of the Electronics business.

Net income decreased $884.3 million for the year ended December 31, 2008 compared with the prior year due to the reasons noted above.

Net sales

Specialty Chemicals.   Net sales increased $149.7 million over the prior year, including the positive impact of currency changes of $53.0 million. In the Fine Chemicals business, higher selling prices of lithium products, as well as increased volumes, had a favorable impact on net sales. Net sales in the Surface Treatment business were favorably impacted by higher selling prices and the impact of bolt-on acquisitions in December 2007 and September 2008.

Performance Additives.   Net sales increased $37.1 million over the prior year due to acquisitions in August 2007 and 2008.  Also, increased selling prices in our Color Pigments and Services and Clay-based Additives businesses and the positive impact of currency changes of $3.8 million had a favorable impact on net sales. This was partially offset by lower volumes of construction-related products in our Color Pigments and Services and Timber Treatment Chemicals businesses.

Titanium Dioxide Pigments.   Net sales increased $91.9 million over the prior year due to the completion of the venture with Kemira on September 1, 2008 and the positive impact of currency changes of $32.9 million.  This was partially offset by significantly lower net sales on lower volumes, as well as lower selling prices of titanium dioxide products, primarily commodity grade, and lower volumes of functional additives.

Advanced Ceramics.   Net sales increased $53.4 million over the prior year primarily due to the positive impact of currency changes of $35.7 million, increased volumes of medical applications and the impact of bolt-on acquisitions made in April 2007 and October 2008. This was partially offset by lower selling prices and volumes in most applications, particularly in mechanical systems and applications and multifunctional ceramics.

Specialty Compounds.   Net sales decreased $15.1 million over the prior year due to lower volumes in most businesses, particularly in wire and cable and regulated packaging applications, and the negative impact of currency changes of $3.1 million.  This was partially

46

offset by increased selling prices.

Corporate and other.   Net sales decreased $2.1 million over the prior year due to lower volumes and selling prices in the European wafer reclaim business.

Gross profit

Gross profit increased $38.2 million over the prior year due to the positive impact of currency changes of $45.9 million and the sales increases noted above, in particular selling price increases. This was partially offset by raw material cost increases, particularly from the impact of higher phosphoric acid and tin costs in our Specialty Chemicals segment, higher iron-oxide costs in our Color Pigments and Services business, higher quat costs in our Clay-based additives business and higher ethylene vinyl acetate, plasticizer and PVC resin costs in our Specialty Compounds segment. We also experienced lower volumes in our Color Pigments and Services, Timber Treatment Chemicals and Titanium Dioxide Pigments businesses and higher depreciation and amortization costs in most businesses including the impact of acquisitions. Gross profit as a percentage of net sales decreased to 30.0% for the year ended December 31, 2008 from 31.8% for the year ended December 31, 2007.

Selling, general and administrative expenses

Selling, general and administrative expenses, or SG&A, increased $63.7 million over the prior year due in part to the impact of currency changes of $25.5 million. Higher SG&A costs were also recorded in a few segments, particularly in Specialty Chemicals and Advanced Ceramics, related to increased sales volumes. SG&A expenses as a percentage of net sales was 19.6% in the year ended December 31, 2008 compared to 19.5% for the year ended December 31, 2007.

Impairment charges

We recorded a goodwill impairment charge of $809.5 million in the fourth quarter of 2008 due to the significant drop in global stock valuations, the substantial reduction in the market valuation of Rockwood and comparable companies, and the continuing negative global economic and market outlook. In particular, the downturn in the construction industry has had a negative impact on a number of our businesses. As a result, we recorded a non-cash goodwill impairment charge in the following businesses: Color Pigments and Services ($293.2 million), Timber Treatment Chemicals ($88.3 million) and Clay-based Additives ($75.1 million) within our Performance Additives segment; Titanium Dioxide Pigments segment ($247.7 million); and Specialty Compounds segment ($105.2 million). See further discussion in “Critical Accounting Policies and Estimates,” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 7, “Goodwill.”

Restructuring and other severance costs

We recorded $35.3 million of restructuring and other severance costs for the year ended December 31, 2008 throughout the Company.  These charges primarily related to headcount reductions as part of our global cost control initiatives.  We recorded $12.0 million of restructuring charges for the year ended December 31, 2007 for miscellaneous restructuring actions in the Specialty Chemicals, Performance Additives, Advanced Ceramics and Corporate and other segments for headcount reductions and facility closures. See Note 14, “Restructuring And Other Severance Costs,” for further details.

Gain on sale of assets

We recorded a gain of $2.4 million for the year ended December 31, 2008 primarily related to the sale of land that was acquired as part of the acquisition of Dynamit Nobel in 2004. For the year ended December, 2007, we recorded a gain of $4.7 million primarily related to the sale of our U.S. wafer reclaim business.

Operating income

Specialty Chemicals.   Operating income increased $16.8 million over the prior year primarily due to the positive impact of currency changes of $9.1 million and higher sales discussed above. This increase was partially offset by higher raw material costs of $25.5 million, primarily for phosphoric acid and tin, increased depreciation and amortization costs of $15.3 million, including the impact of bolt-on acquisitions made in December 2007 and September 2008, and increased restructuring and other severance costs of $14.6 million.

Performance Additives.   Operating income decreased $520.0 million over the prior year due to the goodwill impairment charge of $456.6 million, lower sales volumes discussed above, and higher raw material costs of $46.7 million, particularly higher iron-oxide costs in the Color Pigments and Services business and higher quat costs in our Clay-based Additives business. Higher depreciation and amortization costs of $9.6 million primarily due to the acquisitions made in August 2007 and 2008 and increased restructuring and other severance costs of $8.1 million also had an unfavorable impact on operating income.

47

Titanium Dioxide Pigments.   Operating income decreased $267.4 million over the prior year primarily due to the goodwill impairment charge of $247.7 million, lower sales volumes and selling prices discussed above, increased depreciation and amortization costs of $13.9 million and higher energy costs of $8.7 million. This was partially offset by increased sales related to the completion of the venture with Kemira on September 1, 2008.

Advanced Ceramics.   Operating income increased $12.8 million over the prior year primarily due to the positive impact of currency changes of $8.8 million, the increased sales volumes noted above and productivity improvements. The impact of bolt-on acquisitions made in April 2007 and October 2008 also had a favorable impact on operating income. This increase was partially offset by lower selling prices and increased depreciation and amortization costs of $6.5 million primarily related to the acquisitions discussed above.

Specialty Compounds.   Operating income decreased $105.9 million over the prior year due to the goodwill impairment charge of $105.2 million, lower sales volumes discussed above and higher raw material costs of $12.6 million, particularly ethylene vinyl acetate, plasticizer and PVC resin costs.  This was partially offset by lower operating costs and higher selling prices.

Corporate and other.   Operating loss decreased $3.1 million primarily due to lower incentive compensation related costs and lower professional fees, partially offset by lower gains on asset sales and higher depreciation and amortization costs.

Other income (expenses)

Interest expense.  Interest expense increased $11.8 million over the prior year. The years ended December 31, 2008 and 2007 included losses of $51.5 million and $32.2 million, respectively, representing the movement in the mark-to-market valuation of our interest rate hedging instruments. The remaining interest expense decrease of $7.5 million is primarily due to the redemption of the 2011 Notes in May 2007 in the aggregate amount of $273.4 million, partially offset by increased debt levels related to the completion of the Titanium Dioxide Pigments venture.

Interest income.  Interest income decreased $5.5 million for the year ended December 31, 2008 compared to the same period in the prior year due to lower average cash balances in 2008 compared to prior year and lower short-term average rates.

Gain/Loss on early extinguishment of debt.   In the fourth quarter of 2008, we redeemed €11.0 million of our senior subordinated notes due in 2014 at a discount and recorded a gain of $4.0 million. In the second quarter of 2007, we paid a redemption premium of $14.5 million and wrote off $4.1 million of deferred financing costs associated with the redemption of the 2011 Notes in May 2007.

Refinancing expenses.  In March 2007, we expensed $0.9 million related to the fourth amendment of the senior secured credit agreement resulting in a 50 basis point reduction on our tranche G term loans.

Foreign exchange, net.   For the year ended December 31, 2008, we had foreign exchange losses of $32.3 million primarily due to the impact of the weaker British Pound as of December 31, 2008 versus December 31, 2007 related to non-operating euro-denominated transactions. For the year ended December 31, 2007, we had foreign exchange gains of $7.8 million primarily related to euro-denominated debt, cash and inter-company loans.

Provision for income taxes

The effective income tax rate for the year ended December 31, 2008 was 3.2% and an income tax benefit of $23.9 million was recorded for the year ended December 31, 2008. The effective income tax rate compared to the federal statutory rate was negatively impacted primarily by non-deductible book goodwill impairments. It was also impacted negatively by domestic losses which are not tax effected as a result of a full valuation allowance and positively impacted by geographic earnings mix and an allocation of tax benefits to continuing operations. The effective income tax rate was 41.1% for the year ended December 31, 2007 and was favorably impacted by certain non-recurring items, primarily related to the impact of a statutory rate change in certain European jurisdictions and the allocation of tax benefits to continuing operations.

Minority interest in continuing operations

For the years ended December 31, 2008 and 2007, we recorded minority interest in continuing operations of $83.6 million and $(7.9) million.  Minority interest represents the minority interest portion of the Viance, LLC joint venture completed in January 2007 between our Timber Treatment Chemicals business and Rohm and Haas Company and the minority interest portion of the Titanium Dioxide Pigments venture completed in September 2008 between our Titanium Dioxide Pigments segment and Kemira.  Minority interest in 2008 is primarily related to the goodwill impairment charge recorded in the Titanium Dioxide Pigments venture in the fourth quarter of 2008.

Net (loss) income from continuing operations

Net loss from continuing operations for the year ended December 31, 2008 was $634.6 million as compared to net income from

48

continuing operations of $81.5 million for the prior year for the reasons described above.

Income from discontinued operations, net of tax

Income from discontinued operations, net of tax was $3.3 million for the year ended December 31, 2008 from operating the pool and spa chemicals business that was sold in October 2008, compared to $25.3 million for the year ended December 31, 2007, due to income from operating the Electronics business, that was sold in December 2007 and the pool and spa chemicals business.

Gain on sale of discontinued operations, net of tax

The gain on sale of discontinued operations, net of tax, of $34.3 million recorded for the year ended December 31, 2008 is primarily related to the sale of the pool and spa chemicals business in October 2008. The gain on the sale of the pool and spa chemicals business included a tax provision of $8.6 million related to the excess of taxable income at Group versus available net operating losses (“NOL’s”) at Group. Group, through its tax sharing agreement with its parent companies, will utilize available NOL’s at its parent companies to offset the taxable income not covered by Group NOL’s. The corresponding credit is reflected in additional paid in capital. For the year ended December 31, 2007, we recorded a gain on sale, net of tax, of $115.6 million as a result of the sale of the Groupe Novasep segment in January 2007 and a gain, net of tax, of $65.0 million as a result of the sale of the Electronics business in December 2007. The gain on the sale of the Electronics business included a tax provision of $29.8 million related to the excess of taxable income at Group versus available NOL’s at Group. Group, through its tax sharing agreement with its parent companies, will utilize available NOL’s at its parent companies to offset the taxable income not covered by Group NOL’s. The corresponding credit is reflected in additional paid in capital.

Minority interest in discontinued operations

Minority interest in discontinued operations represents the minority interest portion of Groupe Novasep’s net income for the year ended December 31, 2007.

Net (loss) income

Net loss for the year ended December 31, 2008 was $597.0 million as compared to net income of $287.3 million for the year ended December 31, 2007 for the reasons described above.

Adjusted EBITDA

Specialty Chemicals.   Adjusted EBITDA increased $50.8 million over the prior year primarily due to the impact of higher sales discussed above and the positive impact of currency changes of $11.7 million. This increase was partially offset by higher raw material costs of $25.5 million as discussed above.

Performance Additives.   Adjusted EBITDA decreased $43.6 million over the prior year due to lower sales volumes and higher raw material costs of $46.7 million as discussed above.

Titanium Dioxide Pigments.   Adjusted EBITDA increased $0.4 million over the prior year primarily due to the impact of currency changes of $5.2 million, as well as by increased sales related to the completion of the venture with Kemira on September 1, 2008. This was partially offset by the lower sales volumes and selling prices discussed above and higher energy costs of $8.7 million.

Advanced Ceramics.   Adjusted EBITDA increased $22.1 million over the prior year primarily due to the impact of the increased sales volumes noted above, productivity improvements and the positive impact of currency changes of $12.0 million. The impact of bolt-on acquisitions made in April 2007 and October 2008 also had a favorable impact on Adjusted EBITDA. This increase was partially offset by lower selling prices.

Specialty Compounds.   Adjusted EBITDA decreased $0.3 million primarily due to the lower sales volumes discussed above and higher raw material costs of $12.6 million, particularly ethylene vinyl acetate, plasticizer and PVC resin costs.  This was partially offset by lower operating costs and higher selling prices.

Corporate and other.   Adjusted EBITDA increased $7.1 million primarily due to lower incentive compensation related costs and lower professional fees.

Year ended December 31, 2007 compared to year ended December 31, 2006

Overview

Net sales increased $350.5 million for the year ended December 31, 2007 compared with the prior year driven by increased selling

49

prices of $76.4 million, strong demand in a number of our segments, particularly in our Specialty Chemicals segment, and higher volumes related to acquisitions. The positive impact of currency changes of $168.0 million also had a favorable impact on net sales. See further discussion by segment below.

Operating income and Adjusted EBITDA also increased for the year ended December 31, 2007 compared with the prior year primarily due to the impact of the sales increases noted above. Operating income and Adjusted EBITDA were negatively impacted by higher raw material costs in most businesses.

Net income from continuing operations increased $21.4 million in the year ended December 31, 2007 compared with the prior year primarily due to the reasons noted above. This was partially offset by costs of $18.6 million incurred in the second quarter of 2007 to redeem our 2011 Notes and higher interest expense recorded in the year ended December 31, 2007 compared to the prior year due to an increase in mark-to-market losses on our interest rate hedging instruments.

Income from discontinued operations, net of tax, decreased $22.8 million in the year ended December 31, 2007 compared with the prior year primarily due to the sale of Groupe Novasep in January 2007, partially offset by the tax benefit recorded in the first quarter of 2006 related to the favorable treatment on the sale of Rohner AG in 2006.  See further details in Note 2, “Discontinued Operations.”

The gain on sale of discontinued operations, net of tax, of $180.6 million for the year ended December 31, 2007 was comprised of the gain of $115.6 million (net of taxes) on the sale of Groupe Novasep and a gain of $65.0 million (net of taxes) on the sale of the Electronics business, excluding the European wafer reclaim business.

Net income increased $184.3 million in the year ended December 31, 2007 compared with the prior year primarily due to the reasons noted above.

Net sales

Specialty Chemicals.   Net sales increased $164.6 million over the prior year, primarily on higher selling prices, as well as increased volumes and the positive impact of currency changes of $63.7 million. In the Fine Chemicals business, higher selling prices of lithium products, as well as increased volumes, had a favorable impact on net sales. Net sales in the Surface Treatment business were favorably impacted by higher selling prices and increased volumes in most markets, particularly in European automotive, aerospace and general industrial applications.

Performance Additives.   Net sales increased $73.7 million over the prior year primarily due to the acquisition of the global color pigments business of Elementis plc completed on August 31, 2007, increased selling prices of ACQ products and the positive impact of currency changes of $22.9 million. This was partially offset by lower construction volumes in North America in our Color Pigments and Services business and lower volumes in our Timber Treatment Chemicals business.

Titanium Dioxide Pigments.   Net sales increased $33.8 million over the prior year due to the positive impact of currency changes of $36.7 million.  Excluding the impact of currency changes, net sales were down as lower volumes and prices of titanium dioxide in anatase grade were partially offset by higher selling prices for functional additives and higher volumes of titanium dioxide products in rutile grade.

Advanced Ceramics.   Net sales increased $62.9 million over the prior year primarily due to the positive impact of currency changes of $34.7 million and the impact of bolt-on acquisitions made in April 2007 and May 2006. Higher volumes in most businesses, particularly in medical, cutting tools, mechanical systems, and multi-functional ceramics also had a favorable impact on net sales. This was partially offset by lower selling prices and volume declines in electronic applications.

Specialty Compounds.   Net sales increased $25.6 million over the prior year due to higher volumes resulting from an acquisition made in October 2006 in the wire and cable business and the positive impact of currency changes of $9.1 million.

Corporate and other.   Net sales decreased $10.1 million over the prior year primarily due to the sale of our U.S. wafer reclaim business in the first quarter of 2007.

Gross profit

Gross profit increased $120.4 million over the prior year primarily due to the selling price increases noted above, as well as productivity improvements and the positive impact of currency changes of $55.8 million. This was partially offset by raw material cost increases, particularly from the impact of higher zinc and other raw material costs in our Specialty Chemicals segment, higher iron-oxide and cobalt raw material costs in our Color Pigments and Services business and higher copper costs in our Timber Treatment Chemicals business of our Performance Additives segment. Gross profit as a percentage of net sales was 31.8% in the year ended December 31, 2007 versus 31.5% in the year ended December 31, 2006. Gross profit in 2007 includes a reduction of $5.7 million primarily due to an inventory write-up charge related to the acquisition of the global color pigments business of Elementis

50

plc. In 2006, gross profit was lower due to an inventory write-up charge of $1.1 million.

Selling, general and administrative expenses

Selling, general and administrative expenses, or SG&A, increased $57.2 million over the prior year primarily due to the impact of currency changes of $33.8 million. Higher SG&A costs were also recorded in a number of our segments related to increased sales volumes. SG&A expenses as a percentage of net sales were 19.5% in the year ended December 31, 2007 compared to 19.9% in the year ended December 31, 2006, as a result of higher net sales impacted by selling price increases.

Impairment charges

We recorded an impairment charge of $2.2 million in 2006 related to the write-down of machinery and equipment in the Fine Chemicals division of the Specialty Chemicals segment.

Restructuring and other severance costs

We recorded $12.0 million of restructuring charges in the year ended December 31, 2007 for miscellaneous restructuring actions in the Specialty Chemicals, Performance Additives, Advanced Ceramics and Corporate and other segments.  In the Corporate and other segment, $4.7 million of restructuring charges were recorded for the year ended December 31, 2007 primarily related to the restructuring of the wafer reclaim business.  We recorded $4.9 million of restructuring charges in the year ended December 31, 2006 for miscellaneous restructuring actions in the Specialty Chemicals, Performance Additives, Advanced Ceramics and Corporate and other segments for miscellaneous headcount reductions and facility closures. See Note 14, “Restructuring And Other Severance Costs,” for further details.

Gain on sale of assets

We recorded gains of $4.7 million and $0.3 million for the years ended December 31, 2007 and 2006, respectively.  The gain of $4.7 million for the year ended December 31, 2007 is primarily related to the sale of our U.S wafer reclaim business.

Operating income

Specialty Chemicals.   Operating income increased $51.9 million primarily due to the impact of higher sales in both the Surface Treatment and Fine Chemicals businesses and the positive impact of currency changes of $10.3 million. This increase was partially offset by higher raw material costs of $25.2 million primarily related to zinc and other raw materials.

Performance Additives.   Operating income increased $1.8 million over the prior year due to the positive impact of currency changes of $1.7 million. This increase was partially offset by the lower sales volumes discussed above, and higher raw material costs of $9.8 million, particularly copper costs in the Timber Treatment Chemicals business, higher iron-oxide and cobalt costs in our Color Pigments and Services business and higher quat costs in our Clay-based Additives business.  Higher depreciation and amortization costs of $14.0 million primarily due to the Viance, LLC joint venture formed in January 2007 and the acquisition of the global color pigments business of Elementis plc, along with increased inventory write-up charges of $4.7 million primarily related to the Elementis acquisition, also had an unfavorable impact on operating income.

Titanium Dioxide Pigments.   Operating income decreased $7.4 million over the prior year due to higher raw material costs of $4.6 million, particularly zinc and other raw material costs, higher energy costs of $2.1 million, an unfavorable mix and lower selling prices of titanium dioxide products.  This decrease was partially offset by the positive impact of currency changes of $3.2 million.

Advanced Ceramics.   Operating income increased $15.8 million over the prior year primarily due to the impact of increased sales in most businesses, productivity improvements and the positive impact of currency changes of $7.4 million. The impact of a bolt-on acquisition made in April 2007 also had a favorable impact on operating income. This increase was partially offset by lower selling prices and increased depreciation and amortization costs of $7.4 million related to the acquisition discussed above.

Specialty Compounds.   Operating income increased $0.1 million due to the positive impact of currency changes of $0.4 million, higher sales volumes from the acquisition completed in October 2006 and a favorable product mix.  This was partially offset by higher depreciation and amortization costs of $2.5 million related to an acquisition in October 2006.

Corporate and other.   Operating loss decreased $0.5 million over the prior year primarily due to higher gains on asset sales of $4.0 million primarily related to the sale of our U.S. wafer reclaim business and lower professional fees incurred regarding systems and internal control documentation required in connection with the Company’s compliance with the Sarbanes-Oxley Act of 2002.  This was partially offset by additional stock compensation expense related to the May 2007 equity grant, higher legal accruals and increased restructuring charges.

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Other income (expenses)

Interest expense.  Interest expense increased $19.4 million in the year ended December 31, 2007 compared to the prior year. The years ended December 31, 2007 and 2006 included losses of $32.2 million and gains of $7.2 million, respectively, representing the movement in the mark-to-market valuation of our interest rate hedging instruments. The remaining interest expense decrease of $20.0 million is primarily due to lower interest expense related to the redemption in May 2007 of the 2011 Notes in the aggregate amount of $273.4 million.

Interest income.  Interest income increased $9.1 million in the year ended December 31, 2007 compared to the prior year from interest earned on cash from operations and interest earned on cash equivalents stemming from the net cash proceeds received from the sale of Groupe Novasep and the formation of the Viance, LLC joint venture in January 2007.

Loss on early extinguishment of debt.  In May 2007, we paid a redemption premium of $14.5 million and wrote off $4.1 million of deferred financing costs associated with the redemption of the 2011 Notes in May 2007.

Refinancing expenses.   In March 2007, we expensed $0.9 million related to the fourth amendment of the senior secured credit agreement resulting in a 50 basis point reduction on our new tranche G term loans.

Foreign exchange gain, net.   For the years ended December 31, 2007 and 2006, we had foreign exchange gains of $7.8 million and $8.6 million, respectively, primarily related to euro-denominated debt, cash and inter-company loans.

Other, net.   For the year ended December 31, 2006, we recorded $1.8 million of income in connection with the correction of an immaterial error related to a previously unrecorded asset in the Titanium Dioxide Pigments segment of $1.6 million.

Provision for income taxes

The effective income tax rate for the year ended December 31, 2007 was 41.1%. We recorded an income tax provision of $62.3 million for the year ended December 31, 2007.  The effective income tax rate was favorably impacted by certain non-recurring items, primarily a reduction related to the impact of statutory rate changes in certain European jurisdictions and the allocation of tax benefits to continuing operations. The effective income tax rate for the year ended December 31, 2006 was 50.5% and was negatively impacted by an increase in the valuation allowances primarily related to the U.S. operations and favorably impacted by the foreign rate differential.

Minority interest in continuing operations

Minority interest represents the minority interest portion of the Viance, LLC joint venture that was completed in January 2007 between our Timber Treatment Chemicals business and Rohm and Haas Company.

Net income from continuing operations

Net income from continuing operations was $81.5 million as compared to net income from continuing operations of $60.1 million for the year ended December 31, 2006 for the reasons described above.

Income from discontinued operations, net of tax

Income from discontinued operations, net of tax decreased to $25.3 million for the year ended December 31, 2007 compared to income of $48.1 million for the year ended December 31, 2006 due to income earned from the Groupe Novasep segment in the year ended December 31, 2006 and the tax benefit recorded in the first quarter of 2006 related to the favorable treatment on the sale of Rohner AG. As noted above, the Groupe Novasep segment was sold in January 2007.

Gain on sale of discontinued operations, net of tax

This included a gain on sale of $115.6 million (net of tax) as a result of the sale of the Groupe Novasep segment in January 2007 and a gain on sale of $65.0 million (net of tax) as a result of the sale of the Electronics business, excluding the European wafer reclaim business, in December 2007. The gain on the sale of the Electronics business included a tax provision of $29.8 million related to the excess of taxable income at Group versus available NOL’s at Group. Group, through its tax sharing agreement with its parent companies, will utilize available NOL’s at its parent companies to offset the taxable income not covered by Group NOL’s. The corresponding credit is reflected in additional paid in capital.

Minority interest in discontinued operations

Minority interest in discontinued operations represents the minority interest portion of Groupe Novasep’s net income for the years

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ended December 31, 2007 and 2006.

Net income

Net income for the year ended December 31, 2007 was $287.3 million as compared to net income of $103.0 million for the year ended December 31, 2006 for the reasons described above.

Adjusted EBITDA

Specialty Chemicals.   Adjusted EBITDA increased $55.6 million primarily due to higher sales in both the Surface Treatment and Fine Chemicals businesses and the positive impact of currency changes of $13.4 million. This increase was partially offset by higher raw material costs.

Performance Additives.   Adjusted EBITDA increased $22.0 million over the prior year primarily from the selling price increases noted above.  The positive impact of currency changes of $4.2 million and the acquisition of the global color pigments business of Elementis plc that was completed on August 31, 2007 also had a favorable impact on Adjusted EBITDA. This was partially offset by higher raw material costs and the lower sales volumes discussed above.

Titanium Dioxide Pigments.   Adjusted EBITDA increased $0.8 million over the prior year due to the positive impact of currency changes of $6.9 million. Excluding the impact of currency changes, Adjusted EBITDA was lower due to higher raw material and energy costs, an unfavorable mix and lower selling prices.

Advanced Ceramics.   Adjusted EBITDA increased $23.3 million over the prior year primarily due to the impact of the bolt-on acquisition made in April 2007, productivity improvements and the positive impact of currency changes of $10.6 million. Increased sales in most businesses also had a favorable impact on Adjusted EBITDA. This increase was partially offset by lower selling prices.

Specialty Compounds.   Adjusted EBITDA increased $2.6 million primarily due to higher volumes resulting from an acquisition made in October 2006 in the wire and cable business and a favorable product mix.

Corporate and other.   Adjusted EBITDA loss increased $7.8 million primarily due to higher legal accruals and the recording of additional stock compensation expense related to the May 2007 equity grant.

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Reconciliation of Net (Loss) Income to Adjusted EBITDA

Because we view Adjusted EBITDA on both a consolidated basis and segment basis as an operating performance measure, we use net (loss) income as the most comparable U.S. GAAP measure on a consolidated basis. The following table, which sets forth the applicable components of Adjusted EBITDA, presents a reconciliation of net (loss) income to Adjusted EBITDA on a consolidated basis:

	Year ended December 31,
($ in millions)	2008			2007			2006
Net (loss) income	$	(597.0	)	$	287.3		$	103.0
Income from discontinued operations, net of tax	(3.3		)	(25.3		)	(48.1		)
Gain on sale of discontinued operations, net of tax	(34.3		)	(180.6		)	—
Minority interest in discontinued operations, net of tax	—			0.1			5.2
Net (loss) income from continuing operations	(634.6		)	81.5			60.1
Income tax (benefit) provision	(23.9		)	62.3			61.3
Minority interest in continuing operations, net of tax	(83.6		)	7.9			—
(Loss) income from continuing operations before taxes and minority interest	(742.1		)	151.7			121.4
Interest expense (a)	231.1			219.3			199.9
Interest income	(6.0		)	(11.5		)	(2.4		)
Depreciation and amortization	258.9			211.7			174.4
Impairment charges	809.5			—			2.2
Restructuring and other severance costs (b)	35.3			12.0			5.3
Systems/organization establishment expenses	12.9			4.2			10.7
Acquisition and disposal costs	1.7			2.3			1.9
Inventory write-up charges	6.9			5.7			1.1
(Gain) loss on early extinguishment of debt (c)	(4.0		)	18.6			—
Refinancing expenses	—			0.9			—
Acquired in-process research and development	2.9			—			—
Gain on sale of assets and other	(2.4		)	(4.7		)	(0.3		)
Foreign exchange loss (gain), net	32.3			(7.8		)	(8.6		)
Other	1.9			—			0.3
Total Adjusted EBITDA (d)	$	638.9		$	602.4		$	505.9

(a)Includes (losses) gains of $(51.5) million, $(32.2) million and $7.2 million for the years ended December 31, 2008, 2007 and 2006, respectively, representing the movement in the mark-to-market valuation of the Company’s interest rate and cross-currency hedging instruments.

(b)Includes inventory write-downs of $0.4 million recorded in cost of products sold for the year ended December 31, 2006.

(c)For the year ended December 31, 2008, we redeemed €11.0 million of our senior subordinated notes due in 2014 at a discount and recorded a gain of $4.0 million. For the year ended December 31, 2007, a redemption premium of $14.5 million was paid and $4.1 million of deferred financing costs were written off in connection with the redemption of the 2011 Notes.

(d)This amount does not include $1.8 million and $68.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the former Groupe Novasep segment which was sold in January 2007; $37.6 million and $35.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the Electronics segment sold in December 2007; and $5.4 million, $12.0 million and $12.0 million for the years ended December 31, 2008, 2007 and 2006, respectively, of Adjusted EBITDA from the pool and spa chemicals business sold in October 2008.

Liquidity and Capital Resources

Cash Flows

Operating Activities.   Net cash provided by operating activities was $301.9 million, $368.6 million and $305.0 million in 2008, 2007 and 2006, respectively. Net cash from operating activities decreased in 2008 primarily from the higher use of operating cash from working capital changes and the reduction in operating cash flows due to the divestiture of the Electronics business, partially offset by lower cash interest expense. Net cash from operating activities increased in 2007 primarily from higher operating income and lower cash interest expense, partially offset by higher use of operating cash from working capital changes and lower operating cash flows due to the Groupe Novasep divestiture.

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Investing Activities.   Net cash (used in) provided by investing activities was $(295.5) million, $377.6 million and $(248.8) million in 2008, 2007 and 2006, respectively. Net cash used in investing activities for the year ended December 31, 2008 included the acquisitions of Holliday Pigments, Nalco’s Finishing Technologies business and other acquisitions in 2008 and increased capital expenditures. This was partially offset by the sale proceeds from the sale of the pool and spa chemicals business in the fourth quarter of 2008 and funds received related to the claim settlement between the Company and GEA Group in the first quarter of 2008.  See Note 7, “Goodwill,” for further details.  Net cash provided by investing activities for the year ended December 31, 2007 increased primarily due to proceeds received from the sale of the Electronics business, the sale of the Groupe Novasep segment and the formation of the Viance, LLC joint venture. This was partially offset by acquisitions made in 2007, including the acquisition of the global color pigments business of Elementis plc in August 2007, and higher capital expenditures. Net cash used for investing activities for the year ended December 31, 2006 was primarily comprised of capital expenditures and acquisitions. Net cash used for acquisitions in 2006 was related to businesses acquired in our Advanced Ceramics and Specialty Compounds segments.

Financing Activities.   Net cash provided by (used in) financing activities was $102.6 million, $(413.3) million and $(102.8) million in 2008, 2007 and 2006, respectively.  For the year ended December 31, 2008, net cash provided by financing activities included $362.5 million related to the financing of the Titanium Dioxide Pigments venture, partially offset by the payment of assumed debt to the minority shareholder of the Titanium Dioxide Pigments venture of $141.4 million. For the year ended December 31, 2007, net cash used in financing activities included the redemption of our 10 5/8% Senior Subordinated Notes that were due in 2011 in the aggregate principal amount of $273.4 million and related redemption premiums of $14.5 million. For the year ended December 31, 2006, net cash used in financing activities was primarily comprised of scheduled debt payments for long-term debt.

Liquidity

Our primary source of liquidity has been and will continue to be cash generated from the operations of our subsidiaries. Events that occurred in 2008 that had an impact on our liquidity include:

·In March 2008, we received €18.8 million ($29.1 million) from GEA Group and GEA North America for the settlement of all existing and future non-tax related claims resulting from the sale and purchase agreement entered into in connection with the Dynamit Nobel Acquisition in April 2004.

·In the third quarter of 2008, we acquired Holliday Pigments for approximately €46.0 million ($68.6 million using an August 11, 2008 exchange rate of €1.00 = $1.4909) and Nalco’s Finishing Technologies business for approximately $75.0 million.

·In September 2008, we completed the Titanium Dioxide Pigments venture with Kemira. The venture’s acquisition of the shares of the Rockwood and Kemira entities was facilitated by the borrowings under a term loan of €250.0 million ($362.5 million using a September 3, 2008 exchange rate of €1.00 = $1.4498).  The venture made a payment of €97.5 million ($141.4 million using a September 3, 2008 exchange rate) to the venture’s minority shareholder.

·In October 2008, we sold the pool and spa chemicals business and received net cash proceeds of $122.0 million.

Our primary liquidity requirements are working capital, debt service, capital expenditures and acquisitions. Our debt service requirements and other contractual obligations and commitments over the next several years are significant and are substantially higher than historical amounts.  We believe that based on current conditions in our industry and markets, our cash reserves, cash flows from operations and borrowings available under our revolving credit facility will be adequate sources of liquidity for the remainder of 2009. However, a prolonged economic downturn or recession may have a material adverse impact on our results of operations, cash flows from operations and our liquidity. If our operating results deteriorate, we may need to use some or all of our available cash to reduce our leverage in order to comply with the leverage ratios in our debt agreements. If these sources are insufficient to fund our liquidity needs, we may need to use other means available to us, such as reduce or delay capital expenditures or take other cost cutting measures or seek additional sources of capital. In addition, any future major acquisitions, business combinations or other such events may require us to seek additional capital resources, such as through additional borrowings, equity issuances or other sources, to satisfy our liquidity needs.  The recent unprecedented adverse conditions in the global capital and credit markets may limit our ability to secure capital or obtain it on terms and conditions that are acceptable to us.  We cannot predict with any certainty the impact of this or any further disruption in these markets or our ability to access these markets in the future. See Item 1, “Business,” and Item 1A, “Risk Factors.”

In addition, our liquidity may be negatively impacted due to funding obligations related to certain pension plans. We have several pension plans located in Germany, Finland, the United Kingdom and the United States, which have been adversely impacted by market conditions. For example, based upon recent investment performance of pension assets in a pension plan covering the majority of our German employees, we may have to increase funding and/or make a significant payment to the plan via a one-time payment and/or long-term funding arrangement. However, this could change significantly based on the investment performance of the pension plan and the future performance of the pension plan assets. Any further deterioration of the capital markets or returns available in such

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markets may materially and adversely impact our pension plan assets and increase our funding obligations for one or more of these plans and adversely impact our liquidity. We cannot predict the impact of this or any further market disruption on our pension funding obligations.

As of December 31, 2008, we had actual total indebtedness of $2,811.2 million. The revolving credit facility under the senior secured credit facilities provided for additional borrowings of up to $225.2 million as of December 31, 2008. There were no outstanding borrowings under this revolving credit facility as of December 31, 2008. The revolving credit facility under the Titanium Dioxide Pigments venture facility provided for additional borrowings of up to €30.0 million ($41.9 million). As of December 31, 2008, there were no outstanding borrowings under this revolving credit facility.

As of December 31, 2008, we had cash and cash equivalents of $468.7 million from several sources, including cash from operations and the net cash proceeds received from the sale of the Electronics business in December 2007 and pool and spa chemicals business in October 2008, less cash used for certain selective acquisitions.

Senior secured credit facilities.   The senior secured credit facilities, as amended, consist of:

·tranche A-1 term loans in an aggregate principal amount of €22.8 million ($31.9 million) and tranche A-2 term loans in an aggregate principal amount of €99.4 million ($138.9 million), each maturing on July 30, 2011 and bearing interest at EURIBOR plus 1.75%;

·tranche E term loans in an aggregate principal amount of $1,104.9 million, maturing on July 30, 2012 and bearing interest at the Company’s option of either (i)  LIBOR plus 1.50% or (ii) ABR plus 0.75%. For the year ended December 31, 2008, we have elected to use option (i)  LIBOR plus 1.50%;

·tranche G term loans in an aggregate principal amount of €265.2 million ($370.5 million) maturing on July 30, 2012 and bearing interest of EURIBOR plus 1.75%; and

·a revolving credit facility in an aggregate principal amount of $250.0 million maturing on July 30, 2010, bearing interest at the Company’s option of either (i)  LIBOR plus 1.75% or (ii) ABR plus 1.00%. As of December 31, 2008, we had no borrowings outstanding under this facility and had outstanding letters of credit of $24.8 million that reduced our availability under the credit facility.

In each case, the interest rates are subject to step-downs determined by reference to a performance test. LIBOR is the London inter-bank offered rate. ABR is the alternate base rate, which is the highest of Credit Suisse’s prime rate and the federal funds effective rate plus 0.5%. Tranche A-1 and A-2 term loans are payable in January and July of each year at escalating percentages of the original principal amount. Tranche E and tranche G term loans are payable in January and July of each year at amounts equal to 0.5% of the principal amount of the former tranche D term loans and tranche F term loans, respectively, with the remainder due at the final maturity date.

The Company’s borrowings and the borrowings of Rockwood Specialties Limited under the senior secured credit facilities are guaranteed and secured by assets and pledges of capital stock.

In addition to the financial covenants described below under “Covenant Compliance,” the Company’s senior secured credit facilities contain various affirmative and restrictive covenants. The restrictive covenants limit our ability to, among other things, incur indebtedness and other liabilities; create liens; merge or consolidate; dispose of assets; make investments; pay dividends and make payments to shareholders; make payments on certain indebtedness or to amend documents related to certain indebtedness and to enter into sale leaseback transactions. In connection with the fourth amendment of our senior secured credit agreement, substantially all of the baskets relating to the above restrictions were reset.

Covenant compliance.   In addition to the affirmative and restrictive covenants, the senior secured credit agreement contains the following financial covenants that are determined based on our Adjusted EBITDA (including certain adjustments for acquisitions and synergies), which reflects management’s interpretations thereof:

·a leverage ratio: for the twelve-month period ended December 31, 2008, net debt (total debt plus capital lease obligations, minus cash up to a maximum of $100.0 million) to Adjusted EBITDA must be less than 4.50 to 1; for such period, our ratio equaled 3.97 to 1; and

·an interest coverage ratio: for the twelve-month period ended December 31, 2008, Adjusted EBITDA to cash interest expense (interest expense, net excluding deferred debt issuance cost amortization and the movements in the mark-to market value of our interest rate and cross-currency interest rate derivatives) must be at least 1.95 to 1; for such period, our ratio equaled 4.28 to 1.

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Effective January 1, 2009, our leverage ratio must be 4.25 to 1 under the terms of our credit agreement. These covenants are material terms of the senior secured credit agreement. Non-compliance with these covenants or other covenants could result in a default under the senior secured credit agreement and the lenders could elect to declare all amounts borrowed immediately due and payable. Any such acceleration would also result in a default under the indenture governing the 2014 Notes, which could lead to the note holders electing to declare the principal, premium, if any, and interest on the then outstanding notes immediately due and payable.  The senior secured credit agreement contains a cross default provision for indebtedness in excess of $30.0 million; therefore, a default under the indenture governing the 2014 Notes, the Titanium Dioxide Pigments term loans or other indebtedness may cause the lenders to declare the principal and interest on the then outstanding senior secured credit facilities immediately due and payable.

As discussed above, the leverage ratio under the senior secured credit agreement must be less than 4.25 to 1 effective January 1, 2009, with no further reductions thereafter.  We may use available cash in excess of $100.0 million to pay down debt at any time in order to reduce this leverage ratio.  As of December 31, 2008, we had cash and cash equivalents of $468.7 million.

See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—“Definitions of Adjusted EBITDA,” for a discussion of the definition of Adjusted EBITDA used in calculating our financial covenants.

We were in compliance with the above covenants as of December 31, 2008 and 2007.

2014 Notes.   The 2014 Notes have an aggregate principal amount of €364.0 million ($508.5 million) in the case of the Euro notes and $200.0 million in the case of the U.S. Dollar notes, and mature on November 15, 2014. Interest on the 2014 Notes is payable semi-annually on May 15 and November 15. Interest on the 2014 Notes accrues at the rate of 7.625% in the case of the Euro notes and 7.500% in the case of the U.S. Dollar notes. Certain of our domestic subsidiaries guarantee the 2014 Notes on a senior subordinated unsecured basis.  In the fourth quarter of 2008, we redeemed €11.0 million of our 2014 Notes at a discount and recorded a gain of $4.0 million.  We may use available cash to redeem additional 2014 Notes at any time to reduce our leverage ratio.

The 2014 Notes contain various affirmative and restrictive covenants. The restrictive covenants limit our ability, and the ability of our restricted subsidiaries, to, among other things, incur or guarantee additional indebtedness (as described below), pay dividends or make other equity distributions or repurchase capital stock, make investments or other restricted payments, create liens, transfer or sell assets, restrict dividends or other payments to us, engage in transactions with affiliates, and merge or consolidate with other companies or sell substantially all of our assets.

The indenture governing the 2014 Notes prohibits us from incurring additional debt, subject to certain permitted incurrences, unless the fixed charge coverage ratio, which is the ratio of Adjusted EBITDA (as defined therein excluding certain adjustments permitted under the senior secured credit agreement) to fixed charges (as defined therein), for the most recently ended four fiscal quarters is at least 2.00 to 1. In addition, the indenture prohibits us from making restricted payments (such as dividends or other equity distributions, repurchases of capital stock or restricted investments), subject to certain permitted payments, unless, among other things, the fixed charge coverage ratio for the most recently ended four fiscal quarters is at least 2.00 to 1. For the four-fiscal quarter period ended December 31, 2008, the fixed charge coverage ratio equaled 4.28 to 1. This covenant is a material term of the indenture governing the 2014 Notes.

Because the indenture governing the 2014 Notes defines an event of default to include, among other things, a default under any other debt obligation in excess of $35.0 million that could cause the acceleration of such obligation, any acceleration under the senior secured credit agreement or other debt agreement would also result in a default under the indenture governing these notes, which could lead to the note holders electing to declare the principal, premium, if any, and interest on the then outstanding notes immediately due and payable.

Titanium Dioxide Pigments venture term loans, revolving credit facility and assumed debt.   During June 2008, as amended in August 2008, the Titanium Dioxide Pigments venture entered into a facility agreement that provides for a term loan facility in an aggregate amount of €250.0 million ($349.3 million) and a revolving credit facility in an aggregate amount of €30.0 million ($41.9 million), both maturing on June 17, 2013. The Titanium Dioxide Pigments venture borrowed €250.0 million under the term loan facility.  In addition, the Titanium Dioxide Pigments venture has assumed debt of €24.2 million ($33.8 million) at December 31, 2008 from Kemira, primarily due to a defined benefit plan, at interest rates ranging from 3.75% to 5.00%.  As of December 31, 2008, there were no outstanding borrowings under the revolving credit facility.

The loans are secured by the assets of the venture. In the event that either Kemira’s or Rockwood’s ownership interest changes, any lender may cancel its commitment and demand repayment of its respective portion of the loans, including accrued and unpaid interest.  The facility agreement contains customary events of default, subject to remedy periods, thresholds and exceptions. Upon the occurrence of an event of default under the facility agreement, the lenders can terminate the commitments and declare all amounts, including accrued and unpaid interest, to be due and payable.

The interest rate on the loans is EURIBOR (or LIBOR if the currency is in USD) plus 3%, subject to a step down determined by reference to a leverage ratio test. The term loan shall be repaid in installments over a five-year period from the date of the facility

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agreement, with payments commencing twelve months from such date; both loans may be repaid in advance without penalty.

The facility agreement contains affirmative and restrictive covenants, subject to certain thresholds and exceptions. The restrictive covenants limit the venture’s ability to undertake certain actions, including but not limited to acquiring or disposing of assets, creating liens on assets, entering into a merger or corporate restructuring, and incurring additional indebtedness. These covenants are calculated in accordance with International Financial Reporting Standards and are based solely on the results of the venture. In addition, the facility agreement requires the venture to meet certain financial covenants, including:

·A leverage coverage ratio: for the twelve-month period ended December 31, 2008, net debt to EBITDA, subject to certain adjustments, (which is substantially similar to the definition of Adjusted EBITDA in our senior secured credit agreement) must be less than 4.00 to 1: for such period, our ratio equaled 3.38 to 1;

·An interest coverage ratio: EBITDA, subject to certain adjustments, (which is substantially similar to the definition of Adjusted EBITDA in our senior secured credit agreement) to cash interest expense (net of interest income), must be greater than 2.75 to 1: for such period, our ratio equaled 3.46 to 1; and

·Cash flow coverage ratio: cash generated for financing activities (EBITDA, subject to certain adjustments, less working capital changes, capital expenditures and interest) to debt service (interest expense and amortization of debt) must be greater than 1.00: for such period, our ratio equaled 1.58 to 1.

As discussed above, the leverage ratio under the facility agreement must be less than 4.00 to 1.  We may use available cash to pay down debt at any time in order to reduce this leverage ratio.

We were in compliance with the above covenants as of December 31, 2008.

Given our use of Adjusted EBITDA (see “Special Note Regarding Non-GAAP Financial Measures” for the definition of Adjusted EBITDA and management’s uses of Adjusted EBITDA) as a liquidity measure, the following table presents a reconciliation of net cash provided by operating activities to Adjusted EBITDA:

	Year ended December 31,
($ in millions)	2008			2007			2006
Net cash provided by operating activities from continuing operations	$	289.9		$	330.3		$	248.6
Changes in assets and liabilities, net of the effect of foreign currency translation and acquisitions	91.5			50.7			18.2
Current portion of income tax provision	40.6			33.3			24.9
Interest expense, net, excluding amortization of deferred financing costs and unrealized losses/gains on derivatives	164.0			166.4			195.1
Restructuring and other severance costs (a)	35.3			12.0			5.3
Systems/organization establishment expenses	12.9			4.2			10.7
Acquisition and disposal costs	1.7			2.3			1.9
Inventory write-up charges	6.9			5.7			1.1
Refinancing expenses	—			0.9			—
Bad debt provision	(3.4		)	1.3			0.1
Gain on sale of assets and other	(2.4		)	(4.7		)	(0.3		)
Other	1.9			—			0.3
Total Adjusted EBITDA (b)	$	638.9		$	602.4		$	505.9

(a)Includes inventory write-downs of $0.4 million recorded in cost of products sold for the year ended December 31, 2006.

(b)This amount does not include $1.8 million and $68.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the former Groupe Novasep segment which was sold in January 2007; $37.6 million and $35.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the Electronics segment sold in December 2007; and $5.4 million, $12.0 million and $12.0 million for the years ended December 31, 2008, 2007 and 2006, respectively, of Adjusted EBITDA from the pool and spa chemicals business sold in October 2008.

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Contractual Obligations

The following table details Rockwood’s fixed contractual cash obligations as of December 31, 2008:

			Less than		2-3		4-5		After
($ in millions)	Total		1 year		Years		Years		5 years
Debt, including current portion (a)	$	3,489.6	$	242.6	$	525.5	$	1,890.6	$	830.9
Operating leases	64.0		17.3		23.5		11.7		11.5
Purchase obligations (b)	498.2		227.2		153.4		33.7		83.9
Total (c) (d)	$	4,051.8	$	487.1	$	702.4	$	1,936.0	$	926.3

(a)Amounts represent the expected principal payments of our long-term debt, including capital leases, and do not include any fair value adjustments or bond premiums or discounts. This amount also includes estimated scheduled cash interest payments totaling $678.4 million. A portion of the debt balance outstanding as of December 31, 2008 contained a variable interest rate component. Therefore, interest was calculated on this portion based upon the average of the rates in effect as of December 31, 2008. See Note 9, “Long-Term Debt.”

(b)Purchase obligations consist of agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty.

(c)Statutory minimum funding requirements for 2008 for defined benefit pension plans are not included as such amounts have not been determined. For 2009, the Company expects to make contributions of approximately $9.5 million to pension trusts and $18.4 million directly to plan participants as benefit payments. Future contributions, including additional payments that may be required as a result of investment performance of pension assets, are not included, as they are not fixed either as to timing or amount. See Note 13, “Employee Benefit Plans,” for further details.

(d)Obligations relating to eventual settlement of derivative contracts are not included as the timing and amounts are not fixed. These contracts are marked to market with the related liabilities or assets depending on the mark to market position. At December 31, 2008, the mark to market position of obligations relating to derivative contracts was a liability and was recorded in “Other Liabilities” in the Consolidated Balance Sheet.

Liabilities for unrecognized tax benefits in the amount of $28.0 million related to Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) 48, Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109, are excluded from the Contractual Obligations table as we are unable to make a reasonably reliable estimate of the period of cash settlement with the respective taxing authorities. Liabilities for these unrecognized tax benefits are classified as non-current income tax liabilities (other liabilities) unless expected to be paid in one year.

Capital Expenditures

Rockwood’s capital expenditures in 2008 consisted primarily of replacements of worn, obsolete or damaged equipment as well as investments in new equipment.  For the year ended December 31, 2008, capital expenditures, excluding capital leases, were $224.0 million. For 2009, we expect capital expenditures to be below 2008 levels. For the years ended December 31, 2007 and 2006, our capital expenditures, excluding capital leases, amounted to $193.2 million and $165.1 million, respectively.

We may incur future costs for capital improvements and general compliance under Safety, Health and Environmental (“SHE”) laws. For the year ended December 31, 2008, our capital expenditures for SHE matters totaled approximately $28.1 million, excluding costs to maintain and repair pollution control equipment. For 2009, we estimate capital expenditures for compliance with SHE laws to be at similar levels; however, because capital expenditures for these matters are subject to changes in and new SHE laws, we cannot provide assurance that our recent expenditures will be indicative of future amounts required to comply with these laws including the EU’s Registration, Evaluation and Authorization of Chemicals (“REACH”) legislation. See Note 17, “Commitments and Contingencies,” “Regulatory Developments” for a discussion of REACH.  We are applying our capital discipline and stringent controls to reduce our future capital expenditures.

Foreign currency related transactions

As of December 31, 2008, $1,493.8 million of the debt outstanding is denominated in euros. See Item 7A, “Quantitative and Qualitative Disclosures about Market Risk.”

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Off-Balance Sheet Arrangements

In the normal course of business, the Company incurs obligations which include guarantees related to contract completion, regulatory compliance and product performance. Under certain circumstances, these obligations are supported through the issuance of letters of credit and other bank guarantees. As of December 31, 2008, the Company had approximately $58.2 million of letters of credit and other bank guarantees, of which $25.8 million will expire in 2009 through 2012. The remaining guarantees have no specified expiration date. This amount includes outstanding letters of credit of $24.8 million that reduced our availability under the senior secured credit facility. In the opinion of management, such obligations will not significantly affect the Company’s financial position, results of operations or cash flows as the Company anticipates fulfilling its performance obligations.

Commitments and Contingencies

See Note 17, “Commitments and Contingencies,” for a discussion of the Company’s Commitments and Contingencies.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. These estimates include assessing, among other things:

·the fair values of assets acquired and liabilities assumed in business combinations;

·the use and recoverability of inventory;

·the valuation of deferred tax assets;

·the amount of unrecognized tax benefits in accordance with FIN 48;

·impairment of goodwill, property, plant and equipment and other intangible assets; and

·the useful lives of tangible and intangible assets.

We evaluate our estimates on an ongoing basis, based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

See Note 1, “Description of Business and Summary of Significant Accounting Policies,” for a summary of our significant accounting policies. We believe the following to be the most critical accounting policies and estimates affecting preparation of our consolidated financial statements:

Revenue Recognition.   We recognize revenue when the earnings process is complete. Product sales are recognized when products are shipped to the customer in accordance with the terms of the contract of sale, title and risk of loss have been transferred and collectibility is reasonably assured. We believe that we have adequate credit granting procedures in place and operating effectively so that collectibility is reasonably assured. We have a low incidence of uncollectible accounts. Additionally, credit insurance is purchased at times by certain of our businesses, particularly in Europe, to protect against collection risk. Accruals are made for sales returns based on our experience and for other allowances based on the terms of allowance programs put in place. Although we believe that sufficient experience and history exists to make reasonable estimates as to such accruals and allowances, actual results can differ depending on market conditions.

Impairment Accounting.   The recoverability of goodwill is reviewed on an annual basis during the fourth quarter. Additionally, the recoverability of goodwill, long-lived tangible, and other intangible assets is reviewed when events or changes in circumstances occur indicating that the carrying value of the assets may not be recoverable.  In accordance with paragraph 30 of Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, we have determined that our reporting units for our goodwill impairment review are our operating segments or components of an operating segment that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results.  Based on this analysis, we have identified nine reporting units within our reportable segments.

SFAS No. 142 prescribes a two-step method for determining goodwill impairment.  In the first step, we determine the fair value of each reporting unit (as discussed in the following sentence) and compare that fair value to the carrying value of such reporting unit.  This begins with our estimating the fair value of each reporting unit, which we derive from peer multiples.  Specifically, we base our estimate of the fair value of such reporting unit on an industry metric that is the ratio of enterprise value (“EV”, which is commonly

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defined as market capitalization, plus long-term debt, less cash) to Adjusted EBITDA of the relevant benchmark peer companies and groups; we refer to this as the peer multiple approach.  The peer companies are typically based upon the competitors disclosed in Item 1, “Business” for each of our reporting units.  We use EV multiples to the last twelve months Adjusted EBITDA and to the next fiscal year Adjusted EBITDA. We then multiply this ratio by the Adjusted EBITDA for the recently completed year and the budgeted Adjusted EBITDA for the upcoming year of such reporting unit and compare it to the carrying value of such reporting unit.  If the product of such peer multiple and reporting unit’s Adjusted EBITDA is less than such carrying value, it may be an indication of an impairment. If our initial review indicates there may be an impairment, we perform a review based on expected future cash flows; we refer to this as the discounted cash flow approach.  For the discounted cash flow approach, the Company makes certain assumptions about, among other things, estimates of future cash flows, including growth rates, price increases, capital expenditures, the benefits of recent acquisitions and expected synergies, and an appropriate discount rate.  If the results of the peer multiple approach and the discounted cash flow approach differ materially, we would review the relevant facts and circumstances and make a qualitative assessment to determine the proper weighting.  If the results of the first step indicate the carrying amount of a reporting unit is higher than its fair value, the second step must be performed.  Specifically, SFAS No. 142 prescribes that the Company determine the implied fair value of goodwill in the same manner as if the Company had acquired those reporting units.  In the second step, the potential impairment is computed by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill.  If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss must be recognized for the excess.  If necessary, we may consult with valuation specialists to assist with our goodwill impairment review.

In the fourth quarter of 2008, we tested the recoverability of goodwill as part of our annual review.  In connection with the determination of fair value of the reporting units, we made significant estimates and assumptions with respect to those reporting units and engaged independent valuation specialists to assist with this review. The first step of our review indicated that the fair values of our Color Pigments and Services, Timber Treatment Chemicals, Clay-based Additives, Titanium Dioxide Pigments, Specialty Compounds and Rubber Chemicals reporting units were less than their carrying values.  Accordingly, we were required to complete the second step of the impairment review.  To compute the amount of the impairment, SFAS No. 142 prescribes that the Company determine the implied fair value of goodwill in the same manner as if the Company had acquired those reporting units.  Specifically, the Company allocated the fair value of the reporting units to all of the assets, including any unrecognized intangible assets, and liabilities of that unit, in a hypothetical calculation that would yield the implied fair value of goodwill.  The impairment loss is measured as the difference between the book value of the goodwill and the implied fair value of the goodwill computed in step two.  Based on the results of the second step of the impairment review, we determined and recorded goodwill impairment charges in our Color Pigments and Services business ($293.2 million), Timber Treatment Chemicals business ($88.3 million) and Clay-based Additives business ($75.1 million) within our Performance Additives segment; Titanium Dioxide Pigments segment ($247.7 million); and Specialty Compounds segment, including our Rubber Chemicals business ($105.2 million).  The goodwill impairment charges were attributed to the significant drop in global stock valuations, the substantial reduction in the market valuation of Holdings and comparable companies, and the continuing negative global economic and market outlook.  In particular, the downturn in the construction industry has had a negative impact on a number of our businesses.

These calculations are based on inherent assumptions and estimates about future cash flows and appropriate benchmark peer companies or groups. Subsequent changes in these assumptions could result in future impairment. Although we consistently use the same methods in developing the assumptions and estimates underlying the fair value calculations, such estimates are uncertain by nature and can vary from actual results.  For example, if the Company had applied a 10% reduction in the peer multiples of the reporting units that were not impaired in 2008, there may have been an additional potential goodwill impairment in two of our reporting units. If the Company had applied a 10% reduction in all peer multiples for all reporting units in 2007 and 2006, no potential goodwill impairment would exist at any of our reporting units, except for one reporting unit for which there may have been a potential impairment. As noted above, if we had discovered such a potential impairment, we might have expanded the review to prepare more detailed estimates of future cash flows in subsequent years, which might have resulted in a different impairment assessment.

Prior to completing the assessment of goodwill for impairment during the fourth quarter of 2008, we performed a recoverability test of certain long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. As a result, we concluded that there was no impairment of those assets in the fourth quarter of 2008.

During the fourth quarter of 2006, management performed an impairment review of a business within the Fine Chemicals division of the Specialty Chemicals segment due to poor profitability. Based on this review, an impairment charge of $2.2 million was recorded to write-down the full value of machinery and equipment.

Business Combinations.   We account for business combinations using the purchase method of accounting as required by SFAS No. 141, Business Combinations. Under the purchase method of accounting, we are required to allocate the purchase price to the estimated fair value of assets acquired and liabilities assumed. Examples of material estimates from our previous acquisitions are:

·The fair values of work-in-process and finished goods inventories are estimated based on selling price less selling profit. The calculation of selling profit requires a judgment on the relative margins derived from manufacturing vs. marketing efforts.

·The fair value of property, plant and equipment can be estimated by a variety of methods taking into account market values,

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replacement cost, and remaining useful life. Although market value and replacement cost is sometimes readily obtainable, often this requires judgment, as does determining the estimated remaining useful life. When we believe that property, plant and equipment acquired will be material to our overall balance sheet, or that fair value might represent a significant difference from the historical cost (net of accumulated depreciation) of such assets, we have engaged an independent appraiser to assist us on such estimates, as we have done in our recent acquisitions. However, it is not uncommon for appraisers to differ on the valuation of items (such as manufacturing equipment) where a ready secondary market does not exist.

·The fair value of identifiable intangible assets such as patents and other intellectual property, customer lists, and trademarks, can be estimated by discounted cash flow and return on royalties. The process utilized to identify intangible assets is consistent with the requirements of SFAS No. 141. When considered material, we have engaged an independent appraiser to assist us in the identification of intangible assets acquired, valuation of such assets and determination of the estimated useful life. An independent appraiser, with management’s oversight and input, is required to make judgments and estimates that could cause such appraisals to differ from those of other appraisal experts.

·In order to determine the fair value of intangible assets and other long term assets, a discount rate and royalty rate is determined in conjunction with our independent appraiser. The royalty rate is based on professional judgment taking into consideration the type of product, market and perceived strength. The discount rate and royalty rate has a material impact on the determination of the fair value.

·Purchase accounting often involves the same critical estimates that are required in our ordinary course of business including estimates of deferred tax assets or liabilities, pension liabilities, restructuring liabilities and legal and environmental reserves.

Goodwill is an intangible asset that represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed. While goodwill itself does not represent an estimate, under SFAS No. 141 we must assign goodwill to one or more reporting units. Allocation of goodwill to reporting units requires judgments about the relative fair values of reporting units including the fair value of their identifiable assets and estimates as to the present value of future cash flows expected from the reporting units as adjusted by weighted average and or risk-adjusted costs of capital. Goodwill is assessed for impairment at least annually.

Some of our business combinations have complex terms that may result in conflicting claims between buyer and seller concerning the purchase price itself. Management is required to assess the probability and amount (or range of amounts) of such claims, and, where possible, determine the most likely amount due.

Legal Matters.   We are involved in various legal proceedings, including commercial, product liability, intellectual property and environmental matters, of a nature that can be expected in our business. It is our policy to accrue for amounts related to these matters in accordance with SFAS No. 5, Accounting for Contingencies, if it is probable that a liability has been incurred and an amount can be reasonably estimated. The probability that a contingent liability has been incurred is regularly assessed by our legal staff, based on periodic reviews of available facts and circumstances for our legal matters, with senior operating and finance management both at the business accountable for the potential liability and at our corporate offices. This is supplemented where applicable by consultation with outside counsel. We do not believe it is informative to quantify past experience at assessing probability or estimating exposure since material matters of this nature at Rockwood often represent unique situations with little applicability to the assessment of probability or estimation of potential liability regarding other legal matters. It is our policy to disclose such matters when there is at least a reasonable possibility that a loss may have been incurred.

Environmental Matters.   We accrue costs of a non-capital nature related to environmental clean-up when those costs are believed to be probable and can be reasonably estimated. Expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized, and expenditures related to existing conditions resulting from past or present operations and from which no current or future benefit is discernible are immediately expensed. The quantification of environmental exposures requires an assessment of many factors, including changing laws and regulations, advancements in environmental technologies, the quality of information available related to specific sites, the assessment stage of each site investigation and the length of time involved in remediation or settlement. As such, it can be extremely difficult to accurately estimate such costs. We do not include anticipated recoveries from insurance carriers or other third parties in our accruals for environmental liabilities.

We have estimated and established financial reserves relating to anticipated environmental cleanup obligations, site reclamation and remediation and closure costs. On a consolidated basis, we have accrued approximately $55.1 million for known environmental liabilities as of December 31, 2008. Given that these obligations may be paid/relieved over extended time periods (30 years in some cases), charges or credits to operations may be required as information is gathered and estimates refined.

We have evaluated our total environmental exposure based on currently available data and believe that such environmental matters will not have a material adverse impact on our financial position or results of operations. If matters previously identified by management are resolved in a manner different from original estimates, there is the potential for a material adverse effect on operating results or cash flows in any one accounting period. See Note 17, “Commitments and Contingencies.”

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Restructuring.   We record restructuring charges from time to time that represent expenses incurred in connection with consolidations and cessations of certain of our operations as well as headcount reduction programs. These charges consist primarily of write-offs of surplus assets and severance costs. These charges are based on various factors including the employee’s length of service, contract provisions, salary levels and local governmental legislation. At the time a related charge is recorded, we calculate our best estimate based upon detailed analysis. Although significant changes are not expected, actual costs may differ from these estimates.

For example, we have accrued liabilities of $18.9 million as of December 31, 2008 to cover restructuring liabilities for employee severance, facility closure and relocation costs. The portion of this accrued liability that was recorded as part of purchase accounting is not charged to operations, but was recorded as part of goodwill. In the event that our estimates of such costs are too low, an additional charge to operations would be required.

Income Taxes.

Valuation Allowance - We record valuation allowances to reduce our deferred tax assets to the amount that is more likely than not to be realized based on available evidence weighted toward evidence that is objectively verifiable. If we were to determine that we would be able to realize deferred tax assets in the future in excess of our net recorded amount, an adjustment to the net deferred tax asset would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our recorded net deferred tax assets in the future, an adjustment to the deferred tax asset would decrease income in the period such determination was made.

We have cumulative net operating loss carry forwards in the U.S., China and other jurisdictions for which we have reserved. The valuation allowance also includes certain states in the U.S. as we have concluded realizability of these net operating loss carry forwards is not more likely than not. We have not recorded valuation allowances on a significant portion of our German net operating loss carry forwards as we have considered positive evidence such as forecasted future taxable income based on historical taxable income adjusted for charges which are not indicative of future operations and as the carry forward period is indefinite.

SFAS No. 109, Accounting for Income Taxes, paragraph 105, “requires consideration of future taxable income and other available evidence when assessing the need for a valuation allowance.” Various assumptions and strategies (including elections for tax purposes) are implicit in estimates of forecasted future taxable income.

We believe that, in situations in which future realization of deferred tax assets is dependent on taxable income from future operations, SFAS No. 109 requires the relative significance of cumulative losses be addressed within the guidance provided in paragraphs 24 and 103. Accordingly, in assessing the realization of U.S. jurisdiction net operating loss carry forwards for the years ended December 31, 2008, 2007 and 2006, and, considering future taxable income, we have identified the key elements of both positive and negative evidence and evaluated such evidence by applying the guidance provided by paragraphs 24 and 103 of SFAS No. 109.

The worldwide valuation allowance decreased by $6.7 million to $84.9 million at December 31, 2008. Of this amount, $50.7 million was a charge to income tax expense, $16.3 million represents a decrease to other comprehensive income, $35.4 million was reversed primarily as a result of the reduction in U.S. deferred tax assets due to the sale of the pool and spa chemicals business and $2.8 million represents a decrease recorded to goodwill. The remainder related to foreign currency translation adjustments and other balance sheet items.

As of December 31, 2008, we had three years of net cumulative losses in the U.K.  As such, we evaluated the realizability of the net deferred tax assets of $13.4 million related to our U.K. entities. For any specific jurisdiction where a history of three years of cumulative losses has occurred or where there has been a substantial change in the business (e.g., a major acquisition or divestiture), the Company’s policy is to determine its need for a valuation allowance on deferred tax assets, if any, by calculating an average steady-state normalized taxable income amount over the last three years, adjusted for acquisitions or divestitures if necessary. The steady-state calculation includes management assumptions that relate to the appropriateness of certain items, such as, including permanent cost savings which have been/are being implemented and excluding one-time items.

In accordance with this policy, we calculated the average annual income before taxes in the U.K. on a steady-state normalized basis.  We continue to be profitable on a normalized basis. We additionally considered the nature of the U.K. net deferred tax assets which includes unused tax depreciation (“capital allowances” in the U.K.). Under U.K. law, this tax attribute can be utilized indefinitely. Accordingly, we concluded that given the level of profitability and given their unlimited life, these assets should more likely than not be realizable as of December 31, 2008 in the U.K. and therefore no valuation allowance was recorded as of such date.

We are committed to buying and selling businesses within our portfolio of businesses as opportunities arise to enhance our overall results. We are committed to selling assets which are non-core and which would generate a taxable gain in the event of expiring U.S. Federal NOL’s.

During the first quarter of 2007, the Company adopted FIN 48, Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109.  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial

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statements and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return.  Under FIN 48, the impact of an uncertain income tax provision on the income tax return must be recognized as the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority.  An uncertain income tax provision will not be recognized if it has less than a 50% likelihood of being sustained.

The Company is subject to taxation in the U.S., various states, and foreign jurisdictions. As part of the adoption of FIN 48, we evaluated all tax positions taken including the existing tax liabilities recorded in accordance with SFAS No. 5, Accounting for Contingencies, and evaluated whether such tax positions would more-likely-than-not be sustained upon examination, based on the technical merits of the position.  If the position met the more-likely-than-not threshold test, we estimated the amount of the benefit that would be more than 50% likely to be sustained upon ultimate settlement.  The estimate includes management’s judgment of the amounts and probabilities of outcomes that could be realized upon ultimate settlement, taking into account all facts, circumstances, and information available at the reporting date.

Although we have a full valuation allowance on the U.S. net deferred tax assets and certain U.S. states, in accordance with FIN 48, we have evaluated the U.S. positions as well as foreign positions. Liabilities associated with positions taken as part of purchase accounting have been recorded as part of goodwill. Based on our year-end analysis, we have recorded unrecognized tax benefits of $46.2 million on a gross basis.  The ultimate settlement of this liability is subject to tax audits or the expiration of the statute of limitations.  As such, actual results will differ from our estimates.

In accordance with our policy, we have offset the gross FIN 48 liability in respect of our uncertain tax positions against deferred taxes where settlement of such liability would reduce tax loss carry forwards. On a net basis, we have recorded unrecognized tax benefits of $28.0 million as of December 31, 2008.

To the extent that the provision for income taxes increases/decreases by 1% of income before taxes, consolidated net income would have declined/improved by $7.4 million in 2008.

Stock-Based Compensation.  We have a stock-based compensation plan which includes stock options, restricted stock and other stock-based awards. See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 12, “Stock-Based Compensation,” for a complete discussion of our stock-based compensation programs. In accordance with SFAS No. 123R, Share-Based Payment, we record stock-compensation expense associated with Holdings’ equity awards. The accounting for stock compensation is a critical accounting estimate, which requires judgments and assumptions that have an impact on our financial statements.

The fair value of Holdings’ stock options are estimated on the date of grant using the Black-Scholes option pricing model, which includes assumptions of expected term, expected volatility and risk-free rates. Changes in these assumptions can affect the fair value estimate. The fair value of Holdings’ performance restricted stock units is estimated on the date of grant based on the closing market price of its stock. These performance-based equity awards require management to make assumptions regarding the likelihood of achieving company-performance goals, which in turn impacts our compensation expense.  In addition, SFAS No. 123R requires the recognition of expense only for awards that will eventually vest.  This requires pre-vesting forfeitures to be estimated at the time of grant and modified, if necessary, if actual forfeitures differ from estimated forfeitures.  Our forfeiture rates are based upon historical share-based equity award cancellations.

We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expense.  However, if actual results are not consistent with our estimates and assumptions, we may be exposed to changes in stock-based compensation expense. A 10% change in our stock-based compensation expense for the year ended December 31, 2008, would have affected net income by approximately $0.4 million for the year ended December 31, 2008.

Pensions, Postemployment and Postretirement Costs. In connection with prior year acquisitions, particularly the KKR and Dynamit Nobel acquisition, Rockwood assumed responsibility for the pension and postretirement benefits for substantially all of the employees of the businesses acquired that were active as of the date of the acquisition. For the KKR acquisition, obligations related to retired and terminated vested employees as of such date remained the responsibility of the seller, and accordingly, these obligations are not reflected in our consolidated financial statements. Defined benefit costs and liabilities have been determined in accordance with SFAS No. 87, Employers’ Accounting for Pensions and SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132 (R).  Postretirement benefit costs and liabilities have been determined in accordance with SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions and SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132 (R).  Postemployment benefit costs and liabilities have been determined in accordance with SFAS No. 112, Employers’ Accounting for Postemployment Benefits.

The measurement of our pension obligations, costs and liabilities is dependent on a variety of assumptions used by our actuaries. These assumptions include estimates of the present value of projected future pension payments to all plan participants, with

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consideration to the likelihood of potential future events such as salary increases (due to marketplace conditions and/or inflation) and demographic experience (such as retirement and mortality rates). These assumptions may have an effect on the amount and timing of future contributions or benefit payments. For funded plans, the plan trustee obtains an independent valuation of the fair value of pension plan assets and prepares estimates of expected returns based on target asset allocations multiplied by current marketplace rates of return for comparable assets. We base the discount rate assumption on investment yields available at year-end on AA-rated corporate long-term bonds. The effects of actual results differing from our assumptions are accumulated and amortized over future periods and therefore are likely to affect our recognized expense in those periods. We cannot predict these bond yields or investment returns and therefore cannot reasonably estimate whether adjustments to our stockholder’s equity for minimum pension liability in subsequent years will be significant.

Estimated sensitivity of our pension funded status and stockholder’s equity and annual pension expense to a 0.25% increase/decrease in the discount rate assumption is shown below as of and for the year ended December 31, 2008. The estimates were based on inquiries of the actuaries of plans representing approximately 85% of our global pension obligations as of December 31, 2008. Remaining plans are assumed to have similar sensitivities. The December 31, 2008 funded status and stockholders’ equity are affected by assumptions as of December 31, 2008 while 2008 annual pension expense is affected by December 31, 2007 assumptions:

	As of December 31, 2008
($ in millions)	U.S. Plans			Non-U.S. Plans						2008 Pension
Impact of a Change in Discount Rate	Funded Status			Funded Status			Equity			Expense
+25 basis points	$	1.1		$	17.4		$	(18.5	)	$	(0.3	)
-25 basis points	(1.1		)	(18.3		)	19.4			0.1

As shown above, changes in the discount rate can have a significant effect on the funded status of our pension plans and stockholders’ equity. As noted above, the funded status and stockholders’ equity of our funded plans might also be significantly affected by assumptions concerning expected return of plan assets. However, given that most of our pension obligations do not require funding, such sensitivity would be significantly less.

Useful lives of Plant and Equipment. We determine the estimated useful lives and related depreciation charges for our plant and equipment. Depreciation is determined using the straight-line method over the various asset classes. Estimated lives range from 20-30 years for buildings and improvements (including land improvements), 7-12 years for machinery and equipment, 3-5 years for furniture and fixtures and 14-50 years for mining rights. To the extent actual lives are less than previously estimated lives, we will increase our depreciation charge or will write-off or write-down obsolete assets.

To the extent that our plant and equipment actual useful lives differ from management’s estimates by 10%, consolidated net income would be an estimated $17.9 million higher/lower based upon 2008 results, depending upon whether the actual lives were longer/shorter, respectively, than the estimates.

Useful lives of Other Intangible Assets. We determine the estimated useful lives and related amortization charges for our other intangible assets. Other intangible assets primarily consist of patents and other intellectual property, trade names and trademarks, and customer relationships. Patents and other intellectual property are recorded at their estimated fair values at the time of acquisition and are being amortized over their estimated remaining useful lives, ranging from 4-20 years. Trade names and trademarks are being amortized from 18-25 years, customer relationships are amortized from 7-15 years and supply agreements are being amortized from 10-15 years. To the extent actual lives are less than previously estimated lives, we will increase our amortization charge or will write-off or write-down obsolete other intangible assets.

To the extent that the actual useful lives of our other intangible assets differ from management’s estimates by 10%, consolidated net income would be an estimated $8.0 million higher/lower based upon 2008 results, depending upon whether the actual lives were longer/shorter, respectively, than the estimates.

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements” section in Note 1, “Description of Business and Summary of Significant Accounting Policies,” for discussion of recent accounting pronouncements.

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Quarterly Financial Information (Unaudited)

The following information has been reclassified to reflect the sale of our Groupe Novasep segment in January 2007, the sale of the Electronics business, excluding the European wafer reclaim business, in December 2007 and the sale of the pool and spa chemicals business in October 2008, that have been reported as discontinued operations for all periods presented.

	First			Second		Third			Fourth
($ in millions, except per share amounts)	Quarter			Quarter		Quarter			Quarter (a)
2008
Net sales	$	843.8		$	923.2	$	880.8		$	732.3
Gross profit	272.5			283.3		257.5			201.0
Net income (loss) from continuing operations	$	28.1		$	76.2	$	(4.8	)	$	(734.1	)
(Loss) income from discontinued operations, net of tax	(0.4		)	1.8		1.5			0.4
Gain on sale of discontinued operations, net of tax	—			—		—			34.3
Net income (loss)	$	27.7		$	78.0	$	(3.3	)	$	(699.4	)

	First			Second		Third		Fourth
	Quarter (b)			Quarter (c)		Quarter		Quarter (d)
2007
Net sales	$	735.5		$	782.5	$	763.1	$	784.1
Gross profit	240.6			254.0		237.3		244.2
Net income from continuing operations	$	25.2		$	22.4	$	19.2	$	14.7
Income from discontinued operations, net of tax	4.5			5.6		5.5		9.7
Gain on sale of discontinued operations, net of tax	115.7			—		—		64.9
Minority interest in discontinued operations	(0.1		)	—		—		—
Net income	$	145.3		$	28.0	$	24.7	$	89.3

(a)Results in the fourth quarter of 2008 include a goodwill impairment charge of $809.5 million ($675.7 million net of tax and minority interest) and a gain of $34.3 million (net of tax) primarily related to the sale of the pool and spa chemicals business on October 10, 2008.

(b)Results in the first quarter of 2007 include a gain of $115.7 million (net of tax) related to the sale of Group Novasep on January 9, 2007.

(c)Results in the second quarter of 2007 include a redemption premium of $14.5 million and the write off of $4.1 million of deferred financing costs associated with the redemption of the 2011 Notes on May 15, 2007.

(d)Results in the fourth quarter of 2007 include a gain of $65.0 million (net of tax) related to the sale of the Electronics business, excluding the European wafer reclaim business, on December 31, 2007.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk from changes in interest rates, foreign currency exchange rates and commodity prices. We manage our exposure to these market risks through regular operating and financing activities and through the use of derivatives. When used, derivatives are employed as risk management tools and not for trading purposes.

Interest Rate Risk

We had $699.5 million and $425.1 million of variable rate debt (after hedging) outstanding as of December 31, 2008 and 2007, respectively, at the then applicable exchange rate. Any borrowings under our revolving credit facility will also be at a variable rate. Although we are not required under the terms of any of our long-term debt facilities to hedge, or otherwise protect against interest rate fluctuation in our variable rate debt, we have entered into interest rate swaps to manage our exposure to changes in interest rates related to variable-rate debt. As of December 31, 2008, these contracts cover notional amounts of $610.0 million (at interest rates ranging from 4.864% to 5.038%) and €499.9 million (at interest rates ranging from 2.995% to 4.416%). As of December 31, 2007, these contracts cover notional amounts of $725.0 million (at a rate of 4.499%) and €410.9 million (at rates ranging from 2.498% to 4.529%). The derivative contracts as of December 31, 2008 effectively convert the senior secured credit obligations and the obligations under the Titanium Dioxide Pigments term loan facility to fixed rate obligations. These hedges will mature between November 2009 and July 2012. The Company has elected not to apply hedge accounting for these interest rate swaps and has recorded

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the mark-to-market of these derivatives as a component of interest expense in the Consolidated Statements of Operations. We may in the future consider adjusting the amounts covered by these derivative contracts to better suit our capital structure. Each 0.125% increase or decrease in the assumed weighted average interest rate would change the annual interest expense by $0.9 million and $0.5 million in 2008 and 2007, respectively.

Foreign Currency Risk

We conduct operations in many countries around the world. Our results of operations are subject to both currency transaction risk and currency translation risk. We operate a geographically diverse business, with 54% of our net sales in 2008 generated from customers in Europe, 29% in North America (predominantly in the United States) and 17% from the rest of the world based upon customer ship to locations. For a geographic description of the origin of our net sales and location of our long-lived assets, see Note 3, “Segment Information.” Our diverse and extensive customer base is served by 96 manufacturing facilities in 26 countries. Although we sell and manufacture our products in many countries, our sales and production costs are mainly denominated in U.S. dollars and euros. Our results of operations and financial condition are therefore impacted by the fluctuation of the euro against our reporting currency, the U.S. dollar. Approximately 54% of our 2008 net sales were derived from subsidiaries whose local currency is the euro. This increases the impact of the fluctuation of the euro against the U.S. dollar.

We incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the local currency of the transacting entity. Gains and losses on currency transactions are included in operating income and do impact our operating margins. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant domestic currency and then translated into U.S. dollars for inclusion in our consolidated financial statements. Gains and losses on currency translations are recorded in our consolidated financial statements as a component of “other comprehensive income (loss)” and do not impact our operating margins. Exchange rates between these currencies and U.S. dollars in recent years have fluctuated significantly and may do so in the future.

In December 2008, we entered into foreign currency forward contracts to manage our exposure to fluctuations in currency rates on third-party sales denominated in a currency other than the functional currency of the legal entity.  We hedged such exposures with foreign currency forward contracts denominated in the same currency and with similar terms as the underlying exposure. Therefore, the instruments were designated as foreign exchange cash flow hedges and are effective at generating offsetting changes in the fair value or cash flows of the hedged item or transaction. As a result, any foreign currency gains or losses related to changes in the fair value of the derivative is accounted for as a component of accumulated other comprehensive income for as long as the hedge remains effective.  See discussion of derivative contracts under Note 9, “Long-Term Debt” for further details.

Our financial results are subject to the effect of currency fluctuations on the translation of our euro-denominated debt. As of December 31, 2008 and 2007, our total euro-denominated debt equaled €1,069.2 million ($1,493.8 million) and €841.5 million ($1,227.7 million based on the December 31, 2007 exchange rate of €1.00 = $1.4590), respectively. A weakening or strengthening of the euro against the U.S. dollar by $0.01 would decrease or increase, respectively, by $10.7 million and $8.4 million in 2008 and 2007, respectively, the U.S. dollar equivalent of our total euro-denominated debt. Gains and losses on the translation of debt denominated in a currency other than the functional currency of the borrower are included as a separate component of “other income (expenses)” in our statement of operations and “accumulated other comprehensive income” in our balance sheet.

In connection with the offering of the 2014 Notes, we entered into a cross-currency interest rate swap in November 2004 with a notional amount of €155.6 million that effectively converts the U.S. dollar fixed rate debt in respect of the 2014 dollar-denominated notes sold into euro fixed rate debt. We designated this contract as a hedge of the foreign currency exposure of our net investment in our euro-denominated operations. In addition, we designated the remaining portion of our euro-denominated debt that is recorded on our U.S. books as a net investment hedge of our euro-denominated investments as of October 1, 2005 (euro debt of €652.0 million at December 31, 2008; $910.9 million). As a result, any foreign currency gains and losses resulting from the euro-denominated debt discussed above is accounted for as a component of accumulated other comprehensive income.

Commodity Price Risk

We are subject to commodity price risk for certain of our raw materials, such as copper and zinc. We have not materially hedged this commodity price exposure to date.  In March 2008, we entered into derivative contracts in our Titanium Dioxide Pigments segment to protect a portion of its exposure to movements in certain raw materials prices.  These contracts expired in November 2008.  We elected not to apply hedge accounting for these derivative contracts and recorded the mark-to-market of these contracts in cost of products sold in our Consolidated Statements of Operations.

67

Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Rockwood Specialties Group, Inc.

Princeton, New Jersey

We have audited the accompanying consolidated balance sheets of Rockwood Specialties Group, Inc. and subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Rockwood Specialties Group, Inc. and subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standard No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans as of December 31, 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 on January 1, 2007, and Statement of Financial Accounting Standard No. 157, Fair Value Measurements on January 1, 2008.

/s/ Deloitte & Touche LLP

Parsippany, New Jersey

March 11, 2009

68

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions)

	Year ended December 31,
	2008			2007			2006
Net sales	$	3,380.1		$	3,065.2		$	2,714.7
Cost of products sold	2,365.8			2,089.1			1,859.0
Gross profit	1,014.3			976.1			855.7
Selling, general and administrative expenses	661.3			597.6			540.4
Impairment charges	809.5			—			2.2
Restructuring and other severance costs	35.3			12.0			4.9
Gain on sale of assets and other	(2.4		)	(4.7		)	(0.3		)
Operating (loss) income	(489.4		)	371.2			308.5
Other income (expenses):
Interest expense (a)	(231.1		)	(219.3		)	(199.9		)
Interest income	6.0			11.5			2.4
Gain (loss) on early extinguishment of debt	4.0			(18.6		)	—
Refinancing expenses	—			(0.9		)	—
Foreign exchange (loss) gain, net	(32.3		)	7.8			8.6
Other, net	0.7			—			1.8
Other expenses, net	(252.7		)	(219.5		)	(187.1		)
(Loss) income from continuing operations before taxes and minority interest	(742.1		)	151.7			121.4
Income tax (benefit) provision	(23.9		)	62.3			61.3
(Loss) income from continuing operations before minority interest	(718.2		)	89.4			60.1
Minority interest in continuing operations, net of tax	83.6			(7.9		)	—
Net (loss) income from continuing operations	(634.6		)	81.5			60.1
Income from discontinued operations, net of tax	3.3			25.3			48.1
Gain on sale of discontinued operations, net of tax	34.3			180.6			—
Minority interest in discontinued operations, net of tax	—			(0.1		)	(5.2		)
Net (loss) income	$	(597.0	)	$	287.3		$	103.0

(a) Interest expense includes:
Interest expense on debt	$	(170.0	)	$	(177.9	)	$	(197.6	)
Mark-to-market (losses) gains on interest rate swaps	(51.5		)	(32.2		)	7.2
Deferred financing costs	(9.6		)	(9.2		)	(9.5		)
Total	$	(231.1	)	$	(219.3	)	$	(199.9	)

See accompanying notes to consolidated financial statements.

69

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except per share amounts)

	December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	468.7		$	346.9
Accounts receivable, net	464.6			460.3
Inventories	641.0			526.9
Deferred income taxes	22.2			22.7
Prepaid expenses and other current assets	65.9			69.7
Assets of discontinued operations	—			75.1
Total current assets	1,662.4			1,501.6
Property, plant and equipment, net	1,752.2			1,508.5
Goodwill	917.8			1,730.0
Other intangible assets, net	754.8			675.9
Deferred debt issuance costs, net of accumulated amortization of $39.2 and $31.2, respectively	39.1			41.1
Deferred income taxes	11.6			15.5
Other assets	39.5			39.2
Total assets	$	5,177.4		$	5,511.8
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	260.8		$	285.5
Income taxes payable	4.1			9.5
Accrued compensation	92.6			81.5
Restructuring liability	18.9			14.0
Accrued expenses and other current liabilities	215.5			171.3
Deferred income taxes	9.0			7.2
Long-term debt, current portion	90.9			107.4
Liabilities of discontinued operations	—			17.0
Total current liabilities	691.8			693.4
Long-term debt	2,720.3			2,474.0
Pension and related liabilities	352.0			327.5
Deferred income taxes	97.7			112.7
Other liabilities	189.8			163.6
Total liabilities	4,051.6			3,771.2
Minority interest	315.4			175.3
Stockholder’s equity:
Common stock ($0.01 par value, 1,000,000 shares authorized, 382,000 shares outstanding)	—			—
Paid-in capital	1,044.0			1,035.2
Accumulated other comprehensive income	207.0			373.7
Retained (deficit) earnings	(440.6		)	156.4
Total stockholder’s equity	810.4			1,565.3
Total liabilities and stockholder’s equity	$	5,177.4		$	5,511.8

See accompanying notes to consolidated financial statements.

70

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in millions)

	Year ended December 31,
	2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(597.0	)	$	287.3		$	103.0
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Income from discontinued operations, net of tax	(3.3		)	(25.3		)	(48.1		)
Gain on sale of discontinued operations, net of tax	(34.3		)	(180.6		)	—
Minority interest in discontinued operations, net of tax	—			0.1			5.2
Depreciation and amortization	258.9			211.7			174.4
Deferred financing costs amortization	9.6			9.2			9.5
(Gain) loss on early extinguishment of debt (including $4.1 of noncash write-offs on deferred financing costs for the year ended December 31, 2007)	(4.0		)	18.6			—
Foreign exchange loss (gain)	32.3			(7.8		)	(8.6		)
Fair value adjustment of derivatives	51.5			32.2			(7.2		)
Bad debt provision	3.4			(1.3		)	(0.1		)
Acquired in-process research and development	2.9			—			—
Stock-based compensation	4.1			3.9			—
Deferred income taxes	(64.5		)	29.0			36.4
Impairment charges	809.5			—			2.2
Loss (gain) on sale of assets and other	0.7			(4.7		)	(0.2		)
Minority interest in continuing operations	(83.6		)	7.9			—
Changes in assets and liabilities, net of the effect of foreign currency translation and acquisitions:
Accounts receivable	36.8			7.1			(22.1		)
Inventories	(66.8		)	(34.5		)	(26.3		)
Prepaid expenses and other assets	10.5			(18.5		)	23.1
Accounts payable	(52.1		)	1.6			10.1
Income taxes payable	(1.4		)	(6.4		)	(4.8		)
Accrued expenses and other liabilities	(23.3		)	0.8			2.1
Net cash provided by operating activities of continuing operations	289.9			330.3			248.6
Net cash provided by operating activities of discontinued operations	12.0			38.3			56.4
Net cash provided by operating activities	301.9			368.6			305.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, including transaction fees paid, net of cash acquired	(226.7		)	(240.1		)	(45.7		)
Post closing purchase price consideration	29.8			—			—
Capital expenditures, excluding capital leases	(224.0		)	(193.2		)	(165.1		)
Proceeds from formation of Viance joint venture, net	—			73.0			—
Proceeds on sale of assets	9.1			14.2			4.3
Net cash used in investing activities of continuing operations	(411.8		)	(346.1		)	(206.5		)
Net cash provided by (used in) investing activities of discontinued operations, including net sale proceeds of $122.0 and $731.7 in 2008 and 2007, respectively	116.3			723.7			(42.3		)
Net cash (used in) provided by investing activities	(295.5		)	377.6			(248.8		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Titanium Dioxide Pigments venture financing	362.5			—			—
Payment of assumed debt to Titanium Dioxide Pigments venture minority shareholder	(141.4		)	—			—
Proceeds from senior secured credit facilities	—			—			239.1
Repayment of 2011 Notes	—			(273.4		)	—
Repayment of 2014 Notes	(10.2		)	—			—
Repayment of senior secured credit facilities	(68.7		)	(57.1		)	(275.6		)
Repayment of senior secured credit facilities revolver	—			(37.0		)	—
Payments on other long-term debt	(30.9		)	(24.1		)	(20.1		)
Equity contributions	0.2			—			—
Deferred financing costs	(5.0		)	—			—
Payments related to early extinguishment of debt	—			(14.5		)	—
Distribution to minority shareholder	(3.9		)	(7.2		)	—
Net cash provided by (used in) financing activities of continuing operations	102.6			(413.3		)	(56.6		)
Net cash used in financing activities of discontinued operations	—			—			(46.2		)
Net cash provided by (used in) financing activities	102.6			(413.3		)	(102.8		)
Effect of exchange rate changes on cash and cash equivalents	12.8			(10.3		)	(13.8		)
Net increase (decrease) in cash and cash equivalents	121.8			322.6			(60.4		)
Less increase in cash and cash equivalents from discontinued operations, net (a)	—			(1.6		)	(10.1		)
Increase (decrease) in cash and cash equivalents from continuing operations	121.8			321.0			(70.5		)
Cash and cash equivalents of continuing operations, beginning of period	346.9			25.9			96.4
Cash and cash equivalents of continuing operations, end of period	$	468.7		$	346.9		$	25.9

(a) Excludes net sale proceeds of $122.0 and intercompany transfers of $6.3 for the year ended December 31, 2008. Excludes net sale proceeds of $731.7 in 2007 and intercompany transfers of $28.7 and $(42.2) for the years ended December 31, 2007 and 2006, respectively.

Supplemental disclosures of cash flow information:
Interest paid	$	167.3	$	174.4	$	147.8
Income taxes paid, net of refunds	$	41.9	$	39.8	$	31.3
Non-cash investing activities:
Titanium Dioxide Pigments venture formation, net	$	246.0	$	—	$	—
Acquisition of capital equipment	$	22.7	$	24.7	$	24.6
Non-cash financing activites:
Tax liability not payable to parent	$	8.6	$	29.8	$	—

See accompanying notes to consolidated financial statements.

71

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

(Dollars in millions;)

					Accumulated
					Other			Retained
	Common		Paid-in		Comprehensive			Earnings			Comprehensive			Stockholder’s
	Stock		Capital		Income (Loss)			(Deficit)			Income (Loss)			Equity
Balance, January 1, 2006	$	—	$	1,003.4	$	56.0		$	(226.5	)				$	832.9
Deferred compensation	—		0.7		—			—						0.7
Minimum pension liability, net of tax	—		—		20.7			—			$	20.7		20.7
Effect of adoption of SFAS No. 158, net of tax	—		—		(11.3		)	—			—			(11.3		)
Other	—		1.3		(1.3		)	—			(1.3		)	—
Foreign currency translation	—		—		147.4			—			147.4			147.4
Intercompany foreign currency loans	—		—		131.7			—			131.7			131.7
Net investment hedges, net of tax	—		—		(107.1		)	—			(107.1		)	(107.1		)
Cash flow hedges, net of tax	—		—		0.6			—			0.6			0.6
Net income	—		—		—			103.0			103.0			103.0
Comprehensive income											$	295.0
Balance, December 31, 2006	—		1,005.4		236.7			(123.5		)				1,118.6
Pension related adjustments, net of tax	—		—		36.7			—			36.7			36.7
Effect of adoption of FIN 48	—		—		—			(7.4		)	—			(7.4		)
Foreign currency translation	—		—		177.6			—			177.6			177.6
Sales of investments in foreign entities, primarily Electronics business	—		—		(35.8		)	—			(35.8		)	(35.8		)
Intercompany foreign currency loans	—		—		66.8			—			66.8			66.8
Net investment hedges, net of tax	—		—		(108.3		)	—			(108.3		)	(108.3		)
Tax liability not payable to parent	—		29.8		—			—			—			29.8
Net income	—		—		—			287.3			287.3			287.3
Comprehensive income											$	424.3
Balance, December 31, 2007	—		1,035.2		373.7			156.4						1,565.3
Equity contribution	—		0.2		—			—			—			0.2
Pension related adjustments, net of tax	—		—		(27.9		)	—			(27.9		)	(27.9		)
Foreign currency translation	—		—		(146.0		)	—			(146.0		)	(146.0		)
Intercompany foreign currency loans	—		—		(32.2		)	—			(32.2		)	(32.2		)
Net investment hedges, net of tax	—		—		38.9			—			38.9			38.9
Cash flow hedges, net of tax	—		—		0.2			—			0.2			0.2
Other	—		—		0.3			—			—			0.3
Tax liability not payable to parent	—		8.6		—			—			—			8.6
Net loss	—		—		—			(597.0		)	(597.0		)	(597.0		)
Comprehensive loss											$	(764.0	)
Balance, December 31, 2008	$	—	$	1,044.0	$	207.0		$	(440.6	)				$	810.4

See accompanying notes to consolidated financial statements.

72

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Business Description, Background—Rockwood Specialties Group, Inc. and Subsidiaries (“Rockwood,” “Group” or the “Company”) is a global developer, manufacturer and marketer of high value-added specialty chemicals and advanced materials used for industrial and commercial purposes.

Rockwood was formed in connection with an acquisition of certain assets, stock and businesses from Laporte plc (“Laporte”) on November 20, 2000 (the “KKR Acquisition”) by affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”). The businesses acquired focused on specialty chemicals, iron-oxide pigments, timber-treatment chemicals, clay-based additives, pool and spa chemicals, and electronic chemicals in semiconductors and printed circuit boards.

On July 31, 2004, the Company completed the acquisition of certain businesses of Dynamit Nobel from mg technologies ag, now known as GEA Group Aktiengesellschaft (the “Dynamit Nobel Acquisition”). The businesses acquired are focused on highly specialized markets and consist of: surface treatment and lithium chemicals; advanced ceramics and titanium dioxide pigments.

On November 16, 2007, funds affiliated with KKR and DLJ Merchant Banking Partners III, L.P. (“DLJMB”) and certain management stockholders sold an aggregate of 10 million shares of Rockwood Holdings, Inc.’s (“Holdings”), our ultimate parent, common stock. On December 7, 2007, these stockholders sold an additional aggregate amount of 125,915 shares of common stock as a result of the underwriters’ partial exercise of the over-allotment option. Prior to this offering, affiliates of KKR owned approximately 50.9% of Holdings’ common stock on an undiluted basis. As a result of this offering, effective November 16, 2007, affiliates of KKR control less than a majority of the voting power of Holdings’ outstanding common stock and as a result, it is no longer considered a “controlled company” under NYSE rules. On June 17, 2008, funds affiliated with KKR, DLJMB and certain management stockholders sold an aggregate of 10 million shares of Holdings’ common stock.

On January 9, 2007, the Company completed the sale of its Groupe Novasep segment and on December 31, 2007, the Company completed the sale of its Electronics business, excluding its European wafer reclaim business. These businesses have been reported as discontinued operations for all periods presented.

On September 1, 2008, the Company completed the formation of a venture with Kemira Oyj (“Kemira”) that focuses on specialty titanium dioxide pigments (See Note 4, “Acquisitions,” for further details).

On October 10, 2008, the Company completed the sale of its pool and spa chemicals business in the Performance Additives segment.

Basis of Presentation—The accompanying financial statements of Rockwood are presented on a consolidated basis. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts related to reporting the sale of the pool and spa chemicals business as discontinued operations, have been reclassified to conform to current-year classification. See Note 2, “Discontinued Operations,” for further details. In the opinion of management, this information contains all adjustments necessary for a fair presentation of the results for the periods presented.

The Company’s minority interest in continuing operations represents the total of the minority party’s interest in certain investments (principally the Viance, LLC joint venture and the Titanium Dioxide Pigments venture) that are consolidated but less than 100% owned. On January 2, 2007, Chemical Specialties, Inc. (“CSI”), a wholly-owned subsidiary of the Company within the Timber Treatment Chemicals business of the Performance Additives segment, and Rohm and Haas Company completed the formation of Viance, LLC, a joint venture company that provides an extensive range of advanced wood treatment technologies and services to the global wood treatment industry. In accordance with the consolidation principles of Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) 46 (R), Consolidation of Variable Interest Entities — An Interpretation of ARB No. 51, the Company has concluded that Rockwood is the primary beneficiary of the joint venture and as such has consolidated the joint venture.  At December 31, 2008 and 2007, the Viance, LLC joint venture had no third party debt outstanding, no consolidated assets of the Company were pledged as collateral for any joint venture obligations and the general creditors of the joint venture had no recourse to the general credit of the Company.  The net assets of the Viance, LLC joint venture included in the Consolidated Balance Sheets of the Company were $87.5 million and $99.0 million at December 31, 2008 and 2007, respectively, and were primarily related to identifiable intangible assets. All intercompany accounts, balances and transactions have been eliminated.

As noted above, the Company completed a Titanium Dioxide Pigments venture with Kemira in September 2008.  The Company has consolidated this venture and has reported Kemira’s interest as minority interest in the consolidated financial statements. This entity did not meet the definition of a variable interest entity under FIN 46 (R) and was thus consolidated in accordance with ARB No. 51, Consolidated Financial Statements. The water treatment business formerly within the Titanium Dioxide Pigments segment was not part of the transaction and is now being reported within the Clay-based Additives business in the Performance Additives segment. As a result, the Company’s financial statements have been reclassified to reflect the water treatment business as part of the Performance

73

Additives segment for the periods presented. See Note 4, “Acquisitions,” for further details.

Unless otherwise noted, all balances which are denominated in euros are converted at the December 31, 2008 exchange rate of €1.00 = $1.3971.

Nature of Operations/Segment Reporting—The Company is a global developer, manufacturer and marketer of high value-added specialty chemicals and advanced materials. The Company currently operates in various business lines within its five reportable segments consisting of: (1) Specialty Chemicals, which includes lithium compounds and chemicals, metal surface treatment chemicals, and synthetic metal sulfides, (2) Performance Additives, which includes color pigments and services, timber treatment chemicals and clay-based additives, (3) Titanium Dioxide Pigments, which consists of titanium dioxide pigments, and zinc- and barium-based compounds, (4) Advanced Ceramics, which includes ceramic-on-ceramic ball head and liner components used in hip-joint prostheses systems, ceramic cutting tools and a range of other ceramic components and (5) Specialty Compounds, which consists of plastic and rubber compounds. As discussed above, the Company sold its Electronics business, excluding its European wafer reclaim business, in December 2007. As a result, the European wafer reclaim business is included within “Corporate and other” for all periods presented (See Note 3, “Segment Information,” for further details).

The basis for determining an enterprise’s operating segments is the manner in which financial information is used internally by the enterprise’s chief operating decision maker, the Company’s Chief Executive Officer. See Note 3, “Segment Information,” for further segment reporting information.

Use of Estimates—The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the periods reported. These estimates include, among other things, assessing the collectability of accounts receivable, the use and recoverability of inventory, the valuation of deferred tax assets, the measurement of the accrual for uncertain tax benefits, impairment of goodwill as well as property, plant and equipment and other intangible assets, the accrual of environmental and legal reserves and the useful lives of tangible and intangible assets, among others. Actual results could differ from those estimates. Such estimates also include the fair value of assets acquired and liabilities assumed allocated to the purchase price of business combinations consummated.

Major Customers and Concentration of Credit—The Company has a number of major end-user, retail and OEM customers, with the largest concentration in Europe, and the United States. No single customer accounted for more than 2% of net sales during any of the periods presented. The Company does not believe a material part of its business is dependent upon any single customer, the loss of which would have a material long-term impact on the business of the Company. However, the loss of one or more of the Company’s largest customers would most likely have a negative short-term impact on the Company’s results of operations. Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable and derivative contracts. See Note 9, “Long-Term Debt,” and “Critical Accounting Policies and Estimates” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of estimates used.

Accounts Receivable—The allowance for doubtful accounts is estimated at each reporting date based on factors such as receivable age, customer liquidity status and previous write-off history. The Company performs ongoing credit evaluations of customers and generally does not require collateral. Credit insurance is maintained by certain of the Company’s businesses. Allowance is maintained for aggregate expected credit losses. Write-offs are charged to the allowance when taken, net of recoveries. Allowance for doubtful account activity is as follows:

	Year Ended December 31,
($ in millions)	2008			2007			2006
Balance, January 1	$	8.6		$	8.6		$	8.6
Additions charged to expense	4.5			0.5			0.8
Write-offs, net of recoveries	(1.1		)	(1.8		)	(0.9		)
Other (a)	(1.2		)	1.3			0.1
Balance, December 31	$	10.8		$	8.6		$	8.6

(a)  Primarily the impact of currency changes.

Risks Associated with International Operations and Currency Risk—The Company’s international operations are subject to risks normally associated with foreign operations, including, but not limited to, the disruption of markets, changes in export or import laws, restrictions on currency exchanges and the modification or introduction of other governmental policies with potentially adverse effects. A majority of the Company’s sales and expenses are denominated in currencies other than U.S. dollars. Changes in exchange rates may have a material effect on the Company’s reported results of operations and financial position. In addition, a significant portion of the Company’s indebtedness is denominated in euros.

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Revenue Recognition—The Company recognizes revenue when the earnings process is complete. Product sales are recognized when products are shipped to the customer in accordance with the terms of the contract of sale, title and risk of loss have been transferred, collectibility is reasonably assured, and pricing is fixed or determinable. Accruals are made for sales returns and other allowances based on the Company’s experience. Revenue under service agreements, which was less than 1% of consolidated net sales in 2008, is realized when the service is performed. Liabilities for product warranties are less than 1% of consolidated net sales as of December 31, 2008 and 2007.

Foreign Currency Translation—The functional currency of each of the Company’s foreign subsidiaries is primarily the respective local currency. Balance sheet accounts of the foreign operations are translated into U.S. dollars at period-end exchange rates and income and expense accounts are translated at average exchange rates during the period. Translation gains and losses related to net assets located outside the U.S. are shown as a component of accumulated other comprehensive income. Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity’s functional currency), including intercompany financing arrangements for which settlement is planned or anticipated, are included in determining net income for the period in which exchange rates change. Gains or losses on certain intercompany loans that are of a long-term investment nature for which settlement is not planned or anticipated in the foreseeable future and gains or losses on euro-denominated debt that is designated as a net investment hedge of the Company’s euro-denominated investments are reported and accumulated in the same manner as translation adjustments. These loans are all related to intercompany debt arrangements. As of December 31, 2008, intercompany debt arrangements deemed to be of a long-term investment nature for which settlement is not planned or anticipated in the foreseeable future is predominantly related to €519.4 million ($725.7 million) of intercompany loans.

Advertising—The Company expenses advertising costs as incurred.

Research and Development—Research and development costs are charged to expense, as incurred. Such costs were $51.7 million, $44.0 million and $39.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Accounting for Shipping and Handling Costs—The Company records shipping and handling costs in cost of products sold and records shipping and handling costs billed to customers in net sales.

Cash and Cash Equivalents—All highly liquid instruments and money market funds with an original maturity of three months or less are considered to be cash equivalents. The carrying amount approximates fair value because of the short maturities of these instruments.

Inventories—Inventories are stated at the lower of cost or market. Cost is determined primarily on average cost or the first-in, first-out method. Inventory quantities on hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based primarily on either the Company’s estimated forecast of product demand and production requirements or historical usage. See Note 5, “Inventories.”

Property, Plant and Equipment—Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is determined using the straight-line method over the various asset classes. Estimated lives range from 20-30 years for buildings and improvements (including land improvements), 7-12 years for machinery and equipment, 3-5 years for furniture and fixtures and 14-50 years for mining rights. See Note 6, “Property, Plant and Equipment.”

The estimated useful lives of leasehold improvements are the lesser of the estimated life of the improvement or the term of the lease.

Major renewals and improvements are capitalized and minor replacements, maintenance and repairs are charged to current operations as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation are removed from the balance sheet and any gain or loss is reflected in the statement of operations.

The Company classifies depreciation and amortization in its Consolidated Statements of Operations consistent with the utilization of the underlying assets as follows:

	Year Ended December 31,
($ in millions)	2008		2007		2006
Cost of products sold	$	161.9	$	129.5	$	108.6
Selling, general and administrative expenses (a)	97.0		82.2		65.8
Total depreciation and amortization	$	258.9	$	211.7	$	174.4

(a)Primarily consists of amortization costs.

Gain/Loss on Early Extinguishment of Debt— In the fourth quarter of 2008, the Company redeemed €11.0 million of its 2014 Notes

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at a discount and recorded a gain of $4.0 million. In the second quarter of 2007, the Company paid a redemption premium of $14.5 million and wrote off $4.1 million of deferred financing costs associated with the redemption of the 2011 Notes.

Goodwill—Goodwill represents the cost in excess of fair value of net assets acquired for transactions accounted for using the purchase method of accounting. See Note 7, “Goodwill,” for details of goodwill activity by segment.

Other Intangible Assets—Other intangible assets primarily consists of patents and other intellectual property, trade names and trademarks, and customer relationships. Patents and other intellectual property are recorded at their estimated fair values at the time of acquisition and are being amortized over their estimated remaining useful lives, ranging from 4-20 years. Trade names and trademarks are being amortized from 18-25 years, customer relationships are being amortized over periods ranging from 7-15 years and supply agreements are being amortized over periods ranging from 10-15 years. See Note 8, “Other Intangible Assets.”

Impairment Accounting— The recoverability of goodwill is reviewed on an annual basis during the fourth quarter. Additionally, the recoverability of goodwill, long-lived tangible, and other intangible assets is reviewed when events or changes in circumstances occur indicating that the carrying value of the assets may not be recoverable.  In accordance with paragraph 30 of Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, the Company determined that its reporting units for its goodwill impairment review are its operating segments or components of an operating segment that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results.  Based on this analysis, the Company has identified nine reporting units within its reportable segments.

SFAS No. 142 prescribes a two-step method for determining goodwill impairment.  In the first step, the Company determines the fair value of each reporting unit (as discussed in the following sentence) and compares that fair value to the carrying value of such reporting unit.  This begins with estimating the fair value of each reporting unit, which is derived from peer multiples.  Specifically, the estimate of the fair value of such reporting unit is based on an industry metric that is the ratio of enterprise value (“EV”, which is commonly defined as market capitalization, plus long-term debt, less cash) to Adjusted EBITDA of the relevant benchmark peer companies and groups; this is the peer multiple approach.  The Company uses EV multiples to the last twelve months Adjusted EBITDA and to the next fiscal year Adjusted EBITDA.  The peer companies are typically based upon the competitors disclosed in Item 1, “Business” for each of the reporting units.  The Company then multiplies this ratio by the Adjusted EBITDA for the recently completed year and the budgeted Adjusted EBITDA for the upcoming year of such reporting unit and compares it to the carrying value of such reporting unit.  If the product of such peer multiple and reporting unit’s Adjusted EBITDA is less than such carrying value, it may be an indication of an impairment. If the initial review indicates there may be an impairment, a review based on expected future cash flows is performed; this is the discounted cash flow approach.  For the discounted cash flow approach, the Company makes certain assumptions about, among other things, estimates of future cash flows, including growth rates, price increases, capital expenditures, the benefits of recent acquisitions and expected synergies, and an appropriate discount rate.  If the results of the peer multiple approach and the discounted cash flow approach differ materially, the relevant facts and circumstances are reviewed and a qualitative assessment is made to determine the proper weighting.  If the results of the first step indicate the carrying amount of a reporting unit is higher than its fair value, the second step must be performed. Specifically, SFAS No. 142 prescribes that the Company determine the implied fair value of goodwill in the same manner as if the Company had acquired those reporting units.  In the second step, the potential impairment is computed by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill.  If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss must be recognized for the excess.  If necessary, the Company may consult with valuation specialists to assist with its goodwill impairment review.

These calculations are based on inherent assumptions and estimates about future cash flows and appropriate benchmark peer companies or groups. Subsequent changes in these assumptions could result in future impairment. Although the Company consistently uses the same methods in developing the assumptions and estimates underlying the fair value calculations, such estimates are uncertain by nature and can vary from actual results.

In the fourth quarter of 2008, the Company recorded a non-cash goodwill impairment charge of $809.5 million. See Note 7, “Goodwill,” for further details.

Financial Instruments—Management believes the carrying amount of financial instruments, including accounts receivable, accounts payable and debt, approximates fair value, except as described in Note 9, “Long-Term Debt.”

Derivatives— The Company accounts for derivatives based on SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted. SFAS No. 133 requires that all derivatives be recognized as either assets or liabilities at fair value. Changes in the fair value of derivatives not designated as hedging instruments are recognized currently in earnings while changes in the fair value of derivatives that are designated as hedging instruments are recognized as a component of comprehensive income. The Company uses derivative instruments to manage its exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. See “Comprehensive Income” section of Note 1 and Note 16, “Accumulated Other Comprehensive Income,” for the impact of the Company’s net investment and cash flow hedges. The Company does not enter into derivative contracts for trading purposes nor does it use leveraged or complex instruments.

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Pension, Postemployment and Postretirement Costs—Defined benefit costs and liabilities have been determined in accordance with SFAS No. 87,  Employers’ Accounting for Pensions  and SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132 (R). Other postretirement benefit costs and liabilities have been determined in accordance with SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions and SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132 (R).  Postemployment benefit costs and liabilities have been determined in accordance with SFAS No. 112, Employers’ Accounting for Postemployment Benefits.

Related Party Transactions—In the ordinary course of business, Rockwood has engaged in transactions with certain related parties including KKR and DLJMB and affiliates of each.

Credit Suisse Securities (USA) LLC (“Credit Suisse”), an affiliate of DLJMB, served as an underwriter in the secondary offering of Holdings’ common stock by certain selling stockholders in November 2007 and June 2008. The Company did not receive any proceeds in these offerings or pay any commissions.  Also, from time to time, Credit Suisse provides the Company with advisory services in connection with acquisitions and divestitures. For example, the Company paid fees of $0.5 million in 2008 primarily in connection with the Titanium Dioxide Pigments venture completed in September 2008 and $3.2 million in 2007 for advice primarily related to the sale of the Electronics business.

As part of the Titanium Dioxide Pigments venture with Kemira that was completed in September 2008, the venture has a long-term agreement expiring in August 2018 to purchase steam and electricity (“energy”) from Kemira.  The venture purchased $13.4 million of energy from Kemira during the venture’s four months of operation in 2008.  As of December 31, 2008, $9.4 million was due to Kemira, as well an additional one-time payment of $13.9 million in connection with the energy supply agreement.  Minimum annual payments under the energy agreement are approximately $17.0 million.  In connection with this arrangement, the venture has approximately $30.2 million of non-interest bearing notes receivable from Kemira that are due in August 2028.  The carrying value of the notes receivable were $4.5 million at December 31, 2008. Interest is imputed at an effective rate of 8.96%.

As part of the Titanium Dioxide Pigments venture with Kemira, the venture has a supply agreement for the sale of certain raw materials to Kemira that are manufactured by the venture.  The term of this contract expires in December 2015.  Transactions between the Titanium Dioxide Pigments venture and Kemira amounted to: sales to Kemira of $0.5 million in 2008 and amounts due from Kemira of $0.2 million at December 31, 2008.  In addition, there were sales from the Titanium Dioxide Pigments venture to companies owned by Kemira of $5.8 million during the venture’s four months of operation in 2008, of which $1.7 million was due to the venture at December 31, 2008.

As part of the Viance, LLC joint venture formed in January 2007 between the CSI subsidiary within the Timber Treatment Chemicals business and Rohm and Haas, the joint venture entered into certain related party transactions with Rohm and Haas.  Viance, LLC does not own manufacturing facilities, and as a result, relies on the members of the joint venture to provide substantially all product and distribution requirements. In addition, the members sell products to Viance, LLC.  Transactions between Viance, LLC and Rohm and Haas amounted to: purchases from Rohm and Haas of $9.2 million and $8.2 million in 2008 and 2007, respectively, and sales to Rohm and Haas of $0.5 million and $2.7 million in 2008 and 2007, respectively.  Amounts due to Rohm and Haas totaled $3.0 million and $2.1 million at December 31, 2008 and 2007, respectively.

As of December 31, 2008, the Company had $11.7 million of payables due to its parent company, primarily related to stock-based compensation costs.

Income Taxes—Income taxes are determined in accordance with SFAS No. 109, Accounting for Income Taxes and FIN 48, Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts and the corresponding tax carrying amounts of assets and liabilities. Deferred tax assets are also recognized for tax loss and tax credit carryforwards. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on available evidence weighted toward evidence that is objectively verifiable. Deferred taxes are not provided on the undistributed earnings of subsidiaries as such amounts are considered to be permanently invested.

FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes and prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to not be sustained upon audit by the relevant authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, with regard to uncertain tax liabilities, FIN 48 provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company adopted the provisions of FIN 48 on January 1, 2007. The total amount of unrecognized tax benefits as of the date of

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adoption was $42.0 million. In conjunction with the adoption of FIN 48, the Company has classified uncertain tax positions as non-current income tax liabilities (other liabilities) unless expected to be paid within one year. Previously, accrued income tax liabilities were classified as current liabilities. As a result of the initial implementation of FIN 48, the Company recognized a $1.0 million increase in the liability for unrecognized tax benefits which was accounted for as follows:

($ in millions)
Increase in accumulated deficit (cumulative effect)	$	7.4
Additional deferred tax assets	3.5
Reduction in goodwill	(9.9		)
Increase in liability	$	1.0

In accordance with FIN 48, the Company records liabilities for uncertain tax benefits net of deferred tax assets associated with tax loss carryforwards for liabilities arising in the same year as the asset and for liabilities arising in different years from the asset, provided that the related tax loss can be carried back or forward to offset the liability.

In accordance with SFAS No. 109, Paragraph 140, the Company has allocated a tax benefit to the extent of its U.S. loss from continuing operations, offset by a tax provision charged to discontinued operations and separately to other comprehensive income.  When a tax jurisdiction has a loss from continuing operations and income from other items on a net basis, the Company’s policy is to allocate a tax benefit to continuing operations from the other items of income on a pro-rata basis.

Future realization of the tax benefit of an existing deductible temporary difference or carryforward ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryforward period available under the tax law. The Company’s policy is to consider the following sources of taxable income, which may be available under the tax law to realize a tax benefit for deductible temporary differences and carryforwards:

·Future reversals of existing taxable temporary differences.

·Future taxable income exclusive of reversing temporary differences and carryforwards.

·Taxable income in prior carry back year (s) if carry back is permitted under the tax law.

·Tax planning strategies that would, if necessary, be implemented to:

(1)Accelerate taxable amounts to utilize expiring carryforwards.

(2)Change the character of taxable or deductible amounts from ordinary income or loss to capital gain or loss.

(3)Switch from tax-exempt to taxable investments.

Evidence available about each of those possible sources of taxable income will vary between tax jurisdictions and, possibly, from year to year. To the extent evidence about one or more sources of taxable income is sufficient to support a conclusion that a valuation allowance is not necessary, the Company’s policy is that other sources need not be considered. Consideration of each source is required, however, to determine the amount of the valuation allowance that may be required to be recognized for deferred tax assets.

For any specific jurisdiction where a history of three years of cumulative losses has occurred or where there has been a substantial change in the business (e.g., a major acquisition or divestiture), the Company does not rely on projections of future taxable income as described above. Instead, the Company determines its need for a valuation allowance on deferred tax assets, if any, by determining an average steady-state normalized taxable income amount over the last three years, adjusted for acquisitions or divestitures if necessary. The Company will also consider the following positive evidence in the above scenarios, if present:

·Existing contracts or firm sales backlog that will produce more than enough taxable income to realize the deferred tax asset based on existing sales prices and cost structures.

·An excess of appreciated asset value over the tax basis of the entity’s net assets in an amount sufficient to realize the deferred tax asset.

For the years ended December 31, 2008 and 2007, the Company recorded gains on the sale of discontinued operations, net of tax of $34.3 million and $180.6 million, respectively. These gains included a tax provision of $8.6 million and $29.8 million for the years ended December 31, 2008 and 2007, respectively, related to the excess of taxable income at Group versus available net operating losses (“NOL’s”) at Group. It is the Company’s policy that Group, through its tax sharing agreement with its parent companies, will utilize available NOL’s at its parent companies to offset the taxable income not covered by Group NOL’s. Corresponding credits are reflected in additional paid-in capital.

Comprehensive Income—Comprehensive income includes net income and the other comprehensive income components which include unrealized gains and losses from foreign currency translation and from certain intercompany transactions that are of a long-term investment nature, pension-related adjustments that are recorded directly into a separate section of stockholder’s equity in the balance sheets and net investment and cash flow hedges. Foreign currency translation amounts are not adjusted for income taxes since they relate to indefinite length investments in non-U.S. subsidiaries and certain intercompany debt. See Note 16, “Accumulated Other

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Comprehensive Income.”

Accounting for Environmental Liabilities—In the ordinary course of business, Rockwood is subject to extensive and changing federal, state, local and foreign environmental laws and regulations, and has made provisions for the estimated financial impact of environmental cleanup related costs. Rockwood’s policy has been to accrue costs of a non-capital nature related to environmental clean-up when those costs are believed to be probable and can be reasonably estimated. If the aggregate amount of the obligation and the amount and timing of the cash payments for a site are fixed or reliably determinable, the liability is discounted. Expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized and expenditures related to existing conditions resulting from past or present operations and from which no current or future benefit is discernible are immediately expensed. The quantification of environmental exposures requires an assessment of many factors, including changing laws and regulations, advancements in environmental technologies, the quality of information available related to specific sites, the assessment stage of each site investigation and the length of time involved in remediation or settlement. In some matters, Rockwood may share costs with other parties. Rockwood does not include anticipated recoveries from insurance carriers or other third parties in its accruals for environmental liabilities.

Stock-Based Compensation— Holdings has in place the 2008 Amended and Restated Stock Purchase and Option Plan of Rockwood Holdings, Inc. and Subsidiaries (the “Plan”). Under the Plan, Holdings may grant stock options, restricted stock and other stock-based awards to the Company’s employees and directors and allow employees and directors to purchase shares of its common stock. There are 10,000,000 authorized shares available for grant under the Plan.  The Company has issued and expects to continue to issue new registered shares under the Plan to satisfy stock option exercises and the vesting of restricted stock units.  Effective January 1, 2006, the Company adopted SFAS No. 123R, Share-Based Payment, and related interpretations and began expensing the grant-date fair value of stock options.

The Company adopted SFAS No. 123R using the modified prospective approach and therefore has not restated prior periods. In accordance with SFAS No. 123R, beginning in the first quarter of 2006, the Company recorded compensation cost for the unvested portion of awards issued after February 2005, which is the date Holdings first filed its registration statement with the SEC. The aggregate compensation cost for stock options, restricted stock units and Board of Director stock grants recorded under the Plan, as discussed below, caused income from continuing operations before taxes and minority interest to decrease by $4.1 million, $3.9 million and less than $0.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Holdings granted additional stock options and restricted stock units in 2008 and 2007 to certain employees of Rockwood Corporate Headquarters and its business units. The restricted stock units contain a provision in which the units shall immediately vest and become converted into the right to receive a cash payment upon a change in control as defined in the equity agreement. As the provisions for redemption are outside the control of the Company, the fair value of these units as of December 31, 2008 and 2007 have been recorded as mezzanine equity (outside of permanent equity) in the Consolidated Balance Sheets of Holdings.

Recent Accounting Pronouncements—The Company adopted the following accounting pronouncements:

In September 2006, SFAS No. 157, Fair Value Measurements, was issued. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. This statement does not require any new fair value measurements. Certain disclosure provisions of this standard were effective for the Company as of January 1, 2008 and are disclosed in Note 15, “Fair Value Measurements.” The adoption of SFAS No. 157 did not have a material impact on the Company’s financial statements.

In September 2006, SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132 (R), was issued. The Company adopted the recognition provisions of SFAS No. 158 and initially applied them to the funded status of its defined benefit postretirement plans as of December 31, 2006. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for the Company for the 2008 fiscal year end. This requirement did not have a material impact on the Company’s financial statements in 2008.

In February 2007, SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115 , was issued. This statement permits an entity to choose to measure many financial instruments and certain other items at fair value and permits all entities to choose to measure eligible items at fair value at specified election dates. This statement is effective for the Company as of January 1, 2008. The Company adopted this standard on January 1, 2008. However, the Company has elected not to measure any additional instruments at fair value under SFAS No. 159.

In December 2007, SFAS No. 141 (revised 2007), Business Combinations (“FAS 141R”) was issued, which replaces FASB Statement No. 141,  Business Combinations.  FAS 141R establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. This statement also establishes disclosure requirements to enable users of financial statements to evaluate the

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nature and financial effects of the business combination. This statement is effective for acquisitions completed on or after January 1, 2009.

In December 2007, SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, was issued. Per this statement, the accounting and reporting for minority interests will be recharacterized as noncontrolling interests and classified as a component of equity (but separate from parent’s equity). This statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This statement is effective for the Company as of January 1, 2009 and primarily relates to its Viance, LLC joint venture and its Titanium Dioxide Pigments venture, as discussed above.  The Company does not expect this statement to have a material impact on its financial statements.

In December 2007, the SEC issued Staff Accounting Bulletin (“SAB”) No. 110, which provided interpretive guidance regarding the use of a “simplified” method, as discussed in SAB No. 107, in developing an estimate of expected term of “plain vanilla” share options in accordance with SFAS No. 123R, Share-Based Payment. SAB 110 is effective for share options granted as of January 1, 2008. SAB 110 extended the use of the simplified method beyond December 31, 2007, under certain circumstances, which included not having sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time a company’s equity shares have been publicly traded. As Holdings became a public company in August 2005, there is not sufficient historical exercise data available to estimate expected term. As a result, the Company will continue to use the “simplified” method to estimate expected term for share option grants until more relevant detailed information becomes widely available.

In February 2008, the FASB issued FASB Staff Position (FSP) Financial Accounting Standard (FAS) 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions, and FSP FAS 157-2,  Effective Date of FASB Statement No. 157. FSP FAS 157-1 removes leasing from the scope of SFAS No. 157. FSP FAS 157-2 delays the effective date of SFAS No. 157 from 2008 to 2009 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company will apply the provisions of FSP 157-2 on January 1, 2009 and does not expect this FSP to have a material impact on its financial statements.

In March 2008, SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an Amendment of FASB Statement 133 was issued. This statement changes the disclosure requirements for derivative instruments and hedging activities, including enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for the Company as of January 1, 2009. The Company does not expect this statement to have a material impact on its financial statements.

In April 2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of Intangible Assets. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and other U.S. GAAP. This FSP is effective for recognized intangible assets acquired after January 1, 2009. The Company does not expect this FSP to have a material impact on its financial statements.

In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active. This FSP clarifies the application of SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. This FSP is effective upon issuance, including prior periods for which financial statements have not been issued. This FSP did not have an impact on the Company’s consolidated financial statements.

2. DISCONTINUED OPERATIONS:

On October 10, 2008, the Company completed the sale of its pool and spa chemicals business and received net proceeds of $122.0 million in cash. On January 9, 2007, the Company completed the sale of its Groupe Novasep segment. The transaction was valued at approximately €425.0 million, which included the repayment of third party and intercompany indebtedness. On December 31, 2007, the Company completed the sale of its Electronics business, excluding its European wafer reclaim business, for $315.6 million.

In connection with SFAS No. 144, the Company’s financial statements have been reclassified to reflect the pool and spa chemicals business, the Groupe Novasep segment and the Electronics business sold as discontinued operations for all periods presented.

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Operating results of the discontinued operations of the pool and spa chemicals business for the year ended December 31, 2008 are as follows:

($ in millions)	Total
Net sales	$	54.9
Cost of products sold	39.4
Gross profit	15.5
Selling, general and administrative expenses	10.9
Gain on sale of business/assets	(66.3		)
Operating income	70.9
Other expenses:
Interest expense	(0.2		)
Other expenses	(0.2		)
Income before taxes	70.7
Income tax provision (a)	35.5
Net income	$	35.2

(a)Includes a tax provision of $8.6 million for the year ended December 31, 2008 related to the excess of taxable income at Group versus available NOL’s at Group. Group, through its tax sharing agreement with its parent companies, will utilize available NOL’s at its parent companies to offset taxable income not covered by Group NOL’s. The corresponding credit is reflected in additional paid in capital.

The Company also recorded a tax gain of $2.4 million related to the sale of Groupe Novasep for the year ended December 31, 2008.

Operating results of the discontinued operations for the year ended December 31, 2007 are as follows:

	Pool and Spa
	Chemicals			Electronics			Groupe
($ in millions)	Business			Business			Novasep			Total
Net sales	$	71.2		$	201.9		$	8.9		$	282.0
Cost of products sold	46.1			149.4			7.0			202.5
Gross profit	25.1			52.5			1.9			79.5
Selling, general and administrative expenses	14.1			28.8			1.1			44.0
Gain on sale of business/assets	—			(106.8		)	(117.7		)	(224.5		)
Operating income	11.0			130.5			118.5			260.0
Other expenses, net:
Interest expense	—			—			(0.3		)	(0.3		)
Interest income	(0.3		)	0.8			—			0.5
Loss on early extinguishment of debt	(0.5		)	(0.3		)	—			(0.8		)
Foreign exchange loss, net	—			(0.5		)	—			(0.5		)
Other expenses, net	(0.8		)	—			(0.3		)	(1.1		)
Income before taxes and minority interest	10.2			130.5			118.2			258.9
Income tax provision (a)	4.0			46.9			2.1			53.0
Net income before minority interest	6.2			83.6			116.1			205.9
Minority interest, net of tax	—			—			(0.1		)	(0.1		)
Net income	$	6.2		$	83.6		$	116.0		$	205.8

(a)Includes a tax provision of $29.8 million for the year ended December 31, 2008 related to the excess of taxable income at Group versus available NOL’s at Group. Group, through its tax sharing agreement with its parent companies, will utilize available NOL’s at its parent companies to offset taxable income not covered by Group NOL’s. The corresponding credit is reflected in additional paid in capital.

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Operating results of the discontinued operations for the year ended December 31, 2006 are as follows:

	Pool and Spa
	Chemicals			Electronics		Groupe
($ in millions)	Business			Business		Novasep			Total
Net sales	$	73.5		$	187.0	$	355.7		$	616.2
Cost of products sold	48.8			137.4		266.0			452.2
Gross profit	24.7			49.6		89.7			164.0
Selling, general and administrative expenses	13.7			30.5		54.3			98.5
Restructuring and other severance costs				0.3		—			0.3
Loss on sale of business/assets	—			0.1		11.3			11.4
Operating income	11.0			18.7		24.1			53.8
Other income (expenses):
Interest expense	(0.2		)	—		(4.1		)	(4.3		)
Interest income	—			2.0		—			2.0
Foreign exchange gain, net	—			—		0.7			0.7
Other	—			—		(4.9		)	(4.9		)
Other income (expenses), net	(0.2		)	2.0		(8.3		)	(6.5		)
Income before taxes and minority interest	10.8			20.7		15.8			47.3
Income tax provision (benefit)	4.4			6.9		(12.1		)	(0.8		)
Net income before minority interest	6.4			13.8		27.9			48.1
Minority interest, net of tax	—			—		(5.2		)	(5.2		)
Net income	$	6.4		$	13.8	$	22.7		$	42.9

The carrying values of the assets and liabilities of the pool and spa chemicals business included in the Consolidated Balance Sheets at December 31, 2007 are as follows:

	December 31,
($ in millions)	2007
ASSETS
Accounts receivable, net	$	23.4
Inventories	8.5
Prepaid expenses and other current assets	1.0
Property, plant and equipment, net	4.3
Goodwill	37.0
Other intangible assets, net	0.9
Total assets disposed	$	75.1
LIABILITIES
Accounts payable	$	7.7
Income taxes payable	3.2
Accrued compensation	1.6
Accrued expenses and other current liabilities	1.5
Deferred income taxes	(0.1		)
Other liabilities	3.1
Total liabilities disposed	$	17.0

The Company received net cash proceeds of $122.0 million in 2008 from the sale of the pool and spa chemicals business. These proceeds were reported as net cash provided by investing activities of discontinued operations for the year ended December 31, 2008 in the Company’s Consolidated Statements of Cash Flows. The net gain on the pool and spa chemicals business sale recorded in the fourth quarter of 2008 was $31.9 million (net of $34.3 million of taxes)

The Company received net cash proceeds of $420.7 million and $311.0 million in 2007 from the sale of Groupe Novasep and the Electronics business, excluding the European wafer reclaim business, respectively. These proceeds were reported as net cash provided by investing activities of discontinued operations for the year ended December 31, 2007 in the Company’s Consolidated Statements of Cash Flows. The net gain on the Groupe Novasep sale recorded in the first quarter of 2007 was $115.6 million (net of $2.1 million of German taxes) and the net gain on the sale of the Electronics business, excluding the European wafer reclaim business, recorded in the fourth quarter of 2007 was $65.0 million (net of $41.8 million of taxes).

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In connection with the sale of Rohner AG, a subsidiary in the Company’s former Groupe Novasep segment, the Company recorded a pre-tax loss of $11.5 million in 2006, representing consideration given less the remaining net liabilities of Rohner, which were transferred to the purchaser.

3. SEGMENT INFORMATION:

Rockwood operates in five reportable segments according to the nature and economic characteristics of its products and services as well as the manner in which the information is used internally by the Company’s key decision maker, who is the Company’s Chief Executive Officer. The five segments are: (1) Specialty Chemicals, which consists of the surface treatment and fine chemicals business lines; (2) Performance Additives, which consists of color pigments and services, timber treatment chemicals and clay-based additives; (3) Titanium Dioxide Pigments; (4) Advanced Ceramics; and (5) Specialty Compounds.

Items that cannot be readily attributed to individual segments have been classified as “Corporate and other.” Corporate and other operating loss primarily represents payroll, professional fees and other operating expenses of centralized functions such as treasury, tax, legal, internal audit and consolidation accounting as well as the cost of operating the Company’s central offices (including some costs maintained based on legal or tax considerations). The primary components of Corporate and other loss, in addition to operating loss, are interest expense on external debt (including the amortization of deferred financing costs), foreign exchange losses or gains, and mark-to-market gains or losses on derivatives. Major components within the reconciliation of income before taxes (described more fully below) include systems/organization establishment expenses, interest expense on external debt, foreign exchange losses or gains, and refinancing expenses related to external debt. Corporate and other identifiable assets primarily represent deferred financing costs that have been capitalized in connection with corporate external debt financing, deferred income tax assets and cash balances maintained in accordance with centralized cash management techniques. The Corporate and other classification also includes the results of operations, assets (primarily real estate) and liabilities (including pension and environmental) of legacy businesses formerly belonging to Dynamit Nobel and the wafer reclaim business. The European wafer reclaim business line provides semiconductor wafer reclaim services, wafer thinning/grinding services and wafer supply services. This business works with semiconductor manufacturers to refurbish used test wafers and return them to the manufacturer for reuse in test and process monitor applications. In February 2007, the Company completed the sale of its U.S. wafer reclaim business.

In September 2008, the Company completed the formation of its Titanium Dioxide Pigments venture. The water treatment business, formerly part of the Titanium Dioxide Pigments segment, is being reported within the Clay-based Additives business in the Performance Additives segment. As a result, the Company’s financial statements have been reclassified to reflect the water treatment business as part of the Performance Additives segment for the periods presented.

Summarized financial information for each of the reportable segments is provided in the following table:

					Titanium
	Specialty		Performance		Dioxide		Advanced		Specialty		Corporate
($ in millions)	Chemicals		Additives		Pigments		Ceramics		Compounds		and other			Consolidated (a)
Year ended December 31, 2008
Net sales	$	1,232.6	$	835.6	$	534.8	$	505.9	$	261.5	$	9.7		$	3,380.1
Total Adjusted EBITDA	313.0		107.1		83.1		150.2		34.0		(48.5		)	638.9
Capital expenditures	74.5		45.6		42.5		46.1		9.6		5.7			224.0
Year ended December 31, 2007
Net sales	$	1,082.9	$	798.5	$	442.9	$	452.5	$	276.6	$	11.8		$	3,065.2
Total Adjusted EBITDA	262.2		150.7		82.7		128.1		34.3		(55.6		)	602.4
Capital expenditures	63.5		37.0		39.2		31.2		17.6		4.7			193.2
Year ended December 31, 2006
Net sales	$	918.3	$	724.8	$	409.1	$	389.6	$	251.0	$	21.9		$	2,714.7
Total Adjusted EBITDA	206.6		128.7		81.9		104.8		31.7		(47.8		)	505.9
Capital expenditures	52.7		27.6		34.6		32.5		3.8		13.9			165.1

					Titanium
	Specialty		Performance		Dioxide		Advanced		Specialty		Corporate
	Chemicals		Additives		Pigments		Ceramics		Compounds		and other (b)		Eliminations (c)			Consolidated (d)
Identifiable assets as of:
December 31, 2008	$	2,030.9	$	829.8	$	990.0	$	879.9	$	130.2	$	541.5	$	(224.9	)	$	5,177.4
December 31, 2007	$	1,900.1	$	1,344.3	$	764.8	$	843.6	$	281.8	$	461.2	$	(159.1	)	$	5,436.7

(a)This amount does not include $1.8 million and $68.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the former Groupe Novasep segment which was sold on January 9, 2007; $37.6 million and $35.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the Electronics segment sold on December 31, 2007; and $5.4 million, $12.0 million and $12.0 million for the years ended December 31, 2008, 2007 and 2006, respectively, of Adjusted EBITDA from the pool and spa chemicals business sold on October 10, 2008.

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(b)This includes $50.7 million and $47.4 million of assets from legacy businesses at December 31, 2008 and 2007, respectively. These businesses were formerly owned primarily by Dynamit Nobel.

(c)Amounts contained in the “Eliminations” column represent the individual subsidiaries’ retained interest in their cumulative net cash balance (deposits less withdrawals) included in the corporate centralized cash system and within the identifiable assets of the respective segment. These amounts are eliminated as the corporate centralized cash system is included in the Corporate and other segment’s identifiable assets.

(d)This amount does not include $75.1 million of identifiable assets at December 31, 2007 from the pool and spa chemicals business sold in October 2008. Total identifiable assets including these amounts were $5,511.8 million at December 31, 2007.

The following table represents summarized geographic information with net sales based on seller’s location:

	Year ended December 31,
($ in millions)	2008		2007		2006
Net sales:
Germany	$	1,371.0	$	1,298.6	$	1,140.6
United States	890.2		852.5		842.1
Rest of Europe	799.3		655.1		515.1
Rest of World	319.6		259.0		216.9
	$	3,380.1	$	3,065.2	$	2,714.7

The following table presents the Company’s long-lived assets located in the regions indicated:

	December 31,
($ in millions)	2008		2007
Long-lived assets:
Germany	$	791.5	$	798.7
Rest of Europe	456.9		261.5
United States	293.4		239.1
Rest of World	210.4		209.2
	$	1,752.2	$	1,508.5

The increase in long-lived assets is due to acquisitions completed in 2008.

On a segment basis, the Company defines Adjusted EBITDA as operating income excluding depreciation and amortization, certain non-cash gains and charges, certain other special gains and charges deemed by senior management to be non-recurring gains and charges and certain items deemed by senior management to have little or no bearing on the day-to-day operating performance of its business segments and reporting units. The adjustments made to operating income directly correlate with the adjustments to net income in calculating Adjusted EBITDA on a consolidated basis pursuant to the senior secured credit agreement, which reflects management’s interpretations thereof. The indenture governing the 2014 Notes and the facility agreement related to the Titanium Dioxide Pigments venture excludes certain adjustments permitted under the senior credit agreement. Senior management uses Adjusted EBITDA on a segment basis as the primary measure to evaluate the ongoing performance of the Company’s business segments and reporting units.

The Company uses Adjusted EBITDA on a segment basis to assess its operating performance. Because the Company views Adjusted EBITDA on a segment basis as an operating performance measure, the Company uses income (loss) from continuing operations before taxes and minority interest as the most comparable GAAP measure. The following table presents a reconciliation of income (loss) before taxes to Adjusted EBITDA on a segment GAAP basis:

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							Titanium
	Specialty			Performance			Dioxide			Advanced			Specialty			Corporate
($ in millions)	Chemicals			Additives			Pigments			Ceramics			Compounds			and other			Consolidated
Year ended December 31, 2008
Income (loss) from continuing operations before taxes and minority interest	$	166.5		$	(470.6	)	$	(266.3	)	$	61.3		$	(92.8	)	$	(140.2	)	$	(742.1	)
Interest expense (a)	56.2			30.4			37.9			34.2			9.3			63.1			231.1
Interest income	(1.2		)	1.3			(0.2		)	(0.2		)	(0.5		)	(5.2		)	(6.0		)
Depreciation and amortization	69.7			67.2			56.3			47.0			11.3			7.4			258.9
Impairment charges	—			456.6			247.7			—			105.2			—			809.5
Restructuring and other severance costs	17.2			10.3			0.2			4.5			0.7			2.4			35.3
Systems/organization establishment expenses	2.7			5.1			3.4			0.3			0.4			1.0			12.9
Acquisition and disposal costs	—			0.9			—			—			0.4			0.4			1.7
Inventory write-up charges	0.8			1.5			3.3			1.3			—			—			6.9
Gain on early extinguishment of debt	—			—			—			—			—			(4.0		)	(4.0		)
(Gain) loss on sale of assets and other	(1.3		)	—			1.1			0.1			—			(2.3		)	(2.4		)
Acquired in-process research and development	—			2.6			—			0.3			—			—			2.9
Foreign exchange loss (gain), net	2.9			0.3			(0.3		)	1.4			—			28.0			32.3
Other	(0.5		)	1.5			—			—			—			0.9			1.9
Total Adjusted EBITDA (b)	$	313.0		$	107.1		$	83.1		$	150.2		$	34.0		$	(48.5	)	$	638.9
Year ended December 31, 2007
Income (loss) from continuing operations before taxes and minority interest	$	165.4		$	62.5		$	6.0		$	50.9		$	11.8		$	(144.9	)	$	151.7
Interest expense (a)	42.0			19.5			32.4			33.8			9.4			82.2			219.3
Interest income	—			(1.6		)	(0.2		)	0.3			(0.3		)	(9.7		)	(11.5		)
Depreciation and amortization	54.4			57.6			42.4			40.5			11.2			5.6			211.7
Restructuring and other severance costs	2.6			2.2			—			2.5			—			4.7			12.0
Systems/organization establishment expenses	(0.4		)	2.8			—			1.1			0.6			0.1			4.2
Acquisition and disposal costs	0.1			0.1			1.6			—			0.5			—			2.3
Inventory write-up charges	0.1			5.5			—			0.1			—			—			5.7
Loss on early extinguishment of debt	—			1.4			—			—			1.1			16.1			18.6
Refinancing expenses	—			—			—			—			—			0.9			0.9
(Gain) loss on sale of assets and other	(0.2		)	0.2			0.5			—			—			(5.2		)	(4.7		)
Foreign exchange gain, net	(0.6		)	(0.2		)	—			(1.2		)	—			(5.8		)	(7.8		)
Other	(1.2		)	0.7			—			0.1			—			0.4			—
Total Adjusted EBITDA (b)	$	262.2		$	150.7		$	82.7		$	128.1		$	34.3		$	(55.6	)	$	602.4
Year ended December 31, 2006
Income (loss) from continuing operations before taxes and minority interest	$	110.1		$	70.0		$	18.5		$	36.4		$	12.5		$	(126.1	)	$	121.4
Interest expense (a)	49.3			11.4			29.2			31.6			9.6			68.8			199.9
Interest income	(4.6		)	(1.6		)	(0.3		)	(0.1		)	(0.2		)	4.4			(2.4		)
Depreciation and amortization	47.5			43.6			36.1			33.1			8.7			5.4			174.4
Impairment charges	2.2			—			—			—			—			—			2.2
Restructuring and other severance costs (c)	2.0			1.2			—			1.1			—			1.0			5.3
Systems/organization establishment expenses	0.1			1.3			—			1.3			0.9			7.1			10.7
Acquisition and disposal costs	1.0			0.1			—			—			—			0.8			1.9
Inventory write-up charges	—			0.8			—			0.1			0.2			—			1.1
Loss (gain) on sale of assets and other	0.3			0.4			0.1			0.1			—			(1.2		)	(0.3		)
Foreign exchange loss (gain), net	0.4			0.1			—			—			—			(9.1		)	(8.6		)
Other	(1.7		)	1.4			(1.7		)	1.2			—			1.1			0.3
Total Adjusted EBITDA (b)	$	206.6		$	128.7		$	81.9		$	104.8		$	31.7		$	(47.8	)	$	505.9

(a)Includes (losses) gains of $(51.5) million, $(32.2) million and $7.2 million for the years ended December 31, 2008, 2007 and 2006, respectively, representing the movement in the mark-to-market valuation of the Company’s interest rate and cross-currency hedging instruments.

(b)This amount does not include $1.8 million and $68.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the former Groupe Novasep segment which was sold on January 9, 2007; $37.6 million and $35.3 million for the years ended December 31, 2007 and 2006, respectively, of Adjusted EBITDA from the Electronics segment sold on December 31, 2007; and $5.4 million, $12.0 million and $12.0 million for the years ended December 31, 2008, 2007 and 2006, respectively, of Adjusted EBITDA from the pool and spa chemicals business sold on October 10, 2008.

(c)Includes inventory write-downs of $0.4 million recorded in cost of products sold for the year ended December 31, 2006.

The summary of segment information above includes “Adjusted EBITDA,” a financial measure used by the Company’s chief decision maker and senior management to evaluate the operating performance of each segment.

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Items excluded from Adjusted EBITDA

Certain items are added to or subtracted from income (loss) from continuing operations before taxes and minority interest to derive Adjusted EBITDA, as defined below. These items include the following:

·Impairment charges:  In the fourth quarter of 2008, the Company recorded goodwill impairment charges of $809.5 million in several businesses (see Note 7, “Goodwill,” for further details).  In 2006, the Company recorded an impairment charge of $2.2 million related to the write-down of property, plant and equipment within the Fine Chemicals business of the Specialty Chemicals segment.

·Restructuring and other severance costs:  Charges of $35.3 million, $12.0 million and $5.3 million (including $0.4 million of charges recorded in cost of products sold in the Consolidated Statements of Operations in 2006) were recorded in 2008, 2007 and 2006, respectively, for miscellaneous restructuring activities, including facility closures, headcount reductions and severance costs (see Note 14, “Restructuring And Other Severance Costs,” for further details).

·Systems/organization establishment expenses:  In 2008, expenses of $12.9 million were recorded primarily related to the integration of businesses acquired in the Specialty Chemicals, Performance Additives and Titanium Dioxide Pigments segments. In 2007, expenses of $4.2 million were recorded primarily related to the integration of businesses acquired in the Performance Additives and Advanced Ceramics segments. For 2006, expenses of $10.7 million were recorded related to professional fees incurred regarding systems and internal control documentation in connection with the Sarbanes-Oxley Act of 2002 and fees relating to the implementation of a new consolidation software system.

·Acquisition and disposal costs:  Costs of $1.7 million, $2.3 million and $1.9 million were recorded in 2008, 2007 and 2006, respectively, in connection with potential and actual acquisitions and dispositions.

·Inventory write-up charges:  Under SFAS No. 141, Business Combinations, all inventories acquired in an acquisition must be revalued to “fair value.” This resulted in a consequential reduction in gross profit of $6.9 million, $5.7 million and $1.1 million for the years ended December 31, 2008, 2007 and 2006, respectively, as the inventory was sold in the normal course of business. The reduction in gross profit in 2008 was primarily related to the acquisition of Holliday Pigments in the Performance Additives segment and the completion of the Titanium Dioxide Pigments venture.  The reduction in gross profit in 2007 was primarily related to the acquisition of the Elementis plc business. In 2006, the reduction in gross profit was primarily due to acquisitions made in 2006 and the end of 2005 in the Performance Additives, Advanced Ceramics and Specialty Compounds segments.

·(Gain) loss on early extinguishment of debt:  In the fourth quarter of 2008, the Company redeemed €11.0 million of the 2014 Notes at a discount and recorded a gain of $4.0 million. In the second quarter of 2007, the Company paid a redemption premium of $14.5 million to redeem long-term debt and wrote off $4.1 million of deferred financing costs associated with the redemption of the 2011 Notes.

·Refinancing expenses:  In March 2007, the Company expensed $0.9 million related to the fourth amendment of the senior secured credit agreement to refinance all outstanding borrowings under the tranche F term loans with new tranche G term loans.

·Gain on sale of assets and other:  The Company recorded gains, net of $2.4 million, $4.7 million and $0.3 million in 2008, 2007 and 2006, respectively, related to asset sales. The gain recorded in 2008 primarily relates to the sale of land that was acquired as part of the acquisition of Dynamit Nobel in 2004.  The gain reported in 2007 primarily relates to the sale of the U.S. wafer reclaim business.

·Acquired in-process research and development:  Under SFAS No. 141, Business Combinations, acquired in-process research and development costs are charged to expense as of the acquisition date. For the year ended December 31, 2008, the Company expensed $2.9 million primarily related to the acquisition of Holliday Pigments in August 2008 in the Performance Additives segment. These acquired in-process research and development costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations.

·Foreign exchange loss (gain):  For 2008, foreign exchange losses of $32.3 million were recorded primarily due to the impact of the weaker pound sterling as of December 31, 2008 versus December 31, 2007 related to non-operating euro-denominated transactions. For the year ended December 31, 2007 and 2006, foreign exchange gains of $7.8 million and $8.6 million, respectively, were recorded primarily related to euro-denominated debt, cash and inter-company loans.

·Other:  In 2008, the company recorded expenses of $1.9 million which includes fees incurred in connection with the secondary offering of Holdings’ common stock in June 2008.

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4. ACQUISITIONS:

Pursuant to the Company’s business strategy of achieving profitable growth through selective acquisitions, the Company has acquired several businesses in recent years. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, any goodwill resulting from acquisitions is tested for impairment at least annually.

On August 31, 2007, the Company completed the acquisition of the global color pigments business of Elementis plc for a purchase price of approximately $140.0 million.  This acquisition includes facilities in North America, Europe and China and is included in the Color Pigments and Services business, which is part of the Performance Additives segment. The results of this acquired business prior to the acquisition date of August 31, 2007 are not included in the consolidated financial statements for the year ended December 31, 2007.

On August 11, 2008, the Company completed the acquisition of Holliday Pigments, the leading global manufacturer of technical grade ultramarine blue and manganese violet pigments, from Yule Catto & Co. plc for a purchase price of approximately €46.0 million ($68.6 million using an August 11, 2008 exchange rate of €1.00 = $1.4909). Holliday Pigments manufactures inorganic ultramarine pigments for a wide range of applications, including plastics, cosmetics, coatings and inks. Holliday Pigments was incorporated into the Color Pigments and Services business, which is part of the Performance Additives segment. The results of Holliday Pigments prior to the acquisition date of August 11, 2008 are not included in the consolidated financial statements for the year ended December 31, 2008.  The allocation of the purchase price to the identifiable assets acquired is preliminary and is subject to change, with estimated completion during the first half of 2009.

On September 1, 2008, the Company completed the formation of a venture with Kemira that focuses on specialty titanium dioxide pigments. The venture combines the Company’s titanium dioxide pigments and functional additives businesses, which are part of the Titanium Dioxide Pigments segment, including its production facility in Duisburg, Germany, and Kemira’s titanium dioxide business, including Kemira’s titanium dioxide plant in Pori, Finland.  The Company has consolidated this venture and has reported Kemira’s interest as minority interest in the consolidated financial statements. The Company owns 61% of the venture with Kemira owning the remaining portion.  The venture’s acquisition of the shares of the Rockwood and Kemira entities was facilitated by the borrowings under a term loan of €250.0 million on September 3, 2008 ($362.5 million using a September 3, 2008 exchange rate of €1.00 =  $1.4498).  The venture made a payment of €97.5 million ($141.4 million using a September 3, 2008 exchange rate) to the venture’s minority shareholder. In addition, the venture obtained a €30.0 million ($41.9 million) revolving credit facility to finance its operations and the venture has assumed debt of €24.2 million ($33.8 million) from Kemira, primarily due to a defined benefit pension plan. The Company estimates that the potential exposure range for assumed environmental liabilities is from $14.0 million to $25.3 million. At December 31, 2008, $14.0 million of related reserves are recorded.  The results of Kemira’s titanium dioxide business prior to the formation of the venture on September 1, 2008 are not included in the consolidated financial statements for the year ended December 31, 2008.  The purchase accounting allocation is preliminary and is subject to change, with estimated completion during 2009.

On September 4, 2008, the Company completed the acquisition of Nalco Holdings, Inc.’s (“Nalco”) Finishing Technologies business for a purchase price of approximately $75.0 million. Nalco’s Finishing Technologies business provides chemicals and services for pre-treating of metal and is part of the Surface Treatment business within the Specialty Chemicals segment.  The results of Nalco’s Finishing Technologies business prior to the acquisition date of September 4, 2008 are not included in the consolidated financial statements for the year ended December 31, 2008.  The allocation of the purchase price to the identifiable assets acquired is preliminary and is subject to change, with estimated completion during the first half of 2009.

In addition to the acquisitions described above, the Company has completed other smaller acquisitions in 2008, 2007 and 2006. Depending on the timing and complexity involved, the purchase price allocation to the net assets acquired for certain acquisitions completed within the last year was preliminary as of December 31, 2008.

The above acquisitions were not material on an individual basis, or in the aggregate.

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5. INVENTORIES:

Inventories are comprised of the following:

	December 31,
($ in millions)	2008 (a)		2007
Raw materials	$	203.8	$	184.6
Work-in-process	74.2		60.7
Finished goods	355.3		275.5
Packaging materials	7.7		6.1
Total	$	641.0	$	526.9

(a)The increase from December 31, 2007 is primarily related to the Titanium Dioxide Pigment venture and other acquisitions, net of the impact of currency changes.

6. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment, net is comprised of the following:

	December 31,
($ in millions)	2008			2007
Land	$	155.6		$	157.0
Buildings and improvements, including land improvements	594.6			491.7
Machinery and equipment	1,394.7			1,128.1
Furniture and fixtures	117.9			100.8
Mining rights	86.3			86.3
Construction-in-progress	95.7			112.2
Property, plant and equipment, at cost	2,444.8			2,076.1
Less accumulated depreciation and amortization	(692.6		)	(567.6		)
Property, plant and equipment, net	$	1,752.2		$	1,508.5

Depreciation expense was $179.1 million, $144.8 million and $123.0 million for the years ended December 31, 2008, 2007 and 2006, respectively.

In addition, property, plant and equipment at December 31, 2008 and 2007 includes items recorded under capital leases as follows:

	December 31,
($ in millions)	2008			2007
Buildings and improvements, including land improvements	$	49.5		$	53.2
Machinery and equipment	3.0			0.3
Furniture and fixtures	6.0			5.7
	58.5			59.2
Accumulated depreciation	(9.2		)	(8.1		)
Total	$	49.3		$	51.1

At December 31, 2008, minimum payments due under capital leases are as follows:

($ in millions)
Years ended December 31:
2009	$	6.5
2010	6.2
2011	5.5
2012	5.2
2013	4.8
Thereafter	40.8
Total	$	69.0

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During the fourth quarter of 2006, management performed an impairment review of a business within the Fine Chemicals division of the Specialty Chemicals segment due to poor profitability and recorded an impairment charge of $2.2 million to write-down the full value of machinery and equipment.

7.  GOODWILL:

In the fourth quarter of 2008, the Company tested the recoverability of goodwill as part of its annual review.  In connection with the determination of fair value of the reporting units, the Company made significant estimates and assumptions with respect to those reporting units and engaged independent valuation specialists to assist with this review. The first step of the review indicated that the fair values of the Color Pigments and Services, Timber Treatment Chemicals, Clay-based Additives, Titanium Dioxide Pigments, Specialty Compounds and Rubber Chemicals reporting units were less than their carrying values, thus requiring the Company to complete the second step of the impairment review. To compute the amount of the impairment under step two, SFAS No. 142 prescribes that the Company determine the implied fair value of goodwill in the same manner as if the Company had acquired those reporting units.  Specifically, the Company allocated the fair value of the reporting units to all of the assets, including any unrecognized intangible assets and liabilities of that unit, in a hypothetical calculation that would yield the implied fair value of goodwill.  The impairment loss is measured as the difference between the book value of the goodwill and the implied fair value of the goodwill.  Based on these results, the Company recorded goodwill impairment charges in the Color Pigments and Services business ($293.2 million), Timber Treatment Chemicals business ($88.3 million) and Clay-based Additives business ($75.1 million) within the Performance Additives segment; Titanium Dioxide Pigments segment ($247.7 million); and Specialty Compounds segment, including the Rubber Chemicals business ($105.2 million).  The goodwill impairment charges were attributed to the significant drop in global stock valuations, the substantial reduction in the market valuation of Holdings and comparable companies, and the continuing negative global economic and market outlook.  In particular, the downturn in the construction industry has had a negative impact on a number of the Company’s businesses.

Prior to completing the assessment of goodwill for impairment during the fourth quarter of 2008, the Company performed a recoverability test of certain long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. As a result, the Company concluded that there was no impairment of those assets in the fourth quarter of 2008.

Below are goodwill balances and activity by segment:

							Titanium
	Specialty			Performance			Dioxide			Advanced			Specialty
($ in millions)	Chemicals			Additives			Pigments			Ceramics			Compounds			Total
Balance, December 31, 2006	$	597.6		$	457.8		$	158.6		$	223.2		$	118.5		$	1,555.7
Acquisitions	34.9			23.3			—			13.3			—			71.5
FIN 48 tax adjustments (a)	(6.1		)	—			(1.6		)	(2.2		)	—			(9.9		)
Other tax adjustments (b)	(4.5		)	—			(1.2		)	(1.6		)	(1.7		)	(9.0		)
Foreign exchange and other (c)	62.2			12.8			16.5			25.8			4.4			121.7
Balance, December 31, 2007	684.1			493.9			172.3			258.5			121.2			1,730.0
Post closing purchase price consideration (d)	(18.8		)	—			(6.0		)	(5.0		)	—			(29.8		)
Goodwill impairment charges	—			(456.6		)	(247.7		)	—			(105.2		)	(809.5		)
Acquisitions	9.7			34.9			114.8			25.3			—			184.7
Foreign exchange and other (c)	(27.0		)	(72.2		)	(33.4		)	(9.0		)	(16.0		)	(157.6		)
Balance, December 31, 2008	$	648.0		$	—		$	—		$	269.8		$	—		$	917.8

(a)See Note 10, “Income Taxes,” for details regarding the adoption of FIN 48.

(b)As disclosed in Note 10, “Income Taxes,” adjustments were recorded in the fourth quarter of 2007 related to prior year tax computations within Specialty Chemicals ($4.5 million), Titanium Dioxide Pigments ($1.2 million), Advanced Ceramics ($1.6 million) and Specialty Compounds ($1.5 million).

(c)Consists primarily of foreign currency changes.

(d)In March 2008, the Company entered into an agreement with GEA Group and GEA North America to settle all existing and future environmental claims in consideration of payment to the Company of €18.8 million ($29.1 million) which was received on March 28, 2008. This payment was considered an adjustment to the purchase price per the claims settlement agreement between the Company and GEA Group and its subsidiary. As a result, the Company has reported this as an adjustment to the purchase price with a credit to goodwill in the first quarter of 2008. See Note 17, “Commitments and Contingencies,” for further details.

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8. OTHER INTANGIBLE ASSETS:

Other intangible assets, net consist of:

	As of December 31, 2008							As of December 31, 2007
	Gross							Gross
	Carrying		Accumulated					Carrying		Accumulated
($ in millions)	Amount (a)		Amortization			Net		Amount		Amortization			Net
Patents and other intellectual property	$	411.9	$	(142.0	)	$	269.9	$	395.6	$	(116.7	)	$	278.9
Trade names and trademarks	141.5		(27.1		)	114.4		146.6		(23.0		)	123.6
Customer relationships	372.2		(79.1		)	293.1		273.0		(57.3		)	215.7
Supply agreements	57.3		(6.3		)	51.0		29.6		(2.9		)	26.7
Other	61.7		(35.3		)	26.4		57.7		(26.7		)	31.0
Total	$	1,044.6	$	(289.8	)	$	754.8	$	902.5	$	(226.6	)	$	675.9

(a)The increase from December 31, 2007 is primarily related to the impact of acquisitions, net of the impact of currency changes.

Amortization of other intangible assets was $79.8 million, $66.9 million and $51.4 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Estimated amortization expense for each of the five succeeding fiscal years is as follows:

($ in millions)	Amortization
Year ended	Expense
2009	$	77.0
2010	75.4
2011	71.1
2012	65.4
2013	63.9

9. LONG-TERM DEBT:

Long-term debt and loans payable are summarized as follows:

	December 31,
($, € and £ in millions)	2008			2007
Senior secured credit facilities:
Tranche A-1 term loans (€22.8 and €29.3, respectively)	$	31.9		$	42.8
Tranche A-2 term loans (€99.4 and €127.8, respectively)	138.9			186.5
Tranche E term loans	1,104.9			1,116.4
Tranche G term loans (€265.2 and €267.9, respectively)	370.5			390.9
2014 Notes (€364.0 and $200.0 and €375.0 and $200.0, respectively)	708.5			747.1
Titanium Dioxide Pigments venture term loans (€250.0 as of December 31, 2008)	349.3			—
Capitalized lease obligations (€34.3 and €34.1, respectively)	47.9			49.7
Other loans	59.3			24.2
Preferred stock of subsidiary (£12.0 as of December 31, 2007)	—			23.8
	2,811.2			2,581.4
Less current maturities	(90.9		)	(107.4		)
	$	2,720.3		$	2,474.0

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Maturities of long-term debt are as follows:

($ in millions)
2009	$	90.9
2010	113.5
2011	122.1
2012	1,474.9
2013	233.9
Thereafter	775.9
	$	2,811.2

Senior Secured Credit Facilities

a) Structure

In connection with the Dynamit Nobel Acquisition, the Company entered into a senior secured credit agreement on July 30, 2004 (“Credit Agreement”).  See Long-Term Debt table above for senior secured credit facility balances as of December 31, 2008 and 2007.

On March 23, 2007, the Company entered into the fourth amendment to the senior secured credit agreement, which among other things, (i) provided for approximately €269.3 million of tranche G loans, the proceeds of which were used to repay in full the outstanding borrowings under the tranche F term loans, (ii) permitted the Company to repay its outstanding 2011 Notes any time on or after May 15, 2007 without a corresponding repayment of term loans under the Credit Agreement, and (iii) resets substantially all of the baskets contained in the restrictive covenants and elsewhere in the Credit Agreement. The refinancing of the tranche F loans with the tranche G loans effectively reduced the interest rate on the tranche G term loans by 50 basis points. The Company did not incur any additional borrowings under the fourth credit amendment. In March 2007, the Company expensed $0.9 million related to the fourth amendment of the senior secured credit agreement.

b) Availability

The senior secured credit facilities consist of the term loan tranches listed above as well as a senior secured revolving credit facility in an aggregate principal amount of $250.0 million made available in U.S. dollars, euros and/or pounds sterling. A portion of the revolving credit facility is available in the form of letters of credit and swingline loans. Under the terms of the amendments, the Company may, under certain circumstances and subject to receipt of additional commitments from existing lenders or other eligible institutions, request that the tranche E term loans and/or the revolving credit commitments be increased by an aggregate amount of up to $250.0 million. As of December 31, 2008 the Company had no outstanding borrowings under the revolving credit facility, and $24.8 million of letters of credit issued on its behalf.

Amounts borrowed under the term loan facilities, other than the revolving credit facility, that are repaid or prepaid may not be reborrowed.

c) Interest and Fees

The interest rates per year under the tranche A-1 and A-2 term loan facilities are EURIBOR plus 1.75%. EURIBOR is the euro inter-bank offered rate. The interest rate per year, at the Company’s option, under the tranche E term loan facility is LIBOR plus 1.50% or ABR plus 0.75% (for the year ended December 31, 2008, the Company elected option (i) LIBOR plus 1.50%).  LIBOR is the London inter-bank offered rate. ABR is the alternate base rate, which is the higher of Credit Suisse’s prime rate and the federal funds effective rate plus 0.5%. The interest rate per year under the tranche G term loan facility is EURIBOR plus 1.75%. The interest rates under the revolving credit facility are, at the Company’s option, LIBOR plus 1.75% or, ABR plus 1.00% (for the year ended December 31, 2008, the Company elected option (i) LIBOR plus 1.75%). In each case, the interest rates per year are subject to step-downs determined by reference to a performance test.

The Company may elect interest periods of one, two, three or six months (or in the case of revolving credit loans, nine or twelve months, to the extent available from all lenders under the revolving credit facility) for LIBOR borrowings. Interest is payable quarterly in the case of ABR loans and at the end of each interest period and, in any event, at least every three months, in the case of LIBOR borrowings.

The senior secured credit facilities require payment of customary commitment, letter of credit and other fees.

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d) Guarantees; Security

Obligations under the senior secured credit facilities are guaranteed by Rockwood Specialties International, Inc. and each of the Company’s existing and subsequently acquired or organized direct or indirect domestic subsidiaries, subject to certain exceptions, and are secured by first-priority security interests in: substantially all the tangible and intangible assets of the Company and its direct or indirect domestic subsidiaries, subject to exceptions; all the capital stock of or other equity interest in the Company and each of its direct or indirect domestic subsidiaries; a maximum of 65% of the capital stock of or other equity interests in each direct foreign subsidiary of any domestic subsidiary of the Company.

e) Maturity, Amortization and Prepayments

The tranche A-1 and A-2 term loans will mature on July 30, 2011 and amortize at escalating percentages on a semi-annual basis. The tranche E term loans and tranche G term loans will mature on July 30, 2012 and amortize on a semi-annual basis with each repayment amount prior to maturity to be equal to 0.5% of the principal amount of the former tranche C term loans and tranche D term loans, respectively. The revolving credit facility will mature on July 30, 2010.

In addition, the Company is required to make the following mandatory prepayments of the term loans under the senior secured credit facilities, in each case subject to certain exceptions, with:

·100% of the net cash proceeds of all sales or other dispositions by the Company or any of its restricted subsidiaries under the senior secured credit facilities of assets other than net cash proceeds (a) from the sale or other disposition of assets in the ordinary course of business, (b) of certain disposals permitted under the senior secured credit agreement (including the proceeds of sales or transfers of accounts receivable (including pursuant to a securitization) in the amount of up to $200.0 million at any time) or (c) that are reinvested in the Company and its restricted subsidiaries within twelve months of the sale or other disposition (subject to extension in certain circumstances).

·100% of the net cash proceeds of issuances of certain debt obligations.

·50% of excess cash flows, as defined, in respect of any fiscal year at the end of which the consolidated total debt to consolidated EBITDA ratio is equal to or greater than 3.50 to 1.0, reduced by any amounts reinvested during the first six months of the year and voluntary prepayments.

f) Financial Covenants

The senior secured credit facilities contain the following financial covenants:

·a consolidated total net debt to consolidated Adjusted EBITDA test;

·a consolidated Adjusted EBITDA to consolidated cash interest expense test; and

·limitations on capital expenditures.

For purposes of calculating compliance with the financial covenants as of any date, foreign currency denominated indebtedness is to be converted to U.S. dollars based on average exchange rates for the twelve-month period ending on such date. In addition to the financial covenants described above, the Company’s senior secured credit facilities contain various affirmative and restrictive covenants. The restrictive covenants limit the Company’s ability to, among other things, incur indebtedness and other liabilities; create liens; merge or consolidate; dispose of assets; make investments; pay dividends and make payments to shareholders; make payments on certain indebtedness or to amend documents related to certain indebtedness and to enter into sale leaseback transactions. In connection with the fourth amendment of the senior secured credit agreement, substantially all of the baskets relating to the above restrictions were reset.

2011 Notes— On May 15, 2007, the Company redeemed its outstanding 10 5/8% Senior Subordinated Notes due 2011 in the aggregate principal amount of $273.4 million. In connection with this debt repayment, the Company paid redemption premiums of $14.5 million and wrote off deferred financing costs of $4.1 million.

2014 Notes—In November 2004, the Company issued  €375.0 million aggregate principal amount of 7.625% senior subordinated notes and $200.0 million aggregate principal amount of 7.500% senior subordinated notes, both due in 2014 (“2014 Notes”). The 2014 Notes are  pari passu  to future senior subordinated indebtedness and junior to all of the Company’s existing and future senior indebtedness. The 2014 Notes are guaranteed on a senior subordinated unsecured basis by certain of the Company’s domestic subsidiaries. In the fourth quarter of 2008, the Company redeemed €11.0 million of its 2014 Notes at a discount and recorded a gain of $4.0 million.

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Titanium Dioxide Pigments venture term loans, revolving credit facility and other assumed debt—During June 2008, as amended in August 2008, the Titanium Dioxide Pigments venture entered into a facility agreement that provides for a term loan facility in an aggregate amount of €250.0 million and a revolving credit facility in an aggregate amount of €30.0 million ($41.9 million), both maturing on June 17, 2013. On September 3, 2008, the Titanium Dioxide Pigments venture borrowed €250.0 million ($349.3 million) under the term loan facility. As of December 31, 2008, there were no outstanding borrowings under the revolving credit facility. The interest rate on the loans is EURIBOR (or LIBOR if the currency is in USD) plus 3%, subject to a step down determined by reference to a leverage ratio test. The term loan shall be repaid in installments over a five-year period from the date of the facility agreement, with payments commencing twelve months from such date; both loans may be repaid in advance without penalty. In addition, the Titanium Dioxide Pigments venture has assumed debt of €24.2 million ($33.8 million) at December 31, 2008 from Kemira, primarily due to a defined benefit plan, at interest rates ranging from 3.75% to 5.00%.

The facility agreement requires the venture to meet the following financial covenants:

·a net debt to EBITDA (which is substantially similar to the definition of Adjusted EBITDA in the Company’s senior secured credit agreement) test;

·a EBITDA to cash interest expense test; and

·a cash generated for financing activities to debt service test.

The covenants are calculated in accordance with International Financial Reporting Standards and are based solely on the results of the venture.

Other term loan facilities— The Company has euro-denominated term loan facilities that provide aggregate outstanding borrowings of approximately €9.2 million ($12.9 million) as of December 31, 2008. These term loans mature between 2009 and 2016 and bear annual interest rates ranging up to 12.41%. In addition, the Company has a term loan facility denominated in Chinese Renminbi, providing for borrowings of an aggregate U.S. dollar equivalent amount of $12.4 million as of December 31, 2008. This term loan matures in 2010 and bears an annual interest rate of 7.56%. The term loan facilities described above contain customary events of default and some of them are secured by mortgages or accounts receivable.

Preferred stock of subsidiary—Chemetall Plc., a Rockwood subsidiary, had previously issued 12.0 million shares of preferred stock, which were redeemed at their par value (£1) on July 3, 2008.

Fair Value—The Company estimates that its debt under the senior secured credit facilities and Titanium Dioxide Pigments venture facility agreement, based on current interest rates and terms, approximates fair value. Based on quoted market values at December 31, 2008, the Company estimates the fair value of its 2014 Notes approximated $501.0 million.

Derivative Contracts— The Company has historically entered into interest rate swaps to manage its exposure to changes in interest rates related to variable rate debt. As of December 31, 2008, these contracts cover notional amounts of $610.0 million (at interest rates ranging from 4.864% to 5.038%) and €499.9 million (at interest rates ranging from 2.995% to 4.416%). These derivative contracts effectively convert a majority of the senior secured credit obligations and the obligations under the Titanium Dioxide Pigments term loan facility to fixed rate obligations. These swaps will mature between November 2009 and July 2012.

The Company has elected not to apply hedge accounting for these interest rate swaps and has recorded the mark-to-market of these derivatives as a component of interest expense in the Consolidated Statements of Operations. These transactions increased interest expense by $53.9 million and $16.3 million in 2008 and 2007, respectively and decreased interest expense by $15.7 million in 2006, of which (losses) gains of $(51.7) million, $(29.8) million and $9.4 million in 2008, 2007 and 2006, respectively, represented mark-to-market adjustments. The related asset and liability on the contracts’ marked-to-market adjustments is reflected in “Other assets” and “Other liabilities,” respectively, in the Consolidated Balance Sheets.

During 2003, the Company entered into cross-currency interest rate swaps with notional amounts aggregating $78.2 million that effectively converted $78.2 million U.S. dollar borrowings into euro-based obligations at an effective interest rate of EURIBOR plus 4%. In connection with the July 2003 refinancing, the Company reduced the notional amounts of this cross-currency hedge, with current notional amounts of $19.3 million and €17.0 million. These contracts have final maturity dates of July 2010. These transactions increased interest expense by $0.7 million, $2.6 million and $1.3 million in 2008, 2007 and 2006, respectively, of which gains (losses) of $0.2 million $(2.4) million and $(2.2) million in 2008, 2007 and 2006, respectively, represented mark-to-market adjustments.

In connection with the offering of the 2014 Notes, the Company entered into cross-currency interest rate swaps with a five year term and a notional amount of €155.6 million that effectively convert the U.S. dollar fixed rate debt in respect of the 2014 dollar-denominated notes sold into euro fixed rate debt. The Company designated this contract as a hedge of the foreign currency exposure of its net investment in its euro-denominated operations. There was no ineffective portion of the net investment hedge as of

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December 31, 2008. The Company does not expect any of the loss on the net investment hedge residing in other comprehensive income at December 31, 2008 to be reclassified into earnings in 2009.

In addition, the Company has designated the remaining portion of its euro-denominated debt that is recorded on its U.S. books as a net investment hedge of its euro-denominated investments (euro debt of €652.0 million at December 31, 2008; $910.9 million). As a result, any foreign currency gains and losses resulting from the euro-denominated debt discussed above is accounted for as a component of accumulated other comprehensive income for as long as the hedge remains effective. There was no ineffective portion of the net investment hedge as of December 31, 2008. The Company does not expect any of the loss on the net investment hedge residing in other comprehensive income at December 31, 2008 to be reclassified into earnings in 2009.

In December 2008, the Company entered into foreign currency forward contracts to manage its exposure to fluctuations in currency rates on third-party sales denominated in a currency other than the functional currency of the legal entity. The instruments were designated as foreign exchange cash flow hedges and are effective at generating offsetting changes in the fair value or cash flows of the hedged item or transaction. For the year ended December 31, 2008, the Company reported after-tax gains of $0.2 million in accumulated other comprehensive income relating to the change in fair value of derivatives designated as foreign exchange cash flow hedges.  It is expected that cumulative gains of $0.2 million as of December 31, 2008 will be reclassified into earnings within the next twelve months.  There was no gain or loss reclassified from accumulated other comprehensive income into earnings as a result of the discontinuance of cash flow hedges due to the probability of the original forecasted transaction not occurring.  As of December 31, 2008, the maximum length of time over which the Company has hedged its exposure to movements in foreign exchange rates for forecasted transactions is twelve months.

As of December 31, 2008, $1,493.8 million of the debt outstanding was denominated in euros.

10. INCOME TAXES:

Income (loss) from continuing operations before income taxes and minority interest is as follows:

	Year Ended December 31,
($ in millions)	2008			2007			2006
United States	$	(395.2	)	$	(44.6	)	$	(29.0	)
Foreign	(346.9		)	196.3			150.4
	$	(742.1	)	$	151.7		$	121.4

The provision (benefit) for taxes on income consisted of the following:

	Year Ended December 31,
($ in millions)	2008			2007			2006
Current income tax expense:
Federal	$	(0.4	)	$	2.7		$	—
State	1.6			6.6			3.0
Foreign	39.4			35.1			28.0
	40.6			44.4			31.0
Deferred income tax expense:
Federal	3.2			4.9			11.4
State	(0.1		)	(1.3		)	1.1
Foreign	(32.4		)	25.4			23.9
	(29.3		)	29.0			36.4
Allocation from discontinued operations:
Federal	(23.7		)	(9.3		)	(6.1		)
State	—			(1.8		)	—
	(23.7		)	(11.1		)	(6.1		)
Allocation from other comprehensive income:
Federal	(11.5		)	—			—
State	—			—			—
	(11.5		)	—			—
Total (benefit) provision for taxes	$	(23.9	)	$	62.3		$	61.3

Amounts are reflected in the preceding table based on the location of the taxing authorities. Changes in enacted rates impact the tax provision in the year a rate change is enacted.

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The income tax provision from continuing operations has been reduced by $35.2 million, $11.1 million and $6.1 million for the years ended December 31, 2008, 2007 and 2006, respectively, through allocations from discontinued operations and other comprehensive income in accordance with the Company’s policy disclosed in Note 1, “Description of Business and Summary of Significant Accounting Policies,” as the Company had both a loss in continuing operations and a net profit in other categories including discontinued operations and other comprehensive income in the United States.

Deferred income taxes are provided for the effects of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. The deferred tax assets and liabilities are determined by applying the enacted tax rate in the year in which the temporary difference is expected to reverse.

The tax effects of the major items recorded as deferred tax assets and liabilities are as follows:

	December 31,
($ in millions)	2008			2007
Current deferred income tax assets:
Allowance for doubtful accounts	$	1.8		$	1.5
Restructuring	2.8			3.8
Derivative instruments	10.0			7.4
Other current reserves and accruals	5.7			7.2
Valuation allowance	(7.1		)	(4.4		)
Total current deferred income tax assets	13.2			15.5
Noncurrent deferred income tax assets:
Investment basis difference	57.1			57.7
Pension and postretirement benefits	37.3			30.9
Tax loss carryforwards and credits	43.9			51.0
Other noncurrent reserves and accruals	20.5			16.1
Foreign exchange on debt	54.3			61.7
Valuation allowance	(77.8		)	(87.1		)
Total noncurrent deferred income tax assets	135.3			130.3
Noncurrent deferred income tax liabilities:
Derivative instruments	0.6			(11.7		)
Goodwill and other intangibles	(94.2		)	(123.0		)
Property, plant and equipment	(127.8		)	(92.8		)
Total noncurrent deferred income tax liabilities	(221.4		)	(227.5		)
Net deferred income tax liability	$	(72.9	)	$	(81.7	)

Reconciliations of the U.S. statutory income tax rate to the effective tax rate are as follows:

	Year Ended December 31,
	2008		2007		2006
Federal statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal effect	(0.1	)	1.5		2.2
Foreign/U.S. tax differential	(1.3	)	1.2		(2.4	)
Goodwill	(26.4	)	0.3		1.2
(Decrease) increase in valuation allowance	(4.8	)	7.1		16.4
Debt instruments	(3.5	)	15.4		2.3
Allocation to discontinued operations	4.7		(7.3	)	(5.0	)
Minority interest	(0.1	)	(1.9	)	—
Foreign tax rate reductions	0.2		(7.3	)	—
Other	(0.5	)	(2.9	)	0.8
Effective tax rate	3.2	%	41.1	%	50.5	%

The effective income tax rate compared to the federal statutory rate was negatively impacted by non-deductible book goodwill impairments.

The Company’s U.S. operations are included in a consolidated federal income tax return. The amount of current and deferred tax expense is computed on a separate entity basis for each member of the group based on applying the principles of SFAS No. 109.

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As of December 31, 2008, the Company has U.S. federal and foreign corporate tax loss carryforwards (excluding state and local amounts) of approximately $197.6 million, of which $43.5 million expire in years 2009 through 2028 and of which $154.1 million have no current expiration date. Included in the U.S. federal and foreign carryforwards are U.S. federal tax loss carryforwards of $24.1 million that expire in years through 2027, of which $1.2 million are subject to limitations. The Company also has state and local tax loss carryforwards of approximately $204.5 million expiring in years 2009 through 2028.

The worldwide valuation allowance decreased by $6.7 million to $84.9 million at December 31, 2008. Of this amount, $50.7 million was a charge to income tax expense, $16.3 million represents a decrease to other comprehensive income, $35.4 million was reversed primarily as a result of the reduction in U.S. deferred tax assets due to the sale of the pool and spa chemicals business and $2.8 million represents a decrease recorded to goodwill. The remainder related to foreign currency translation adjustments and other balance sheet items.

The valuation allowance as of December 31, 2008 and 2007 is attributable to deferred tax assets related to certain items, such as tax loss carryforwards in the United States, including certain states, and foreign countries for which it is more likely than not that the related tax benefits will not be realized. It is the Company’s policy that the valuation allowance is decreased or increased in the year management determines that it is more likely than not that the deferred tax assets will be realized.

A table reflecting the activity in the valuation allowance is as follows:

					Reductions						Other
	Balance at		Additions		Resulting from						Comprehensive			Balance at
	Beginning		Charged to		Discontinued			Additions			Income and			End
($ in millions)	of Period		Expense		Operations			Acquired			Other			of Period
Valuation allowance
For the year ended December 31, 2008	$	91.6	$	50.7	$	(35.4	)	$	(2.8	)	$	(19.2	)	$	84.9
For the year ended December 31, 2007	62.1		2.6		(17.5		)	1.6			42.8			91.6
For the year ended December 31, 2006	12.9		16.1		—			—			33.1			62.1

At December 31, 2008 and 2007, the Company had undistributed foreign earnings of $881.7 million and $840.4 million, respectively, which the Company intends to be permanently reinvested. The Company has determined that it is not practicable to compute a deferred tax liability for foreign withholding taxes or U.S. income taxes on these earnings. The foreign currency gains recorded in other comprehensive income related to intercompany debt and foreign currency translation have not been tax affected in accordance with the indefinite reversal criteria.

The Company records liabilities for potential assessments in various tax jurisdictions. The liabilities relate to tax return positions which, although supportable by the Company, may be challenged by the tax authorities. The Company adjusts these liabilities as a result of changes in tax legislation, interpretations of laws by Courts, rulings by tax authorities, changes in estimates and the closing of the statute of limitations. The Company’s effective tax rate in any given year includes the impact of any changes to these liabilities. Favorable resolution of an issue would generally be recognized as a reduction to the Company’s annual tax rate.

The Company adopted the provisions of FIN 48 on January 1, 2007. The total amount of unrecognized tax benefits as of the date of adoption was $42.0 million. In conjunction with the adoption of FIN 48, the Company has classified uncertain tax positions as non-current income tax liabilities (other liabilities) unless expected to be paid within one year. Previously, accrued income tax liabilities were classified as current liabilities. As of December 31, 2008, the total amount of unrecognized tax benefits was $28.0 million. A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:

($ in millions)	2008			2007
Unrecognized tax benefits at January 1	$	39.1		$	42.0
Increases in tax positions for prior years	9.4			15.5
Decreases in tax positions for prior years	(2.9		)	(15.4		)
Increases in tax positions for current year	3.8			10.5
Decreases due to settlements with taxing authorities	(2.6		)	(14.2		)
Lapse in statute of limitations	(0.1		)	(0.7		)
Foreign exchange	(0.5		)	1.4
Unrecognized tax benefits at December 31, before reconciling item	46.2			39.1
Reconciling item: Offset against deferred tax assets	(18.2		)	(14.5		)
Unrecognized tax benefits at December 31	$	28.0		$	24.6

In accordance with both FIN 48 and the Company’s policy, where tax losses can be carried back or forward to offset liabilities for uncertain tax benefits, then deferred tax assets associated with such tax losses are netted against both liabilities for uncertain tax

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benefits arising in the same year as the assets, and also liabilities for uncertain tax benefits arising in different years. This policy results in an $18.2 million reduction in FIN 48 liabilities and deferred tax assets as of December 31, 2008.

Included in the balance of unrecognized tax benefits at December 31, 2008 are $27.6 million of tax benefits that, if recognized, would affect the effective tax rate and $0.4 million that, if recognized, would result in an adjustment to other tax accounts.

The Company recognizes interest and penalties related to unrecognized tax benefits in its income tax provision. The Company had accrued $4.3 million for interest and penalties as of December 31, 2007. During the year ended December 31, 2008, the accrual for interest and penalties was increased by $2.8 million to $7.1 million.

The Company is currently under audit in certain jurisdictions and during the next twelve months, it is reasonably possible that resolution of these audits could result in a benefit of up to $1.3 million or a cost of up to $26.1 million. Audit outcomes and the timing of audit settlements are subject to significant uncertainty.

The Company is subject to taxation in the U.S., various states, and foreign jurisdictions. The Company’s tax filings in major jurisdictions are open to investigation by tax authorities; in the U.S. from 2000, in the U.K. from 2007 and in Germany from 2000.

Tax law changes were enacted in Germany and the U.K. in the third quarter of 2007 and in Italy in the fourth quarter of 2007. The change in law and tax rates had an impact on the existing deferred tax assets and liabilities recorded in those jurisdictions. The impact of the change in the law and tax rates was recorded as a discrete tax benefit in the income tax provision for the year ended December 31, 2007. If the tax law changes had not occurred, the effective tax rate would have been 47.9% for the year ended December 31, 2007.

11. OPERATING LEASE OBLIGATIONS:

The following is a schedule of minimum future rentals under the terms of noncancelable operating leases as of December 31, 2008:

($ in millions)
Years ended December 31:
2009	$	17.3
2010	13.8
2011	9.7
2012	7.0
2013	4.7
Thereafter	11.5
Total	$	64.0

Rent expense under all operating leases was $28.3 million, $24.7 million and $25.3 million for the years ended December 31, 2008, 2007, 2006, respectively. Rent escalations and other lease concessions are reflected on a straight-line basis over the minimum lease term. Minimum future rentals include the effect of any index or rate that was applicable at lease inception.

12. STOCK-BASED COMPENSATION:

Holdings has in place the 2008 Amended and Restated Stock Purchase and Option Plan of Rockwood Holdings, Inc. and Subsidiaries (the “Plan”). Under the Plan, Holdings may grant stock options, restricted stock and other stock-based awards to the Company’s employees and directors and allow employees and directors to purchase shares of its common stock. There are 10,000,000 authorized shares available for grant under the Plan. The aggregate compensation cost for stock options, restricted stock units and Board of Director stock grants recorded under the Plan, as discussed below, caused income from continuing operations before taxes and minority interest to decrease by $4.1 million, $3.9 million and less than $0.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Restricted Stock—Restricted stock of Holdings can be granted with or without payment of consideration with restrictions on the recipient’s right to transfer or sell the stock. In December 2007, Holdings awarded 167,951 performance restricted stock units to management and key employees, which will vest on December 31, 2010 as long as the employee continues to be employed by the Company on such date and based upon the achievement of certain performance targets as approved by the Compensation Committee. The number of shares of Holdings’ common stock ultimately awarded upon vesting is determined based on its achievement of specified performance criteria over the period January 1, 2008 - December 31, 2010.  The performance measures for these awards were set, and effectively granted, in February 2008 once the audit of the Company’s financial statements for 2007 was complete.

Certain employees have “company-wide performance targets,” for which vesting is based on the achievement of specified annualized Adjusted EBITDA and earnings per share growth levels, while others have “divisional performance targets” for which vesting is based

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on a particular division’s achievement of annualized Adjusted EBITDA growth. Holdings granted a “target amount” of performance restricted stock units, whereby if the specified performance target is met, shares of its common stock would be awarded upon vesting of these units. However, these awards provide the employee with the possibility of earning from 0% to 200% of the share targeted units granted based upon performance versus the target.

In December 2008, Holdings granted 320,867 time restricted stock units to management and key employees, which will vest on December 31, 2011 as long as the employee continues to be employed by the Company on such date.

The compensation cost related to restricted stock units of Holdings caused income from continuing operations before taxes and minority interest to decrease by $0.2 million and $1.8 million for the years ended December 31, 2008 and 2007, respectively. The total tax benefit recognized related to restricted stock was $0.1 million and $0.2 million for the year ended December 31, 2008 and 2007, respectively. The weighted average grant date fair value of the restricted shares granted in 2008 and 2007 were $16.57 and $31.94, respectively, per stock unit. As of December 31, 2008, there was $5.4 million of unrecognized compensation cost related to restricted stock units determined in accordance with SFAS No. 123R, which is expected to be recognized over a weighted-average period of approximately 2.4 years.

A summary of the status of the Company’s nonvested restricted stock granted pursuant to the Plan at December 31, 2008 and 2007 and changes during the year ended December 31, 2008 is presented below:

			Weighted  Average
	Shares		Fair Value
	(‘000)
Nonvested at December 31, 2007	226		$	31.89
Granted	489		16.57
Vested	(1	)	20.70
Forfeited	(14	)	32.03
Nonvested at December 31, 2008	700		$	21.56

In December 2008, Holdings approved 606,256 performance restricted stock units to be awarded to management and key employees which will vest on December 31, 2011 as long as the employee continues to be employed by the Company on this date and upon the achievement of certain performance targets approved by the Compensation Committee. The number of shares of Holdings’ common stock ultimately awarded upon vesting is determined based on the achievement of specified performance criteria over the period January 1, 2009 - December 31, 2009. However, in accordance with SFAS No. 123R, the Company did not recognize any compensation cost in 2008 for this issuance because the performance measures that will form the basis for vesting of these restricted stock units were not known as of December 31, 2008. These performance measures will be set once Holdings’ 2009 performance targets are approved by the Compensation Committee, at which point compensation cost for these awards will be determined.

Stock Purchase—Eligible employees and directors can purchase shares of Holdings’ common stock at prices as determined by its board of directors. There were no stock purchases by eligible employees and directors in 2008 or 2007.

Board of Directors Stock Grant—Holdings granted 9,167 shares of its common stock to its independent directors during the year ended December 31, 2008. Compensation cost related to directors stock grant caused income from continuing operations before taxes and minority interest and net income to decrease by $0.3 million and $0.1 million for the years ended December 31, 2008 and 2007, respectively.

Board of Directors Stock Options—Stock options granted to Holdings’ directors under this Plan shall have an exercise price at least equal to the fair market value of Holdings’ common stock on the date of grant. Options available for grant under this Plan are time options which have a life of ten years from the date of grant and vest in three equal annual installments on each of the first three anniversaries of the grant date.  In the year ended December 31, 2008, Holdings granted 6,211 stock options to a new director under this Plan.

Stock Options—Stock options granted to employees under the Plan shall have an exercise price at least equal to the fair market value of Holdings’ common stock on the date of grant. Holdings has granted two types of options under the Plan (time and performance options).

·Time-Based Stock Options - Time options granted prior to 2004 have a life of ten years from the date of grant and vest as follows: 10% in year one, 10% in year two, 25% in year three, 25% in year four and 30% in year five. Time options granted in 2004 have a life of ten years from the date of grant and vest in installments of 20% on each of the first five anniversaries of the grant date. Time options granted in May 2007 have a life of seven years and vest in three equal annual installments on each of the first three anniversaries of December 31, 2006; time options granted in December 2007 have a life of seven years and vest

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in three equal annual installments on each of the first three anniversaries of December 31, 2007; and time options granted in December 2008 have a life of seven years and vest in three equal annual installments on each of the first three anniversaries of December 31, 2008. In 2008, Holdings granted 948,784 time-based stock options to management and key employees under the Plan.

·Performance-Based Stock Options - Performance options have a life of ten years and become exercisable with respect to 20% of the total performance options granted upon the achievement of certain performance targets. Performance options become exercisable on the eighth anniversary of the grant date to the extent that the options have not become otherwise exercisable or have not been terminated. Certain option holders have “company-wide performance targets,” for which targets are based on the achievement by Holdings of certain implied equity values. Other option holders have “divisional performance targets,” for which targets are based on a particular division’s achievement of annual or cumulative Adjusted EBITDA.

The compensation cost related to stock options of Holdings caused income from continuing operations before taxes and minority interest to decrease by $3.6 million, $2.0 million and $0.1 million in the years ended December 31, 2008, 2007 and 2006, respectively. The total tax benefit recognized related to stock options was $0.4 million, $0.3 million and less than $0.1 million in the years ended December 31, 2008, 2007 and 2006, respectively. As discussed in Note 1, “Description of Business and Summary of Significant Accounting Policies,” the Company is recording compensation cost for the nonvested portion of awards issued after February 2005, which is the date Holdings first filed a registration statement with the SEC.

As of December 31, 2008, there was $9.1 million of unrecognized compensation cost related to nonvested stock options determined in accordance with SFAS No. 123R, which is expected to be recognized over a weighted-average period of approximately 2.2 years.

The weighted-average fair value of options granted during the years ended December 31, 2008, 2007 and 2006 was $4.26, $10.41 and $9.46, respectively. The fair value of stock options granted in the years ended December 31, 2008, 2007 and 2006 are estimated on the date of grant using the Black-Scholes option pricing model that used the assumptions noted in the following table:

	Year ended December 31,
	2008		2007		2006
Expected term (in years)	4.5		4.5		6.8
Expected volatility	54	%	30	%	30	%
Risk-free rate	1.6	%	4.2	%	4.8	%
Expected dividends	N/A		N/A		N/A

The expected term represents the period of time that options granted are expected to be outstanding based on the simplified method for determining expected term of an employee share option (in accordance with SAB No. 107 and 110). As Holdings became a public company in August 2005, there is not a long period of history of its share price. As a result, Holdings expected term was based on the simplified method.  The expected volatility for awards granted in December 2008 is based on historical share prices of Holdings since it became a public company.  For awards granted prior to December 2008, the expected volatility was based on the expected volatilities of comparable peer companies that are publicly traded as Holdings became a public company in August 2005 and did not have a long period of history of its share price.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividends are not applicable as Holdings currently does not pay and does not expect to pay a dividend on its shares.

In addition, SFAS No. 123R requires the recognition of expense only for awards that will eventually vest.  This requires pre-vesting forfeitures to be estimated at the time of grant and modified, if necessary, if actual forfeitures differ from estimated forfeitures.  The Company’s forfeiture rates are based upon historical share-based equity award cancellations.

The total intrinsic value of stock options exercised during the years ended December 31, 2008, 2007 and 2006 was $3.6 million, $2.1 million and less than $0.1 million, respectively. Cash received from option exercises during 2008 was $2.4 million. The total tax benefit realized from options exercised in 2008 was $0.2 million. The total fair value of shares vested during the years ended December 31, 2008, 2007 and 2006 was $4.3 million, $3.4 million and $2.0 million, respectively.

During 2008, Holdings extended the exercise period of 193,165 fully vested share options held by four employees and accelerated the vesting of 55,857 share options held by six employees. As a result of the modifications, the Company recognized additional expense of $0.2 million for the year ended December 31, 2008.

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A summary of the status of the Company’s options granted pursuant to the Plan at December 31, 2008 and 2007 and changes during the year ended December 31, 2008 is presented below:

			Weighted  Average		Weighted Average  Remaining
			Exercise		Contractual	Aggregate
	Shares		Price		Term	Intrinsic Value
	(‘000)				(years)	($ in millions)
Outstanding at December 31, 2007	4,730		$	18.50
Granted	955		9.38
Exercised	(157	)	15.05
Forfeited	(300	)	15.73
Outstanding at December 31, 2008	5,228		$	17.10	5.05	$	—
Options vested at December 31, 2008 and expected to vest in the future (a)	4,214		$	18.77	4.62	$	—
Options exercisable at December 31, 2008	3,095		$	17.54	4.50	$	—

(a)The number of options expected to vest takes into account an estimate of expected forfeitures.

13. EMPLOYEE BENEFIT PLANS:

The Company maintains various defined benefit pension plans, which cover certain employees in the U.S., U.K., Germany, Finland and other countries. Two subsidiaries in the United States provide various retirees with postretirement benefits, principally health care benefits. In addition, the Company provides certain retired employees in Germany with postretirement benefits for private health insurance premiums.

Funding requirements and investment policies for the Company’s various defined benefit plans are governed by local statutes and fiduciary standards outlined below.

The following tables provide a reconciliation of the benefit obligations, plan assets and the funded status of the plans, along with the amounts recognized in the Consolidated Balance Sheets and the weighted average assumptions used. The Company uses a December 31 measurement date for all of its plans.

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	Pension Benefits
	U.S. Plans						Non-U.S. Plans
($ in millions)	2008			2007			2008			2007
Change in benefit obligation:
Benefit obligation at beginning of year	$	27.7		$	28.2		$	475.2		$	483.3
Service cost	0.2			0.2			7.5			7.2
Interest cost	1.7			1.6			28.6			21.5
Plan participants’ contributions	—			—			0.5			0.7
Actuarial loss (gain)	1.1			(1.6		)	(29.8		)	(54.2		)
Benefits paid	(1.1		)	(0.7		)	(28.0		)	(20.9		)
Acquisitions	—			—			170.6			—
Foreign exchange (gain) loss	—			—			(52.2		)	36.9
Effect of curtailment/settlement	—			—			—			(2.1		)
Other	0.2			—			(1.8		)	2.8
Benefit obligation at end of year	$	29.8		$	27.7		$	570.6		$	475.2
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	26.7		$	23.4		$	130.6		$	120.0
Actual return on assets	(7.7		)	2.4			(42.6		)	3.4
Employer contributions	1.1			1.6			5.3			7.0
Plan participants’ contributions	—			—			0.5			0.7
Benefits paid from fund	(1.1		)	(0.7		)	(8.6		)	(4.1		)
Acquisitions	—			—			157.3			—
Foreign exchange (loss) gain	—			—			(30.9		)	3.6
Other	—			—			(1.9		)	—
Fair value of plan assets at end of year	$	19.0		$	26.7		$	209.7		$	130.6
Funded status	$	(10.8	)	$	(1.0	)	$	(360.9	)	$	(344.6	)
Amounts recognized in the consolidated balance sheets:
Current liabilities	$	—		$	—		$	(13.6	)	$	(12.2	)
Noncurrent liabilities (a)	(10.8		)	(1.0		)	(347.3		)	(332.4		)
Net amount recognized	$	(10.8	)	$	(1.0	)	$	(360.9	)	$	(344.6	)
Amounts recognized in accumulated other comprehensive income:
Net actuarial losses (gains)	$	11.0		$	(0.2	)	$	6.3		$	(17.0	)
Prior service cost	0.1			0.1			—			—
Accumulated other comprehensive loss (income)	$	11.1		$	(0.1	)	$	6.3		$	(17.0	)
Accumulated benefit obligation	$	29.8		$	27.5		$	530.2		$	443.7
Information for pension plans with an accumulated benefit obligation in excess of plan assets:
Accumulated benefit obligation	$	29.8		$	11.8		$	503.7		$	427.2
Fair value of plan assets	$	19.0		$	10.8		$	178.9		$	106.2
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate	6.18		%	6.26		%	6.02		%	5.53		%
Rate of compensation increase	N/A			N/A			3.13		%	3.33		%

(a)Balances include $10.7 million and $10.9 million as of December 31, 2008 and 2007, respectively, related to pension obligations for certain pension plans in Germany which are reported as “Other Liabilities” in the Consolidated Balance Sheets.

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	U.S. Plans									Non-U.S. Plans
($ in millions)	2008			2007			2006			2008			2007			2006
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Discount rate	6.26		%	5.76		%	5.69		%	5.53		%	4.62		%	4.18		%
Expected return on plan assets (a)	8.28		%	8.28		%	8.29		%	6.00		%	5.19		%	4.83		%
Rate of compensation increase	N/A			N/A			4.50		%	3.31		%	3.19		%	2.67		%
Components of net pension benefit costs:
Service cost	$	0.2		$	0.2		$	0.9		$	7.5		$	7.2		$	6.8
Interest cost	1.7			1.6			1.6			28.6			21.5			19.0
Expected return on assets	(2.2		)	(2.0		)	(1.7		)	(10.9		)	(6.5		)	(5.4		)
Net amortization of actuarial losses (gains)	—			0.1			0.1			(0.5		)	(1.0		)	0.6
Net periodic pension (benefit) cost	(0.3		)	(0.1		)	0.9			24.7			21.2			21.0
SFAS 88 settlement/curtailment	—			—			(0.4		)	—			—			1.1
Total pension (benefit) cost	$	(0.3	)	$	(0.1	)	$	0.5		$	24.7		$	21.2		$	22.1

(a)The expected return on plan assets reflects the asset mix of the underlying plan assets along with the expected returns within each asset category, based on the local market. See “Investment policies and strategies” below.

Pension plans have the following weighted-average asset allocations at December 31, 2008 and 2007:

	U.S. Plans				Non-U.S. Plans
	2008		2007		2008		2007
Equity securities	58	%	59	%	39	%	47	%
Debt securities	42	%	41	%	46	%	37	%
Real estate	0	%	0	%	1	%	4	%
Other, including cash and cash equivalents	0	%	0	%	14	%	12	%

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

($ in millions)	U.S. Plans		Non-U.S. Plans
2009	$	1.1	$	33.2
2010	1.2		33.7
2011	1.4		34.5
2012	1.5		36.2
2013	1.7		36.2
Years 2014 - 2018	10.3		186.7
Expected employer contributions (a):
2009	$	2.8	$	6.7

(a)Expected employer contributions include only contributions to plan assets.

In 2009, the Company expects to recognize $0.8 million of previously unrecognized actuarial losses.

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	Other Postretirement Benefits
($ in millions)	2008			2007
Change in benefit obligation:
Benefit obligation at beginning of year	$	4.8		$	4.9
Service cost	0.2			0.2
Interest cost	0.3			0.3
Actuarial gain	(0.2		)	(0.4		)
Benefits paid	(0.2		)	(0.2		)
Benefit obligation at end of year	$	4.9		$	4.8
Funded status	$	(4.9	)	$	(4.8	)
Amounts recognized in the consolidated balance sheets:
Current liabilities	$	(0.3	)	$	(0.2	)
Noncurrent liabilities	(4.6		)	(4.6		)
Net amount recognized	$	(4.9	)	$	(4.8	)
Amounts recognized in accumulated other comprehensive income:
Net actuarial gains	$	(0.6	)	$	(0.4	)
Prior service cost	(0.1		)	(0.1		)
Accumulated other comprehensive income	$	(0.7	)	$	(0.5	)
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate	6.37		%	6.25		%
Rate of compensation increase	N/A			N/A

($ in millions)	2008			2007			2006
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Discount rate	6.25		%	5.75		%	5.52		%
Expected return on plan assets	N/A			N/A			N/A
Rate of compensation increase	N/A			N/A			N/A
Components of other postretirement benefit costs:
Service cost	$	0.2		$	0.2		$	0.2
Interest cost	0.3			0.3			0.3
Net amortization of prior experience gains	(0.1		)	(0.1		)	(0.1		)
Total pension cost	$	0.4		$	0.4		$	0.4

	2008	2007
Other Postretirement Benefit Plans
Assumed health care cost trend rates at December 31 (hourly plan/salaried plan):
Health care cost trend rate assumed for the following year	10.00% - 11.00%	10.00% - 12.00%
Ultimate trend rate (rate to which the cost trend rate is assumed to decline)	4.75% - 5.00%	4.75% - 5.00%
Year that the rate reaches the ultimate trend rate	2014	2014

($ in millions)	1% Decrease			1% Increase
2008 Healthcare cost trend rate sensitivity analysis:
Effect on annual total of service cost and interest cost	$	—		$	—
Effect on postretirement benefit obligation	(0.3		)	0.4

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The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

	Other Post-
($ in millions)	retirement
2009	$	0.2
2010	0.3
2011	0.3
2012	0.4
2013	0.4
Years 2014 - 2018	2.7
Expected employer contributions (a):
2009	$	—

(a)Expected employer contributions include only contributions to plan assets.

Plans with projected benefit obligations in excess of plan assets—The Company’s defined benefit plans all had projected benefit obligations in excess of plan assets.

Contributions—During the year ended December 31, 2008, the Company made contributions of approximately $6.4 million to its defined benefit pension trusts and an additional $19.6 million in benefit payments directly to plan participants. For 2009, the Company expects to make payments of approximately $9.5 million as contributions to pension trusts plus benefit payments directly to plan participants of approximately $18.4 million.

Investment policies and strategies—The Company’s plans have varying statutory and plan governance requirements. For example, U.K. plan investments are limited to listed securities not affiliated with the Company or the investment advisor and equities are divided between domestic and foreign equity. U.S. plan investments are generally limited to mutual funds. Although the Company has representatives of local management involved in the governance of all plans, some plans or statutes also have representation by workers, employee unions, and/or corporate-level executives.

Plans in Finland, the U.K. and the U.S. represent over 85% of total plan assets. In these countries, the general investment objectives are to maximize the expected return on the plans’ assets without unduly prejudicing the security of the members’ accrued benefits and with sufficient liquidity to meet current plan cash flow requirements. As each plan is locally governed, asset allocations may vary between plans. Most plans do not have fixed targets but vary their investment allocations based on plan trustees’ consultation with professional investment advisors as to whether these allocations remain appropriate in light of relative investment performance and risk and/or actuarial changes related to plan participants. In 2008, the plans were targeted to investment allocations within certain ranges that approximate the following:

	U.S. Plans		Non-U.S. Plans
Equity securities	61	%	47	%
Debt securities	39	%	38	%
Other	0	%	15	%

Expected long-term rate of return on assets—The long-term rate of return on assets listed above is the average of expected returns developed for each plan weighted by each plan’s assets, as of January 1 of the year measured. Rates of return have been estimated based on various asset-appropriate price and yield indices, adjusted for projected inflation and long-term dividend growth.

Other Retirement Benefit Plans

Savings Plans—The Company sponsors various defined contribution plans for certain employees. Contributions under the plans are based on specified percentages of employee compensation. In aggregate, the Company’s contributions to these plans were $13.3 million, $10.6 million and $8.6 million in 2008, 2007 and 2006, respectively.

Multiemployer Plans—The Company participates in three multiemployer plans. Contributions under the plans are based on specified percentages of associate contributions. The Company’s contributions to the plans were $5.0 million, $4.8 million and $4.2 million and in 2008, 2007 and 2006, respectively.

14. RESTRUCTURING AND OTHER SEVERANCE COSTS:

The Company records restructuring liabilities that represent charges incurred in connection with consolidations and cessations of certain of its operations, including operations from acquisitions, as well as headcount reduction programs. These charges consist

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primarily of severance and facility closure costs, in some cases including asset write-offs and impairments. Severance charges are based on various factors including the employee’s length of service, contract provisions, salary levels and local governmental legislation. At the time a related charge is recorded, the Company calculates its best estimate based upon detailed analysis. Although significant changes are not expected, actual costs may differ from these estimates.

During the year ended December 31, 2008, the Company expensed $17.7 million of restructuring charges. In the Performance Additives segment, the Company recorded $7.6 million primarily related to a restructuring plan implemented in the Color Pigments and Services business in connection with the integration of the businesses acquired from Elementis plc, including the reorganization and relocation of the North American Finance and IT services, and the closure of three manufacturing facilities in 2008.  This included $3.5 million of asset write-offs, $3.1 million of severance costs, and $0.7 million of facility closure costs primarily related to this plan.  In the Specialty Chemicals, Advanced Ceramics and Specialty Compounds segments, $8.2 million, $0.8 million and $0.7 million, respectively, were recorded primarily for miscellaneous headcount reductions.  In the Corporate and other segment, facility closure costs of $0.4 million were recorded related to the restructuring of the wafer reclaim business. In addition, “restructuring and other severance costs” in the Consolidated Statements of Earnings included other severance-related costs of $17.6 million related to headcount reductions undertaken throughout the Company.

During the year ended December 31, 2007, the Company expensed $12.0 million of restructuring charges. In the Corporate and other segment, facility closure and severance costs of $4.7 million were recorded, primarily related to the restructuring of the wafer reclaim business.  In addition, $2.6 million was recorded in the Specialty Chemicals segment, $2.5 million was recorded in the Advanced Ceramics segment and $2.2 million was recorded in the Performance Additives segment for miscellaneous headcount reductions and facility closures.

During the year ended December 31, 2006, the Company expensed $4.9 million of restructuring charges. In the Specialty Chemicals segment, $1.6 million was recorded for miscellaneous headcount reductions and the closure of an administrative office in Spain. In the Corporate and other segment, $1.0 million was recorded primarily related to the restructuring of the wafer reclaim business. This included severance and related costs for employees in connection with the closure of two wafer reclaim facilities. The Company closed a wafer reclaim facility in the U.K. in January 2006 and one of the facilities in the U.S. in March 2006. In addition, $1.2 million was recorded in the Performance Additives segment and $1.1 million was recorded in the Advanced Ceramics segment primarily for miscellaneous headcount reductions.

Selected information for the 2008 restructuring actions follows:

				Facility
	Severance			Closure			Relocation			Write-
($ in millions)	Costs			Costs			Costs			Downs			Total
2008
Liability balance, December 31, 2007	$	—		$	—		$	—		$	—		$	—
Acquisitions (a)	5.6			—			—			—			5.6
Restructuring charge in 2008	11.8			0.9			0.3			3.5			16.5
Utilized	(4.9		)	(0.9		)	(0.1		)	(3.5		)	(9.4		)
Foreign exchange and other	0.7			0.1			—			—			0.8
Liability balance, December 31, 2008	$	13.2		$	0.1		$	0.2		$	—		$	13.5

(a)     Relates primarily to the Titanium Dioxide Pigments venture and other bolt-on acquisitions.

In connection with the 2008 restructuring actions, the Company expects additional facility closure costs of approximately $2.5 million to be incurred in 2009. The 2008 actions are expected to be completed by the end of 2009.

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Selected information for the 2007 restructuring actions follows:

				Facility
	Severance			Closure			Relocation			Write-
($ in millions)	Costs			Costs			Costs			Downs			Total
2007
Liability balance, December 31, 2006	$	—		$	—		$	—		$	—		$	—
Acquisitions (a)	4.7			—			0.3						5.0
Restructuring charge in 2007	4.5			1.6			0.3			0.4			6.8
Utilized	(3.1		)	(1.3		)	(0.3		)	(0.4		)	(5.1		)
Liability balance, December 31, 2007	6.1			0.3			0.3			—			6.7
Restructuring charge in 2008	0.6			—			—			—			0.6
Utilized	(2.9		)	(1.4		)	—			—			(4.3		)
Foreign exchange and other	(2.5		)	2.6			(0.1		)	—			—
Liability balance, December 31, 2008	$	1.3		$	1.5		$	0.2		$	—		$	3.0

(a)Relates primarily to the acquisition of the global color pigments business of Elementis plc.

These actions are expected to be completed during 2009.

Selected information for the 2006 restructuring actions follows:

				Facility
	Severance			Closure			Relocation
($ in millions)	Costs			Costs			Costs			Total
2006
Liability balance, December 31, 2005	$	—		$	—		$	—		$	—
Acquisitions (a)	3.5			0.7			0.7			4.9
Restructuring charge in 2006	2.9			0.9			—			3.8
Utilized	(1.2		)	(0.9		)	—			(2.1		)
Foreign exchange and other	(0.8		)	—			—			(0.8		)
Liability balance, December 31, 2006	4.4			0.7			0.7			5.8
Restructuring charge in 2007	1.8			3.2			—			5.0
Utilized	(4.5		)	(1.6		)	—			(6.1		)
Foreign exchange and other	(0.4		)	1.8			(0.6		)	0.8
Liability balance, December 31, 2007	1.3			4.1			0.1			5.5
Restructuring charge in 2008	—			0.7			—			0.7
Utilized	(1.6		)	(1.5		)	—			(3.1		)
Foreign exchange and other	0.4			(1.0		)	(0.1		)	(0.7		)
Liability balance, December 31, 2008	$	0.1		$	2.3		$	—		$	2.4

(a)Consists of severance costs related to the consolidation in 2007 of several U.K. facilities resulting from an acquisition by the Specialty Compounds segment.

The severance and relocation costs related to the acquisition in the Specialty Compounds segment are expected to be completed during 2009. The facility closure costs from the 2006 restructuring actions primarily relate to the restructuring of the wafer reclaim business and the closure of two wafer reclaim facilities. The facility closure costs are expected to be completed when a facility lease expires in 2018.

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Selected information for the 2005 restructuring actions follows:

				Facility
	Severance			Closure
($ in millions)	Costs			Costs			Total
2005
Liability balance, December 31, 2005	$	1.5		$	—		$	1.5
Restructuring charge in 2006	—			0.9			0.9
Utilized	(0.9		)	(1.3		)	(2.2		)
Foreign exchange and other	(0.4		)	0.9			0.5
Liability balance, December 31, 2006	0.2			0.5			0.7
Utilized	—			(0.2		)	(0.2		)
Foreign exchange and other	—			(0.1		)	(0.1		)
Liability balance, December 31, 2007	0.2			0.2			0.4
Restructuring charge in 2008	—			(0.1		)	(0.1		)
Utilized	—			—			—
Foreign exchange and other	(0.2		)	(0.1		)	(0.3		)
Liability balance, December 31, 2008	$	—		$	—		$	—

Selected information for the 2004 restructuring actions follows:

				Facility
	Severance			Closure			Relocation
($ in millions)	Costs			Costs			Costs			Total
2004
Liability balance, December 31, 2005	$	10.6		$	0.9		$	0.4		$	11.9
Restructuring charge in 2006	—			0.2			—			0.2
Utilized	(4.8		)	(1.0		)	(0.1		)	(5.9		)
Foreign exchange and other	(4.2		)	—			—			(4.2		)
Liability balance, December 31, 2006	1.6			0.1			0.3			2.0
Restructuring charge in 2007	—			0.2			—			0.2
Utilized	(0.9		)	(0.1		)	—			(1.0		)
Foreign exchange and other	0.1			—			0.1			0.2
Liability balance, December 31, 2007	0.8			0.2			0.4			1.4
Utilized	(0.2		)	(0.1		)	—			(0.3		)
Foreign exchange and other	(0.6		)	(0.1		)	(0.4		)	(1.1		)
Liability balance, December 31, 2008	$	—		$	—		$	—		$	—

Restructuring reserves by segment are as follows:

	December 31,
($ in millions)	2008		2007
Specialty Chemicals	$	8.1	$	3.4
Performance Additives	2.3		4.6
Titanium Dioxide Pigments	1.4		—
Advanced Ceramics	4.5		0.8
Specialty Compounds	0.5		2.4
Corporate and other	2.1		2.8
	$	18.9	$	14.0

15. FAIR VALUE MEASUREMENTS:

As discussed in Note 1, “Description of Business and Summary of Significant Accounting Policies,” SFAS No. 157, Fair Value Measurements, was issued in September 2006. This statement defines fair value, establishes a framework for measuring fair value in GAAP, and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. This statement does not require any new fair value measurements, but requires disclosure of how the fair values of any assets and liabilities that are measured at fair value on a recurring basis are determined. Certain provisions of this standard were

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effective for the Company as of January 1, 2008 and are disclosed below. However, the FASB has deferred the implementation of SFAS No. 157 by one year for non-financial assets and liabilities. Under SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  —  Including an Amendment of FASB Statement No. 115, entities are permitted to choose to measure many financial instruments and certain other items at fair value. The Company has elected not to measure any additional instruments at fair value under SFAS No. 159.

As of December 31, 2008, the only assets and liabilities that the Company currently measures at fair value on a recurring basis are derivatives and marketable securities. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 – Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 – Inputs are directly or indirectly observable, which include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Inputs are unobservable inputs that are used to measure fair value to the extent observable inputs are not available. The Company does not have any financial assets or liabilities that are classified as Level 3 inputs as of December 31, 2008.

In accordance with the fair value hierarchy, the following table provides the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value as of December 31, 2008:

	As of		Fair Value Measurements
	December 31, 2008		Level 1		Level 2		Level 3
Assets
Marketable securities (a)	$	395.8	$	395.8	$	—	$	—
Interest rate swaps (b)	1.1		—		1.1		—
Total assets at fair value	$	396.9	$	395.8	$	1.1	$	—
Liabilities
Interest rate swaps (b)	$	65.4	$	—	$	65.4	$	—
Cross-currency interest rate swaps (c)	4.8		—		4.8		—
Cross-currency interest rate swaps - net
investment hedge (d)	16.4		—		16.4		—
Raw material purchase hedge (e)	—		—		—		—
Total liabilities at fair value	$	86.6	$	—	$	86.6	$	—

(a)These primarily represent money market funds with an original maturity of three months or less.

(b)In December 2008, the Company entered into foreign currency forward contracts to manage its exposure to fluctuations in currency rates on third-party sales denominated in a currency other than the functional currency of the legal entity.  These instruments were designated as foreign exchange cash flow hedges and were effective at generating offsetting changes in the fair value or cash flows of the hedged item or transaction. As a result, any foreign currency gains or losses related to changes in the fair value of these derivatives are accounted for as a component of accumulated other comprehensive income for as long as the hedge remains effective.

(c)The Company has historically entered into interest rate swaps to manage its exposure to changes in interest rates related to variable rate debt. As of December 31, 2008, these contracts cover notional amounts of $610.0 million (at interest rates ranging from 4.864% to 5.038%) and €499.9 million (at interest rates ranging from 2.995% to 4.416%). These derivative contracts effectively convert a majority of the senior secured credit obligations and the obligations under the Titanium Dioxide Pigments term loan facility to fixed rate obligations. These swaps will mature between November 2009 and July 2012. The Company has elected not to apply hedge accounting for these interest rate swaps and has recorded the mark-to-market of these derivatives as a component of interest expense in the Consolidated Statements of Operations.

(d)The Company entered into cross-currency interest rate swaps with current notional amounts of $19.3 million and €17.0 million that effectively convert U.S. dollar borrowings into euro-based obligations at an effective interest rate of EURIBOR plus 4%. These contracts have final maturity dates of July 2010. The Company has elected not to apply hedge accounting for these interest rate swaps and has recorded the mark-to-market of these derivatives as a component of interest expense in the Consolidated Statements of Operations.

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(e)In connection with the offering of the 2014 Notes, the Company entered into a cross-currency interest rate swap in November 2004 with a notional amount of €155.6 million that effectively converts the U.S. dollar fixed rate debt in respect of the 2014 dollar-denominated notes sold into euro fixed rate debt. This swap has a final maturity date of November 2009. The Company designated this contract as a hedge of the foreign currency exposure of its net investment in its euro-denominated operations. As a result, any foreign currency gains and losses resulting from the translation of this euro-denominated debt is accounted for as a component of accumulated other comprehensive income for as long as the hedge remains effective.

The fair values of marketable securities are based on unadjusted quoted market prices from various financial information service providers and securities exchanges. The fair values of derivatives are based on quoted market prices from various banks for similar instruments.  The valuation of these instruments reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including forward curves.

Counter-party risk

The Company manages counter-party risk by entering into derivative contracts with only major financial institutions of investment grade quality and by limiting the amount of exposure to each financial institution. The Company has considered credit adjustments in its determination of the fair value of its derivative assets and liabilities as of December 31, 2008 based on market participant assumptions. In addition, based on the credit evaluation of each institution comprising its derivative assets as of December 31, 2008, the Company believes the carrying values of these assets as of December 31, 2008 to be fully realizable.

16. ACCUMULATED OTHER COMPREHENSIVE INCOME:

Changes in accumulated other comprehensive income (loss) are as follows:

	Pension															Total
	related			Foreign			Intercompany			Net			Cash flow			accumulated
	adjustments,			currency			foreign currency			investment hedge,			hedges,			other comprehensive
($ in millions)	net of tax (a)			translation (b)			loans (b)			net of tax (c)			net of tax (d)			income (loss)
Balance at December 31, 2005	$	(33.6	)	$	55.4		$	2.5		$	32.3		$	(0.6	)	$	56.0
Period change	20.7			146.1			131.7			(107.1		)	0.6			192.0
Effect of adoption of SFAS No. 158, net of tax	(11.3		)	—			—			—			—			(11.3		)
Balance at December 31, 2006	(24.2		)	201.5			134.2			(74.8		)	—			236.7
Period change	36.7			177.6			66.8			(108.3		)	—			172.8
Foreign currency translation of entities sold, primarily Electronics business	—			(35.8		)	—			—			—			(35.8		)
Balance at December 31, 2007	12.5			343.3			201.0			(183.1		)	—			373.7
Period change	(27.9		)	(145.7		)	(32.2		)	38.9			0.2			(166.7		)
Balance at December 31, 2008	$	(15.4	)	$	197.6		$	168.8		$	(144.2	)	$	0.2		$	207.0

(a)The tax effect on the pension related adjustments is a benefit (expense) of $6.2 million, $(17.6) million and $(5.0) million for 2008, 2007 and 2006, respectively.

(b)The foreign currency translation and intercompany loan adjustments are not adjusted for income taxes in accordance with the indefinite reversal criteria.

(c)The tax effect on the net investment hedge is an (expense) benefit of $(2.0) million, $0.4 million and $6.7 million for 2008, 2007 and 2006, respectively.

(d)The tax effect on the cash flow hedges is an expense of $0.3 million and $0.3 million for 2008 and 2006, respectively.

Gains and losses on intercompany foreign currency loans that are of a long-term investment nature for which settlement is not planned or anticipated in the foreseeable future are reported as a component of accumulated other comprehensive income.

On October 1, 2005, the Company designated the remaining portion of its euro-denominated debt that is recorded on its U.S. books as a net investment hedge of its euro-denominated investments. As a result, any foreign currency gains and losses resulting from this debt, effective October 1, 2005, is accounted for as a component of accumulated other comprehensive income for as long as the hedge remains effective.

17. COMMITMENTS AND CONTINGENCIES:

Legal Proceedings—The Company is involved in various legal proceedings, including commercial, intellectual property, product liability and environmental matters of a nature considered normal to its business. It is the Company’s policy to accrue for amounts related to these matters in accordance with SFAS No. 5, Accounting for Contingencies, if it is probable that a liability has been

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incurred and an amount can be reasonably estimated. It is the Company’s policy to disclose such matters when there is at least a reasonable possibility that a material loss may have been incurred.

In April 2005, Hospira Incorporated filed suit in Mecklenburg County, North Carolina Superior Court against one of the Company’s wholly-owned subsidiaries in its Specialty Compounds segment alleging claims for negligence, negligent misrepresentation, estoppel, fraud, third party beneficiary breach of contract and unfair trade practices as a result of the subsidiary providing PVC compound to its customer. Hospira is seeking damages of approximately $16.0 million for costs allegedly related to its recall and destruction of intravenous administration kits that incorporated components made with this compound, and further seeks treble damages of approximately $48.0 million, plus attorneys’ fees and interest, under the North Carolina unfair trade practice statute. The Court dismissed Hospira’s negligence and estoppel claims, but initially denied the subsidiary’s motion to dismiss the other claims. Following discovery, the Company’s subsidiary filed a motion for summary judgment to dismiss the remaining claims and, on November 9, 2007, the trial court granted the Company’s motion for summary judgment and dismissed all of the plaintiff’s claims. The plaintiff appealed this decision and, in early 2009, the appellate court affirmed on all counts with the exception of the negligence claim, which it reversed and remanded to the trial court. The Company will continue to vigorously defend this matter.  While the Company believes its subsidiary has meritorious defenses against Hospira’s claims and does not believe that resolution of this matter will have a material adverse effect on its business or financial condition, the Company cannot predict the ultimate outcome of this litigation and resolution of this claim may have a material adverse effect on its results of operations or cash flows in any quarterly or annual reporting period.

In addition, a subsidiary in the Specialty Chemicals segment that formerly manufactured sealants for insulating glass and resins for laminated glass prior to and after the sale of this business has been named as a defendant in several lawsuits relating to alleged negligent manufacturing of those products. Pursuant to the sale and purchase agreement with respect to the divested “glass” business, this subsidiary may be required to pay indemnity claims related to these lawsuits. Although the Company expects its subsidiary to have coverage under its product liability insurance policies should damages ultimately be awarded or agreed to, in such an event, its insurance may not cover such claims and, if not, its subsidiary may not have sufficient cash flow to pay these claims. Although the Company does not believe that resolution of these matters will have a material adverse effect on its business or financial condition, the Company cannot predict the ultimate outcome of this litigation, and the resolution of one or more of these claims may have a material adverse effect on its results of operations or cash flows in any quarterly or annual reporting period.

Although the Company expects to continue to pay legal fees in connection with the above matters and other legal actions related to chromated copper arsenate and other product liability matters, based on currently available facts, the Company does not believe that these actions will have a material effect on the financial condition, results of operations or liquidity of the Company.

Reserves in connection with product liability matters do not individually exceed $3.0 million and in the aggregate $8.0 million as of December 31, 2008. The Company’s reserve estimates are based on available facts, including damage claims and input from its internal and external legal counsel, past experience, and, in some instances where defense costs are being paid by its insurer, known insurance recoveries. The Company is unable to estimate the amount or range of any potential incremental charges should facts and circumstances change and may in the future revise its estimates based on new information becoming available. Further, the Company cannot predict the outcome of any litigation or the potential for future litigation.

Indemnity Matters— The Company may be indemnified by third parties in connection with certain matters related to acquired businesses.  For example, under the terms of the sale and purchase agreement, mg technologies ag (now known as GEA Group Aktiengesellschaft (“GEA Group”)) and its subsidiary MG North America Holdings, Inc. (now known as GEA North America Inc. (“GEA North America”)), were obligated to indemnify the Company for certain legal, tax and environmental liabilities and obligations that relate to the period prior to the closing, subject to certain limits and exclusions. Pursuant to these agreements, the Company has various claims for indemnification with GEA Group. However, in March 2008, the Company entered into an agreement with GEA Group and GEA North America to settle all existing and future environmental indemnities under the sale and purchase agreement relating to the Dynamit Nobel Acquisition in consideration of payment to the Company of €18.8 million ($29.1 million), which was received on March 28, 2008. Although the Company has no reason to believe that the financial condition of those parties who may have indemnification obligations to the Company is other than sound, in the event the Company seeks indemnity under any of these agreements or through other means, there can be no assurance that any party who may have obligations to indemnify the Company will adhere to their obligations and the Company may have to resort to legal action to enforce its rights under the indemnities. In cases where the Company’s indemnification claims to such third parties are uncontested, the Company expects to realize recoveries within the short term.

In addition, the Company may be subject to indemnity claims relating to properties or businesses it divested. The Company is required to indemnify the buyer of its former Electronics business, Groupe Novasep segment and pool and spa chemicals business. For example, the Company is required to indemnify the buyer of its Electronics business for certain known and unknown environmental actions which may arise in the future that relate to the period prior to the closing. In the opinion of management, and based upon information currently available, the ultimate resolution of any indemnification obligations owed to the Company or by the Company is not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows, but may have a material adverse effect on the Company’s results of operations or cash flow in any quarterly or annual reporting period.

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Safety, Health and Environmental Matters

General

The Company is subject to extensive environmental, health and safety laws in the United States, the European Union (“EU”) and elsewhere at the international, national, state, and local levels. Many of these laws impose requirements relating to clean-up of contamination, and impose liability in the event of damage to human beings, natural resources or property, and provide for substantial fines, injunctions and potential criminal sanctions for violations. The products, including the raw materials handled, are also subject to rigorous industrial hygiene regulations and investigation. The nature of the Company’s operations exposes it to risks of liability for breaches of these laws and regulations as a result of the production, storage, transportation and sale of materials that can cause contamination or personal injury when released into the environment. Environmental laws are subject to change and have tended to become stricter over time. Such changes in environmental laws, or the enactment of new environmental laws, could result in materially increased capital, operating and compliance costs.

Safety, Health and Environmental Management Systems

The Company is committed to achieving and maintaining compliance with all applicable safety, health and environmental (“SHE”) legal requirements. The Company’s subsidiaries have developed policies and management systems that are intended to identify the SHE legal requirements applicable to their operations, enhance compliance with such requirements, ensure the safety of the Company’s employees, contractors, community neighbors and customers and minimize the production and emission of wastes and other pollutants. Although SHE legal requirements are constantly changing, these SHE management systems are designed to assist the Company in meeting its compliance goals and minimizing overall risk.

SHE Capital Expenditures

The Company may incur future costs for capital improvements and general compliance under SHE laws. For the year ended December 31, 2008, the capital expenditures for SHE matters totaled $28.1 million, excluding costs to maintain and repair pollution control equipment. For 2009, the Company estimates capital expenditures for compliance with SHE laws to be at similar levels; however, because capital expenditures for these matters are subject to changes in existing and new SHE laws, the Company cannot provide assurance that its recent expenditures will be indicative of future amounts required to comply with these laws.

Regulatory Developments

On June 1, 2007, the Registration, Evaluation and Authorization of Chemicals (“REACH”) legislation became effective in the EU. REACH requires manufacturers and importers of certain chemicals to register those chemicals, perform health and environmental risk analyses of those chemicals, and in certain instances, obtain authorizations for the use of the chemicals. Covered substances were pre-registered by December 31, 2008. REACH is expected to be implemented in three phases over the next eleven years based on known product hazards and/or volume of product in commerce. Under REACH, where warranted by a risk assessment, specified uses of some hazardous substances may be restricted. As a specialty chemicals company, it is possible that the Company is the only manufacturer of one or more substances to be regulated under REACH and thus could potentially bear the full cost of compliance with REACH for some or all of the Company’s products. The Company estimates it has approximately 350 products that are subject to REACH. The Company is taking steps to comply with REACH, which included the pre-registration of its products. The Company does not believe these costs will have a material impact on its results of operations, financial position or liquidity. In addition, it is possible that REACH may affect raw material supply, customer demand for certain products and the Company’s decision to continue to manufacture and sell certain products.

In addition, the Company is subject to the Homeland Security Agency’s regulations, which address chemical plant safety, the Kyoto Protocol, which relates to the emission of greenhouse gases and the European Union Integrated Pollution Prevention and Control Directive, which relates to environmental permitting programs for individual facilities.  The Company does not believe, based upon currently available information, that these regulations will have a material adverse impact on its results of operations, financial position or liquidity.

Remediation Liabilities

Environmental laws have a significant effect on the nature and scope of any clean-up of contamination at current and former operating facilities, the costs of transportation and storage of chemicals and finished products and the costs of the storage and disposal of wastes. In addition, “Superfund” statutes in the United States as well as statutes in other jurisdictions impose strict, joint and several liability for clean-up costs on the entities that generated waste and/or arranged for its disposal at contaminated third party sites, as well as the past and present owners and operators of contaminated sites. All responsible parties may be required to bear some or all clean-up costs regardless of fault, legality of the original disposal or ownership of the disposal site.

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The following table provides a list of the Company’s present and former facilities with environmental contamination for which the Company has reserved for at December 31, 2008:

Country	Location	(a)	(b)	(c)	(d)	(e)
Brazil	Diadema			X
China	Shenzhen			X
Finland	Kipsikorpi				X
	Pori				X
France	Sens			X
Germany	Duisburg	X			X
	Hainhausen	X
	Ibbenbueren				X
	Marktredwitz		X
	Plochingen		X
	Stadeln	X	X
	Troisdorf	X	X	X
Italy	Turin			X
The Netherlands	Oss	X
United Kingdom	Barrow-in Furness	X
	Birtley			X
	Kidsgrove			X
United States	Beltsville, MD	X		X
	East St. Louis, IL			X
	Easton, PA	X
	Gonzales, TX				X
	Harrisburg, NC	X		X
	La Mirada, CA			X
	Laurens, SC		X
	Middletown, NY (formerly owned)			X		X
	New Johnsonville, TN		X	X
	Silver Peak, NV	X			X
	Sunbright, VA (facility closed)	X				X
	Valdosta, GA	X

(a)	The Company is currently operating groundwater monitoring and/or remediation systems at these locations.
(b)	The Company is currently operating groundwater monitoring and/or remediation systems at these locations for which prior owners or insurers have assumed responsibility.
(c)	The Company is currently conducting investigations into additional possible soil and/or groundwater contamination at these locations.
(d)	The Company has land restoration obligations relating to landfill activities or surface mining at these locations.
(e)	The Company is responsible for liabilities related to environmental matters at these closed facilities.

The Company is also responsible for environmental matters at some of its former off-site disposal locations owned by third parties. These sites are considered Superfund sites as defined by the EPA or state regulatory authority. The Company is a potentially responsible party or de minimis participant at the following Superfund locations: Casmalia, CA; Laurel, MD; Niagara Falls, NY; South Gate, CA; and Whittier, CA and has reserves for these matters totaling $0.3 million at December 31, 2008. In addition, the German environmental authorities recently notified the Company, along with a few other potentially responsible parties, of a potential remediation at a former site in Liebenau, Germany. The Company is currently in the process of gathering additional information regarding the site and cannot predict the potential scope of any such remediation.

Although the Company cannot provide assurances in this regard, the Company does not believe that these issues will have a material adverse effect on its business or financial condition, but may have a material adverse effect on the results of operations or cash flows in any given quarterly or annual reporting period. Nonetheless, the discovery of contamination arising from present or historical industrial operations at some of the Company’s or its predecessor’s former and present properties and/or at sites where the Company and its predecessor disposed wastes could expose the Company to cleanup obligations and other damages in the future.

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Government Enforcement Proceedings and Civil Litigation

During the course of the Company’s business, the Company may receive notices of violation, enforcement and other complaints from regulatory agencies alleging non-compliance with applicable SHE laws. Currently, the Company is a party to a consent order with the Metropolitan Sewer District (“MSD”) in St. Louis, Missouri to reduce ammonia concentrations in wastewater discharge to a city treatment plant. MSD’s new National Pollution Discharge Elimination System (“NPDES”) permit required the Company to reduce the facility’s ammonia discharge by December 31, 2008. The Company has spent $2.2 million as of December 31, 2008 and expects to spend $2.4 million in total capital expenditures in connection with this matter.

During 2008, the Company’s Timber Treatment Chemicals subsidiary was cited by the U.S. EPA for failure to report hazardous material production quantities under the Toxic Substances Control Act - 2005 Inventory Update Rule.  The business has provided the required information; however, the business expects to pay a fine as a result of this violation. The Company does not believe, based upon currently available information, that this issue will have a material adverse impact on its results of operations, financial position or liquidity.

Environmental Reserves

The Company has established financial reserves relating to anticipated environmental cleanup obligations, site reclamation and remediation and closure costs, which are reviewed at least quarterly based on currently available information. Liabilities are recorded when potential liabilities are either known or believed to be probable and can be reasonably estimated. In the event that the Company establishes a financial reserve in connection with site remediation costs, the Company records a reserve for the estimated cost of the remediation, even though the costs of the remediation will likely be spread out over many years. The Company does not include unasserted claims in its reserves.

The Company’s liability estimates are based upon available facts, existing technology, indemnities from third parties, past experience and, in some instances, insurance recoveries where the remediation costs are being paid by its insurers, and are generated by several means, including State-mandated schedules, environmental consultants and internal experts, depending on the circumstances. On a consolidated basis, the Company has accrued $55.1 million and $40.7 million for known environmental liabilities as of December 31, 2008 and 2007, respectively, all of which were classified as other non-current liabilities in the Consolidated Balance Sheets.  The increase in the environmental reserve is primarily due to environmental liabilities assumed from the Titanium Dioxide Pigments venture that was completed in September 2008. The environmental liabilities assumed are subject to change upon the finalization of purchase accounting. Included in the $55.1 million as of December 31, 2008 is $21.4 million that is discounted using discount rates ranging from 5.0% to 7.5%, with the undiscounted amount of these reserves equaling $30.9 million. Included in the $40.7 million as of December 31, 2007 is $15.8 million that is discounted using discount rates ranging from 5.0% to 7.0%, with the undiscounted amount of these reserves equaling $22.5 million. In certain cases, the Company’s remediation liabilities are payable over periods of up to 30 years. At a number of the sites described above, the extent of contamination has not yet been fully investigated or the final scope of remediation is not yet determinable and could potentially affect the range. The Company estimates that the potential range for such environmental matters as of December 31, 2008 is from $55.1 million to $96.6 million. For the year ended December 31, 2008, the Company recorded charges of $2.9 million to increase its environmental liabilities and made payments of $2.4 million for clean-up and remediation costs, which reduced its environmental liabilities. For the year ended December 31, 2008, the recurring cost of managing hazardous substances for ongoing operations is $52.7 million.

The Company is obligated to undertake soil remediation at two facilities in Europe in the event manufacturing operations are discontinued there at some future date. In addition, in the event that manufacturing operations are discontinued at any of the Company’s other facilities with known contamination, regulatory authorities may impose more stringent requirements on the Company including soil remediation. The Company does not contemplate any such action occurring in the foreseeable future, as these facilities’ remaining lives are indefinite. Given the indeterminate useful life of these facilities and the corresponding indeterminate settlement date of any soil remediation obligations, the Company does not have sufficient information to estimate a range of potential settlement dates for its obligations. Consequently, the Company cannot employ a present value technique to estimate fair value and, accordingly, has not accrued for any environmental related costs to remediate soil at these facilities.

The Company believes these accruals are adequate based on currently available information. The Company may incur losses in excess of the amounts accrued; however, based on currently available information it does not believe the additional amount of potential losses would have a material effect on its results of operations or financial condition, but may have a material effect on the results of operations or cash flow in any given quarterly or annual reporting period. The Company does not believe that any known individual environmental matter would have a material effect on its results of operations or financial condition. The Company is unable to estimate the amount or range of any potential incremental charges should facts and circumstances change and may in the future revise its estimates based on new information becoming available.

Commitments

As of December 31, 2008, the Company has unconditional purchase obligations of $498.2 million primarily consisting of take-or-pay contracts to purchase goods and energy that are enforceable and legally binding and that specify all significant terms, including: fixed

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or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.

These purchase obligations are expected to be incurred as follows: $227.2 million in less than one year, $153.4 million in two-three years, $33.7 million in four-five years and $83.9 million after five years. The Company has disclosed its contractual obligations as of December 31, 2008 in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources,” section.

18. CONSOLIDATING FINANCIAL INFORMATION:

As described in Note 9, “Long-Term Debt,” the Company issued the 2014 Notes in November 2004. The following consolidating financial statements present the results of operations, financial condition and cash flows in separate columns of the parent company (Rockwood Specialties Group, Inc.), which is the issuer of the 2014 Notes, guarantor subsidiaries, non-guarantor subsidiaries, elimination adjustments and consolidated totals.

The Company has determined certain cash balances of the parent company and the guarantor and non-guarantor subsidiaries which were presented as cash and cash equivalents at December 31, 2007, are more appropriately presented as intergroup payables or receivables and has changed that presentation on its December 31, 2008 consolidating balance sheet. The change in parent, guarantor and non-guarantor cash and intergroup balances had a corresponding impact on cash flows from financing activities in the consolidating statements of cash flows for the year ended December 31, 2008.  Had the December 31, 2007 consolidating balance sheet been presented in the same manner as at December 31, 2008, cash and cash equivalents would have been $110.2 million for the parent company, $194.9 million for the guarantor subsidiaries and $41.8 million for the non-guarantor subsidiaries. Intergroup receivables would have been $1,967.0 million for the parent company and $4,243.3 million for the non-guarantor subsidiaries, while intergroup payables would have been $1,730.1 million for the guarantor subsidiaries. As all intergroup balances and the classification of intergroup transactions in the statement of cash flows are eliminated upon consolidation, there would have been no impact on the consolidated balance sheets or statements of cash flows for the prior years presented.

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ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2008

(Dollars in millions)

	Parent			Guarantor			Non-Guarantor
	Company			Subsidiaries			Subsidiaries			Consolidated
Net sales	$	—		$	761.3		$	2,618.8		$	3,380.1
Cost of products sold	—			572.3			1,793.5			2,365.8
Gross profit	—			189.0			825.3			1,014.3
Selling, general and administrative expenses	0.6			159.3			501.4			661.3
Impairment charges	—			288.8			520.7			809.5
Restructuring and other severance costs	—			4.3			31.0			35.3
Loss (gain) on sale of assets	—			0.3			(2.7		)	(2.4		)
Operating (loss) income	(0.6		)	(263.7		)	(225.1		)	(489.4		)
Other income (expenses):
Intergroup interest, net	109.4			(39.8		)	(69.6		)	—
Interest expense	(189.7		)	(1.6		)	(39.8		)	(231.1		)
Interest income	9.8			(3.6		)	(0.2		)	6.0
Intergroup other, net	91.5			(79.0		)	(12.5		)	—
Gain on early extinguishment of debt	4.0			—			—			4.0
Foreign exchange loss, net	(15.0		)	(0.5		)	(16.8		)	(32.3		)
Other, net	(0.7		)	0.9			0.5			0.7
Other income (expenses), net	9.3			(123.6		)	(138.4		)	(252.7		)
Income (loss) from continuing operations before taxes and minority interest	8.7			(387.3		)	(363.5		)	(742.1		)
Income tax (benefit) provision	(1.1		)	(31.4		)	8.6			(23.9		)
Income (loss) from continuing operations before minority interest	9.8			(355.9		)	(372.1		)	(718.2		)
Minority interest in continuing operations	—			—			83.6			83.6
Net income (loss) from continuing operations	9.8			(355.9		)	(288.5		)	(634.6		)
Income from discontinued operations, net of tax	1.5			1.8			—			3.3
Gain on sale of discontinued operations, net of tax	27.0			4.9			2.4			34.3
Net income (loss)	$	38.3		$	(349.2	)	$	(286.1	)	$	(597.0	)

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ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2007

(Dollars in millions)

	Parent			Guarantor			Non-Guarantor
	Company			Subsidiaries			Subsidiaries			Consolidated
Net sales	$	—		$	686.6		$	2,378.6		$	3,065.2
Cost of products sold	—			499.4			1,589.7			2,089.1
Gross profit	—			187.2			788.9			976.1
Selling, general and administrative expenses	0.2			149.5			447.9			597.6
Restructuring and other severance costs	—			2.9			9.1			12.0
Loss (gain) on sale of assets	0.1			(4.0		)	(0.8		)	(4.7		)
Operating (loss) income	(0.3		)	38.8			332.7			371.2
Other expenses, net:
Intergroup interest, net	87.5			(29.7		)	(57.8		)	—
Interest expense	(189.2		)	(2.2		)	(27.9		)	(219.3		)
Interest income	23.1			(5.1		)	(6.5		)	11.5
Intergroup other, net	45.3			4.9			(50.2		)	—
Loss on early extinguishment of debt	(15.6		)	(2.5		)	(0.5		)	(18.6		)
Refinancing expenses	(0.9		)	—			—			(0.9		)
Foreign exchange gain (loss), net	19.2			—			(11.4		)	7.8
Other, net	0.9			(0.3		)	(0.6		)	—
Other expenses, net	(29.7		)	(34.9		)	(154.9		)	(219.5		)
(Loss) income from continuing operations before taxes and minority interest	(30.0		)	3.9			177.8			151.7
Income tax (benefit) provision	(0.4		)	1.6			61.1			62.3
(Loss) income from continuing operations before minority interest	(29.6		)	2.3			116.7			89.4
Minority interest in continuing operations	—			—			(7.9		)	(7.9		)
Net (loss) income from continuing operations	(29.6		)	2.3			108.8			81.5
Income from discontinued operations, net of tax	—			13.3			12.0			25.3
Gain (loss) on sale of discontinued operations, net of tax	95.4			(29.0		)	114.2			180.6
Minority interest in discontinued operations	—			—			(0.1		)	(0.1		)
Net income (loss)	$	65.8		$	(13.4	)	$	234.9		$	287.3

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ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2006

(Dollars in millions)

	Parent			Guarantor			Non-Guarantor
	Company			Subsidiaries			Subsidiaries			Consolidated
Net sales	$	—		$	840.1		$	1,874.6		$	2,714.7
Cost of products sold	—			629.2			1,229.8			1,859.0
Gross profit	—			210.9			644.8			855.7
Selling, general and administrative expenses	0.2			158.0			382.2			540.4
Impairment charges	—			—			2.2			2.2
Restructuring and other severance costs	—			0.4			4.5			4.9
Loss (gain) on sale of assets	—			1.6			(1.9		)	(0.3		)
Operating (loss) income	(0.2		)	50.9			257.8			308.5
Other income (expenses):
Intergroup interest, net	113.0			(26.9		)	(86.1		)	—
Interest expense	(170.7		)	(4.3		)	(24.9		)	(199.9		)
Interest income	9.7			(5.8		)	(1.5		)	2.4
Intergroup other, net	58.0			(60.1		)	2.1			—
Foreign exchange gain, net	1.9			0.3			6.4			8.6
Other, net	—			—			1.8			1.8
Other income (expenses), net	11.9			(96.8		)	(102.2		)	(187.1		)
Income (loss) from continuing operations before taxes	11.7			(45.9		)	155.6			121.4
Income tax provision (benefit)	20.9			(12.0		)	52.4			61.3
Net (loss) income from continuing operations	(9.2		)	(33.9		)	103.2			60.1
Income from discontinued operations, net of tax	—			10.3			37.8			48.1
Minority interest in discontinued operations	—			—			(5.2		)	(5.2		)
Net (loss) income	$	(9.2	)	$	(23.6	)	$	135.8		$	103.0

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ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2008

(Dollars in millions)

	Parent			Guarantor			Non-Guarantor
	Company			Subsidiaries			Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	272.7		$	11.5		$	184.5	$	—		$	468.7
Accounts receivable, net	—			91.6			373.0		—			464.6
Inventories	—			154.0			487.0		—			641.0
Deferred income taxes	3.2			11.9			7.1		—			22.2
Prepaid expenses and other current assets	1.4			13.3			51.2		—			65.9
Total current assets	277.3			282.3			1,102.8		—			1,662.4
Property, plant and equipment, net	—			290.2			1,462.0		—			1,752.2
Investment in subsidiary	1,423.2			90.7			—		(1,513.9		)	—
Goodwill	—			18.2			899.6		—			917.8
Intergroup receivable	1,877.0			701.2			3,501.3		(6,079.5		)	—
Other intangible assets, net	—			116.2			638.6		—			754.8
Deferred debt issuance costs, net	1.7			3.1			34.3		—			39.1
Deferred income taxes	—			—			11.6		—			11.6
Other assets	—			1.5			38.0		—			39.5
Total assets	$	3,579.2		$	1,503.4		$	7,688.2	$	(7,593.4	)	$	5,177.4
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	—		$	48.6		$	212.2	$	—		$	260.8
Income taxes payable	(0.6		)	(1.7		)	6.4		—			4.1
Accrued compensation	—			19.0			73.6		—			92.6
Restructuring liability	—			1.9			17.0		—			18.9
Accrued expenses and other current liabilities	40.2			51.4			123.9		—			215.5
Deferred income taxes	—			—			9.0		—			9.0
Long-term debt, current portion	24.4			—			66.5		—			90.9
Total current liabilities	64.0			119.2			508.6		—			691.8
Long-term debt	2,191.4			—			528.9		—			2,720.3
Pension and related liabilities	—			15.4			336.6		—			352.0
Intergroup payable	78.8			1,619.1			4,381.6		(6,079.5		)	—
Deferred income taxes	1.5			3.6			92.6		—			97.7
Other liabilities	68.9			29.6			91.3		—			189.8
Total liabilities	2,404.6			1,786.9			5,939.6		(6,079.5		)	4,051.6
Minority interest	—			—			315.4		—			315.4
Stockholder’s equity:
Common stock	—			190.6			164.7		(355.3		)	—
Paid-in capital	1,044.0			104.2			1,054.4		(1,158.6		)	1,044.0
Accumulated other comprehensive income	19.4			(6.6		)	194.2		—			207.0
Retained earnings (deficit)	111.2			(571.7		)	19.9		—			(440.6		)
Total stockholder’s equity	1,174.6			(283.5		)	1,433.2		(1,513.9		)	810.4
Total liabilities and stockholder’s equity	$	3,579.2		$	1,503.4		$	7,688.2	$	(7,593.4	)	$	5,177.4

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ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2007

(Dollars in millions)

	Parent		Guarantor			Non-Guarantor
	Company		Subsidiaries			Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	370.7	$	(84.3	)	$	60.5	$	—		$	346.9
Accounts receivable, net	—		89.4			370.9		—			460.3
Inventories	—		129.7			397.2		—			526.9
Deferred income taxes	2.5		14.0			6.2		—			22.7
Prepaid expenses and other current assets	6.5		10.8			52.4		—			69.7
Assets of discontinued operations	—		75.1			—		—			75.1
Total current assets	379.7		234.7			887.2		—			1,501.6
Property, plant and equipment, net	—		237.5			1,271.0		—			1,508.5
Investment in subsidiary	1,433.5		94.6			—		(1,528.1		)	—
Goodwill	—		335.2			1,394.8		—			1,730.0
Intergroup receivable	1,706.5		712.9			4,224.6		(6,644.0		)	—
Other intangible assets, net	—		81.1			594.8		—			675.9
Deferred debt issuance costs, net	2.2		4.1			34.8		—			41.1
Deferred income taxes	—		—			15.5		—			15.5
Other assets	—		5.0			34.2		—			39.2
Total assets	$	3,521.9	$	1,705.1		$	8,456.9	$	(8,172.1	)	$	5,511.8
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	—	$	65.0		$	220.5	$	—		$	285.5
Income taxes payable	0.4		0.2			8.9		—			9.5
Accrued compensation	—		19.1			62.4		—			81.5
Restructuring liability	—		3.0			11.0		—			14.0
Accrued expenses and other current liabilities	24.4		46.1			100.8		—			171.3
Deferred income taxes	—		—			7.2		—			7.2
Long-term debt, current portion	25.0		—			82.4		—			107.4
Liabilities of discontinued operations	0.7		16.3			—		—			17.0
Total current liabilities	50.5		149.7			493.2		—			693.4
Long-term debt	2,272.2		—			201.8		—			2,474.0
Pension and related liabilities	—		5.5			322.0		—			327.5
Intergroup payable	—		1,450.9			5,193.1		(6,644.0		)	—
Deferred income taxes	14.1		0.2			98.4		—			112.7
Other liabilities	55.6		31.9			76.1		—			163.6
Total liabilities	2,392.4		1,638.2			6,384.6		(6,644.0		)	3,771.2
Minority interest	—		—			175.3		—			175.3
Stockholder’s equity:
Common stock	—		190.6			164.7		(355.3		)	—
Paid-in capital	1,035.2		102.2			1,070.6		(1,172.8		)	1,035.2
Accumulated other comprehensive income	17.3		0.4			356.0		—			373.7
Retained earnings (deficit)	77.0		(226.3		)	305.7		—			156.4
Total stockholder’s equity	1,129.5		66.9			1,897.0		(1,528.1		)	1,565.3
Total liabilities and stockholder’s equity	$	3,521.9	$	1,705.1		$	8,456.9	$	(8,172.1	)	$	5,511.8

119

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2008

(Dollars in millions)

	Parent			Guarantor			Non-Guarantor
	Company			Subsidiaries			Subsidiaries			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	38.3		$	(349.2	)	$	(286.1	)	$	(597.0	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Income from discontinued operations, net of tax	(1.5		)	(1.8		)	—			(3.3		)
Gain on sale of discontinued operations	(27.0		)	(4.9		)	(2.4		)	(34.3		)
Depreciation and amortization	—			48.1			210.8			258.9
Deferred financing costs amortization	0.4			1.0			8.2			9.6
Gain on early extinguishment of debt	(4.0		)	—			—			(4.0		)
Foreign exchange loss	15.0			0.5			16.8			32.3
Fair value adjustment of derivatives	46.4			—			5.1			51.5
Bad debt provision	—			0.5			2.9			3.4
Acquired in-process research and development	—			—			2.9			2.9
Stock-based compensation	—			2.2			1.9			4.1
Deferred income taxes	(24.3		)	(9.5		)	(30.7		)	(64.5		)
Impairment charges	—			288.8			520.7			809.5
Loss (gain) on sale of assets and other	0.1			0.9			(0.3		)	0.7
Minority interest in continuing operations	—			—			(83.6		)	(83.6		)
Changes in assets and liabilities, net of the effect of foreign currency translation and acquisitions:
Accounts receivable	—			1.6			35.2			36.8
Inventories	—			(21.5		)	(45.3		)	(66.8		)
Prepaid expenses and other assets	2.4			1.1			7.0			10.5
Accounts payable	—			(18.0		)	(34.1		)	(52.1		)
Income taxes payable	21.3			(22.6		)	(0.1		)	(1.4		)
Accrued expenses and other liabilities	(11.0		)	(3.3		)	(9.0		)	(23.3		)
Intercompany operating activities, net	31.7			(24.4		)	(7.3		)	—
Net cash provided by (used in) operating activities of continuing
operations	87.8			(110.5		)	312.6			289.9
Net cash provided by operating activities of discontinued operations	—			12.0			—			12.0
Net cash provided by (used in) operating activities	87.8			(98.5		)	312.6			301.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, including transaction fees paid, net of cash acquired	(0.2		)	(103.5		)	(123.0		)	(226.7		)
Acquisitions, related intercompany	(102.1		)	102.1			—			—
Post closing purchase price consideration	—			—			29.8			29.8
Post closing purchase price consideration, related intercompany	10.0			—			(10.0		)	—
Capital expenditures, excluding capital leases	—			(33.8		)	(190.2		)	(224.0		)
Proceeds on sale of assets	0.1			2.3			6.7			9.1
Net cash used in investing activities of continuing operations	(92.2		)	(32.9		)	(286.7		)	(411.8		)
Net cash provided by investing activities of discontinued operations, including sale proceeds of $122.0	—			116.3			—			116.3
Net cash (used in) provided by investing activities	(92.2		)	83.4			(286.7		)	(295.5		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Titanium Dioxide Pigments venture financing	—			—			362.5			362.5
Payment of assumed debt to Titanium Dioxide Pigments venture minority shareholder	—			—			(141.4		)	(141.4		)
Repayment of 2014 Notes	(10.2		)	—			—			(10.2		)
Repayment of senior secured credit facilities	(25.6		)	—			(43.1		)	(68.7		)
Payments on other long-term debt	—			(0.4		)	(30.5		)	(30.9		)
Equity contributions	0.2			—			—			0.2
Deferred financing costs	—			—			(5.0		)	(5.0		)
Distribution to minority shareholder	—			—			(3.9		)	(3.9		)
Intercompany financing related activity	(59.7		)	111.4			(51.7		)	—
Net cash (used in) provided by financing activities of continuing operations	(95.3		)	111.0			86.9			102.6
Net cash used in financing activities of discontinued operations	—			—			—			—
Net cash (used in) provided by financing activities	(95.3		)	111.0			86.9			102.6
Effect of exchange rate changes on cash and cash equivalents	1.7			(0.1		)	11.2			12.8
Net (decrease) increase in cash and cash equivalents	(98.0		)	95.8			124.0			121.8
Less increase in cash and cash equivalents from discontinued operations, net (a)	—			—			—			—
(Decrease) increase in cash and cash equivalents from continuing operations	(98.0		)	95.8			124.0			121.8
Cash and cash equivalents of continuing operations, beginning of period	370.7			(84.3		)	60.5			346.9
Cash and cash equivalents of continuing operations, end of period	$	272.7		$	11.5		$	184.5		$	468.7

(a) Excludes net sale proceeds of $122.0 and intercompany transfers of $6.3.

120

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2007

(Dollars in millions)

	Parent			Guarantor			Non-Guarantor
	Company			Subsidiaries			Subsidiaries			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	65.8		$	(13.4	)	$	234.9		$	287.3
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Income from discontinued operations, net of tax	—			(13.3		)	(12.0		)	(25.3		)
(Gain) loss on sale of discontinued operations	(95.4		)	29.0			(114.2		)	(180.6		)
Minority interest in discontinued operations	—			—			0.1			0.1
Depreciation and amortization	—			36.3			175.4			211.7
Deferred financing costs amortization	0.5			1.3			7.4			9.2
Loss on early extinguishment of debt (including $4.1 million of noncash write-offs on deferred financing costs)	15.5			2.5			0.6			18.6
Foreign exchange (gain) loss	(19.2		)	—			11.4			(7.8		)
Fair value adjustment of derivatives	28.9			—			3.3			32.2
Bad debt provision	—			(0.8		)	(0.5		)	(1.3		)
Stock-based compensation	—			2.6			1.3			3.9
Deferred income taxes	20.7			(17.4		)	25.7			29.0
Loss (gain) on sale of assets and other	0.1			(4.0		)	(0.8		)	(4.7		)
Minority interest in continuing operations	—			—			7.9			7.9
Changes in assets and liabilities, net of the effect of foreign currency translation and acquisitions:
Accounts receivable	—			14.6			(7.5		)	7.1
Inventories	—			(9.5		)	(25.0		)	(34.5		)
Prepaid expenses and other assets	0.1			(1.0		)	(17.6		)	(18.5		)
Accounts payable	—			6.7			(5.1		)	1.6
Income taxes payable	11.0			(19.4		)	2.0			(6.4		)
Accrued expenses and other liabilities	(5.0		)	9.7			(3.9		)	0.8
Intercompany operating activities, net	(23.1		)	12.4			10.7			—
Net cash (used in) provided by operating activities of continuing operations	(0.1		)	36.3			294.1			330.3
Net cash provided by operating activities of discontinued operations	3.4			18.9			16.0			38.3
Net cash provided by operating activities	3.3			55.2			310.1			368.6
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, including transaction fees paid, net of cash acquired	(0.4		)	(164.9		)	(74.8		)	(240.1		)
Acquisitions, related intercompany	(235.1		)	154.3			80.8			—
Capital expenditures, excluding capital leases	—			(25.1		)	(168.1		)	(193.2		)
Proceeds from formation of Viance joint venture, net	—			51.5			21.5			73.0
Proceeds on sale of assets	(0.1		)	6.8			7.5			14.2
Net cash (used in) provided by investing activities of continuing operations	(235.6		)	22.6			(133.1		)	(346.1		)
Net cash provided by investing activities of discontinued operations, including sale proceeds of $731.7	165.1			65.5			493.1			723.7
Net cash (used in) provided by investing activities	(70.5		)	88.1			360.0			377.6
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of 2011 Notes	(273.4		)	—			—			(273.4		)
Repayment of senior secured credit facilities	(23.0		)	—			(34.1		)	(57.1		)
Repayment of senior secured credit facilities revolver	(37.0		)	—			—			(37.0		)
Payments on other long-term debt	—			—			(24.1		)	(24.1		)
Payments related to early extinguishment of debt	(14.5		)	—			—			(14.5		)
Distribution to minority shareholder	—			—			(7.2		)	(7.2		)
Intercompany financing related activity	269.8			(58.9		)	(210.9		)	—
Net cash used in financing activities of continuing operations	(78.1		)	(58.9		)	(276.3		)	(413.3		)
Net cash provided by (used in) financing activities of discontinued operations	49.7			—			(49.7		)	—
Net cash used in financing activities	(28.4		)	(58.9		)	(326.0		)	(413.3		)
Effect of exchange rate changes on cash and cash equivalents	2.6			0.3			(13.2		)	(10.3		)
Net (decrease) increase in cash and cash equivalents	(93.0		)	84.7			330.9			322.6
Less increase in cash and cash equivalents from discontinued operations, net (a)	—			—			(1.6		)	(1.6		)
(Decrease) increase in cash and cash equivalents from continuing operations	(93.0		)	84.7			329.3			321.0
Cash and cash equivalents of continuing operations, beginning of period	463.7			(169.0		)	(268.8		)	25.9
Cash and cash equivalents of continuing operations, end of period	$	370.7		$	(84.3	)	$	60.5		$	346.9

(a) Excludes net sale proceeds of $731.7 and intercompany transfers of $28.7.

121

ROCKWOOD SPECIALTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2006

(Dollars in millions)

	Parent			Guarantor			Non-Guarantor
	Company			Subsidiaries			Subsidiaries			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(9.2	)	$	(23.6	)	$	135.8		$	103.0
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Income from discontinued operations, net of tax	—			(10.3		)	(37.8		)	(48.1		)
Minority interest in discontinued operations	—			—			5.2			5.2
Depreciation and amortization	—			32.0			142.4			174.4
Deferred financing costs amortization	0.6			1.8			7.1			9.5
Foreign exchange gain	(1.9		)	—			(6.7		)	(8.6		)
Fair value adjustment of derivatives	(6.1		)	—			(1.1		)	(7.2		)
Bad debt provision	—			0.4			(0.5		)	(0.1		)
Deferred income taxes	12.2			(0.2		)	24.4			36.4
Impairment charges	—			—			2.2			2.2
Gain on sale of assets and other	—			1.7			(1.9		)	(0.2		)
Changes in assets and liabilities, net of the effect of foreign currency translation and acquisitions:
Accounts receivable	—			4.7			(26.8		)	(22.1		)
Inventories	—			2.1			(28.4		)	(26.3		)
Prepaid expenses and other assets	(2.1		)	4.7			20.5			23.1
Accounts payable	—			(8.2		)	18.3			10.1
Income taxes payable	8.7			(13.6		)	0.1			(4.8		)
Accrued expenses and other liabilities	11.5			7.8			(17.2		)	2.1
Intercompany operating activities, net	61.7			(61.0		)	(0.7		)	—
Net cash provided by (used in) operating activities of continuing operations	75.4			(61.7		)	234.9			248.6
Net cash provided by operating activities of discontinued operations	4.9			9.6			41.9			56.4
Net cash provided by (used in) operating activities	80.3			(52.1		)	276.8			305.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, including transfer fees paid, net of cash acquired	—			—			(45.7		)	(45.7		)
Acquisitions, related intercompany	12.6			(12.6		)	—			—
Capital expenditures, excluding capital leases	—			(32.2		)	(132.9		)	(165.1		)
Proceeds from sale of assets	—			0.2			4.1			4.3
Net cash provided by (used in) investing activities of continuing operations	12.6			(44.6		)	(174.5		)	(206.5		)
Net cash used in investing activities of discontinued operations	—			(1.7		)	(40.6		)	(42.3		)
Net cash provided by (used in) investing activities	12.6			(46.3		)	(215.1		)	(248.8		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution	(31.6		)	—			31.6			—
Proceeds from senior secured credit facilities	81.0			—			158.1			239.1
Repayment of senior secured credit facilities	(93.7		)	—			(181.9		)	(275.6		)
Payments on other long-term debt	—			—			(20.1		)	(20.1		)
Intercompany dividends and other	12.4			(12.4		)	—			—
Intercompany debt related	288.7			(28.7		)	(260.0		)	—
Net cash provided by (used in) financing activities of continuing operations	256.8			(41.1		)	(272.3		)	(56.6		)
Net cash provided by (used in) financing activities of discontinued operations	3.0			(1.9		)	(47.3		)	(46.2		)
Net cash provided by (used in) financing activities	259.8			(43.0		)	(319.6		)	(102.8		)
Effect of exchange rate changes on cash and cash equivalents	1.6			—			(15.4		)	(13.8		)
Net increase (decrease) in cash and cash equivalents	354.3			(141.4		)	(273.3		)	(60.4		)
Less increase in cash and cash equivalents from discontinued operations, net (a)	—			—			(10.1		)	(10.1		)
Increase (decrease) in cash and cash equivalents from continuing operations	354.3			(141.4		)	(283.4		)	(70.5		)
Cash and cash equivalents of continuing operations, beginning of period	109.4			(27.6		)	14.6			96.4
Cash and cash equivalents of continuing operations, end of period	$	463.7		$	(169.0	)	$	(268.8	)	$	25.9

(a) Excludes intercompany transfers of $(42.2).

122

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A(T). Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2008 and concluded that our disclosure controls and procedures are effective. In connection with this evaluation, our management did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting during the fourth quarter of 2008.

123

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Rockwood Specialties Group, Inc. and subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

Our disclosure controls and procedures are designed to ensure that (a) information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework. Based on this assessment, management believes that, as of December 31, 2008, the Company’s internal control over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of the Company’s registered public accounting firm, Deloitte & Touche LLP, regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management’s report in this annual report.

/s/ SEIFI GHASEMI

Seifi Ghasemi

Chairman and Chief Executive Officer

March 11, 2009

/s/ ROBERT J. ZATTA

Robert J. Zatta

Senior Vice President and Chief Financial Officer

March 11, 2009

124

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Omitted.

Item 11. Executive Compensation.

Omitted.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Omitted.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Omitted.

Item 14. Principal Accounting Fees and Services.

The audit committee has adopted a formal policy concerning the pre-approval of audit and non-audit services to be provided by the independent registered public accounting firm to Rockwood. The policy requires that all services to be performed by Deloitte & Touche LLP and its affiliates, including audit services, audit-related services and permitted non-audit services, be pre-approved by the audit committee. Specific services being provided by the independent accountants are regularly reviewed in accordance with the pre-approval policy. At each subsequent audit committee meeting, the audit committee receives updates on the services actually provided by the independent accountants, and management may present additional services for approval. For 2008, the audit committee pre-approved all audit, audit-related and non-audit services performed by Deloitte & Touche LLP.

The following table summarizes aggregate fees billed to us by Deloitte & Touche LLP and its affiliates for the fiscal years below, calculated in part based on amounts billed through December 31, 2008, with the following notes explaining the services underlying the table captions:

($ in millions)	2008		2007
Audit fees (a)	$	9.0	$	10.8
Audit-related fees (b)	0.5		0.5
Tax fees (c)	1.2		0.5
All other fees (d)	—		0.2
Total	$	10.7	$	12.0

(a)	Includes fees for the integrated audit of our annual consolidated financial statements and internal control over financial reporting (Holdings), audits required by federal regulatory bodies, audits of joint ventures which Rockwood consolidates, review of the consolidated financial statements included in our Form 10-Qs, various services in connection with other SEC filings of Holdings, comfort letters and foreign subsidiary statutory audits.
(b)	Includes fees for services related to due diligence reviews of potential and consummated mergers, acquisitions and dispositions.
(c)	Includes fees for services related to tax compliance, including preparation of U.S. and foreign tax returns, responses to tax authorities and assistance on tax appeals and audits; tax planning and advice, including potential and completed restructuring of existing organizations and advice related to tax structuring for mergers, acquisitions and divestitures.
(d)	Includes fees related to services provided in connection with benefit plans of acquired companies.

125

PART IV

Item 15. Exhibits and Financial Statement Schedules.

List of documents filed as part of this report:

		Page No.
1.	Financial Statements:
	Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006	69
	Consolidated Balance Sheets as of December 31, 2008 and 2007	70
	Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006	71
	Consolidated Statements of Changes in Stockholder’s Equity for the years ended December 31, 2008, 2007 and 2006	72
	Notes to Consolidated Financial Statements	73
2.	Financial Statement Schedules.
	None
3.	Exhibits.	127

126

3.     Exhibits:

Exhibit No.	Description of Exhibit
2.1 (A)	Business and Share Sale and Purchase Agreement, dated September 25, 2000 between Rockwood Holdings, Inc. and Laporte plc
2.2 (B)	Sale and Purchase Agreement, dated April 19, 2004 among mg technologies ag and MG North America Holdings Inc., as Sellers and other parties named as purchasers therein
2.3(L)	Share Purchase Agreement dated November 29, 2006 by and among Rockwood Specialties Group GmbH and Gilde Buyout Partners BV, Banexi Capital and Groupe Novasep management.
2.4 (M)	Stock Purchase Agreement dated as of October 7, 2007 by and between Rockwood Specialties Group, Inc. and OM Group, Inc.
3.1 (A)	Amended and Restated Certificate of Incorporation of Rockwood Specialties Group, Inc., as amended
3.2 (A)	By-Laws of Rockwood Specialties Group, Inc.
4.1 (C)	Indenture, dated as of November 10, 2004, among Rockwood Specialties Group, Inc., the Guarantors named therein and The Bank of New York, as Trustee
10.1 (D)	Credit Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative agent and Collateral agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.2 (E)	First Amendment, dated as of October 8, 2004, to the Credit Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative agent and Collateral agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.3 (F)	Second Amendment, dated as of December 10, 2004, to the Credit Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative agent and Collateral agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.4 (K)	Third Amendment, dated as of December 13, 2005, to the Credit Agreement dated as of July 30, 2004 and as amended by the First Amendment dated as of October 8, 2004 and by the Second Amendment dated as of December 10, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse (formerly known as Credit Suisse First Boston), acting through its Cayman Islands Branch, as Administrative Agent and Collateral Agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.5 (N)	Fourth Amendment, dated as of March 23, 2007, to the Credit Agreement dated as of July 30, 2004 and as amended by the First Amendment dated as of October 8, 2004, by the Second Amendment dated as of December 10, 2004 and by the Third Amendment dated as of December 13, 2005, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse (formerly known as Credit Suisse First Boston), acting through its Cayman Islands Branch, as Administrative Agent and Collateral Agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.6(D)	Security Agreement, dated as of July 30, 2004, among Rockwood Specialties International, Inc., Rockwood Specialties Group, Inc., as US Borrower, the Subsidiaries of the U.S. Borrower named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent
10.7(D)	Pledge Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., as U.S. Borrower, the Subsidiaries of the U.S. Borrower named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent
10.8(D)	Guarantee, dated as of July 30, 2004, among Rockwood Specialties International, Inc., Rockwood Specialties Group, Inc., as U.S. Borrower, the Subsidiaries of the U.S. Borrower named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent
10.9(D)	Guarantee, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., the Subsidiaries of Rockwood Specialties Limited named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent

127

10.10(D)	Guarantee, dated as of July 30, 2004, among the Subsidiaries of Rockwood Specialties Group, Inc. named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, UBS Securities LLC and Goldman Sachs Credit Partners L.P. and UBS AG, Stamford Branch, as Agents
10.11(A)	Deed of Tax Covenant dated September 25, 2000 between Rockwood Holdings, Inc. and Laporte plc
10.12(A)	Environmental Deed dated September 25, 2000 between Rockwood Holdings, Inc. and Laporte plc
10.13(A)	Form of Management Stockholder’s Agreement, dated as of February 2, 2001, between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.14(I)	Form of Management Stockholder’s Agreement, dated as of November 30, 2004 between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.15(I)	Form of Amended and Restated Management Stockholder’s Agreement, dated as of October, 2004, between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.16(A)	Form of Sale Participation Agreement, dated as of January 30, 2001, among Rockwood Holdings, Inc., each Management Stockholder party to the Management Stockholders’ Agreement, dated as of January 30, 2001, KKR Partners II L.P. and KKR 1996 Fund L.P.
10.17(I)	Form of Sale Participation Agreement, dated as of November 30, 2004, among KKR 1996 Fund L.P., KKR Partners II L.P., KKR Millennium Fund, L.P., KKR Partners III, L.P. and KKR European Fund, Limited Partnership and each Management Stockholder (as defined therein)
10.18(I)	Form of Amended and Restated Sale Participation Agreement, dated as of October, 2004, between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.19(A)	Form of Pledge Agreement in favor of Rockwood Specialties, Inc. made by an executive officer in connection with 2001 management equity program
10.20(A)	Form of Promissory Note made by an executive officer in connection with 2001 management equity program
10.21(G)	Amended and Restated Management Stockholder’s Agreement, dated as of September 24, 2004, between Rockwood Holdings, Inc. and Seifi Ghasemi
10.22(G)	Amended and Restated Sale Participation Agreement, dated as of September 24, 2004, among Seifi Ghasemi, KKR 1996 Fund L.P., KKR Partners II, L.P., KKR Millennium Fund, L.P., KKR Partners III, L.P. and KKR European Fund, Limited Partnership
10.23(G)	Time Stock Option Agreement, dated as of September 24, 2004, between Rockwood Holdings, Inc. and Seifi Ghasemi (included as Exhibit A to the Second Amendment to the Employment Agreement listed as Exhibit 10.37 herewith)
10.24(J)	Time/Performance Stock Option Agreement, dated as of September 24, 2004, between Rockwood Holdings, Inc. and Seifi Ghasemi
10.25(H)	Amended and Restated Management Stockholder’s Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.26(H)	Time/Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.27(H)	Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.28(H)	Amended and Restated Sale Participation Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.29(I)	Amendment to Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.30(H)	Amended and Restated Management Stockholder’s Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.31(H)	Time/Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.32(H)	Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.33(H)	Amended and Restated Sale Participation Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.34(I)	Amendment to Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.35(A)	Employment Agreement dated as of September 28, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi
10.36(G)	First Amendment, dated as of August 9, 2004, to the Employment Agreement dated as of September 28, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi
10.37(G)	Second Amendment, dated as of September 24, 2004, to the Employment Agreement dated as of September 28, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi

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10.38(R)	Amended and Restated Employment Agreement, dated November 13, 2008, by and between Rockwood Holdings, Inc. and Seifollah Ghasemi
10.39(A)	Employment Agreement dated as of March 21, 2001 between Rockwood Specialties, Inc. and Robert J. Zatta
10.40(H)	Amendment, dated as of October 15, 2004, to the Employment Agreement, dated as of March 21, 2001 between Rockwood Specialties, Inc. and Robert J. Zatta
10.41(R)	Employment Agreement, dated November 13, 2008, by and between Rockwood Holdings, Inc. and Robert J. Zatta
10.42(A)	Employment Agreement dated as of October 14, 1994 and amended as of August 26, 1999 between Laporte Inc. and Thomas J. Riordan
10.43(R)	Employment Agreement, dated November 13, 2008, by and between Rockwood Holdings, Inc. and Thomas Riordan
10.44*	Profit-Sharing/401(K) Plan for Employees of Rockwood Specialties, Inc. as amended and restated effective as of January 1, 2009
10.45*	The Rockwood Specialties, Inc. Money Purchase Pension Plan as amended and restated effective as of January 1, 2009
10.46*	Supplementary Savings Plan of Rockwood Specialties, Inc. as amended and restated effective as of January 1, 2009
10.47(A)	Rockwood Specialties, Inc. Deferred Compensation Plan
10.48(I)	Management Services Agreement dated as of July 29, 2004 between Kohlberg Kravis Roberts & Co. L.P., DLJ Merchant Banking Partners III, L.P. and Rockwood Holdings, Inc.
10.49(I)	Termination Agreement dated as of May 13, 2005 between Kohlberg Kravis Roberts & Co. L.P., DLJ Merchant Banking Partners III, L.P. and Rockwood Holdings, Inc.
10.50(I)	Restricted Stock Unit Award Agreement effective as of November 1, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi
10.51(I)	Form of 2001 Stock Option Agreement, dated as of February 2, 2001, between K-L Holdings, Inc. and an employee of the Company or a Subsidiary or Affiliate of the Company.
10.52(I)	Form of 2004 Stock Option Agreement between Rockwood Holdings, Inc. and an employee of the Company or a Subsidiary or Affiliate of the Company.
10.53*	2008 Amended and Restated Stock Purchase and Option Plan for Rockwood Holdings, Inc. and Subsidiaries
10.54 (I)	Short-Term Incentive Plan for Rockwood Holdings, Inc. and Subsidiaries
10.55(I)	Form of Non-Employee Director Stock Option Agreement
10.56(O)	Form of Company’s Stock Option Agreement (May 2007)
10.57(O)	Form of Performance Restricted Stock Unit Award Agreement (May 2007)
10.58(P)	Form of Company’s Stock Option Agreement (December 2007)
10.59(P)	Form of Performance Restricted Stock Unit Award Agreement (December 2007)
10.60(Q)	Master Agreement, dated May 21, 2008, by and among, Rockwood Holdings, Inc., Rockwood Specialties Group, Inc. and certain of their affiliates and Kemira Oyj and certain of its affiliates
10.61(Q)	Shareholders’ and Joint Venture Agreement, dated May 21, 2008, by and among, Rockwood Holdings, Inc., Rockwood Specialties Group, Inc. and certain of their affiliates and Kemira Oyj and certain of its affiliates
10.62(Q)	Share and Asset Purchase and Transfer Agreement, dated May 21, 2008, by and among, Rockwood Holdings, Inc., Rockwood Specialties Group, Inc. and certain of their affiliates and Kemira Oyj and certain of its affiliates
10.63(Q)	Facility Agreement, made between Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs GmbH, Sachtleben Chemie GmbH, White Pigments Holding Oy, and Kemira Pigments Oy, Merchant Banking, Skandinaviska Enskilda Banken AB as Agent, Security Agent and Issuing Bank; and Nordea Bank Finland Plc as Arranger and Original Lender; and the lenders party thereto
10.64*	Facility Agreement, as amended and restated, made between Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs GmbH, Sachtleben Chemie GmbH, White Pigments Holding Oy, and Kemira Pigments Oy, Merchant Banking, Skandinaviska Enskilda Banken AB as Agent, Security Agent and Issuing Bank; and Nordea Bank Finland Plc as Arranger and Original Lender; and the lenders party thereto
10.65(S)	Form of Stock Option Agreement (December 2008)
10.66(S)	Form of Restricted Stock Unit Award Agreement (December 2008)
10.67(S)	Form of Performance Restricted Stock Unit Award Agreement (December 2008)
12*	Computation of Ratio of Earnings to Fixed Charges
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1	Section 1350 Certification of Chief Executive Officer. This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 or any other provision of the Securities Exchange Act of 1934, as amended.

129

32.2 Section 1350 Certification of Chief Financial Officer. This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 or any other provision of the Securities Exchange Act of 1934, as amended.

*	Filed herewith.
(A)	Incorporated by reference to Rockwood Specialties Group, Inc.’s Registration Statement on Form S-4 (File No. 333-109686).
(B)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on May 4, 2004.
(C)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on November 12, 2004.
(D)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on August 4, 2004.
(E)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on October 12, 2004.
(F)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on December 14, 2004.
(G)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on September 30, 2004.
(H)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on October 19, 2004.
(I)	Incorporated by reference to Rockwood Holdings, Inc.’s Registration Statement on Form S-1 (File No. 333-122764).
(J)	Incorporated by reference to the Annual Report on Form 10-K of the Rockwood Specialties Group, Inc. filed on April 29, 2005.
(K)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 15, 2005.
(L)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 16, 2007.
(M)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 7, 2008.
(N)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 27, 2007.
(O)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 22, 2007.
(P)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 20, 2007.
(Q)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on August 6, 2008.
(R)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 13, 2008.
(S)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 12, 2008.

130

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROCKWOOD SPECIALTIES GROUP, INC.
By:	/s/ SEIFI GHASEMI
	Seifi Ghasemi
	Chairman and Chief Executive Officer
	Date: March 11, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated

Name		Title	Date
/s/	SEIFI GHASEMI	Chairman and Chief Executive Officer and Director	March 11, 2009
By:	Seifi Ghasemi	(Principal Executive Officer)
/s/	ROBERT J. ZATTA	Senior Vice President and Chief Financial Officer	March 11, 2009
By:	Robert J. Zatta	(Principal Financial Officer)
/s/	THOMAS J. RIORDAN	Senior Vice President Law & Administration and Director	March 11, 2009
By:	Thomas J. Riordan
/s/	JAMES T. SULLIVAN	Corporate Controller and Treasurer	March 11, 2009
By:	James T. Sullivan	(Principal Accounting Officer)

131

Exhibit Index

Exhibit No.	Description of Exhibit
2.1 (A)	Business and Share Sale and Purchase Agreement, dated September 25, 2000 between Rockwood Holdings, Inc. and Laporte plc
2.2 (B)	Sale and Purchase Agreement, dated April 19, 2004 among mg technologies ag and MG North America Holdings Inc., as Sellers and other parties named as purchasers therein
2.3(L)	Share Purchase Agreement dated November 29, 2006 by and among Rockwood Specialties Group GmbH and Gilde Buyout Partners BV, Banexi Capital and Groupe Novasep management.
2.4 (M)	Stock Purchase Agreement dated as of October 7, 2007 by and between Rockwood Specialties Group, Inc. and OM Group, Inc.
3.1 (A)	Amended and Restated Certificate of Incorporation of Rockwood Specialties Group, Inc., as amended
3.2 (A)	By-Laws of Rockwood Specialties Group, Inc.
4.1 (C)	Indenture, dated as of November 10, 2004, among Rockwood Specialties Group, Inc., the Guarantors named therein and The Bank of New York, as Trustee
10.1 (D)	Credit Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative agent and Collateral agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.2 (E)	First Amendment, dated as of October 8, 2004, to the Credit Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative agent and Collateral agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.3 (F)	Second Amendment, dated as of December 10, 2004, to the Credit Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative agent and Collateral agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.4 (K)	Third Amendment, dated as of December 13, 2005, to the Credit Agreement dated as of July 30, 2004 and as amended by the First Amendment dated as of October 8, 2004 and by the Second Amendment dated as of December 10, 2004, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse (formerly known as Credit Suisse First Boston), acting through its Cayman Islands Branch, as Administrative Agent and Collateral Agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.5 (N)	Fourth Amendment, dated as of March 23, 2007, to the Credit Agreement dated as of July 30, 2004 and as amended by the First Amendment dated as of October 8, 2004, by the Second Amendment dated as of December 10, 2004 and by the Third Amendment dated as of December 13, 2005, among Rockwood Specialties Group, Inc., Rockwood Specialties Limited, Rockwood Specialties International, Inc., the lenders party thereto, Credit Suisse (formerly known as Credit Suisse First Boston), acting through its Cayman Islands Branch, as Administrative Agent and Collateral Agent, and UBS Securities LLC and Goldman Sachs Credit Partners L.P., as Co-Syndication Agents
10.6(D)	Security Agreement, dated as of July 30, 2004, among Rockwood Specialties International, Inc., Rockwood Specialties Group, Inc., as US Borrower, the Subsidiaries of the U.S. Borrower named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent
10.7(D)	Pledge Agreement, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., as U.S. Borrower, the Subsidiaries of the U.S. Borrower named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent
10.8(D)	Guarantee, dated as of July 30, 2004, among Rockwood Specialties International, Inc., Rockwood Specialties Group, Inc., as U.S. Borrower, the Subsidiaries of the U.S. Borrower named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent
10.9(D)	Guarantee, dated as of July 30, 2004, among Rockwood Specialties Group, Inc., the Subsidiaries of Rockwood Specialties Limited named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent
10.10(D)	Guarantee, dated as of July 30, 2004, among the Subsidiaries of Rockwood Specialties Group, Inc. named therein and Credit Suisse First Boston, acting through its Cayman Islands Branch, UBS Securities LLC and Goldman Sachs Credit Partners L.P. and UBS AG, Stamford Branch, as Agents

132

10.11(A)	Deed of Tax Covenant dated September 25, 2000 between Rockwood Holdings, Inc. and Laporte plc
10.12(A)	Environmental Deed dated September 25, 2000 between Rockwood Holdings, Inc. and Laporte plc
10.13(A)	Form of Management Stockholder’s Agreement, dated as of February 2, 2001, between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.14(I)	Form of Management Stockholder’s Agreement, dated as of November 30, 2004 between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.15(I)	Form of Amended and Restated Management Stockholder’s Agreement, dated as of October, 2004, between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.16(A)	Form of Sale Participation Agreement, dated as of January 30, 2001, among Rockwood Holdings, Inc., each Management Stockholder party to the Management Stockholders’ Agreement, dated as of January 30, 2001, KKR Partners II L.P. and KKR 1996 Fund L.P.
10.17(I)	Form of Sale Participation Agreement, dated as of November 30, 2004, among KKR 1996 Fund L.P., KKR Partners II L.P., KKR Millennium Fund, L.P., KKR Partners III, L.P. and KKR European Fund, Limited Partnership and each Management Stockholder (as defined therein)
10.18(I)	Form of Amended and Restated Sale Participation Agreement, dated as of October, 2004, between Rockwood Holdings, Inc. and each Management Stockholder (as defined therein)
10.19(A)	Form of Pledge Agreement in favor of Rockwood Specialties, Inc. made by an executive officer in connection with 2001 management equity program
10.20(A)	Form of Promissory Note made by an executive officer in connection with 2001 management equity program
10.21(G)	Amended and Restated Management Stockholder’s Agreement, dated as of September 24, 2004, between Rockwood Holdings, Inc. and Seifi Ghasemi
10.22(G)	Amended and Restated Sale Participation Agreement, dated as of September 24, 2004, among Seifi Ghasemi, KKR 1996 Fund L.P., KKR Partners II, L.P., KKR Millennium Fund, L.P., KKR Partners III, L.P. and KKR European Fund, Limited Partnership
10.23(G)	Time Stock Option Agreement, dated as of September 24, 2004, between Rockwood Holdings, Inc. and Seifi Ghasemi (included as Exhibit A to the Second Amendment to the Employment Agreement listed as Exhibit 10.37 herewith)
10.24(J)	Time/Performance Stock Option Agreement, dated as of September 24, 2004, between Rockwood Holdings, Inc. and Seifi Ghasemi
10.25(H)	Amended and Restated Management Stockholder’s Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.26(H)	Time/Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.27(H)	Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.28(H)	Amended and Restated Sale Participation Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.29(I)	Amendment to Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Robert J. Zatta
10.30(H)	Amended and Restated Management Stockholder’s Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.31(H)	Time/Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.32(H)	Performance Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.33(H)	Amended and Restated Sale Participation Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.34(I)	Amendment to Stock Option Agreement, dated as of October 15, 2004, between Rockwood Holdings, Inc. and Thomas J. Riordan
10.35(A)	Employment Agreement dated as of September 28, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi
10.36(G)	First Amendment, dated as of August 9, 2004, to the Employment Agreement dated as of September 28, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi
10.37(G)	Second Amendment, dated as of September 24, 2004, to the Employment Agreement dated as of September 28, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi
10.38(R)	Amended and Restated Employment Agreement, dated November 13, 2008, by and between Rockwood Holdings, Inc. and Seifollah Ghasemi
10.39(A)	Employment Agreement dated as of March 21, 2001 between Rockwood Specialties, Inc. and Robert J. Zatta

133

10.40(H)	Amendment, dated as of October 15, 2004, to the Employment Agreement, dated as of March 21, 2001 between Rockwood Specialties, Inc. and Robert J. Zatta
10.41(R)	Employment Agreement, dated November 13, 2008, by and between Rockwood Holdings, Inc. and Robert J. Zatta
10.42(A)	Employment Agreement dated as of October 14, 1994 and amended as of August 26, 1999 between Laporte Inc. and Thomas J. Riordan
10.43(R)	Employment Agreement, dated November 13, 2008, by and between Rockwood Holdings, Inc. and Thomas Riordan
10.44*	Profit-Sharing/401(K) Plan for Employees of Rockwood Specialties, Inc. as amended and restated effective as of January 1, 2009
10.45*	The Rockwood Specialties, Inc. Money Purchase Pension Plan as amended and restated effective as of January 1, 2009
10.46*	Supplementary Savings Plan of Rockwood Specialties, Inc. as amended and restated effective as of January 1, 2009
10.47(A)	Rockwood Specialties, Inc. Deferred Compensation Plan
10.48(I)	Management Services Agreement dated as of July 29, 2004 between Kohlberg Kravis Roberts & Co. L.P., DLJ Merchant Banking Partners III, L.P. and Rockwood Holdings, Inc.
10.49(I)	Termination Agreement dated as of May 13, 2005 between Kohlberg Kravis Roberts & Co. L.P., DLJ Merchant Banking Partners III, L.P. and Rockwood Holdings, Inc.
10.50(I)	Restricted Stock Unit Award Agreement effective as of November 1, 2001 between Rockwood Holdings, Inc. and Seifi Ghasemi
10.51(I)	Form of 2001 Stock Option Agreement, dated as of February 2, 2001, between K-L Holdings, Inc. and an employee of the Company or a Subsidiary or Affiliate of the Company.
10.52(I)	Form of 2004 Stock Option Agreement between Rockwood Holdings, Inc. and an employee of the Company or a Subsidiary or Affiliate of the Company.
10.53*	2008 Amended and Restated Stock Purchase and Option Plan for Rockwood Holdings, Inc. and Subsidiaries
10.54 (I)	Short-Term Incentive Plan for Rockwood Holdings, Inc. and Subsidiaries
10.55(I)	Form of Non-Employee Director Stock Option Agreement
10.56(O)	Form of Company’s Stock Option Agreement (May 2007)
10.57(O)	Form of Performance Restricted Stock Unit Award Agreement (May 2007)
10.58(P)	Form of Company’s Stock Option Agreement (December 2007)
10.59(P)	Form of Performance Restricted Stock Unit Award Agreement (December 2007)
10.60(Q)	Master Agreement, dated May 21, 2008, by and among, Rockwood Holdings, Inc., Rockwood Specialties Group, Inc. and certain of their affiliates and Kemira Oyj and certain of its affiliates
10.61(Q)	Shareholders’ and Joint Venture Agreement, dated May 21, 2008, by and among, Rockwood Holdings, Inc., Rockwood Specialties Group, Inc. and certain of their affiliates and Kemira Oyj and certain of its affiliates
10.62(Q)	Share and Asset Purchase and Transfer Agreement, dated May 21, 2008, by and among, Rockwood Holdings, Inc., Rockwood Specialties Group, Inc. and certain of their affiliates and Kemira Oyj and certain of its affiliates
10.63(Q)	Facility Agreement, made between Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs GmbH, Sachtleben Chemie GmbH, White Pigments Holding Oy, and Kemira Pigments Oy, Merchant Banking, Skandinaviska Enskilda Banken AB as Agent, Security Agent and Issuing Bank; and Nordea Bank Finland Plc as Arranger and Original Lender; and the lenders party thereto
10.64*	Facility Agreement, as amended and restated, made between Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs GmbH, Sachtleben Chemie GmbH, White Pigments Holding Oy, and Kemira Pigments Oy, Merchant Banking, Skandinaviska Enskilda Banken AB as Agent, Security Agent and Issuing Bank; and Nordea Bank Finland Plc as Arranger and Original Lender; and the lenders party thereto
10.65(S)	Form of Stock Option Agreement (December 2008)
10.66(S)	Form of Restricted Stock Unit Award Agreement (December 2008)
10.67(S)	Form of Performance Restricted Stock Unit Award Agreement (December 2008)
12*	Computation of Ratio of Earnings to Fixed Charges
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1	Section 1350 Certification of Chief Executive Officer. This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 or any other provision of the Securities Exchange Act of 1934, as amended.
32.2	Section 1350 Certification of Chief Financial Officer. This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 or any other provision of the Securities Exchange Act of 1934, as amended.

* Filed herewith.

134

(A)	Incorporated by reference to Rockwood Specialties Group, Inc.’s Registration Statement on Form S-4 (File No. 333-109686).
(B)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on May 4, 2004.
(C)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on November 12, 2004.
(D)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on August 4, 2004.
(E)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on October 12, 2004.
(F)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on December 14, 2004.
(G)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on September 30, 2004.
(H)	Incorporated by reference to the Current Report on Form 8-K of Rockwood Specialties Group, Inc filed on October 19, 2004.
(I)	Incorporated by reference to Rockwood Holdings, Inc.’s Registration Statement on Form S-1 (File No. 333-122764).
(J)	Incorporated by reference to the Annual Report on Form 10-K of the Rockwood Specialties Group, Inc. filed on April 29, 2005.
(K)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 15, 2005.
(L)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 16, 2007.
(M)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 7, 2008.
(N)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 27, 2007.
(O)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 22, 2007.
(P)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 20, 2007.
(Q)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on August 6, 2008.
(R)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 13, 2008.
(S)	Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 12, 2008.

135

EX-10.44

Exhibit 10.44

PROFIT-SHARING/401(K) PLAN

FOR EMPLOYEES OF

ROCKWOOD SPECIALTIES INC.

As Amended and Restated Effective as of January 1, 2008

(Except as otherwise Provided)

TABLE OF CONTENTS

		Page
INTRODUCTION		1
ARTICLE I DEFINITIONS		2
1.1	Account	2
1.2	Account Balance	2
1.3	Actual Deferral Percentage	2
1.4	Administrative Committee	2
1.5	Affiliate	2
1.6	Annuity Contract	2
1.7	Average Actual Deferral Percentage	3
1.8	Average Contribution Percentage	3
1.9	Beneficiary	3
1.10	Benefit Commencement Date	3
1.11	Break-in-Service	3
1.12	Change Date	4
1.13	Code	4
1.14	Company	4
1.15	Compensation	4
1.16	Contribution Percentage	5
1.17	Defined Benefit Plan	5
1.18	Defined Contribution Plan	6
1.19	Disability	6
1.20	Effective Date	6
1.21	Elective 401(k) Deferrals	6
1.22	Eligible Employee	6
1.23	Eligible Participant	6
1.24	Employee	7
1.25	Employer	7
1.26	Employer-Derived Account Balance	7
1.27	Employer Matching Contributions	7
1.28	Employer Matching Contributions Subaccount	7
1.29	Employment	7
1.30	Employment Commencement Date	7
1.31	Entry Date	7
1.32	ERISA	7
1.33	Excess Aggregate Contributions	7
1.34	Excess Contributions	7
1.35	Excess Deferral	8

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1.36	401(k) Election	8
1.37	401(k) Subaccount	8
1.38	Highly Compensated Employee	8
1.39	Hour of Service	8
1.40	Investment Fund	9
1.41	Investment Manager	9
1.42	Leased Employee	9
1.43	Leave of Absence	10
1.44	Non-Highly Compensated Employee	10
1.45	Normal Retirement Age	10
1.46	Participant	10
1.47	Participating Affiliate	10
1.48	Period of Service	10
1.49	Period of Severance	10
1.50	Plan	10
1.51	Plan Year	10
1.52	Primary Employee	10
1.53	Profit-Sharing Contribution	10
1.54	Profit-Sharing Contributions Subaccount	10
1.55	Reduction in Force	10
1.56	Rollover Contribution	10
1.57	Rollover Contributions Subaccount	11
1.58	Seconded Employee	11
1.59	Severance from Service Date	11
1.60	Spousal Consent	11
1.61	Spouse	11
1.62	Surviving Spouse	11
1.63	Termination of Employment	11
1.64	Trust	11
1.65	Trust Agreement	11
1.66	Trustee	11
1.67	Valuation Date	12
1.68	Vesting Service	12
1.69	Year of Service	12
ARTICLE II PARTICIPATION		13
2.1	Admission as a Participant	13
2.2	Rehired Employees	13
2.3	Termination of Participation	14
2.4	Rollover Membership	14
ARTICLE III CONTRIBUTIONS		15
3.1	Employer Contributions	15
3.2	After-Tax Contributions	18
3.3	Elective 401(k) Deferral Limitations	18
3.4	Employer Matching Contribution Limitations	21

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3.5	Rollover Contributions	23
3.6	Timing of Contributions	23
3.7	Forfeitures	24
3.8	Limitation on Allocations	24
3.9	[Reserved]	27
3.10	Return of Employer Contributions Under Special Circumstances	27
3.11	Profits Not Required	27
3.12	Contributions Conditioned on Deductibility	27
ARTICLE IV ACCOUNTS, INVESTMENTS AND ALLOCATIONS		28
4.1	Establishment of Participant Accounts	28
4.2	Investment of Funds	28
4.3	Allocation of Earnings to Accounts	28
4.4	Allocation Report	29
4.5	Allocation Corrections	29
ARTICLE V VESTING AND TOP-HEAVY PROVISIONS		30
5.1	Determination of Vesting	30
5.2	Rules for Crediting Vesting Service	30
5.3	Rules for Crediting Service Upon Termination of Employment	31
5.4	Top-Heavy Provisions	32
ARTICLE VI AMOUNT AND PAYMENT OF BENEFITS TO PARTICIPANTS		36
6.1	Termination of Employment	36
6.2	In-Service Distributions	37
6.3	Loans	38
6.4	Minimum Required Distributions	40
ARTICLE VII FORMS OF PAYMENT OF ACCOUNTS		45
7.1	Methods of Distribution	45
7.2	Election of Optional Forms	45
7.3	Direct Rollovers	45
ARTICLE VIII DEATH BENEFITS		47
8.1	Payment of Account Balances	47
8.2	Beneficiary	47
8.3	Required Commencement	47
ARTICLE IX FIDUCIARIES		48
9.1	Named Fiduciaries	48
9.2	Employment of Advisers	48
9.3	Multiple Fiduciary Capacities	48
9.4	Payment of Expenses	48
9.5	Indemnification	48
ARTICLE X TRUSTEE AND TRUST FUND		50

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10.1	Establishment of Trust	50
10.2	Powers and Duties of the Trustee	50
10.3	Exclusive Benefit	50
10.4	Delegation of Responsibility	50
ARTICLE XI PLAN ADMINISTRATION		51
11.1	The Administrative Committee	51
11.2	Administrative Committee Powers and Duties	51
11.3	Claims Procedure	52
11.4	Delegation of Responsibility	54
ARTICLE XII MANAGEMENT, CONTROL AND INVESTMENT OF PLAN ASSETS		55
12.1	Investment Funds	55
12.2	Valuation of Accounts	55
12.3	Investment in Insurance Contract	55
12.4	The Investment Manager	55
12.5	Compensation	56
ARTICLE XIII PLAN AMENDMENT OR TERMINATION		57
13.1	Plan Amendment	57
13.2	Limitations of Plan Amendment	57
13.3	Right of the Company to Terminate Plan	57
13.4	Effect of Partial or Complete Termination	58
ARTICLE XIV MISCELLANEOUS PROVISIONS		59
14.1	Plan Not a Contract of Employment	59
14.2	Source of Benefits	59
14.3	Benefits Not Assignable	59
14.4	Domestic Relations Orders	59
14.5	Benefits Payable to Minors, Incompetents and Others	59
14.6	Merger or Transfer of Assets	60
14.7	Participation in the Plan By an Affiliate	60
14.8	Action by the Company or a Participating Affiliate	60
14.9	Provision of Information	61
14.10	Notice of Address	61
14.11	Controlling Law	61
14.12	Military Service	61
14.13	Conditional Adoption	61
14.14	Word Usage and Article and Section References	61
14.15	Effect of Mistake	61

SUPPLEMENT A	64
SUPPLEMENT B	66
SUPPLEMENT C	68

iv

SUPPLEMENT D	70
SUPPLEMENT E	72

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INTRODUCTION

Laporte Inc. established the Profit-Sharing/401(k) Plan for Employees of Laporte Inc. (the “Plan”) effective as of January 1, 1989. The Plan was amended from time to time for administrative reasons, to reflect changes in the Laporte Inc. corporate structure, and to comply with changes in relevant law.

The Plan was amended and restated effective as of January 1, 1997 (except where otherwise indicated), to comply with the Uruguay Round Agreements Act (“GATT”), the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), the Small Business Job Protection Act of 1996 (“SBJPA”), the Taxpayer Relief Act of 1997 (TRA ‘97), the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA ‘98), and the Community Renewal Tax Relief Act of 2000 (“CRA”) (collectively known as “GUST”), and other changes in applicable law.

Effective as of March 1, 2001, the Plan name was changed to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. to reflect the acquisition of Laporte Inc. by Rockwood Specialties Inc. (the “Company”).

This Plan was amended and restated effective as of January 1, 2002 (except where otherwise indicated) to reflect the applicable provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”).

The Plan is hereby amended and restated effective as of January 1, 2008 (except where otherwise indicated), to incorporate all effective amendments to the Plan since the Plan’s last amendments and restatement, and to reflect applicable legislative changes, including changes under EGTRRA, the Pension Protection Act of 2006, and the final regulations under Code Section 415.

The Company intends that this Plan and the related Trust qualify under all applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and each of the terms of this Plan and the related Trust Agreement shall be so interpreted.

The benefits provided under the Plan to any Participant who terminates Employment, retires or dies while employed by the Company or any Affiliate thereof shall be determined in accordance with the provisions of the Plan as in effect on the date of such Termination of Employment (unless such person is thereafter reeemployed and again becomes a Participant in the Plan), retirement or death.

ARTICLE I
DEFINITIONS

Each of the following terms shall have the meaning set forth in this Article I for purposes of this Plan:

1.1Account  shall mean a Participant’s collective account that includes a separate Profit-Sharing Contributions Subaccount, 401(k) Subaccount, Employer Matching Contributions Subaccount, and Rollover Contributions Subaccount, as the case may be.

1.2Account Balance  shall mean the value of a Participant’s Account, determined as of the applicable Valuation Date.

1.3Actual Deferral Percentage  shall mean the ratio (expressed as a percentage to the nearest 1/100th of 1%) of Elective 401(k) Deferrals on behalf of an Eligible Participant for the Plan Year to the Eligible Participant’s Compensation for the Plan Year. For purposes of determining Actual Deferral Percentage, an Eligible Participant’s Compensation for the Plan Year shall not include Compensation paid during (a) any period prior to the Employee’s participation date, and (b) any period when the Employee was not an Eligible Participant. In addition, Excess Deferrals of a Non-Highly Compensated Employee attributable to elective deferrals to this Plan or any other plan of the Company or an Affiliate shall not be taken into account.

1.4Administrative Committee  shall mean the committee appointed pursuant to, and having the responsibilities specified in, Article XI of the Plan.  In the event no such committee has been appointed, the Company shall be the Administrative Committee.

1.5Affiliate  shall mean any corporation or unincorporated trade or business (other than the Company) while it is:

(a)a member of a controlled group of corporations (within the meaning of Code Section 414(b)) of which the Company is a member;

(b)a trade or business under “common control” (within the meaning of Code Section 414(c)) with the Company;

(c)a member of an “affiliated service group” (within the meaning of Code Section 414(m)) which includes the Company; or

(d)any other entity required to be aggregated with the Company under Code Section 414(o).

Notwithstanding the foregoing, for purposes of applying Code Sections 414(b) and (c) to Code Section 415, the phrase “more than 50 percent” shall be substituted for the phrase “more than 80% percent” each place it appears in Code Section 1563(a)(i).

1.6Annuity Contract  shall mean an individual or group annuity contract issued by an insurance company providing periodic benefits, whether fixed, variable or both, the benefits or

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value of which a Participant or Beneficiary cannot transfer, sell, assign, discount, or pledge as collateral for a loan or as security for the performance of an obligation, or for any other purpose, to any person other than the issuer thereof. The terms of any Annuity Contract distributed by the Plan to a Participant or Beneficiary shall comply with the terms of this Plan.

1.7Average Actual Deferral Percentage  shall mean, for any group of Eligible Participants, the average (expressed as a percentage to the nearest 1/100th of 1%) of the Actual Deferral Percentages for each of the Eligible Participants in that group, including those not making Elective 401(k) Deferrals.

1.8Average Contribution Percentage  shall mean, for any group of Eligible Participants, the average (expressed as a percentage to the nearest 1/100th of 1%) of the Contribution Percentages for each of the Eligible Participants in that group, including those on whose behalf Employer Matching Contributions are not being made.

1.9Beneficiary  shall mean the person or persons entitled to receive any payment of benefits from the Plan upon a Participant’s death, as determined in accordance with Section 8.2.

1.10Benefit Commencement Date  shall mean the first day of the first period for which an annuity benefit is payable to the Participant under the Plan or, if a Participant’s benefit is not payable in the form of an annuity, the first day on which all events have occurred that entitle the Participant to receive his or her benefit.

1.11Break-in-Service  shall mean a one-year period of severance determined on the basis of a 12-consecutive-month period beginning on the severance from service date and ending on the first anniversary of such date, provided that the Employee during such 12-consecutive-month period does not perform an hour of service (within the meaning of Section 2530.200b-2(a)(1) of the U.S. Department of Labor Regulations) for the Employer; provided, however, (a) if an Employee severs from service as a result of quit, discharge or retirement and then returns to service within 12 months, the period of severance shall be deemed a period of service, and (b) if an Employee is absent from service for any reason other than quit, discharge, retirement or death and during the absence a quit, discharge or retirement occurs, the period of time between the severance from service date (i.e., the date of quit, discharge or retirement) and the first anniversary of the date on which the employee was first absent shall be taken in account, if the employee returns to service on or before such first anniversary date.

Solely for purposes of determining whether a Break-in-Service has occurred, an Employee who is absent from work for any period  by reason of the (a) pregnancy of the Employee (b) the birth of a child of the Employee, (c) the placement of a child with the Employee in connection with the adoption of such child by such Employee, or (d) caring for such child for a period beginning immediately following such birth or placement, shall be credited with a sufficient Period of Service to prevent a Break-in-Service; provided, however, the Employee shall have a Severance from Service Date which is the second anniversary of the first day of such absence if the Employee is absent from service beyond the first anniversary of the first day of such absence. The period between the first and second anniversaries of the first day of absence from work shall not be deemed a period of service nor a period of severance.

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An Employee who is reemployed and is subject to reemployment under the Uniformed Services Reemployment Rights Act of 1994 (“USERRA”) shall not be treated as having incurred a Break in Service by reason of the individual’s period of qualified military service as defined in USERRA.

For purposes of this Section 1.11, a “severance from service” shall occur on the earlier of (a) the date on which an Employee quits, retires, is discharged or dies, or (ii) the first anniversary of the first date of a period in which an Employee remains absent from service (with or without pay) with the Employer for any reason other than quit, retirement, discharge or death, such as vacation, holiday, sickness, disability, leave of absence or layoff.

1.12Change Date  shall mean the first day of each calendar month and such other dates as may be specified by the Administrative Committee.

1.13Code  shall mean the Internal Revenue Code of 1986, as now in effect or as amended from time to time. A reference to a specific provision of the Code shall include such provision, any successor provision, and any applicable regulation pertaining thereto.

1.14Company  shall mean Rockwood Specialties Inc. or any successor legal entity.

1.15Compensation  shall mean all remuneration for services rendered paid by the Employer to an Employee, including, without limitation, bonuses, overtime and commissions, but excluding amounts paid or reimbursed by the Employer for moving expenses incurred by an Employee to the extent that, at the time of payment, it is reasonable to believe such amounts are deductible by the Employee under Code Section 217, the value of any non-qualified stock option granted to a Highly Compensated Employee by the Employer, amounts paid to a Highly Compensated Employee to enable such Employee to pay taxes on certain items of compensation received from the Employer, and items which would be excluded from the definition of “compensation” within the meaning of Treas. Reg. Section 1.415-2(d)(3). Compensation includes compensation which is not currently includible in the Participant’s gross income by reason of the application of Code Section 125, Code Section 402(e)(3), or Code Section 402(h)(1)(B). Effective as of January 1, 2001, Compensation shall also include amounts not includible in the Employee’s gross income by reason of the application of Code Section 132(f).

Notwithstanding the foregoing, the Compensation taken into account for an Employee for any Plan Year shall not exceed $150,000, as adjusted pursuant to Code Section 401(a)(17) (the “Code Section 401(a)(17) limitation”). For the 2001 Plan Year, the Code Section 401(a)(17) limitation is $170,000. Effective for Plan Years beginning after December 31, 2001, Compensation taken into account for an Employee for a Plan Year shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Section 401 (a)(1 7)(B) of the Code.

Effective for January 1, 2008, Compensation shall also include Post-Severance Compensation.  “Post-Severance Compensation” means, for Plan Years that begin on or after January 1, 2008, the following amount(s) that would have been included in the definition of Compensation if the amounts were paid prior to the Employee’s Severance from Service Date from employment with the Employer, provided such amount(s) are paid to the Employee by the

4

later of 2½ months after the Employee’s Severance from Service Date from employment with the Employer or the end of the Plan Year that includes the Severance from Service Date from employment with the Employer:

(i)The payment is regular compensation for services during the Employee’s regular working hours, or compensation for services outside the Employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments; and

(ii)The payment would have been paid to the Employee prior to a Severance from Service Date from employment if the Employee had continued in employment with the Employer.

Post-Severance Compensation shall also include:

(i)Payment for unused accrued bona fide sick, vacation, or other leave, but only if the Employee would have been able to use the leave if employment had continued; or

(ii)Received by an Employee pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid to the Employee at the same time if the Employee had continued in employment with the Employer and only to that the payment is includible in the Employee’s gross income.

Any other payment that is not described shall not be considered Post-Severance Compensation if paid after the Severance from Service Date from employment with the Employer, even if paid within the time period described above. Accordingly, Post-Severance Compensation shall not include severance pay, or parachute payments within the meaning of Code Section 280G(b)(2), if they are paid after the Severance from Service Date from employment with the Employer, and shall not include post-severance payments under a non-qualified unfunded deferred compensation plan unless the payments would have been paid at that time without regard to the severance from employment.

1.16Contribution Percentage  shall mean the ratio (expressed as a percentage to the nearest 1/100th of 1%) of the Employer Matching Contributions under the Plan on behalf of an Eligible Participant for the Plan Year to the Eligible Participant’s Compensation for the Plan Year. For purposes of determining Contribution Percentage, an Eligible Participant’s Compensation for a Plan Year shall not include Compensation during (i) any period prior to the date such Eligible Participant entered the Plan, and (ii) any period when the Eligible Participant was not an Eligible Participant. In addition, in determining Contribution Percentage, Employer Matching Contributions which are forfeited because they relate to Excess Contributions or Excess Deferrals shall not be taken into account.

1.17Defined Benefit Plan  shall mean any plan of the type defined in Code Section 414(j) maintained by the Company or an Affiliate.

5

1.18Defined Contribution Plan  shall mean any plan of the type defined in Code Section 414(i) maintained by the Company or an Affiliate.

1.19Disability  shall mean a physical or mental condition which results in the Participant’s total and permanent inability to meet the requirements of the Participant’s customary employment in a satisfactory manner, by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; provided, however, that such disability:

(a)was not contracted, suffered, or incurred while the Participant was engaged in, or did not result from his or her having engaged in, a criminal enterprise; or

(b)was not sustained while the Participant was employed by anyone other than the Company or an Affiliate. A Participant shall not be considered to have a Disability unless he or she furnishes proof of the existence of such Disability to the Administrative Committee in the form and manner, and at such time, as the Administrative Committee may request.

1.20Effective Date  shall mean January 1, 2008 the effective date of this amendment and restatement of this Plan, except as otherwise provided.

1.21Elective 401(k) Deferrals  shall mean contributions made to the Plan by the Employer pursuant to a Participant’s 401(k) Election.

1.22Eligible Employee  shall mean all Employees of the Employer other than: (a) Employees included in a unit of employees covered by a collective bargaining agreement between the Employer and an employee representative (not including any organization more than half of whose members are owners, officers or executives of the Employer) in the negotiation of which retirement benefits were the subject of good faith bargaining, unless such bargaining agreement specifically provides for participation in the Plan; (b) Leased Employees and other individuals providing services to the Employer pursuant to an agreement between the Employer and a third party, even if they are not “leased employees” under Section 414(n) of the Code; (c) individuals providing services pursuant to contracts designating them as independent contractors or consultants, or individuals designated by the Employer as independent contractors or consultants; and (d) any other individual who is compensated, directly or indirectly, by the Employer and with respect to whom such compensation is not treated by the Employer at the time of payment as being subject to statutorily required payroll tax withholding, such as withholding of federal and/or state income tax and/or withholding of the Employee’s share of Social Security tax, provided that statutorily required backup withholding shall not be considered to be payroll tax withholding. The foregoing exclusions from the definition of “Eligible Employee” shall apply notwithstanding any contrary determination of employee status by any court or governmental agency including, but not limited to, the Internal Revenue Service or the Department of Labor.

1.23Eligible Participant   shall mean any Eligible Employee who has met the service requirements of Section 2.1.

6

1.24Employee  shall mean any person in an employee-employer relationship with the Company or an Affiliate (as reported on the Company’s or an Affiliates payroll records) and shall include Leased Employees.  Notwithstanding the foregoing, if such Leased Employees do not constitute more than 20% of the nonhighly compensated work force, within the meaning of Code Section 414(n)(5)(C)(ii), of the Company and its Affiliates, the term “Employee” shall not include those Leased Employees covered by a plan described in Code Section 414(n)(5).

1.25Employer  shall mean the Company and each Participating Affiliate in the Plan pursuant to Section 14.7.

1.26Employer-Derived Account Balance  shall mean the balance of a Participant’s Profit-Sharing Contributions Subaccount and Employer Matching Contributions Subaccount.

1.27Employer Matching Contributions  shall mean any contribution to the Plan made by the Employer and allocated to a Participant’s Employer Matching Contributions Subaccount by reason of the Participant’s 401(k) Election.

1.28Employer Matching Contributions Subaccount  shall mean the separate subaccount established for a Participant pursuant to Section 4.1(b).

1.29Employment  shall mean services performed for the Company or an Affiliate as an Employee.

1.30Employment Commencement Date  shall mean the date on which an Employee first performs an Hour of Service.

1.31Entry Date  shall mean the first day of every calendar month and such other dates as may be specified by the Administrative Committee.

1.32ERISA  shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a specific provision of ERISA shall include such provision, any successor provision, and any applicable regulation pertaining thereto.

1.33Excess Aggregate Contributions  shall mean, with respect to any Plan Year, the aggregate amount of Employer Matching Contributions made for the Plan Year on behalf of Highly Compensated Employees in excess of the maximum amount of such contributions permitted under Section 3.4.1, determined by hypothetically reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages.

1.34Excess Contributions  shall mean, with respect to any Plan Year, the aggregate amount of Elective 401(k) Deferrals made for the Plan Year on behalf of Highly Compensated Employees in excess of the maximum amount of such contributions permitted under Section 3.3.1(b), determined by hypothetically reducing contributions made on behalf of Highly Compensated Employees in order of their Actual Deferral Percentages, beginning with the highest of such percentages.

7

1.35Excess Deferral  shall mean the amount of Elective 401(k) Deferrals under this Plan in excess of the adjusted annual dollar limit of Section 3.3.1 below, or the amount of Elective 401(k) Deferrals that a Participant allocates to this Plan pursuant to the claim procedure set forth in Section 3.3.1(a).

1.36401(k) Election  shall mean the election by a Participant to make Elective 401(k) Deferrals in accordance with Section 3.1.2.

1.37401(k) Subaccount  shall mean the separate subaccount established for a Participant pursuant to Section 4.1(a).

1.38Highly Compensated Employee  shall mean, with respect to any Plan Year, an Employee who performs services for the Company or any Affiliate during the Plan Year, and:

(a)was a 5% owner (as defined in Code Section 414(q)(2)) during the Plan Year or the preceding Plan Year; or

(b)had compensation (as defined in Code Section 415(c)(3)) in excess of $80,000, as adjusted in accordance with Code Section 415(d), for the preceding Plan Year and was in the top-paid group for such preceding Plan Year. The top-paid group is the group consisting of the top 20% of Employees when ranked on the basis of compensation.

A former Employee shall be treated as a Highly Compensated Employee if such Employee was a Highly Compensated Employee when he or she separated from service or at any time after attaining age 55.  The determination of who is a Highly Compensated Employee shall be made in accordance with Code Section 414(q).

1.39Hour of Service  shall shall mean service credited in accordance with the elapsed time method under Treas. Reg §1.410(a)-7.  Accordingly, for purposes of the Employee’s rights with respect to eligibility to participate, vesting and benefit accrual, the Plan shall credit the period of time which elapses while the Employee is employed (i.e., while the employment relationship exists) with the Employer, regardless of the actual number of hours he or she completes during such period. An Employee’s service shall be taken into account for purposes of eligibility to participate and vesting as of the date he or she first performs an hour of service within the meaning of Treas. Reg. §2530.200b-2(a)(1) for the Employer. Service shall be taken into account for the period of time from the date the Employee first performs such an hour of service until the date he or she severs from service with the Employer.

The date an Employee severs from service shall be the earlier of the date the Employee quits, is discharged, retires or dies, or the first anniversary of the date the employee is absent from service for any other reason (e.g., disability, vacation, leave of absence, layoff, etc.). If an Employee is granted a leave of absence (and if no intervening event occurs), the Severance from Service Date shall occur one year after the date the Employee was first absent on leave, and this one year of absence shall be taken into account as service for the Employee. A quit, discharge, retirement or death within the year after the beginning of an absence for any other reason shall result in an immediate severance from service.

8

For purposes of eligibility to participate and vesting, an Employee who has severed from service by reason of a quit, discharge or retirement may be entitled to have a period of time of 12 months or less taken into account by the Employer if the Employee returns to service within a certain period of time and performs an hour of service within the meaning of Treas. Reg. §2530.200b-2(a)(1). In general, the period of time during which the Employee must return to service shall begin on the date the Employee severs from service as a result of a quit, discharge or retirement and ends on the first anniversary of such date. However, if the Employee is absent for any other reason (e.g., layoff) and then quits, is discharged or retires, the period of time during which the Employee may return and receive credit shall begin on the Severance from Service Date and end one year after the first day of absence (e.g., first day of layoff). A severance from service (e.g., a quit), or an absence (e.g., layoff) followed by a severance from service, shall not result in a period of time of more than one year being required to be taken into account after an Employee severs from service or is absent from service.

For purposes of benefit accrual, an Employee shall be entitled to have his or her service taken into account from the date he or she begins to participate in the Plan until the Severance from Service Date. Periods of severance under any circumstances are not required to be taken into account.

Prior to January 1, 2002, an Hour of Service was determined under the general method of crediting service for an Employee under Treas. Reg. §2530.200b-2 (i.e., actual counting of hours of service during the applicable 12-consecutive-month computation period), and/or the equivalencies set forth in Treas. Reg. §2530.200b-3. Accordingly, an Employee received a year’s credit (in units of years of service or years of participation) for a computation period during which the Employee was credited with a specified number of hours of service. An Employee’s rights with respect to eligibility to participate, vesting and benefit accrual was determined by totaling the number of years’ credit to which an Employee was entitled.

1.40Investment Fund  shall mean an investment fund, if any, in which the Trust may be invested pursuant to Section 12.1.

1.41Investment Manager  shall mean any person appointed pursuant to Section 12.4 having the power to direct the investment of assets in accordance with that Section.

1.42Leased Employee  shall mean, pursuant to Code Section 414(n), any person who is not a common law employee of the Company or an Affiliate and who provides services to the Company or an Affiliate if:

(a)Such services are provided pursuant to an agreement between the Company or the Affiliate and any other person (called a “leasing company”);

(b)Such person has performed such services for the Company or the Affiliate on a substantially full-time basis for a period of at least one year; and

(c)Such services are performed under primary direction or control by the Company or the Affiliate.

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1.43Leave of Absence  shall mean a leave granted by the Employer or an Affiliate in accordance with its standard personnel policies applied in a nondiscriminatory manner to all Employees similarly situated. Leave of Absence shall also include an unpaid leave under the Family and Medical Leave Act of 1993.

1.44Non-Highly Compensated Employee  shall mean an Employee of the Company or an Affiliate who is not a Highly Compensated Employee.

1.45Normal Retirement Age  shall mean age 65.

1.46Participant  shall mean an Eligible Employee who has commenced, but not terminated, participation in the Plan as provided in Article II.

1.47Participating Affiliate  shall mean any Affiliate which has duly adopted the Plan with the consent of the Company and has not withdrawn therefrom.

1.48Period of Service  shall mean a period beginning on an Employee’s Employment Commencement Date (or re-Employment Commencement Date, as applicable) and ending on the Employee’s Severance from Service Date.

1.49Period of Severance  shall mean a period beginning on an Employee’s Severance from Service Date and ending on the date the Employee earns an Hour of Service.

1.50Plan  shall mean the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. and any amendments thereto.

1.51Plan Year  shall mean the calendar year.

1.52Primary Employee  shall mean each Eligible Employee other than a Seconded Employee.

1.53Profit-Sharing Contribution  shall mean any contribution made to the Plan and allocated to a Participant’s Profit-Sharing Contributions Subaccount in accordance with Section 3.1.4.

1.54Profit-Sharing Contributions Subaccount  shall mean the separate subaccount established for a Participant pursuant to Section 4.1(c).

1.55Reduction in Force  shall mean the reduction of an Employer’s workforce due to a voluntary or involuntary Termination of Employment where the Participant is eligible to receive severance pay and/or severance benefits under an employment termination program or severance plan, program or arrangement offered by an Employer to at least 5 Participants within a period not exceeding 6 months.

1.56Rollover Contribution  shall mean a direct rollover of distributions from the following types of plans: qualified plans described in Code Section 401(a) or 403(a), including after-tax employee contributions; annuity contracts described in Code Section 403(b), excluding after-tax employee contributions; and eligible plans under Code Section 457(b) which are maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political

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subdivision of a state. In addition, Rollover Contributions will include participant rollover distributions from individual retirement accounts or annuities described in Section 408(a) or (b) of the Code that are eligible to be rolled over and would otherwise be includible in gross income.

1.57Rollover Contributions Subaccount  shall mean the separate subaccount established for a Participant pursuant to Section 4.1(d).

1.58Seconded Employee  shall mean an Employee of the Employer who participates in any non-United States pension plan sponsored by the Company or any Affiliate.

1.59Severance from Service Date  shall mean the earlier of (a) the date the Employee quits, retires, is discharged, or dies, or (b) the first anniversary of the first date of a period in which an Employee is absent for any other reason; provided, however, that an Employee shall not experience a Severance from Service Date while the Employee is on lay-off or Leave of Absence if the Employee returns to Employment immediately following the end of the lay-off or Leave of Absence. If the Employee does not return to Employment immediately following the end of the lay-off or Leave of Absence, such Employee shall be deemed to have had a Severance from Service Date as of his first day of absence due to lay-off or Leave of Absence.

1.60Spousal Consent  shall mean the written consent of a Participant’s Surviving Spouse to an election or designation by the Participant under the Plan. Such consent shall acknowledge the effect of the Participant’s election or designation, shall specify the alternate Beneficiary or alternate form of benefit, as appropriate (unless a general consent is executed), and shall be witnessed by either a representative of the Administrative Committee or a notary public. Spousal Consent shall not be necessary if the Participant establishes to the satisfaction of the Administrative Committee that he or she has no Spouse, his or her Spouse cannot be located or such other circumstances exist as the Administrative Committee may, in accordance with applicable regulations, deem appropriate to waive the requirement of Spousal Consent. Spousal Consent, once given, may be revoked only with the consent of the Participant. Spousal Consent shall be valid and binding only with respect to the Spouse who gave the consent.

1.61Spouse  shall mean the person legally married to a Participant.

1.62Surviving Spouse  shall mean the Spouse of a Participant on the earlier of: (a) the date of the Participant’s death; or (b) the Participant’s Benefit Commencement Date.

1.63Termination of Employment  shall mean the voluntary or involuntary severance of Employment.

1.64Trust  shall mean the trust established under the Plan in which Plan assets are held.

1.65Trust Agreement  shall mean the agreement between the Company and the Trustee with respect to the Trust.

1.66Trustee  shall mean the person appointed as trustee pursuant to Article X, and any successor trustee.

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1.67Valuation Date  shall mean each business day or such other dates as may be specified by the Administrative Committee.

1.68Vesting Service  shall mean the service credited to a Participant under Section 5.2 for purposes of determining the Participant’s vested percentage in his or her Account.

1.69Year of Service  shall mean, in determining service to be taken into account for purposes of eligibility to participate, vesting and benefit accrual, each Period of Service unit which is 12-consecutive-months.  For purposes of eligibility to participate and vesting, the Period of Service shall run from the Employment Commencement Date (or re-Employment Commencement Date, as applicable) until the Severance from Service Date. For purposes of benefit accrual, a Period of Service shall run from the date that a Participant commences participation under the Plan until his or her Severance from Service Date. An Employee shall be credited with the period of time which runs during any absence from service (other than for reason of a quit, retirement, discharge or death) which is 12 months or less. Prior to January 1, 2002, an Hour of Service was determined under the general method of crediting service for an Employee under Treas. Reg. §2530.200b-2 (i.e., actual counting of hours of service during the applicable 12-consecutive-month computation period), and/or the equivalencies set forth in Treas. Reg. §2530.200b-3.

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ARTICLE II

PARTICIPATION

2.1Admission as a Participant

2.1.1Each Eligible Employee who was a Participant in the Plan immediately prior to the Effective Date shall be a Participant in the Plan as of the Effective Date.

2.1.2Each Eligible Employee shall become a Participant in the Plan on the Entry Date coinciding with or next following such Eligible Employee’s completion of at least one month of Employment, provided he or she is an Eligible Employee on such date.  This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

2.1.3Notwithstanding Section 2.1.2 above, the Company may, in its discretion, provide an earlier Entry Date or grant past service credit for eligibility purposes to individuals who become Employees through an acquisition of assets or an entity by an Employer or Affiliate or through a merger or consolidation of an entity with or into an Employer or an Affiliate or any other similar transaction; provided, however, that any such provision shall be subject to the nondiscrimination requirements of Code § 401(a)(4).

2.1.4Each Participant shall be entitled to make Elective 401(k) Deferrals, and each Participant who is a Primary Employee shall be entitled to have Employer Matching Contributions, contributed to his or her Account upon (a) execution and delivery to the Administrative Committee of a 401(k) enrollment form, and (b) submission of any information reasonably required by the Administrative Committee for proper administration of the Plan. Any Participant in the Plan shall for all purposes be deemed conclusively to have assented to the provisions of the Plan.

2.1.5An Eligible Employee who has attained his or her Normal Retirement Age and who continues as an Eligible Employee shall continue to be eligible to actively participate in the Plan until his or her actual retirement. Participation shall terminate as provided in Section 2.3.

2.2Rehired Employees

2.2.1An Employee who has a Termination of Employment before earning a vested interest in his or her Employer-Derived Account Balance and who again becomes an Employee shall lose credit for his or her Periods of Service prior to such Termination of Employment if his or her Period of Severance equals or exceeds the greater of five years or his or her Periods of Service prior to such Termination of Employment. This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg §1.410(a)-7.

2.2.2If a Participant who has a Termination of Employment again becomes an Eligible Employee and his or her prior Years of Service (i.e., Period of Service) are not disregarded under Section 2.2.1, then he or she shall again become a Participant in the Plan as of the first date on which he or she again becomes an Eligible Employee. However, no Elective 401(k) Deferrals or Employer Matching Contributions shall be contributed to his or her Account until the first

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payroll period after he or she has again executed and delivered a 401(k) enrollment form in accordance with Section 2.1.4 above.

2.2.3If an Employee or Participant who has a Termination of Employment again becomes an Eligible Employee and his or her prior Years of Service (i.e., Period of Service) are disregarded under Section 2.2.1, then he or she shall be treated as a new Employee.

2.2.4A former Employee who has a Termination of Employment and subsequently performs an Hour of Service within 12 months of his or her Severance from Service Date, such Employee’s Period of Severance shall instead be included as part of his or her Period of Service for purposes of participation and vesting. This paragraph shall be interpreted in accordance with the service spanning rules set forth in Treas. Reg §1.410(a)-7.

2.3Termination of Participation

An individual shall cease to be a Participant on the earliest of:

(a)payment to him or her or on his or her behalf of all vested benefits due to him or her under the Plan at a time when he or she is no longer eligible for any future contributions;

(b)his or her Termination of Employment when he or she has no vested interest in his or her Account; or

(c)his or her death.

2.4Rollover Membership

An Eligible Employee who makes a Rollover Contribution in accordance with Section 3.5 shall become a Participant as of the date of such contribution even if he or she has not yet satisfied the requirements of Section 2.1; provided, however, that such an Eligible Employee shall be a Participant only with respect to his or her Rollover Contributions Subaccount and shall not be eligible to make or receive any other type of contribution under the Plan until he or she has satisfied the requirements under Section 2.1.

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ARTICLE III

CONTRIBUTIONS

3.1Employer Contributions

3.1.1Subject to the limitations set forth in this Article III, the Employer shall contribute to the Trust an amount equal to the sum of:

(a)Elective 401(k) Deferrals in such amount as determined in accordance with Section 3.1.2;

(b)Employer Matching Contributions in such amount as determined in accordance with Section 3.1.3; and

(c)Profit-Sharing Contributions in such amount, if any, as determined in accordance with Section 3.1.4.

3.1.2Elective 401(k) Deferrals

(a)Subject to the limitations set forth in Sections 3.3, 3.8 and 3.9, the Employer shall contribute to the Trust on behalf of each of its Employees who has a 401(k) Election in effect for any payroll period an amount equal to the deferral percentage elected by each such Participant on his or her 401(k) Election, multiplied by his or her Compensation for the payroll period. The amount elected by a Participant pursuant to a 401(k) Election cannot be less than 1 % or greater than 25% (in 1 % increments) of the Participant’s Compensation. The 401(k) Election shall be made on a form provided by the Administrative Committee. A Participant may elect to change the percentage of his or her Elective 401(k) Deferral effective as of any Change Date by filing the appropriate form with the Administrative Committee on or before the deadline established by the Administrative Committee for filing such form. A Participant may elect to cancel any 401(k) Election at any time by filing the appropriate form with the Administrative Committee, and such election shall become effective as soon as practicable. A Participant who elects to cancel his or her Elective 401(k) Deferrals may elect to resume such deferrals as of any Change Date following such cancellation by filing a new 401(k) Election with the Administrative Committee. The Administrative Committee may reduce the amount of any 401(k) Election or may make such other modifications as necessary so that the Plan complies with the provisions of Code Section 401 and all contributions are currently deductible under Code Section 404. All contributions pursuant to a 401(k) Election shall be made by reducing the Participant’s Compensation for each payroll period by the amount determined pursuant to the 401(k) Election. The Administrative Committee may establish such additional rules and procedures with respect to the making, changing and resumption of contributions pursuant to 401(k) Elections (including suspension from contributions) as it shall determine.

(b)Notwithstanding paragraph (a) above, and as soon as is practicable as determined by the Administrative Committee, all Employees who are eligible to make Elective 401(k) Deferrals and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v).

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Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of making such catch-up contributions. This paragraph (b) shall apply only if all other applicable employer plans (within the meaning of Code Section 414(v)(6)(A)) of the Company and the Affiliates permit all eligible participants (within the meaning of Code Section 414(v)(5)) to make the same catch-up elections, as required under Code Section 414(v)(4); provided, however, that no eligible participant shall be permitted to make catch-up contributions under more than one applicable employer plan.

(c)Notwithstanding any provision of the Plan to the contrary, except for occasional, bona fide administrative considerations, Elective 401(k) Deferrals made pursuant to an election under paragraph (a) above shall not precede the earlier of (1) the performance of services relating to such Elective 401(k) Deferrals, and (2) when the Compensation subject to such Elective 401(k) Deferral election would be currently available to the Employee in the absence of an election to defer.

3.1.3Employer Matching Contributions

Subject to the limitations set forth in Sections 3.4, 3.8 and 3.9, Employer Matching Contributions shall be made by the Employer to the Trust on behalf of each of its Primary Employees, who has participated in the Plan for at least three months and who has a 401(k) Election in effect for any payroll period, in an amount equal to 50% of the Participant’s Elective 401(k) Deferral, up to 6% of the Participant’s Compensation, made for the payroll period. An Employer Matching Contribution shall not be made with respect to a Participant’s Elective 401(k) Deferrals in excess of 6% of his or her Compensation for any payroll period.

Subject to the limitations set forth in Sections 3.4 and 3.8, Employer Matching Contributions also shall be made by the Employer to the Trust on behalf of each of its Primary Employees who has elected to make a catch-up contribution pursuant to Section 3.1.2(b) in an amount equal to 50% of the Participant’s catch-up contribution. However, in no event shall the total Employer Matching Contributions made on behalf of any Participant exceed 6% of his or her Compensation.

In addition to the Employer Matching Contributions provided in the preceding paragraphs, a “True-Up Employer Matching Contribution” shall be made for the benefit of each eligible Participant (as provided below), with respect to each Plan Year beginning on or after January 1, 2007.  The True-Up Employer Marching Contribution amount shall be difference between subsection (a) and (b) below, if any:

(a)The amount resulting from recalculating the Employer Matching Contribution for the applicable Plan Year by assuming that it is an amount equal to 50% of the Participant’s Elective 401(k) Deferral, up to 6% of the Participant’s total Compensation for the applicable Plan Year (rather than any payroll period); provided, however, that the resulting Employer Matching Contribution amount shall not exceed 6% of the Participant’s Compensation for such

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Plan Year.  Any Elective 401(k) Deferral distributed to a Participant pursuant to Sections 3.3.1, 3.3.2 and 3.3.3 shall not be considered for this calculation.

(b)The actual Employer Matching Contribution credited to the Participant’s Employer Matching Contribution Subaccount for the applicable Plan Year.  An Employer Matching Contributions forfeited in connection with the distribution of Elective 401(k) Deferrals pursuant to Section 3.3.1, 3.3.2 and 3.3.3 shall not be considered for this calculation.  Further, any Employer Matching Contribution distributed or forfeited pursuant to the Section 3.4.1, 3.4.2 and 3.4.3 shall not be considered for this calculation.

In no event shall the total Employer Matching Contribution and True-Up Employer Matching Contribution for the applicable Plan Year shall not exceed 6% of the Participant’s Compensation for such Plan Year.  True-Up Employer Matching Contributions shall be subject to the applicable limits imposed by the Code.

The True-Up Employer Matching Contribution calculation shall be performed as soon as administratively practicable following the end of each applicable Plan Year.  A Participant shall be eligible to receive a True-Up Employer Matching Contribution (if any) for the applicable Plan Year if he or she was eligible for Employer Matching Contributions for such Plan Year.  True-Up Employer Matching Contributions, if any, shall be contributed to the Plan without adjustment for any earnings and/or losses.

3.1.4Profit-Sharing Contributions

(a)Subject to the limitations set forth in Sections 3.8 and 3.9, for each Plan Year, the Employer may contribute to the Plan an amount, if any, to be determined by Employer in its sole and absolute discretion. Any such contribution by an Employer shall be allocated among each Employee of the contributing Employer during the Plan Year who:

(i)prior to January 1, 2002, is employed in “eligible employment” (as defined below) on the last day of the Plan Year and is credited with at least 1,000 Hours of Service for such Plan Year;

(ii)effective as of January 1, 2002, is employed in “eligible employment” (as defined below) on the last day of the Plan Year and is credited with a Period of Service of at least 6 months during such Plan Year;

(iii)is on a Leave of Absence on the last day of the Plan Year, provided the Primary Employee was employed in “eligible employment”‘ immediately prior to such Leave of Absence;

(iv)died or became Disabled during the Plan Year at a time when he or she was employed in “eligible employment;” or

(v)terminated Employment during the Plan Year on or after attainment of Normal Retirement Age at a time when he or she was employed in “eligible employment.”

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For purposes of this Section 3.1.4, “eligible employment” shall mean employment as a Primary Employee or employment with an Affiliate that is not an Employer in a position under which the Employee would be a Primary Employee if the Affiliate were an Employer.

(b)Profit-Sharing Contributions with respect to any Plan Year shall be allocated to the Profit-Sharing Contributions Subaccount of each Employee eligible for such an allocation under (a) above according to the ratio that the Employee’s Compensation from the Employer for the portion of the Plan Year that he or she was an Employee bears to the aggregate of such Compensation of all Employees eligible for such an allocation.

3.2After-Tax Contributions

No Participant after-tax contributions shall be required or permitted under the Plan.

3.3Elective 401(k) Deferral Limitations

3.3.1Elective 401(k) Deferral Limits

Elective 401(k) Deferrals shall be subject to the following:

(a)Code Section 402(g) Dollar Limit

A Participant’s Elective 401(k) Deferrals made under this Plan and his or her elective deferrals made under all other plans of the Company and its Affiliates during any taxable year shall not exceed the adjusted limit imposed on elective deferrals for such year under Code Section 402(g). This limit shall not apply to the extent permitted under Plan Section 3.1.2(a) and Code Section 414(v).

A Participant may claim Excess Deferrals for any taxable year by filing a written claim with the Administrative Committee not later than the March 1 following the taxable year for which the Excess Deferrals were contributed. Any such claim shall specify the amount of the Participant’s Excess Deferrals for the year and shall be accompanied by the Participant’s written statement that, if such amounts are not distributed, such Excess Deferrals, when added to amounts deferred under other plans or arrangements described in Code Section 402(g)(3) (whether or not maintained by the Company or an Affiliate), will exceed the limit imposed on the Participant by Code Section 402(g) for the year in which the deferral occurred. Excess Deferrals shall be distributed in accordance with Section 3.3.2 below.

(b)Average Actual Deferral Percentage Test

The Average Actual Deferral Percentage for Eligible Participants who are Highly Compensated Employees for any Plan Year must satisfy one of the following tests:

(i)The Average Actual Deferral Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual

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Deferral Percentage for Eligible Participants who were Non-Highly Compensated Employees for the prior Plan Year multiplied by 1.25; or

(ii)The Average Actual Deferral Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Deferral Percentage for Eligible Participants who were Non-Highly Compensated Employees for the prior Plan Year multiplied by 2.0, provided that the excess of the Average Actual Deferral Percentage for Eligible Participants who are Highly Compensated Employees over the prior Plan Year’s Average Actual Deferral Percentage for Eligible Participants who were Non-Highly Compensated Employees is not more than two percentage points.

At the Company’s election, the current Plan Year’s Average Actual Deferral Percentage data for Eligible Participants who are Non-Highly Compensated Employees may be used; provided, however, that if an election to use current Plan Year data is made, it cannot be changed except as provided by the Secretary of the Treasury.

This Section 3.3.1(b) shall not apply to the extent permitted under Plan Section 3.1.2(a) and Code Section 414(v).

(c)Aggregation of Elective 401(k) Deferrals

(i)For purposes of this Section 3.3.1, the Actual Deferral Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective 401(k) Deferrals allocated to his or her account under two or more plans or arrangements described in Code Section 401(k) that are maintained by the Company or an Affiliate shall be determined as if all such Elective 401(k) Deferrals were made under a single arrangement.

(ii)In the event that this Plan satisfies the requirements of Code Sections 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this section shall be applied by determining Average Actual Deferral Percentages as if all such plans were a single plan.

3.3.2Distribution of Excess Deferrals

(a)Notwithstanding any other provision of the Plan, Excess Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 following the close of the taxable year for which the Participant’s Excess Deferrals were contributed. Excess Deferrals may be returned during the taxable year in which they were made only if designated as Excess Deferrals. The income or loss allocable to Excess Deferrals shall be determined through the end of the taxable year to which the contributions relate by the Administrative Committee in accordance with applicable regulations.

For taxable years beginning on or after January 1, 2007, gap-period earnings shall be included with the distribution of Excess Deferrals (as defined in Code Section 402(g)(2)(A) to

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the extent the Participant is or would be credited with an allocable gain or loss on such Excess Deferrals for the gap-period, if the total amount were to be distributed.  Any income and/or losses earned during the gap-period shall be allocated to all Participants and to all corrective distributions for the taxable year in a consistent and non-discriminatory manner. The gap period income and/or losses allocable to a Participant’s Excess Deferrals shall be determined by any one of the methods provided in Treas. Reg. §1.402(g)-1(e)(5).  However, if contrary legal guidance is promulgated after April 30, 2007, then excess deferrals shall be adjusted for income and/or losses only to the extent mandated by such guidance.  For purposes of this paragraph, the “gap period” means the period between the close of the applicable Plan Year and prior to the distribution; provided, however, that income or loss for the “gap period” may be determined as of a date that is no more than seven days before the date of distribution.

(b)Employer Matching Contributions related to Excess Deferrals, together with any allocable income or loss, shall be forfeited and used to reduce Employer Matching Contributions and Profit-Sharing Contributions. For this purpose, Excess Deferrals shall be deemed attributable first to unmatched Elective 401(k) Deferrals.

3.3.3Distribution of Excess Contributions

Notwithstanding any other provision of the Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of the close of the Plan Year following the Plan Year for which the Excess Contributions were made in accordance with the following:

(a)The Excess Contributions with respect to Highly Compensated Employees shall be distributed in accordance with the following procedure.

(i)The total amount of Excess Contributions for all affected Highly Compensated Employees shall be calculated in accordance with Section 1.34.

(ii)The Elective 401(k) Deferrals of the Highly Compensated Employee with the highest dollar amount of Elective 401(k) Deferrals for the Plan Year shall be reduced by the amount required to cause that Highly Compensated Employee’s Elective 401(k) Deferrals to equal the dollar amount of Elective Compensated Employee with the next highest dollar amount of Elective 401(k) Deferrals.  This amount is then distributed to such Highly Compensated Employee with the highest dollar amount of Elective 401(k) Deferrals.  However, if a lesser reduction under this Section 3.3.3(a)(ii) would equal the total Excess Contributions, then such lesser reduction amount shall be distributed.

(iii)Notwithstanding anything to the contrary in this Section, prior to the distribution of any Excess Contributions, all or a part of the Excess Contributions, as applicable, shall be recharacterized as catch-up contributions for catch-up contribution eligible Participants, up to the catch-up contributions limit for the appolicable Plan Year in accordance with the requirements of Treasury Regulation Section 1.414(v)-1(d)(2)(iii).

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(iv)If the total dollar amount distributed is less than the total Excess Contributions for the Plan Year for all affected Highly Compensated Employees the process described in this Section 3.3.3(a)(ii) shall be repeated until the total dollar amount distributed equals the Excess Contributions for the year.

(b)The income or loss allocable to Excess Contributions shall be determined through the end of the Plan Year to which the contributions relate by the Administrative Committee in accordance with applicable regulations. Effective as of January 1, 2006, the income or loss allocable to Excess Contributions shall be determined in accordance with the requirements of Treasury Regulation Section 1.401(k)-2(b)(2)(iv) as follows:  The income or loss attributable to the Excess Contributions shall be the sum of (i) the income or loss on such contributions for the Plan Year, determined under any reasonable method, and (ii) the income or loss on such Excess Contributions for the “gap period”, determined under such reasonable method.  Any reasonable method used to determine income or loss hereunder shall be used consistently for all Participants and for all corrective distributions under the Plan for the applicable Plan Year.  For purposes of this paragraph, the “gap period” means the period between the close of the applicable Plan Year and prior to the distribution; provided, however, that income or loss for the “gap period” may be determined as of a date that is no more than seven days before the date of distribution.  Notwithstanding anything in this paragraph to the contrary, the Administrative Committee may elect, in a non-discriminatory manner, not to distribute “gap period” income with respect to any Plan Year beginning on or after January 1, 2008.

(c)Employer Matching Contributions related to Excess Contributions, together with any allocable income or loss, shall be forfeited and used to reduce Employer Matching Contributions and Profit-Sharing Contributions. For this purpose, Excess Contributions shall be deemed attributable first to unmatched Elective 401(k) Deferrals.

3.4Employer Matching Contribution Limitations

3.4.1Limit on Employer Matching Contributions

For each Plan Year, Employer Matching Contributions shall be subject to the following provisions:

(a)Contribution Percentage Test

For Employer Matching Contributions made on behalf of Highly Compensated Employees for each Plan Year, the Average Contribution Percentage for Primary Employees who are Highly Compensated Employees for the Plan Year must not exceed the greater of:

(i)The Average Contribution Percentage for Primary Employees who were Non-Highly Compensated Employees for the prior Plan Year, multiplied by 1.25; or

(ii)The lesser of (A) the Average Contribution Percentage for Primary Employees who were Non-Highly Compensated Employees for the prior Plan Year, multiplied by 2.0; or (B) the prior Plan Year’s Average Contribution Percentage for

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Primary Employees who were Non-Highly Compensated Employees plus two percentage points.

At the Company’s election, the current Plan Year’s Average Contribution Percentage data for Primary Employees who are Non-Highly Compensated Employees may be used; provided, however, that if an election to use prior Plan Year data is made, it cannot be changed except as provided by the Secretary of the Treasury.

(b)Aggregation of Contributions

(i)For purposes of this Section 3.4.1, the Contribution Percentage for any Primary Employee who is a Highly Compensated Employee for the Plan Year and who is eligible to receive matching contributions or to make employee after-tax contributions under one or more other plans described in Code Section 401 (a) that are maintained by the Company or an Affiliate shall be determined as if all such contributions were made under a single plan aggregated with this Plan.

(ii)In the event that this Plan satisfies the requirements of Code Sections 401(m), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this section shall be applied by determining Average Contribution Percentages as if all such plans were a single plan.

3.4.2Distribution of Excess Aggregate Contributions

Notwithstanding any other provisions of the Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be distributed or forfeited to the extent not vested no later than the last day of the close of the Plan Year following the Plan Year for which the Excess Aggregate Contributions were made in accordance with the following:

(a)The Excess Aggregate Contributions with respect to Highly Compensated Employees shall be distributed in accordance with the following procedure.

(i)The total amount of Excess Contributions for all affected Highly Compensated Employees shall be calculated in accordance with Section 1.33.

(ii)The Employer Matching Contributions of the Highly Compensated Employee with the highest dollar amount of Employer Matching Contributions for the Plan Year shall be reduced by the amount required to cause that Highly Compensated Employee’s Employer Matching Contributions to equal the dollar amount of Employer Matching Contributions of the Highly Compensated Employee with the next highest dollar amount of Employer Matching Contributions.  This amount is then distributed to such Highly Compensated Employee with the highest dollar amount of Employer Matching Contributions.  However, if a lesser reduction under this Section 3.3.3(a)(ii) would equal the total Excess Aggregate Contributions, then such lesser reduction amount shall be distributed.

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(iii)If the total dollar amount distributed in less than the total Excess Aggregate Contributions for the Plan Year for all affected Highly Compensated Employees, the process described in Section 3.4.2(a)(ii) is repeated until the total dollar amount distributed equals the total excess contributions for the Plan Year.

(b)The income or loss allocable to Excess Aggregate Contributions shall be determined through the end of the Plan Year to which the contributions relate by the Administrative Committee in accordance with applicable regulations.  Effective as of January 1, 2006, the income or loss allocable to the Excess Aggregate Contributions shall be determined in accordance with the requirements of Treasury Regulation Section 1.401(m)-2(b)(2)(iv) as follows:  The income or loss attributable to the Excess Aggregate Contributions shall be the sum of (i) the income or loss on such contributions for the Plan Year, determined under any reasonable method, and (ii) the income or loss on such Excess Aggregate Contributions for the “gap period”, determined under such reasonable method.  Any reasonable method used to determine income or loss hereunder shall be used consistently for all Participants and for all corrective distributions under the Plan for the applicable Plan Year.  For purposes of this paragraph, the “gap period” means the period between the close of the applicable Plan Year and prior to the distribution; provided, however, that income or loss for the “gap period” may be determined as of a date that is no more than seven days before the date of distribution.  Notwithstanding anything in this paragraph to the contrary, the Administrative Committee may elect, in a non-discriminatory manner, not to distribute “gap period” income with respect to any Plan Year beginning on or after January 1, 2008.

3.4.3[Reserved]

3.5Rollover Contributions

Any Eligible Employee may make a Rollover Contribution to the Plan. A Rollover Contribution shall be in cash only or such other property as may be acceptable under rules established by the Administrative Committee. The Administrative Committee may condition acceptance of a contribution intended to be a Rollover Contribution upon receipt of such documents as it may require. In the event that an Eligible Employee makes a contribution pursuant to this Section 3.5 intended to be a Rollover Contribution but which the Administrative Committee later concludes did not qualify as a Rollover Contribution, the Trustee shall distribute to the Eligible Employee, as soon as practicable after that conclusion is reached, the amount of such contribution, together with any earnings thereon.

3.6Timing of Contributions

The Employer shall transfer Profit-Sharing Contributions to the Trustee no later than the last day prescribed by law for the filing of the Employer’s federal income tax return (including extensions thereon) for the taxable year of the Employer which includes the last day of the Plan Year for which such contributions were made. The Employer shall transfer Elective 401(k) Deferrals to the Trustee as soon as practicable following the end of each month, but in no event later than the 15th business day of the month following the month in which the Elective 401(k) Deferral would otherwise have been payable to the Participant in cash. The Employer shall

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transfer Employer Matching Contributions to the Trustee at such time as it shall determine, but in no event later than the last day prescribed by law for the filing of the Employer’s federal income tax (including extensions thereof) for the taxable year of the Employer which includes the last day of the Plan Year for which such contributions were made.  The Employer shall transfer True-Up Employer Matching Contribution (if any) to the Trustee at such time as it shall determine, but in no event later than the last day prescribed by law for the filing of the Employer’s federal income tax (including extensions thereof) for the taxable year of the Employer which includes the last day of the Plan Year for which such contributions were made.

3.7Forfeitures

Any Forfeitures arising under the Plan shall be applied to reduce Employer Matching Contributions and Profit-Sharing Contributions.

3.8Limitation on Allocations

3.8.1As used in this Section 3.8 and in Section 3.9, each of the following terms shall have the meaning for that term set forth in this Section 3.8.1:

(a)Annual Additions means, for each Participant, the sum of the following amounts credited to the Participant’s Account for the Limitation Year under this Plan or another Defined Contribution Plan maintained by the Company or an Affiliate:

(i)Company or Affiliate contributions;

(ii)Employee contributions;

(iii)forfeitures;

(iv)amounts described in Code Section 415(1)(1) and Code Section 419A(d)(2); and

(v)allocations under a simplified employee pension.

Amounts attributable to Rollover Contributions or trust to trust transfers shall not be Annual Additions.

Excess Deferrals which are not distributed before the April 15 following the taxable year to which they relate and Excess Contributions and Excess Aggregate Contributions shall be treated as Annual Additions.

(b)Defined Benefit Fraction means, for any Participant, the fraction (determined as of the last day of the Limitation Year) which shall have a numerator equal to the Projected Annual Benefit of the Participant under all Defined Benefit Plans and a denominator equal to the lesser of:

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(i)1.25 multiplied by the dollar limitation in effect under Code Section 415(b)(1)(A) for such Limitation Year; or

(ii)1.4 multiplied by 100% of the Participant’s average Limitation Compensation for his or her high three years.

(c)Defined Contribution Dollar Limitation means $30,000, as adjusted pursuant to Code Section 415(d). Effective for Limitation Years beginning after December 31, 2001, Defined Contribution Dollar Limitation means $40,000, as adjusted for increases in the cost-of-living under Section 415(d) of the Code.

(d)Defined Contribution Fraction means, for any Participant, the fraction (determined as of the last day of the Limitation Year) which shall have a numerator equal to the sum of the Participant’s Annual Additions and a denominator equal to the sum of the lesser of the following amounts determined for such Limitation Year and for each prior Limitation Year for which the Participant was credited with a Year of Service:

(i)1.25 multiplied by the dollar limitation in effect under Code Section 415(c)(1)(A) for such Limitation Year; or

(ii)35% of the Participant’s Limitation Compensation for such Limitation Year.

(e)Excess Amount means the excess of the Participant’s Annual Additions for the Limitation Year involved over the Maximum Permissible Amount for that Limitation Year.

(f)Limitation Compensation means an Employee’s compensation as determined pursuant to Code Section 415(c)(3). Limitation Compensation shall be subject to the adjusted dollar limitation under Code Section 401(a)(17).

(g)Limitation Year means each 12-consecutive month period ending on the same last day as the Plan Year.

(h)Maximum Permissible Amount means, for a Limitation Year and with respect to any Participant, the lesser of (i) the Defined Contribution Dollar Limitation, or (ii) 100% of the Participant’s Limitation Compensation for the Limitation Year provided, however, that the percentage of Limitation Compensation limit shall not apply to (A) any contribution for medical benefits (within the meaning of Code Section 419A(d)(2)) after Termination of Employment which is otherwise treated as an Annual Addition, or (B) an amount otherwise treated as an Annual Addition under Code Section 415(l)(1). This Section 3.8.1(h) shall not apply to the extent permitted under Plan Section 3.1.2(a) and Code Section 414(v).

(i)Protected Annual Benefit means the Participant’s annual benefit under a Defined Benefit Plan payable in the form of a straight life annuity computed on the assumptions that the Participant will remain employed until Normal Retirement Age (or his or her current age, if later) and that his or her Limitation Compensation will remain at its current level until that time.

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3.8.2The amount of Annual Additions which may be credited to the Participant’s Accounts for any Limitation Year shall not exceed the Maximum Permissible Amount. If the Employer contribution that could otherwise be made or allocated to the Participant’s Account would cause the Annual Additions on behalf of the Participant for the Limitation Year to exceed the Maximum Permissible Amount with respect to that Participant for the Limitation Year, the amount to be contributed or allocated will be reduced so that the Annual Additions on behalf of the Participant for the Limitation Year will equal such Maximum Permissible Amount.

(a)Prior to determining the Participant’s actual Limitation Compensation for a Limitation Year, the Administrative Committee may determine the Maximum Permissible Amount for the Participant for the Limitation Year on the basis of a reasonable estimation of the Participant’s Limitation Compensation for that Limitation Year. Such estimated Limitation Compensation shall be uniformly determined for all Participants similarly situated.

(b)As soon as is administratively feasible after the end of a Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant’s actual Limitation Compensation for the Limitation Year.

(c)If a Participant is credited with an Annual Addition under any other Defined Contribution Plan maintained by the Company or an Affiliate, before any Annual Addition is reduced under such other Defined Contribution Plan, Annual Additions to this Plan shall be reduced to bring all such Plans in conformity with Code Section 415(c).

(d)If, as a result of the allocation of forfeitures, a reasonable error in estimating a Participant’s annual Limitation Compensation, a reasonable error in determining the amount of elective deferrals that may be made with respect to any Participant under the limits of Code Section 415, or under other limited facts and circumstances that the Commissioner of Internal Revenue finds justify the availability of the rules set forth in this Section 3.8.2(d), the Annual Additions under the Plan for a particular Participant would cause the limitations of Code Section 415 to be exceeded, then -

(i)Elective 401(k) Deferrals shall be returned to the Participant to the extent of the Excess Amount.

(ii)If, after the application of Section 3.8.2(d)(i), an Excess Amount still exists and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant’s Account will be used to reduce Employer Matching Contributions for such Participant in the next Limitation Year and each succeeding Limitation Year, if necessary.

(iii)If, after the application of Section 3.8.2(d)(ii), an Excess Amount still exists and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account and applied to reduce Employer Matching Contributions for all remaining Participants in the next Limitation Year and each succeeding Limitation Year, if necessary.

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If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants’ Accounts before any Employer or Employee contributions may be made to the Plan for that Limitation Year. Any Elective 401(k) Deferrals returned under this Section 3.8.2(d) shall be disregarded for purposes of the Average Actual Deferral Percentage Test set forth in Section 3.3.1(b) and the annual limit on Elective 401(k) Deferrals under Code Section 402(g).

3.9[Reserved]

3.10Return of Employer Contributions Under Special Circumstances

Notwithstanding any provision of this Plan to the contrary, upon timely written demand by an Employer to the Trustee:

(a)Any contribution made by the Employer under a mistake of fact shall be returned to the Employer by the Trustee within one year after the payment of the contribution.

(b)Any contribution made by the Employer shall be returned to the Employer within one year after a current deduction for the contribution under Code Section 404 is disallowed by the Internal Revenue Service, but only to the extent disallowed.

(c)Any contribution made by the Employer shall be returned to the Employer by the Trustee within one year after notification from the Internal Revenue Service following a timely application for determination as to initial qualification that the Plan is not a qualified plan.

Contributions returned to the Employer under (a) or (b) shall be net of any investment losses but shall not include any earnings thereon.

3.11Profits Not Required

All contributions to the Plan may be made without regard to the current or accumulated earnings or profits of the Employer. The Plan shall, however, continue to be designated as a profit sharing plan for purposes of the Code.

3.12Contributions Conditioned on Deductibility

All contributions made under the Plan are made on the condition that they are currently deductible under Code Section 404; provided, however, that no contributions shall be returned to the Employer except as provided in Section 3.10.

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ARTICLE IV

ACCOUNTS, INVESTMENTS AND ALLOCATIONS

4.1Establishment of Participant Accounts

The Administrative Committee shall establish and maintain an Account in the name of each Participant and shall credit or cause to be credited all amounts allocable to each such Participant to the following subaccounts:

(a)401(k) Subaccount.  Any Elective 401(k) Deferrals allocable to the Participant and the earnings, losses and expenses attributable thereto.

(b)Employer Matching Contributions Subaccount.  Any Employer Matching Contributions allocable to the Participant and the earnings, losses and expenses attributable thereto.

(c)Profit-Sharing Contributions Subaccount.  Any Profit-Sharing Contributions allocable to the Participant and the earnings, losses and expenses attributable thereto.

(d)Rollover Contributions Subaccount.  Any Rollover Contributions allocable to the Participant and the earnings, losses and expenses attributable thereto.

The maintenance of separate subaccounts under this Section 4.1 is for accounting purposes only, and a physical segregation of assets of the Trust to each separate subaccount shall not be required. Any distribution to a Participant or Beneficiary, or any withdrawal by or loan to a Participant under Article VI, shall be charged to the appropriate subaccount of the Participant in accordance with procedures established by the Administrative Committee.

4.2Investment of Funds

If Investment Funds are established pursuant to Section 12.1, then the contributions and Account Balance of a Participant or the Account Balance of a Beneficiary of a deceased Participant shall be invested among the Investment Funds as directed by the Participant or Beneficiary in accordance with and subject to Section 12.1.2. Investment directions by a Participant or Beneficiary may be made or changed as of each business day once a calendar month, subject to such procedures as may be established by the Administrative Committee (including, but not limited to, requirements for prior notice and investments in minimum increments). In the event that a Participant, for any reason, fails to provide proper initial investment directions, contributions allocated to such Participant shall be entirely invested in the default Investment Fund or Funds designated by the Administrative Committee from time to time.

4.3Allocation of Earnings to Accounts

All earnings or income received on any investment credited to a Participant’s or Beneficiary’s Account under the Plan shall be reinvested in additional interests in such investment and shall be credited to such subaccount.

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4.4Allocation Report

The Administrative Committee shall deliver to each Participant and Beneficiary of a deceased Participant, at least annually, a statement for the Account of such Participant or Beneficiary which shows the activity since the prior statement date and the market value of the Account as of the current statement date and any other information deemed appropriate by the Administrative Committee.

4.5Allocation Corrections

Any error or omission in the statement provided pursuant to Section 4.4 shall be corrected as necessary to remedy such error or omission.

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ARTICLE V

VESTING AND TOP-HEAVY PROVISIONS

5.1Determination of Vesting

5.1.1A Participant shall at all times have a vested percentage of 100% in the balance of his or her 401(k) Subaccount and Rollover Contributions Subaccount.

5.1.2A Participant who has a Termination of Employment due to death or Disability or who has a Termination of Employment on or after attainment of Normal Retirement Age shall have a vested percentage of 100% in his or her Account.

5.1.3A Participant shall be fully vested at all times in his or her Employer Matching Contributions Subaccount and Profit-Sharing Contributions Subaccount; provided, however, prior to July 31, 2004, the vested percentage of a Participant in his or her Employer Matching Contributions Subaccount, and Profit-Sharing Contributions Subaccount shall be determined in accordance with the following schedule:

Completed Years	Vested
of Vesting Service	Percentage
2 years	25	%
3 years	50	%
4 years	75	%
5 years	100	%

5.1.4Notwithstanding the foregoing, any Participant with 3 or more years of Vesting Service who, prior to attaining Normal Retirement Age, has an involuntary or voluntary Termination of Employment as a result of a Reduction in Force shall be 100% vested in his or her Account; provided, however, that such provision shall be implemented in a uniform and nondiscriminatory manner.

5.2Rules for Crediting Vesting Service

5.2.1A Participant’s Vesting Service shall equal the sum of paragraphs (a) and (b) below.

(a)Subject to the limitations set forth in Sections 5.2.2 and 5.2.3, a Participant shall earn a year of Vesting Service for each one year Period of Service he or she completes. For purposes of determining a one year Period of Service for vesting, non-successive Periods of Service shall be aggregated on the basis that Periods of Service totaling 12 months (with 30 days deemed to be a month in the case of the aggregation of fractional months) or 365 days shall equal a whole year Period of Service. This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

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(b)In addition, the Company may, in its discretion, grant past service credit for Vesting Service to individuals who become Employees through an acquisition of assets or an entity by an Employer or Affiliate or through a merger or consolidation of an entity with or into an Employer or an Affiliate or any other similar transaction; provided, however, that any such provision shall be subject to the nondiscrimination requirements of Code Section 401(a)(4).

5.2.2A Participant who has no vested percentage in his or her Employer-Derived Account Balance and who has a Termination of Employment shall, if he or she again becomes an Employee, receive no credit for his or her Vesting Service prior to such Termination of Employment if his or her Period of Severance equals or exceeds the greater of five years or his or her Period Service prior to such Termination of Employment. This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

5.2.3If a Participant who is less than 100% vested in his or her Employer-Derived Account Balance has a Termination of Employment and incurs a Period of Severance of at least five consecutive years, then his or her Period of Service after such Period of Severance shall be disregarded for purposes of vesting in his or her Employer-Derived Account Balance which accrued before such Period of Severance. This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

5.3Rules for Crediting Service Upon Termination of Employment

5.3.1If a Participant who is less than 100% vested in his or her Employer-Derived Account Balance terminates Employment and receives a complete distribution of his or her vested Employer-Derived Account Balance (or, under Section 6.1.2, is deemed to have received a complete distribution), then the nonvested portion of his or her Employer-Derived Account balance shall be treated as a forfeiture.

5.3.2In the event a Participant forfeited any portion of his or her Account in accordance with Section 5.3.1 and again becomes an Eligible Employee prior to incurring, a Period of Severance equaling at least five consecutive years), the nonvested portion of his or her Account shall be restored to its value as of the date of distribution (or deemed distribution). If the Participant received a distribution, his or her vested portion shall not be less than an amount (“X”) determined by the formula: X = P(AB + D) - D. For purposes of applying the formula: P is the vested percentage at the relevant time; AB is the Account Balance at the relevant time; D is the amount of the distribution; and the “relevant time” is any time prior to the time at which, under the Plan, the vested percentage in the account cannot increase. The restored amount shall be derived from amounts forfeited during the Plan Year through such Valuation Date and, if such forfeitures are not sufficient, from a contribution by the Employer.

5.3.3The Plan shall disregard Elective 401(k) Deferrals in applying the vesting provisions of the Plan to other contributions or benefits under Code Section 411(a)(2). However, the Plan shall otherwise take a Participant’s Elective 401(k) Deferrals into account in determining the Participant’s vested benefits under the Plan. Thus, for example, the Plan shall take Elective 401(k) Deferrals into account in determining whether a Participant has a nonforfeitable right to contributions under the Plan for purposes of forfeitures, and for applying provisions permitting

31

the repayment of distributions to have forfeited amounts restored, and the provisions of Code Sections 410(a)(5)(D)(iii) and 411(a)(6)(D)(iii) permitting a plan to disregard certain service completed prior to breaks-in-service (sometimes referred to as “the rule of parity”).

5.4Top-Heavy Provisions

5.4.1As used in this Section 5.4, each of the following terms shall have the meanings for that term set forth in this Section 5.4.1:

(a)Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year, and for the first Plan Year of the Plan, the last day of such Plan Year.

(b)Determination Period means the Plan Year containing the Determination Date.

(c)Key Employee means any Employee or former Employee (and the beneficiaries of such Employee) who, at any time during the “Determination Period,” was:

(i)an officer of the Company or an Affiliate having an annual Limited Compensation greater than 50% of the Defined Benefit Dollar Limitation for any Plan Year within the Determination Period or, effective for Plan Years beginning after December 31, 2001, an officer of the Company or an Affiliate having an annual Limited Compensation greater than $130,000 (as adjusted under Code Section 416(i)(1)(A));

(ii)an owner (or considered an owner under Code Section 318) of one of the ten largest interests in the Company or an Affiliate if such individual’s compensation exceeds 100% of the Defined Contribution Dollar Limitation; provided, however, that this subparagraph (ii) shall not apply for Plan Years beginning after December 31, 2001;

(iii)a “5% owner” (as defined in Code Section 416(i)) of a Company or an Affiliate; or

(iv)a “1% owner” (as defined in Code Section 416(i)) of a Company or an Affiliate who has an annual Limitation Compensation in excess of $150,000.

(d)Limitation Compensation means an amount determined in accordance with Section 3.8.1(f).

(e)Non-Key Employee means any Employee who is not a Key Employee.

(f)Permissive Aggregation Group means the Required Aggregation Group of plans plus any other plan or plans of the Company or an Affiliate which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code Sections 401(a)(4) and 410.

(g)Required Aggregation Group means (i) each Qualified Plan of the Company or an Affiliate in which at least one Key Employee participates, and (ii) any other Qualified Plan of the

32

Company or an Affiliate which enables a plan described in (i) to meet the requirements of Code Section 401(a)(4) and Code Section 410.

(h)Super Top-Heavy Plan means the Plan, if the Top-Heavy Ratio, as determined under the definition of Top-Heavy Plan, exceeds 90%.

(i)Top-Heavy Plan means, for any Plan Year, the Plan if any of the following conditions exists:

(i)If the Top-Heavy Ratio for the Plan exceeds 60% and the Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans.

(ii)If the Plan is part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Required Aggregation Group of plans exceeds 60%.

(iii)If the Plan is part of a Required Aggregation Group and part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.

Solely for the purposes of determining whether the Plan or any other plan included in an aggregation group is a Top-Heavy Plan, the accrued benefit of a Non-Key Employee shall be determined (a) under the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Company and any Affiliate, or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate set forth in Code Section 411(b)(1)(C).

(j)Top-Heavy Ratio means, for the Plan, alone, or for the Required or Permissive Aggregation Group, as appropriate, either (i) or (ii) or (iii) below:

(i)If the Company or any Affiliate maintains one or more Defined Contribution Plans (including any “simplified employee pension” within the meaning of Code Section 408(k)) and the Company or any Affiliate has never maintained any Defined Benefit Plan which, during the one year period ending on the Determination Date, has or has had accrued benefits, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date, and the denominator of which is the sum of all account balances, in each case computed in accordance with Code Section 416; provided, however, that the numerator and denominator of the Top-Heavy Ratio shall be adjusted to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Code Section 416; and further provided, however, that the numerator and denominator of the Top-Heavy Ratio shall include any part of any account balance distributed within the one year period ending on the Determination Date due to severance from employment, separation from service, death, or disability, and shall also include any part of any account balance distributed for any other reason within the five year period ending on the Determination Date.

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(ii)If the Company or any Affiliate maintains one or more Defined Contribution Plans (including any “simplified employee pension” within the meaning of Code Section 408(k)) and the Company or any Affiliate maintains or has maintained one or more Defined Benefit Plans which, during the one year period ending on the Determination Date, has or has had any accrued benefits, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of the account balances under the aggregated Defined Contribution Plans for all Key Employees, determined in accordance with (iv) above, plus the present value of accrued benefits under the aggregated Defined Benefit Plans for all Key Employees as of the Determination Date and the denominator of which is the sum of the account balances under the aggregate Defined Contribution Plans for all Participants, determined in accordance with (iv) above, plus the present value of accrued benefits under the Defined Benefit Plans for all such Participants as of the Determination Date, all determined in accordance with Code Section 416; provided, however, that the numerator and denominator of the Top-Heavy Ratio shall include any accrued benefit under a Defined Benefit Plan distributed within the one year period ending on the Determination Date due to severance from employment, separation from service, death, or disability, and shall also include any part of any account balance distributed for any other reason within the five year period ending on the Determination Date.

(iii)For purposes of determining the Top-Heavy Ratio, the value of account balances will be determined as of the most recent Top-Heavy Valuation Date that falls within or ends with the twelve (12) month period ending on the Determination Date, except as provided in Code Section 416 for the first and second plan years of a Defined Benefit Plan. The account balances of any Participant who (a) is a Non-Key Employee, but who was a Key Employee in a prior year, or (b) has not performed an Hour of Service with the Company or any Affiliate at any time during the one year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Code Section 416. When aggregating plans, the value of account balances will be calculated with reference to the Determination Dates that fall within the same calendar year.

(k)Top-Heavy Valuation Date means the date as of which account balances or accrued benefits are valued to calculate the Top-Heavy Ratio.

5.4.2If the Plan is determined to be a Top-Heavy Plan as of any Determination Date, then notwithstanding any Plan provision to the contrary, it shall be subject to the rules set forth in the balance of this Section 5.4, beginning with the first Plan Year commencing after such Determination Date.

5.4.3(a)  Except as provided in Section 5.4.3(b), and except to the extent any other Defined Contribution Plan (except for The Rockwood Specialties Inc. Money Purchase Pension Plan) or Defined Benefit Plan provides such minimum benefit to the Participant, for any Plan Year in which the Plan is a Top-Heavy Plan, contributions and forfeitures allocated to the Profit-Sharing Contributions Subaccount of any Participant who is a Non-Key Employee (whether or not such

34

Participant has completed 1,000 Hours of Service in that Plan Year) with respect to that Plan Year shall not be less than the smaller of-

(i)3% of such Participant’s Limitation Compensation, or

(ii)the largest percentage of contributions and forfeitures, as a percentage of the Key Employee’s Compensation, allocated to the Account of any Key Employee for that year.

Effective for Plan Years beginning after December 31, 2001, Employer Matching Contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Section 416(c)(2) of the Code and this paragraph (a). The preceding sentence shall apply with respect to Employer Matching Contributions under this Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, employer matching contributions under such other plan. Employer Matching Contributions that are used to satisfy the minimum contribution requirements shall also be counted for purposes of the Average Contribution Percentage test of Plan Section 3.4.1 and other requirements of Code Section 401(m).

(b)The provision in (a) above shall not apply to any Participant who was not employed by the Company or an Affiliate on the last day of the Plan Year.

5.4.4In the event that any provision of this Section 5.4 is no longer required to qualify the Plan under the Code, then such provision shall thereupon be void without the necessity of further amendment of the Plan.

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ARTICLE VI

AMOUNT AND PAYMENT OF BENEFITS TO PARTICIPANTS

6.1Termination of Employment

6.1.1A Participant shall be entitled to receive the vested portion of his or her Account Balance upon a Termination of Employment which constitutes a “severance from employment” under Code Section 401(k).

6.1.2Subject to (a) and (b) below, and Section 6.2, a Participant’s Benefit Commencement Date shall be the date determined under Section 6.1.3.

(a)A Participant who terminates Employment prior to his or her Normal Retirement Date may make a written election (with Spousel Consent, if married) to receive his or her vested Account Balance as of a date prior to his or her Normal Retirement Date, provided such election is made during the 180-day period preceding his Benefit Commencement Date. The Administrative Committee shall notify the Participant (and the Participant’s Spouse, if any) of the right to defer any distribution until the Participant’s Required Distribution Date. Such notification shall include a general description of the material features of the optional forms of benefit under the Plan in a manner which would satisfy the notice requirements of Treasury Regulations Section 1.411 (a)-11. Such notice shall be provided no less than 30 days and no more than 180 days prior to the Benefit Commencement Date. However, distribution may commence less than 30 days after such notice is provided, so long as (i) the Participant (and his or her Spouse, if applicable) has been provided with information that clearly indicates that he or she has at least 30 days to consider whether to consider the decision of whether or not to elect a distribution; and (ii) the Participant (and his or her Spouse, if applicable) affirmatively elects a distribution.

(b)Notwithstanding (b) above, if a Participant’s vested Account Balance does not exceed $1,000, the Participant’s vested Account Balance shall be paid to him or her in a lump sum distribution as soon as practicable following his or her Termination of Employment. For this purpose, if a Participant does not have a vested interest in any subaccount (and thus is not entitled to any distribution from such subaccount), the Participant shall be deemed to have received a complete distribution of his or her interest in such subaccount upon termination of Employment.

6.1.3Unless the Participant otherwise elects, in no event shall he or she begin to receive a benefit later than the sixtieth day after the close of the Plan Year in which the latest of the following events occurs:

(a)the date the Participant attains his or her Normal Retirement Age;

(b)the Participant’s termination of employment; or

(c)the 10th anniversary of the year in which the Participant commenced participation in the Plan.

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Notwithstanding the foregoing, a Participant who terminates employment may elect to defer receipt of his or her benefit until his or her Required Distribution Date. In no event shall a Participant begin to receive his or her benefit later than is required under Section 6.2.3.

6.2In-Service Distributions

6.2.1Prior to Termination of Employment, a Participant who is at least age 59-1/2 may elect to withdraw all or any part of his or her vested Account Balance; provided, however, that any such withdrawal shall be permitted only if Spousal Consent (if married) to the withdrawal is obtained within 90 days prior to the date of the withdrawal, and provided, further, that any such withdrawal shall be subject to such rules and procedures as the Administrative Committee may establish.  A Participant who has incurred a Disability may also elect to withdraw all or any part of his or her vested Account Balance in accordance with this Section 6.2.1.

6.2.2Prior to Termination of Employment, a Participant may request a distribution from his or her 401(k) Subaccount due to hardship. The amount of a hardship withdrawal from a Participant’s 401(k) Subaccount shall not exceed the amount of his or her Elective 401(k) Deferrals (without earnings). A hardship withdrawal shall be permitted only if (1) the Administrative Committee determines that it is due to an immediate and heavy financial need (in accordance with (a) below) and is necessary to satisfy such financial need (in accordance with (b) below), and (2) the Participant obtains Spousal Consent to such withdrawal within 90 days prior to the date of the withdrawal. A withdrawal under this Section 6.2.2 shall be subject to such rules and procedures as the Administrative Committee may establish.

(a)A distribution shall be considered due to an immediate and heavy financial need only if it is due to:

(i)medical expenses described in Code Section 213(d) of the Participant, the Participant’s Spouse, or any dependents of the Participant (as defined in Code Section 152);

(ii)the purchase (excluding mortgage payments) of a principal residence for the Participant;

(iii)the payment of tuition and related educational fees for the next 12 months of post-secondary education for the Participant or his or her Spouse, children or dependents;

(iv)the need to prevent the eviction of the Participant from his or her principal residence or foreclosure on the mortgage of the Participant’s principal residence:

(v)the funeral expenses of a member of the Participant’s family; or

(vi)any other condition or event which the Commissioner of the Internal Revenue Service determines is a deemed immediate and financial need.

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(b)A distribution will be considered necessary to satisfy an immediate and heavy financial need of a Participant if all of the following requirements are satisfied:

(i)the distribution will not be in excess of (A) the amount of the immediate and heavy financial need of the Participant, plus (B) such amount as the Administrative Committee deems necessary to provide for federal, state and local income and penalty taxes which may reasonably be anticipated to result from the distribution;

(ii)the Participant is unable to satisfy the need by borrowing from commercial sources on reasonable commercial terms;

(iii)the Participant has made reasonable liquidation of his or her assets;

(iv)the Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Employer and the Affiliates;

(v)the Participant’s Elective 401(k) Deferrals and any other elective contributions and employee contributions, to the Plan and all other plans maintained by the Employer (as defined in Treas. Reg. §1.401(k)-1(d)(3)(iv)(F)) will be suspended for at least 6 months after receipt of the hardship distribution;

(vi)Effective for Plan Years beginning on or before December 31, 2001, the Participant may not make Elective 401(k) Deferrals for the Participant’s taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under Code Section 402(g) for such next taxable year.

(c)Effective as of January 1, 2002, Section 6.4 shall apply with respect to the minimum required distributions under Code Section 401(a)(9).

6.2.3[Reserved]

6.2.4Prior to Termination of Employment, a Participant may elect to withdraw all or any part of his or her Rollover Contributions Subaccount; provided, however, that any such withdrawal shall be permitted only if Spousal Consent to the withdrawal is obtained within 90 days prior to the date of the withdrawal, and provided, further, that any such withdrawal shall be subject to such rules and procedures as the Administrative Committee may establish.

6.3Loans

6.3.1A Participant or Beneficiary who is a “party in interest” within the meaning of ERISA Section 3(14) may submit an application to the Administrative Committee to borrow from his or her Account an amount which, when added to the outstanding balance of all other loans to the Participant from all qualified plans of the Employer and Affiliates, is not in excess of the lesser of:

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(a)$50,000, reduced by the excess, if any, of (i) the highest outstanding balance of loans from the Plan or any other qualified retirement plan maintained by the Employer or an Affiliate during the one-year period ending on the day before the date on which such loan was made, over (ii) the outstanding balance of any such other loan on the date on which the loan is made, or

(b)50% of the vested portion of his or her Account Balance.

6.3.2If approved, each such loan shall comply with the following conditions:

(a)It shall be evidenced by a negotiable promissory note.

(b)The rate of interest payable on the unpaid balance of such loan shall be a reasonable rate determined by the Administrative Committee.

(c)The loan, by its terms, must require substantial level amortization of repayments (to be made not less frequently than quarterly) within five years; provided, however, that if the proceeds of the loan are used to acquire any dwelling unit which, within any reasonable time (determined at the time the loan is made), will be used as the principal residence of the Participant, the repayment schedule may be for a reasonable term in excess of five years.

(d)In the event of a default, foreclosure on the promissory note will not occur until a distributable event occurs under Article VI or Article VIII. Notwithstanding the foregoing, upon the failure of a Participant to make loan payments because of the bankruptcy of the Participant or some other event of default set forth in the promissory note, or upon the occurrence of a distributable event under Article VI or Article VIII, such loan will become due and payable, and the unpaid balance of such loan, including any unpaid interest, may, in the Administrative Committee’s discretion, be charged against the Participant’s Account Balance. The unpaid balance of such loan, including unpaid interest, shall be charged against the Participant’s Account Balance before any distribution to the Participant or a Beneficiary.

(e)The loan shall be adequately secured; provided however, that not more than 50% of the Participant’s vested Account Balance shall be used as security for a loan.

(f)A Participant must obtain Spousal Consent to any loan within the 90-day period prior to the time any portion of the Participant’s Account Balance is used to secure the loan. A new Spousal Consent must be obtained in the event the loan is renegotiated, extended, renewed, or otherwise revised.

6.3.3Any loan of a Participant shall be charged solely against the Account of the borrowing Participant. Principal and interest payments with respect to the loan shall be credited solely to the Account of the borrowing Participant from which the loan was made. Any loss caused by nonpayment or other default on a Participant’s loan obligations shall be borne solely by that Account.

6.3.4The Administrative Committee may adopt written rules and procedures for loans which are hereby incorporated by reference.

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6.3.5Loans shall be made available to all Participants on a reasonably equivalent basis, except that the Administrative Committee may make reasonable distinctions based upon creditworthiness, other obligations of the Participant, the ability to repay through payroll deductions and other factors that may adversely affect the ability to assure repayment through payroll deduction.

6.3.6Plan loans under this Section 6.3 shall be administered in accordance with Code Section 72(p) and the regulations thereunder.

6.4Minimum Required Distributions

6.4.1General Requirements

(a)Effective Date.  The provisions of this Section will apply for purposes of determining required minimum distributions for calendar years beginning with the 2002 calendar year.

(b)Coordination with Minimum Distribution Requirements Previously in Effect.  The required minimum distributions for 2002 under this Section will be determined as follows.  If the total amount of 2002 required minimum distributions under the Plan made to the distributee prior to the effective date of this Section equals or exceeds the required minimum distributions determined under this Section, then no additional distributions will be required to be made for 2002 on or after such date to the distributee.  If the total amount of 2002 required minimum distributions under the Plan made to the distributee prior to the effective date of this Section is less than the amount determined under this Section, then required minimum distributions for 2002 on and after such date will be determined so that the total amount of required minimum distributions for 2002 made to the distributee will be the amount determined under this Section.

(c)Precedence.  The requirements of this Section will take precedence over any inconsistent provisions of the Plan.

(d)Requirements of Treasury Regulations Incorporated.  All distributions required under this Section will be determined and made in accordance with the Treasury Regulations under Code Section 401(a)(9).

6.4.2Time and Manner of Distribution

(a)Required Beginning Date.  The Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s required beginning date.

(b)Death of Participant Before Distributions Begin.  If the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(i)If the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary, then, except as provided in Article VIII, distributions to the Surviving Spouse will begin by December 31 of the calendar year immediately following the calendar year

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in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70 ½, if later.

(ii)If the Participant’s Surviving Spouse is not the Participant’s sole designated beneficiary, then, except as provided in Article VIII, distributions to the designated beneficiary will begin in December 31 of the calendar year immediately following the calendar year in which the Participant died.

(iii)If there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(iv)If the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary and the Surviving Spouse dies after the Participant but before distributions to the Surviving Spouse begin, this subsection 6.4.2(b), other than subection 6.4.2(b)(i), will apply as if the Surviving Spouse were the Participant.

For purposes of this subsection 6.4.2(b) and subsection 6.4.4, unless subsection 6.4.2(b)(iv) applies, distributions are considered to begin on the Participant’s required beginning date.  If subsection 6.4.2(b)(iv) applies, distributions are considered to begin on the date distributions are required to begin to the Surviving Spouse under subsection 6.4.2(b)(i).  If distributions under an annuity purchased from an insurance company irrevocably commence to the Participant before the Participant’s required beginning date (or to the Participant’s Surviving Spouse before the date distributions are required to begin to the Surviving Spouse under subsection 6.4.2(b)(i), the date distributions are considered to begin is the date distributions actually commence.

(c)Forms of Distribution.  Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with subsections 6.4.2(b)(i) and 6.4.4 of this Section.  If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and the Treasury Regulations.

6.4.3Required Minimum Distributions During Participant’s Lifetime

(a)Amount of Required Minimum Distribution For Each Distribution Calendar Year.  During the Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(i)the quotient obtained by dividing the Participant’s account balance by the distribution period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s age as of the Participant’s birthday in the distribution calendar year; or

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(ii)if the Participant’s sole designated beneficiary for the distribution calendar year is the Participant’s Spouse, the quotient obtained by dividing the Participant’s account balance by the number in the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and Spouse’s attained ages as of the Participant’s and Spouse’s birthdays in the distribution calendar year.

(b)Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death.  Required minimum distributions will be determined under this subsection 6.4.3 beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant’s date of death.

6.4.4Required Minimum Distributions After Participant’s Death

(a)Death On or After Date Distributions Begin

(i)Participant Survived by Designated Beneficiary.  If the Participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s designated beneficiary, determined as follows:

(A)The Participant’s remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(B)If the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary, the remaining life expectancy of the Surviving Spouse is calculated for each distribution calendar year after the year of the Participant’s death using the Surviving Spouse’s age as of the Spouse’s birthday in that year.  For distribution calendar years after the year of the Surviving Spouse’s death, the remaining life expectancy of the Surviving Spouse is calculated using the age of the Surviving Spouse as of the Spouse’s birthday in the calendar year of the Spouse’s death, reduced by one for each subsequent calendar year.

(C)If the Participant’s Surviving Spouse is not the Participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(ii)No Designated Beneficiary.   If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the Participant’s remaining life

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expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(b)Death Before Date Distributions Begin.

(i)Participant Survived by Designated Beneficiary.  Except as provided in Article VIII, if the Participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the remaining life expectancy of the Participant’s designated beneficiary, determined as provided in subsection 6.4.4(a).

(ii)No Designated Beneficiary.   If the Participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(iii)Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin.  If the Participant dies before the date distributions begin, the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary, and the Surviving Spouse dies before distributions are required to begin to the Surviving Spouse under subsection 6.4.2(b)(i), this subsection 6.4.4(b) will apply as if the Surviving Spouse were the Participant.

6.4.5Definitions

For purposes of this Section 6.4, the following definitions shall apply:

(a)Designated beneficiary.  The individual who is designated as the Beneficiary under the Plan and is the designated beneficiary under Code Section 401(a)(9) and Treas. Reg. §1.401(a)(9)-1, Q&A-4.

(b)Distribution calendar year.  A calendar year for which a minimum distribution is required.  For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s required beginning date.  For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin under subsection 6.4.2(b).  The required minimum distribution for the Participant’s first distribution calendar year will be made on or before the Participant’s required beginning date.  The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant’s required beginning date occurs, will be made on or before December 31 of that distribution calendar year.

(c)Life expectancy.  Life expectancy as computed by use of the Single Life Table in Treas. Reg. §1.401(a)(9)-9.

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(d)Participant’s account balance.  The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date.  The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

(e)Required beginning date.  The date specified in the Plan when distributions under Code Section 401(a)(9) are required to begin.

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ARTICLE VII

FORMS OF PAYMENT OF ACCOUNTS

7.1Methods of Distribution

The “Normal Form” of benefit for all Participants shall be a lump sum distribution. Distributions from a Participant’s vested Account under Article VI (other than a loan), shall be distributed in the Normal Form unless the Participant elects to receive his or her benefit in monthly, quarterly or annual installments, payable over any period not exceeding the life expectancy of the Participant or the joint life expectancies of the Participant and the Participant’s designated Beneficiary.

A Participant who has elected to receive an installment distribution may at any time elect to discontinue such installment payments and have the unpaid vested Account Balance paid in a lump sum distribution. In the event a Participant who has elected to receive an installment distribution dies after his or her Benefit Commencement Date but before the payment of the final installment, the unpaid installments shall be paid to the Participant’s Beneficiary. The Beneficiary may elect to continue receiving such installments or to have the unpaid vested Account Balance paid in a lump sum distribution. In the event a Participant dies before his or her Benefit Commencement Date, any election of a form of payment shall be void, and the Participant’s vested Account Balance shall be distributed in accordance with Article VIII.

Distributions shall be subject to the requirements of Code Section 401(a)(9).

7.2Election of Optional Forms

7.2.1An optional form of benefit payment provided for in Section 7.1 may be elected in accordance with procedures established by the Administrative Committee, which are hereby incorporated by reference.

7.2.2[Reserved]

7.2.3[Reserved]

7.2.4[Reserved]

7.3Direct Rollovers

7.3.1Notwithstanding any provision in this Plan to the contrary, a Participant or a Beneficiary who is the Surviving Spouse of a Participant may elect to have all or a portion of any amount payable to him or her from the Plan which is an “eligible rollover distribution” (as defined in Section 7.3.2 below) transferred directly to an “eligible retirement plan” (as defined in Section 7.3.2 below).  Without limiting the generality of the foregoing, the Administrative Committee shall be permitted to allow a direct rollover of a Participant’s loan under the Plan (and related promissory note) to a qualified trust described in Code Section 401(a) or a qualified annuity plan described in Code Section 403(a).

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Effective as of January 1, 2008, a distributee may elect to have an eligible rollover distribution paid directly to a Roth IRA (as defined in Code Section 408A); provided, however, for taxable years beginning prior to January 1, 2010, a distributee shall not be permitted to make a qualified rollover contribution (as defined in Code Section 408A(e)) from the Plan to a Roth IRA if, for the year the eligible rollover distribution is made, the Participant has a modified adjusted gross income exceeding $100,000 or is married and files a separate return (as provided in Code Section 408A(c)(3)(b)).  Any such election shall be made in accordance with such uniform rules and procedures as the Administrative Committee may prescribe from time to time as to the time and manner of the election in accordance with Code Section 401(a)(31).

7.3.2Definitions for purposes of this Section 7.3

(a)“Eligible rollover distribution” shall mean any distribution of all or any portion of the balance to the credit of the distributee other than: (1) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary; (2) any distribution for a specified period of ten years or more; (3) any distribution to the extent such distribution is required under Code Section 401(a)(9); or (4) the portion of any distribution that is not includable in gross income.  Hardship withdrawals under Section 6.2.2 shall not be eligible rollover distributions, and the distributee may not elect to have any portion of such a distribution paid directly to an eligible retirement plan.

(b)“Eligible retirement plan” shall mean, with respect to a Participant, an individual retirement account or annuity described in Code Section 408(a) or 408(b)(“IRA”), an annuity plan described in Code Section 403(a) or a qualified plan described in Code Section 401(a), that accepts the distributee’s eligible rollover distribution. An eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.

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ARTICLE VIII

DEATH BENEFITS

8.1Payment of Account Balances.  In the event of the death of a Participant while an Employee, the Participant’s entire Account Balance shall be payable to his or her Beneficiary. In the event of the death of a Participant after Termination of Employment but before his or her Benefit Commencement Date, the Participant’s vested Account Balance shall be payable to his or her Beneficiary. If Section 8.1.2 does not apply, benefits shall be payable as soon as practicable after the Participant’s death in a lump sum distribution unless the Beneficiary instead elects one of the optional forms of benefit available under Section 7.1. In the event of a Participant’s death after his or her Benefit Commencement Date, any unpaid vested Account Balance shall be payable in accordance with the form of benefit elected by the Participant under Article VII.

8.2Beneficiary

8.2.1Subject to Sections 8.2.2, 8.2.3, 8.2.4, and 8.2.5 below, a Participant may, with Spousal Consent (if married), designate a person or persons as his or her Beneficiary by filing a written designation of Beneficiary with the Administrative Committee in the time and manner established by the Committee. If no valid designation of Beneficiary is in effect at the time of the Participant’s death, or if the designated Beneficiary does not survive the Participant, the Beneficiary shall be the Participant’s Surviving Spouse or, if there is no Surviving Spouse, the Participant’s estate. For this purpose, if the Participant and the Beneficiary die simultaneously, or if there is not sufficient evidence to establish who died first, the Participant shall be deemed to have survived the Beneficiary.

8.2.2[Reserved]

8.2.3Any prior designation of a Beneficiary shall be automatically revoked upon the subsequent marriage or remarriage of the Participant.

8.2.4To the extent permitted by law and subject to any valid qualified domestic relations order (as defined in Code Section 414(p)), a Participant’s designation of his or her Spouse as Beneficiary shall be automatically revoked upon the Participant’s subsequent divorce. The Participant shall not be prevented from re-designating a former Spouse as his or her Beneficiary following a divorce.

8.3Required Commencement

Notwithstanding any other provision of the Plan to the contrary, if a Participant dies before his or her Benefit Commencement Date, the Participant’s entire interest must be distributed within five years after the Participant’s death, except that if the designated Beneficiary is the Participant’s Surviving Spouse, then distributions must begin (a) within one year of the Participant’s death, or (b) the date the Participant would have attained age 70-1/2.

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ARTICLE IX

FIDUCIARIES

9.1Named Fiduciaries

9.1.1The Administrative Committee (or its delegate) shall be a “named fiduciary” (within the meaning of Section 402(a)(2) of ERISA) of the Plan, with authority to control and manage the operation and administration of the Plan.

9.1.2The Company (or its delegate) shall be the “administrator” and “plan administrator” (within the meaning of ERISA Section 3(16)(A) and Code Section 414(g), respectively) with respect to the Plan.

9.1.3The Trustee shall be a “named fiduciary” (within the meaning of ERISA Section 402(a)(2)) of the Plan, with the authority to manage and control Trust assets in accordance with the terms of the Trust Agreement.

9.1.4There are no “named fiduciaries” of the Plan other than the Administrative Committee and the Trustee.

9.2Employment of Advisers

Each named fiduciary shall be authorized, to the extent it deems advisable, to designate persons who are not named fiduciaries to carry out fiduciary responsibilities allocated to it, to retain accountants, agents, attorneys, actuaries and other professional consultants and to rely upon information, statistics or analysis provided by any of such persons.

9.3Multiple Fiduciary Capacities

Any “named fiduciary” with respect to the Plan (as defined in ERISA Section 402(a)(2)) and any other “fiduciary” (as defined in ERISA Section 3(21)) with respect to the Plan may serve in more than one fiduciary capacity.

9.4Payment of Expenses

The reasonable expenses incident to the operation of the Plan, including, without limitation, the compensation of the Trustee, consultants, attorneys, fiduciaries and other advisors, shall be paid out of the Trust, to the extent permitted by law and not paid by the Employer. All members of the Administrative Committee shall serve without compensation from the Trust. Any determination by the Employer to pay all or part of any expense shall not in any way limit the Employer’s right to determine to have similar or other expenses paid out of the Trust assets at any other time.

9.5Indemnification

To the extent not prohibited by state or federal law, the Company and each Participating Affiliate, jointly and severally, agree to, and shall, indemnify and hold harmless any member of

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the Administrative Committee or any other Employee, officer or director of an Employer from all claims for liability, loss, damage or expense (including payment of reasonable expenses in connection with defense against any such claim) which result from any exercise or failure to exercise any of the indemnified person’s responsibilities with respect to the Plan, other than by reason of gross negligence, willful misconduct or a willful failure to act.

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ARTICLE X

TRUSTEE AND TRUST FUND

10.1Establishment of Trust.  A Trust Agreement shall be executed between the Company and the Trustee, which agreement shall provide for the creation of the Trust to receive and hold all contributions and earnings therefrom. Benefits provided under the Plan and expenses of administration of the Plan shall be paid from the assets held in the Trust as directed by the Administrative Committee and the Company, respectively.

10.2Powers and Duties of the Trustee.  The Trustee shall have exclusive authority and discretion to manage and control the assets of the Plan in accordance with the terms of the Trust Agreement.

10.3Exclusive Benefit.  Except as provided in Section 3.10, the Trust shall be maintained for the exclusive purpose of providing Plan benefits to Participants and their beneficiaries and paying the expenses of administration of the Plan and the Trust to the extent not paid by the Employer.

10.4Delegation of Responsibility.  The Trustee may designate persons, including persons other than “named fiduciaries” (as defined in ERISA Section 402(a)(2)), to carry out the specified responsibilities of the Trustee and shall not be liable for any act or omission of a person so designated.

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ARTICLE XI

PLAN ADMINISTRATION

11.1The Administrative Committee

11.1.1Administrative Committee members shall be appointed by the Company and may be removed by the Company at its discretion. Unless the Company otherwise provides, any member of the Administrative Committee who is an Employee of the Company or an Affiliate at the time of his or her appointment will be considered to have resigned from the Administrative Committee when no longer an Employee. Employees of the Company or an Affiliate shall receive no compensation for their services rendered to or as members of the Administrative Committee.

11.1.2If more than one member is appointed, the Administrative Committee shall act by a majority of its members at the time in office, and such action may be taken either by a vote at a meeting or in writing without a meeting. However, if less than three members are appointed, the Administrative Committee shall act only upon the unanimous consent of its members. The Administrative Committee may authorize in writing any person to execute any document or documents on its behalf, and any interested person, upon receipt of notice of such authorization directed to it, may thereafter accept and rely upon any document executed by such authorized person until the Administrative Committee shall deliver to such interested person a written revocation of such authorization.

11.1.3A member of the Administrative Committee who is also a Participant shall not vote or act upon any matter relating solely to himself or herself unless such person is the sole member of the Administrative Committee.

11.2Administrative Committee Powers and Duties

The Administrative Committee is allocated such duties and powers as may be necessary to discharge its duties hereunder including, without limitation, the exclusive and discretionary authority to perform the following functions:

(a)To make such rules and regulations as it shall deem necessary or proper for the efficient administration of the Plan;

(b)To interpret and construe the Plan, to resolve any Plan ambiguities and to decide any and all matters arising hereunder including, without limitation, questions of fact as to eligibility to participate in the Plan or receive benefits under the Plan or the amount and timing of benefits under the Plan; provided however, that all such interpretations and decisions shall be applied in a uniform and nondiscriminatory manner to all similarly situated persons and shall be conclusively binding upon all persons interested in the Plan. The Administrative Committee has discretionary authority to grant or deny benefits under this Plan. Benefits under the Plan will be provided only if the Administrative Committee decides, in its sole discretion, that the applicant is entitled to them;

(c)To select the Investment Funds;

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(d)To appoint one or more insurance companies;

(e)To appoint one or more Investment Managers;

(f)To establish and carry out a funding policy and method consistent with the objectives of the Plan and the requirements of ERISA;

(g)To monitor the limits on contributions under Article III and to take action to assure that such limits are satisfied for each Plan Year;

(h)To authorize disbursements from the Trust;

(i)To prescribe procedures to be followed by Participants or Beneficiaries who file applications for benefits;

(j)To approve the design of enrollment forms, Beneficiary designation forms and any other forms utilized in the administration of the Plan;

(k)To prepare and distribute, in such manner as the Administrative Committee determines to be appropriate, information concerning the Plan;

(l)To receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan;

(m)To establish such written procedures as it shall deem necessary or proper to determine the qualified status, pursuant to Code Section 414(p) of any domestic relations order received by the Administrative Committee which affects the right of a Participant and any alternate payee to payment of benefits under the Plan, and to administer distributions pursuant to any domestic relations order which the Administrative Committee determines to be a qualified domestic relations order within the meaning of Code Section 414(p);

(n)To delegate, by written instrument to one or more administrative subcommittees with respect to each Employer, such of the powers and duties allocated herein to the Administrative Committee as it deems advisable; any such subcommittee shall consist of persons appointed by the Administrative Committee, taking into consideration designations recommended by the principal executive officer of any Employer; and

(o)To make recommendations to the Company concerning amendments to the Plan.

11.3Claims Procedure

The Administrative Committee hereby adopts the procedure set forth below for reviewing benefits claims under the Plans:

(a)A Participant or Beneficiary shall submit all claims for benefits under the Plans in writing to the Administrative Committee.

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(b)The Administrative Committee shall send to the Participant or Beneficiary written notice of its decision within ninety (90) days of receiving the claim. The period may be extended to one hundred eighty (180) days if the Administrative Committee notifies the claimant in writing within the initial ninety (90) day period that special circumstances exist which require an extension of the period.  The written decision from the Administrative Committee shall set forth:

(i)the specific reasons for the decision;

(ii)the specific Plan provisions upon which the decision is based;

(iii)a description of any additional material or information necessary for the Participant or Beneficiary to perfect the claim for benefits and an explanation of the reasons why such material or information is necessary;

(iv)information regarding procedures for submitting a request for review of the decision on the claim; and

(v)a statement of the claimant’s right to bring an action under ERISA Section 502(a) following an adverse benefit determination on review.

(c)If the Administrative Committee denies the claim in whole or in part, the Participant or Beneficiary may submit a written request for review to the Administrative Committee within sixty (60) days of the notice of denial, pursuant to the procedures referenced in paragraph (b)(iv) above. The Participant or Beneficiary shall set forth all the grounds upon which the request for review is based and may submit issues or comments in writing. The Participant or Beneficiary (or his or her duly authorized representative) shall be entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits.

(d)The Administrative Committee shall send the Participant or Beneficiary written notice of its decision within sixty (60) days after the Administrative Committee receives the request for review. The review period may be extended to one hundred twenty (120) days if the Administrative Committee notifies the claimant within the initial sixty (60) day period that special circumstances exist which require an extension of the review period. The Administrative Committee’s written decision shall set forth the specific reasons for the decision and the Plan provision on which the decision is based. The Administrative Committee’s written decision shall also include a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits, and a statement of the claimant’s right to bring an action under ERISA Section 502(a). All such decisions of the Administrative Committee shall be final, conclusive and binding upon all Participants, Beneficiaries, and other interested persons. If no decision is received after sixty (60) days, the Participant should deem the claim on review denied.

(e)If applicable, claims for benefits due to Disability shall be decided in accordance with the applicable disability claims procedures under Section 2560.503-1 of the U.S.

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Department of Labor regulations (such procedures are hereby fully incorporated herein by this reference).

11.4Delegation of Responsibility

The Administrative Committee may designate persons, including persons other than “named fiduciaries” (as defined in ERISA Section 402(a)(2)), to carry out the specified responsibilities of the Administrative Committee and shall not be liable for any act or omission of a person so designated.

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ARTICLE XII

MANAGEMENT, CONTROL AND INVESTMENT OF PLAN ASSETS

12.1Investment Funds

12.1.1The Administrative Committee may establish one or more Investment Funds as it shall from time to time determine for the investment of a Participant’s Accounts. Notwithstanding the foregoing, the Administrative Committee, in accordance with Section 404(c) of ERISA, shall make available at all times at least three investment alternatives, each of which is diversified and has materially different risk and return characteristics. The investment alternatives in the aggregate shall enable each Participant, by choosing among them, to achieve a portfolio with aggregate risk and return characteristics at any point within the range normally appropriate for the Participant and which, in the aggregate, tend to minimize through diversification the overall risk of the Participant’s portfolio. The Plan is intended to constitute a plan described in Section 404(c) of ERISA and Section 2550.404c-1 of the U.S. Department of Labor Regulations, such that, to the extent applicable, the fiduciaries of the Plan may be relieved of liability for any losses that are the direct and necessary result of the investments instructions given by Participants and Beneficiaries under the Plan.

12.1.2Each Participant shall exercise control over the assets in his Accounts and is solely responsible for his investment elections. The Plan fiduciaries are not empowered to advise a Participant as to the manner in which his Accounts shall be invested. The fact that an Investment Fund is available to Participants for investment under the Plan shall not be construed as a recommendation for investment in that fund.

12.2Valuation of Accounts

A Participant’s Accounts shall be revalued at fair market value on each Valuation Date, with earnings and losses since the previous Valuation Date being credited to the Participant’s Account. Earnings and losses of the particular Investment Funds shall be allocated in the ratio that the portion of the Account Balance of a Participant invested in a particular Investment Fund bears to the total amount invested in such fund.

12.3Investment in Insurance Contract

The Administrative Committee may appoint one or more insurance companies to hold assets of the Plan, and may purchase insurance contracts or policies from one or more insurance companies with assets of the Plan. Neither the Trustee nor the Administrative Committee shall be liable for any act or omission of an insurance company with respect to any duties delegated to any insurance company.

12.4The Investment Manager

12.4.1The Administrative Committee may, by an instrument in writing, appoint one or more persons as an Investment Manager. Each person so appointed shall be (a) an investment adviser registered under the Investment Advisers Act of 1940, (b) a bank as defined in that Act, or (c) an

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insurance company qualified to manage, acquire or dispose of any asset of the Plan under the laws of more than one state.

12.4.2Each Investment Manager shall acknowledge in writing that it is a fiduciary (as defined in ERISA Section 3(21)) with respect to the Plan. The Company or the Administrative Committee shall enter into an agreement with each Investment Manager specifying the duties and compensation of such Administrative Manager and the other terms and conditions under which such Investment Manager shall be retained. Neither the Trustee nor the Administrative Committee shall be liable for any act or omission of any Investment Manager and shall not be liable for following the advice of any Investment Manager with respect to any duties delegated to any Investment Manager.

12.4.3The Administrative Committee shall have the power to determine the Trust assets to be invested pursuant to the direction of a designated Investment Manager and to set investment objectives and guidelines for the Investment Manager.

12.5Compensation

Each insurance company, Investment Manager and Trustee shall be paid such reasonable compensation, in addition to their expenses, as shall from time to time be agreed to by the Company or other person making such appointment; provided, however, that no such compensation shall be paid to any person who is an Employee.

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ARTICLE XIII

PLAN AMENDMENT OR TERMINATION

13.1Plan Amendment

The Company shall have the right at any time to amend the Plan, by an instrument in writing, effective retroactively or otherwise, provided that no such amendment shall have any of the effects specified in Section 13.2.

13.2Limitations of Plan Amendment

No Plan amendment shall:

(a)authorize any part of the Trust to be used for, or diverted to, purposes other than for the exclusive benefit of Participants or their Beneficiaries;

(b)decrease the Account Balance of any Participant or his or her Beneficiary under the Plan;

(c)reduce the vested percentage of any Participant;

(d)eliminate an optional form of benefit except to the extent permitted by Code Section 411(d)(6); or

(e)change the vesting schedule, either directly or indirectly, unless each Participant having not less than three years of Vesting Service is permitted to elect, within a reasonable period specified by the Administrative Committee after the adoption of such amendment, to have his or her vested percentage computed without regard to such amendment. The period during which the election may be made shall commence with the date the amendment is adopted and shall end as the later of:

(i)sixty days after the amendment is adopted;

(ii)sixty days after the amendment becomes effective; or

(iii)sixty days after the Participant is issued written notice by the Administrative Committee.

13.3Right of the Company to Terminate Plan

The Company intends and expects that, from year to year, it will be able to and will deem it advisable to continue this Plan in effect and to make contributions as herein provided. The Company reserves the right, however, to terminate the Plan at any time.

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13.4Effect of Partial or Complete Termination

13.4.1As of the date of a “partial termination” of the Plan or a complete discontinuance of contributions under the Plan, each affected Participant who is then an Employee shall become 100% vested in his or her Account Balance.

13.4.2As of the date of a “complete termination” of the Plan, each affected Participant who is then an Employee shall become 100% vested in his or her Account Balance, and distributions shall be made as soon as practicable thereafter, as determined by the Administrative Committee, in accordance with Article VII; provided, however, if the Company or an Affiliate maintains another “alternative defined contribution plan” (other than an employee stock ownership plan as defined in Code Section 4975(e)(7), a simplified employee pension, a SIMPLE IRA as defined in Code Section 408(p), a contract or plan under Code Section 403(b), and a plan under Code Section 457), no 401(k) Subaccounts shall be distributed solely in connection with the Plan’s termination.  For purposes this paragraph, a plan is an “alternative defined contribution plan” only if it exists at any time during the period beginning on the date of Plan termination and ending 12 months after distribution of all assets from the terminated Plan.  However, if at all times during the 24-month period beginning 12 months before the date of Plan termination, fewer than 2% of the employees who were eligible under this Plan as of the date of Plan termination are eligible under the other defined contribution plan, the other plan is not an alternative defined contribution plan.

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ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.1Plan Not a Contract of Employment

The Plan is not a contract of Employment, and the terms of Employment of any Employee shall not be affected in any way by the Plan or related instruments except as specifically provided therein.

14.2Source of Benefits

Benefits under the Plan shall be paid or provided for solely from the Trust, and neither the Employer, the Administrative Committee, Trustee, Investment Manager or insurance company shall assume any liability therefor.

14.3Benefits Not Assignable

Except as permitted in Code Section 401(a)(13) and ERISA Section 206(d), benefits provided under the Plan may not be assigned or alienated, either voluntarily or involuntarily. The preceding sentence shall not apply to (a) loans under Article VI, or (b) the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order which the Administrative Committee determines to be a “qualified domestic relations order” (as defined in Code Section 414(p)).

14.4Domestic Relations Orders

Any other provision of the Plan to the contrary notwithstanding, the Administrative Committee shall have all powers necessary with respect to the Plan for the proper operation of Code Section 414(p) with respect to qualified domestic relations orders referred to in Section 14.3, including, but not limited to, the power to establish all necessary or appropriate procedures, to authorize the establishment of new accounts with such assets and, subject to such investment control by the Administrative Committee as the Administrative Committee may deem appropriate, and the Administrative Committee may decide upon and make direct appropriate distributions therefrom. To the extent provided in a qualified domestic relations order, distribution of any portion of a Participant’s vested Account Balance allocated to an alternate payee may be made whether or not the Participant has terminated Employment or is otherwise eligible to receive a distribution. Effective as of April 6, 2007, a domestic relations order shall not fail to be treated as a qualified domestic relations order, pursuant to this Section 14.4, solely because (1) the order is issued after, or revises, another domestic relations order or qualified domestic relations order, and/or (2) solely because of the time at which it is issued; provided, however, any such domestic relations order shall be subject to the same requirements and protections that apply to qualified domestic relations orders under ERISA Section 206(d)(3).

14.5Benefits Payable to Minors, Incompetents and Others

In the event any benefit is payable to a minor or to a person otherwise under a legal disability, or who, in the sole discretion of the Administrative Committee, is by reason of

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advanced age, illness or other physical or mental incapacity incapable of handling and disposing of his or her property, or otherwise is in such position or condition that the Administrative Committee believes that he or she could not utilize the benefit for his or her support or welfare, the Administrative Committee shall have discretion to apply the whole or any part of such benefit directly to the care, comfort, maintenance, support, education or use of such person, or to pay the whole or any part of such benefit to the parent of such person; to the guardian, committee, conservator or other legal representative, wherever appointed, of such person; the person with whom such person is residing; or to any other person having the care and control of such person. The receipt by any such person to whom any such payment on behalf of any Participant or Beneficiary is made shall be a sufficient discharge therefor.

14.6Merger or Transfer of Assets

14.6.1Subject to Section 14.6.2, the Company may direct that the Plan be merged or consolidated with, or may transfer all or a portion of its assets and liabilities to, another plan or may receive assets and liabilities from another plan; without limiting the generality of the foregoing, the Company may direct that the Plan accept from, or transfer to, another plan any outstanding plan loan balances.  The Administrative Committee may take whatever action it deems necessary or appropriate to effect any such merger, consolidation or transfer. Any optional forms of benefit or other special provisions applicable to a Participant for whom an account balance has been transferred to this Plan from another plan shall be set forth in an Appendix hereto.

14.6.2The Plan may not merge or consolidate with, or transfer any assets or liabilities to, any other plan, unless each Participant would (if the Plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation or transfer (if the Plan had then terminated).

14.7Participation in the Plan By an Affiliate

14.7.1With the consent of the Company and by duly authorized action, an Affiliate may adopt the Plan. Participating Affiliate contributions shall be allocated solely to Eligible Employees of the Participating Affiliate. Company contributions shall be allocated solely to Eligible Employees of the Company.

14.7.2With the consent of the Company and by duly authorized action, any other Employer may terminate its participation in the Plan or withdraw from the Plan and the Trust.

14.7.3A Participating Affiliate shall have no independent power with respect to the Plan except as specifically provided by this Section 14.7.

14.8Action by the Company or a Participating Affiliate

Any action required to be taken by the Company or any Participating Affiliate pursuant to the terms of the Plan shall be taken by its board of directors or any person or persons duly empowered to act on its behalf.

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14.9Provision of Information

For purposes of the Plan, each Employee shall execute such forms as may be reasonably required by the Administrative Committee, and the Employee shall make available to the Administrative Committee and the Trustee any information they may reasonably request in this regard.

14.10Notice of Address

Each person entitled to benefits under this Plan must file with the Administrative Committee, in writing, his or her post office address and each subsequent change of post office address. Any communication, statement or notice addressed to such person at his or her latest reported post office address will be binding on him or her for all purposes under the Plan.

14.11Controlling Law

The Plan is intended to qualify under Code Section 401(a) and to comply with ERISA, and its terms shall be interpreted accordingly. Otherwise, to the extent not preempted by ERISA, the laws of the State of New York shall control the interpretation and performance of the terms of the Plan.

14.12Military Service

Notwithstanding any provision of this Plan to the contrary, effective as of December 12, 1994, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u).

14.13Conditional Adoption

Anything in the foregoing to the contrary notwithstanding, the Plan has been adopted on the express condition that the Plan will be considered by the Internal Revenue Service as qualifying under the provisions of Code Section 401(a), and the Trust will be considered as qualifying for exemption from taxation under Code Section 501(a). If the Internal Revenue Service determines that the Plan or Trust does not so qualify, the Plan shall be amended or terminated as decided by the Company.

14.14Word Usage and Article and Section References

As used in the Plan, the masculine includes the feminine, the singular includes the plural, and the plural includes the singular, unless qualified by the context. Titles of Articles and Sections of the Plan are for convenience of reference only and are to be disregarded in applying the provisions of the Plan.

14.15Effect of Mistake

In the event of a mistake or misstatement as to the age, eligibility, participation of an Eligible Employee, Vesting Service, the amount of contributions made by or on behalf of a

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Participant or the amount of distributions made or to be made to a Participant or Beneficiary, the Administrative Committee shall, to the extent it deems it possible, make the necessary adjustments (including, but not limited to, recoupment, reduction in benefit payments, offset of benefit payments or return of overpayments) to grant to such Participant or Beneficiary the credits or distributions to which he is properly entitled under the Plan.

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IN WITNESS WHEREOF, this Plan is hereby adopted, effective as of January 1, 2008, to be signed this              day of                               , 2008.

Rockwood Specialties Inc.

By:

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SUPPLEMENT A

Merger of the CeramTec NA Innovative Ceramic Engineering Corp. portion

of the

MG North America Holdings Inc. Saving Plan

A-1Introduction.  Effective July 31, 2004 (the “merger date”), plan assets and liabilities related to Ceram Tec NA Innovative Ceramic Engineering Corp. (“Ceram Tec”) participants and beneficiaries under the MG North America Holdings Inc. Savings Plan (the “MG Savings Plan”) shall be spun-off and merged into the Plan.  The merger of the Ceram Tec portion of the MG Savings Plan into the Plan (and any resulting transfer of assets) shall comply with Sections 401(a)(12), 411(d)(6), and 414(l) of the Code and the regulations thereunder.  The purpose of this Supplement A is to provide for the plan spin-off and merger.  Each participant and beneficiary in the Ceram Tec portion of the MG Savings Plan shall be referred to herein as a “Supplement A member.”

A-2Transfer of Account Balances.  As of the merger date, liabilities equal to the aggregate account balances, as adjusted through the merger date in accordance with the provisions of the MG Savings Plan, of each Supplement A member shall be transferred to the Plan and shall be credited to corresponding accounts established for each such Supplement A member under the Plan.  Thereafter, such balances shall be subject to the terms and conditions of the Plan, except as otherwise provided herein in this Supplement A.  The accounts of the Supplement A members under this Plan shall be adjusted for earnings, gains, and losses after such accounts have been invested in the investment funds as provided in Paragraph A-3 below.

A-3Transfer of Assets.  On, or as soon as practicable following, the merger date, the assets of the trust that serves as the funding vehicle for the Ceram Tec portion of the MG Savings Plan shall be transferred to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. Trust.  Such transfers shall be in cash, except that promissory notes related to Supplement A members’ loans from the MG Savings Plan shall be transferred in-kind.  Such transferred assets (other than promissory notes) shall be invested in the investment funds designated by the Administrative Committee on or as soon as practicable following the transfer of assets to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. Trust.

A-4Participation in the Plan.  Each Supplement A member who is employed by an Employer on the merger date shall become a member of the Plan on the merger date, subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement A.  Each other Supplement A member shall, on and after the merger date, be treated as an inactive member or a beneficiary (whichever is applicable) of the Plan, subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement A.

A-5Contributions under the Plan.  Each Supplement A member who becomes a participant under the Plan shall be eligible to make Elective 401(k) Deferrals as provided under Section 3.1.2 of the Plan.  Each Supplement A member who becomes a participant under the Plan shall be eligible for an Employer Matching Contribution after three months of such participation in the Plan, in an amount equal to the following:

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200% of each Supplement A member’s Elective 401(k) Deferrals not exceeding 1% of the Supplement A member’s Compensation for each Plan Year, plus 100% of the Supplement A member’s Elective 401(k) Deferrals that exceed 1% but do not exceed 2% of the Supplement A member’s Compensation that Year, plus 25% of the Supplement A member’s Elective 401(k) Deferrals that exceed 2% but no more than 6% of the Supplement A member’s Compensation for that Year, for a maximum Employer Matching Contribution of 4% of the Supplement A member’s Compensation for that Plan Year.

Effective as of January 1, 2007, each Supplement A member who becomes a participant under the Plan shall be eligible for an Employer Matching Contribution after three months of such participation in the Plan, in an amount equal to 50% of each Supplement A member’s Elective 401(k) Deferrals that do not exceed 6% of the Supplement A member’s Compensation each Plan Year, for a maximum Employer Matching Contribution of 3% of the Supplement A member’s Compensation for that Plan Year.

Effective January 1, 2007, Supplement A members shall be eligible for Profit-Sharing Contributions as otherwise provided under Section 3.1.4 of the Plan.

A-6Loans.  Any outstanding loan on the merger date that had been made to a Supplement A member under the MG Savings Plan shall be maintained on after that date under the Plan until all amounts of principal and interest thereon have been repaid.  The terms and conditions relating to such outstanding loans of Supplement A members will continue as in existence prior to merger date.

A-7In-Service Withdrawals.  On and after the merger date, a Supplement A member (other than a beneficiary) may obtain any in-service withdrawal described in Article VI of the Plan from such member’s accounts, including any balances attributable to transferred MG Savings Plan balances, subject to all applicable Plan provisions.

A-8Administrative Committee’s Actions.  The Administrative Committee shall take such actions as it deems necessary or desirable to accomplish the plan merger as described in this Supplement A.

A-9Transfer of Records.  On or as soon as practicable after the merger date, the administrator of the MG Savings Plan shall transfer to the Administrative Committee all the administrative records maintained with respect to Supplement A members.

A-10Use of Terms.  Terms used in this Supplement A shall, unless defined in this Supplement A or otherwise noted, have the meanings give those terms elsewhere in the Plan.

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SUPPLEMENT B

Merger of the Chemetall Foote Corporation portion

of the

MG North America Holdings Inc. Savings Plan

B-1Introduction.  Effective July 31, 2004 (the “merger date”), plan assets and liabilities related to the Chemetall Foote Corporation (“Chemetall”) participants and beneficiaries under the MG North America Holdings Inc. Savings Plan (the “MG Savings Plan”) shall be spun-off and merged into the Plan.  The merger of the Chemetall portion of the MG Savings Plan into the Plan (and any resulting transfer of assets) shall comply with Sections 401(a)(12), 411(d)(6), and 414(l) of the Code and the regulations thereunder.  The purpose of this Supplement B is to provide for the plan spin-off and merger.  Each participant and beneficiary in the Chemetall portion of the MG Savings Plan shall be referred to herein as a “Supplement B member.”

B-2Transfer of Account Balances.  As of the merger date, liabilities equal to the aggregate account balances, as adjusted through the merger date in accordance with the provisions of the MG Savings Plan, of each Supplement B member shall be transferred to the Plan and shall be credited to corresponding accounts established for each such Supplement B member under the Plan.  Thereafter, such balances shall be subject to the terms and conditions of the Plan, except as otherwise provided herein in this Supplement B.  The accounts of the Supplement B members under this Plan shall be adjusted for earnings, gains, and losses after such accounts have been invested in the investment funds as provided in Paragraph B-3 below.

B-3Transfer of Assets.  On, or as soon as practicable following, the merger date, the assets of the trust that serves as the funding vehicle for the Chemetall portion of the MG Savings Plan shall be transferred to the Profit-Sharing/401(k) Plan for Employee of Rockwood Specialties Inc. Trust.  Such transfers shall be in cash, except that promissory notes related to Supplement B members’ loans from the MG Savings Plan shall be transferred in-kind.  Such transferred assets (other than promissory notes) shall be invested in the investment funds designated by the Administrative Committee on or as soon as practicable following the transfer of assets to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. Trust.

B-4.Participation in the Plan.  Each Supplement B member who is employed by an Employer on the merger date shall become a member of the Plan on the merger date, subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement B.  Each other Supplement B member shall, on and after the merger date, be treated as an inactive member or a beneficiary (whichever is applicable) of the Plan, subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement B.

B-5Contributions under the Plan.  Each Supplement B member who becomes a participant under the Plan shall be eligible to make Elective 401(k) Deferrals as provided under Section 3.1.2 of the Plan.  Each Supplement C member who becomes a participant under the Plan shall be eligible for an Employer Matching Contribution after three months of such participation in the Plan, in an amount equal to the following:

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100% of each Supplement B member’s Elective 401(k) Deferrals that do not exceed 3% of the Supplement B member’s Compensation each Plan Year, for a maximum Employer Matching Contribution of 3% of the Supplement C member’s Compensation for that Plan Year.

Effective January 1, 2007, Supplement B members shall be eligible for Profit-Sharing Contributions as provided under Section 3.1.4 of the Plan.

B-6Loans.  Any outstanding loan on the merger date that had been made to a Supplement B member under the MG Savings Plan shall be maintained on after that date under the Plan until all amounts of principal and interest thereon have been repaid.  The terms and conditions relating to such outstanding loans of Supplement B members will continue as in existence prior to merger date.

B-7In-Service Withdrawals.  On and after the merger date, a Supplement B member (other than a beneficiary) may obtain any in-service withdrawal described in Article VI of the Plan from such member’s accounts, including any balances attributable to transferred MG Savings Plan balances, subject to all applicable Plan provisions.

B-8Administrative Committee’s Actions.  The Administrative Committee shall take such actions as it deems necessary or desirable to accomplish the plan merger as described in this Supplement B.

B-9Transfer of Records.  On or as soon as practicable after the merger date, the administrator of the MG Savings Plan shall transfer to the Administrative Committee all the administrative records maintained with respect to Supplement B members.

B-10Use of Terms.  Terms used in this Supplement B shall, unless defined in this Supplement B or otherwise noted, have the meanings give those terms elsewhere in the Plan.

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SUPPLEMENT C

Merger of the Oakite Products, Inc. portion

of the

MG North America Holdings Inc. Savings Plan

C-1Introduction.  Effective as of July 31, 2004 or as soon as administratively practicable thereafter (the “merger date”), the plan assets and liabilities attributable to the Oakite Products, Inc. (“Oakite”) participants and beneficiaries under the MG North America Holdings Inc. Savings Plan (the “MG Savings Plan”) shall be spun-off and immediately merged with and into the Plan; provided, however, the assets and liabilities which are attributable to the participants who are covered by the collective bargaining agreement between Oakite and USWA Local Union 2659, as of July 31, 2004, shall remain in the MG Savings Plan and not be subject to the spin-off and merger transaction with the Plan.  The merger of the Oakite portion of the MG Savings Plan into the Plan (and any resulting transfer of assets) shall comply with all the applicable legal requirements, including Sections 401(a)(12), 411(d)(6), and 414(l) of the Code and the regulations thereunder.  The purpose of this Supplement C is to provide for the plan spin-off and merger.  Each participant and beneficiary in the Oakite portion of the MG Savings Plan whose account is subject to the spin-off and merger transaction with the Plan shall be referred to herein as a “Supplement C member.”

C-2Transfer of Account Balances.  As of the merger date, liabilities equal to the aggregate account balances, as adjusted through the merger date in accordance with the provisions of the MG Savings Plan, of each Supplement C member shall be transferred to the Plan and shall be credited to corresponding accounts established for each such Supplement C member under the Plan.  Thereafter, such balances shall be subject to the terms and conditions of the Plan, except as otherwise provided herein in this Supplement C.  The accounts of the Supplement C members under this Plan shall be adjusted for earnings, gains, and losses after such accounts have been invested in the investment funds as provided in Paragraph C-3 below.

C-3Transfer of Assets.  On, or as soon as administratively practicable following, the merger date, the assets of the trust that serves as the funding vehicle for the Oakite portion of the MG Savings Plan shall be transferred to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. Trust.  Such transfers shall be in cash, except that promissory notes related to Supplement C members’ loans from the MG Savings Plan shall be transferred in-kind.  Such transferred assets (other than promissory notes) shall be invested in the investment funds designated by the Administrative Committee on or as soon as practicable following the transfer of assets to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. Trust.

C-4Participation in the Plan.  Each Supplement C member who is employed by the Employer on July 31, 2004 (or immediately thereafter) shall become a member of the Plan as of such date, subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement C.  Each other Supplement C member shall, on and after the merger date, be treated as an inactive member or a beneficiary (whichever is applicable) of the Plan,

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subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement C.

C-5Contributions under the Plan.  Each Supplement C member who becomes a participant under the Plan shall be eligible to make Elective 401(k) Deferrals as provided under Section 3.1.2 of the Plan.  Each Supplement C member who becomes a participant under the Plan shall be eligible for an Employer Matching Contribution after three months of such participation in the Plan, in amount equal to the following:

100% of each Supplement C member’s Elective 401(k) Deferrals that do not exceed 3% of the Supplement C member’s Compensation each Plan Year, for a maximum Employer Matching Contribution of 3% of the Supplement C member’s Compensation for that Year.

Effective January 1, 2005, Supplement C members shall be eligible for Profit-Sharing Contributions as provided under Section 3.1.4 of the Plan.

C-6Loans.  Any outstanding loan on the merger date that had been made to a Supplement C member under the MG Savings Plan shall be maintained on after that date under the Plan until all amounts of principal and interest thereon have been repaid.  The terms and conditions relating to such outstanding loans of Supplement C members will continue as in existence prior to merger date.

C-7In-Service Withdrawals.  On and after the merger date, a Supplement C member (other than a beneficiary) may obtain any in-service withdrawal described in Article VI of the Plan from such member’s accounts, including any balances attributable to transferred MG Savings Plan balances, subject to all applicable Plan provisions.

C-8Administrative Committee’s Actions.  The Administrative Committee shall take such actions as it deems necessary or desirable to accomplish the plan merger as described in this Supplement C.

C-9Transfer of Records.  On or as soon as practicable after the merger date, the administrator of the MG Savings Plan shall transfer to the Administrative Committee all the administrative records maintained with respect to Supplement C members.

C-10Use of Terms.  Terms used in this Supplement C shall, unless defined in this Supplement C or otherwise noted, have the meanings give those terms elsewhere in the Plan.

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SUPPLEMENT D

Merger of the Sachtleben Corporation portion

of the

MG North America Holdings Inc. Saving Plan

D-1Introduction.  Effective July 31, 2004 (the “merger date”), plan assets and liabilities related to Sachtleben Corporation (“Sachtleben”) participants and beneficiaries under the MG North America Holdings Inc. Savings Plan (the “MG Savings Plan”) shall be spun-off and merged into the Plan.  The merger of the Sachtleben portion of the MG Savings Plan into the Plan (and any resulting transfer of assets) shall comply with Sections 401(a)(12), 411(d)(6), and 414(l) of the Code and the regulations thereunder.  The purpose of this Supplement D is to provide for the plan spin-off and merger.  Each participant and beneficiary in the Sachtleben portion of the MG Savings Plan shall be referred to herein as a “Supplement D member.”

D-2Transfer of Account Balances.  As of the merger date, liabilities equal to the aggregate account balances, as adjusted through the merger date in accordance with the provisions of the MG Savings Plan, of each Supplement D member shall be transferred to the Plan and shall be credited to corresponding accounts established for each such Supplement D member under the Plan.  Thereafter, such balances shall be subject to the terms and conditions of the Plan, except as otherwise provided herein in this Supplement D.  The accounts of the Supplement D members under this Plan shall be adjusted for earnings, gains, and losses after such accounts have been invested in the investment funds as provided in Paragraph D-3 below.

D-3Transfer of Assets.  On, or as soon as practicable following, the merger date, the assets of the trust that serves as the funding vehicle for the Sachtleben portion of the MG Savings Plan shall be transferred to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. Trust.  Such transfers shall be in cash, except that promissory notes related to Supplement D members’ loans from the MG Savings Plan shall be transferred in-kind.  Such transferred assets (other than promissory notes) shall be invested in the investment funds designated by the Administrative Committee on or as soon as practicable following the transfer of assets to the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties Inc. Trust.

D-4Participation in the Plan.  Each Supplement D member who is employed by an Employer on the merger date shall become a member of the Plan on the merger date, subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement D.  Each other Supplement D member shall, on and after the merger date, be treated as an inactive member or a beneficiary (whichever is applicable) of the Plan, subject to the conditions and limitations of the Plan, except as otherwise provided herein in this Supplement D.

D-5Contributions under the Plan.  Each Supplement D member who becomes a participant under the Plan shall be eligible to make Elective 401(k) Deferrals as provided under Section 3.1.2 of the Plan.  Each Supplement D member who becomes a participant under the Plan shall be eligible for an Employer Matching Contribution after three months of such participation in the Plan, in an amount equal to the following:

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100 % of each Supplement D member’s Elective 401(k) Deferrals that do not exceed 3% of the Supplement D member’s Compensation each Plan Year, for a maximum Employer Matching Contribution of 3% of the Supplement D member’s Compensation for that Plan Year.

In addition, each Supplement D member shall be eligible for a Profit-Sharing Contribution under the Plan as provided under Section 3.1.4 of the Plan.

D-6Loans.  Any outstanding loan on the merger date that had been made to a Supplement D member under the MG Savings Plan shall be maintained on after that date under the Plan until all amounts of principal and interest thereon have been repaid.  The terms and conditions relating to such outstanding loans of Supplement D members will continue as in existence prior to merger date.

D-7In-Service Withdrawals.  On and after the merger date, a Supplement D member (other than a beneficiary) may obtain any in-service withdrawal described in Article VI of the Plan from such member’s accounts, including any balances attributable to transferred MG Savings Plan balances, subject to all applicable Plan provisions.

D-8Administrative Committee’s Actions.  The Administrative Committee shall take such actions as it deems necessary or desirable to accomplish the plan merger as described in this Supplement D.

D-9Transfer of Records.  On or as soon as practicable after the merger date, the administrator of the MG Savings Plan shall transfer to the Administrative Committee all the administrative records maintained with respect to Supplement D members.

D-10Use of Terms.  Terms used in this Supplement D shall, unless defined in this Supplement D or otherwise noted, have the meanings give those terms elsewhere in the Plan.

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SUPPLEMENT E

MERGER OF THE GLOBAL COLOR PIGMENTS BUSINESS

EMPLOYEES’ ACCOUNTS IN THE

ELEMENTIS WORLDWIDE RETIREMENT SAVINGS PLAN

E-1Introduction.  Effective as of December 10, 2007 (the “Merger Date”), the plan assets and liabilities related to employees of Elementis Worldwide Inc. and/or its affiliates who are employed by the Company or a Participating Affiliate in connection with the closing of the transactions under the Asset Purchase Agreement between Rockwood Specialties Group, Inc. and Elementis Holdings Ltd. Dated May 10, 2007 shall be spun-off from the Elementis Worldwide Retirement Savings Plan (subject to the approval of Elementis Worldwide Inc.) and merged with and into the Plan (the “Global Pigments Portion”).  The merger of the Global Pigments Portion of the Elementis Worldwide Retirement Savings Plan (the “Elementis Plan”) into the Plan (and any resulting transfer of assets) shall comply with the applicable requirements under Sections 401(a)(12), 411(d)(6), and 414(l) of the Code and the regulations thereunder.  The Elementis Plan was known as the “Elementis America Retirement Savings Plan” prior to February 8, 2006. The purpose of this Supplement E is to provide for the plan spin-off and merger of the Global Pigments Portion.  Each participant and beneficiary in the Global Pigments Portion of the Elementis Plan shall be referred to herein as a “Supplement E Member.”

E-2Transfer of Account Balances.  As of the Merger Date, assets and liabilities equal to the aggregate account balances, as adjusted through the Merger Date in accordance with the provisions of the Elementis Plan, of each Supplement E Member shall be transferred to the Plan and shall be credited to corresponding accounts established for each such Supplement E Member under the Plan. The transfer to the Plan shall include any after-tax accounts and outstanding plan loans (and the promissory notes connected to such plan loans).  Thereafter, such balances and loans shall be subject to the terms and conditions of the Plan, except as otherwise provided herein in this Supplement E.  The accounts of the Supplement E Members under the Plan shall be adjusted for earnings, gains, and losses after such accounts have been invested in the Investment Funds as provided in Section E-3 below.

E-3Transfer of Assets.  On, or as soon as practicable following, the Merger Date, the assets of the trust that serves as the funding vehicle for the Global Pigments Portion of the Elementis Plan shall be transferred to the Trust.  Such transfers shall be in cash, except that

(a)any promissory notes related to Supplement E Members’ loans from the Elementis Plan, and

(b)any shares of Pfizer Inc. stock related to Supplement E Members’ investment in the Pfizer Stock Fund under the Elementis Plan,

shall be transferred in-kind.  Such transferred assets (other than promissory notes and shares of Pfizer Inc. stock) shall be invested in the Investment Funds designated by the Administrative Committee on or as soon as practicable following the transfer of assets to the Trust.

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E-4Participation in the Plan. Each Supplement E Member who is employed by an Employer on the Merger Date shall become a member of the Plan on the Merger Date, subject to the conditions and limitations of the Plan.

E-5After-Tax Contribution Account.  No after-tax contributions shall be permitted under the Plan; provided, however, any after-tax contribution accounts transferred to the Plan from the Elementis Plan as of the Merger Date shall be maintained as “frozen” after-tax accounts (“After-Tax Contribution Subaccount”) to the extent necessary to account for such assets.

E-6Withdrawals from After-Tax Contribution Subaccount.  A Supplement E Member, while still employed, may request a withdrawal of all or a portion of his After-Tax Contribution Subaccount at any time.

E-7Withdrawals from Rollover Subaccount.  A Supplement E Member, while still employed, may request a withdrawal of all or a portion of his Rollover Contributions Subaccount attributable to the amounts transferred to the Plan from the Elementis Plan as of the Merger Date.

E-8Withdrawals of Employer Contributions from Chemicals Subaccount. Any amounts transferred to the Plan from the Elementis Plan as of the Merger Date which are attributable to amounts previously transferred to the Elementis Plan from the Harcros Chemicals Inc. Employee Savings Plan (as in effect through December 31, 1992) shall be maintained in the “Chemicals Subaccount.”  A Supplement E Member, while still employed, may request a withdrawal of all or a portion of his Chemicals Subaccount attributable to vested employer contributions and earnings thereon.

E-9Withdrawals of Employer Contributions from NL Subaccount.  Any amounts transferred to the Plan from the Elementis Plan as of the Merger Date which are attributable to amounts previously transferred to the Elementis Plan from the NL Industries, Inc. Retirement Savings Plan (as in effect through January 30, 1998) shall be maintained in the “NL Subaccount.”  A Supplement E Member, while still employed, may request a withdrawal of all or a portion of his NL Subaccount attributable to vested employer contributions and earnings thereon.

E-10Pfizer Stock Fund

E-10.1Pfizer Stock Fund. Any shares of Pfizer Inc. stock transferred to the Plan from the Elementis Plan as of the Merger Date shall be maintained as the “Pfizer Stock Fund.”

E-10.2Investment Elections. Schedule E Members (and any other Participant) shall not be permitted to elect to have any future contributions, or the proceeds from any other Investment Fund, invested in the Pfizer Stock Fund. Also, Schedule E Members may not elect to have any amount that is less than the full value of their Pfizer Stock Fund investment transferred from the Pfizer Stock Fund to any other Investment Fund. Finally, any dividends paid with respect to the Pfizer Stock Fund shall be reinvested in other Investment Funds in accordance with the Schedule E Members’ most recent instructions directing the investment of new contributions to the Plan.

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E-10.3Tender Offers.  To the extent that shares of Pfizer Inc. stock under the Pfizer Stock Fund are allocated to a Schedule E Member’s Account, the Trustee shall vote or tender such shares solely in accordance with written instructions furnished to it by each Schedule E Member (or Beneficiary of a deceased Schedule E Member); provided that the Trustee shall be responsible for delivery to each Schedule E Member (or Beneficiary of a deceased Schedule E Member) of all notices, proxies and proxy soliciting materials related to any such shares.  Any such instructions shall remain in the strict confidence of the Trustee.  Any and all fractional shares of Pfizer Inc. stock allocated to a Schedule E Member’s Account shall be combined with other fractional shares of other Schedule E Members and shall be voted, to the extent possible, to reflect the direction of Schedule E Members holding such fractional shares.  Shares, including fractional shares, for which no voting or tender instructions are received shall not be voted by the Trustee.

E-10.4In-Kind Distribution Right. If, as of the date a Schedule E Member terminates his employment, part of his Account is invested in the Pfizer Stock Fund, and if the Schedule E Member’s benefit is to be paid in the form of a lump sum, then the Schedule E Member or Beneficiary to whom such payment is made shall have that portion of the Accounts that is so invested paid in common stock or shares held in the Pfizer Stock Fund unless the Schedule E Member or Beneficiary elects to have such portion paid in cash; provided, however, that cash will be paid in lieu of any fractional shares allocated to the Schedule E Member’s Account.

E-11Wayne Profit Sharing Subaccount

E-11.1Wayne Profit Sharing Subaccount. Any assets transferred to the Plan from the Elementis Plan as of the Merger Date which are attributable to amounts previously transferred to the Elementis Plan from the New Wayne Chemical Corporation Profit Sharing Plan (as in effect through December 31, 1992) shall be maintained in the “Wayne Profit Sharing Subaccount.”

E-11.2Investment Elections.  Schedule E Members (and any other Participant) shall not be permitted to elect to have any future contributions, or the proceeds from any other Investment Fund, invested in any insured contracts held in the Wayne Profit Sharing Subaccount. Also, Schedule E Members shall not be permitted to transfer to an Investment Fund any portion of his Wayne Profit Sharing Subaccount that is held under an insured contract. Any life insurance policies held in the Wayne Profit Sharing Subaccount shall be continued and will be subject to the provisions of the Plan.  No new insurance policies may be purchased under the Plan.

E-12Vesting. Schedule E Members shall be fully vested in the portion of this Account consisting of the Global Pigments Portion upon the earliest to occur of (a) his attainment of age 55; (b) his Disability while actively employed; (c) his death while actively employed; or (d) his Normal Retirement Date.

E-13Loans.  Any outstanding loan on the Merger Date that had been made to a Supplement E Member under the Elementis Plan shall be maintained on after that date under the Plan until all amounts of principal and interest thereon have been repaid.  The terms and conditions relating to such outstanding loans of Supplement E Members will continue as in

74

existence immediately prior to Merger Date. A Schedule E Member may not apply to the Administrative Committee for a loan from his NL Subaccount (as defined in Section E-9).

E-14Forms of Benefit Payment for Wayne Pension Subaccount, H&C Subaccount, Northland Subaccount and Chemicals Account

E-14.1Definitions

(a)H&C Subaccount. Any assets transferred to the Plan from the Elementis Plan as of the Merger Date which are attributable to amounts previously transferred to the Elementis Plan from the Harrisons & Crosfield (America) Inc. Money Purchase Pension Plan and Trust (as in effect through December 31, 1992) shall be maintained in the “H&C Subaccount.”

(b)Northland Subaccount. Any assets transferred to the Plan from the Elementis Plan as of the Merger Date which are attributable to amounts previously transferred to the Elementis Plan from the Northland Chemical, Inc. Pension Plan and Trust (as in effect through December 31, 1992) shall be maintained in the “Northland Subaccount.”

(c)Wayne Pension Subaccount.  Any assets transferred to the Plan from the Elementis Plan as of the Merger Date which are attributable to amounts previously transferred to the Elementis Plan from the Wayne Chemical Pension Plan and Trust (as in effect through December 31, 1992) shall be maintained in the “Wayne Pension Subaccount.”

E-14.2Automatic Form of Payment

(a)Married Schedule E Members.  If the Schedule E Member is married on his benefit payment date, the Schedule E Member’s Wayne Pension Account, H&C Account and Northland Account shall be paid in the form of an annuity for the joint lives of the Schedule E Member and his spouse with a periodic benefit payable after the death of the Schedule E Member to the spouse equal to 50% of the periodic benefit payable to the Schedule E during his lifetime, if such spouse survives the Schedule E, unless such Schedule E Member elects another form of payment in the manner described below.  If the Schedule E Member makes no election, the survivor percentage shall be 50%.

(b)Unmarried Schedule E Members.  If the Schedule E Member is not married on his benefit payment date, the Schedule E Member’s Wayne Pension Account, H&C Account and Northland Account shall be paid in the form of an annuity for the life of the Schedule E Member only, unless he elects another form of payment in the manner described below.

E-14.3Optional Form of Payment.  A Schedule E Member who is not subject to the provisions above may elect, in writing, to have his Wayne Pension Account, H&C Account and Northland Account paid to him in a single sum.

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E-14.4Spousal Consent Requirement

(a)Consent Requirement. A Schedule E Member described in this subparagraph E-14.4(a) who does not establish to the satisfaction of the Administrative Committee that he has no spouse on his benefit payment date may elect to receive a form of benefit other than the automatic form applicable to the Schedule E Member only if his spouse (or the spouse’s legal guardian if the spouse is legally incompetent) consents, in the manner described in subparagraph E-14.4(b) not to receive the automatic form of payment described in subparagraph E-14.2(a) and to the specific alternative form elected by the Schedule E Member, or to the Schedule E Member’s right to choose any alternative form without any further consent by the spouse, or the spouse’s consent is not required for the reason specified in subparagraph 14.4(c).

(b)Form and Content of Spouse’s Consent. A spouse may consent to the designation of one or more Beneficiaries other than such spouse provided that such consent shall be in writing, must consent to the specific alternate beneficiary or beneficiaries designated (or permit beneficiary designations by the Schedule E Member without the spouse’s further consent), must acknowledge the effect of such consent, and must be witnessed by a Plan representative or notary public.  Such spouse’s consent shall be irrevocable, unless expressly made revocable.  The consent of a spouse in accordance with this subsection E-14.4(b) shall not be effective with respect to any subsequent spouse of the Schedule E Member.

(c)Spouse as Beneficiary. A Schedule E Member may designate a Beneficiary other than his spouse pursuant to Section 8.2 of the Plan if

the Schedule E Member has no spouse, or the Administrative Committee determines that the spouse cannot be located or such other circumstances exist under which spousal consent is not required, as prescribed by Treasury regulations.

E-14.5Revocation of Election.  A Schedule E Member may revoke an election to waive the automatic form of payment described in subparagraph E-14.2(a).  Such revocation may be made at any time during the election period in which such election can be made.  Such revocation shall not void any prospectively effective consent given by his spouse in connection with the revoked election.

E-14.6Explanations to Schedule E Members.  Each Schedule E Member described in this section E-14 shall receive, no less than 30 days and no more than 180 days before the date his benefits are to begin, a written explanation of:

(a)the terms and conditions of the automatic form of payment and each alternative form of payment available to the Schedule E Member, including information explaining the relative values of each form of payment;

(b)the Schedule E Member’s right to waive the automatic form of payment and the effect of such waiver;

76

(c)the rights of the Schedule E Member’s spouse with respect to such waiver; and

(d)the right to revoke an election to receive an alternative form of payment and the effect of such revocation.

Notwithstanding the foregoing, the Schedule E Member’s benefit payment date may be less than 30 days after the explanation described in this Section is provided if (A) the Schedule E Member is given notice of his right to a 30-day period in which to consider whether to (i) waive the normal form of benefit and elect an optional form and (ii) to the extent applicable, consent to the distribution; (B) the Schedule E Member affirmatively elects a distribution and a form of benefit and the spouse, if necessary, consents to the form of benefit elected; (C) the Schedule E Member is permitted to revoke his affirmative election at any time prior to his benefit payment date or, if later, the expiration of a 7-day period beginning on the day after the explanation described in this section is provided to the Schedule E Member; (D) the benefit payment date is after the date the explanation described in this section is provided to the Schedule E Member; and (E) distribution to the Schedule E Member does not commence before the expiration of the 7-day period described in clause (C) above.

E-14.7Death Benefits from the Wayne Pension Subaccount, H&C Subaccount, Northland Subaccount and Chemicals Subaccount

(a)If the Schedule E Member dies after his benefit payment date, death benefits, if any, from the Schedule E Member’s Wayne Pension Subaccount, H&C Subaccount, Northland Subaccount and Chemicals Subaccount shall be determined by the form of payment in effect for the Schedule E Member at the time of his death.

(b)If the Schedule E Member dies before his benefit payment date and his spouse is the Beneficiary with respect to all or a portion of his Wayne Pension Subaccount, H&C Subaccount and Northland Subaccount, death benefits payable from his Wayne Pension Subaccount, H&C Subaccount and Northland Subaccount to his surviving spouse shall be paid in the form of life annuity for the spouse, unless the spouse elects, in writing in the manner prescribed by the Administrative Committee, to receive the Wayne Pension Subaccount in the form of a single sum.

(c)If the Schedule E Member dies before his benefit payment date and has designated a Beneficiary other than his spouse for all or a portion of his Chemicals Subaccount, death benefits payable from his Chemicals Subaccount to such Beneficiary shall be paid, at the election of the Schedule E Member or the Beneficiary, in the form of a single sum or quarterly installments over five (5) years.

E-14.8Beneficiary Designation. An election to designate one or more Beneficiaries other than the Schedule E Member’s spouse for the Schedule E Member’s Wayne Pension Subaccount, H&C Subaccount and Northland Subaccount shall become invalid on January 1 of the calendar year in which the Schedule E Member attains age 35.  The Schedule E Member’s spouse shall, on such date, become the Beneficiary with respect to the Schedule E Member’s

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Wayne Pension Subaccount, H&C Subaccount and Northland Subaccount, unless the Schedule E Member subsequently designates, in accordance with the provisions of this Section and Plan, one or more Beneficiaries with respect to his Wayne Pension Subaccount, H&C Subaccount and Northland Subaccount.

E-14.9Qualified Domestic Relations Orders. The benefit payable to an alternate payee shall be paid in the form of a single sum in cash, except that the alternate payee may elect to receive the portion of the benefit, if any, attributable to a Schedule E Member’s Wayne Pension Subaccount, H&C Subaccount, Northland Subaccount and Chemicals Subaccount distributed in any form provided under Section E-14 with respect to such account to the extent permitted by section 401(a)(9) of the Code and regulations issued thereunder.

E-15Distribution Restrictions on Wayne Pension Subaccount. A Schedule E Member shall not be permitted to take an age 59-1/2 or hardship distribution from his Wayne Pension Subaccount.

E-16Elimination of Forms of Benefit Payments. Any and all forms of distribution applicable to the Global Pigments Portion are eliminated as of the Merger Date, except to the extent the form of benefit distribution is provided in this Schedule E and/or the Plan. This provision shall be interpreted in a manner consistent with the requirements of Code Section 411(d)(6)(E).

E-17Administrative Committee Actions. The Administrative Committee shall take such actions as it deems necessary or desirable to accomplish the plan merger as described in this Supplement E.

E-18Transfer of Records.  On or as soon as practicable after the Merger Date, the administrator of the Elementis Plan shall transfer to the Administrative Committee all the administrative records maintained with respect to Supplement E Members.

E-19Use of Terms.  Terms used in this Supplement E shall, unless defined in this Supplement E or otherwise noted, have the meanings give those terms elsewhere in the Plan.

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EX-10.45

Exhibit 10.45

THE ROCKWOOD SPECIALTIES INC.

MONEY PURCHASE PENSION PLAN

As Amended and Restated Effective as of January 1, 2008

(Except as otherwise Provided)

1

TABLE OF CONTENTS

		Page
INTRODUCTION		1
ARTICLE I DEFINITIONS		2
1.1	Account	2
1.2	Account Balance	2
1.3	Administrative Committee	2
1.4	Affiliate	2
1.5	Annuity Contract	2
1.6	Beneficiary	2
1.7	Benefit Commencement Date	2
1.8	Break-in-Service	2
1.9	Code	3
1.10	Company	3
1.11	Compensation	3
1.12	Defined Benefit Plan	5
1.13	Defined Contribution Plan	5
1.14	Disability	5
1.15	Effective Date	5
1.16	Eligible Employee	5
1.17	Employee	6
1.18	Employer	6
1.19	Employer Contributions	6
1.20	Employment	6
1.21	Employment Commencement Date	6
1.22	Entry Date	6
1.23	ERISA	6
1.24	Highly Compensated Employee	6
1.25	Hour of Service	7
1.26	Investment Fund	8
1.27	Investment Manager	8
1.28	Leased Employee	8
1.29	Leave of Absence	8
1.30	Normal Retirement Age	8
1.31	Participant	8
1.32	Participating Affiliate	8
1.33	Period of Service	8
1.34	Period of Severance	8
1.35	Plan	8
1.36	Plan Year	8
1.37	Qualified Joint and Survivor Annuity	9
1.38	Qualified Pre-Retirement Survivor Annuity	9
1.39	Reduction in Force	9
1.40	Severance from Service Date	9

i

1.41	Spousal Consent	9
1.42	Spouse	9
1.43	Surviving Spouse	9
1.44	Termination of Employment	9
1.45	Trust	10
1.46	Trust Agreement	10
1.47	Trustee	10
1.48	Valuation Date	10
1.49	Vesting Service	10
1.50	Year of Service	10
ARTICLE II		11
2.1	Admission as a Participant	11
2.2	Rehired Employees	11
2.3	Termination of Participation	12
ARTICLE III CONTRIBUTIONS		13
3.1	Employer Contributions	13
3.2	Participant Contributions	13
3.3	Timing of Contributions	13
3.4	Forfeitures	14
3.5	Limitation on Allocations	14
3.6	[Reserved]	16
3.7	Return of Employer Contributions Under Special Circumstances	16
3.8	Contributions Conditioned on Deductibility	17
ARTICLE IV ACCOUNTS, INVESTMENTS AND ALLOCATIONS		18
4.1	Establishment of Participant Accounts	18
4.2	Investment of Funds	18
4.3	Allocation of Earnings to Accounts	18
4.4	Allocation Report	18
4.5	Allocation Corrections	18
ARTICLE V VESTING AND TOP-HEAVY PROVISIONS		19
5.1	Determination of Vesting	19
5.2	Rules for Crediting Vesting Service	19
5.3	Rules for Crediting; Service Upon Termination of Employment	20
5.4	Top-Heavy Provisions	21
ARTICLE VI AMOUNT AND PAYMENT OF BENEFITS TO PARTICIPANTS,		25
6.1	Termination of Employment	25
6.2	Age 70-1/2 Distributions	26
6.3	No In-Service Withdrawals or Loans	26
6.4	Minimum Required Distributions	26
ARTICLE VII FORMS OF PAYMENT OF ACCOUNTS		31
7.1	Methods of Distribution	31

ii

7.2	Election of Optional Forms	31
7.3	Direct Rollovers	33
ARTICLE VIII DEATH BENEFITS		34
8.1	Payment of Account Balances	34
8.2	Beneficiary	34
8.3	Required Commencement	35
ARTICLE IX FIDUCIARIES		36
9.1	Named Fiduciaries	36
9.2	Employment of Advisers	36
9.3	Multiple Fiduciary Capacities	36
9.4	Payment of Expenses	36
9.5	Indemnification	36
ARTICLE X TRUSTEE AND TRUST FUND		38
10.1	Establishment of Trust	38
10.2	Powers and Duties of the Trustee	38
10.3	Exclusive Benefit	38
10.4	Delegation of Responsibility	38
ARTICLE XI PLAN ADMINISTRATION		39
11.1	The Administrative Committee	39
11.2	Administrative Committee Powers and Duties	39
11.3	Claims Procedure	40
11.4	Delegation of Responsibility	42
ARTICLE XII MANAGEMENT, CONTROL AND INVESTMENT OF PLAN ASSETS		43
12.1	Investment Funds	43
12.2	Valuation of Accounts	43
12.3	Investment in Insurance Contract	43
12.4	The Investment Manager	43
12.5	Compensation	44
ARTICLE XIII PLAN AMENDMENT OR TERMINATION		45
13.1	Plan Amendment	45
13.2	Limitations of Plan Amendment	45
13.3	Right of the Company to Terminate Plan	45
13.4	Effect of Partial or Complete Termination	46
ARTICLE XIV MISCELLANEOUS PROVISIONS		47
14.1	Plan Not a Contract of Employment	47
14.2	Source of Benefits	47
14.3	Benefits Not Assignable	47
14.4	Domestic Relations Orders	47
14.5	Benefits Payable to Minors, Incompetents and Others	47
14.6	Merger or Transfer of Assets	48

iii

14.7	Participation in the Plan by an Affiliate	48
14.8	Action by the Company or a Participating Affiliate	48
14.9	Provision of Information	48
14.10	Notice of Address	49
14.11	Controlling Law	49
14.12	Military Service	49
14.13	Conditional Adoption	49
14.14	Word Usage and Article and Section References	49
14.15	Effect of Mistake	49

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INTRODUCTION

Effective as of January 1, 1989, Laporte Inc. established The Laporte Inc. Money Purchase Pension Plan (the “Plan”). The Plan was amended from time to time for administrative reasons, to reflect changes in the Laporte Inc. corporate structure, and to comply with changes in relevant law.

The Plan was amended and restated effective as of January 1, 1997 (except where otherwise indicated), to comply with the Uruguay Round Agreements Act (“GATT”), the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), the Small Business Job Protection Act of 1996 (“SBJPA”), the Taxpayer Relief Act of 1997 (“TRA ‘97”), the Internal Revenue Service Restructuring and Reform Act of 1998 (“RRA ‘98”) and the Community Renewal Tax Relief Act of 2000 (“CRA”) (collectively known as “GUST”), and other changes in applicable law. Effective as of March 1, 2001, the Plan name was changed to The Rockwood Specialties Inc. Money Pension Plan to reflect the acquisition of Laporte Inc. by Rockwood Specialties Inc. (the “Company”). This Plan, was amended and restated effective as of January 1, 1997 (except where otherwise indicated) to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”), and is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and any guidance issued thereunder. The Plan is hereby amended and restated effective as of January 1, 2008 to incorporate all effective prior amendments since the Plan’s last amendment and restatement, and to reflect applicable legislative changes, including changes under the Pension Protection Act of 2006, changes under EGTRRA, and the final regulations under Code Section 415.

The Company intends that this Plan and related Trust qualify under all applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and each of the terms of this Plan and Trust shall be so interpreted.

The benefits provided under the Plan to any participant who terminates Employment, retires or dies while employed by the Company or any Affiliate thereof shall be determined in accordance with the provisions of the Plan as in effect on the date of such Termination of Employment, unless such person is thereafter reemployed and again becomes a Participant in the Plan.

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ARTICLE I

DEFINITIONS

Each of the following terms shall have the meaning set forth in this Article I for purposes of this Plan:

1.1Account  shall mean the separate account established and maintained for each Participant pursuant to Section 4.1.

1.2Account Balance  shall mean the value of a Participant’s Account determined as of the applicable Valuation Date.

1.3Administrative Committee  shall mean the committee appointed pursuant to, and having the responsibilities specified in, Article XI of the Plan.

1.4Affiliate  shall mean any corporation or unincorporated trade or business (other than the Company) while it is: (a) a member of a controlled group of corporations (within the meaning of Code Section 414(b)) of which the Company is a member; (b) a trade or business under “common control” (within the meaning of Code Section 414(c)) with the Company; (c) a member of an “affiliated service group” (within the meaning of Code Section 414(m)) which includes the Company; or (d) any other entity required to be aggregated with the Company under Code Section 414(o).

Notwithstanding the foregoing, for purposes of applying Code Section 414 (b) and (c) to Code Section 415, the phrase “more than 50 percent” shall be substituted for the phrase “at least 80 percent” each place it appears in Code Section 1563(a)(1).

1.5Annuity Contract  shall mean an individual or group annuity contract issued by an insurance company providing periodic benefits, whether fixed, variable or both, the benefits or value of which a Participant or Beneficiary cannot transfer, sell, assign, discount, or pledge as collateral for a loan or as security for the performance of an obligation, or for any other purpose, to any person other than the issuer thereof. The terms of any Annuity Contract distributed by the Plan to a Participant or Beneficiary shall comply with the terms of this Plan.

1.6Beneficiary  shall mean the person or persons entitled to receive any payment of benefits from the Plan upon a Participant’s death, as determined in accordance with Section 8.2.

1.7Benefit Commencement Date  shall mean the first day of the first period for which an annuity benefit is payable to the Participant under the Plan or, if a Participant’s benefit is not payable in the form of an annuity, the first day on which all events have occurred that entitle the Participant to receive his or her benefit.

1.8Break-in-Service  shall mean a one-year period of severance determined on the basis of a 12-consecutive-month period beginning on the severance from service date and ending on the first anniversary of such date, provided that the Employee during such 12-consecutive-month period does not perform an hour of service (within the meaning of Section 2530.200b-2(a)(1) of the U.S. Department of Labor Regulations) for the Employer; provided, however, (a) if an

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Employee severs from service as a result of quit, discharge or retirement and then returns to service within 12 months, the period of severance shall be deemed a period of service, and (b) if an Employee is absent from service for any reason other than quit, discharge, retirement or death and during the absence a quit, discharge or retirement occurs, the period of time between the severance from service date (i.e., the date of quit, discharge or retirement) and the first anniversary of the date on which the employee was first absent shall be taken in account, if the employee returns to service on or before such first anniversary date.

Solely for purposes of determining whether a Break-in-Service has occurred, an Employee who is absent from work for any period  by reason of the (a) pregnancy of the Employee (b) the birth of a child of the Employee, (c) the placement of a child with the Employee in connection with the adoption of such child by such Employee, or (d) caring for such child for a period beginning immediately following such birth or placement, shall be credited with a sufficient Period of Service to prevent a Break-in-Service; provided, however, the Employee shall have a Severance from Service Date which is the second anniversary of the first day of such absence if the Employee is absent from service beyond the first anniversary of the first day of such absence. The period between the first and second anniversaries of the first day of absence from work shall not be deemed a period of service nor a period of severance.

An Employee who is reemployed and is subject to reemployment under the Uniformed Services Reemployment Rights Act of 1994 (“USERRA”) shall not be treated as having incurred a Break in Service by reason of the individual’s period of qualified military service as defined in USERRA.

For purposes of this Section 1.8, a “severance from service” shall occur on the earlier of (a) the date on which an Employee quits, retires, is discharged or dies, or (ii) the first anniversary of the first date of a period in which an Employee remains absent from service (with or without pay) with the Employer for any reason other than quit, retirement, discharge or death, such as vacation, holiday, sickness, disability, leave of absence or layoff.

1.9Code  shall mean the Internal Revenue Code of 1986, as now in effect or as amended from time to time. A reference to a specific provision of the Code shall include such provision, any successor provision, and any applicable regulations pertaining thereto.

1.10Company  shall mean Rockwood Specialties Inc. or any successor legal entity.

1.11Compensation  shall mean all remuneration for services rendered paid by the Employer to an Employee, including, without limitation, bonuses, overtime and commissions, but excluding amounts paid or reimbursed by the Employer for moving expenses incurred by an Employee to the extent that at the time of payment it is reasonable to believe such amounts are deductible by the Employee under Code Section 217, the value of any non-qualified stock option granted to a Highly Compensated Employee by the Employer, amounts paid to a Highly Compensated Employee to enable such Employee to pay taxes on certain items of compensation received from the Employer, and items which be excluded from the definition of “compensation” within the meaning of Treas. Reg. Section 1.415-2(d)(3).  Compensation includes compensation which is not currently includible in the Participant’s gross income by reason of the application of Code Section 125, Code Section 402(e)(3) or Code Section 402(h)(1)(B). Effective as of January 1, 2001,

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Compensation shall also include amounts includible in the Employee’s gross income by reason of the application of Code Section 132(f).

Notwithstanding the foregoing, the Compensation taken into account for an Employee for any Plan Year shall not exceed $150,000, as adjusted pursuant to Code Section 401(a)(17) (the “Code Section 401(a)(17) limitation”). For the 2001 Plan Year, the Code Section 401(a)(17) limitation is $170,000. Effective for Plan Years beginning after December 31, 2001, Compensation taken into account for an Employee for a Plan Year shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the Code.

Effective for January 1, 2008, Limitation Compensation shall also include Post-Severance Compensation.  “Post-Severance Compensation” means, for Limitation Years that begin on or after January 1, 2008, the following amount(s) that would have been included in the definition of Limitation Compensation if the amounts were paid prior to the Employee’s Severance from Service Date from employment with the Employer, provided such amount(s) are paid to the Employee by the later of 2½ months after the Employee’s Severance from Service Date from employment with the Employer or the end of the Limitation Year that includes the Severance from Service Date from employment with the Employer:

(i)The payment is regular compensation for services during the Employee’s regular working hours, or compensation for services outside the Employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments; and

(ii)The payment would have been paid to the Employee prior to a Severance from Service Date from employment if the Employee had continued in employment with the Employer.

Post-Severance Compensation shall also include:

(i)Payment for unused accrued bona fide sick, vacation, or other leave, but only if the Employee would have been able to use the leave if employment had continued; or

(ii)Received by an Employee pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid to the Employee at the same time if the Employee had continued in employment with the Employer and only to that the payment is includible in the Employee’s gross income.

Any other payment that is not described shall not be considered Post-Severance Compensation if paid after the Severance from Service Date from employment with the Employer, even if paid within the time period described above. Accordingly, Post-Severance Compensation shall not include severance pay, or parachute payments within the meaning of Code Section 280G(b)(2), if they are paid after the Severance from Service Date from employment with the Employer, and shall not include post-severance payments under a non-qualified unfunded deferred compensation plan unless the payments would have been paid at that time without regard to the severance from employment.

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1.12Defined Benefit Plan  shall mean any plan of the type defined in Code Section 414(j) maintained by the Company or an Affiliate.

1.13Defined Contribution Plan  shall mean any plan of the type defined in Code Section 414(i) maintained by the Company or an Affiliate.

1.14Disability  shall mean a Participant’s total and permanent inability to meet the requirements of the Participant’s customary employment in a satisfactory manner by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; provided, however, that such disability:

(a)was not contracted, suffered, or incurred while the Participant was engaged in, or did not result from his or her having engaged in, a criminal enterprise; or

(b)was not sustained while the Participant was employed by anyone other than the Company or an Affiliate. A Participant shall not be considered to have a Disability unless he or she furnishes proof of the existence of such Disability to the Administrative Committee in the form and manner, and at such time, as the Administrative Committee may request.

1.15Effective Date  shall mean January 1, 2008.

1.16Eligible Employee  shall mean all Employees of the Employer other than: (a) Employees included in a unit of employees covered by a collective bargaining agreement between the Employer and an employee representative (not including any organization more than half of whose members are owners, officers or executives of the Employer) in the negotiation of which retirement benefits were the subject of good faith bargaining, unless such bargaining agreement specifically provides for participation in the Plan; (b) Leased Employees and other individuals providing services to the Employer pursuant to an agreement between the Employer and a third party, even if they are not “leased employees” under Code Section 414(n); (c) “seconded employees” who participate in any non-United States pension plan sponsored by the Company or any Affiliate; (d) individuals providing services pursuant to contracts designating them as independent contractors or consultants, or individuals designated by the Employer as independent contractors or consultants; and (e) any other individual who is compensated, directly or indirectly, by the Employer and with respect to whom such compensation is not treated by the Employer at the time of payment as being subject to statutorily required payroll tax withholding, such as withholding of federal and/or state income tax and/or withholding of the Employee’s share of Social Security tax, provided that statutorily required backup withholding shall not be considered to be payroll tax withholding. The foregoing exclusions from the definition of “Eligible Employee” shall apply notwithstanding any contrary determination of employee status by any court or governmental agency including, but not limited to, the Internal Revenue Service or the Department of Labor.

Effective July 31, 2004, an employee of the Sachtleben Company shall become an Eligible Employee under the Plan in accordance with this Section 1.16 and shall be eligible to participate in the Plan in accordance with Section 2.1.

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Effective January 1, 2005, an employee of Oakite Products, Inc. shall become an Eligible Employee under the Plan in accordance with this Section 1.16 of the Plan and shall be eligible to participate in the Plan in accordance with Section 2.1.

Effective January 1, 2007, an employee of Chemetall Foote Corp. and an employee of CeramTec North America Innovative Ceramic Engineering Corporation shall become an Eligible Employee under the Plan in accordance with Section 1.16 of the Plan and shall be eligible to participate in the Plan in accordance with Section 2.1.

1.17Employee  shall mean any person in an employee-employer relationship with the Company or an Affiliate and shall include Leased Employees. Notwithstanding the foregoing, if such Leased Employees do not constitute more than 20% of the nonhighly compensated work force, within the meaning of Code Section 414(n)(5)(C)(ii), of the Company and its Affiliates, the term “Employee” shall not include those Leased Employees covered by a plan described in Code Section 414(n)(5).

1.18Employer  shall mean the Company and each Participating Affiliate in the Plan pursuant to Section 14.7.

1.19Employer Contributions  shall mean any contribution to the Plan made by the Employer and allocated to a Participant’s Account in accordance with Section 3.1.

1.20Employment  shall mean services performed for the Company or an Affiliate.

1.21Employment Commencement Date  shall mean the date on which an Employee first performs an Hour of Service.

1.22Entry Date  shall mean the first day of every calendar month.

1.23ERISA  shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a specific provision of ERISA shall include such provision, any successor provision and any applicable regulation pertaining thereto.

1.24Highly Compensated Employee  shall mean, with respect to any Plan Year, an Employee who performs services for the Company or any Affiliate during the Plan Year, and:

(a)was a 5% owner (as defined in Code Section 414(q)(2)) during the Plan Year or the preceding Plan Year; or

(b)had compensation (as defined in Code Section 415(c)(3)) in excess of $80,000, as adjusted in accordance with Code Section 415(d), for the preceding Plan Year and was in the top-paid group of employees for such preceding Plan Year. The top-paid group of employees is the group consisting of the top 20% of employees when ranked on the basis of compensation.

A former Employee shall be treated as a Highly Compensated Employee if such Employee was a Highly Compensated Employee when he or she separated from service or at any time after attaining age 55.

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The determination of who is a Highly Compensated Employee shall be made in accordance with Code Section 414(q).

1.25Hour of Service  shall mean service credited in accordance with the elapsed time method under Treas. Reg §1.410(a)-7.  Accordingly, for purposes of the Employee’s rights with respect to eligibility to participate, vesting and benefit accrual, the Plan shall credit the period of time which elapses while the Employee is employed (i.e., while the employment relationship exists) with the Employer, regardless of the actual number of hours he or she completes during such period. An Employee’s service shall be taken into account for purposes of eligibility to participate and vesting as of the date he or she first performs an hour of service within the meaning of Treas. Reg. §2530.200b-2(a)(1) for the Employer. Service shall be taken into account for the period of time from the date the Employee first performs such an hour of service until the date he or she severs from service with the Employer.

The date an Employee severs from service shall be the earlier of the date the Employee quits, is discharged, retires or dies, or the first anniversary of the date the employee is absent from service for any other reason (e.g., disability, vacation, leave of absence, layoff, etc.). If an Employee is granted a leave of absence (and if no intervening event occurs), the Severance from Service Date shall occur one year after the date the Employee was first absent on leave, and this one year of absence shall be taken into account as service for the Employee. A quit, discharge, retirement or death within the year after the beginning of an absence for any other reason shall result in an immediate severance from service.

For purposes of eligibility to participate and vesting, an Employee who has severed from service by reason of a quit, discharge or retirement may be entitled to have a period of time of 12 months or less taken into account by the Employer if the Employee returns to service within a certain period of time and performs an hour of service within the meaning of Treas. Reg. §2530.200b-2(a)(1). In general, the period of time during which the Employee must return to service shall begin on the date the Employee severs from service as a result of a quit, discharge or retirement and ends on the first anniversary of such date. However, if the Employee is absent for any other reason (e.g., layoff) and then quits, is discharged or retires, the period of time during which the Employee may return and receive credit shall begin on the Severance from Service Date and end one year after the first day of absence (e.g., first day of layoff). A severance from service (e.g., a quit), or an absence (e.g., layoff) followed by a severance from service, shall not result in a period of time of more than one year being required to be taken into account after an Employee severs from service or is absent from service.

For purposes of benefit accrual, an Employee shall be entitled to have his or her service taken into account from the date he or she begins to participate in the Plan until the Severance from Service Date. Periods of severance under any circumstances are not required to be taken into account.

Prior to January 1, 2002, an Hour of Service was determined under the general method of crediting service for an Employee under Treas. Reg. §2530.200b-2 (i.e., actual counting of hours of service during the applicable 12-consecutive-month computation period), and/or the equivalencies set forth in Treas. Reg. §2530.200b-3. Accordingly, an Employee received a year’s credit (in units of years of service or years of participation) for a computation period during

7

which the Employee was credited with a specified number of hours of service. An Employee’s rights with respect to eligibility to participate, vesting and benefit accrual was determined by totaling the number of years’ credit to which an Employee was entitled.

1.26Investment Fund  shall mean an investment fund, if any, in which the Trust may be invested pursuant to Section 12.1.

1.27Investment Manager  shall mean any person appointed pursuant to Section 12.4 having the power to direct the investment of assets in accordance with that Section.

1.28Leased Employee  shall mean, pursuant to Code Section 414(n), any person who is not a common law employee of the Company or an Affiliate and who provides services to the Company or an Affiliate if

(a)Such services are provided pursuant to an agreement between the Company or the Affiliate and any other person (called a “leasing company”);

(b)Such person has performed such services for the Company or the Affiliate on a substantially full-time basis for a period of at least one year; and

(c)Such services are performed under primary direction or control by the Company or the Affiliate.

1.29Leave of Absence  shall mean a leave granted by the Employer or an Affiliate in accordance with its standard personnel policies applied in a nondiscriminatory manner to all Employees similarly situated. Leave of Absence shall also include an unpaid leave under the Family and Medical Leave Act of 1993.

1.30Normal Retirement Age  shall mean age 65.

1.31Participant  shall mean an Employee who has commenced, but not terminated, participation in the Plan as provided in Article II.

1.32Participating Affiliate  shall mean any Affiliate which has duly adopted the Plan with the consent of the Company and has not withdrawn therefrom.

1.33Period of Service  shall mean a period beginning on an Employee’s Employment Commencement Date and ending on the Employee’s Severance from Service Date.

1.34Period of Severance  shall mean a period beginning on an Employee’s Severance from Service Date and ending on the date the Employee earns an Hour of Service.

1.35Plan  shall mean The Rockwood Specialties Inc. Money Purchase Pension Plan and any amendments thereto.

1.36Plan Year  shall mean the calendar year.

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1.37Qualified Joint and Survivor Annuity  shall mean an Annuity Contract purchased from an insurance company with a Participant’s distribution amount which is payable for the life of the Participant with a survivor annuity continuing after the Participant’s death to the Participant’s Surviving Spouse for the Surviving Spouse’s life in an amount which is equal to 50% of the amount of the annuity payable to the Participant.

1.38Qualified Pre-Retirement Survivor Annuity  shall mean an Annuity Contract purchased from an insurance company with a Participant’s vested Account Balance providing level monthly benefits for the lifetime of the Participant’s Surviving Spouse.

1.39Reduction in Force  shall mean the reduction of an Employer’s workforce due to a voluntary or involuntary Termination of Employment where the Participant is eligible to receive severance pay and/or severance benefits under an employment termination program or severance plan, program or arrangement offered by an Employer to at least 5 Participants within a period not exceeding 6 months.

1.40Severance from Service Date  shall mean the earlier of (a) the date the Employee quits, retires, is discharged, or dies, or (b) the first anniversary of the first date of a period in which an Employee is absent for any other reason; provided, however, that an Employee shall not experience a Severance from Service Date while the Employee is on lay-off or Leave of Absence if the Employee returns to Employment immediately following the end of the lay-off or Leave of Absence. If the Employee does not return to Employment immediately following the end of the lay-off or Leave of Absence, such Employee shall be deemed to have had a Severance from Service Date as of his first day of absence due to lay-off or Leave of Absence.

1.41Spousal Consent  shall mean the written consent of a Participant’s Surviving Spouse to an election or designation by the Participant under the Plan. Such consent shall acknowledge the effect of the Participant’s election or designation, shall specify the alternate Beneficiary or form of benefit (if not a general consent), as applicable, and shall be witnessed by either a representative of the Administrative Committee or a notary public Spousal Consent shall not be necessary if the Participant establishes to the satisfaction of the Administrative Committee that he or she has no Spouse, his or her Spouse cannot be located or such other circumstances exist as the Administrative Committee may, in accordance with applicable regulations, deem appropriate to waive the requirement of Spousal Consent. Spousal Consent, once given, may be revoked only with the consent of the Participant. Spousal Consent shall be valid and binding only with respect to the Spouse who gave the consent.

1.42Spouse  shall mean the person legally married to a Participant.

1.43Surviving Spouse  shall mean the Spouse of a Participant on the earlier of

(a)the date of the Participant’s death; or

(b)the Participant’s Benefit Commencement Date.

1.44Termination of Employment  shall mean the voluntary or involuntary severance of Employment.

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1.45Trust  shall mean the trust established under the Plan in which Plan assets are held.

1.46Trust Agreement  shall mean the agreement between the Company and the Trustee with respect to the Trust.

1.47Trustee  shall mean the person appointed as trustee pursuant to Article X, and any successor trustee.

1.48Valuation Date  shall mean each business day or such other dates as may be specified by the Administrative Committee.

1.49Vesting Service  shall mean the service credited to a Participant under Section 5.2 for purposes of determining the Participant’s vested percentage in his or her Account.

1.50Year of Service  shall mean, in determining service to be taken into account for purposes of eligibility to participate, vesting and benefit accrual, each Period of Service unit which is 12-consecutive-months.  For purposes of eligibility to participate and vesting, the Period of Service shall run from the Employment Commencement Date (or re-Employment Commencement Date, as applicable) until the Severance from Service Date. For purposes of benefit accrual, a Period of Service shall run from the date that a Participant commences participation under the Plan until his or her Severance from Service Date. An Employee shall be credited with the period of time which runs during any absence from service (other than for reason of a quit, retirement, discharge or death) which is 12 months or less. Prior to January 1, 2002, an Hour of Service was determined under the general method of crediting service for an Employee under Treas. Reg. §2530.200b-2 (i.e., actual counting of hours of service during the applicable 12-consecutive-month computation period), and/or the equivalencies set forth in Treas. Reg. §2530.200b-3.

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ARTICLE II

PARTICIPATION

2.1Admission as a Participant

2.1.1Each Eligible Employee who was a Participant in the Plan immediately prior to the Effective Date shall be a Participant in the Plan as of the Effective Date.

2.1.2(a) each Eligible Employee not eligible to become a Participant under Section 2.1.1 above, shall become a Participant in the Plan on the Entry Date coinciding with or next following such Eligible Employee’s completion of a Period of Service of at least one month, provided he or she is an Eligible Employee on such date.  This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

(b)Effective July 31, 2004, an Eligible Employee who is an employee of the Sachtleben Company shall be credited with his or her prior service with the Sachtleben Company for eligibility purposes under the Plan.

(c)Effective January 1, 2005, an Eligible Employee who is an employee of Oakite Products, Inc. shall be credited with his or her prior service with Oakite Products, Inc. for eligibility purposes under the Plan.

(d)Effective January 1, 2007, an Eligible Employee who is an employee of Chemetall Foote Corp. and CeramTec North America Innovative Ceramic Engineering Corporation, shall be credited with his or her prior service with said companies for eligibility purposes under the Plan.

2.1.3Notwithstanding Section 2.1.2 above, the Employer may, in its discretion, provide an earlier Entry Date or grant past service credit for eligibility purposes to individuals who become Employees through an acquisition of assets or an entity by the Company or Affiliate or through a merger or consolidation of an entity with or into the Company or an Affiliate or any other similar transaction; provided, however, that any such provision shall be subject to the nondiscrimination requirements of Code Section 401(a)(4).

2.1.4An Eligible Employee who has attained his or her Normal Retirement Age and who continues as an Eligible Employee shall continue to be eligible to actively participate in the Plan until his or her actual retirement.  Participation shall terminate as provided in Section 2.3.

2.2Rehired Employees

2.2.1An Employee who has a Termination of Employment before earning a vested interest in his or her Account Balance and who again becomes an Employee shall lose credit for his or her Periods of Service prior to such Termination of Employment if his or her Period of Severance equals or exceeds the greater of five years or his or her Periods of Service prior to such Termination of Employment. This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

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2.2.2If a Participant who has a Termination of Employment again becomes an Eligible Employee and his or her prior Years of Service (or Periods of Service) are not disregarded under Section 2.2.1, then he or she shall again become a Participant in the Plan as of the first date on which he or she again becomes an Eligible Employee.

2.2.3A former Employee or Participant who has a Termination of Employment and whose prior Years of Service (or Periods of Service) are disregarded under Section 2.2.1 shall be treated as a new Employee.

2.2.4A former Employee who has a Termination of Employment and subsequently performs an Hour of Service within 12 months of his or her Severance from Service Date, such Employee’s Period of Severance shall instead be included as part of his or her Period of Service for purposes of participation and vesting. This Section 2.2.4 shall be interpreted in accordance with the service spanning rules of the elapsed time method, as set forth in Treas. Reg. §4.10(a)-7.

2.3Termination of Participation

An individual shall cease to be a Participant on the earliest of

(a)payment to him or her or on his or her behalf of all vested benefits due to him or her under the Plan at a time when he or she is no longer eligible for any future contributions;

(b)his or her Termination of Employment when he or she has no vested interest in his or her Account; or

(c)his or her death.

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ARTICLE III

CONTRIBUTIONS

3.1Employer Contributions

3.1.1Subject to the limitations of Sections 3.5 and 3.6, for each Plan Year, an Employer shall make an Employer Contribution (in an amount determined under Section 3.1.2) on behalf of each of Participant who was employed by it during the Plan Year and who:

(a)is employed in “eligible employment” (as defined below) on the last day of the Plan Year and is credited with a Period of Service of at least 6 months during such Plan Year;

(b)is on a Leave of Absence on the last day of the Plan Year, provided the Participant was employed in “eligible employment” immediately prior to such Leave of Absence;

(c)died or became Disabled during the Plan Year at a time when he or she was employed in “eligible employment;” or

(d)terminated Employment during the Plan Year on or after attainment of Normal Retirement Age at a time when he or she was employed in “eligible employment;”

(e)effective as of January 1, 2007, is employed in “eligible employment” (as defined below) on the last day of the Plan Year and is credited with a Period of Service of at least one month during such Plan Year.

For purposes of this Section 3.1.1, “eligible employment” shall mean employment as an Eligible Employee or employment with an Affiliate that is not an Employer in a position under which the Employee would be an Eligible Employee if the Affiliate were an Employer.

3.1.2The amount of the Employer Contribution made on behalf of any Participant who is eligible to receive an allocation shall be 3% of such Participant’s Compensation received from the Employer for that portion of the Plan Year during which he or she was a Participant.

3.2Participant Contributions

No Participant contributions shall be required or permitted under the Plan.

3.3Timing of Contributions

The Employer shall transfer Employer Contributions to the Trustee no later than the last day prescribed by law for the filing of the Employer’s federal income tax return (including extensions thereof) for the taxable year of the Employer which includes the last day of the Plan Year for which such contributions were made.

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3.4Forfeitures

Any forfeitures arising under the Plan shall be applied to reduce Employer Contributions.

3.5Limitation on Allocations

3.5.1As used in this Section 3.5 and in Section 3.6, each of the following terms shall have the meaning for that term set forth in this Section 3.5.1:

(a)Annual Additions means, for each Participant, the sum of the following amounts credited to the Participant’s Account for the Limitation Year under this Plan or another Defined Contribution Plan maintained by an Employer:

(i)Employer or Affiliate contributions;

(ii)Employee contributions;

(iii)forfeitures;

(iv)amounts described in Code Sections 415(1)(1) and 419A(d)(2); and

(v)allocations under a simplified employee pension.

Amounts attributable to rollover contributions or trust to trust transfers shall not be Annual Additions.

(b)Defined Benefit Fraction means, for any Participant, the fraction (determined as of the last day of the Limitation Year) which shall have a numerator equal to the Projected Annual Benefit of the Participant under all Defined Benefit Plans and a denominator equal to the lesser of:

(i)1.25 multiplied by the dollar limitation in effect under Code Section 415(b)(1)(A) for such Limitation Year; or

(ii)1.4 multiplied by 100% of the Participant’s average Limitation Compensation for his or her high three years.

(c)Defined Contribution Dollar Limitation means $30,000, as adjusted pursuant to Code Section 415(d). Effective for Limitation Years beginning after December 31, 2001, Defined Contribution Dollar Limitation means $40,000, as adjusted for increases in the cost-of-living under Section 415(d) of the Code.

(d)Defined Contribution Fraction means, for any Participant, the fraction (determined as of the last day of the Limitation Year) which shall have a numerator equal to the sum of the Participant’s Annual Additions and a denominator equal to the sum of the lesser of the following amounts determined for such Limitation Year and for each prior Limitation Year for which the Participant was credited with a Year of Service:

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(i)1.25 multiplied by the dollar limitation in effect under Code Section 415(c)(1)(A) for such Limitation Year.

(ii)35% of the Participant’s Limitation Compensation for such Limitation Year.

(e)Excess Amount means the excess of the Participant’s Annual Additions for the Limitation Year involved over the Maximum Permissible Amount for that Limitation Year.

(f)Limitation Compensation means an Employee’s compensation as determined pursuant to Code Section 415(c)(3). Limitation Compensation shall be subject to the adjusted dollar limitation under Code Section 401(a)(17). Effective for Plan Years beginning after December 31, 2001, Limitation Compensation for a Participant for a Plan Year shall not exceed $200,000, as adjusted.

(g)Limitation Year means each 12-consecutive month period ending on the same last day as the Plan Year.

(h)Maximum Permissible Amount means, for a Limitation Year and with respect to any Participant, the lesser of (i) the Defined Contribution Dollar Limitation, or (ii) 25% of the Participant’s Limitation Compensation for the Limitation Year (or 100% of the Participant’s Limitation Compensation for the Limitation Year, effective for Limitation Years beginning after December 31, 2001); provided, however, that the percentage of Limitation Compensation limit shall not apply to (A) any contribution for medical benefits (within the meaning of Code Section 419A(d)(2)) after Termination of Employment which is otherwise treated as an Annual Addition, or (B) an amount otherwise treated as an Annual Addition under Code Section 415(1)(1).

(i)Projected Annual Benefit means the Participant’s annual benefit under a Defined Benefit Plan payable in the form of a straight life annuity computed on the assumptions that the Participant will remain employed until Normal Retirement Age (or his or her current age, if later) and that his or her Limitation Compensation will remain at its current level until that time.

3.5.2The amount of Annual Additions which may be credited to the Participant’s Accounts for any Limitation Year shall not exceed the Maximum Permissible Amount. If the Employer contribution that would otherwise be made or allocated to the Participant’s Account would cause the Annual Additions on behalf of the Participant for the Limitation Year to exceed the Maximum Permissible Amount with respect to that Participant for the Limitation Year, the amount to be contributed or allocated will be reduced so that the Annual Additions on behalf of the Participant for the Limitation Year will equal such Maximum Permissible Amount.

(a)Prior to determining the Participant’s actual Limitation Compensation for a Limitation Year, the Administrative Committee may determine the Maximum Permissible Amount for the Participant for the Limitation Year on the basis of a reasonable estimation of the Participant’s Limitation Compensation for that Limitation Year. Such estimated Limitation Compensation shall be uniformly determined for all Participants similarly situated.

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(b)As soon as is administratively feasible after the end of a Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant’s actual Limitation Compensation for the Limitation Year.

(c)If a Participant is credited with an Annual Addition under any other Defined Contribution Plan maintained by the Company or an Affiliate, before any Annual Addition is reduced under this Plan, Annual Additions to such other Defined Contribution Plan shall be reduced to bring all such Plans into conformity with Code Section 415(c).

(d)If, as a result of the allocation of forfeitures, a reasonable error in estimating a Participant’s annual Limitation Compensation, a reasonable error in determining the amount of elective deferrals that may be made with respect to any Participant under the limits of Code Section 415, or under other limited facts and circumstances that the Commissioner of Internal Revenue finds justify the availability of the rules set forth in this Section 3.5.2(d), the Annual Additions under the Plan for a particular Participant would cause the limitations of Code Section 415 to be exceeded, then -

(i)The Excess Amount in the Participant’s Account will be used to reduce Employer Contributions for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary.

(ii)If, after the application of subparagraph (i), an Excess Amount still exists and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account and applied to reduce Employer Contributions for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary.

If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants’ Accounts before any Employer contributions may be made to the Plan for that Limitation Year.

3.6[Reserved]

3.7Return of Employer Contributions Under Special Circumstances

Notwithstanding any provision of this Plan to the contrary, upon timely written demand by an Employer to the Trustee:

(a)Any contribution made by the Employer under a mistake of fact shall be returned to the Employer by the Trustee within one year after the payment of the contribution.

(b)Any contribution made by the Employer shall be returned to the Employer within one year after a current deduction for the contribution under Code Section 404 is disallowed by the Internal Revenue Service, but only to the extent disallowed.

(c)Any contribution made by the Employer shall be returned to the Employer by the Trustee within one year after notification from the Internal Revenue Service following a timely application for determination as to initial qualification that the Plan is not a qualified plan.

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Contributions returned to the Employer under (a) or (b) above shall be net of any investment losses but shall not include any earnings thereon.

3.8Contributions Conditioned on Deductibility

All contributions made under the Plan are made on the condition that they are currently deductible under Code Section 404; provided, however, that no contributions shall be returned to the Employer except as provided in Section 3.7.

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ARTICLE IV

ACCOUNTS, INVESTMENTS AND ALLOCATIONS

4.1Establishment of Participant Accounts

The Administrative Committee shall establish and maintain an Account in the name of each Participant. The Administrative Committee shall credit or cause to be credited all Employer Contributions allocable to the Participant, and any earnings, losses and expenses attributable thereto, to the Participant’s Account.

The maintenance of separate Accounts under this Section 4.1 is for accounting purposes only, and a physical segregation of assets of the Trust to each separate Account shall not be required. Any distribution to a Participant or Beneficiary shall be charged to the Participant’s Account in accordance with procedures established by the Administrative Committee.

4.2Investment of Funds

If Investment Funds are established pursuant to Section 12.1, then the contributions and Account Balance of a Participant or the Account Balance of a Beneficiary of a deceased Participant shall be invested among the Investment Funds as directed by the Participant or Beneficiary in accordance with and subject to Section 12.1.2. Investment directions by a Participant or Beneficiary may be made or changed on each business day once a calendar month, subject to such procedures as may be established by the Administrative Committee (including, but not limited to, requirements for prior notice and investments in minimum increments). In the event that a Participant for any reason fails to provide proper initial investment directions, contributions allocated to such Participant shall be entirely invested in an Investment Fund or Funds specified by the Administrative Committee.

4.3Allocation of Earnings to Accounts

All earnings or income received on any investment credited to a Participant’s or Beneficiary’s Account under the Plan shall be reinvested in such investment.

4.4Allocation Report

The Administrative Committee shall deliver to each Participant and Beneficiary of a deceased Participant, at least annually, a statement for the Account of such Participant or Beneficiary which shows the activity since the prior statement date and the market value of the Account as of the current statement date and any other information deemed appropriate by the Administrative Committee.

4.5Allocation Corrections

Any error or omission in the statement provided pursuant to Section 4.4 shall be corrected as necessary to remedy such error or omission.

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ARTICLE V

VESTING AND TOP-HEAVY PROVISIONS

5.1Determination of Vesting

5.1.1A Participant who has a Termination of Employment either because of his or her death or Disability or who has a Termination of Employment on or after attainment of Normal Retirement Age shall have a vested percentage of 100% in his or her Account.

5.1.2Effective January 1, 2007, a Participant shall be fully vested at all times in his or her Account; provided, however, the vested percentage of a Participant in his or her Account prior to July 31, 2004 shall be determined in accordance with the following schedule:

Completed Years of	Vested
Vesting Service	Percentage
2 years	25	%
3 years	50	%
4 years	75	%
5 years	100	%

Effective July 31, 2004, an employee of the Sachtleben Company who is a Participant under the Plan shall be credited with his or her prior service with the Sachtleben Company for purposes of this Section 5.1.2 and Article V.  Notwithstanding the Vesting Schedule listed above, effective July 31, 2004, a Participant shall be fully vested at all times in his or her Account. Effective January 1, 2005, an employee of Oakite Products, Inc. who is a Participant under the Plan shall be credited with his or her prior service with Oakite Products, Inc. for purposes of this Section 5.1.2 and Article V. Notwithstanding the Vesting Schedule listed above, effective January 1, 2005, a Participant shall be fully vested at all times in his or her Account.  Effective January 1, 2007, an employee of Chemetall Foote Corp. and CeramTec North America Innovative Ceramic Engineering Corporation who is a Participant under the Plan shall be credited with his or her prior service with said companies for purposes of this Section 5.1.2 and Article V notwithstanding.

5.1.3Notwithstanding the foregoing, any Participant who, prior to attaining Normal Retirement Age, has an involuntary or voluntary Termination of Employment as a result of a Reduction in Force shall be 100% vested in his or her Account; provided, however, that such provision shall be implemented in a uniform and nondiscriminatory manner. Effective as of March 1, 2002, this Section 5.1.3 shall apply only to Participants with 3 or more years of Vesting Service on March 1, 2002.

5.2Rules for Crediting Vesting Service

5.2.1A Participant’s Vesting Service shall equal the sum of paragraphs (a) and (b) below:

(a)Subject to the limitations set forth in Sections 5.2.2 and 5.2.3, a Participant shall earn a year of Vesting Service for each one year Period of Service he or she completes. For

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purposes of determining a one year Period of Service for vesting, non-successive Periods of Service shall be aggregated on the basis that Periods of Service totaling 12 months (with 30 days deemed to be a month in the case of the aggregation of fractional months) or 365 days shall equal a whole year Period of Service. This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

(b)In addition, the Company may, in its discretion, grant past service credit for Vesting Service to individuals who become Employees through an acquisition of assets or an entity by the Company or an Affiliate or through a merger or consolidation of an entity with or into the Company or an Affiliate or any other similar transaction; provided, however, that any such provision shall be subject to the nondiscrimination requirements of Code Section 401 (a)(4).

5.2.2A Participant who has no vested percentage in his or her Account Balance and who has a Termination of Employment shall, if he or she again becomes an Employee, receive no credit for his or her Vesting Service prior to such Termination of Employment if his or her Period of Severance equals or exceeds the greater of five years or his or her Period of Service prior to such Termination of Employment. This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

5.2.3If a Participant who is less than 100% vested in his or her Account Balance has a Termination of Employment and incurs a Period of Severance of at least five consecutive years, then his or her Period of Service after such Period of Severance shall be disregarded for purposes of vesting in his or her Account Balance which accrued before such Period of Severance This paragraph shall be interpreted in accordance with the elapsed time method set forth in Treas. Reg. §1.410(a)-7.

5.3Rules for Crediting; Service Upon Termination of Employment

5.3,1 If a Participant who is less than 100% vested in his or her Account Balance terminates Employment and receives a complete distribution of his or her vested Account Balance (or, under Section 6.1.2, is deemed to have received a complete distribution), then the nonvested portion of his or her Account Balance shall be treated as a forfeiture.

5.3.1In the event a Participant forfeited any portion of his or her Account in accordance with Section 5.3.1 and again becomes an Eligible Employee prior to incurring a Period of Severance equaling at least five consecutive years, the nonvested portion of his or her Account shall be restored to its value as of the date of distribution (or deemed distribution). If the Participant received a distribution, his or her vested portion shall not be less than an amount (“X”) determined by the formula: X = P(AB + D) - D. For purposes of applying the formula: P is the vested percentage at the relevant time; AB is the Account Balance at the relevant time; D is the amount of the distribution; and the “relevant time” is any time prior to the time at which, under the Plan the vested percentage in the account cannot increase. The restored amount shall be derived from amounts forfeited during the Plan Year through such Valuation Date and, if such forfeitures are not sufficient, from a contribution by the Employer.

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5.4Top-Heavy Provisions

5.4.1As used in this Section 5.4, each of the following terms shall have the meanings for that term set forth in this Section 5.4.1:

(a)Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year, and for the first Plan Year of the Plan, the last day of such Plan Year.

(b)Determination Period means the Plan Year containing the Determination Date and the four preceding Plan Years. Notwithstanding the foregoing, effective for Plan Years beginning after December 31, 2001, Determination Period means the Plan Year containing the Determination Date.

(c)Key Employee means any Employee or former Employee (and the beneficiaries of such Employee) who, at any time during the “Determination Period,” was:

(i)an officer of the Company or an Affiliate having an annual Limitation Compensation greater than 50% of the Defined Benefit Dollar Limitation for any Plan Year within the Determination Period or, effective for Plan Years beginning after December 31, 2001, an officer of the Company or an Affiliate having an annual Limitation Compensation greater than $130,000 (as adjusted under Code Section 416(i)(1)(A));

(ii)a “5% owner” (as defined in Code Section 416(i)) of a Company or an Affiliate; or

(iii)a “1 % owner” (as defined in Code Section 416(i)) of a Company or an Affiliate who has an annual Limitation Compensation in excess of $150,000.

(d)Limitation Compensation means an amount determined in accordance with Section 3.5.1(f ).

(e)Non-Key Employee means any Employee who is not a Key Employee.

(f)Permissive Aggregation Group means the Required Aggregation Group of plans plus any other plan or plans of the Company or an Affiliate which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code Section 401(a)(4) and Code Section 410.

(g)Required Aggregation Group means (i) each Qualified Plan of the Company or an Affiliate in which at least one Key Employee participates, and (ii) any other Qualified Plan of the Company or an Affiliate which enables a plan described in (i) to meet the requirements of Code Section 401(a)(4) and Code Section 410.

(h)Super Top-Heavy Plan means the Plan, if the Top-Heavy Ratio, as determined under the definition of Top-Heavy Plan, exceeds 90%.

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(i)Top-Heavy Plan means, for any Plan Year, the Plan if any of the following conditions exists:

(i)If the Top-Heavy Ratio for the Plan exceeds 60% and the Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans.

(ii)If the Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Required Aggregation Group of plans exceeds 60%.

(iii)If the Plan is a part of a Required Aggregation Group and part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.

Solely for the purposes of determining whether the Plan or any other plan included in an aggregation group is a Top-Heavy Plan, the accrued benefit of a Non-Key Employee shall be determined (a) under the method, if any, that uniformly applies foil accrual purposes under all plans maintained by the Company and any Affiliate, or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate set forth in Code Section 411(b)(1)(C).

(j)Top-Heavy Ratio means, for the Plan alone, or for the Required or Permissive Aggregation Group as appropriate, either (i) or (ii) or (iii) below:

(i)If the Company or any Affiliate maintains one or more Defined Contribution Plans (including any “simplified employee pension” within the meaning of Code Section 408(k)) and the Company or any Affiliate has never maintained any Defined Benefit Plan which, during the one year period ending on the Determination Date, has or has had accrued benefits, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date, and the denominator of which is the sum of all account balances, in each case computed in accordance with Code Section 416; provided, however, that the numerator and denominator of the Top-Heavy Ratio shall be adjusted to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Code Section 416; and further provided, however, that the numerator and denominator of the Top-Heavy Ratio shall include any part of any account balance distributed within the one year period ending on the Determination Date due to severance from employment, separation from service, death, or disability, and shall also include any part of any account balance distributed for any other reason within the five year period ending on the Determination Date.

(ii)If the Company or any Affiliate maintains one or more Defined Contribution Plans (including any “simplified employee pension” within the meaning of Code Section 408(k)) and the Company or any Affiliate maintains or has maintained one or more Defined Benefit Plans which, during the one year period ending on the Determination Date, has or has had any accrued benefits, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of the account balances under the aggregated

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Defined Contribution Plans for all Key Employees, determined in accordance with (iv) above, plus the present value of accrued benefits under the aggregated Defined Benefit Plans for all Key Employees as of the Determination Date and the denominator of which is the sum of the account balances under the aggregate Defined Contribution Plans for all Participants, determined in accordance with (iv) above, plus the present value of accrued benefits under the Defined Benefit Plans for all such Participants as of the Determination Date, all determined in accordance with Code Section 416; provided, however, that the numerator and denominator of the Top-Heavy Ratio shall include any accrued benefit under a Defined Benefit Plan distributed within the one year period ending on the Determination Date due to severance from employment, separation from service, death, or disability, and shall also include any part of any account balance distributed for any other reason within the five year period ending on the Determination Date.

(iii)For purposes of determining the Top-Heavy Ratio, the value of account balances will be determined as of the most recent Top-Heavy Valuation Date that falls within or ends with the twelve (12) month period ending on the Determination Date, except as provided in Code Section 416 for the first and second plan years of a Defined Benefit Plan. The account balances of any Participant who (a) is a Non-Key Employee, but who was a Key Employee in a prior year, or (b) has not performed an Hour of Service with the Company or any Affiliate at any time during the one year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Code Section 416. When aggregating plans, the value of account balances will be calculated with reference to the Determination Dates that fall within the same calendar year.

(k)Top-Heavy Valuation Date means the date as of which account balances, or accrued benefits, are valued to calculate the Top-Heavy Ratio.

5.4.2If the Plan is determined to be a Top-Heavy Plan as of any Determination Date, then notwithstanding any Plan provision to the contrary, it shall be subject to the rules set forth in the balance of this Section 5.4, beginning with the first Plan Year commencing after such Determination Date.

5.4.3(a)Except as provided in Section 5.4.3(b), and except to the extent any other Defined Contribution Plan or Defined Benefit Plan provides such minimum benefit to the Participant, for any Plan Year in which the Plan is a Top-Heavy Plan, contributions and forfeitures allocated to the Employer Account of any Participant who is a Non-Key Employee (whether or not such Participant has completed 1,000 Hours of Service in that Plan Year) in respect of that Plan Year shall not be less than the smaller of:

(i)3% of such Participant’s Limitation Compensation, or

(ii)the largest percentage of contributions and forfeitures, as a percentage of the Key Employee’s Compensation, allocated to the Account of any Key Employee for that year.

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(b)The provision in (a) above shall not apply to any Participant who was not employed by the Company or an Affiliate on the last day of the Plan Year.

5.4.4In the event that any provision of this Section 5.4 is no longer required to qualify the Plan under the Code, then such provision shall thereupon be void without the necessity of further amendment of the Plan.

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ARTICLE VI

AMOUNT AND PAYMENT OF BENEFITS TO PARTICIPANTS,

6.1Termination of Employment

6.1.1Upon a termination of Employment, a Participant shall be entitled to receive the vested portion of his or her Account Balance, determined as of the Valuation Date next following his or her Benefit Commencement Date, as determined under Section 6.1.2.

6.1.2(a)Subject to (b) and (c) below, and Section 6.2, a Participant’s Benefit Commencement Date shall be the date determined under Section 6.1.3.

(b)A Participant who terminates Employment prior to his or her Normal Retirement Date may make a written election (with Spousal Consent, if married) to receive his or her vested Account Balance as of a date prior to his or her Normal Retirement Date, provided such election is made during the 90-day period preceding his Benefit Commencement Date.  The Administrative Committee shall notify the Participant (and the Participant’s Spouse, if any) of the right to any distribution until the Participant’s Required Distribution Date. Such notification shall include a general description of the material features of the optional forms of benefit under the Plan in a manner which would satisfy the notice requirements of Treasury Regulations Section 1.411(a)-l1. Such notice shall be provided no less than 30 days and no more than 90 days prior to the Benefit Commencement Date. However, distribution may commence less than 30 days after such notice is provided, so long as (i) the Participant (and his or her Spouse, if applicable) has been provided with information that clearly indicates that he or she has at least 30 days to consider whether to consider the decision of whether or not to elect a distribution; and (ii) the Participant (and his or her Spouse, if applicable) affirmatively elects a distribution.

(c)Notwithstanding (b) above, if a Participant’s vested Account Balance does not exceed $1,000, the Participant’s vested Account Balance under this Plan shall be paid to him or her in a lump sum distribution as soon as practicable following his or her Termination of Employment. For this purpose, if a Participant does not have a vested interest in his or her Account (and thus is not entitled to any distribution from such Account), the Participant shall be deemed to have received a complete distribution of his or her interest in such Account upon termination of Employment.

6.1.3Unless the Participant otherwise elects, in no event shall he or she begin to receive a benefit later than the sixtieth day after the close of the Plan Year in which the latest of the following events occurs:

(a)the date the Participant attains his or her Normal Retirement Age;

(b)the Participant’s Termination of Employment; or

(c)the 10th anniversary of the year in which the Participant commenced participation in the Plan.

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Notwithstanding the foregoing, a Participant who terminates employment may elect to defer receipt of his or her benefit until his or her Required Beginning Date.

6.2Age 70-1/2 Distributions

Distribution of a Participant’s vested Account Balance shall be subject to the requirements of this Section 6.2 and Section 8.3 and shall be made in accordance with Code Section 401(a)(9) and the regulations thereunder. With respect to distributions under the Plan made for calendar years beginning on or after January 1, 2002, Section 6.4 shall apply the minimum distribution requirements of Code Section 401(a)(9).

6.3No In-Service Withdrawals or Loans

There shall be no distributions to Participants prior to Termination of Employment, except as provided in Section 6.2 above, and there shall be no loans to Participants or beneficiaries.

6.4Minimum Required Distributions

6.4.1General Requirements

(a)Effective Date.  The provisions of this Section will apply for purposes of determining required minimum distributions for calendar years beginning with the 2002 calendar year.

(b)Coordination with Minimum Distribution Requirements Previously in Effect.  The required minimum distributions for 2002 under this Section will be determined as follows.  If the total amount of 2002 required minimum distributions under the Plan made to the distributee prior to the effective date of this Section equals or exceeds the required minimum distributions determined under this Section, then no additional distributions will be required to be made for 2002 on or after such date to the distribute.  If the total amount of 2002 required minimum distributions under the Plan made to the distribute prior to the effective date of this Section is less than the amount determined under this Section, then required minimum distributions for 2002 on and after such date will be determined so that the total amount of required minimum distributions for 2002 made to the distribute will be the amount determined under this Section.

(c)Precedence.  The requirements of this Section will take precedence over any inconsistent provisions of the Plan.

(d)Requirements of Treasury Regulations Incorporated.  All distributions required under this Section will be determined and made in accordance with the Treasury regulations under Code Section 401(a)(9).

6.4.2Time and Manner of Distribution

(a)Required Beginning Date.  The Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s required beginning date.

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(b)Death of Participant Before Distributions Begin.  If the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(i)If the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary, then, except as provided in Article VIII, distributions to the Surviving Spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70-1/2, if later.

(ii)If the Participant’s Surviving Spouse is not the Participant’s sole designated beneficiary, then, except as provided in Article VIII, distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

(iii)If there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(iv)If the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary and the Surviving Spouse dies after the Participant but before distributions to the Surviving Spouse begin, this subsection 6.4.2(b), other than subsection 6.4.2(b)(i), will apply as if the Surviving Spouse were the Participant.

For purposes of this subsection 6.4.2(b) and subsection 6.4.4, unless subsection 6.4.2(b)(iv) applies, distributions are considered to begin on the Participant’s required beginning date.  If subsection 6.4.2(b)(iv) applies, distributions are considered to begin on the date distributions are required to begin to the Surviving Spouse under subsection 6.4.2(b)(i).  If distributions under an annuity purchased from an insurance company irrevocably commence to the Participant before the Participant’s required beginning date or to the Participant’s Surviving Spouse before the date distributions are required to begin to the Surviving Spouse under subsection 6.4.2(b)(i), the date distributions are considered to begin is the date distributions actually commence.

(c)Forms of Distribution.  Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with subsections 6.4.2(b)(i) and 6.4.4 of this Section.  If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and the Treasury regulations.

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6.4.3Required Minimum Distributions During Participant’s Lifetime

(a)Amount of Required Minimum Distribution for Each Distribution Calendar Year.  During the Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(i)the quotient obtained by dividing the Participant’s account balance by the distribution period in the Uniform Lifetime Table set forth in Treas. Reg. §1.401(a)(9)-9, using the Participant’s age as of the Participant’s birthday in the distribution calendar year; or

(ii)if the Participant’s sole designated beneficiary for the distribution calendar year is the Participant’s Spouse, the quotient obtained by dividing the Participant’s account balance by the number in the Joint and Last Survivor Table Treas. Reg. §1.401(a)(9)-9, using the Participant’s and Spouse’s attained ages as of the Participant’s and Spouse’s birthdays in the distribution calendar year.

(b)Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death.  Required minimum distributions will be determined under this subsection 6.4.3 beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant’s date of death.

6.4.4Required Minimum Distributions After Participant’s Death

(a)Death On or After Date Distributions Begin

(i)Participant Survived by Designated Beneficiary.  If the Participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s designated beneficiary, determined as follows:

(A)The Participant’s remaining life expectancy is calculated under the age of the Participant in the year of death, reduced by one for each subsequent year.

(B)If the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary, the remaining life expectancy of the Surviving Spouse is calculated for each distribution calendar year after the year of the Participant’s death using the Surviving Spouse’s age as of the Spouse’s birthday in that year.  For distribution calendar years after the year of the Surviving Spouse’s death, the remaining life expectancy of the Surviving Spouse is calculated using the age of the Surviving Spouse as of the Spouse’s birthday in the calendar year of the Spouse’s death, reduced by one for each subsequent calendar year.

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(C)If the Participant’s Surviving Spouse is not the Participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(ii)No Designated Beneficiary.  If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each distribution calendar year after year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the Participant’s remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(b)Death Before Date Distributions Begin.

(i)Participant Survived by Designated Beneficiary.  Except as provided in Article VIII, if the Participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the remaining life expectancy of the Participant’s designated beneficiary, determined as provided in subsection 6.4.4(a).

(ii)No Designated Beneficiary.  If the Participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(iii)Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin.  If the Participant dies before the date distributions begin, the Participant’s Surviving Spouse is the Participant’s sole designated beneficiary, and the Surviving Spouse dies before distributions are required to begin to the Surviving Spouse under subsection 6.4.2(b)(i), this subsection 6.4.4(b) will apply as if the Surviving Spouse were the Participant.

6.4.5Definitions

For purposes of this Section 6.4, the following definitions shall apply:

(a)Designated beneficiary.  The individual who is designated as the Beneficiary under the Plan and is the designated beneficiary under Code Section 401(a)(9) and Treas. Reg. §1.401(a)(9)-1, Q&A-4.

(b)Distribution calendar year.  A calendar year for which a minimum distribution is required.  For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s required beginning date.  For distributions beginning after the Participant’s death,

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the first distribution calendar year is the calendar year in which distributions are required to begin under subsection 6.4.2(b).  The required minimum distribution for the Participant’s first distribution calendar year will be made on or before the Participant’s required beginning date.  The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant’s required beginning date occurs, will be made on or before December 31 of that distribution calendar year.

(c)Life expectancy.  Life expectancy as computed by use of the Single Life Table in Treas. Reg. §1.401(a)(9)-9.

(d)Participant’s account balance.  The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date.  The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

(e)Required beginning date.  The date specified in the Plan when distributions under Code Section 401(a)(9) are required to begin.

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ARTICLE VII

FORMS OF PAYMENT OF ACCOUNTS

7.1Methods of Distribution

For married Participants, the “Normal Form” of benefit is a Qualified Joint and Survivor Annuity. For Participants who do not have a spouse on their Benefit Commencement Dates, the Normal Form of benefit is a single life Annuity purchased from an insurance company with the Participant’s distribution amount which is payable for the Participant’s life. All distributions from a Participant’s vested Account under Article VI shall be distributed in the Normal Form unless the Participant elects one of the following optional forms of distribution in accordance with Section 7.2:

(a)a lump sum distribution;

(b)an Annuity Contract which may be purchased from an insurance company with the Participant’s distribution amount;

(c)on or after April 3, 2000, monthly, quarterly or annual installments of the Participant’s distribution payable over any period not exceeding the life expectancy of the Participant or the joint life expectancies of the Participant and the Participant’s designated Beneficiary.

(d)effective as of January 1, 2008, any married Participant, with an Annuity Starting Date after that date may elect a Qualified Optional Survivor Annuity or may elect to waive such form of benefit in accordance with Code Section 417(a)(1)(A).  A “Qualified Optional Survivor Annuity” shall mean an annuity which is payable for the life of the Participant with a survivor annuity continuing after the Participant’s death to the Participant’s Surviving Spouse for the Surviving Spouse’s life in amount which is equal to 75% of the amount of the annuity which is payable during the joint lives of the Participant and the Surviving Spouse.

Distributions shall be subject to the requirements of Code Section 401(a)(9). Effective as of April 3, 2000, a Participant who has elected to receive an installment distribution may at any time elect to discontinue such installment payments and have the unpaid vested Account Balance paid in a lump sum distribution. In the event a Participant who has elected to receive an installment distribution dies after his or her Benefit Commencement Date but before the payment of the final installment, the unpaid installments shall be paid to the Participant’s Beneficiary. The Beneficiary may elect to continue receiving such installments or to have the unpaid vested Account Balance paid in a lump sum distribution. In the event a Participant dies before his or her Benefit Commencement Date, any election of a form of payment shall be void, and the Participant’s vested Account Balance shall be distributed in accordance with Article VIII.

7.2Election of Optional Forms

7.2.1At any time within the 90-day period preceding a Participant’s Benefit Commencement Date, the Participant may elect in writing not to receive the Normal Form of benefit and to receive instead an optional form of benefit payment provided for in Section 7.1. Married

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Participants must have Spousal Consent in order to waive the Normal Form and elect an optional benefit form. Any Spousal Consent to a Participant’s election of an optional form of benefit shall specify the form of benefit and the Beneficiary.

7.2.2The Administrative Committee shall provide to each Participant, within the period beginning 180 days before and ending 30 days before the Participant’s Benefit Commencement Date, a written explanation in non-technical terms of:

(a)the terms and conditions of the Qualified Joint and Survivor Annuity and the optional forms of benefit;

(b)the Participant’s right to make, and the effect of, an election to waive the Qualified Joint and Survivor Annuity;

(c)the rights of the Participant’s Spouse under this Section 7.2;

(d)the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity; and

(e)if applicable, the right to defer distribution until Normal Retirement Age.

Notwithstanding the foregoing, the Administrative Committee may provide a Participant with the above written explanation after the Participant’s Benefit Commencement Date so long as the actual distribution does not commence until at least 30 days after such written explanation is provided, subject to Section 7.2.3. The Administrative Committee may, on a uniform and nondiscriminatory basis, provide for such other notices, information or election periods or take such other action as the Administrative Committee considers necessary or appropriate so that this Section 7.2 is implemented in such a manner as to comply with Code Section 401(a)(11) and Code Section 417.

7.2.3Notwithstanding Section 7.2.2 above, distribution of a Participant’s benefit may begin less than 30 days after receipt of the written explanation if:

(a)The Participant has been provided with information that clearly indicates that he or she has at least 30 days to consider whether to waive the Qualified Joint and Survivor Annuity; and

(b)The Participant is permitted to revoke any affirmative election at least until the Benefit Commencement Date or, if later, at any time within the seven-day period beginning the day after the written explanation is provided.

7.2.4A Participant may revoke his or her election to take an optional form of benefit without Spousal Consent and take the Qualified Joint and Survivor Annuity or elect a different optional form of benefit in accordance with Section 7.2 at any time within the 90-day period prior to the Participant’s Benefit Commencement Date. The number of revocations shall not be limited.

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7.3Direct Rollovers

7.3.1Notwithstanding any provision in this Plan to the contrary, a Participant or a Beneficiary who is the Surviving Spouse of a Participant may elect to have all or a portion of any amount payable to him or her from the Plan which is an “eligible rollover distribution” (as defined in Section 7.3.2 below) transferred directly to an “eligible retirement plan” (as defined in Section 7.3.2 below). Any such election shall be made in accordance with such uniform rules and procedures as the Administrative Committee may prescribe from time to time as to the time and manner of the election in accordance with Code Section 401(a)(31).

7.3.2Definitions for purposes of this Section 7.3

(a)“Eligible rollover distribution” shall mean any distribution of all or any portion of the balance to the credit of the distributee other than: (1) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary; (2) any distribution for a specified period of ten years or more; (3) any distribution to the extent such distribution is required under Code Section 401(a)(9); or (4) the portion of any distribution that is not includable in gross income.

(b)“Eligible retirement plan” shall mean, with respect to a Participant, an individual retirement account or annuity described in Code Section 408(a) or 408(b)(“IRA”), an annuity plan described in Code Section 403(a) or a qualified plan described in Code Section 401(a) that accepts the distributee’s eligible rollover distribution. Notwithstanding the foregoing, effective for distributions made after December 31, 2001, an eligible retirement plan shall also mean an annuity contract described in Code Section 403(b) and an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.  Effective as of January 1, 2008, an eligible retirement plan shall also mean a Roth IRA (as defined in Code Section 408A); provided, however, for taxable years beginning prior to January 1, 2010, a distributee shall not be permitted to make a qualified rollover distribution (as defined in Code Section 408A(e)) from the Plan to a Roth IRA if, for the year the eligible rollover distribution is made, the Participant has a modified adjusted gross income exceeding $100,000 or is married and files a separate return (as provided in Code Section 408A(c)(3)(b)).

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ARTICLE VIII

DEATH BENEFITS

8.1Payment of Account Balances

8.1.1In the event of the death of a Participant while an Employee, the Participant’s entire Account Balance shall be payable to his or her Beneficiary. In the event of the death of a Participant after Termination of Employment but before his or her Benefit Commencement Date, the Participant’s vested Account Balance shall be payable to his or her Beneficiary. In the event of a Participant’s death after his or her Benefit Commencement Date, any unpaid vested Account Balance shall be payable in accordance with the form of benefit elected by the Participant under Article VII.

8.1.2(a)Except in the event of a Participant’s death after the distribution of his or her benefit has begun, if the Participant’s Beneficiary is the Participant’s Surviving Spouse, the benefit payable under Section 8.1.1 shall be paid in the form of a Qualified Pre-Retirement Survivor Annuity unless the Surviving Spouse elects one of the optional forms available under Section 7.1 in lieu of the Qualified Pre-Retirement Survivor Annuity within the 90-day period preceding the Benefit Commencement Date. This election must satisfy the requirements of Section 7.2. Such Qualified Pre-Retirement Survivor Annuity benefit shall be payable as soon as practicable after the Participant’s death, provided that distribution shall not be made prior to the date which would have been the Participant’s Normal Retirement Date without the Surviving Spouse’s written consent. Notwithstanding the preceding two sentences, if the benefit payable to a Surviving Spouse under Section 8.1.1 does not exceed $1,000 it shall be paid as soon as practicable following the Participant’s death in a lump sum distribution. A Surviving Spouse to whom a lump sum distribution is payable may elect a direct rollover to the extent permitted by Section 7.3.

(b)If the Participant’s Beneficiary is not the Participant’s Surviving Spouse, the benefit payable under Section 8.1.1 shall be payable as soon as practicable after the Participant’s death in a lump sum distribution unless the Beneficiary instead elects one of the optional forms of benefit available under Section 7.1.

8.2Beneficiary

8.2.1Subject to Sections 8.2.2 and 8.2.3 below, a Participant may, with Spousal Consent (if married), designate a person or persons as his or her Beneficiary by filing a written designation of Beneficiary with the Administrative Committee in the time and manner established by the Committee. If no valid designation of Beneficiary is in effect at the time of the Participant’s death, or if the designated Beneficiary does not survive the Participant, the Beneficiary shall be the Participant’s Surviving Spouse or, if there is no Surviving Spouse, the Participant’s estate. For this purpose, if the Participant and the Beneficiary die simultaneously, or if there is not sufficient evidence to establish who died first, the Participant shall be deemed to have survived the Beneficiary.

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8.2.2(a)Except as provided in (b) below, a married Participant may only waive the Qualified Pre-Retirement Survivor Annuity form of benefit and designate someone other than his or her Spouse as Beneficiary after the first day of the Plan Year in which the Participant reaches age 35 or, if earlier, after the date the Participant terminates Employment, in accordance with Section 8.2.1 above. Such a waiver and Beneficiary designation shall not be valid unless the Participant receives, within the period beginning on the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year in which the Participant attains age 35, a written explanation of the Qualified Pre-Retirement Survivor Annuity in such terms and in such manner as would be compared to the explanation provided for meeting the requirements applicable to a Qualified Joint and Survivor Annuity in Section 7.2 above and must satisfy requirements comparable to those provided in Section 7.2, including notice and Spousal Consent requirements.

(b)A married Participant who will not have attained age 35 as of the end of the current Plan Year may make a special qualified election to waive the Qualified Pre-Retirement Survivor Annuity form of benefit and may, in accordance with Section 8.2.1 above, designate a non-Spouse Beneficiary. Such election shall not be valid unless the Participant receives a written explanation of the Qualified Pre-Retirement Survivor Annuity in such terms as are comparable to the explanation required under Section 7.2. Qualified Pre-Retirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age thirty-five (35). Any new waiver on or after such date shall be subject to the full requirements of this Section. Such election shall be automatically revoked on the first day of the Plan Year in which the Participant will reach age 35. The Participant’s Spouse will then be his or her Beneficiary unless the Participant makes another designation of Beneficiary in accordance with Section 8.2.1 above. The Administrative Committee shall provide a married Participant with a notice similar to that provided under Section 7.2.2 with respect to a Participant’s right to designate someone other than his or her Spouse as Beneficiary. Such notice shall be provided within the one year period ending after the date the individual first becomes a Participant.

8.2.3Any prior designation of a Beneficiary shall be automatically revoked upon the subsequent marriage or remarriage of the Participant.

8.2.4To the extent permitted by law and subject to any valid qualified domestic relations order (as defined in Code Section 414(p)), a Participant’s designation of his or her Spouse as Beneficiary shall be automatically revoked upon the Participant’s subsequent divorce. The Participant shall not be prevented from re-designating a former Spouse as his or her Beneficiary following a divorce.

8.3Required Commencement

Notwithstanding any other provision of the Plan to the contrary, if a Participant dies before his or her Benefit Commencement Date, the Participant’s entire interest must be distributed within five years after the year containing the Participant’s death, except that if the designated Beneficiary is the Participant’s Surviving Spouse, then distributions must begin within the year containing (a) the one-year anniversary of the Participant’s death or, if later, (b) the date the Participant would have attained age 70%.

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ARTICLE IX

FIDUCIARIES

9.1Named Fiduciaries

9.1.1The Administrative Committee (or its delegate) shall be a “named fiduciary” (within the meaning of Section 402(a)(2) of ERISA) of the Plan, with authority to control and manage the operation and administration of the Plan.

9.1.2The Company (or its delegate) shall be the “administrator” and “plan administrator” (within the meaning of ERISA Section 3(16)(A) and Code Section 414(g), respectively) with respect to the Plan.

9.1.3The Trustee shall be a “named fiduciary” (within the meaning of ERISA Section 402(a)(2)) of the Plan, with the authority to manage and control Trust assets in accordance with the terms of the Trust Agreement.

9.1.4There are no “named fiduciaries” of the Plan other than the Administrative Committee and the Trustee.

9.2Employment of Advisers

Each named fiduciary shall be authorized, to the extent it deems advisable, to designate persons who are not named fiduciaries to carry out fiduciary responsibilities allocated to it, to retain accountants, agents, attorneys, actuaries and other professional consultants and to rely upon information, statistics or analysis provided by any of such persons.

9.3Multiple Fiduciary Capacities

Any “named fiduciary” with respect to the Plan (as defined in ERISA Section 402(a)(2)) and any other “fiduciary” (as defined in ERISA Section 3(21)) with respect to the Plan may serve in more than one fiduciary capacity.

9.4Payment of Expenses

The reasonable expenses incident to the operation of the Plan, including, without limitation, the compensation of the Trustee, consultants, attorneys, fiduciaries and other advisors, shall be paid out of the Trust to the extent permitted by law and to the extent not paid by the Employer. All members of the Administrative Committee shall serve without compensation from the Trust. Any determination by the Employer to pay all or part of any expense shall not in any way limit the Employer’s right to determine to have similar or other expenses paid out of the Trust assets at any other time.

9.5Indemnification

To the extent not prohibited by state or federal law, the Company and each Participating Affiliate, jointly and severally, agree to, and shall, indemnify and hold harmless any member of

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the Administrative Committee or any other Employee, officer or director of an Employer from all claims for liability, loss, damage or expense (including payment of reasonable expenses in connection with defense against any such claim) which result from any exercise or failure to exercise any of the indemnified person’s responsibilities with respect to the Plan, other than by reason of willful misconduct or a willful failure to act.

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ARTICLE X

TRUSTEE AND TRUST FUND

10.1Establishment of Trust

A Trust Agreement shall be executed between the Company and the Trustee, which agreement shall provide for the creation of the Trust to receive and hold all contributions and earnings therefrom. Benefits provided under the Plan and expenses of administration of the Plan shall be paid from the assets held in the Trust as directed by the Administrative Committee and the Company, respectively.

10.2Powers and Duties of the Trustee

10.2.1The Trustee shall have exclusive authority and discretion to manage and control the assets of the Plan in accordance with the terms of the Trust Agreement.

10.3Exclusive Benefit

Except as provided in Section 3.7, the Trust shall be maintained for the exclusive purpose of providing Plan benefits to Participants and their Beneficiaries and paying the expenses of administration of the Plan and the Trust to the extent not paid by the Employer.

10.4Delegation of Responsibility

The Trustee may designate persons, including persons other than “named fiduciaries” (as defined in ERISA Section 402(a)(2)), to carry out the specified responsibilities of the Trustee and shall not be liable for any act or omission of a person so designated.

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ARTICLE XI

PLAN ADMINISTRATION

11.1The Administrative Committee

11.1.1Administrative Committee members shall be appointed by the Company and may be removed by the Company at its discretion.  Unless the Company otherwise provides, any member of the Administrative Committee who is an Employee of the Company or an Affiliate at the time of his or her appointment will be considered to have resigned from the Administrative Committee when no longer an Employee. Employees of the Company or an Affiliate shall receive no compensation for their services rendered to or as members of the Administrative Committee.

11.1.2If more than one member is appointed, the Administrative Committee shall act by a majority of its members at the time in office, and such action may be taken either by a vote at a meeting or in writing without a meeting. However, if less than three members are appointed, the Administrative Committee shall act only upon the unanimous consent of its members. The Administrative Committee may authorize in writing any person to execute any document or documents on its behalf, and any interested person, upon receipt of notice of such authorization directed to it, may thereafter accept and rely upon any document executed by such authorized person until the Administrative Committee shall deliver to such interested person a written revocation of such authorization.

11.1.3A member of the Administrative Committee who is also a Participant shall not vote or act upon any matter relating solely to himself or herself unless such person is the sole member of the Administrative Committee.

11.2Administrative Committee Powers and Duties

The Administrative Committee is allocated such duties and powers as may be necessary to discharge its duties hereunder including, without limitation, the exclusive and discretionary authority to perform the following functions:

(a)To make such rules and regulations as it shall deem necessary or proper for the efficient administration of the Plan;

(b)To interpret and construe the Plan, to resolve any ambiguities and to decide any and all matters arising hereunder including, without limitation, questions of fact as to eligibility to participate in the Plan or receive benefits under the Plan or the amount and timing of benefits under the Plan; provided, however, that all such interpretations and decisions shall be applied in a uniform and nondiscriminatory manner to all similarly situated persons and shall be conclusively binding upon all persons interested in the Plan. The Administrative Committee has discretionary authority to grant or deny benefits under this Plan. Benefits under the Plan will be provided only if the Administrative Committee decides, in its sole discretion, that the applicant is entitled to them;

(c)To select the Investment Funds;

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(d)To appoint one or more insurance companies;

(e)To appoint one or more Investment Managers;

(f)To establish and carry out a funding policy and method consistent with the objectives of the Plan and the requirements of ERISA;

(g)To monitor the limits on contributions under Article III and to take action to assure that such limits are satisfied for each Plan Year;

(h)To authorize disbursements from the Trust;

(i)To prescribe procedures to be followed by Participants or Beneficiaries who file applications for benefits;

(j)To approve the design of enrollment forms, Beneficiary designation forms and any other forms utilized in the administration of the Plan;

(k)To prepare and distribute, in such manner as the Administrative Committee determines to be appropriate, information concerning the Plan;

(l)To receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan;

(m)To establish such written procedures as it shall deem necessary or proper to determine the qualified status, pursuant to Code Section 414(p) of any domestic relations order received by the Administrative Committee which affects the right of a Participant and any alternate payee to payment of benefits under the Plan, and to administer distributions pursuant to any domestic relations order which the Administrative Committee determines to be a qualified domestic relations order within the meaning of Code Section 414(p).  However, effective April 6, 2007, a domestic relations order shall not fail to be treated as a “qualified domestic relations order” solely because (1) the order is issued after, or revises, another domestic relations order or qualified domestic relations order, and/or (2) solely because of the time at which it is issued; provided, however, any such domestic relations order shall be subject to the same requirements and protections that apply to qualified domestic relations orders under ERISA § 206(d)(3);

(n)To delegate, by written instrument to one or more administrative subcommittees with respect to each Employer, such of the powers and duties allocated herein to the Administrative Committee as it deems advisable; any such subcommittee shall consist of persons appointed by the Administrative Committee, taking into consideration designations recommended by the principal executive officer of any Employer; and

(o)To make recommendations to the Company concerning amendments to the Plan.

11.3Claims Procedure

The Administrative hereby adopts the procedure set forth below for reviewing benefits claims under the Plans:

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(a)A Participant or Beneficiary shall submit all claims for benefits under the Plans in writing to the Administrative Committee.

(b)The Administrative Committee shall send to the Participant or Beneficiary written notice of its decision within ninety (90) days of receiving the claim. The period may be extended to one hundred eighty (180) days if the Administrative Committee notifies the claimant in writing within the initial ninety (90) day period that special circumstances exist which require an extension of the period.  The written decision from the Administrative Committee shall set forth:

(i)the specific reasons for the decision;

(ii)the specific Plan provisions upon which the decision is based;

(iii)a description of any additional material or information necessary for the Participant or Beneficiary to perfect the claim for benefits and an explanation of the reasons why such material or information is necessary;

(iv)information regarding procedures for submitting a request for review of the decision on the claim; and

(v)a statement of the claimant’s right to bring an action under ERISA Section 502(a) following an adverse benefit determination on review.

(c)If the Administrative Committee denies the claim in whole or in part, the Participant or Beneficiary may submit a written request for review to the Administrative Committee within sixty (60) days of the notice of denial, pursuant to the procedures referenced in paragraph (b)(iv) above. The Participant or Beneficiary shall set forth all the grounds upon which the request for review is based and may submit issues or comments in writing. The Participant or Beneficiary shall also be entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits.

(d)The Administrative Committee shall send the Participant or Beneficiary written notice of its decision within sixty (60) days after the Administrative Committee receives the request for review. The review period may be extended to one hundred twenty (120) days if the Administrative Committee notifies the claimant within the initial sixty (60) day period that special circumstances exist which require an extension of the review period. The Administrative Committee’s written decision shall set forth the specific reasons for the decision and the Plan provision on which the decision is based. The Administrative Committee’s written decision shall also include a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits, and a statement of the claimant’s right to bring an action under ERISA Section 502(a). All such decisions of the Administrative Committee shall be final, conclusive and binding upon all Participants, Beneficiaries, and other interested persons.

(e)If applicable, claims for benefits due to Disability shall be decided in accordance with Section 2560.503-1 of the U.S. Department of Labor regulations.

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11.4Delegation of Responsibility

The Administrative Committee may designate persons, including persons other than “named fiduciaries” (as defined in ERISA Section 402(a)(2)), to carry out the specified responsibilities of the Administrative Committee and shall not be liable for any act or omission of a person so designated.

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ARTICLE XII

MANAGEMENT, CONTROL AND INVESTMENT OF PLAN ASSETS

12.1Investment Funds

12.1.1The Administrative Committee may establish one or more Investment Funds as it shall from time to time determine for the investment of a Participant’s Accounts. Notwithstanding the foregoing, the Administrative Committee, in accordance with Section 404(c) of ERISA, shall make available at all times at least three investment alternatives, each of which is diversified and has materially different risk and return characteristics. The investment alternatives in the aggregate shall enable each Participant, by choosing among them, to achieve a portfolio with aggregate risk and return characteristics at any point within the range normally appropriate for the Participant and which, in the aggregate, tend to minimize through diversification the overall risk of the Participant’s portfolio. The Plan is intended to constitute a plan described in Section 404(c) of ERISA and Section 2550.404c-1 of the Department of Labor Regulations, such that, to the extent applicable, the fiduciaries of the Plan may be relieved of liability for any losses that are the direct and necessary result of the investments instructions given by Participants and Beneficiaries under the Plan.

12.1.2Each Participant shall exercise control over the assets in his Accounts and is solely responsible for his investment elections. The Plan fiduciaries are not empowered to advise a Participant as to the manner in which his Accounts shall be invested. The fact that an Investment Fund is available to Participants for investment under the Plan shall not be construed as a recommendation for investment in that fund.

12.2Valuation of Accounts

A Participant’s Accounts shall be revalued at fair market value on each Valuation Date, with earnings and losses since the previous Valuation Date being credited to the Participant’s Account. Earnings and losses of the particular Investment Funds shall be allocated in the ratio that the portion of the Account Balance of a Participant invested in a particular Investment Fund bears to the total amount invested in such fund.

12.3Investment in Insurance Contract

The Administrative Committee may appoint one or more insurance companies to hold assets of the Plan, and may purchase insurance contacts or policies from one or more insurance companies with assets of the Plan. Neither the Trustee nor the Administrative Committee shall be liable for any act or omission of an insurance company with respect to any duties delegated to any insurance company.

12.4The Investment Manager

12.4.1The Administrative Committee may, by an instrument in writing, appoint one or more persons as an Investment Manager. Each person so appointed shall be (a) an investment adviser registered under the Investment Advisers Act of 1940, (b) a bank as defined in that Act, or (c) an

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insurance company qualified to manage, acquire or dispose of any asset of the Plan under the laws of more than one state.

12.4.2Each Investment Manager shall acknowledge in writing that it is a fiduciary (as defined in ERISA Section 3(21)) with respect to the Plan. The Company or the Administrative Committee shall enter into an agreement with each Investment Manager specifying the duties and compensation of such Administrative Manager and the other terms and conditions under which such Investment Manager shall be retained. Neither the Trustee nor the Administrative Committee shall be liable for any act or omission of any Investment Manager and shall not be liable for following the advice of any Investment Manager with respect to any duties delegated to any Investment Manager.

12.4.3The Administrative Committee shall have the power to determine the Trust assets to be invested pursuant to the direction of a designated Investment Manager and to set investment objectives and guidelines for the Investment Manager.

12.5Compensation

Each insurance company, Investment Manager and Trustee shall be paid such reasonable compensation, in addition to their expenses, as shall from time to time be agreed to by the Company or other person making such appointment; provided, however, that no such compensation shall be paid to any person who is an Employee.

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ARTICLE XIII

PLAN AMENDMENT OR TERMINATION

13.1Plan Amendment

The Company shall have the right at any time to amend the Plan, by an instrument in writing, effective retroactively or otherwise, provided that no such amendment shall have any of the effects specified in Section 1.3.2.

13.2Limitations of Plan Amendment

No Plan amendment shall:

(a)authorize any part of the Trust to be used for, or diverted to, purposes other than for the exclusive benefit of Participants or their Beneficiaries;

(b)decrease the Account Balance of any Participant or his or her Beneficiary under the Plan except to the extent permitted under Code Section 412(c)(8);

(c)reduce the vested percentage of any Participant;

(d)eliminate an optional form of benefit except to the extent permitted by Code Section 411 (d)(6); or

(e)change the vesting schedule, either directly or indirectly, unless each Participant having not less than three years of Vesting Service is permitted to elect, within a reasonable period specified by the Administrative Committee after the adoption of such amendment, to have his or her vested percentage computed without regard to such amendment. The period during which the election may be made shall commence with the date the amendment is adopted and shall end as the later of:

(i)sixty days after the amendment is adopted;

(ii)sixty days after the amendment is becomes effective; or

(iii)sixty days after the Participant is issued written notice by the Administrative Committee.

13.3Right of the Company to Terminate Plan

The Company intends and expects that from year to year it will be able to and will deem it advisable to continue this Plan in effect and to make contributions as herein provided. The Company reserves the right, however, to terminate the Plan at any time.

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13.4Effect of Partial or Complete Termination

13.4.1As of the date of a “partial termination” of the Plan or a complete discontinuance of contributions under the Plan, each affected Participant who is then an Employee shall become 100% vested in his or her Account Balance.

13.4.2As of the date of a “complete termination” of the Plan, each affected Participant who is then an Employee shall become 100% vested in his or her Account balance, and distributions shall be made as soon as practicable thereafter, as determined by the Administrative Committee, in accordance with Article VII.

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ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.1Plan Not a Contract of Employment

The Plan is not a contract of Employment, and the terms of Employment of any Employee shall not be affected in any way by the Plan or related instruments except as specifically provided therein.

14.2Source of Benefits

Benefits under the Plan shall be paid or provided for solely from the Trust, and neither the Employer, the Administrative Committee, Trustee, Investment Manager or insurance company shall assume any liability therefor.

14.3Benefits Not Assignable

Except as permitted in Code Section 401(a)(13) and ERISA Section 206(d), benefits provided under the Plan may not be assigned or alienated, either voluntarily or involuntarily. The preceding sentence shall not apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order which the Administrative Committee determines to be a “qualified domestic relations order” (as defined in Code Section 414(p)).

14.4Domestic Relations Orders

Any other provision of the Plan to the contrary notwithstanding, the Administrative Committee shall have all powers necessary with respect to the Plan for the proper operation of Code Section 414(p) with respect to qualified domestic relations orders referred to in Section 14.3, including, but not limited to, the power to establish all necessary or appropriate procedures, to authorize the establishment of new accounts with such assets and, subject to such investment control by the Administrative Committee as the Administrative Committee may deem appropriate, and the Administrative Committee may decide upon and make direct appropriate distributions therefrom. To the extent provided in a qualified domestic relations order, within the meaning of Code Section 414(p), distribution of any portion of a Participant’s vested Account Balance allocated to an alternate payee may be made whether or not the Participant has terminated Employment or is otherwise eligible to receive a distribution.

14.5Benefits Payable to Minors, Incompetents and Others

In the event any benefit is payable to a minor or to a person otherwise under a legal disability, or who, in the sole discretion of the Administrative Committee, is by reason of advanced age, illness or other physical or mental incapacity incapable of handling and disposing of his or her property, or otherwise is in such position or condition that the Administrative Committee believes that he or she could not utilize the benefit for his or her support or welfare, the Administrative Committee shall have discretion to apply the whole or any part of such benefit directly to the care, comfort, maintenance, support, education or use of such person, or to

47

pay the whole or any part of such benefit to the parent of such person; to the guardian, committee, conservator or other legal representative, wherever appointed, of such person; to the person with whom such person is residing; or to any other person having the care and control of such person.  The receipt by any such person to whom any such payment on behalf of any Participant or Beneficiary is made shall be a sufficient discharge therefor.

14.6Merger or Transfer of Assets

14.6.1Subject to Section 14.6.2, the Company may direct that the Plan be merged or consolidated with, or may transfer all or a portion of its assets and liabilities to, another plan or may receive assets and liabilities from another plan. The Administrative Committee may take whatever action it deems necessary or appropriate to effect any such merger, consolidation or transfer. Any optional forms of benefit or other special provisions applicable to a Participant for whom an account balance has been transferred to this Plan from another plan shall be set forth in an Appendix hereto.

14.6.2The Plan may not merge or consolidate with, or transfer any assets or liabilities to, any other plan, unless each Participant would (if the Plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation or transfer (if the Plan had then terminated).

14.7Participation in the Plan by an Affiliate

14.7.1With the consent of the Company and by duly authorized action, an Affiliate may adopt the Plan. Participating Affiliate contributions shall be allocated solely to Eligible Employees of the Participating Affiliate. Company contributions shall be allocated solely to Eligible Employees of the Company.

14.7.2With the consent of the Company and by duly authorized action, any other Employer may terminate its participation in the Plan or withdraw from the Plan and the Trust.

14.7.3A Participating Affiliate shall have no independent power with respect to the Plan except as specifically provided by this Section 14.7.

14.8Action by the Company or a Participating Affiliate

Any action required to be taken by the Company or any Participating Affiliate pursuant to the terms of the Plan shall be taken by its board of directors or any person or persons duly empowered to act on its behalf.

14.9Provision of Information

For purposes of the Plan, each Employee shall execute such forms as may be reasonably required by the Administrative Committee, and the Employee shall make available to the Administrative Committee and the Trustee any information they may reasonably request in this regard.

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14.10Notice of Address

Each person entitled to benefits under this Plan must file with the Administrative Committee, in writing, his or her post office address and each subsequent change of post office address. Any communication, statement or notice addressed to such person at his or her latest reported post office address will be binding on him or her for all purposes under the Plan.

14.11Controlling Law

The Plan is intended to qualify under Code Section 401(a) and to comply with ERISA, and its terms shall be interpreted accordingly. Otherwise, to the extent not preempted by ERISA, the laws of the State of New York shall control the interpretation and performance of the terms of the Plan.

14.12Military Service

Notwithstanding any provision of this Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u).

14.13Conditional Adoption

Anything in the foregoing to the contrary notwithstanding, the Plan has been adopted on the express condition that the Plan will be considered by the Internal Revenue Service as qualifying under the provisions of Code Section 401(a), and the Trust will be considered as qualifying for exemption from taxation under Code Section 501(a). If the Internal Revenue Service determines that the Plan or Trust does not so qualify, the Plan shall be amended or terminated as decided by the Company.

14.14Word Usage and Article and Section References

As used in the Plan, the masculine includes the feminine, the singular includes the plural, and the plural includes the singular, unless qualified by the context. Titles of Articles and Sections of the Plan are for convenience of reference only and are to be disregarded in applying the provisions of the Plan.

14.15Effect of Mistake

In the event of a mistake or misstatement as to the age, eligibility, participation of an Eligible Employee, Vesting Service, the amount of contributions made by or on behalf of a Participant or the amount of distributions made or to be made to a Participant or Beneficiary, the Administrative Committee shall, to the extent it deems it possible, make the necessary adjustments (including, but not limited to, recoupment, reduction in benefit payments, offset of benefit payments or return of overpayments) to grant to such Participant or Beneficiary the credits or distributions to which he is properly entitled under the Plan.

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IN WITNESS WHEREOF, this Plan is hereby adopted, effective as of January 1, 2008 to be signed this        day of                        , 2008.

ROCKWOOD SPECIALTIES INC.

By:

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EX-10.46

Exhibit 10.46

SUPPLEMENTARY SAVINGS PLAN OF ROCKWOOD SPECIALTIES INC.

(As Amended and Restated Effective January 1, 2009)

Table of Contents

		Page
ARTICLE I		2
ARTICLE II - Definitions		2
2.1	“Account”	2
2.2	“Affiliate”	2
2.3	“Beneficiary”	2
2.4	“Board”	2
2.5	“Code”	2
2.6	“Committee”	2
2.7	“Company”	3
2.8	“Compensation”	3
2.9	“Effective Date”	3
2.10	“Eligible Employee”	3
2.11	“Employer”	3
2.12	“Grandfathered Portion”	3
2.13	“Matching Account”	3
2.14	“Matching Credits”	3
2.15	“Non-Grandfathered Portion”	3
2.16	“Participant”	3
2.17	“Plan”	3
2.18	“Plan Year”	3
2.19	“Profit Sharing/401(k) Plan”	3
2.20	“401(k) Matching Contribution”	3
2.21	“401(k) Salary Deferral Contributions”	4
2.22	“Profit Sharing Annual Contribution”	4
2.23	“Money Purchase Annual Contribution”	4
2.24	“Salary Deferral Account”	4
2.25	“Salary Deferral Agreement”	4
2.26	“Salary Deferral Credits”	4
2.27	“Seconded Employees”	4
2.28	“Section 409A”	4
2.29	“Separation from Service”	4
2.30	“Statutory Limitations”	4
2.31	“Termination”	4
2.32	“Unforeseeable Emergency”	4
ARTICLE III - Participation		5
3.1	Eligibility to Participate	5
3.2	Enrollment	5
3.3	Deferral of Compensation	5
ARTICLE IV - Accounts		6
4.1	Maintenance of Accounts	6
4.2	Salary Deferral Credits	6
4.3	Matching Credits	6
4.4	Interest Credits	7

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Table of Contents

(continued)

		Page
4.5	Vesting	7
4.6	Quarterly Statements	7
ARTICLE V - Payments		7
5.1	Methods of Payment	7
5.2	Commencement of Benefits	8
5.3	Death Benefits	8
5.4	Hardship	8
5.5	Tax Increases	8
5.6	Tax Withholding	8
5.7	Restriction on Commencement of Distributions under Section 409A	8
5.8	Treatment of Installments under Section 409A	9
ARTICLE VI - Determination of Benefits, Claims Procedure and Administration		9
6.1	Determination	9
6.2	Interpretation	9
6.3	Reports	9
6.4	No Liability	9
ARTICLE VII - General Provisions		10
7.1	Designation of Beneficiary	10
7.2	Amendment and Termination	10
7.3	No Contract of Employment	10
7.4	Nonalienation of Benefits	10
7.5	Corporate Successors	10
7.6	Unfunded Plan	11
7.7	Governing Law	11
7.8	Payments to Incompetents or Minors	11
7.9	Partial Invalidity	11

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SUPPLEMENTARY SAVINGS PLAN OF ROCKWOOD SPECIALTIES INC.

(As Amended and Restated Effective January 1, 2009)

ARTICLE I

Rockwood Specialties Inc. (formerly Laporte Inc.) (the “Company”) adopted the Supplementary Savings Plan of Rockwood Specialties Inc. (formerly the Supplementary Savings Plan of Laporte Inc.) (the “Plan”), effective July 1, 1990, in order to provide supplemental retirement benefits to certain of its management and highly compensated employees whose benefits under the Profit-Sharing/401(k) Plan of Rockwood Specialties Inc. (formerly the Profit-Sharing/401(k) Plan of Laporte Inc.) (the “Profit Sharing/401(k) Plan”) and/or the Rockwood Specialties Inc. Money Purchase Pension Plan (formerly the Laporte Inc. Money Purchase Pension Plan) (the “Money Purchase Pension Plan”) are restricted as a result of the limitations imposed by Sections 401(a)(17), 401(k)(3), 401(m)(2), 402(g)(1) and 415 of the Code, or who are otherwise ineligible to participate in the Profit Sharing Plan or the Money Purchase Pension Plan.  The Plan was subsequently amended and restated in its entirety effective December 15, 1993, January 1, 1996 and December 30, 1997.  The Plan is hereby further amended and restated in its entirety effective as of the “Effective Date” (as defined herein).  The benefits, if any, of an Eligible Employee who terminated employment prior to the Effective Date shall be determined in accordance with the provisions of the Plan as in effect as of such termination date.

ARTICLE II

Definitions

Where the following terms appear in this Plan, they shall have the respective meanings set forth in the ARTICLE II, unless the context clearly indicates to the contrary:

2.1“Account” means the Salary Deferral Account and Matching Account maintained by the Committee to reflect the accrued benefit of a Participant under the Plan.

2.2“Affiliate” means any entity that is a member of a controlled group of corporations of a group of trades or businesses under common control (as such terms are defined in Section 414(b) and (c) of the Code), of which the Company is a member.

2.3“Beneficiary” means the person or persons entitled to receive benefits under the Plan after the death of a Participant pursuant to Section 7.1 hereof.

2.4“Board” means the Board of Directors of the Company.

2.5“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations issued thereunder.

2.6“Committee” means the committee appointed by the Board to administer the Plan.

2.7“Company” means Rockwood Specialties Inc. (formerly Laporte Inc.), a Delaware corporation, and its successors.

2.8“Compensation” means the amount of compensation that (i) would be available for elective deferral under the Profit Sharing Plan if the limitations of Sections 401(a)(17) and 402(g) of the Code were not imposed or (ii) would be eligible for determining contributions under the Money Purchase Pension Plan if the limitations of Section 401(a)(17) were not imposed, as applicable.

2.9“Effective Date” means January 1, 2009.

2.10“Eligible Employee” means a management or highly compensated employee of an Employer (i) who is eligible to participate in the Profit Sharing Plan and/or the Money Purchase Pension Plan, but whose contributions are limited by the Statutory Limitations, or who is a Seconded Employee, and (ii) who is selected by the Committee to participate in the Plan.

2.11“Employer” means the Company and each Affiliate that is a participating employer under the Profit Sharing Plan and/or the Money Purchase Pension Plan and that has elected, with the consent of the Company, to be a participating employer under this Plan.

2.12“Grandfathered Portion” of a Participant’s Account means the amounts that were credited to a Participant’s Account as of December 31, 2004, to the extent vested as of that date, plus earnings credited with respect to such amounts under Section 4.4 less withdrawals of such amounts under Article V.  The Company shall separately account for the Grandfathered Portion of a Participant’s Account.

2.13“Matching Account” means the portion of a Participant’s Account derived from Matching Credits.

2.14“Matching Credits” means the amount credited to a Participant’s Account pursuant to Section 4.3.

2.15“Non-Grandfathered Portion” of a Participant’s Account means the entire amount of the Participant’s Account other than the Grandfathered Portion of the Account.

2.16“Participant” means an Eligible Employee who has enrolled in the Plan in accordance with Section 3.2.

2.17“Plan” means the Supplementary Savings Plan of Rockwood Specialties, Inc., as set forth herein and as amended and restated from time to time.

2.18“Plan Year” means the calendar year.

2.19“Profit Sharing/401(k) Plan” means the Profit-Sharing/401(k) Plan for Employees of Rockwood Specialties, Inc.

2.20“401(k) Matching Contribution” means the matching contributions made by an Employer on behalf of a Participant under the Profit Sharing/401(k) Plan.

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2.21“401(k) Salary Deferral Contributions” means the pre-tax, salary deferral contributions made by the Employer to the Profit Sharing/401(k) Plan on behalf of a Participant pursuant to the Participant’s election.

2.22“Profit Sharing Annual Contribution” means the discretionary annual contribution (0% to 4% of compensation) made by the Employer on behalf of the Participant to the Profit Sharing/401(k) Plan based upon the Participant’s participating Company’s profitability for that fiscal year.

2.23“Money Purchase Annual Contribution” means the non-discretionary annual contribution of 3% of compensation made by the Employer on behalf of the Participant to the Money Purchase Pension Plan.

2.24“Salary Deferral Account” means the portion of a Participant’s Account derived from Salary Deferral Credits.

2.25“Salary Deferral Agreement” means an agreement entered into between an Eligible Employee and an Employer whereby the Eligible Employee agrees to become a Participant in the Plan and to defer a portion of his or her Compensation under this Plan pursuant to the provisions of Section 3.3.

2.26“Salary Deferral Credits” means the amount credited to a Participant’s Account pursuant to Section 4.2.

2.27“Seconded Employees” means those employees of the Employer who are only eligible to make salary deferrals under the Profit Sharing Plan and/or the Money Purchase Pension Plan because they participate in a non-United States pension plan sponsored by the Employer.

2.28“Section 409A” means Section 409A of the Code.

2.29“Separation from Service” means a Participant’s separation from service with the Company and its Affiliates within the meaning of Section 409A, applying the “at least 50 percent” test for this purpose.

2.30“Statutory Limitations” means the limitations imposed by Sections 401(a)(17), 401(k)(3), 401(m)(2), 402(g)(1) and 415 of the Code on the amount that may be contributed to the Profit Sharing Plan and/or the Money Purchase Pension Plan on behalf of an Eligible Employee.

2.31“Termination” means the termination of a Participant’s employment with his or her Employer for any reason.

2.32“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  The circumstances that will constitute an

4

Unforeseeable Emergency shall be determined by the Committee depending upon the facts of each case.  Notwithstanding the foregoing, with respect to the Non-Grandfathered Portion of a Participant’s Account, no event shall be an Unforeseeable Emergency unless it qualifies as an “unenforceable emergency” for purposes of Section 409A of the Code.

ARTICLE III

Participation

3.1Eligibility to Participate.  The Committee, in its sole discretion, shall select management or highly compensated employees of the Employer, including Seconded Employees, as eligible to participate in the Plan.  The Committee shall notify such Eligible Employees of their eligibility as soon as practicable after the Committee has made its selection.  The Committee may revoke a Participant’s eligibility prospectively; however, such revocation may not adversely affect such Participant’s rights hereunder with respect to amounts previously credited to his or her Account.

3.2Enrollment.  Each Eligible Employee may become a Participant in the Plan by filing with his or her Employer a fully completed and executed Salary Deferral Agreement on which the Eligible Employee elects to participate in the Plan and to defer a portion of his or her Compensation.  A Salary Deferral Agreement must be filed with the Employer prior to the first day for the Plan Year to which it relates.  If an Eligible Employee first becomes an Eligible Employee after the first day of the Plan Year (and has not previously become eligible to participate in another nonqualified account balance deferred compensation plan maintained by the Company or any of its Affiliates), his or her Salary Deferral Agreement must be filed with the Employer within thirty (30) days after the date on which he or she first becomes an Eligible Employee in order to participate in the Plan for such Plan Year; however, such Salary Deferral Agreement shall only apple to Compensation earned after the date the Salary Deferral Agreement has been filed with the Employer.  For Compensation that is earned based on a specified performance period, such as an annual bonus, the Participant may not defer more than an amount equal to the total amount of such Compensation paid for the performance period multiplied by the ratio of the number of days remaining in the performance period after the Salary Deferral Agreement is filed over the total number of days in the performance period.

A Salary Deferral Agreement shall be irrevocable and shall remain in full force and effect for subsequent Plan Years unless modified or terminated by the filing with the Employer of a new Salary Deferral Agreement.  A new Salary Deferral Agreement shall apply only to Compensation earned by the Participant after the end of the Plan Year in which it is filed with the Employer.  Deferrals under this Plan may be cancelled because of an Unforeseeable Emergency in accordance with the hardship rules set forth in Section 5.4.  If a Participant receives a distribution on account of hardship from the Profit Sharing Plan and/or the Money Purchase Pension Plan under circumstances requiring that deferrals under this Plan be terminated, deferrals under this Plan shall be cancelled as may be required in connection with such distribution.

3.3Deferral of Compensation.  For each Plan Year a Participant shall have the right to elect on his or her Salary Deferral Agreement the percentage of the Participant’s

5

Compensation to defer for such Plan Year, and to make the designations provided for in Section 5.1, in the manner permitted by the Company.

A Participant shall be permitted to defer Compensation under this Section 3.3 for a Plan Year only if he or she has elected to contribute a percentage of his or her Compensation to the Profit Sharing Plan as a Profit Sharing Plan Salary Deferral Contribution for such Plan Year and/or is eligible to receive a contribution under the Money Purchase Pension Plan, and such contribution cannot be made in its entirety because of the Statutory Limitations, provided that this restriction shall not apply to Seconded Employees or any other Participant’s prohibited from making or receiving contributions to the Profit Sharing Plan and/or the Money Purchase Pension Plan.

ARTICLE IV

Accounts

4.1Maintenance of Accounts.  The Employer and the Committee shall maintain on the Employer’s books and records an Account for each Participant (separately segregated to reflect the Grandfathered Portion and Non-Grandfathered Portion of such Account) that shall be credited with any credits and earnings pursuant to this Article IV and charged with payments and forfeitures pursuant to Article V.  Each Participant’s Account shall consist of a Salary Deferral Agreement and a Matching Account.  The amount available for payments shall be limited to the portion of the Account that is vested.  The Employer or the Committee may from time to time assess reasonable service charges against all or any portion of the Accounts to defray costs associated with the implementation and administration of the Plan.  Payments under the Plan shall be charged against Accounts on the date on which the payments are made and forfeitures shall be charged on the date of Termination.

4.2Salary Deferral Credits.  As of the Effective Date, the Salary Deferral Account of each Participant shall be equal to the balance of the Participant’s Salary Deferral Account immediately prior to the Effective Date.  Thereafter, the Salary Deferral Account of each Participant shall be credited at the end of each calendar quarter with Salary Deferral Credits equal to the amount of Compensation deferred by the Participant with respect to the payroll periods during such quarter pursuant to Section 3.3.

4.3Matching Credits.  As of the Effective Date, the Matching Account of each Participant shall be equal to the balance of the Participant’s Matching Account immediately prior to the Effective Date.  Thereafter, the Matching Account of each Participant, other than a Participant who is a Seconded Employee, shall be credited at the end of each calendar quarter during a Plan Year with a Matching Credit in an amount equal to:

(A)the amount of 401(k) Matching Contributions that would have been made by the Employer on behalf of the Participant for the calendar quarter if (i) the Profit Sharing/401(k) Plan Salary Deferral Contributions and 401(k) Matching Contributions had not been restricted by the Statutory Limitations, and (ii) the Participant had elected to contribute as Profit Sharing/401(k) Plan Deferral Contributions the maximum permissible

6

amount (taking into account the Statutory Limitations) plus the amount of Salary Deferral Credits Actually elected under this Plan, minus

(B)the maximum 401(k) Matching Contributions that would have been made by the Employer on behalf of the Participant for such calendar quarter had the Participant made the maximum permissible Profit Sharing/401(k) Plan Salary Deferral Contributions.

In addition to the matching contributions, the Employer shall make additional credits to the Participant’s Matching Account based on the Profit Sharing Annual Contribution and the Money Purchase Annual Contribution with respect to Compensation above the Statutory Limitations.

4.4Interest Credits.  As of the last day of each calendar quarter, each Participant’s Account shall be credited with an interest credit equal to (i) the Account balance on such date, multiplied by (ii) one-fourth of the prime rate being charged by JP Morgan Chase on the first day of the calendar quarter, as published in the Wall Street Journal.

4.5Vesting.  A Participant shall at all times be fully vested in his or her Salary Deferral and Matching Accounts.

4.6Quarterly Statements.  Statements indicating the total amount credited to a Participant’s Account as of the last day of each calendar quarter shall be furnished by the Committee to the Participant not more than ninety (90) days after the end of each calendar quarter and at such other time or times as the Committee may determine.

ARTICLE V

Payments

5.1Methods of Payment.  A Participant shall designate in his or her Salary Deferral Agreement whether his or her Account balance shall be distributed in a single, lump sum payment or in approximately equal quarterly installments for a period of three (3) years, five (5) years, ten (10) years, fifteen (15) years, or twenty (20) years, (with the amount of each quarterly installment to be determined by dividing the value of the Participant’s Account on the applicable payment date by the number of remaining installments).  Payment of the lump sum or first quarterly installment shall be made on the date specified in Section 5.2.  With respect to the Grandfathered Portion of a Participant’s Account, the Participant and the Employer may agree to change the method of payment of his or her Account balance, if an additional service agreement (“Additional Service Agreement”) is entered into by the Employer and the Participant and such Additional Service Agreement is a bona fide written agreement with the Employer which requires the Participant to provide substantial services to the Employer for a reasonable period of time before benefit payments commence.  With respect to the Non-Grandfathered Portion of a Participant’s Account, the Participant and the Employer may agree to change the method of payment of his or her Account balance, provided that: (i) such agreement is made at least one year prior to the date on which such Account balance is scheduled to be paid, or in the case of installment payments, one year prior to the date on which the affected installment is scheduled to

7

be paid, (ii) the redesignated payment date for the Account balance or installment payment, as the case may be, is no less than five years after the date on which such Account balance or installment payment would otherwise be paid, and (iii) the change in method of payment may not take effect until 12 months following the date of the agreement making such change.

5.2Commencement of Benefits.  With respect to the Grandfathered Portion of a Participant’s Account, payment of such portion of the Participant’s Account shall be made or shall commence on the last day of the month in which the Participant’s employment terminates with the Company (whether because of retirement or any other reason).  With respect to the Non-Grandfathered Portion of a Participant’s Account, payment of such portion shall be made or shall commence on the last day of the month in which the Participant has a Separation from Service.

5.3Death Benefits.  Upon the death of a Participant prior to the distribution of the entire balance of his or her Account, payment of the remaining balance in the Participant’s Account shall commence as to the Participant’s Beneficiary within ninety (90) days of the date of death in the form designated by the Participant; provided, however, that if the Participant elected quarterly installments and the Committee has determined that an Unforeseeable Emergency has occurred, the Committee may approve a Beneficiary’s request for a single, lump sum payment.

5.4Hardship.  A Participant’s Account shall be distributed according to Sections 5.1 and 5.2, except that a Participant may apply for and receive a distribution of all or a portion of the vested balance in his or her Account prior to the date the Account is otherwise payable if the Committee determines that an Unforeseeable Emergency has occurred.  Payment may not be made to the extent that the need caused by the Unforeseeable Emergency is or may be relieved through reimbursement by insurance or otherwise, by reasonable liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or by cessation of deferrals under this Plan or the Profit Sharing Plan and/or the Money Purchase Pension Plan.  Amounts shall only be distributed because of an Unforeseeable Emergency to the extent reasonable necessary to address the Unforeseeable Emergency.  Any payment under this Section 5.4 will be made within ninety (90) days of the date of the Committee’s determination.

5.5Tax Increases.  Notwithstanding the provisions of Section 5.1, in the event the Grandfathered Portion of a Participant’s Accounts is being paid in installment payments, and during said payout period Federal personal income tax rates for the highest marginal tax rate are scheduled to increase by fifteen (15) or more percentage points, any remaining installment payments from the Grandfathered Portion of such Accounts shall be paid in a lump sum at a date determined by the Committee which precedes the effective date of such tax rate increase.

5.6Tax Withholding.  The Company shall withhold from payments due under the Plan any and all taxes of any nature required by any government to be withheld.

5.7Restriction on Commencement of Distributions under Section 409A.  Notwithstanding anything to the contrary in this Article V, if a Participant is a “specified employee” as defined below and determined by the Committee in accordance with Section 409A and if any amounts (other than the Grandfathered Portion of a Participant’s Accounts) are

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payable under this Plan on account of the Participant’s Separation from Service, then any amounts that would otherwise be paid to the Participant under this Article V within six months of such Separation from Service (other than amounts payable from the Grandfathered Portion of the Participant’s Accounts) shall automatically be deferred and paid in a lump sum on the six month anniversary of such Separation from Service (or upon the Participant’s death, if sooner).  A “specified employee” means a Participant who is a “key employee” as defined for purposes of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding Section 416 (i)(5)), of the Company or its affiliates.    If a person is a specified employee as of December 31 of the preceding Plan Year, he or she is treated as a specified employee for the 12-month period beginning on April 1 of the Plan Year.  For purposes of this Section 1.30, the term “compensation” will be defined in accordance with Regulation Section 1.415(c)-2(a), and the Company hereby elects to apply the rule of Regulation Section 1.415(c)-2(g)(5)(ii) to not treat as compensation certain compensation excludible from the employee’s gross income on account of the location of the services or the identity of the employer that is not effectively connected with the trade or business within the United States.  Whether an individual is a specified employee will be determined in accordance with the requirements of Code Section 409A and the final regulations issued thereunder.

5.8Treatment of Installments under Section 409A.  A series of installment payments under this Article V shall be treated as a single payment for purposes of Section 409A.

ARTICLE VI

Determination of Benefits, Claims Procedure and Administration

6.1Determination.  The Company may assign all or some of its duties hereunder to an officer or other employee of the Company.  The Committee shall make all determinations as to rights to benefits under this Plan.  Subject to and in compliance with the specific procedures contained in the applicable regulations promulgated under the Employee Retirement Income Security Act of 1974, as amended: (i) any decision by the Committee denying a claim for benefits under this Plan by the Participant or any other claimant shall be stated in writing by the Committee and delivered or mailed to the claimant; (ii) each such notice shall set forth the specific reasons for the denial, written to the best of the Committee’s ability in a manner that may be understood without legal or actuarial counsel; and (iii) the Committee shall afford a reasonable opportunity to the claimant whose claim for benefits has been denied for a review of the decision denying such claim.

6.2Interpretation.  Subject to the foregoing: (i) the Committee shall have full power and authority to interpret, construe and administer this Plan; and (ii) the interpretation and construction of this Plan by the Committee, and any action taken hereunder, shall be binding and conclusive upon all parties in interest.

6.3Reports.  The Company shall provide the Participant with a statement reflecting the amount of the Participant’s Account on a quarterly basis.

6.4No Liability.  No employee, agent, officer or director of the Company shall, in any event, be liable to any person for any action taken or omitted to be taken in connection with

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the interpretation, construction or administration of this Plan, so long as such action or omission to act be made in good faith.

ARTICLE VII

General Provisions

7.1Designation of Beneficiary.  A Participant may designate one or more Beneficiaries to receive any payments due under the Plan upon the Participant’s death.  All Beneficiary designations must be on forms provided by the Committee and will be effective on the date filed with the Committee.  A Participant may change a Beneficiary designation at any time, without the consent of any prior Beneficiary, by filing with the Committee a new Beneficiary designation form.  No Beneficiary designation form shall be effective unless received by the Committee prior to the Participant’s death.  If a Participant dies without having filed a proper Beneficiary designation form with the Committee, or to the extent no designated Beneficiary is living, any amounts payable under the Plan upon the Participant’s death shall be paid to his or her beneficiaries as determined under the provisions of the Profit Sharing Plan.

7.2Amendment and Termination.  The Company may, at any time and from time to time, amend, in whole or in part, or terminate the Plan without the consent of any Participant or Beneficiary; provided, however, that no amendment or termination of the Plan shall reduce the amount then credited to any Participant’s Account.  If the Plan is terminated, the Employer shall continue to be responsible for making payments attributable to existing Accounts; however, the Committee, in its discretion, may direct that all Account balances be distributed, in which case the Grandfathered Portion of Participants’ Accounts shall be distributed upon such termination in the form of a single, lump sum distribution, and the Non-Grandfathered Portion of Participants’ Accounts shall be distributed at the time and to the extent permitted under Section 409A.

7.3No Contract of Employment.  The establishment of the Plan, the creation of the Accounts, and/or the making of any payments under the Plan, shall not give any employee the right to remain in the service of any Employer, and all Participants and other employees shall remain subject to discharge to the same extent as if the Plan had never been adopted.

7.4Nonalienation of Benefits.  None of the interests, benefits or rights of any Participant or Beneficiary hereunder shall be subject to any claim of any creditor of such Participant or Beneficiary and, to the fullest extent permitted by law, all such interests, benefits and rights shall be free from attachment, garnishment or any other legal or equitable process available to any creditor of such Participant and Beneficiary.  No Participant or Beneficiary shall have the right to alienate, anticipate, pledge, encumber, sell, transfer or otherwise assign any of the benefits or payments that the Participant or Beneficiary may expect to receive under the Plan, and any attempt to do so shall be void.

7.5Corporate Successors.  The Plan shall not be automatically terminated by a transfer or sale of the assets of the Company or by the merger or consolidation of the Company into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan.  In the event that the Plan is not continued by the transferee,

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purchaser or successor entity, then the Plan shall terminate in accordance with the provisions of Section 7.2.

7.6Unfunded Plan.  The Plan shall at all times be entirely unfunded and, except as provided in the following paragraph, no provision shall at any time be made with respect to segregating any assets of the Company or any other Employer for payment of any benefits due hereunder.  The right of a Participant or Beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of the Employers, and neither the Participant nor any Beneficiary shall have any rights in or against any specific assets of the Employers.

The preceding paragraph to the contrary notwithstanding, the Company may establish a trust to which the Employers may transfer funds for the payment of benefits under the Plan.  The terms of such trust must require that its assets be used to satisfy the claims of the Employer’s unsecured creditors in the event of the Employer’s bankruptcy or insolvency, and the trust must contain such terms and conditions as shall prevent taxation to Participants and Beneficiaries of any amounts held in the trust or credited to an Account prior to the time payments are made.  No Participant or Beneficiary shall have any ownership rights in or to the assets of any trust established pursuant to this paragraph.

7.7Governing Law.  This Plan shall be governed by and construed in accordance with the laws of the State of Delaware, except to the extent preempted by federal law.

7.8Payments to Incompetents or Minors.  If a Participant or Beneficiary entitled to receive benefits hereunder is deemed by the Committee or is adjudged to be legally incapable of caring for his or her affairs, such benefits shall be paid to the duly appointed and acting guardian, if any, and if no such guardian is appointed and acting, to such person or persons as the Committee may designate.  Any such payment shall, to the extent made, be deemed a completer discharge of the obligation of the Plan or the Committee to make such payment.

7.9Partial Invalidity.  If any term or provision hereof or the application thereof to any person or circumstance, is held to be invalid or unenforceable by a court of competent jurisdiction, the remainder of the Plan, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall both be unaffected and each term or provision hereof shall be valid and enforceable to the fullest extent permitted by law.

EXECUTED AND DATED as of this        day of December, 2008.

ROCKWOOD SPECIALTIES INC.

By:

Print Name:

Print Title:

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EX-10.53

Exhibit 10.53

2008 AMENDED AND RESTATED

STOCK PURCHASE AND OPTION PLAN

FOR ROCKWOOD HOLDINGS, INC. AND SUBSIDIARIES

1.Purpose of Plan

This 2008 Amended and Restated Stock Purchase and Option Plan for Rockwood Holdings, Inc. and Subsidiaries (formerly the Amended and Restated 2005 Stock Purchase and Option Plan for Rockwood Holdings, Inc., which was formerly the Amended and Restated 2003 Stock Purchase and Option Plan for Rockwood Holdings, Inc., which was formerly the 2000 Stock Purchase and Option Plan for K-L Holdings, Inc. and Subsidiaries) (the “Plan”) is designed:

(a)to promote the long term financial interests and growth of Rockwood Holdings, Inc. (the “Company”), its Subsidiaries and any other Service Recipients by attracting and retaining management personnel with the training, experience and ability to enable them to make a substantial contribution to the success of the Company’s business;

(b)to motivate management personnel by means of growth-related incentives to achieve long range goals; and

(c)to further the identity of interests of participants with those of the shareholders of the Company through opportunities for increased stock, or stock-based, ownership in the Company.

2.Definitions

As used in the Plan, the following words shall have the following meanings:

(a)“Board of Directors” means the Board of Directors of the Company.

(b)“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor thereto.

(c)“Committee” means the Compensation Committee of the Board of Directors (or, if no such committee is appointed, the Board of Directors).

(d)“Common Stock” or “Share” means common stock of the Company which may be authorized but unissued, or issued and reacquired.

(e)“Director” means any member of the Board of Directors.

(f)“Disability” shall mean Disability as defined under Section 409A of the Code.

(g)“Employee” means a person, including an officer, in the regular full-time employment of the Company, one of its Subsidiaries or any other Service Recipient.

(h)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(i)“Grant” means an award made to a Participant pursuant to the Plan and described in Section 5, including, without limitation, an award of a Stock Option, Restricted Stock, Purchase Stock, or Other Stock Based Grant or any combination of the foregoing.

(j)“Grant Agreement” means an agreement between the Company and a Participant that sets forth the terms, conditions and limitations applicable to a Grant.

(k)“Participant” means an Employee, Director, consultant or other person having a relationship with the Company, one of its Subsidiaries or any other “Service Recipient” (within the meaning of Section 409A of the Code), to whom one or more Grants have been made and such Grants have not all been forfeited or terminated under the Plan.

(l)“Stock-Based Grants” means the collective reference to the grant of Purchase Stock, Restricted Stock and Other Stock Based Grants described in Section 5.

(m)“Stock Options” means options to purchase Common Stock, which may or may not be incentive stock options (“Incentive Stock Options”) within the meaning of Section 422 of the Code.

(n)“Subsidiary” means any entity other than the Company in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain owns 50% or more of the voting stock or other voting interests in one of the other entities in such chain.

3.             Administration of Plan

(a)The Plan shall be administered by the Committee.  All of the members of the Committee and any other Directors shall be eligible to be selected for Grants under the Plan; provided, however, that the members of the Committee shall qualify to administer the Plan for purposes of Rule 16b-3 (and any other applicable rule) promulgated under Section 16(b) of the Exchange Act to the extent that the Company is subject to such rule.  The Committee may adopt its own rules of procedure, and the action of a majority of the Committee, taken at a meeting or taken without a meeting by a writing signed by such majority, shall constitute action by the Committee.  The Committee shall have the power and authority to administer, construe and interpret the Plan, to make rules for carrying it out and to make changes in such rules.  Any such interpretations, rules, and administration shall be consistent with the basic purposes of the Plan.

(b)The Committee may delegate to the Chief Executive Officer and to other senior officers of the Company its duties under the Plan subject to such conditions and limitations as the Committee shall prescribe except that only the Committee may designate and make Grants to Participants who are subject to Section 16 of the Exchange Act.

(c)The Committee may employ attorneys, consultants, accountants, appraisers, brokers or other persons.  The Committee, the Company, and the officers and Directors of the Company shall be entitled to rely upon the advice, opinions or valuations of any such persons.  All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon all Participants, the Company and all other interested persons.  No member of the Committee shall be personally liable for any action,

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determination or interpretation made in good faith with respect to the Plan or the Grants, and all members of the Committee shall be fully protected by the Company with respect to any such action, determination or interpretation.

4.Eligibility

The Committee may from time to time make Grants under the Plan to such Employees, Directors or other persons having a relationship with the Company, any of its Subsidiaries or any other Service Recipient, and in such form and having such terms, conditions and limitations as the Committee may determine.  Grants may be granted singly, in combination or in tandem.  The terms, conditions and limitations of each Grant under the Plan shall be set forth in a Grant Agreement, in a form approved by the Committee, consistent, however, with the terms of the Plan.

5.Grants

From time to time, the Committee will determine the forms and amounts of Grants for Participants.  Such Grants may take the following forms in the Committee’s sole discretion:

(a)Stock Options - These are options to purchase Common Stock, which may or may not be Incentive Stock Options and shall have an exercise price at least equal to the fair market value of one share of Common Stock on the date of Grant (or, if the person to whom an Incentive Stock Option is being granted owns Common Stock representing more than 10 percent of the voting power of all classes of Company equity, the exercise price shall be at least equal to 110 percent of the fair market value of one share of Common Stock on the date of Grant). At the time of the Grant the Committee shall determine, and shall have contained in the Grant Agreement or other Plan rules, the option exercise period, the option price, and such other conditions or restrictions on the grant or exercise of the option as the Committee deems appropriate, which may include the requirement that the grant of options is predicated on the acquisition of Purchase Shares under Section 5(c) by the Participant or as may be required pursuant to applicable law, if such options shall be Incentive Stock Options.  Payment of the option exercise price shall be made in cash or in shares of Common Stock (provided, that such Shares have been held by the Participant for not less than six months (or such other period as established by the Committee from time to time)), or a combination thereof, in accordance with the terms of the Plan, the Grant Agreement and any applicable guidelines of the Committee in effect at the time.

(b)Restricted Stock - Restricted Stock is Common Stock delivered to a Participant with or without payment of consideration with restrictions or conditions on the Participant’s right to transfer or sell such stock.  The number of shares of Restricted Stock and the restrictions or conditions on such shares shall be as the Committee determines, in the Grant Agreement or by other Plan rules, and the certificate for the Restricted Stock shall bear evidence of such restrictions or conditions.

(c)Purchase Stock - Purchase Stock refers to shares of Common Stock offered to a Participant at such price as determined by the Committee, the acquisition of which may make him eligible to receive under the Plan, among other things, Stock Options.

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(d)Other Stock-Based Grants - The Committee may make other Grants under the Plan pursuant to which shares of Common Stock or other equity securities of the Company are or may in the future be acquired, or Grants denominated in stock units, including ones valued using measures other than market value of the Common Stock.  Other Stock-Based Grants may be granted with or without consideration.

6.Limitations and Conditions

(a)Subject to Section 8 hereof, the number of Shares available for Grants under this Plan shall be 10,000,000 shares of the authorized Common Stock as of the effective date of the Plan.  The number of Shares subject to Grants made under this Plan to any one Participant in any one calendar year shall not be more than $20 million worth of the Shares.  Unless restricted by applicable law, Shares related to Grants that are forfeited, terminated, cancelled or expire unexercised, shall immediately become available for new Grants.

(b)No Grants shall be made under the Plan beyond ten years after the effective date of the Plan, but the terms of Grants made on or before the expiration of the Plan may extend beyond such expiration.  At the time a Grant is made or amended or the terms or conditions of a Grant are changed, the Committee may provide for limitations or conditions on such Grant.

(c)Nothing contained herein shall affect the right of the Company to terminate any Participant’s employment at any time or for any reason.

(d)Deferrals of Grant payouts may be provided for, at the sole discretion of the Committee, in the Grant Agreements, but only to the extent such deferral satisfies the requirements of Section 409A of the Code.

(e)Except as otherwise prescribed by the Committee, the amounts of the Grants for any employee of a Subsidiary or any other Service Recipient, along with interest, dividend, and other expenses accrued on deferred Grants shall be charged to the Participant’s employer during the period for which the Grant is made.  If the Participant is employed by more than one Subsidiary or by both the Company and a Subsidiary (or any other Service Recipient) during the period for which the Grant is made, the Participant’s Grant and related expenses will be allocated between the companies employing the Participant in a manner prescribed by the Committee.

(f)Other than as specifically provided pursuant to a Grant Agreement or other related agreement between a Participant and the Company, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void.  No such benefit shall, prior to receipt thereof by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of the Participant.

(g)Participants shall not be, and shall not have any of the rights or privileges of, shareholders of the Company in respect of any Shares purchasable in connection with any Grant unless and until certificates representing any such Shares have been issued by the Company to (or book entry representing such Shares has been made and such Shares have been

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deposited with the appropriate registered book — entry custodian for the benefit of) such Participants.

(h)No election as to benefits or exercise of Stock Options or other rights may be made during a Participant’s lifetime by anyone other than the Participant except by a legal representative appointed for or by the Participant.

(i)Absent express provisions to the contrary, any grant under this Plan shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company, its Subsidiaries or any other Service Recipient and shall not affect any benefits under any other benefit plan of any kind now or subsequently in effect under which the availability or amount of benefits is related to level of compensation.  This Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.

(j)Unless the Committee determines otherwise, no benefit or promise under the Plan shall be secured by any specific assets of the Company, any of its Subsidiaries or any other Service Recipient, nor shall any assets of the Company, any of its Subsidiaries or any other Service Recipient be designated as attributable or allocated to the satisfaction of the Company’s obligations under the Plan.

7.Transfers and Leaves of Absence

For purposes of the Plan, unless the Committee determines otherwise:  (a) a transfer of a Participant’s employment without an intervening period of separation among the Company, any Subsidiary or any other Service Recipient shall not be deemed a termination of employment, and (b) a Participant who is granted in writing a leave of absence shall be deemed to have remained in the employ of the Company during such leave of absence.

8.Adjustments

In the event of any change in the outstanding Common Stock by reason of a stock split, spin-off, stock dividend, stock combination or reclassification, recapitalization or merger, change of control, or similar event, the Committee shall adjust appropriately the number of Shares subject to the Plan and available for or covered by Grants and Share prices related to outstanding Grants to the extent necessary, and may make such other revisions to outstanding Grants as it deems are equitably required including, without limitation, in an event that is not a change of control, providing for the payment of a dividend in respect of the Shares subject to any outstanding Grants, in all events in order to allow Participants to participate in such event in an equitable manner.

9.Merger, Consolidation, Exchange, Acquisition, Liquidation or Dissolution

In its absolute discretion, and on such terms and conditions as it deems appropriate, coincident with or after the grant of any Stock Option or any Stock-Based Grant, the Committee may provide that such Stock Option or Stock-Based Grant cannot be exercised after the merger or consolidation of the Company into another company, the exchange of all or substantially all of the assets of the Company for the securities of another company, the

5

acquisition by another company of 80% or more of the Company’s then outstanding shares of voting stock or the recapitalization, reclassification, liquidation or dissolution of the Company, and if the Committee so provides, it shall, on such terms and conditions as it deems appropriate in its absolute discretion, also provide, either by the terms of such Stock Option or Stock-Based Grant or by a resolution adopted prior to the occurrence of such merger, consolidation, exchange, acquisition, recapitalization, reclassification, liquidation or dissolution, that, for some period of time prior to such event, such Stock Option or Stock-Based Grant shall be exercisable as to all shares subject thereto, notwithstanding anything to the contrary herein (but subject to the provisions of Section 6(b) and that, upon the occurrence of such event, such Stock Option or Stock-Based Grant shall terminate and be of no further force or effect; provided, however, that the Committee may also provide, in its absolute discretion, that even if the Stock Option or Stock-Based Grant shall remain exercisable after any such event, from and after such event, any such Stock Option or Stock-Based Grant shall be exercisable only for the kind and amount of securities and/or other property, or the cash equivalent thereof, receivable as a result of such event by the holder of a number of shares of stock for which such Stock Option or Stock-Based Grant could have been exercised immediately prior to such event.

10.Code Section 409A Compliance

The Plan is intended to comply with Section 409A of the Code and will be interpreted in a manner intended to comply with Section 409A of the Code.  In furtherance thereof, no Grants may be accelerated under the Plan, other than to the extent permitted under Section 409A of the Code.  To the extent that any provision of the Plan violates Section 409A of the Code such that amounts would be taxable to a Participant prior to payment or would otherwise subject a Participant to a penalty tax under Section 409A, such provision shall be automatically reformed or stricken to preserve the intent hereof.  Notwithstanding anything herein to the contrary, (i) if at the time of a Participant’s termination of employment the Participant is a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company shall defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Participant) until the date that is six months following the Participant’s termination of employment (or the earliest date as is permitted under Section 409A of the Code) and (ii) if any other payments due to a Participant hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment compliant under Section 409A of the Code, or otherwise such payment shall be restructured, to the extent possible, in a manner, determined by the Committee, that does not cause such an accelerated or additional tax.  The Committee shall implement the provisions of this section in good faith; provided that neither the Company, the Committee nor any of the employees or representatives of the Company, its Subsidiaries or any other Service Recipient shall have any liability to Participants with respect to this Section 10.

11.Amendment and Termination

The Committee shall have the authority to make such amendments to any terms and conditions applicable to outstanding Grants as are consistent with this Plan provided that,

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except for adjustments under Section 8 or 9 hereof, (a) no such action shall modify such Grant in a manner adverse to the Participant without the Participant’s consent except as such modification is provided for or contemplated in the terms of the Grant and (b) no such action may provide for an increase in the number of Shares to be made available for issuance under this Plan without obtaining approval by the Shareholders of such increase.  The Board of Directors may amend, suspend or terminate the Plan.

12.Foreign Options and Rights

The Committee may make Grants to Employees who are subject to the laws of nations other than the United States, which Grants may have terms and conditions that differ from the terms thereof as provided elsewhere in the Plan for the purpose of complying with foreign laws.

13.Withholding Taxes

The Company shall have the right to deduct from any cash payment made under the Plan any federal, state or local income or other taxes required by law to be withheld with respect to such payment.  It shall be a condition to the obligation of the Company to deliver shares upon the exercise of an Option, upon delivery of Restricted Stock or upon exercise, settlement or payment of any Other Stock-Based Grant that the Participant pay to the Company such amount as may be requested by the Company for the purpose of satisfying any liability for such withholding taxes.  Any Grant Agreement may provide that the Participant may elect, in accordance with any conditions set forth in such Grant Agreement, to pay a portion or all of such minimum withholding taxes in shares of Common Stock.

14.Effective Date and Termination Dates

The Plan shall be effective on and as of the date of its original approval by the Board of Directors of the Company and shall be approved by a majority of the shareholders of the Company, and shall terminate ten years thereafter, subject to earlier termination by the Board of Directors pursuant to Sections 9 and 10.

Effective Date of adoption of Plan:  November 20, 2000

Effective Date of amendment and restatement of Plan:  June 9, 2003

Effective Date of amendment of Plan:  September 1, 2004

Effective Date of second amendment of Plan:  July 18, 2005

Effective Date of amendment and restatement of Plan:  July 29, 2005

Effective Date of amendment and restatement of Plan:  November 5, 2008

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EX-10.64

Exhibit 10.64

EXECUTION VERSION

AMENDMENT AND RESTATEMENT AGREEMENT

dated 29 August 2008

for

DEUKALION EINHUNDERTVIERUNDZWANZIGSTE VERMÖGENSVERWALTUNGS - GMBH

arranged by

MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) AND NORDEA BANK FINLAND PLC

with

MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)

acting as Agent

RELATING TO A FACILITY AGREEMENT DATED

17 June 2008

Ref: NHAX/GEM

Linklaters LLP

CONTENTS

CLAUSE		PAGE
1.	Definitions and interpretation	i
2.	Conditions precedent	ii
3.	Representations	ii
4.	Amendment	ii
5.	Transaction expenses	ii
6.	Miscellaneous	ii
7.	Governing law	iii

THE SCHEDULES

SCHEDULE	PAGE
SCHEDULE 1 The Original Obligors
SCHEDULE 2 Conditions precedent
SCHEDULE 3 Form of Amended Agreement

THIS AGREEMENT is dated 29 August 2008 and made between:

(1)DEUKALION EINHUNDERTVIERUNDZWANZIGSTE VERMÖGENSVERWALTUNGS - GMBH, a limited liability company incorporated under the laws of Germany (Gesellschaft mit beschränkter Haftung) and registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Frankfurt am Main under the registration number HR B8 05 60 (the “Company”);

(2)THE SUBSIDIARIES of the Company listed in Schedule 1 as original borrowers (together with the Company, the “Original Borrowers”);

(3)THE SUBSIDIARIES of the Company listed in Schedule 1 as original guarantors (together with the Company, the “Original Guarantors”);

(4)MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) as agent of the other Finance Parties (the “Agent”).

IT IS AGREED as follows:

1.DEFINITIONS AND INTERPRETATION

1.1Definitions

In this Agreement:

“Amended Agreement” means the Original Facility Agreement, as amended and restated in the form set out in Schedule 3 (Form of Amended Agreement).

“Effective Date” means the date of this Agreement.

“Original Facility Agreement” means the €330,000,000 facility agreement dated 17 June 2008 between the Company, certain Subsidiaries of the Company as borrowers and guarantors, the Agent, the Arranger named in it and the Lenders named in it.

“Party” means a party to this Agreement.

1.2Incorporation of defined terms

(a)Unless a contrary indication appears, terms defined in the Original Facility Agreement have the same meaning in this Agreement.

(b)The principles of construction set out in the Original Facility Agreement shall have effect as if set out in this Agreement.

1.3Third Party Rights

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

1.4Designation

In accordance with the Original Facility Agreement, each of the Company and the Agent designate this Agreement as a Finance Document.

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2.CONDITIONS SUBSEQUENT

The Company shall deliver to the Agent all the documents and other evidence listed in Schedule 2 (Conditions subsequent) in form and substance satisfactory to the Agent by no later than the initial Utilisation Date. Any failure by the Company to fulfil these conditions shall be a breach of the Amended Agreement.

3.REPRESENTATIONS

Each Obligor makes the Repeating Representations, and the representations and warranties in Clause 22.5 (Validity and admissibility in evidence), 22.7 (Deduction of Tax) and 22.8 (No filing or stamp taxes) of the Original Facility Agreement, by reference to the facts and circumstances then existing:

(a)on the date of this Agreement; and

(b)on the Effective Date,

but as if references in Clause 22 (Representations) of the Original Facility Agreement to “the Finance Documents” include this Agreement and, on the Effective Date, the Amended Agreement.

4.AMENDMENT

4.1Amendment

With effect from the Effective Date the Original Facility Agreement shall be amended and restated in the form set out in Schedule 3 (Form of Amended Agreement).

4.2Continuing obligations

The provisions of the Original Facility Agreement and the other Finance Documents (including the guarantee and indemnity of each Guarantor) shall, save as amended by this Agreement, continue in full force and effect.

5.TRANSACTION EXPENSES

The Company shall within three Business Days of demand reimburse the Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent in connection with the negotiation, preparation, printing and execution of this Agreement and any other documents referred to in this Agreement.

6.MISCELLANEOUS

6.1Incorporation of terms

The provisions of Clause 35 (Notices) and Clause 42 (Enforcement) of the Original Facility Agreement shall be incorporated into this Agreement as if set out in full in this Agreement and as if references in those clauses to “this Agreement” are references to this Agreement.

6.2Counterparts

This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

ii

7.GOVERNING LAW

This Agreement is governed by English law.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

iii

SCHEDULE 1

THE ORIGINAL OBLIGORS

Name of Original Borrower

SACHTLEBEN CHEMIE GMBH

FINNISH HOLDCO

KEMIRA PIGMENTS OY

Name of Original Guarantor

SACHTLEBEN CHEMIE GMBH

FINNISH HOLDCO

KEMIRA PIGMENTS OY

iv

SCHEDULE 2

CONDITIONS SUBSEQUENT

1.Obligors

(a)A certified (beglaubigt) copy of the constitutional documents (Satzung or Gesellschaftsvertrag) of each Obligor incorporated in Germany.

(b)A certified copy of the constitutional documents of each Obligor incorporated in Finland, being a copy of an extract from the Finnish Trade Register and articles of association of recent date not dated earlier than 14 days prior to the Original Facility Agreement.

(c)A certified (beglaubigt) excerpt from the commercial register (Handelsregister) of each Obligor incorporated in Germany of recent date not dated earlier than 14 days prior to the Original Facility Agreement.

(d)A copy of a resolution of the shareholders of each Obligor incorporated in Germany:

(i)approving the terms of, and the transactions contemplated by, this Agreement and resolving that it execute this Agreement; and

(ii)instructing the managing director(s) of each Obligor to execute this Agreement.

(e)A copy of a resolution of the board of directors of each Obligor incorporated in a jurisdiction other than Germany:

(i)approving the terms of, and the transactions contemplated by, this Agreement and resolving that it execute this Agreement; and

(ii)authorising a specified person or persons to execute this Agreement on its behalf.

(f)A copy of a resolution signed by all the holders of the issued shares in each Guarantor incorporated in a jurisdiction other than Germany, approving the terms of, and the transactions contemplated by, this Agreement.

(g)A specimen of the signature of each person authorised by the resolutions referred to in paragraphs (d) and (e) above.

(h)A certificate of an authorised signatory of the relevant Obligor certifying that each copy document relating to it specified in this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the initial Utilisation Date.

2.Legal opinions

(a)A legal opinion of Linklaters LLP, legal advisers to the Agent in England, substantially in the form distributed to the Lenders prior to signing this Agreement.

(b)A legal opinion of Clifford Chance LLP, legal advisers to the Obligors in Germany, on due incorporation and capacity of the Obligors, incorporated in Germany, substantially in the form distributed to the Lenders prior to signing this Agreement.

(c)A legal opinion of Hannes Snellman Attorneys at Law Ltd, legal advisers to the Arranger and the Agent in Finland, substantially in the form distributed to the Lenders prior to signing this Agreement.

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3.Other documents and evidence

(a)A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Company accordingly) in connection with the entry into and performance of the transaction contemplated by this Agreement or for the validity and enforceability of this Agreement.

(b)Evidence that the costs and expenses then due from the Company pursuant to Clause 5 (Transaction expenses) have been paid.

vi

SCHEDULE 3

FORM OF AMENDED AGREEMENT

€330,000,000

FACILITY AGREEMENT

Dated 17 June 2008
as amended and restated on                August 2008

for

DEUKALION EINHUNDERTVIERUNDZWANZIGSTE VERMÖGENSVERWALTUNGS - GMBH

arranged by

MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) AND NORDEA BANK FINLAND PLC

with

MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)

acting as Agent

and

MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)

acting as Security Agent

and

MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)

acting as Issuing Bank

Ref: NHAX/GEM

Linklaters LLP

vii

CONTENTS

CLAUSE		PAGE
SECTION 1
INTERPRETATION
1.	Definitions and interpretation	1
SECTION 2
THE FACILITIES
2.	The Facilities	31
3.	Purpose	31
4.	Conditions of Utilisation	31
SECTION 3
UTILISATION
5.	Utilisation - Loans	34
6.	Utilisation - Letters of Credit and Bank Guarantees	35
7.	Letters of Credit and Bank Guarantees	38
8.	Optional Currencies	42
9.	Ancillary Facilities	43
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
10.	Repayment	47
11.	Prepayment and cancellation	48
SECTION 5
COSTS OF UTILISATION
12.	Interest	55
13.	Interest Periods	57
14.	Changes to the calculation of interest	58
15.	Fees	59
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
16.	Tax gross up and indemnities	61
17.	Increased costs	65
18.	Other indemnities	66
19.	Mitigation by the Lenders	67
20.	Costs and expenses	67
SECTION 7
GUARANTEE
21.	Guarantee and indemnity	69
SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
22.	Representations	75
23.	Information undertakings	79
24.	Financial covenants	82
25.	General undertakings	88
26.	Events of Default	93

viii

SECTION 9
CHANGES TO PARTIES
27.	Changes to the Lenders	98
28.	Changes to the Obligors	101
SECTION 10
THE FINANCE PARTIES
29.	Role of the Agent, the Security Agent and the Arranger	105
30.	Parallel Debt	110
31.	Conduct of business by the Finance Parties	111
32.	Sharing among the Finance Parties	111
SECTION 11
ADMINISTRATION
33.	Payment mechanics	114
34.	Set-off	117
35.	Notices	117
36.	Calculations and certificates	119
37.	Partial invalidity	119
38.	Remedies and waivers	119
39.	Amendments and waivers	119
40.	Counterparts	120
SECTION 12
GOVERNING LAW AND ENFORCEMENT
41.	Governing law	121
42.	Enforcement	121

THE SCHEDULES

SCHEDULE	PAGE
SCHEDULE 1 The Original Parties	2
SCHEDULE 2 Conditions precedent	2
SCHEDULE 3 Requests	2
SCHEDULE 4 Mandatory Cost formulae	2
SCHEDULE 5 Form of Transfer Certificate	2
SCHEDULE 6 Form of Accession Letter	2
SCHEDULE 7 Security Agency Provisions	2
SCHEDULE 8 Form of Compliance Certificate	2
SCHEDULE 9 Existing Security	2
SCHEDULE 10 Timetables	2
SCHEDULE 11 Form of Letter of Credit	2
SCHEDULE 12 Form of Bank Guarantee	2
SCHEDULE 13 Form of Resignation Letter	2

ix

THIS AGREEMENT is dated 17 June 2008 as amended and restated on                             August 2008 and made between:

(5)DEUKALION EINHUNDERTVIERUNDZWANZIGSTE VERMÖGENSVERWALTUNGS - GMBH, a limited liability company incorporated under the laws of Germany (Gesellschaft mit beschränkter Haftung) and registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Frankfurt am Main under the registration number HR B8 05 60 (the “Company”);

(6)THE SUBSIDIARIES of the Company listed in Part I of Schedule 1 as original borrowers (together with the Company, the “Original Borrowers”);

(7)THE SUBSIDIARIES of the Company listed in Part I of Schedule 1 as original guarantors (together with the Company, the “Original Guarantors”);

(8)MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) and NORDEA BANK FINLAND PLC as mandated lead arrangers (whether acting individually or together the “Arranger”);

(9)THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 as lenders (the “Original Lenders”);

(10)MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) as agent of the other Finance Parties (the “Agent”);

(11)MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) as security agent for the Finance Parties (the “Security Agent”); and

(12)MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) as issuer of letters of credit and bank guarantees (the “Issuing Bank”).

IT IS AGREED as follows:

SECTION 1

INTERPRETATION

8.DEFINITIONS AND INTERPRETATION

8.1Definitions

In this Agreement:

“Acceleration Date” means the date (if any) on which the Agent gives a notice under Clause 26.16 (Acceleration).

“Accession Letter” means a document substantially in the form set out in Schedule 6 (Form of Accession Letter).

“Additional Borrower” means a company which becomes an Additional Borrower in accordance with Clause 28 (Changes to the Obligors).

“Additional Cost Rate” has the meaning given to it in Schedule 4 (Mandatory Cost formulae).

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“Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 28 (Changes to the Obligors).

“Additional Obligor” means an Additional Borrower or an Additional Guarantor.

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

“Agent’s Spot Rate of Exchange” means the Agent’s spot rate of exchange for the purchase of the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.

“Ancillary Commitment” means, in relation to an Ancillary Lender and an Ancillary Facility, the maximum Base Currency Amount from time to time agreed (whether or not subject to satisfaction of conditions precedent and whether or not utilised) to be made available by that Ancillary Lender under an Ancillary Facility and authorised under Clause 9 (Ancillary Facilities), to the extent not cancelled or reduced under this Agreement.

“Ancillary Facility” means an ancillary facility made available by an Ancillary Lender in accordance with Clause 9 (Ancillary Facilities).

“Ancillary Facility Document” means a document setting out the terms of an Ancillary Facility.

“Ancillary Facility Request” means a notice substantially in the form set out in Part IV of Schedule 3 (Requests).

“Ancillary Lender” means a Lender which agrees to make available an Ancillary Facility in accordance with Clause 9 (Ancillary Facilities).

“Ancillary Outstandings” means, at any time and in relation to an Ancillary Facility, the aggregate (calculated in the Base Currency) of the following amounts outstanding at that time under that Ancillary Facility:

(a)the maximum potential liability under all guarantees, bonds and letters of credit issued under that Ancillary Facility; and

(b)in relation to any other Ancillary Facility, such other amount as fairly represents the aggregate exposure of the Ancillary Lender under that Ancillary Facility,

in each case determined by the relevant Ancillary Lender in accordance with its usual practice at that time for calculating its exposure under similar facilities or transactions (acting reasonably and after consultation with the Agent).

For the purposes of this definition:

(i)in relation to any utilisation denominated in the Base Currency, the amount of that utilisation (determined as described in paragraphs (a) and (b) above) shall be used; and

(ii)in relation to any utilisation not denominated in the Base Currency, the equivalent (calculated as specified in the relevant Ancillary Facility Document or, if not so specified, as the relevant Ancillary Lender may specify, in each case in accordance with its usual practice at that time for calculating that equivalent (acting reasonably and after

2

consultation with the Agent)) in the Base Currency of the amount of that utilisation (determined as described in paragraphs (a) and (b) above) shall be used.

“Agreed Form” means agreed between the Company and the Agent or otherwise in form and substance satisfactory to the Agent (acting reasonably).

“Applicable Accounting Principles” means GAAP and, in the case of the Company, practices and financial reference periods used in the preparation of the Base Case.

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

“Availability Period” means:

(a)in relation to Facility A, the period from and including the date of this Agreement to and including the date which is 180 days after the date of this Agreement; and

(b)in relation to Facility B, the period from and including the date of this Agreement to and including the Business Day one month before the Termination Date.

“Available Ancillary Commitment” means, in relation to an Ancillary Facility, an Ancillary Lender’s Ancillary Commitment less the Ancillary Outstandings in relation to that Ancillary Facility.

“Available Commitment” means, in relation to a Facility, a Lender’s Commitment under that Facility minus:

(a)the Base Currency Amount of its participation in any outstanding Utilisations under that Facility;

(b)in relation to any proposed Utilisation, the Base Currency Amount of its participation in any Utilisations that are due to be made under that Facility on or before the proposed Utilisation Date; and

(c)in the case of Facility B only, the Base Currency Amount of its Ancillary Commitment in relation to any Ancillary Facility that is due to be made available on or before the proposed Utilisation Date of Facility B,

other than, in relation to any proposed Utilisation under Facility B only, that Lender’s participation in any Facility B Utilisations that are due to be repaid or prepaid on or before the proposed Utilisation Date.

“Available Facility” means, in relation to a Facility, the aggregate for the time being of each Lender’s Available Commitment in respect of that Facility.

“Bank Guarantee” means a bank guarantee, substantially in the form set out in Schedule 12 (Form of Bank Guarantee) or in any other form requested by a Borrower and agreed by the Agent and the Issuing Bank.

“Base Case” means the economic projections and assumptions in relation to the Group prepared by the Company.

“Base Currency” or “€” means euros.

3

“Base Currency Amount” means:

(a)in relation to a Utilisation, the amount specified in the Utilisation Request delivered by a Borrower for that Utilisation (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request and, in the case of a Letter of Credit or Bank Guarantee, as adjusted under Clause 6.8 (Revaluation of Letters of Credit and Bank Guarantees));

(b)in relation to an Ancillary Commitment, the amount specified in the notice delivered to the Agent by the Company pursuant to paragraph (a) of Clause 9.3 (Request for Ancillary Facilities),

adjusted to reflect any repayment, prepayment, consolidation or division of the Utilisation or (as the case may be) cancellation or reduction of the Ancillary Commitment.

“Borrower” means an Original Borrower or an Additional Borrower.

“Break Costs” means the amount (if any) by which:

(a)the interest (excluding Mandatory Costs and the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b)the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Frankfurt, Helsinki, London and Stockholm, and (in relation to any date for payment in or purchase of euro) which is a TARGET Day and (in relation to any date for payment or purchase of a currency other than euro) the principal financial centre of the country of that currency.

“Capital Expenditure” has the meaning given to it in Clause 24 (Financial covenants).

“Cash” means any credit balance on any deposit, savings, current or other account, and any cash in hand, of any member of the Group which is:

(c)freely withdrawable on demand;

(d)not subject to any Security or Quasi Security (other than pursuant to any Security Document or any Permitted Security constituted by either a netting or set-off arrangement entered into by members of the Group in the ordinary course of their banking arrangements or a lien arising under the general terms and conditions of banks

4

or Sparkassen (Allgemeine Geschäftsbedingungen der Banken oder Sparkassen) with whom any member of the Group maintains its banking arrangements);

(e)denominated and payable in freely transferable and freely convertible currency; and

(f)capable of being remitted to an Obligor.

“Cash Equivalent Investments” means:

(g)securities with a maturity of less than 12 months from the date of calculation issued or fully guaranteed or fully insured by the Government of the United States or any member state of the European Union or by an instrumentality or agency of any of them having an equivalent credit rating;

(h)commercial paper or other debt securities issued by an issuer rated at least A-1 by Standard & Poor’s Ratings Group or P-1 by Moody’s Investors Service, Inc. and with a maturity of less than 12 months; and

(i)certificates of deposit or time deposits of any commercial bank (which has outstanding debt securities rated as referred to in paragraph (b) above) and with a maturity of less than three months,

in each case not subject to any Security or Quasi Security (other than pursuant to any Security Document or any Permitted Security constituted by a lien arising under the general terms and conditions of banks or Sparkassen (Allgemeine Geschäftsbedingungen der Banken oder Sparkassen) with whom any member of the Group maintains its banking arrangements), denominated and payable in freely transferable and freely convertible currency and the proceeds of which are capable of being remitted to an Obligor.

“Cash Generated for Financing” has the meaning given to it in Clause 24 (Financial covenants).

“Clean Down Period” has the meaning given to it in Clause 11.15 (Clean Down).

“Commencement Date” has the meaning given to it in Clause 9.3 (Request for Ancillary Facilities).

“Commitment” means a Facility A Commitment, Facility B Commitment or Ancillary Commitment.

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 8 (Form of Compliance Certificate).

“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the LMA or in any other form agreed between the Company and the Agent.

“Current Assets” has the meaning given to it in Clause 24 (Financial covenants).

“Current Liabilities” has the meaning given to it in Clause 24 (Financial covenants).

“Debt” has the meaning given to it in Clause 24 (Financial covenants).

“Debt Service” has the meaning given to it in Clause 24 (Financial covenants).

5

“Default” means an Event of Default or any event or circumstance specified in Clause 26 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

“Disruption Event” means either or both of:

(a)a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facilities (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

(b)the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

(i)from performing its payment obligations under the Finance Documents; or

(ii)from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

“EBITDA” has the meaning given to it in Clause 24 (Financial covenants).

“Environment” means living organisms including the ecological systems of which they form part and the following media:

(a)air (including air within natural or man-made structures, whether above or below ground);

(b)water (including territorial, coastal and inland waters, water under or within land and water in drains and sewers); and

(c)land (including land under water).

“Environmental Law” means all laws and regulations of any relevant jurisdiction which:

(a)relate to the protection of, and/or prevention of harm or damage to, the Environment;

(b)provide remedies or compensation for harm or damage to the Environment; or

(c)relate to Hazardous Substances or health and safety matters.

“Environmental Licence” means any Authorisation required at any time under Environmental Law.

“EURIBOR” means, in relation to any Loan in euro:

(a)the applicable Screen Rate; or

(b)(if no Screen Rate is available for the Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its

6

request quoted by the Reference Banks to leading banks in the European interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in euro for a period comparable to the Interest Period of the relevant Loan.

“Event of Default” means any event or circumstance specified as such in Clause 26 (Events of Default).

“Exceptional Items” has the meaning given to it in Clause 24 (Financial covenants).

“Existing Debt” means the amount owed to the Owners which is to be prepaid using the proceeds of Facility A in accordance with steps 1 to 17 of the section of the Structuring Report entitled “JV — Structure for Europe”.

“Facility” means Facility A or Facility B.

“Facility A” means the term loan facility made available under this Agreement as described in Clause 2 (The Facilities).

“Facility A Commitment” means:

(a)in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Facility A Commitment” in Part II of Schedule 1 (The Original Parties) and the amount of any other Facility A Commitment transferred to it under this Agreement; and

(b)in relation to any other Lender, the amount in the Base Currency of any Facility A Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“Facility A Loan” means a loan made or to be made under Facility A or the principal amount outstanding for the time being of that loan.

“Facility A Repayment Date” means each date specified in Clause 10.1 (Repayment of Facility A Loans) for the payment of a Repayment Instalment.

“Facility B” means the revolving credit facility made available under this Agreement as described in Clause 2 (The Facilities), part of which may be designated as Ancillary Facilities in accordance with Clause 9 (Ancillary Facilities).

“Facility B Commitment” means:

(a)in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Facility B Commitment” in Part II of Schedule 1 (The Original Parties) and the amount of any other Facility B Commitment transferred to it under this Agreement; and

(b)in relation to any other Lender, the amount in the Base Currency of any Facility B Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement (including a reduction pursuant to Clause 9 (Ancillary Facilities)).

7

“Facility B Loan” means a loan made or to be made under Facility B or the principal amount outstanding for the time being of that loan.

“Facility B Utilisation” means a Facility B Loan, a Letter of Credit or a Bank Guarantee.

“Facility Office” means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.

“Fee Letter” means any letter or letters dated on or about the date of this Agreement between, as the case may be, the Arranger and the Company, the Agent and the Company, the Security Agent and the Company or the Issuing Bank and the Company setting out any of the fees referred to in Clause 15 (Fees).

“Finance Document” means this Agreement, the Subordination Agreement, any Fee Letter, any Accession Letter, any Security Document, any Ancillary Facility Document and any other document designated as such by the Agent and the Company.

“Finance Lease” means any lease or hire purchase contract which would, in accordance with IFRS, be treated as a finance or capital lease.

“Finance Party” means the Agent, an Ancillary Lender, the Security Agent, the Arranger, the Issuing Bank or a Lender.

“Financial Indebtedness” means any indebtedness for or in respect of the following (for the avoidance of doubt, excluding any liabilities in respect of pension schemes or other post-employment benefit schemes but including the Reborrowing Loan):

(a)moneys borrowed;

(b)any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

(c)any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d)the amount of any liability in respect of any Finance Lease;

(e)receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(f)any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

(g)any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

(h)shares which are expressed to be redeemable at the option of the holder prior to the Termination Date;

(i)any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial

8

institution in respect of an underlying liability of an entity which is not a member of the Group which liability would fall within one of the other paragraphs of this definition; and

(j)the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.

“Financial Quarter” means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.

“Financial Year” has the meaning given to it in Clause 24 (Financial covenants).

“Finnish Holdco” means White Pigments Holding Oy, a company incorporated in Finland with business identity code 2196924-0.

“Finnish Security Documents” means the following security agreements each to be governed by Finnish law and to be entered into in connection with the other Finance Documents:

(j)share pledge agreement over the shares in Finnish Holdco;

(k)share pledge agreement over the shares in Kemira Pigments;

(l)pledge agreement over the Floating Charge Notes in respect of Finnish Holdco; and

(m)pledge agreement over the Floating Charge Notes in respect of Kemira Pigments.

“Finnish Trade Register Extracts” means the commercial register (kaupparekisteri) maintained by the Finnish National Board of Patents and Register (Patentti- ja rekisterihallitus).

“Floating Charge” means a floating charge (Fi: yrityskiinnitys) registered on movable property in accordance with the Finnish Act on Floating Charge (Fi: yrityskiinnityslaki, 1984/634 as amended).

“Floating Charge Notes” means with respect to an Obligor incorporated in Finland the promissory notes (Fi: panttivelkakirja) with registered Floating Charge (FI: yrityskiinnitys) on the movable property of such Obligor.

“GAAP” means generally accepted accounting principles, standards and practices in the jurisdiction of incorporation of the relevant member of the Group, including IFRS.

“German Security Documents” means the following security agreements each to be governed by German law and to be entered into in connection with the other Finance Documents:

(a)the global assignment agreement in respect of receivables owned by the Company;

(b)the account pledge agreement over the German bank accounts of the Company;

(c)the share pledge agreement over the shares in Sachtleben Chemie;

(d)the global assignment agreement in respect of receivables owned by Sachtleben Chemie;

(e)the account pledge agreement over the German bank accounts of Sachtleben Chemie;

(f)the transfer of title for security purposes agreement in respect of the movable assets owned by Sachtleben Chemie (the “German Transfer Agreement”); and

9

(g)any other Security Document requested by the Security Agent in accordance with the terms of the Finance Documents.

“Group” means:

(n)from the date of this Agreement to the date of first Utilisation of any Facility, the Company, Sachtleben Chemie, Finnish Holdco, Kemira Pigments, Pigment Chemie GmbH and Sachtleben Trading (Shanghai) Company Limited and any entity acquired after the date of this Agreement (other than pursuant to a transaction contemplated by steps 1-17, as set out in the section of the Structuring Report entitled “JV - Structure for Europe”) which upon acquisition becomes a Subsidiary of the Company; and

(o)from the date of first Utilisation of any Facility, the Company and its Subsidiaries for the time being.

“Guarantor” means an Original Guarantor or an Additional Guarantor.

“Hazardous Substance” means any waste, pollutant, contaminant or other substance (including any liquid, solid, gas, ion, living organism or noise) that may be harmful to human health or other life or the Environment or a nuisance to any person.

“Hedging Letter” means a letter dated on or about the date of this Agreement between the Arranger and the Company setting out the hedging strategy agreed in relation to Facility A.

“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

“IFRS” means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.

“Information Memorandum” means the document in the form approved by the Company concerning the Group which, at the Company’s request and on its behalf, was prepared in relation to this transaction and distributed by the Arranger to selected financial institutions before the date of this Agreement.

“Insurance Proceeds” means any cash proceeds (other than in relation to third party liabilities that are, or are intended to be, applied to meet such liabilities or in relation to consequential loss policies that are, or are intended to be, applied to cover operating losses, loss of profits or business interruption or similar losses) received by any member of the Group under or pursuant to any insurance policy (or equivalent) after the date of this Agreement.

“Interest Expenses” has the meaning given to it in Clause 24 (Financial covenants).

“Interest Period” means, in relation to a Loan, each period determined in accordance with Clause 13 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 12.3 (Default interest).

“Issuing Bank” means Merchant Banking, Skandinaviska Enskilda Banken AB (publ) and any Lender which has notified the Agent that it has agreed to the Company’s request to be an Issuing Bank pursuant to the terms of this Agreement (and if more than one Lender has so agreed, such Lenders and Merchant Banking, Skandinaviska Enskilda Banken AB (publ) shall be referred to, whether acting individually or together, as the “Issuing Bank”) provided that, in

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respect of a Letter of Credit or Bank Guarantee issued or to be issued pursuant to the terms of this Agreement, the “Issuing Bank” shall be the Issuing Bank which has issued or agreed to issue that Letter of Credit or Bank Guarantee.

“Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, joint venture, association, partnership or any other entity.

“JV Costs” means all fees, costs and expenses, stamp, registration and other Taxes incurred by the Company or any other member of the Group in connection with steps 1 to 17 of the section of the Structuring Report entitled “JV - Structure for Europe” or the Finance Documents.

“JV Document” means:

(iii)the Shareholders’ and Joint Venture Agreement regarding the Titanium Dioxide Joint Venture dated 21 May 2008;

(iv)the Master Agreement regarding the Titanium Dioxide Joint Venture dated 21 May 2008;

(v)the Master Agreement regarding the Implementation of the Titanium Dioxide Joint Venture dated 21 May 2008; and

(vi)any other document relating to the Ti02 Joint Venture.

“Kemira Guarantee” means the €7,200,000 bank guarantee granted by Pohjola Bank in favour of Finland’s environmental administration on 30 April 2008 at the request of Kemira Pigments.

“Kemira Pigments” means Kemira Pigments Oy, a company incorporated in Finland with business identity code 0948159-2.

“Kemira Pledge” means the pledge over real estate granted by Kemira Pigments in favour of Neliapila Pension Fund securing a principal amount of Financial Indebtedness equal to €31,262,648.78 including but not limited to the mortgages set out in more detail in Part II of Schedule 9 (Kemira Pledge).

“KPMG Financial Due Diligence Report” means the report prepared by KPMG OY AB in the Agreed Form.

“KPMG Supplementary Report” means the report prepared by KPMG entitled “Project David Pro Forma FY 2007” dated 12 February 2008.

“Legal Opinion” means any legal opinion delivered to the Agent under Clause 4 (Conditions of Utilisation) or Clause 28 (Changes to the Obligors).

“Legal Reservations” means:

(a)the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

(b)the time barring of claims under applicable statutes of limitation, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of stamp duty may be void and defences of set-off or counterclaim;

(c)similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

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(d)any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.

“Lender” means:

(a)any Original Lender; and

(b)any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 27 (Changes to the Lenders),

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

“Letter of Credit” means a letter of credit, substantially in the form set out in Schedule 11 (Form of Letter of Credit) or in any other form requested by a Borrower and agreed by the Agent and the Issuing Bank.

“Letter of Credit and Bank Guarantee Limit” means €10,000,000.

“Liabilities” means all present and future moneys, debts and liabilities due, owing or incurred by an Obligor to any Finance Party under or in connection with any Finance Document (in each case, whether alone or jointly, or jointly and severally, with any other person, whether actually or contingently and whether as principal, surety or otherwise).

“LIBOR” means, in relation to any Loan:

(a)the applicable Screen Rate; or

(b)(if no Screen Rate is available for the currency or Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Loan and for a period comparable to the Interest Period for that Loan.

“LMA” means the Loan Market Association.

“Loan” means a Facility A Loan or a Facility B Loan.

“Majority Lenders” means:

(a)if there are no Utilisations then outstanding, a Lender or Lenders whose Commitments aggregate more than 662/3% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 662/3% of the Total Commitments immediately prior to the reduction); or

(b)at any other time, a Lender or Lenders whose participations in the Utilisations then outstanding aggregate more than 662/3% of all the Utilisations then outstanding.

For the purpose of this definition, the provisions of Clause 9.5 (Adjustments to Facility B Commitment) shall not apply.

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory Cost formulae).

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“Margin” means 3.00 per cent. per annum, subject to adjustment in accordance with Clause 12.5 (Adjustment of Margin).

“Material Adverse Effect” means a material adverse effect on or material adverse change in:

(a)the financial condition, assets or business of the Group taken as a whole;

(b)the ability of any Obligor to perform and comply with its payment obligations under any Finance Document or its obligations under Clause 24.1 (Financial condition);

(c)the validity, legality or enforceability of any Finance Document; or

(d)the validity, legality or enforceability of any Security expressed to be created pursuant to any Security Document or on the priority and ranking of any of that Security.

“Material Subsidiary” means:

(e)a Subsidiary of the Company listed in the list of Material Subsidiaries provided to the Agent under Clause 4.1 (Initial conditions precedent);

(f)a Subsidiary of the Company, the total net assets, EBITDA or total turnover of which (unconsolidated where that Subsidiary itself has Subsidiaries) as at the date as at which its latest unaudited unconsolidated annual or quarterly financial statements were prepared or, as the case may be, for the financial period to which those financial statements relate account for 5 per cent. or more of the consolidated total net assets, EBITDA or total turnover of the Group (all as calculated by reference to the latest audited annual or quarterly consolidated financial statements of the Group);

(g)a Holding Company of a Subsidiary falling within paragraph (b) above; or

(h)a Subsidiary of the Company to which has been transferred (whether in a single transaction or a series of transactions (whether related or not)) the whole or substantially the whole of the assets of a Subsidiary which immediately prior to such transaction(s) was a Material Subsidiary.

For the purposes of this definition:

(vii)if a Subsidiary becomes a Material Subsidiary under paragraph (d) above, the Material Subsidiary by which the relevant transfer was made shall, subject to paragraph (b) above, cease to be a Material Subsidiary; and

(viii)if a Subsidiary is acquired by any member of the Group after the end of the financial period to which the latest audited consolidated financial statements of the Group relate, those financial statements shall be adjusted as if that Subsidiary had been shown in them by reference to its then latest audited financial statements until audited consolidated financial statements of the Group for the financial period in which the acquisition is made have been prepared.

“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

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(a)if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and

(b)if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.

The above rules will only apply to the last Month of any period.

“Net Debt” has the meaning given to it in Clause 24 (Financial covenants).

“Net Interest Expenses” has the meaning given to it in Clause 24 (Financial covenants).

“Net Sale Proceeds” means the cash proceeds (including, when received, the cash proceeds of any deferred consideration, whether by way of adjustment to the purchase price or otherwise) received by a member of the Group from a person which is not a member of the Group in connection with the sale, transfer or other disposal by any member of the Group of an asset (which is a sale, transfer or other disposal falling within paragraphs (f) or (m) of the definition of Permitted Disposal) after deducting:

(a)fees and transaction costs properly incurred in connection with that sale, transfer or disposal;

(b)Taxes paid or reasonably estimated by the Company to be payable (as certified by the Company to the Agent) as a result of that sale, transfer or disposal;

(c)any amount repayable in cash to the entity disposed of under intercompany debt; and

(d)the amount of indebtedness secured by the asset which is the subject of that sale, transfer or disposal which is repaid out of the cash proceeds of that sale, transfer or disposal.

“Non-Group Entity” has the meaning given to it in Clause 24 (Financial covenants).

“Obligor” means a Borrower or a Guarantor.

“Optional Currency” means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3 (Conditions relating to Optional Currencies).

“Original Financial Statements” means:

(a)in relation to the Company, the proforma unaudited consolidated financial statements of the Group for the period ended 31 December 2007;

(b)in relation to Finnish Holdco, its opening balance sheet; and

(c)in relation to each Original Obligor other than the Company and Finnish Holdco, its unaudited consolidated financial statements for its financial year ended 31 December 2007.

“Original Obligor” means an Original Borrower or an Original Guarantor.

“Owners” means Kemira Oy and Rockwood Specialties Group GmbH, and “Owner” means any one of them.

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“Participating Member State” means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

“Party” means a party to this Agreement.

“Pension Items” has the meaning given to it in Clause 24 (Financial covenants).

“Perfection Requirements” means the making of the appropriate registrations, filings or notifications of or pursuant to the Security Documents.

“Permitted Acquisition” means:

(e)the acquisition of, or investment in, any share or interest in any Permitted Joint Venture;

(f)the acquisition by a member of the Group of any share or asset sold, leased, transferred or otherwise disposed of by another member of the Group in circumstances constituting a Permitted Disposal;

(g)the acquisition by a member of the Group of Cash Equivalent Investments provided that that member of the Group creates Security over those Cash Equivalent Investments under a Security Document to the extent necessary to ensure that the Finance Parties will enjoy the same or equivalent Security over those assets as that provided over assets by the acquiring Obligor or other Obligors incorporated in its jurisdiction of incorporation; or

(h)an acquisition by any member of the Group of any business or of all or at least 75 per cent. of the issued share capital of a limited liability company or the partnership interests of a limited partnership if:

(i)no Event of Default is continuing on the closing date for that acquisition or would occur as a result of that acquisition;

(ii)the acquired company or business is incorporated or established, and carries on its principal business, in any jurisdiction in which acquisitions are not prohibited to be made under any law applicable to the Owners;

(iii)the acquired company carries on, or the business is, a business substantially the same as, or similar or complementary to, that carried on by the Group;

(iv)until the date of delivery of a Compliance Certificate showing that the ratio of Net Debt (excluding the amount of any proceeds of any new equity or Financial Indebtedness subordinated to the Facilities on terms acceptable to the Majority Lenders (acting reasonably) received by a member of the Group from a person which is not a member of the Group and which is subsequently used to fund any such acquisition (or associated costs and expenses) or to refinance Financial Indebtedness remaining in any such acquired companies or businesses) on any Quarter Date to EBITDA for the Relevant Period ending on that Quarter Date does not exceed 2.50:1.00:

(A)the total consideration (including associated costs and expenses) for that acquisition (and any Financial Indebtedness remaining in the acquired

15

company or business at the date of acquisition) when aggregated with the consideration (including associated costs and expenses) for any other acquisition permitted under this paragraph (d) (and any Financial Indebtedness remaining in any such acquired companies or businesses at the date of acquisition) less the proceeds of any new equity or Financial Indebtedness subordinated to the Facilities on terms acceptable to the Majority Lenders (acting reasonably) received by a member of the Group from a person which is not a member of the Group and used to fund any such acquisition (or associated costs and expenses) or to refinance Financial Indebtedness remaining in any such acquired companies or business does not in any financial year of the Company exceed €10,000,000 (or its equivalent in another currency or currencies); and

(B)the total consideration (including associated costs and expenses) for that acquisition (and any Financial Indebtedness remaining in the acquired company or business at the date of acquisition) does not exceed €50,000,000 (or its equivalent in another currency or currencies);

(v)to the extent that the acquired company would constitute a Material Subsidiary or be required to become a Guarantor to ensure that the Company complies with its obligations under Clause 25.22 (Guarantees and Security) based on calculations for the Relevant Period referred to in paragraph (vi) below if the relevant tests were recalculated (A) consolidating the financial statements of the company to be acquired (consolidated if that company has Subsidiaries) for that Relevant Period with those of the Group on a pro forma basis and (B) as if the consideration for the proposed acquisition had been paid at the start of that Relevant Period, and to the extent lawful, valid and effective Security, in form and substance satisfactory to the Security Agent, is given in favour of the Security Agent for the benefit of the Finance Parties over all the shares and material assets of the acquired company upon or immediately following its acquisition;

(vi)at least five Business Days before any member of the Group legally commits to making the proposed acquisition (other than an acquisition, the total consideration for which does not exceed €1,000,000), the Company certifies that:

(A)it would have complied with the requirements of paragraphs (a) and (b) of Clause 24.1 (Financial condition) for the Relevant Period ending on the last Quarter Date for which financial statements are available falling before that certificate is given, if the covenant tests for that Relevant Period were recalculated (i) consolidating the financial statements of the company or business to be acquired (consolidated if that company has Subsidiaries) for that Relevant Period with those of the Group on a pro forma basis and taking into account reasonable synergies as confirmed by the Company’s auditors (ii) as if the consideration for the proposed acquisition had been paid at the start of that Relevant Period; and

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(B)the company or business to be acquired had positive EBITDA for the twelve month period to which its latest management accounts relate; and

(vii)if that acquisition is of all of the issued share capital of a limited liability company, and to the extent available, the Company supplies to the Agent a copy of:

(A)the most recent annual audited financial statements of that company (consolidated if it has Subsidiaries); and

(B)the most recent management accounts of that company (consolidated if it has Subsidiaries);

(i)an acquisition of shares or securities permitted pursuant to Clause 25.23 (Issue of shares); and

(j)the acquisition of a company which has not traded prior to the date of acquisition and has no liabilities and which on acquisition becomes a member of the Group, but only if, if the shares in the company are owned by an Obligor, Security over the shares of that company, in form and substance satisfactory to the Agent, is created in favour of the Security Trustee within 30 days of the date of its incorporation.

“Permitted Disposal” means a sale, lease, transfer or other disposal:

(k)of assets (including inventory) by any member of the Group in the ordinary course of trading of the disposing entity;

(l)of Cash Equivalent Investments for cash or in exchange for other Cash Equivalent Investments;

(m)of cash to the extent not expressly prohibited under the terms of the Finance Documents;

(n)arising as a result of any Permitted Security;

(o)of assets to a Permitted Joint Venture;

(p)of obsolete or redundant vehicles, plant and equipment for cash and which, in the reasonable opinion of the member of the Group making the sale, transfer or disposal, are not required for the efficient operation of its business;

(q)of assets in exchange for other assets comparable or superior as to type, value or quality;

(r)of assets by an Obligor to another Obligor provided that the Security Agent, acting reasonably, is satisfied that the Finance Parties will enjoy the same or equivalent Security over those assets;

(s)of assets by a member of the Group which is not an Obligor to another member of the Group which is not an Obligor;

(t)of assets by a member of the Group which is not an Obligor to an Obligor provided that the Security Agent, acting reasonably, is satisfied that the Finance Parties will enjoy the same or equivalent Security over those assets as that provided over assets of that type by the acquiring Obligor or other Obligors incorporated in its jurisdiction of incorporation

17

and provided further that such sale, lease, transfer or disposal is on terms not less advantageous to the relevant Obligor than arm’s length terms;

(u)of assets by an Obligor to another member of the Group which is not an Obligor provided that the aggregate of the consideration for such assets does not, in any financial year of the Company, when aggregated with the consideration for any other assets sold by an Obligor to a member of the Group which is not an Obligor in that financial year exceed €2,000,000 (or its equivalent in another currency or currencies) and provided further that such sale, lease transfer or disposal is on terms not less advantageous to the relevant Obligor than arm’s length terms;

(v)which is a lease or licence of real property granted in the ordinary course of trading of the disposing entity;

(w)that has been approved by the Agent (acting on the instructions of the Majority Lenders); or

(x)where the net consideration receivable (when aggregated with the net consideration receivable for any other sale, lease, transfer or other disposal, other than any permitted under paragraphs (a) to (m) above), does not exceed €10,000,000 (or its equivalent in another currency or currencies) in any financial year of the Company.

“Permitted Financial Indebtedness” means:

(y)any Financial Indebtedness arising under any Finance Document;

(z)any Financial Indebtedness owed to the Owners or (in the amount of up to €2,900,000 (in accordance with step 18 of the Structuring Report) plus capitalised interest at a rate not exceeding the interest rate payable under this Agreement in respect of a Facility A Loan in respect of the same period plus 5 per cent. per annum) iSiltec Innovative Silicon Technologies GmbH (to be renamed Sachtleben Wasserchemie GmbH), which from the date of the first Utilisation of Facility A is subordinated under the Subordination Agreement (including Financial Indebtedness arising pursuant to any Shareholder Loan) or which is otherwise subordinated on terms acceptable to the Majority Lenders (acting reasonably);

(aa)any Financial Indebtedness arising under a Permitted Loan or a Permitted Guarantee;

(bb)any Financial Indebtedness arising under a Permitted Joint Venture;

(cc)until the date of first Utilisation under Facility A, any Existing Debt;

(dd)any Financial Indebtedness to the extent covered by a Letter of Credit or Bank Guarantee or a guarantee, bond or letter of credit issued under an Ancillary Facility;

(ee)any Financial Indebtedness arising under a Finance Lease the aggregate principal amount of which when aggregated with the Financial Indebtedness under each other Finance Lease entered into by members of the Group does not at any time exceed €2,000,000 (or its equivalent in another currency or currencies);

(ff)any Financial Indebtedness arising under a Permitted Hedging Transaction;

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(gg)any Financial Indebtedness of any person acquired by a member of the Group after the date of this Agreement which is incurred under arrangements in existence at the date of acquisition, but not incurred or increased or its maturity date extended in contemplation of, or since, that acquisition, and outstanding only for a period of three months following the date of acquisition;

(hh)any Financial Indebtedness approved by the Agent (acting on the instructions of the Majority Lenders);

(ii)the Reborrowing Loan; or

(jj)any Financial Indebtedness not falling within paragraphs (a) to (k) above, the aggregate outstanding principal amount of which across the Group does not at any time exceed €4,000,000 (or its equivalent in another currency or currencies).

“Permitted Guarantee” means:

(kk)any guarantee arising under any Finance Document;

(ll)until the date of first Utilisation of Facility A, the Kemira Guarantee;

(mm)any guarantee issued by an Obligor in respect of the obligations or liabilities of another Obligor (including any guarantee in respect of a netting or set-off arrangement entered into by that Obligor in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of Obligors);

(nn)any guarantee issued by an Obligor in relation to the obligations or liabilities of a member of the Group which is not an Obligor (including any guarantee in respect of a netting or set-off arrangement entered into by that Obligor in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group) provided that the aggregate principal amount guaranteed at any time does not, when aggregated with the amount of any loans outstanding at that time which are permitted under paragraph (c) of the definition of Permitted Loan, exceed €3,000,000 (or its equivalent in another currency or currencies);

(oo)any guarantee issued by a member of the Group which is not an Obligor in respect of the obligations or liabilities of another member of the Group which is not an Obligor (including any guarantee in respect of a netting or set-off arrangement entered into by that member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group);

(pp)any guarantee issued by a member of the Group which is not an Obligor in respect of the obligations or liabilities of an Obligor (including any guarantee in respect of a netting or set-off arrangement entered into by that member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group);

(qq)any guarantee issued by a member of the Group in respect of the liabilities or obligations of a Permitted Joint Venture;

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(rr)any guarantee issued by a member of the Group on arm’s length terms and in the ordinary course of its trading, to the extent that it is not in respect of Financial Indebtedness, nor to or for the benefit of, nor in respect of the liabilities or obligations of, another member of the Group;

(ss)any customary indemnity to a purchaser in relation to a Permitted Disposal provided that the maximum potential liability under any such indemnity does not exceed the consideration received by the Group for that disposal;

(tt)any guarantee issued in respect of another member of the Group’s liabilities or obligations as lessee under any lease of real property;

(uu)any guarantee issued in respect of a Permitted Hedging Transaction;

(vv)any guarantee issued by a person acquired by a member of the Group after the date of this Agreement which is issued under arrangements in existence at the date of acquisition but not issued or its maturity date extended in contemplation of, or since, that acquisition, and outstanding only for a period of three months following the date of acquisition;

(ww)the counter indemnity to be granted by Kemira Pigments in connection with a letter of credit for an amount up to €17,000,000 relating to the Reborrowing Loan;

(xx)any guarantee approved by the Agent (acting on the instructions of the Majority Lenders); or

(yy)any guarantee not falling within paragraphs (a) to (n) above, where the aggregate liability (whether actual or contingent) of members of the Group under all such guarantees does not, when aggregated with the aggregate principal amount of any loans outstanding at that time which are permitted under paragraph (k) of the definition of Permitted Loan, at any time exceed €2,000,000 (or its equivalent in another currency or currencies).

“Permitted Hedging Transaction” means:

(zz)any derivative transaction required by the Hedging Letter and documented by a Hedging Document;

(aaa)interest rate hedging agreements and spot and forward delivery foreign exchange contracts entered into in the ordinary course of business and not for speculative purposes; and

(bbb)any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (including in relation to electricity) and entered into for the hedging of actual or projected real exposures arising in the ordinary course of trading activities of a member of the Group and not for speculative purposes.

“Permitted Joint Venture” means a Joint Venture where:

(ccc)no Event of Default is continuing on the date of the acquisition of, or investment in, or transfer or loan to, or the granting of any guarantee, Security or Quasi Security for the obligations of, or the incurring of any other liability to, the Joint Venture or would occur as a result of the acquisition of or investment in, or transfer or loan to, or guarantee,

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Security or Quasi Security for the obligations of, or the incurring of any other liability to, the Joint Venture;

(ddd)the Joint Venture is incorporated or established, and carries on its principal business, in any jurisdiction in which joint ventures are not prohibited to be entered into under any law applicable to the Owners;

(eee)the Joint Venture carries on, or is, a business substantially the same as, or similar or complementary to, that carried on by the Group; and

(fff)the amount that any member of the Group invests in or pays to acquire any share or interest in, or the value of the assets that any member of the Group transfers or lends to, or the actual or contingent liability of any member of the Group under any guarantee, Security or Quasi Security for the obligations of, or any liability (whether actual or contingent and whether present or future) of any member of the Group in respect of, the Joint Venture, does not in any financial year of the Company exceed in aggregate €2,000,000 (or its equivalent in another currency or currencies).

“Permitted Loan” means:

(ggg)any trade credit extended by any member of the Group to its customers on normal commercial terms and in the ordinary course of its trading activities;

(hhh)any loan, credit or other arrangement having a similar effect, made by an Obligor to another Obligor;

(iii)any loan, credit or other arrangement having a similar effect, made by an Obligor to another member of the Group which is not an Obligor provided that the aggregate principal amount of all such loans, credit or other arrangements having a similar effect, outstanding at any time does not, when aggregated with the amount of any guarantee outstanding at that time which are permitted under paragraph (d) of the definition of Permitted Guarantee, exceed €3,000,000 (or its equivalent in another currency or currencies) and provided further that such loan is on terms not less advantageous to the relevant Obligor than arm’s length terms;

(jjj)a loan, credit or other arrangement having a similar effect made by a member of the Group which is not an Obligor to another member of the Group which is not an Obligor;

(kkk)a loan, credit or other arrangement having a similar effect made by a member of the Group which is not an Obligor to an Obligor if that member of the Group has entered into a subordination agreement in form and substance satisfactory to the Agent;

(lll)a loan, credit or other arrangement having a similar effect made to a Permitted Joint Venture;

(mmm)	a loan, credit or other arrangement having a similar effect which constitutes Permitted Financial Indebtedness;
(nnn)	a loan, credit or other arrangement having a similar effect made by a member of the Group to an employee or director of any member of the Group if the amount of that loan, when aggregated with the amount of all loans to employees and directors by members

21

of the Group, does not at any time exceed €1,000,000 (or its equivalent in another currency or currencies);

(ooo)any loan, credit or other arrangement having a similar effect constituting deferred consideration on any Permitted Disposal until the date which is six months after the date of the relevant disposal;

(ppp)the US JV Loan; or

(qqq)any loan, credit or other arrangement having a similar effect not falling within paragraphs (a) to (j), the aggregate principal amount of which at any time does not, when aggregated with the aggregate principal amount of the Financial Indebtedness under any such loans and the aggregate liability (whether actual or contingent) under any guarantees at that time which are permitted under paragraph (o) of the definition of Permitted Guarantee, exceed €2,000,000 (or its equivalent in another currency or currencies).

“Permitted Security” means:

(rrr)any Security or Quasi-Security listed in Part I of Schedule 9 (Existing Security) except to the extent the principal amount secured by that Security exceeds the amount stated in that Schedule;

(sss)any lien arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by any member of the Group;

(ttt)any retention of title arrangements and rights of set-off arising in the ordinary course of trading with suppliers of goods to any member of the Group and not as a result of any default or omission by any member of the Group;

(uuu)any Security or Quasi Security created pursuant to any Finance Document;

(vvv)any Security or Quasi Security over or affecting any asset acquired by a member of the Group after the date of this Agreement, if:

(i)the Security or Quasi Security was not created in contemplation of the acquisition of that asset by a member of the Group;

(ii)the principal amount secured has not been increased in contemplation of or since the acquisition of that asset by a member of the Group; and

(iii)the Security or Quasi Security is removed or discharged within three months of the date of acquisition of such asset;

(www)any Security or Quasi Security over or affecting any asset of any company which becomes a member of the Group after the date of this Agreement, where the Security or Quasi Security is created prior to the date on which that company becomes a member of the Group, if:

(i)the Security or Quasi Security was not created in contemplation of the acquisition of that company;

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(ii)the principal amount secured has not increased in contemplation of or since the acquisition of that company; and

(iii)the Security or Quasi Security is removed or discharged within three months of that company becoming a member of the Group;

(xxx)any Security or Quasi Security arising under any Finance Lease and provided that the Financial Indebtedness secured thereby is permitted under paragraph (g) of the definition of Permitted Financial Indebtedness;

(yyy)any Security or Quasi Security over goods and documents of title to goods arising in the ordinary course of letter of credit transactions not prohibited by this Agreement;

(zzz)any netting or set-off arrangement entered into by a member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group, provided that (1) the arrangement only permits credit balances of Obligors to be netted or set off against debit balances of members of the Group which are not Obligors to the extent that the aggregate amount of credit balances available for set-off at any time does not, when aggregated with the amount of any loans outstanding at that time which are permitted under paragraph (c) of the definition of Permitted Loan, exceed €3,000,000 (or its equivalent in another currency or currencies); and (2) if the arrangement gives rise to other Security or Quasi Security over the assets of Obligors in support of liabilities of members of the Group which are not Obligors, the aggregate amount of those liabilities at any time, when aggregated with the amounts in paragraph (1) above, does not exceed €2,000,000 (or its equivalent in another currency or currencies);

(aaaa)any Quasi Security arising as a result of a sale, transfer or other disposal which is a Permitted Disposal;

(bbbb)any lien arising under the general terms and conditions of banks or Sparkassen (Allgemeine Geschäftsbedingungen der Banken oder Sparkassen) with whom any member of the Group maintains its banking arrangements;

(cccc)until the date of first Utilisation of Facility A, the Kemira Pledge; and

(dddd)any Security or Quasi Security, over assets of the Group the market value of which (when aggregated with the market value of any other assets over which Security or Quasi Security is given by any member of the Group other than any permitted under paragraphs (a) to (l) above) does not at any time exceed €2,000,000 (or its equivalent in another currency or currencies).

“Permitted Transaction” means:

(eeee)any intra-Group loan which is a Permitted Loan;

(ffff)the solvent liquidation or reorganisation of any member of the Group which is not an Obligor so long as any payments or assets distributed as a result of such liquidation or reorganisation are distributed to other members of the Group; or

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(gggg)a merger on a solvent basis of Finnish Holdco and Kemira Pigments pursuant to the Structuring Report where:

(i)all of the business and assets of Finnish Holdco and Kemira Pigments are retained by the surviving entity, being one of them;

(ii)the surviving entity of that merger is liable for the obligations of the Obligor it has merged with; and

(iii)the Agent and the Security Agent are given ten Business Days’ notice by the Company of that proposed merger and the Security Agent, acting reasonably, is satisfied that the Finance Parties will enjoy the same or equivalent Security over the same assets and over the surviving entity and the shares in it.

(hhhh)any payments or other transactions contemplated by and set out in steps 1 to 17 of the section of the Structuring Report entitled “JV — Structure for Europe” (including any repayment of Existing Debt which is funded by a Facility A Loan).

“PwC Financial Due Diligence Report” means the report prepared by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft in the Agreed Form.

“Qualifying Lender” has the meaning given to it in Clause 16 (Tax gross-up and indemnities).

“Quarter Date” means each of 31 December, 31 March, 30 June and 30 September.

“Quasi Security” means a transaction under which any member of the Group will:

(iiii)	sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by any other member of the Group;
(jjjj)	sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(kkkk)	enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(llll)	enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

“Quotation Day” means, in relation to any period for which an interest rate is to be determined:

(a)	(if the currency is euro) two TARGET Days before the first day of that period; or
(b)	(for any other currency) two Business Days before the first day of that period,

unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations for that currency and period would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Reborrowing Loan” means the €23,177,144.59 loan made available by Kemira Pigments Dy:n eläkesääkiö to Kemira Pigments existing on the date of this Agreement.

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“Reference Banks” means, in relation to LIBOR and EURIBOR and Mandatory Cost, the principal London offices of Merchant Banking, Skandinaviska Enskilda Banken AB (publ) and Nordea Bank Finland Plc or such other banks as may be appointed by the Agent in consultation with the Company.

“Relevant Interbank Market” means, in relation to euro, the European interbank marketand, in relation to any other currency, the London interbank market.

“Relevant Jurisdiction” means, in relation to an Obligor:

(a)its jurisdiction of incorporation;

(b)any jurisdiction where any asset subject to or intended to be subject to the Security to be created by it is situated;

(c)any jurisdiction where it conducts its business; and

(d)the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.

“Relevant Period” means each period of four consecutive Financial Quarters ending on a Quarter Date.

“Repayment Instalment” means each instalment for repayment of the Facility A Loan specified in Clause 10.1 (Repayment of Facility A Loans).

“Repeating Representations” means each of the representations set out in Clauses 22.1 (Status), 22.2 (Binding obligations), 22.3 (Non-conflict with other obligations), 22.4 (Power and authority), 22.5 (Validity and admissibility in evidence), 22.6 (Governing law and enforcement), 22.9 (No default), and paragraph (c) of 22.11 (Financial statements).

“Resignation Letter” means a letter substantially in the form set out in Schedule 13 (Form of Resignation Letter).

“Rollover Loan” means one or more Facility B Loans:

(a)made or to be made on the same day that (i) a maturing Facility B Loan is due to be repaid or (ii) a Borrower is obliged to pay to the Agent for the Issuing Bank the amount of any claim under a Letter of Credit or Bank Guarantee;

(b)the aggregate amount of which is equal to or less than (i) the maturing Facility B Loan or (ii) the amount of the claim under the Letter of Credit or Bank Guarantee;

(c)in the same currency as (i) the maturing Facility B Loan (unless it arose as a result of the operation of Clause 8.2 (Unavailability of a currency)) or (ii) the claim under the Letter of Credit or Bank Guarantee; and

(d)made or to be made to the same Borrower for the purpose of (i) refinancing a maturing Facility B Loan or (ii) satisfying the obligations of the Borrower to pay the amount of a claim under the Letter of Credit or Bank Guarantee to the Agent for the Issuing Bank.

“Sachtleben Chemie” means Sachtleben Chemie GmbH, a limited liability company incorporated under the laws of Germany (Gesellschaft mit beschränkter Haftung) and registered

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with the commercial register (Handelsregister) of the local court (Amtsgericht) of Duisburg under the registration number HR B 1 96 69.

“Screen Rate” means:

(a)in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period; and

(b)in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period,

displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Company and the Lenders.

“Security” means a mortgage, charge, pledge, lien, assignment, retention or transfer of title for security purposes or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

“Security Document” means the Finnish Security Documents, the German Security Document and any other security document that may at any time be entered into by any member of the Group as security for any of the Liabilities pursuant to or in connection with any Finance Document.

“Security Property” has the meaning given to it in Schedule 7 (Security agency provisions).

“Selection Notice” means a notice substantially in the form set out in Part II of Schedule 3 (Requests) given in accordance with Clause 13 (Interest Periods) in relation to Facility A.

“Shareholder Loan” means:

(a)a loan made available pursuant to an agreement dated 28 April 2005 (as amended) between Rockwood Specialities Group GmbH as lender and Knight Dritte Beteiligungs - GmbH (now Sachtleben Chemie) as borrower relating to a loan in an amount of €16,229,175.47;

(b)a loan made available pursuant to an agreement dated 30 July 2004 (as amended) between Knight Erste Beteiligungs - GmbH (now Rockwood Specialities Group GmbH) as lender and Knight Dritte Beteilingungs - GmbH (now Sachtleben Chemie) as borrower relating to a loan in an amount of €266,300,000;

(c)a loan made available by Kemira Oy to Kemira Pigments maturing on 9 December 2008;

(d)a loan made available by Kemira Oy to Kemira Pigments maturing on 27 June 2008;

(e)a loan made available by Kemira Oy to Kemira Pigments maturing on 9 December 2008; and

(f)a loan made available by Kemira Oy to Kemira Pigments maturing on 27 June 2008.

“Specified Time” means a time determined in accordance with Schedule 10 (Timetables).

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“Structuring Report” means the draft report entitled “Project David Outline Structuring Steps — Working Draft” prepared by Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft in the Agreed Form.

“Subordination Agreement” means the subordination agreement to be entered into between, amongst others, the Agent, the Obligors and the Owners.

“Subsidiary” means in relation to any company, corporation or other legal entity (a “holding company”), a company, corporation or other legal entity:

(a)which is controlled, directly or indirectly, by the holding company;

(b)more than half the equity share capital of which is owned, directly or indirectly, by the holding company;

(c)more than half the voting rights of which are exercisable, directly or indirectly, by the holding company,

(d)which is a subsidiary (Tochterunternehmen) in the meaning of section 290 of the German Commercial Code (Handelsgesetzbuch) or

(e)which is a subsidiary of another Subsidiary of the holding company,

and, for this purpose, a company or corporation or other legal entity shall be treated as being controlled by a holding company if such holding company has the right or is in a factual position to otherwise exercise control in respect of the first within the meaning given to it in section 17 of the German Stock Corporation Act (Aktiengesetz).

“Syndication” means general syndication of the Facilities.

“Syndication Date” means the date (as determined by the Arranger and notified to the Company) on which primary syndication of the Facilities has been completed and the additional syndicate members have become bound by this Agreement.

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007.

“TARGET Day” means any day on which TARGET2 is open for the settlement of payments in euro.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

“Termination Date” means the date which is 5 years after the date of this Agreement

“Ti02 Joint Venture” means the joint venture of the Owners pursuant to the JV Documents.

“Total Ancillary Commitments” means the aggregate of the Ancillary Commitments, being zero at the date of this Agreement.

“Total Ancillary Limit” means €10,000,000.

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“Total Commitments” means the aggregate of the Total Facility A Commitments, the Total Facility B Commitments and the Total Ancillary Commitments, being €330,000,000 at the date of this Agreement.

“Total Facility A Commitments” means the aggregate of the Facility A Commitments, being €300,000,000 at the date of this Agreement.

“Total Facility B Commitments” means the aggregate of the Facility B Commitments, being €30,000,000 at the date of this Agreement.

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 5 (Form of Transfer Certificate) or any other form agreed between the Agent and the Company.

“Transfer Date” means, in relation to a transfer, the later of:

(a)the proposed Transfer Date specified in the Transfer Certificate; and

(b)the date on which the Agent executes the Transfer Certificate.

“Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the Finance Documents.

“US JV Loan” means:

(i)the loan of €6,400,000 from Finnish Holdco to White Pigments LLC; and

(ii)the loan of €600,000 from Finnish Holdco to Kemira Speciality Inc..

“Utilisation” means a Loan, a Letter of Credit or a Bank Guarantee (but not a utilisation of an Ancillary Facility).

“Utilisation Date” means the date on which a Utilisation is made.

“Utilisation Request” means a notice substantially in the form set out in Part I, or (in relation to a letter of credit or bank guarantee) a notice substantially in the form set out in Part III of Schedule 3 (Requests).

“VAT” means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature.

“Working Capital” has the meaning given to it in Clause 24 (Financial covenants).

8.2Construction

(a)Unless a contrary indication appears, any reference in this Agreement to:

(i)the “Agent”, any “Ancillary Lender”, the “Arranger”, any “Finance Party”, the “Issuing Bank”, any “Lender”, any “Obligor”, any “Party” or the “Security Agent” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

(ii)“assets” includes present and future properties, revenues and rights of every description;

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(iii)a Borrower providing “cash cover” for a Letter of Credit or Bank Guarantee or contingent liability under an Ancillary Facility means:

(A)a Borrower paying an amount in the currency of the Letter of Credit or Bank Guarantee or, as the case may be, contingent liability under the Ancillary Facility to an interest-bearing account in the name of the Borrower and the following conditions are met:

(aa)the account is with the Agent or the Issuing Bank (if the cash cover is to be provided for all the Lenders) or with a Lender (if the cash cover is to be provided for that Lender) or, in relation to an Ancillary Facility, the relevant Ancillary Lender;

(bb)withdrawals from the account may only be made to pay a Finance Party amounts due and payable to it under this Agreement in respect of that Letter of Credit, Bank Guarantee or contingent liability under that Ancillary Facility until no amount is or may be outstanding under that Letter of Credit, Bank Guarantee or contingent liability under that Ancillary Facility; and

(cc)if the Issuing Bank or Ancillary Lender requires, the Borrower has executed a security document, in form and substance satisfactory to the Agent or the Finance Party with which that account is held, creating a first ranking security interest over that account; or

(B)a Borrower procuring that a bank guarantee be issued in favour of the Issuing Bank or, as the case may be, the Ancillary Lender (in form and substance satisfactory to it) by a bank acceptable to the Issuing Bank or, as the case may be, the Ancillary Lender, acting in its sole discretion.

(iv)a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended, restated (however fundamentally and whether or not more onerously) or replaced and includes any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under that Finance Document or other agreement or instrument;

(v)“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(vi)a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);

(vii)a Borrower “repaying” or “prepaying” a Letter of Credit, a Bank Guarantee or Ancillary Outstandings means:

(A)that Borrower providing cash cover for that Letter of Credit, or Bank Guarantee or those Ancillary Outstandings;

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(B)the maximum amount payable under the Letter of Credit, Bank Guarantee or the Ancillary Facility being reduced in accordance with its terms; or

(C)the Issuing Bank or, as the case may be, Ancillary Lender, being satisfied that it has no further liability under that Letter of Credit, Bank Guarantee or Ancillary Facility,

and the amount by which a Letter of Credit or Bank Guarantee is, or Ancillary Outstandings are, repaid or prepaid under sub-paragraphs (vii)(A) and (vii)(B) above is the amount of the relevant cash cover or reduction;

(viii)a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

(ix)a provision of law is a reference to that provision as amended or re-enacted; and

(x)a time of day is a reference to London time.

(b)Section, Clause and Schedule headings are for ease of reference only.

(c)Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

(d)A Default is “continuing” if it has not been remedied or waived.

8.3Third Party Rights

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

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SECTION 2

The Facilities

9.THE FACILITIES

9.1The Facilities

Subject to the terms of this Agreement, the Lenders make available to the Borrowers:

(a)(other than the Company) a euro term loan facility in an aggregate amount equal to the Total Facility A Commitments; and

(b)a multicurrency revolving credit facility in an aggregate amount equal to the Total Facility B Commitments, part of which may, from time to time and in an aggregate amount at any time up to the Total Ancillary Limit, be designated as Ancillary Facilities.

9.2Finance Parties’ rights and obligations

(a)The obligations of each Finance Party under the Finance Documents are several.  Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents.  No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

(b)The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.

(c)A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

10.PURPOSE

10.1Purpose

(a)Each Borrower shall apply all amounts borrowed by it under Facility A towards refinancing the Existing Debt of the Original Obligors, the acquisition of shares and the US JV Loan, in each case, in accordance with steps 1 to 17 of the section of the Structuring Report entitled “JV-Structure for Europe”.

(b)Each Borrower shall apply all amounts borrowed by it under Facility B to finance (i) its working capital requirements and/or (ii) its general corporate purposes, including bank guarantees and letters of credit, provided that no Borrower shall apply amounts borrowed by it under Facility B to finance or refinance JV Costs.

10.2Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

11.CONDITIONS OF UTILISATION

11.1Initial conditions precedent

No Borrower may deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in Part I of Schedule 2

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(Conditions precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Company and the Lenders promptly upon being so satisfied.

11.2Further conditions precedent

(a)The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) if on the date of the Utilisation Request and (in relation to sub paragraphs (ii) and (iii) of this Clause 4.2) on the proposed Utilisation Date:

(i)until delivery of the Compliance Certificate relating to the period ending 30 September 2008, the Agent has received a certificate of the Company (signed by a director);

(A)specifying proforma EBITDA (or a minimum amount thereof) of the Group (assuming steps 1 to 17, as set out in the section of the Structuring Report entitled “JV - Structure for Europe”, have been completed in accordance with the Structuring Report) for the Relevant Period ending on the Quarter Date immediately preceding the date of that Utilisation Request; and

(B)certifying that the ratio of (i) the aggregate of Net Debt on the date of that Utilisation Request and the amount of the proposed Utilisation to (ii) EBITDA for the 12 month period ending on the most recent month end or, if the Utilisation Request is delivered within 7 Business Days of the start of a month, for the 12 month period ending on the next-to-last month end does not exceed 4.00:1.00, setting out (in reasonable detail) computations as to compliance with that ratio;

(ii)in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Loan, no Default is continuing or would result from the proposed Loan; and

(iii)the Repeating Representations to be made by each Obligor are true.

11.3Conditions relating to Optional Currencies

(a)A currency will constitute an Optional Currency in relation to a Utilisation if:

(i)it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Utilisation; and

(ii)it is US dollars or has been approved by the Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Agent of the relevant Utilisation Request or Selection Notice for that Utilisation.

(b)If by the Specified Time the Agent has received a written request from the Company for a currency to be approved under paragraph (a)(ii) above, the Agent will notify the Lenders of that request by the Specified Time.  Based on any responses received by the Agent by the Specified Time, the Agent will confirm to the Company by the Specified Time:

(i)whether or not the Lenders have granted their approval; and

(ii)if approval has been granted, the minimum amount (and, if required, integral multiples) for any subsequent Utilisation in that currency.

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11.4Maximum number of Utilisations

(a)A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation:

(i)more than 6 Facility A Loans would be outstanding;

(ii)more than 6 Facility B Loans would be outstanding; or

(iii)more than 10 Letters of Credit and Bank Guarantees would be outstanding.

(b)A Borrower may not request that a Facility A Loan be divided if, as a result of the proposed division, more than 6 Facility A Loans would be outstanding.

(c)Any Loan made by a single Lender under Clause 8.2 (Unavailability of a currency) shall not be taken into account in this Clause 4.4.

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SECTION 3

UTILISATION

12.UTILISATION - LOANS

12.1Delivery of a Utilisation Request

A Borrower may utilise a Facility by way of a Loan by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.

12.2Completion of a Utilisation Request

(a)Each Utilisation Request for a Loan is irrevocable and will not be regarded as having been duly completed unless:

(i)it specifies that it is for a Loan;

(ii)it identifies the Facility to be utilised;

(iii)the proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility;

(iv)the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);

(v)the proposed Interest Period complies with Clause 13 (Interest Periods); and

(vi)it specifies the account and bank (which must be in the principal financial centre of the country of the currency of the Utilisation or, in the case of euro, the principal financial centre of a Participating Member State in which banks are open for general business on that day or London) to which the proceeds of the Utilisation are to be credited.

(b)Only one Loan may be requested in each Utilisation Request.

12.3Currency and amount

(a)The currency specified in a Utilisation Request must be the Base Currency or, in relation to Facility B, the Base Currency or an Optional Currency.

(b)The amount of the proposed Loan must be:

(i)if the currency selected is the Base Currency, a minimum of €10,000,000 (and integral multiples thereafter) for Facility A and €5,000,000 (and integral multiples of €1,000,000 thereafter) for Facility B or in either case, if less, the Available Facility or the amounts set out in paragraph (c) of this Clause 5.3;

(ii)if the currency selected is US dollars, a minimum of $5,000,000 (and integral multiples of $1,000,000 thereafter) or, if less, the Available Facility;

(iii)if the currency selected is any other Optional Currency, the minimum amount (and, if required, integral multiple) specified by the Agent pursuant to paragraph (b)(ii) of Clause 4.3 (Conditions relating to Optional Currencies) or, if less, the Available Facility; and

(iv)in any event such that its Base Currency Amount is less than or equal to the Available Facility; and

(v)in compliance with Clause 5.3(c).

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(c)Each Borrower may borrow Facility A Loans in the maximum aggregate amounts as follows:

Borrower	Aggregate amount of Facility A Loans (€)
Sachtleben Chemie	152,500,000
Kemira Pigments	53,800,000
Finnish HoldCo	43,700,000

unless set out otherwise in the Structuring Report and agreed with the Agent.

12.4Lenders’ participation

(a)If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.

(b)The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Loan.

(c)The Agent shall determine the Base Currency Amount of each Loan which is to be made in an Optional Currency and shall notify each Lender of the amount, currency and the Base Currency Amount of each Loan and the amount of its participation in that Loan, in each case, by the Specified Time.

12.5Cancellation of Commitment

(a)The Total Facility A Commitments shall be immediately cancelled at the end of the Availability Period for Facility A.

(b)The Total Facility B Commitments shall be immediately cancelled at the end of the Availability Period for Facility B.

13.UTILISATION - LETTERS OF CREDIT AND BANK GUARANTEES

13.1General

(a)In this Clause 6 and Clause 7 (Letters of Credit and Bank Guarantees):

(i)“Approved Beneficiary” means a beneficiary of a Letter of Credit or Bank Guarantee approved by the Issuing Bank and the Agent;

(ii)“Expiry Date” means, for a Letter of Credit or Bank Guarantee, the last day of its Term;

(iii)“Proportion” means, in relation to a Lender in respect of any Letter of Credit or Bank Guarantee, the proportion (expressed as a percentage) borne by that Lender’s Available Commitment under Facility B to the Available Facility under Facility B immediately prior to the issue of that Letter of Credit or Bank Guarantee, adjusted to reflect any assignment or transfer under this Agreement to or by that Lender;

(iv)“Renewal Request” means a written notice delivered to the Agent in accordance with Clause 6.7 (Renewal of a Letter of Credit or Bank Guarantee); and

(v)“Term” means each period determined under this Agreement for which the Issuing Bank is under a liability under a Letter of Credit or Bank Guarantee.

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(b)Any reference in this Agreement to:

(i)the Interest Period of a Letter of Credit or Bank Guarantee will be construed as a reference to the Term of that Letter of Credit or Bank Guarantee;

(ii)an amount borrowed includes any amount utilised by way of Letter of Credit or Bank Guarantee;

(iii)a Utilisation made or to be made to a Borrower includes a Letter of Credit or Bank Guarantee issued on its behalf;

(iv)a Lender funding its participation in a Utilisation includes a Lender participating in a Letter of Credit or Bank Guarantee;

(v)amounts outstanding under this Agreement include amounts outstanding under or in respect of any Letter of Credit or Bank Guarantee;

(vi)an outstanding amount of a Letter of Credit or Bank Guarantee at any time is the maximum amount that is or may be payable by a Borrower in respect of that Letter of Credit or Bank Guarantee at that time;

(c)Clause 5 (Utilisation - Loans) does not apply to a Utilisation by way of Letter of Credit or Bank Guarantee.

(d)In determining the amount of the Available Facility and a Lender’s Proportion of a proposed Letter of Credit or Bank Guarantee for the purposes of this Agreement, the Available Commitment of a Lender will be calculated ignoring any cash cover provided for outstanding Letters of Credit or Bank Guarantees.

13.2Facility B

Facility B may be utilised by way of Loans, Letters of Credit and Bank Guarantees.

13.3Delivery of a Utilisation Request for Letters of Credit or Bank Guarantees

A Borrower may request a Letter of Credit or Bank Guarantee to be issued by delivery to the Agent of a duly completed Utilisation Request substantially in the form of Part III of Schedule 3 (Utilisation Request - Letters of Credit and Bank Guarantees) not later than the Specified Time.

13.4Completion of a Utilisation Request for Letters of Credit and Bank Guarantees

Each Utilisation Request for a Letter of Credit or Bank Guarantee is irrevocable and will not be regarded as having been duly completed unless:

(a)it specifies that it is for a Letter of Credit or Bank Guarantee;

(b)the proposed Utilisation Date is a Business Day within the Availability Period applicable to Facility B;

(c)the currency and amount of the Letter of Credit or Bank Guarantee comply with Clause 5.3 (Currency and amount);

(d)the form of Letter of Credit or Bank Guarantee is attached;

(e)the Expiry Date of the Letter of Credit or Bank Guarantee falls on or before the date falling three Months after the Termination Date (for the avoidance of doubt, the relevant

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Borrower shall provide cash cover from the Termination Date in accordance with Clause 10.2 (Repayment of Facility B Loans));

(f)the delivery instructions for the Letter of Credit or Bank Guarantee are specified; and

(g)the beneficiary of the Letter of Credit or Bank Guarantee is an Approved Beneficiary.

13.5Currency and amount

(a)The currency specified in a Utilisation Request must be the Base Currency or an Optional Currency.

(b)The amount of the proposed Letter of Credit or Bank Guarantee must be an amount whose Base Currency Amount is not more than the Available Facility and which is:

(i)if the currency selected is the Base Currency, a minimum of €100,000 or, if less, the Available Facility;

(ii)if the currency selected is US dollars, a minimum of $100,000 or, if less, the Available Facility; or

(iii)if the currency selected is any other Optional Currency, the minimum amount (and, if required, integral multiple) specified by the Agent pursuant to paragraph (b)(ii) of Clause 4.3 (Conditions relating to Optional Currencies) or, if less, the Available Facility,

or, if less, such amount as will result in the aggregate Base Currency Amounts of all outstanding Letters of Credit and all outstanding Bank Guarantees not exceeding the Letter of Credit and Bank Guarantee Limit.

13.6Issue of Letters of Credit or Bank Guarantees

(a)If the conditions set out in this Agreement have been met, the Issuing Bank shall issue the Letter of Credit or Bank Guarantee on the Utilisation Date.

(b)The Issuing Bank will only be obliged to comply with paragraph (a) above if on the date of the Utilisation Request or Renewal Request and on the proposed Utilisation Date:

(i)in the case of a Letter of Credit or Bank Guarantee renewed in accordance with Clause 6.7 (Renewal of a Letter of Credit or Bank Guarantee), no Event of Default is continuing or would result from the proposed Utilisation and, in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation; and

(ii)the Repeating Representations to be made by each Obligor are true.

(c)The amount of each Lender’s participation in each Letter of Credit or Bank Guarantee will be equal to the proportion borne by its Available Commitment under Facility B to the Available Facility under Facility B immediately prior to the issue of the Letter of Credit or Bank Guarantee.

(d)The Agent shall determine the Base Currency Amount of each Letter of Credit or Bank Guarantee which is to be issued in an Optional Currency and shall notify the Issuing Bank and each Lender of the details of the requested Letter of Credit or Bank Guarantee and its participation in that Letter of Credit or Bank Guarantee by the Specified Time.

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13.7Renewal of a Letter of Credit or Bank Guarantees

(a)A Borrower may request any Letter of Credit or Bank Guarantee issued on its behalf be renewed by delivery to the Agent of a Renewal Request by the Specified Time.

(b)The Finance Parties shall treat any Renewal Request in the same way as a Utilisation Request for a Letter of Credit or Bank Guarantee except that the conditions set out in paragraphs (d) and (g) of Clause 6.4 (Completion of a Utilisation Request for Letters of Credit or Bank Guarantees) shall not apply.

(c)The terms of each renewed Letter of Credit or Bank Guarantee shall be the same as those of the relevant Letter of Credit or Bank Guarantee immediately prior to its renewal, except that:

(i)its amount may be less than the amount of the Letter of Credit or Bank Guarantee immediately prior to its renewal; and

(ii)its Term shall start on the date which was the Expiry Date of the Letter of Credit or Bank Guarantee immediately prior to its renewal, and shall end on the proposed Expiry Date specified in the Renewal Request.

(d)If the conditions set out in this Agreement have been met, the Issuing Bank shall amend and re-issue any Letter of Credit or Bank Guarantee pursuant to a Renewal Request.

13.8Revaluation of Letters of Credit and Bank Guarantees

(a)If any Letter of Credit or Bank Guarantee is denominated in an Optional Currency, the Agent shall at six monthly intervals after the date of this Agreement, recalculate the Base Currency Amount of each Letter of Credit and Bank Guarantee by notionally converting into the Base Currency the outstanding amount of that Letter of Credit or Bank Guarantee on the basis of the Agent’s Spot Rate of Exchange on the date of calculation.

(b)A Borrower shall, (i) if the calculation under paragraph (a) above shows that the Base Currency Amount of such Letters of Credit or Bank Guarantees exceeds an amount equal to 105 per cent. of the Total Facility B Commitments; and (ii) if requested by the Agent within 3 days of any calculation under paragraph (a) above, ensure that within three Business Days sufficient Facility B Utilisations are prepaid to prevent the Base Currency Amount of the Facility B Utilisations exceeding an amount equal to the Total Facility B Commitments following any adjustment to a Base Currency Amount under paragraph (a) above.

14.LETTERS OF CREDIT AND BANK GUARANTEES

14.1Immediately payable

If a Letter of Credit or Bank Guarantee or any amount outstanding under a Letter of Credit or Bank Guarantee is expressed to be immediately payable, the Borrower that requested the issue of that Letter of Credit or Bank Guarantee shall repay or prepay that amount immediately.

14.2Assignments and transfers

(a)Notwithstanding any other provision of this Agreement, the consent of the Issuing Bank is required for any assignment or transfer of any Lender’s rights and/or obligations in respect of any outstanding Letter of Credit or Bank Guarantee.

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(b)If paragraph (a) and the conditions and procedure for transfer specified in Clause 27 (Changes to the Lenders) are satisfied, then on the Transfer Date the Issuing Bank and the New Lender shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Issuing Bank and the Existing Lender shall each be released from further obligations to each other under this Agreement.

14.3Fee payable in respect of Letters of Credit and Bank Guarantees

(a)Each Borrower shall (and the Company shall ensure that each Borrower shall) pay to the Issuing Bank a fronting fee in respect of each Letter of Credit and Bank Guarantee requested by it in the amount and at the times agreed in the letter dated on or about the date of this Agreement between the Issuing Bank and the Company.

(b)Each Borrower shall pay to the Agent (for the account of each Lender) a letter of credit fee in arrear computed at the rate of the applicable Margin on the outstanding amount of each Letter of Credit or Bank Guarantee requested by it for the period from the issue of that Letter of Credit or Bank Guarantee until its Expiry Date.  This fee shall be distributed according to each Lender’s Proportion of that Letter of Credit or Bank Guarantee.

(c)The accrued letter of credit fee on the Letters of Credit and Bank Guarantees shall be consolidated and payable on the last day of each successive period of three months (or such shorter period as shall end on the Expiry Date for that Letter of Credit or Bank Guarantee) starting on the date of this Agreement.

(d)If a Borrower cash covers any part of a Letter of Credit or Bank Guarantee then:

(i)the fronting fee payable to the Issuing Bank and the letter of credit fee payable for the account of each Lender shall continue to be payable until the expiry of the Letter of Credit or Bank Guarantee;

(ii)the Borrower will be entitled to withdraw the interest accrued on the cash cover to pay those fees.

14.4Claims under a Letter of Credit or Bank Guarantee

(a)Each Borrower irrevocably and unconditionally authorises the Issuing Bank to pay any claim made or purported to be made under a Letter of Credit or Bank Guarantee requested by it and which appears on its face to be in order (a “claim”).

(b)Each Borrower which requested a Letter of Credit or Bank Guarantee shall immediately on demand pay to the Agent for the Issuing Bank an amount equal to the amount of any claim under that Letter of Credit or Bank Guarantee.

(c)Each Borrower acknowledges that the Issuing Bank:

(i)is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and

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(ii)deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

(d)The obligations of a Borrower under this Clause will not be affected by:

(i)the sufficiency, accuracy or genuineness of any claim or any other document; or

(ii)any incapacity of, or limitation on the powers of, any person signing a claim or other document.

14.5Indemnities

(a)Each Borrower shall immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank’s gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit or Bank Guarantee requested by that Borrower.

(b)Each Lender shall (according to its Proportion) immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank’s gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit or Bank Guarantee (unless the Issuing Bank has been reimbursed by an Obligor pursuant to a Finance Document).

(c)If any Lender is not permitted (by its constitutional documents or any applicable law) to comply with paragraph (b) above), then that Lender will not be obliged to comply with paragraph (b) and shall instead be deemed to have taken, on the date the Letter of Credit or Bank Guarantee is issued (or if later, on the date the Lender’s participation in the Letter of Credit or Bank Guarantee is transferred or assigned to the Lender in accordance with the terms of this Agreement), an undivided interest and participation in the Letter of Credit or Bank Guarantee in an amount equal to its Proportion of that Letter of Credit or Bank Guarantee.  On receipt of demand from the Agent, that Lender shall pay to the Agent (for the account of the Issuing Bank) an amount equal to its Proportion of the amount demanded under paragraph (b) above.

(d)The Borrower which requested a Letter of Credit or Bank Guarantee shall immediately on demand reimburse any Lender for any payment it makes to the Issuing Bank under this Clause 7.5 (Indemnities) in respect of that Letter of Credit or Bank Guarantee.

(e)The obligations of each Lender under this Clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender in respect of any Letter of Credit or Bank Guarantee, regardless of any intermediate payment or discharge in whole or in part.

(f)The obligations of any Lender under this Clause will not be affected by any act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause (without limitation and whether or not known to it or any other person) including:

(i)any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a Letter of Credit or Bank Guarantee or other person;

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(ii)the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

(iii)the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Letter of Credit or Bank Guarantee or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(iv)any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor, any beneficiary under a Letter of Credit or Bank Guarantee or any other person;

(v)any amendment (however fundamental) or replacement of a Finance Document, any Letter of Credit or Bank Guarantee or any other document or security;

(vi)any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit, any Bank Guarantee or any other document or security; or

(vii)any insolvency or similar proceedings.

14.6Rights of contribution

No Obligor will be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause 7.

14.7Role of the Issuing Bank

(a)Nothing in this Agreement constitutes the Issuing Bank as a trustee or fiduciary of any other person.

(b)The Issuing Bank shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

(c)The Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

(d)The Issuing Bank may rely on:

(i)any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

(ii)any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(e)The Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(f)The Issuing Bank may act in relation to the Finance Documents through its personnel and agents.

(g)The Issuing Bank is not responsible for:

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(i)the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Issuing Bank, the Agent, the Security Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the Information Memorandum; or

(ii)the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document.

14.8Exclusion of liability

(a)Without limiting paragraph (b) below, the Issuing Bank will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

(b)No Party (other than the Issuing Bank) may take any proceedings against any officer, employee or agent of the Issuing Bank in respect of any claim it might have against the Issuing Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Issuing Bank may rely on this Clause.

14.9Credit appraisal by the Lenders

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Issuing Bank that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document, including but not limited to, those listed in paragraphs (a) to (d) of Clause 29.15 (Credit appraisal by the Lenders).

14.10Address for notices

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of the Issuing Bank for any communication or document to be made or delivered under or in connection with the Finance Documents is that notified in writing to the Agent prior to the date of this Agreement or any substitute address, fax number or department or officer as the Issuing Bank may notify to the Agent by not less than five Business Days’ notice.

14.11Amendments and Waivers

Notwithstanding any other provision of this Agreement, an amendment or waiver which relates to the rights or obligations of the Issuing Bank may not be effected without the consent of the Issuing Bank.

15.OPTIONAL CURRENCIES

15.1Selection of currency

A Borrower (or the Company on behalf of a Borrower) shall select the currency of a Utilisation in the Utilisation Request for a Facility B Loan.

15.2Unavailability of a currency

If before the Specified Time on any Quotation Day:

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(a)a Lender notifies the Agent that the Optional Currency requested is not readily available to it in the amount required; or

(b)a Lender notifies the Agent that compliance with its obligation to participate in a Loan in the proposed Optional Currency would contravene a law or regulation applicable to it,

the Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this Clause 8.2 will be required to participate in the Loan in the Base Currency (in an amount equal to that Lender’s proportion of the Base Currency Amount or, in respect of a Rollover Loan, an amount equal to that Lender’s proportion of the Base Currency Amount of the Rollover Loan that is due to be made) and its participation will be treated as a separate Loan denominated in the Base Currency during that Interest Period.

16.ANCILLARY FACILITIES

16.1Establishment of Ancillary Facilities

One or more Ancillary Facilities may from time to time be established in favour of one or more Borrowers in accordance with this Clause 9 by designating all or part of the Facility B Commitment of a Lender as an Ancillary Commitment.

16.2Types of Ancillary Facility

Each Ancillary Facility may comprise any of the following (or any combination of the following):

(a)guarantee, bonding or documentary or standby letter of credit facilities; and

(b)such other facilities as may be required and as the Agent and the relevant Ancillary Lender may agree.

16.3Request for Ancillary Facilities

(a)The Company may, at any time, request the establishment of an Ancillary Facility by delivery to the Agent of a duly completed Ancillary Facility Request.

(b)An Ancillary Facility Request relating to a proposed Ancillary Facility will not be regarded as duly completed unless it identifies:

(i)the Borrower(s) under that Ancillary Facility;

(ii)the Ancillary Lender which is to make available that Ancillary Facility;

(iii)the type or types of facility to comprise that Ancillary Facility (which must comply with Clause 9.2 (Types of Ancillary Facility));

(iv)the date (the “Commencement Date”) on which that Ancillary Facility is to become available (which must be a date on which Facility B is available to be drawn and must not be less than 10 Business Days after the date on which the Agent receives the Ancillary Facility Request);

(v)the expiry date of that Ancillary Facility (which must fall on or before the Termination Date);

(vi)the amount of the Ancillary Commitment (which must be denominated in the Base Currency) which is to apply to that Ancillary Facility;

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(vii)the currency or currencies (which must comply with paragraph (c) below) in which utilisations under that Ancillary Facility may be requested;

(viii)the margin, commitment fee and other fees payable in respect of that Ancillary Facility; and

(ix)such other details in relation to that Ancillary Facility as the Agent may reasonably require.

(c)An Ancillary Facility shall only be available for utilisation in the Base Currency or a Currency which:

(i)is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the date for utilisation of that Ancillary Facility; and

(ii)it is US Dollars or has been approved by the Agent acting on the instructions of all the Facility B Lenders on or prior to receipt by the Agent of the Ancillary Facility Request for that Ancillary Facility.

(d)The Agent shall, promptly after receipt by it of an Ancillary Facility Request, notify each Lender of that Ancillary Facility Request.

16.4Grant of Ancillary Facility

The Lender identified in a duly completed Ancillary Facility Request shall become an Ancillary Lender authorised to make the proposed Ancillary Facility available with effect from the proposed Commencement Date, if the following conditions are fulfilled:

(a)the proposed Ancillary Commitment under that Ancillary Facility is equal to or less than the Available Commitment of that Lender under Facility B on that Commencement Date;

(b)the proposed Ancillary Commitment under that Ancillary Facility will not, when aggregated with the Ancillary Commitments under all other Ancillary Facilities in effect on that Commencement Date, exceed the Total Ancillary Limit; and

(c)the proposed Ancillary Lender has notified the Agent by that Commencement Date that it agrees to make available that Ancillary Facility.

For the avoidance of doubt, the maximum amount payable under (1) any guarantee, bonding or documentary or standby, letter of credit issued under, or any other facilities made available under the Ancillary Facilities, (2) any Bank Guarantee issued under Facility B and (3) any Letter of Credit issued under Facility B, cannot exceed €10,000,000 in aggregate.

16.5Adjustments to Facility B Commitment

(a)The Facility B Commitment of a Lender which is an Ancillary Lender shall be reduced by the amount of its Ancillary Commitments.

(b)If and to the extent that:

(i)any Ancillary Facility expires, or is cancelled (in whole or in part) in accordance with Clause 9.8 (Voluntary cancellation of Ancillary Facilities); and

(ii)no amount is or may be payable to or by the Ancillary Lender in respect of that Ancillary Facility (or the relevant part of it),

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the Facility B Commitment of the relevant Lender will immediately be increased by an amount equal to the amount of the Ancillary Commitment of that Ancillary Facility (or, if less, that part of it which has expired or been cancelled).

16.6Terms of Ancillary Facilities

(a)The terms applicable to each Ancillary Facility shall be as agreed between the relevant Ancillary Lender and the relevant Borrower (as set out in the applicable Ancillary Facility Document), provided that:

(i)those terms shall be consistent with this Clause 9 and the details set out in the Ancillary Facility Request;

(ii)utilisations under an Ancillary Facility shall be used only to finance (i) its working capital requirements and/or (ii) its general corporate purposes;

(iii)the rate of interest, fees and other remuneration in respect of the Ancillary Facility shall be based upon the normal market rates and terms from time to time of that Ancillary Lender; and

(iv)cancellation, termination or enforcement of the Ancillary Facility shall only occur as described in Clause 9.8 (Voluntary cancellation of Ancillary Facilities), Clause 11 (Prepayment and cancellation) or Clause 26.16 (Acceleration).

(b)Any material variation to any Ancillary Facility (including any proposed increase or reduction in the Ancillary Commitment) shall be in accordance with and subject to this Clause 9.

(c)An amendment or waiver of any term of an Ancillary Facility shall not require the consent of any Finance Party other than the relevant Ancillary Lender unless the amendment or waiver relates to a matter which would require an amendment to this Agreement. In that case, the provisions of this Agreement relating to amendments and waivers will apply.

(d)In the case of any inconsistency between any term of an Ancillary Facility and any term of this Agreement, this Agreement shall prevail.

16.7Limits on Ancillary Facilities

The Company shall ensure that:

(a)the aggregate of all Ancillary Commitments does not at any time exceed the Total Ancillary Limit;

(b)the Ancillary Outstandings under any Ancillary Facility do not at any time exceed the Ancillary Commitment under that Ancillary Facility; and

(c)the aggregate of the Ancillary Outstandings in respect of an Ancillary Facility and the relevant Ancillary Lender’s share of all other outstanding Facility B Utilisations do not at any time exceed that Ancillary Lender’s Facility B Commitment.

16.8Voluntary cancellation of Ancillary Facilities

The Company may, if it gives the Agent and the relevant Ancillary Lender not less than 5 Business Days’ prior notice, cancel the whole or any part of the Ancillary Commitment under an Ancillary Facility.

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16.9Notice in respect of Ancillary Facilities

(a)Each Ancillary Lender shall promptly notify the Agent of:

(i)the establishment by it of any Ancillary Facility and the applicable Commencement Date;

(ii)the amount of any Ancillary Facility which is cancelled or expires and the date of any such cancellation or expiry; and

(iii)any other information relating to any Ancillary Facility provided by it as the Agent may request, including the Ancillary Outstandings from time to time.

(b)The Agent may assume, unless it has received notice to the contrary in its capacity as agent for the Lenders, that no Ancillary Facility has expired or been cancelled in whole or part.

(c)Each Obligor consents to all information described in paragraph (a) above being disclosed to the Finance Parties.

16.10Ancillary Outstandings

The relevant Borrower under an Ancillary Facility shall repay or pay on the due date each amount payable under that Ancillary Facility.

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SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION

17.REPAYMENT

17.1Repayment of Facility A Loans

(a)The Facility A Loans shall be repaid by Borrowers which have drawn the Facility A Loans on the following dates in an aggregate amount equal to the amounts set out in the following table:

Facility A Repayment Date	Facility A Repayment Instalment (€)
12 months after the date of this Agreement	5,000,000
18 months after the date of this Agreement	5,000,000
24 months after the date of this Agreement	10,000,000
30 months after the date of this Agreement	10,000,000
36 months after the date of this Agreement	10,000,000
42 months after the date of this Agreement	15,000,000
48 months after the date of this Agreement	15,000,000
54 months after the date of this Agreement	15,000,000
60 months after the date of this Agreement	215,000,000

(b)If the aggregate amount of the Facility A Loans outstanding at the end of the Availability Period for Facility A is less than €300,000,000, the amount of the Facility A Repayment Instalments shall be reduced in inverse chronological order.

(c)If, in relation to a Facility A Repayment Date, the aggregate amount of the Facility A Loans made to the Borrowers exceeds the Facility A Repayment Instalment to be repaid by the Borrowers, the Company may, if it gives the Agent not less than five Business Days’ prior notice, select which of those Facility A Loans will be wholly or partially repaid so that the Facility A Repayment Instalment is repaid on the relevant Facility A Repayment Date in full. The Company may not make a selection if as a result more than one Facility A Loan will be partially repaid.

(d)No Borrower may reborrow any part of Facility A which is repaid.

17.2Repayment of Facility B Loans

(a)Each Borrower which has drawn a Facility B Loan shall repay that Loan on the last day of its Interest Period.

(b)Any Facility B Loan remaining outstanding on the Termination Date applicable to Facility B shall be repaid on that date.

(c)Each Borrower shall repay each Letter of Credit or Bank Guarantee requested by that Borrower on the Termination Date applicable to Facility B.

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17.3Repayment of Ancillary Facilities

On the Termination Date each Borrower under an Ancillary Facility shall repay all amounts (if any) owing or outstanding under that Ancillary Facility.

18.PREPAYMENT AND CANCELLATION

18.1Illegality in relation to a Lender or the Issuing Bank

If it becomes unlawful in any applicable jurisdiction for a Lender or the Issuing Bank to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Utilisation or to issue or leave outstanding any Letter of Credit or Bank Guarantee:

(a)that Lender or the Issuing Bank shall promptly notify the Agent upon becoming aware of that event;

(b)upon the Agent notifying the Company, the Commitment of that Lender will be immediately cancelled and the Issuing Bank shall not be obliged to issue any Letter of Credit or Bank Guarantee;

(c)each Borrower shall repay that Lender’s participation in the Utilisations made to that Borrower on the last day of the Interest Period for each Utilisation occurring after the Agent has notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law); and

(d)if the unlawfulness relates to the Issuing Bank and no other Lender has agreed to be an Issuing Bank pursuant to the terms of this Agreement, upon the Agent notifying the Company, Facility B shall cease to be available for the issue of Letters of Credit or Bank Guarantees and the Company shall procure that each of the relevant Borrowers shall use its best endeavours to procure the release of each Letter of Credit or Bank Guarantee issued by that Issuing Bank and outstanding at such time.

18.2Illegality in relation to an Ancillary Lender

If it becomes unlawful in any applicable jurisdiction for an Ancillary Lender to perform any of its obligations as contemplated by this Agreement or any Ancillary Facility Document or to fund or maintain its participation in any utilisation under any Ancillary Facility:

(a)that Ancillary Lender shall promptly notify the Agent upon becoming aware of that event;

(b)upon the Agent notifying the Company:

(i)the Ancillary Commitment of that Ancillary Lender will be immediately cancelled; and

(ii)each Borrower shall use its best endeavours to procure the release of any outstanding letter of credit, guarantee or other instrument issued by that Ancillary Lender in respect of that Borrower under each Ancillary Facility made available by that Ancillary Lender and repay all amounts, if any, payable under each such Ancillary Facility on the earlier of the next date on which any payment or repayment is due under that facility occurring after the Agent has notified the Company or the date specified by the Ancillary Lender in the notice delivered to

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the Agent (being no earlier than the last day of any applicable grace period permitted by law).

18.3Change of control

(a)If a Change of Control Event occurs:

(i)the Company shall promptly notify the Agent upon becoming aware of that event;

(ii)the Issuing Bank shall not be obliged to issue any Letter of Credit or Bank Guarantee;

(iii)a Lender shall not be obliged to fund a Utilisation (except for a Rollover Loan) and an Ancillary Lender shall not be obliged to fund a utilisation of an Ancillary Facility; and

(iv)if a Lender so requires and notifies the Agent within 30 days of the Company notifying the Agent of the occurrence of a Change of Control Event, the Agent shall promptly notify the Company of the notification by that Lender and the Company and that Lender shall negotiate in good faith the continuation of the participation of the respective Lender in the Facilities. If no agreement is reached within 30 days of the Lender notifying the Agent, the Agent shall, by not less than 10 days’ notice to the Company (the date specified in such notice being the “Relevant Lender Cancellation Date”), cancel the Commitment of that Lender and declare the participation of that Lender in all outstanding Utilisations, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Commitment of that Lender will be cancelled and all such outstanding amounts will become immediately due and payable and declare that cash cover in respect of that Lender’s participation in each Letter of Credit or Bank Guarantee is immediately due and payable whereupon it shall become immediately due and payable provided that the Company may, by written notice to the Agent and such Lender given in the period from the date such Lender notifies the Agent following the occurrence of a Change of Control Event to the date 3 Business Days prior to the Relevant Lender Cancellation Date, replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to Clause 26 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Company, and which is acceptable to the Agent (acting reasonably) and (in the case of any transfer of a Facility B Commitment) the Issuing Bank, which confirms its willingness to assume and does assume all the obligations of the transferring Lender (including the assumption of the transferring Lender’s participations on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender’s participation in the outstanding Utilisations and all accrued interest and/or Letter of Credit and/or Bank Guarantee fees, Break Costs and other amounts payable in relation thereto under the Finance Documents. The replacement of a Lender pursuant to this Clause shall be subject to the following conditions:

(A)the Company shall have no right to replace the Agent or the Security Agent;

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(B)neither the Agent nor the Lender shall have any obligation to the Company to find a Replacement Lender;

(C)in the event of a replacement of a Lender, such replacement must take place no later than the Relevant Lender Cancellation Date; and

(D)in no event shall the Lender replaced under this Clause be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents.

(b)For the purpose of paragraph (a) above “Change of Control Event” means:

(i)any of the Owners ceases to own the proportion of shares in the Company, owned at the date of initial Utilisation of any Facility; or

(ii)Rockwood Specialties Group GmbH ceases to be, directly or indirectly, the wholly owned subsidiary of Rockwood Specialties Group Inc.

18.4Voluntary cancellation

The Company may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of €5,000,000) of an Available Facility. Any cancellation under this Clause 11.4 shall reduce the Commitments of the Lenders rateably under that Facility.

18.5Mandatory prepayment - Net Sale Proceeds

(a)The Company shall ensure that an amount equal to all Net Sale Proceeds is applied in accordance with Clause 11.6 (Application of Net Sale Proceeds prepayment) below.

(b)Paragraph (a) above does not apply to any Net Sale Proceeds to the extent that:

(i)such Net Sale Proceeds are intended to be applied within twelve months of receipt towards the purchase of other similar assets for use in the Group’s business; or

(ii)such Net Sale Proceeds do not, when aggregated with any other Net Sale Proceeds received in any financial year of the Company, exceed €1,000,000 (or its equivalent in another currency or currencies).

18.6Application of Net Sale Proceeds prepayment

(a)In this Clause 11.6, “Receipt Date” means the date on which any Net Sale Proceeds to which paragraph (a) of Clause 11.5 (Mandatory prepayment — Net Sale Proceeds) applies (the “Relevant Net Sale Proceeds) have been received by any member of the Group.

(b)Within five Business Days after a Receipt Date, the Company shall notify the Agent of the Receipt Date and the amount in the Base Currency (the “Euro Net Sale Proceeds Amount”) equal or equivalent to those Relevant Net Sale Proceeds.

(c)On receipt of that notice by the Agent, the Facility A Commitment shall be reduced by an aggregate amount equal to the Euro Net Sale Proceeds Amount.

(d)The Company shall ensure that the Facility A Loans are prepaid (in each case, on the earlier of 3 Months after the Receipt Date and the expiry of their Interest Periods current when the Agent

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receives the relevant notice pursuant to paragraph (b) above) until Facility A Loans equal to or greater than the Euro Net Sale Proceeds Amount have been prepaid.

(e)The Facility A Commitment of the Lenders shall be reduced rateably.

(f)Any prepayment under this Clause 11.6 shall satisfy the obligations under Clause 10.1 (Repayment of Facility A Loans) in inverse chronological order.

18.7Mandatory prepayment - Insurance Proceeds

(a)The Company shall ensure that an amount equal to all Insurance Proceeds is applied in accordance with Clause 11.8 (Application of Insurance Proceeds prepayment) below.

(b)Paragraph (a) above does not apply to any Insurance Proceeds to the extent that:

(i)such Insurance Proceeds are intended to be applied within 24 months of receipt to replace, repair or reinstate the asset(s) to which those Insurance Proceeds relate, provided that a document, setting out in reasonable detail any planned replacement, repair or reinstatement is provided to the Agent within 12 Months of receipt of such Insurance Proceeds; and

(ii)such Insurance Proceeds do not exceed €1,000,000 (or its equivalent in another currency or currencies) in respect of any single claim or, when aggregated with any other Insurance Proceeds received since the date of this Agreement, exceed €3,000,000 (or its equivalent in another currency or currencies).

18.8Application of Insurance Proceeds prepayment

(a)In this Clause 11.8, “Receipt Date” means the date on which any Insurance Proceeds to which paragraph (a) of Clause 11.7 (Mandatory prepayment - Insurance Proceeds) applies (the “Relevant Insurance Proceeds”) have been received by any member of the Group.

(b)Within five Business Days after a Receipt Date, the Company shall notify the Agent of the Receipt Date and the amount in the Base Currency (the “Euro Insurance Proceeds Amount”) equal or equivalent to those Relevant Insurance Proceeds.

(c)On receipt of that notice by the Agent, the Facility A Commitment shall be reduced by an aggregate amount equal to the Euro Insurance Proceeds Amount.

(d)The Company shall ensure that the Facility A Loans are prepaid (in each case, on the earlier of 3 Months after the Receipt Date and the expiry of their Interest Periods current when the Agent receives the relevant notice pursuant to paragraph (b) above) until Facility A Loans equal to or greater than the Euro Insurance Proceeds Amount have been prepaid.

(e)The Facility A Commitment of the Lenders shall be reduced rateably.

(f)Any prepayment under this Clause 11.8 shall satisfy the obligations under Clause 10.1 (Repayment of Facility A Loans) in inverse chronological order.

18.9Excluded proceeds

Where Net Sale Proceeds and Insurance Proceeds include amounts which are intended to be used for a specific purpose within a specified period (as set out in paragraph (b) of Clause 11.5 (Mandatory prepayment — Net Sale Proceeds) or paragraph (b) of Clause 11.7 (Mandatory prepayment — Insurance Proceeds)) the Company shall ensure that those amounts are used for

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that purpose and shall promptly deliver a certificate to the Agent at the time of such application and at the end of such period confirming the amount (if any) which has been so applied within the requisite time periods provided for in the relevant definition.

18.10Restriction on upstream payments

(a)If there is a requirement to make a mandatory prepayment pursuant to Clause 11.5 (Mandatory prepayment - Net Sale Proceeds) or Clause 11.7 (Mandatory prepayment - Insurance Proceeds) and, in order to effect such prepayment, moneys need to be upstreamed or otherwise transferred from one member of the Group to another member of the Group and:

(i)the relevant member of the Group who needs to upstream or transfer moneys to facilitate prepayment, having used its reasonable endeavours to make such sums available, is not legally able to make payment (whether by way of dividend, loan or any other means) or some or all of such sums without any relevant officer or director incurring a risk of personal or criminal liability or the relevant payment would result in the relevant member of the Group incurring a material tax liability or other material cost; and

(ii)the relevant Borrower, having used its reasonable endeavours to fund the prepayment from other resources available to the Group, is unable to procure the funding of such prepayment,

then, until such time as that the impediment to prepayment no longer applies, such prepayment shall be made in an amount equal to the aggregate of the amount the relevant Borrower is legally able to pay and the amount the relevant Borrower is able to procure from other resources available to the Group.

(b)The Company shall continue to use its reasonable endeavours to procure that the prepayment which, but for this Clause 11.10, would have been due is made.  If at any time the restrictions set out in paragraph (a) above are removed, any relevant proceeds will be applied in prepayment of the Facilities on the earlier of 3 Months after the restrictions are removed and the expiry of their Interest Periods current when the restrictions are removed and otherwise in accordance with Clauses 11.5 (Mandatory prepayment - Net Sale Proceeds) to 11.9 (Excluded proceeds).

18.11Voluntary prepayment of Facility A Loans

(a)The Borrower to which a Facility A Loan has been made may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of any Facility A Loan (but, if in part, being an amount that reduces the Base Currency Amount of the Facility A Loan by a minimum amount of €5,000,000 and integral multiples of €1,000,000 thereafter.)

(b)A Facility A Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the day on which the applicable Available Facility is zero).

(c)Any prepayment under this Clause 11.11 shall satisfy the obligations under Clause 10.1 (Repayment of Facility A Loans) in inverse chronological order.

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18.12Voluntary prepayment of Facility B Utilisations

The Borrower to which a Facility B Utilisation has been made may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of a Facility B Utilisation, but if in part, being an amount that:

(i)(in relation to a Facility B Utilisation in US Dollars) reduces the amount of the Facility B Utilisation by a minimum amount of US$5,000,000 and integral multiples of US$1,000,000 thereafter; and

(ii)(in relation to a Utilisation in any currency other than US Dollars), reduces the Base Currency Amount of the Facility B Utilisation by a minimum amount of €5,000,000 and integral multiples of €1,000,000 thereafter).

18.13Right of repayment and cancellation in relation to a single Lender, Ancillary Lender or Issuing Bank

(a)If:

(i)any sum payable to any Lender or Ancillary Lender or the Issuing Bank by an Obligor is required to be increased under paragraph (c) of Clause 16.2 (Tax gross-up); or

(ii)any Lender or Ancillary Lender or the Issuing Bank claims indemnification from the Company under Clause 16.3 (Tax indemnity) or Clause 17 (Increased costs),

the Company may, whilst the circumstance giving rise to the requirement for gross-up or indemnification continues, give the Agent notice:

(iii)(if such circumstances relate to a Lender) of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Utilisations;

(iv)(if such circumstances relate to the Issuing Bank) of repayment of any outstanding Letter of Credit or Bank Guarantee issued by it and cancellation of its appointment as an Issuing Bank under this Agreement in relation to any Letters of Credit or Bank Guarantees to be issued in the future; or

(v)(if such circumstances relate to an Ancillary Lender) of cancellation of that Ancillary Lender’s Ancillary Commitment and its intention to procure the repayment of the utilisations of any Ancillary Facility granted by that Ancillary Lender.

(b)On receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender or, as the case may be, that Ancillary Lender’s Ancillary Commitment, shall immediately be reduced to zero.

(c)On the last day of each Interest Period which ends after the Company has given notice under paragraph (a) above (or, if earlier, the date specified by the Company in that notice), each Borrower to which a Utilisation or utilisation of an Ancillary Facility is outstanding shall repay that Lender’s participation in that Utilisation or utilisation of an Ancillary Facility granted by that Ancillary Lender.

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18.14Restrictions

(a)Any notice of cancellation or prepayment given by any Party under this Clause 11 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

(b)Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.

(c)No Borrower may reborrow any part of Facility A which is prepaid.

(d)Unless a contrary indication appears in this Agreement, any part of Facility B which is prepaid may be reborrowed in accordance with the terms of this Agreement.

(e)The Borrowers shall not repay or prepay all or any part of the Utilisations or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

(f)No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

(g)If the Agent receives a notice under this Clause 11 it shall promptly forward a copy of that notice to either the Company or the affected Lender, as appropriate.

18.15Clean Down

The Company shall:

(a)ensure that, for a period of at least five consecutive Business Days (each a “Clean Down Period”) in each financial year of the Company:

(i)all Facility B Loans; and

(ii)all amounts outstanding under any Letter of Credit or Bank Guarantee or similar instrument issued under an Ancillary Facility to the extent that the Letter of Credit or Bank Guarantee or other instrument supports actual outstanding Financial Indebtedness of any member of the Group on a loan or current account,

after deducting an amount equal to the aggregate amount of Cash and Cash Equivalent Investments held by each member of the Group, are reduced to zero;

(b)notify the Agent at least three Business Days before the start of any proposed Clean Down Period; and

(c)ensure that not less than three Months shall elapse between two Clean Down Periods.

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SECTION 5

COSTS OF UTILISATION

19.INTEREST

19.1Calculation of interest

The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(a)Margin;

(b)LIBOR or, in relation to any Loan in euro, EURIBOR; and

(c)Mandatory Cost, if any.

19.2Payment of interest

The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six monthly intervals after the first day of the Interest Period).

19.3Default interest

(a)If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is the sum of 1 per cent. and the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably).  Any interest accruing under this Clause 12.3 shall be immediately payable by the Obligor on demand by the Agent.

(b)If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(i)the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

(ii)the rate of interest applying to the overdue amount during that first Interest Period shall be the sum of 1 per cent. and the rate which would have applied if the overdue amount had not become due.

(c)Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

19.4Notification of rates of interest

The Agent shall promptly notify the Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement.

19.5Adjustment of Margin

(a)Subject to this Clause 12.5, the Margin applicable to each Utilisation shall be the rate per annum specified in the definition of Margin set out in Clause 1.1 (Definitions) adjusted by reference to

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the ratio of Net Debt to EBITDA as shown in the then most recent Compliance Certificate (and the financial statements with which it is required by this Agreement to be delivered) received by the Agent, to equal the rate per annum specified opposite the relevant range set out in the following table in which the ratio of Net Debt to EBITDA falls:

Ratio	Margin (% p.a.)
Equal to or higher than 3.5:1	3.00
Equal to or higher than 3.0:1 but lower than 3.5:1	2.50
Equal to or higher than 2.5:1 but lower than 3.0:1	2.25
Equal to or higher than 2.0:1 but lower than 2.5:1	2.00
Equal to or higher than 1.5:1 but lower than 2.0:1	1.50
Lower than 1.5:1	1.00

(b)No adjustment shall be made to the Margin under paragraph (a) above until receipt by the Agent of the first Compliance Certificate (and the financial statements with which it is required by this Agreement to be delivered) for the Relevant Period ending 31 December 2008.

(c)Any adjustment to the Margin under paragraph (a) above shall take effect on the date (the “Margin Adjustment Date”) falling on the first day of the Interest Period commencing after receipt by the Agent of a Compliance Certificate (and the financial statements with which it is required by this Agreement to be delivered) in accordance with Clause 23.2 (Compliance Certificate).

(d)If the Margin for a Utilisation is reduced for any period under this Clause 12.5 but the annual audited financial statements of the Group (and the Compliance Certificate with which they are required by this Agreement to be delivered) subsequently received by the Agent do not confirm the basis for that reduction, that reduction shall be reversed with retrospective effect. In that event, the Margin for that Utilisation shall be the rate per annum specified opposite the relevant range set out in the table above of the revised ratio of Net Debt to EBITDA calculated using the figures in that Compliance Certificate. The Company shall promptly pay to the Agent any amount necessary to put the Agent and Lenders in the position they would have been in had the appropriate rate of the Margin applied during that period.

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(e)If the annual audited financial statements of the Group (and the Compliance Certificate with which they are required by this Agreement to be delivered) subsequently received by the Agent show that the Margin for any Utilisation should have been reduced for any period, the next payments of interest falling due on the Utilisations shall be reduced to the extent necessary to put the Obligors in the position they would have been in if the Margin had been reduced for that period.

(f)While an Event of Default is continuing, the Margin applicable to each Utilisation shall be the rate of 3.00 per cent. per annum.

20.INTEREST PERIODS

20.1Selection of Interest Periods

(a)A Borrower (or the Company on behalf of a Borrower) may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan has already been borrowed) in a Selection Notice.

(b)Each Selection Notice for a Facility A Loan is irrevocable and must be delivered to the Agent by the Borrower (or the Company on behalf of a Borrower) to which that Facility A Loan was made not later than the Specified Time.

(c)If a Borrower (or the Company) fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will, subject to Clause 13.2 (Changes to Interest Periods), be one Month.

(d)Subject to this Clause 13, a Borrower (or the Company) may select an Interest Period of 1, 3 or 6 Months or any other period agreed between the Company and the Agent (acting on the instructions of all the Lenders participating in the relevant Facility). In addition a Borrower (or the Company on its behalf) may select an Interest Period of less than one Month (in relation to Facility A), if necessary to ensure that there are sufficient Facility A Loans (with an aggregate Base Currency Amount equal to or greater than the Repayment Instalment) which have an Interest Period ending on a Facility A Repayment Date for the Borrowers to make the Repayment Instalment due on that date.

(e)Prior to determining the interest rate for an Interest Period beginning before the Syndication Date, the Agent may shorten that Interest Period to a duration of one Month (or such shorter duration as may be desirable) to ensure that the Interest Period ends on a date on which rights and obligations under this Agreement are to be novated or assigned to persons becoming Parties as a result of Syndication.

(f)An Interest Period for a Loan shall not extend beyond the Termination Date applicable to its Facility.

(g)Each Interest Period for a Facility A Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.

(h)A Facility B Loan has one Interest Period only.

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20.2Changes to Interest Periods

(a)Prior to determining the interest rate for a Facility A Loan, the Agent may shorten an Interest Period for any Facility A Loan to ensure there are sufficient Facility A Loans with an Interest Period ending on a Facility A Repayment Date for the Borrowers to make the Repayment Instalment due on that Facility A Repayment Date.

(b)If the Agent makes any of the changes to an Interest Period referred to in this Clause 13.2, it shall promptly notify the Company and the Lenders.

20.3Non-Business Days

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

20.4Consolidation and division of Facility A Loans

(a)Subject to paragraph (b) below, if two or more Interest Periods:

(i)relate to Facility A Loans in the same currency;

(ii)end on the same date; and

(iii)are made to the same Borrower,

those Facility A Loans will, unless that Borrower (or the Company on its behalf) specifies to the contrary in the Selection Notice for the next Interest Period, be consolidated into, and treated as, a single Facility A Loan on the last day of the Interest Period.

(b)Subject to Clause 4.4 (Maximum number of Utilisations) and Clause 5.3 (Currency and amount), if a Borrower (or the Company on its behalf) requests in a Selection Notice that a Facility A Loan be divided into two or more Facility A Loans, that Facility A Loan will, on the last day of its Interest Period, be so divided with Base Currency Amounts specified in that Selection Notice, being an aggregate Base Currency Amount equal to the Base Currency Amount of the Facility A Loan immediately before its division.

21.CHANGES TO THE CALCULATION OF INTEREST

21.1Absence of quotations

Subject to Clause 14.2 (Market disruption), if LIBOR or, if applicable, EURIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR or EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

21.2Market disruption

(a)If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of that Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

(i)the Margin;

(ii)the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which

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expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and

(iii)the Mandatory Cost, if any, applicable to that Lender’s participation in the Loan.

(b)In this Agreement “Market Disruption Event” means:

(i)at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR or, if applicable, EURIBOR for the relevant currency and Interest Period; or

(ii)before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed 35 per cent. of that Loan) that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR or, if applicable, EURIBOR.

21.3Alternative basis of interest or funding

(a)If a Market Disruption Event occurs and the Agent or the Company so requires, the Agent and the Company shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.

(b)Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties.

21.4Break Costs

(a)Each Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.

(b)Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

22.FEES

22.1Commitment fee

(a)The Company shall pay to the Agent (for the account of each Lender) a fee in the Base Currency computed at the lower of (i) the rate of 50 per cent. per annum of the applicable Margin and (ii) 0.75 per cent. per annum, on that Lender’s Available Commitment for the applicable Availability Period.

(b)The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the relevant Availability Period, on the last day of the Availability Period and, if cancelled in full, on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.

22.2Arrangement fee

The Company shall pay to the Arranger an arrangement fee in the amount and at the times agreed in a Fee Letter.

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22.3Agency fee

The Company shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.

22.4Security Agency fee

The Company shall pay to the Security Agent (for its own account) a security agency fee in the amount and at the times agreed in a Fee Letter.

22.5Issuing Bank fee

The Company shall pay to the Issuing Bank (for its own account) a fee in the amount and at the times agreed in a Fee Letter.

22.6Ancillary Facility fees

The Company or the relevant Borrower shall pay to the relevant Ancillary Lender the Ancillary Facility fee(s), including the Ancillary Facility commitment fee(s), in the amount(s) and at the times agreed in the relevant Ancillary Facility Document.

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SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS

23.TAX GROSS UP AND INDEMNITIES

23.1Definitions

“Finnish Qualifying Lender” means a Lender which is:

(i)resident in Finland for Finnish taxation purposes; or

(ii)a Lender not resident in Finland for Finnish taxation purposes yet entitled to receive all interest payments under the Finance Documents without deduction or withholding of any Finnish income tax pursuant to section 9(2) of the Finnish Income Tax Act 1992/1535.

“German Borrower” means a Borrower resident for tax purposes in Germany.

“Protected Party” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

“Qualifying Lender” means :

(iii)in respect of interest payable by a German Borrower, a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is:

(A)lending through a Facility Office in Germany;

(B)a Treaty Lender with respect to the Federal Republic of Germany; or

(C)otherwise entitled to receive interest payments from an Obligor without such Obligor being required to make (or as the case may be, being exempted from) any deduction or withholding for or on account of Tax imposed by the Federal Republic of Germany in respect of an advance under a Finance Document;

(iv)a Finnish Qualifying Lender; or

(v)in respect of any other Borrower, a Lender which is beneficially entitled to interest payable to that Lender and is:

(A)lending through a Facility Office in the jurisdiction of incorporation of the relevant Borrower; or

(B)a Treaty Lender with respect to the jurisdiction of incorporation of the relevant Borrower.

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

“Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 16.2 (Tax gross-up) or a payment under Clause 16.3 (Tax indemnity).

“Treaty Lender” means a Lender which:

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(vi)is treated as a resident of a Treaty State for the purposes of the Treaty; and

(vii)does not carry on a business in the Federal Republic of Germany or the jurisdiction of incorporation of the relevant Borrower through a permanent establishment with which that Lender’s participation in the Loan is effectively connected.

“Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the Federal Republic of Germany or the jurisdiction of incorporation of the relevant Borrower which makes provision for full exemption for tax imposed by the Federal Republic of Germany or the jurisdiction of incorporation of the relevant Borrower on interest.

(b)Unless a contrary indication appears, in this Clause 16 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

23.2Tax gross-up

(a)Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

(b)The Company shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Company and that Obligor.

(c)If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

(d)An Obligor is not required to make an increased payment to a Lender under paragraph (c) above for a Tax Deduction in respect of tax imposed by the Federal Republic of Germany or the jurisdiction of incorporation of the relevant Obligor from a payment of interest on a Loan, if on the date on which the payment falls due:

(i)the payment could have been made to the relevant Lender without a Tax Deduction if it was a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority; or;

(ii)the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under paragraph (g) below.

(e)If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

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(f)Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

(g)A Treaty Lender and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate in completing any procedural formalities necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction.

23.3Tax indemnity

(a)The Company shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

(b)Paragraph (a) above shall not apply:

(i)with respect to any Tax assessed on a Finance Party:

(A)under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes;

(B)under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction; or

(C)under the laws of Germany pursuant to section 49 paragraph 1 no. 5 lit. c) aa) German Income Tax Code (Einkommensteuergesetz) due to the fact that a Facility is secured (directly or indirectly) by real estate located in Germany (inländische Grundstücke) or domestic rights treated as real property under German Civil Law (inländische Rechte die den Vorschriften des Bürgerlichen Rechts über Grundstücke unterliegen),

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

(ii)to the extent a loss, liability or cost:

(A)is compensated for by an increased payment under Clause 16.2 (Tax gross-up); or

(B)would have been compensated for by an increased payment under Clause 16.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in paragraph (d) of Clause 16.2 (Tax gross-up) applied.

(c)A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Company.

(d)A Protected Party shall, on receiving a payment from an Obligor under this Clause 16.3, notify the Agent.

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23.4Tax Credit

If an Obligor makes a Tax Payment and the relevant Finance Party determines that:

(a)a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and

(b)that Finance Party has (directly or on an affiliated group basis) obtained, utilised and retained that Tax Credit,

the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.

23.5Stamp taxes

The Company shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

23.6Value added tax

(a)All amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such supply, and accordingly, subject to paragraph (c) below, if VAT is chargeable on any supply made by the Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).

(b)If VAT is chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT. The Recipient will promptly pay to the Relevant Party an amount equal to any credit or repayment from the relevant tax authority which it reasonably determines relates to the VAT chargeable on that supply.

(c)Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that neither it nor any other member of any group of which it is a member for VAT purposes is entitled to credit or repayment from the relevant tax authority in respect of the VAT.

23.7German Earnings Stripping Rules

Should a Borrower, which claims interest deductions in Germany for German Tax purposes with regard to interest payments under this Agreement require the assistance by the Finance Parties on the basis of sec. 4f of the German Income Tax Act (Einkommensteuergesetz) and sec. 8a of the German Corporate Income Tax Act (Körperschaftsteuergesetz) in the form of the German

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Business Tax Reform Act 2008 (Unternehmensteuerreformgesetz 2008, published in the Federal Gazette, BGBI. I 2007, 1912 et seq.), with regard to the application of the equity escape clause, the Finance Parties shall, upon receipt of a request of the relevant Borrower (containing a detailed proposal for the requested assistance) enter into good faith negotiations as to what extent it is reasonably practical for the Finance Parties to assist the Borrower in this respect. For the avoidance of doubt, no Finance Party shall be obliged to release any Security, change this Agreement or disclose information which is confidential under applicable statutory or contractual banking secrecy rules.

24.INCREASED COSTS

24.1Increased costs

(a)Subject to Clause 17.3 (Exceptions) the Company shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.

(b)In this Agreement “Increased Costs” means:

(i)a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;

(ii)an additional or increased cost; or

(iii)a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.

24.2Increased cost claims

(a)A Finance Party intending to make a claim pursuant to Clause 17.1 (Increased costs), shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company.

(b)Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

24.3Exceptions

(a)Clause 17.1 (Increased costs) does not apply to the extent any Increased Cost is:

(i)attributable to a Tax Deduction required by law to be made by an Obligor;

(ii)compensated for by Clause 16.3 (Tax indemnity) (or would have been compensated for under Clause 16.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 16.3 (Tax indemnity) applied); or

(iii)compensated for by the payment of the Mandatory Cost; or

(iv)attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.

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(b)In this Clause 17.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 16.1 (Definitions).

25.OTHER INDEMNITIES

25.1Currency indemnity

(a)If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

(i)making or filing a claim or proof against that Obligor;

(ii)obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

that Obligor shall as an independent obligation, within three Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

(b)Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

25.2Other indemnities

The Company shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:

(a)the occurrence of any Event of Default;

(b)a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 32 (Sharing among the Finance Parties);

(c)funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or

(d)a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company.

25.3Indemnity to the Agent and the Security Agent

The Company shall promptly indemnify the Agent and the Security Agent against any cost, loss or liability incurred by the Agent or the Security Agent (acting reasonably) as a result of:

(a)investigating any event which it reasonably believes is a Default; or

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(b)acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.

26.MITIGATION BY THE LENDERS

26.1Mitigation

(a)Each Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 11.1 (Illegality in relation to a Lender or the Issuing Bank), Clause 11.2 (Illegality in relation to an Ancillary Lender), Clause 16 (Tax gross-up and indemnities) or Clause 17 (Increased costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

(b)Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.

26.2Limitation of liability

(a)The Company shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 19.1 (Mitigation).

(b)A Finance Party is not obliged to take any steps under Clause 19.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

27.COSTS AND EXPENSES

27.1Transaction expenses

The Company shall promptly on demand pay the Agent, the Security Agent and the Arranger the amount of all costs and expenses (including legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution and syndication of:

(a)this Agreement and any other documents referred to in this Agreement, subject to agreed caps in respect of out of pocket expenses and legal fees; and

(b)any other Finance Documents executed after the date of this Agreement.

27.2Amendment costs

If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 33.9 (Change of currency), the Company shall, within three Business Days of demand, reimburse the Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent or the Security Agent in responding to, evaluating, negotiating or complying with that request or requirement.

27.3Enforcement costs

The Company shall, within three Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document.

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27.4Security Agent expenses

The Company shall promptly on demand pay the Security Agent the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with the administration or release of any Security created pursuant to any Security Document.

27.5Undertaking to pay

(a)The Company undertakes to pay each Finance Party within three Business Days of demand an amount equal to any liability, damages, loss, cost or expense (including legal fees, costs and expenses) incurred by or awarded against that Finance Party or any of its Affiliates or any of its (or its Affiliates’) directors, officers, employees or agents (each a “Relevant Party”) arising out of, in connection with or based on any actual or potential action, claim, suit, investigation or proceeding arising out of, in connection with or based on:

(i)any Finance Document;

(ii)the arranging, underwriting or syndication of the Facilities;

(iii)the use of proceeds of any Loan; or

(iv)the use of any Letter of Credit or Bank Guarantee,

except to the extent such liability, damages, loss, cost or expense incurred or awarded results from any breach by a Finance Party of a Finance Document which is finally judicially determined to have resulted directly from the gross negligence or wilful misconduct of that Relevant Party.

(b)The Company undertakes to pay each Finance Party, within three Business Days of demand, an amount equal to any cost or expense (including legal fees, costs and expenses) incurred by any Relevant Party in connection with investigating, preparing, pursuing or defending any action, claim, suit, investigation or proceeding arising out of, in connection with or based on any of the above, whether or not pending or threatened and whether or not any Relevant Party is a party.

(c)No Finance Party shall have any duty or obligation, whether as fiduciary for any Relevant Party or otherwise, to recover any payment made or required to be made under paragraph (a).

(d)The Company agrees that no Relevant Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company or any of its Affiliates for or in connection with anything referred to in paragraph (a) above except for any such liability, damages, loss, cost or expense incurred by the Company that results directly from any breach by that Relevant Party of any Finance Document which is in each case finally judicially determined to have resulted directly from the gross negligence or wilful misconduct of that Relevant Party.

(e)Notwithstanding paragraph (d) above, no Relevant Party shall be responsible or have any liability to the Company or any of its Affiliates or anyone else for consequential losses or damages.

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SECTION 7

guarantee

28.GUARANTEE AND INDEMNITY

28.1Guarantee and indemnity

Each Guarantor irrevocably and unconditionally jointly and severally:

(a)guarantees to each Finance Party punctual performance by each Borrower of all that Borrower’s obligations under the Finance Documents;

(b)undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

(c)agrees with each Finance Party that if, for any reason, any amount claimed by a Finance Party under this Clause 21 is not recoverable on the basis of a guarantee, it will be liable to indemnify that Finance Party against any cost, loss or liability it incurs as a result of a Borrower not paying any amount when due under or in connection with any Finance Document. The amount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 21 if the amount claimed had been recoverable on the basis of a guarantee.

28.2Continuing guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

28.3Reinstatement

If as a result of insolvency or any similar event:

(a)any payment by an Obligor is avoided, reduced or must be restored; or

(b)any discharge or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made in whole or in part on the basis of any payment, security or other thing which is avoided, reduced or must be restored,

(i)the liability of each Obligor shall continue or be reinstated as if the payment, discharge or arrangement had not occurred; and

(ii)each Finance Party shall be entitled to recover the value or amount of that payment or security from each Obligor, as if the payment, discharge or arrangement had not occurred.

28.4Waiver of defences

The obligations of each Guarantor under this Clause 21 will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 21 (without limitation and whether or not known to it or any Finance Party) including:

(a)any time, waiver or consent granted to, or composition with, any Obligor or other person;

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(b)the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

(c)the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(d)any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

(e)any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security, including any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;

(f)any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

(g)any insolvency or similar proceedings.

28.5Immediate recourse

Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 21.  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

28.6Appropriations

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

(a)refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

(b)hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this Clause 21.

28.7Deferral of Guarantors’ rights

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent or, as the case may be, the Security Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

(a)to be indemnified by an Obligor;

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(b)to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents; and/or

(c)to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party.

If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 33 (Payment mechanics) of this Agreement.

28.8Additional security

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

28.9Release of Guarantors’ right of contribution

If any Guarantor (a “Retiring Guarantor”) ceases to be a Guarantor in accordance with the terms of the Finance Documents for the purpose of any sale or other disposal of that Retiring Guarantor then on the date such Retiring Guarantor ceases to be a Guarantor:

(a)that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and

(b)each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor.

28.10Preservation of stated share capital of a German Guarantor

(a)To the extent that the guarantee created under this Clause 21 (the “Guarantee”) is granted by a Guarantor incorporated in Germany as a limited liability company (GmbH) (each a “German Guarantor”) and the Guarantee of the German Guarantor guarantees amounts

(i)which are owed by direct or indirect shareholders of the German Guarantor or Subsidiaries of such shareholders (with the exception of Subsidiaries which are also Subsidiaries of the German Guarantor); and provided that

(ii)such amounts do not correspond to funds that have been on-lent to, or otherwise been passed on to, the relevant German Guarantor or any of its Subsidiaries and have not been repaid,

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the Guarantee of the German Guarantor shall be subject to certain limitations as set out in paragraph (b). In relation to any other amounts guaranteed, the Guarantee of the German Guarantor remains unlimited.

(b)To the extent that the demand under the Guarantee against a German Guarantor is made in respect of amounts in relation to which the conditions pursuant to paragraph (a) are fulfilled, the relevant German Guarantor’s liability shall be limited as follows:

(i)Subject to sub-paragraphs (iii) to (viii) below, the Agent shall not be entitled to enforce the Guarantee to the extent that such enforcement has the effect of

(A)reducing the German Guarantor’s net assets (Nettovermögen) (the “Net Assets”) to an amount less than its stated share capital (Stammkapital), or

(B)(if its Net Assets are already lower than its stated share capital) causing such amount to be further reduced,

and thereby affects its assets which are required for the obligatory preservation of its stated share capital according to §§ 30, 31 German GmbH-Act (GmbH-Gesetz) (the “GmbH-Act”).

(ii)The value of the Net Assets shall be determined in accordance with GAAP consistently applied by the German Guarantor in preparing its unconsolidated balance sheets (Jahresabschluss according to § 42 GmbH-Act, §§ 242, 264 HGB) in the previous years, save that

(A)the amount of any increase of the stated share capital (Stammkapital) of the German Guarantor registered after the date of this Agreement without the prior written consent of the Agent shall be deducted from the relevant stated share capital;

(B)loans provided to the relevant German Guarantor by a member of the Group shall be disregarded if such loans are subordinated, or are considered subordinated pursuant to § 32a GmbH-Act; and

(C)loans and other liabilities incurred in violation of the provisions of this Agreement shall be disregarded to the extent such violation is caused by wilful misconduct or gross negligence of the managing directors of the relevant Guarantor.

(iii)The limitations set out in sub-paragraph (i) above shall only apply if and to the extent that the managing director(s) (Geschäftsführer) on behalf of the respective German Guarantor have confirmed in writing to the Agent within 15 calendar days following the Agent’s demand under the Guarantee, to what extent the demanded payment fulfils the conditions pursuant to paragraph (a) and would cause its Net Assets to fall below its stated share capital (Stammkapital) or, if the Net Assets are already less than the stated share capital (Stammkapital), would cause such amount to be further reduced (the “Management Determination”).

(iv)If the Agent disagrees with the Management Determination, the Agent shall nevertheless be entitled to enforce the Guarantee up to such amount, which is undisputed between

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itself and the relevant German Guarantor in accordance with the provisions of paragraph (iii) above. In relation to the amount which is disputed, the Agent and such German Guarantor shall instruct a firm of auditors of international standing and reputation to determine within 45 calendar days (or such longer period as has been agreed between the Company and the Agent) from the date the Agent has contested the Management Determination the value of available Net Assets (the “Auditor’s Determination”). If the Agent and the German Guarantor do not agree on the appointment of a joint auditor within 5 Business Days from the date the Agent has disputed the Management Determination, the Agent shall be entitled to appoint auditors of international standing and reputation. The amount determined as available in the Auditor’s Determination shall be (except for manifest error) binding for all Parties. The costs of the Auditor’s Determination shall be borne by the Company and shall be taken into account in the calculation of Net Assets.

(v)If, and to the extent that, the Guarantee has been enforced without regard to the limitation set forth in sub-paragraph (i) because (A) the Management Determination was not delivered within the relevant time frame or (B) the amount of the available Net Assets pursuant to the Auditor’s Determination is lower than the amount stated in the Management Determination, the Finance Parties shall upon written demand of the relevant German Guarantor to the Agent (on behalf of the Finance Parties) repay any amount (if and to the extent already paid to the Finance Parties) in the case of (A) above, which is necessary to maintain such German Guarantor’s stated share capital (Stammkapital), and in the case of (B) above up to and including the amount calculated in the Auditor’s Determination calculated as of the date the demand under the Guarantee was made and in accordance with sub-paragraphs (i) and (ii) above, provided such demand for repayment is made to the Agent within 6 months (Ausschlussfrist) from the date the Guarantee has been enforced.

If pursuant to the Auditor’s Determination the amount of the available Net Assets is higher than set out in the Management Determination the relevant German Guarantor shall pay such amount to the Finance Parties within 5 Business Days after receipt of the Auditor’s Determination.

(vi)If the German Guarantor intends to demonstrate that the enforcement of the Guarantee has led to one of the effects referred to in sub-paragraph (i) above, then the German Guarantor shall realise at market value any and all of its assets that are shown in its balance sheet with a book value (Buchwert) which are (in the reasonable opinion of the Agent) significantly lower than their market value and to the extent that such assets are not necessary for the relevant German Guarantor’s business (nicht betriebsnotwendig), to the extent necessary to satisfy the amounts demanded under this paragraph Guarantee.

(vii)The limitation set out in sub-paragraph (i) does not affect the right of the Finance Parties to claim again any outstanding amount at a later point in time if and to the extent that paragraph (i) would allow this at that later point.

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(viii)If the German Guarantor demonstrates that, at the time of enforcement, it is obliged to file for the commencement of insolvency proceedings for reason of over-indebtedness (Überschuldung), then for the determination of its Net Assets the lower of the amount of net assets shown by a regular balance sheet (Handelsbilanz) and by a balance sheet showing an over-indebtedness (Überschuldungsstatus) shall be relevant. In the assessment of the Guarantor’s assets for the balance sheet showing an over-indebtedness, however, the continuation of the enterprise shall not be taken as a basis if according to the circumstances such continuation is not deemed highly likely (negative Fortführungsprognose). Sub-paragraphs (iii) to (vii) above shall apply mutatis mutandis in relation to the German Guarantor invoking its over-indebtedness (Überschuldung).

(c)This Clause 21.10 (Preservation of stated share capital of a German Guarantor) shall apply mutatis mutandis if the Guarantee is granted by a Guarantor incorporated as a limited liability partnership (GmbH & Co. KG) in relation to the limited liability company as general partner (Komplementär) of such Guarantor.

28.11Limitation applicable to Finnish Guarantors

No obligations of any Guarantor incorporated in Finland under this Clause 21 shall extend to guarantee the obligations of any Borrower to the extent, and only to the extent, it would constitute (i) unlawful distribution of assets within the meaning of Chapter 13, Section 1 of the Finnish Companies Act (osakeyhtiölaki 624/2006, as amended or re-enacted from time to time), or (ii) unlawful financial assistance within the meaning of Chapter 13, Section 10 of the Finnish Companies Act.

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SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

29.REPRESENTATIONS

Each Obligor makes the representations and warranties set out in this Clause 22 to each Finance Party on the date of this Agreement.

29.1Status

(a)It is a corporation or limited liability company, duly incorporated and validly existing under the law of its jurisdiction of incorporation.

(b)It and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.

29.2Binding obligations

The obligations expressed to be assumed by it in each Finance Document are legal, valid, binding and enforceable, subject to the Legal Reservations and the Perfection Requirements.

29.3Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with:

(a)any law or regulation applicable to it;

(b)its or any of its Subsidiaries’ constitutional documents; or

(c)any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries’ assets to an extent which has or is reasonably likely to have a Material Adverse Effect,

nor (except as provided in any Security Document) result in the existence of, or oblige it to create, any Security over any of its assets which are expressed to be the subject of any Security Document.

29.4Power and authority

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.

29.5Validity and admissibility in evidence

All Authorisations required:

(a)to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party;

(b)to make the Finance Documents to which it is a party admissible in evidence in its jurisdiction of incorporation; and

(c)subject to the Perfection Requirements, to enable it to create the Security to be created by it pursuant to any Security Document and to ensure that such Security has the priority and ranking it is expressed to have,

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have been obtained or effected and are in full force and effect or will be obtained or effected and will be in full force and effect no later than the date of first utilisation of any Facility.

29.6Governing law and enforcement

(a)Subject to the Legal Reservations, the choice of English law as the governing law of the Finance Documents will be recognised and enforced in its jurisdiction of incorporation.

(b)Subject to the Legal Reservations, any judgment obtained in England in relation to a Finance Document will be recognised and enforced in its jurisdiction of incorporation.

29.7Deduction of Tax

At the date of this Agreement, it is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document.

29.8No filing or stamp taxes

Under the law of its jurisdiction of incorporation it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents.

29.9No default

(a)No Event of Default is continuing or might reasonably be expected to result from the making of any Utilisation.

(b)No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or is reasonably likely to have a Material Adverse Effect.

29.10Information Memorandum

(a)Any factual information provided by or on behalf ofany member of the Group for the purposes of the Information Memorandum was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.

(b)The financial projections contained in the Information Memorandum have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.

(c)Nothing has occurred or been omitted from the Information Memorandum and no information has been given or withheld that results in the information contained in the Information Memorandum being untrue or misleading in any material respect.

29.11Financial statements

(a)Its Original Financial Statements were prepared in accordance with GAAP consistently applied.

(b)Its Original Financial Statements fairly represent its financial condition and operations (consolidated in the case of the Company) as at the end of and for the relevant financial year.

(c)There has been no material adverse change in its business or financial condition (or the business or consolidated financial condition of the Group, in the case of the Company) since the date to which its Original Financial Statements were drawn up.

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29.12Pari passu ranking

Without limiting Clause 22.17 (Security) below, its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

29.13No proceedings pending or threatened

(a)No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against it or any of its Subsidiaries.

(b)Paragraph (a) shall not apply to any litigation, arbitration or administrative proceedings which are vexatious or frivolous.

29.14Environmental laws and licences

It and each of its Subsidiaries has:

(a)complied with all Environmental Laws to which it may be subject;

(b)obtained all Environmental Licences required in connection with its business; and

(c)complied with the terms of those Environmental Licences,

in each case where failure to do so has, or is reasonably likely to have a Material Adverse Effect.

29.15Environmental releases

No:

(a)property currently or previously owned, leased, occupied or controlled by it or any of its Subsidiaries (including any offsite waste management or disposal location utilised by it or any of its Subsidiaries) is contaminated with any Hazardous Substance; and

(b)discharge, release, leaching, migration or escape of any Hazardous Substance into the Environment has occurred or is occurring on, under or from that property,

in each case in circumstances where this has or is reasonably likely to have a Material Adverse Effect.

29.16Solvency

No:

(a)corporate action, legal proceeding or other procedure or step described in Clause 25.7 (Insolvency proceedings); or

(b)creditors’ process described in Clause 26.8 (Creditors’ process),

has been started in respect of it or any of its Subsidiaries.

29.17Security

(a)Subject to any applicable Perfection Requirements, each Security Document creates (or, once entered into, will create) in favour of the Security Agent for the benefit of the Finance Parties, the Security which it is expressed to create fully perfected and with the ranking and priority it is expressed to have.

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(b)The constitutional documents of any member of the Group and the JV Documents do not restrict or inhibit in any manner any transfer of any shares of any member of the Group which are expressed to be subject to any Security under any Security Document except for the articles of association of Sachtleben Chemie from which restrictions will be removed in accordance with the terms of the pledge agreement relating to the shares of Sachtleben Chemie.

29.18Legal and beneficial ownership

(a)It and each of its Subsidiaries is the absolute legal and beneficial owner of all the assets over which it purports to create Security pursuant to any Security Document, free from any Security other than Permitted Security.

(b)Paragraph (a) shall not apply to any assets which are subject to the German Transfer Agreement and are not owned by Sachtleben Chemie.

29.19Assets

It and each of its Subsidiaries has good and marketable title to, or valid leases or licences of, or is otherwise entitled to use (in each case, on arm’s length terms), all material assets necessary for the conduct of its business as it is being, and is proposed to be, conducted.

29.20JV Documents

(a)The JV Documents:

(i)contain all the terms of the arrangements between the Owners relating to the Ti02 Joint Venture (and/or any of their respective Affiliates) and any Holding Company of the Company and/or any member of the Group (and/or any of their respective Affiliates);

(ii)are or, on the date of the first Utilisation Request, will be in full force and effect; and

(iii)have not been amended from the form in which they were delivered or waived (in whole or in part) and no consent has been given thereunder, save for any which do not materially and adversely affect the interests of the Lenders or have been approved in writing by the Agent.

(b)Neither it nor any of its Subsidiaries is in, or aware of any, material breach of or material default under any JV Document.

29.21Pensions

(a)No member of the Group has any material liability in respect of any pension scheme and there are no circumstances which would give rise to such a liability other than as disclosed in the Information Memorandum or otherwise to the Agent prior to the date of this Agreement.

(b)Each member of the Group is in compliance in all material respects with all applicable material laws and material contracts relating to and the governing provisions of the pension schemes maintained by or for the benefit of any member of the Group and/or any of its employees.

29.22Insurances

(a)The insurances required by Clause 24.7 (Insurance) are in full force and effect as required by this Agreement.

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(b)No event or circumstance has occurred, and there has been no failure to disclose a fact, which would entitle any insurer to reduce or avoid its liability under any such insurance where such event, circumstance or failure would reasonably be expected to have a Material Adverse Effect.

29.23Repetition

The Repeating Representations (and, in the case of paragraph (b) below, the representations set out in Clauses 22.5 (Validity and admissibility in evidence) and 22.8 (No filing or stamp taxes)) are deemed to be made by each Obligor by reference to the facts and circumstances then existing on:

(a)the date of each Utilisation Request and the first day of each Interest Period; and

(b)in the case of an Additional Obligor, the day on which the company becomes (or it is proposed that the company becomes) an Additional Obligor.

The representations and warranties set out in Clause 22.10 (Information Memorandum) are deemed to be made by each Obligor on the date on which the Information Memorandum is approved by the Company and on the Syndication Date subject to, in each case, any disclosures made by the Company prior thereto.

30.INFORMATION UNDERTAKINGS

The undertakings in this Clause 23 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

30.1Financial statements

The Company shall supply to the Agent in sufficient copies for all the Lenders:

(a)as soon as the same become available, but in any event within 180 days after the end of each of its financial years and beginning with the financial year ending 31 December 2008:

(i)its audited consolidated financial statements for that financial year; and

(ii)the unaudited financial statements of each Obligor for that financial year; and

(b)as soon as the same become available, but in any event within 45 days after the end of each Financial Quarter and beginning with the Financial Quarter ending on 30 September 2008:

(i)its consolidated financial statements for that Financial Quarter; and

(ii)the financial statements of each Obligor for that Financial Quarter.

30.2Compliance Certificate

(a)The Company shall supply to the Agent, with each set of financial statements delivered pursuant to paragraph (a)(i) or (b)(i) of Clause 23.1 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 24 (Financial covenants) as at the date as at which those financial statements were drawn up.

(b)If required to be delivered with the financial statements delivered pursuant to paragraph (a)(i) of Clause 23.1 (Financial statements), the Compliance Certificate shall also set out the Material

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Subsidiaries and (in reasonable detail) computations for the determination of which members of the Group are Material Subsidiaries.

(c)Each Compliance Certificate shall be signed by two directors of the Company and, if required to be delivered with the financial statements delivered pursuant to paragraph (a)(i) of Clause 23.1 (Financial statements), shall be reported on by the Company’s auditors in the form reasonably required by the Agent.

30.3Requirements as to financial statements

(a)Each set of financial statements delivered by the Company pursuant to Clause 23.1 (Financial statements) shall be certified by a director of the relevant company as fairly representing its (or, as the case may be, its consolidated) financial condition and operations as at the end of and for the period in relation to which those financial statements were drawn up.

(b)The Company shall procure that each set of financial statements delivered pursuant to Clause 23.1 (Financial statements) is prepared using the Applicable Accounting Principles, unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in GAAP or the relevant accounting practices or reference periods and its auditors (or, if appropriate, the auditors of the Obligor) deliver to the Agent:

(i)a description of any change necessary for the relevant financial statements to reflect the Applicable Accounting Principles; and

(ii)sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 24 (Financial covenants) has been complied with, to determine any other relevant matter set out in this Agreement and/or to make an accurate comparison between the financial position indicated in those financial statements and that Obligor’s Original Financial Statements.

Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the Applicable Accounting Principles.

(c)If the Company notifies the Agent of a change in accordance with paragraph (b) above, the Company and the Agent shall enter into negotiations in good faith with a view to agreeing any amendments to this Agreement which are necessary as a result of the change.

30.4Information: miscellaneous

The Company shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

(a)all documents dispatched by the Company to its creditors generally at the same time as they are dispatched;

(b)promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the Group, and which might, if adversely determined, reasonably be expected to have a Material Adverse Effect (other than any litigation, arbitration or administrative proceedings which are vexatious or frivolous); and

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(c)promptly, such further information regarding the financial condition, business and operations of any member of the Group as any Finance Party (through the Agent) may reasonably request.

30.5Notification of default

(a)Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).

(b)Promptly upon a request by the Agent, the Company shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

30.6“Know your customer” checks

(a)If:

(i)the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

(ii)any change in the status of an Obligor after the date of this Agreement; or

(iii)a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

(b)Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

(c)The Company shall, by not less than 10 Business Days’ prior written notice to the Agent, notify the Agent (which shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Obligor pursuant to Clause 28 (Changes to the Obligors).

(d)Following the giving of any notice pursuant to paragraph (c) above, if the accession of such Additional Obligor obliges the Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already

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available to it, the Company shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the accession of such Subsidiary to this Agreement as an Additional Obligor.

31.FINANCIAL COVENANTS

31.1Financial condition

The Company shall ensure that:

(a)the ratio of Net Debt on each Quarter Date in each period set out in the table below to EBITDA for the Relevant Period ending on that Quarter Date will not exceed the ratio set out in the relevant column in the table below opposite that period;

(b)the ratio of EBITDA to Net Interest Costs for each Relevant Period ending on a Quarter Date in each period set out in the table below will not be less than the ratio set out in the relevant column in the table below opposite that period; and

(c)the ratio of Cash Generated for Financing to Debt Service for each Relevant Period ending on a Quarter Date in each period set out in the table below will not be less than the ratio set out in the relevant column in the table below opposite that period.

Period	Net Debt: EBITDA	EBITDA: Net Interest Costs	Cash Generated for Financing: Debt Service
30 September 2008 to and including 31 December 2008	4.00:1.00
31 December 2008		2.75:1.00	1.00:1.00
1 January 2009 to and including 31 December 2009	4.00:1.00	3.00:1.00	1.00:1.00
1 January 2010 to and including 31 December 2010	3.50:1.00	3.50:1.00	1.10:1.00
Thereafter	3.00:1.00	4.00:1.00	1.10:1.00

31.2Definitions

In this Clause 24.2:

“Capital Expenditure” means any expenditure or obligation (other than expenditure or obligations in respect of Permitted Acquisitions and Permitted Joint Ventures) in respect of expenditure which, in accordance with the Accounting Principles, is treated as capital

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expenditure (and including the capital element of any expenditure or obligation incurred in connection with a Finance Lease).

“Cash Generated for Financing” means, in respect of any Relevant Period (the “Current Relevant Period”), EBITDA for that Relevant Period after:

(a)adding the amount of any decrease (and deducting the amount of any increase) in Working Capital for that Relevant Period;

(b)adding the amount of any cash receipts (and deducting the amount of any cash payments) during that Relevant Period in respect of any Exceptional Items not already taken account of in calculating EBITDA for any Relevant Period (other than, in the case of cash receipts, Net Sale Proceeds or Insurance Proceeds applied in prepayment of the Facilities);

(c)adding the amount of any cash receipts during that Relevant Period in respect of any Tax rebates or credits and deducting the amount actually paid or due and payable in respect of Taxes during that Relevant Period by any member of the Group;

(d)adding (to the extent not already taken into account in determining EBITDA) the amount of any dividends or other profit distributions received in cash by any member of the Group during that Relevant Period from any entity which is itself not a member of the Group and deducting (to the extent not already deducted in determining EBITDA) the amount of any dividends paid in cash during the Relevant Period to minority shareholders in members of the Group;

(e)adding the amount of any increase in provisions, other non-cash debits and other non-cash charges (which are not Current Assets or Current Liabilities) and deducting the amount of any non-cash credits (which are not Current Assets or Current Liabilities) in each case to the extent taken into account in establishing EBITDA;

(f)deducting the amount of any Capital Expenditure actually made (or due to be made) during that Relevant Period by any member of the Group and the aggregate of any cash consideration paid for, or the cash cost of, any Permitted Acquisitions and Permitted Joint Ventures except (in the case) to the extent funded from;

(i)Cash Generated for Financing in the Relevant Period ending immediately prior to the first day of the Current Relevant Period (the “Previous Relevant Period”) less Debt Service for the Previous Relevant Period;

(ii)Net Sale Proceeds or Insurance Proceeds permitted to be retained for this purpose; or

(iii)new equity or Financial Indebtedness subordinated to the Facilities on terms acceptable to the Majority Lenders (acting reasonably) and received from a person which is not a member of the Group; and

(g)deducting the amount of any cash costs of Pension Items during that Relevant Period to the extent not taken into account in establishing EBITDA,

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and so that no amount shall be added (or deducted) more than once and there shall be excluded the effect of all cash movements associated with the JV Costs up to an amount not exceeding €8,000,000.

“Current Assets” means the aggregate (on a consolidated basis) of all inventory, work in progress, trade and other receivables of each member of the Group including prepayments in relation to operating items and sundry debtors (but excluding Cash and Cash Equivalent Investments) maturing within twelve months from the date of computation but excluding amounts in respect of:

(h)receivables in relation to Tax;

(i)Exceptional Items and other non-operating items;

(j)insurance claims; and

(k)any interest owing to any member of the Group.

“Current Liabilities” means the aggregate (on a consolidated basis) of all liabilities (including trade creditors, accruals and provisions) of each member of the Group falling due within twelve months from the date of computation but excluding amounts in respect of:

(l)liabilities for Debt, other Financial Indebtedness or pensions and Interest Expenses;

(m)liabilities for Tax;

(n)Exceptional Items and other non-operating items; and

(o)insurance claims.

“Debt” means, at any time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable on prepayment (to the extent the relevant member of the Group has taken action that will result in such premium being required to be paid) or redemption) of Financial Indebtedness of members of the Group but excluding:

(p)any indebtedness referred to in paragraphs (f), (g) or (i) of the definition of Financial Indebtedness (provided that, in relation to paragraphs (f) and (i) of such definition, only to the extent such indebtedness is not classified as borrowings under IFRS);

(q)any guarantee in respect of Financial Indebtedness to the extent such guarantee is not classified as a borrowing under IFRS; and

(r)any Financial Indebtedness subordinated to the Facilities under the Subordination Agreement or otherwise on terms acceptable to the Majority Lenders (acting reasonably) including, without limitation, any subordinated shareholder loans.

“Debt Service” means, in respect of any Relevant Period, the aggregate of:

(s)Interest Expenses for that Relevant Period;

(t)the aggregate of all scheduled repayments of Debt falling due during that Relevant Period but excluding:

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(i)any amounts falling due under any overdraft or revolving facility (including, without limitation, Facility B and any Ancillary Facility) and which were available for simultaneous redrawing according to the terms of that facility;

(ii)any such obligations owed to any member of the Group; and

(iii)any prepayment of Debt existing on the date of this Agreement which is required to be repaid under the terms of this Agreement; and

(u)the amount of the capital element of any payments in respect of that Relevant Period payable under any Finance Lease entered into by any member of the Group,

and so that no amount shall be included more than once.

“EBITDA” means, in respect of any Relevant Period, the consolidated operating profit of the Group before taxation (excluding the results from discontinued operations):

(v)before deducting any Net Interest Expenses and other finance charges in respect of Financial Indebtedness;

(w)not including any accrued interest owing to any member of the Group;

(x)before taking into account any Exceptional Items (and after adding the amount of any profit which would have been generated by Kemira Pigments in that Relevant Period but for the strikes that occurred in that Relevant Period, in each case as referred to in the KPMG Supplementary Report);

(y)before deducting JV Costs up to an amount not exceeding €8,000,000 (for the avoidance of doubt, JV Costs exceeding €8,000,000 shall be deducted to the extent otherwise required to be deducted pursuant to the terms of this Agreement);

(z)after deducting the amount of any profit (or adding back the amount of any loss) of any member of the Group which is attributable to minority interests;

(aa)plus or minus the Group’s share of the profits or losses (after finance costs and tax) of Non-Group Entities (after deducting the amount of any profit of any Non-Group Entity to the extent that the amount of the profit included in the financial statements of the Group exceeds the amount actually received in cash by members of the Group through distributions by the Non-Group Entity);

(bb)before taking into account any unrealised gains or losses on any derivative instrument;

(cc)before taking into account any gain or loss on the disposal or revaluation of assets (other than in the ordinary course of trading);

(dd)before taking into account any Pension Items;

(ee)after adding back any amount attributable to the amortisation, depreciation or impairment of assets of members of the Group (and taking no account of the reversal of any previous impairment charge made in that Relevant Period); and

(ff)after adding back, to the extent deducted, any non-recurring fees, expenses or charges paid in relation to (A) any restructuring, provided that it has a future identifiable benefit

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for the operation of the Group (as approved by the Agent in consultation with the Lenders) and the amount added back does not exceed €10,000,000 in any financial year of the Company or €25,000,000 from the date of this Agreement; and (B) any Permitted Acquisition or Permitted Joint Venture,

in each case, to the extent added, deducted or taken into account, as the case may be, for the purposes of determining operating profits of the Group before taxation.

“Exceptional Items” means any exceptional, one off, non-recurring or extraordinary items (including without limitation any lay-off and other restructuring costs and any additional pension costs relating thereto, in each case incurred by Kemira Pigments and as referred to in the KPMG Supplementary Report).

“Financial Year” means the annual accounting period of the Group.

“Interest Expenses” means, for any Relevant Period, the aggregate amount of the accrued interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments in respect of Debt (including, for the avoidance of doubt, any Financial Indebtedness subordinated to the Facilities) whether paid or payable (unless capitalised or included pursuant to paragraph (d) below) by any member of the Group (calculated on a consolidated basis) in respect of that Relevant Period:

(gg)including any upfront fees or costs which are not capitalised;

(hh)including the interest (but not the capital) element of payments in respect of Finance Leases;

(ii)including any commission, fees, discounts and other finance payments payable by (and deducting any such amounts payable to) any member of the Group under any interest rate hedging arrangement;

(jj)including the amortisation of any capitalised finance payments; and

(kk)taking no account of any unrealised gains or losses on any derivative instruments,

and so that no amount shall be added (or deducted) more than once.

“Net Debt” means, at any time, the aggregate amount of all obligations of members of the Group for or in respect of Debt at that time but:

(ll)excluding any such obligations to any other member of the Group;

(mm)including, in the case of Finance Leases only, their capitalised value; and

(nn)deducting the aggregate amount of Cash and Cash Equivalent Investments held by any member of the Group at that time,

and so that no amount shall be included or excluded more than once.

“Net Interest Expenses” means, for any Relevant Period, the Interest Expenses for that Relevant Period after deducting any interest or any other financial income payable in that Relevant Period to any member of the Group on any Cash or Cash Equivalent Investment.

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“Non-Group Entity” means any investment or entity (which is not itself a member of the Group (including associates and Joint Ventures)) in which any member of the Group has an ownership interest.

“Pension Items” means any income or charge attributable to a post-employment benefit scheme other than the current service costs and any past service costs and curtailments and settlements attributable to the scheme.

“Working Capital” means, on any date, Current Assets less Current Liabilities.

31.3Financial covenant calculations

(a)Capital Expenditure, Cash Generated for Financing, Current Assets, Current Liabilities, Debt, Debt Service, EBITDA, Exceptional Items, Interest Expenses, Net Interest Expenses, Net Debt and Working Capital shall be calculated and interpreted on a consolidated basis in accordance with the Applicable Accounting Principles, unless expressly provided to the contrary, and shall be expressed in euro.

(b)Capital Expenditure, Cash Generated for Financing, EBITDA, Interest Expenses, Net Interest Expenses, Net Debt and Working Capital shall be determined (except as needed to reflect the terms of this Clause 24) from the financial statements of the Group and Compliance Certificates delivered under Clause 23.1 (Financial statements), and Clause 23.2 (Compliance Certificate).

(c)For the purpose of this Clause 24, an amount outstanding or repayable on a particular day in a currency other than euro shall on that day be taken into account in its euro equivalent at the rate of exchange that would have been used had an audited consolidated balance sheet of the Group been prepared as at that day in accordance with the Applicable Accounting Principles.

(d)For the purpose of this Clause 24, no item shall be included or excluded more than once in any calculation.

(e)To the extent that any period prior to the date of first Utilisation of any Facility is included in any Relevant Period in Clause 24.1 (Financial condition):

(i)Net Interest Expenses for the period from the beginning of the Relevant Period until the date of first Utilisation of any Facility shall be calculated on a pro forma basis on the basis of the actual Net Interest Expenses from the date of first Utilisation of any Facility until the end of the Relevant Period; and

(ii)EBITDA for the period from the beginning of the Relevant Period until the date of first Utilisation of any Facility shall be the actual earnings before interest, tax, depreciation and amortisation calculated using the same principles set out in this Clause 24 for the calculation of EBITDA.

(f)The Company shall provide the Agent with the financial information and pro forma computations necessary to calculate these items.

(g)If any Permitted Acquisition occurs during a Relevant Period in relation to a business or company and the underlying business or company is not subsequently disposed of

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during that Relevant Period (an “Acquired Entity”), the Acquired Entity’s earnings before interest, tax, depreciation and amortisation and cash generated for financing (calculated using the principles set out in this Clause 24 for the calculation of EBITDA and Cash Generated for Financing, respectively) in respect of the part of the Relevant Period before its acquisition shall be included in determining EBITDA and Cash Generated for Financing for that Relevant Period.

(h)If any Permitted Disposal occurs during a Relevant Period in relation to a business or company (a “Sold Entity”), the Sold Entity’s earnings before interest, tax, depreciation and amortisation and cash generated for financing (calculated using the principles set out in this Clause 24 for the calculation of EBITDA and Cash Generated for Financing, respectively) in respect of the part of the Relevant Period before its disposal shall be excluded in determining EBITDA and Cash Generated for Financing for that Relevant Period.

(i)Net Interest Expenses and Debt Service shall be adjusted to reflect the assumption of debt relating to any Acquired Entity or repayment of debt relating to any Sold Entity.

32.GENERAL UNDERTAKINGS

The undertakings in this Clause 25 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

32.1Authorisations

(a)Each Obligor shall promptly:

(i)obtain, comply with and do all that is necessary to maintain in full force and effect; and

(ii)on request by the Agent, supply certified copies to the Agent of,

any Authorisation required under any law or regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Finance Documents and to ensure, subject to the Legal Reservations, the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document.

32.2Compliance with laws

Each Obligor shall comply in all respects with all laws to which it is subject, if failure so to comply would be reasonably expected to have a Material Adverse Effect.

32.3Negative pledge

(a)No Obligor shall (and the Company shall ensure that no other member of the Group will) create or permit to subsist any Security or Quasi Security over any of its assets.

(b)Paragraph (a) does not apply to any Security or Quasi Security which is Permitted Security.

32.4Disposals

(a)No Obligor shall (and the Company shall ensure that no other member of the Group will) enter into a single transaction or a series of transactions (whether related or not and whether voluntary or involuntary) to sell, lease, transfer or otherwise dispose of any asset.

(b)Paragraph (a) above does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal or a Permitted Transaction.

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32.5Merger

No Obligor shall (and the Company shall ensure that no other member of the Group will) enter into any amalgamation, demerger, merger or corporate reconstruction without the prior written consent of the Majority Lenders other than a Permitted Transaction.

32.6Change of business

The Company shall procure that no substantial change is made to the general nature of the business of the Group taken as a whole from that carried on at the date of this Agreement.

32.7Insurance

Each Obligor shall (and the Company shall ensure that each other member of the Group will) maintain insurances on and in relation to its business and assets with reputable underwriters or insurance companies against those risks, and to the extent, usually insured against by prudent companies located in the same or a similar location and carrying on a similar business.

32.8Environmental undertakings

Each Obligor shall (and the Company shall ensure that each other member of the Group will):

(a)comply with all Environmental Laws to which it is subject;

(b)obtain all Environmental Licences required in connection with its business; and

(c)comply with the terms of all those Environmental Licences,

in each case where failure to do has or is reasonably likely to have a Material Adverse Effect.

32.9Environmental claims

Each Obligor shall (and the Company shall ensure that each other member of the Group will) promptly notify the Agent of any claim, notice or other communication received by it in respect of any actual or alleged breach of or liability under Environmental Law which, if substantiated, has or is reasonably likely to have a Material Adverse Effect.

32.10Assets

Each Obligor shall (and the Company shall ensure that each other member of the Group will) maintain in good working order and condition (ordinary wear and tear excepted) all its assets necessary for the conduct of its business as conducted from time to time.

32.11Pari passu

Each Obligor shall ensure that its obligations under the Finance Documents rank at all times at least pari passu in right of priority and payment with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

32.12Loans or credit

(a)No Obligor shall (and the Company shall ensure that no other member of the Group will) be a creditor in respect of any Financial Indebtedness.

(b)Paragraph (a) above does not apply to a Permitted Loan or a Permitted Transaction.

32.13Guarantees

(a)No Obligor shall (and the Company shall ensure that no other member of the Group will) issue or allow to remain outstanding any guarantee in respect of any liability or obligation of any person.

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(b)Paragraph (a) above does not apply to a Permitted Guarantee.

32.14Financial Indebtedness

(a)No Obligor shall (and the Company shall ensure that no other member of the Group will) incur (or agree to incur) or allow to remain outstanding any Financial Indebtedness.

(b)Paragraph (a) above does not apply to Financial Indebtedness that is Permitted Financial Indebtedness or a Permitted Transaction.

32.15Restricted payments

The Company shall not:

(i)declare, pay or make any dividend or other payment or distribution of any kind on or in respect of any of its shares; or

(ii)reduce, return, purchase, repay, cancel or redeem any of its shares,

provided that the Company may take such action at any time when the ratio of Net Debt on the most recent Quarter Date to EBITDA for the Relevant Period ending on that Quarter Date is less than or equal to 2.50:1.00 and that immediately after any such action is taken, such ratio will be less than or equal to 2.50:1.00.

32.16Acquisitions

(a)No Obligor shall (and the Company shall ensure that no other member of the Group will):

(i)acquire any share in, or any security issued by, any person, or any interest therein (or agree to do any of the foregoing); or

(ii)acquire any business or going concern, or the whole or substantially the whole of the assets or business of any person, or any assets that constitute a division or operating unit of the business of any person (or agree to do any of the foregoing).

(b)Paragraph (a) above does not apply to any acquisition or investment which is a Permitted Acquisition or a Permitted Transaction.

32.17Arm’s length terms

(a)No Obligor shall (and the Company shall ensure that no other member of the Group will) enter into any contract or arrangement with or for the benefit of any other person which is not a member of the Group (including any disposal to that person) other than in the ordinary course of business and on arm’s length terms or better.

(b)Paragraph (a) above does not apply to:

(i)any JV Costs up to an aggregate amount of €8,000,000; and

(ii)a Permitted Transaction.

(c)The Company shall ensure that no member of the Group which is not an Obligor shall enter into any contract or arrangement regarding a sale, lease, transfer or other disposal or a loan, credit or other arrangement having a similar effect with or for the benefit of any Obligor on terms less advantageous to that Obligor than arm’s length terms.

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32.18Hedging

(a)The Company shall ensure that the hedging required by the Hedging Letter is effected within 90 days after the date of first utilisation of any Facility (and is maintained in effect) in accordance with the terms of the Hedging Letter.

(b)No Obligor shall (and the Company shall ensure that no other member of the Group will) enter (or agree to enter) into any derivative transaction.

(c)Paragraph (b) above does not apply to any derivative transaction which is a Permitted Hedging Transaction.

32.19Pensions

The Company shall ensure that all pension schemes maintained or operated by, or for the benefit of, any member of the Group and/or any of its employees:

(i)are maintained and operated in all material respects in accordance with all applicable laws and contracts and their governing provisions; and

(ii)are funded substantially in accordance with the governing provisions of the scheme with any funding shortfall advised by actuaries of recognised standing being rectified in accordance with those governing provisions.

32.20Taxes

(a)Each Obligor shall (and the Company shall ensure that each other member of the Group will) pay all material Taxes required to be paid by it within the time period allowed for payment without incurring any material penalties for non-payment.

(b)Paragraph (a) above does not apply to any Taxes:

(i)being contested by the relevant member of the Group in good faith and in accordance with the relevant procedures;

(ii)for which adequate reserves are being maintained in accordance with, and to the extent required by, GAAP; and

(iii)where payment can be lawfully withheld and will not result in the imposition of any penalty nor in any Security ranking in priority to the claims of any Finance Party under any Finance Document or to any Security created under any Security Document.

(c)No member of the Group may change its residence for Tax purposes.

32.21Joint Ventures

(a)No Obligor shall (and the Company shall ensure that no member of the Group will):

(i)invest in or acquire (or agree to invest in or acquire) any share in, or any security issued by, any Joint Venture or any interest therein; or

(ii)transfer any assets, or lend, to or give a guarantee, Security or Quasi Security for, or otherwise underwrite, the obligations of, or incur any other liability (whether actual or contingent and whether present or future) in respect of, a Joint Venture (or agree to do any of the foregoing).

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(b)Paragraph (a) above does not apply to any acquisition of or investment in, or transfer or loan to, or guarantee, Security or Quasi Security for the obligations of, or any other liability in respect of, the Ti02 Joint Venture or a Permitted Joint Venture.

32.22Guarantees and Security

(a)The Company shall:

(i)within 30 days of a member of the Group becoming a Material Subsidiary, ensure that the relevant member of the Group becomes an Additional Guarantor in accordance with Clause 28 (Changes to the Obligors).

(b)The Company need only perform its obligations under paragraph (a) above if it is not unlawful for the relevant person to become a Guarantor and that person becoming a Guarantor would not result in personal liability for that person’s directors or other management. Each Obligor must use, and must procure that the relevant person uses, all reasonable endeavours lawfully available to avoid any such unlawfulness or personal liability. This includes agreeing to a limit on the amount guaranteed. The Agent may (but shall not be obliged to) agree to such a limit if, in its opinion, to do so would avoid the relevant unlawfulness or personal liability.

(c)Each Obligor shall (and the Company shall ensure that each other member of the Group will), at its own expense, promptly take all such action as the Agent or the Security Agent may require:

(i)for the purpose of perfecting or protecting any of the Finance Parties’ rights under, and preserving the Security intended to be created or evidenced by, any of the Finance Documents; and

(ii)for the purpose of facilitating the realisation of any of that Security,

including the execution of any transfer, conveyance, assignment or assurance of any asset and the giving of any notice, order or direction and the making of any registration which the Agent or the Security Agent may reasonably require.

(d)The Company shall ensure that at all times:

(i)the aggregate of the unconsolidated net assets (excluding any intragroup loans) of the Guarantors (without double counting and excluding any interests in any Subsidiaries which are Guarantors) exceeds 80 per cent. of the consolidated net assets of the Group; and

(ii)the aggregate of the unconsolidated revenues or EBITDA of the Guarantors (without double counting and excluding any dividends or other distributions from Subsidiaries which are Guarantors) exceeds 80 per cent. of the consolidated revenues or EBITDA of the Group,

in each case calculated by reference to the then most recent annual and quarterly unaudited unconsolidated financial statements of each Guarantor and the then most recent annual and quarterly audited consolidated financial statements of the Group.

32.23Issue of shares

(a)No Obligor (other than the Company) shall (and the Company shall ensure that no other member of the Group will):

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(i)issue any share to any person; or

(ii)grant to any person any conditional or unconditional option, warrant or other right to call for the issue or allotment of, subscribe for, purchase or otherwise acquire any share of any member of the Group (including any right of pre-emption, conversion or exchange), or alter any right attaching to any share capital of any member of the Group.

(b)Paragraph (a) above does not apply to:

(i)any issue of shares by a member of the Group to its immediate holding company; and

(ii)any issue of shares by a member of the Group which is not wholly-owned, if such shares are issued pro rata to its shareholders.

32.24Condition subsequent

Within 20 Business Days of request by the Security Agent (or such longer period as the Company and the Security Agent (in its sole discretion) may agree), the Company shall enter into a Transfer of Title for Security Agreement and/or an Agreement on the Security Assignment of Intellectual Property Rights (on terms substantially the same as the terms of the existing Security Documents), if the Security Agent considers it necessary to do so to protect the legitimate interests of the Finance Parties (taking into account (i) the value of the assets subject to security under the existing Security Documents as a whole and (ii) the proportion of the costs associated with the taking and perfection of the additional security to the value of the assets proposed to be subject to the additional security requested by the Security Agent).

33.EVENTS OF DEFAULT

Each of the events or circumstances set out in Clause 26 is an Event of Default (save for Clause 26.16 (Acceleration).

33.1Non-payment

An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

(a)its failure to pay is caused by:

(i)administrative or technical error; or

(ii)a Disruption Event; and

(b)payment is made within 3 Business Days of its due date.

33.2Financial covenants

Any requirement of Clause 24 (Financial covenants) is not satisfied.

33.3Other obligations

(a)Any person (other than a Finance Party) does not comply with Clauses 25.4 (Disposals), 25.5 (Merger), 25.14 (Financial Indebtedness), 25.16 (Acquisitions), 25.21 (Joint ventures) and 25.22 (Guarantees and Security) (other than paragraph (c) thereof).

(b)An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 26.1 (Non-payment) and Clause 26.2 (Financial covenants) and paragraph (a) above), unless the failure to comply is capable of remedy and is remedied within 20 Business

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Days of the earlier of the Agent giving notice to the Company or the Company becoming aware of the failure to comply.

33.4Misrepresentation

Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made unless the facts or circumstances underlying the misrepresentation are capable of remedy and are remedied within the earlier of 20 Business Days of the Agent giving notice to the Company and the Company becoming aware of the misrepresentation.

33.5Cross default

(a)Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period.

(b)Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).

(c)Any commitment for any Financial Indebtedness of any member of the Group is cancelled or suspended by a creditor of any member of the Group as a result of an event of default (however described).

(d)Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described).

(e)No Event of Default will occur under this Clause 26.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than €1,000,000 (or its equivalent in any other currency or currencies).

33.6Insolvency

(a)A member of the Group is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

(b)The value of the assets of any member of the Group is less than its liabilities (taking into account contingent and prospective liabilities).

(c)A moratorium is declared in respect of any indebtedness of any member of the Group.

33.7Insolvency proceedings

(a)In relation to a member of the Group having its seat in Germany:

(i)a petition for insolvency proceedings in respect of its assets (Antrag auf Eröffnung eines Insolvenzverfahrens) is filed, threatened to be filed or any event occurs which constitutes a cause for the initiation of insolvency proceedings (Eröffnungsgrund) as set out in sections 17 et seq. of the German Insolvency Code (Insolvenzordnung); or

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(ii)actions are taken pursuant to section 21 of the German Insolvency Code by a competent court; or

(iii)it commences negotiations with one or more of its creditors with a view to the general readjustment or rescheduling of its indebtedness; or

(b)with respect to any member of the Group located outside Germany, any corporate action, legal proceedings or other procedure or step is taken in relation to:

(i)the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any member of the Group other than a solvent liquidation or reorganisation of any member of the Group which is not an Obligor;

(ii)a composition, compromise, assignment or arrangement with any creditor of any member of the Group;

(iii)the appointment of a liquidator (other than in respect of a solvent liquidation of a member of the Group which is not an Obligor), receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of any member of the Group or any of its assets; or

(iv)enforcement of any Security over any assets of any member of the Group, or

(c)any analogous procedure or step is taken in any jurisdiction,

provided that no Event of Default shall have occurred under this Clause 26.7 in respect of (A) an amalgamation, demerger, merger, consolidation or corporate reconstruction on a solvent basis of a member of the Group which is not an Obligor, or (B) any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement and prior to its advertisement.

(d)unless the context otherwise requires, a reference in each Finance Document in respect of an entity incorporated in Finland to:

(i)winding-up, administration or dissolution includes any declaration of bankruptcy (asetettu konkurssiin);

(ii)an insolvency includes a bankruptcy (konkurssi) and any business restructuring (yrityssaneeraus);

(iii)a liquidator in bankruptcy includes a “pesänhoitaja”;

(iv)an administrator includes a “selvittäjä” and “valvoja” in a business restructuring (yrityssaneeraus); and

(v)an attachment includes a “takavarikko” and/or any other “turvaamistoimi” granted in accordance with Finnish law.

33.8Creditors’ process

Any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction affects any asset or assets of a member of the Group and is not discharged within 5 Business Days.

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33.9Ownership of the Obligors

An Obligor (other than the Company) is not or ceases to be a Subsidiary of the Company.

33.10Unlawfulness

It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents.

33.11Repudiation

An Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document.

33.12Security and guarantees

Any Security Document or any guarantee in, or any subordination under, any Finance Document is not in full force and effect or any Security Document does not create in favour of the Security Agent for the benefit of the Finance Parties, the Security which it is expressed to create fully perfected and with the ranking and priority it is expressed to have in a manner and to an extent which is or is reasonably likely to be materially adverse to the interests of the Lenders under the Finance Documents.

33.13Material adverse change

The Majority Lenders (acting reasonably) determine that a Material Adverse Effect exists, has occurred or might reasonably be expected to occur.

33.14Litigation

(a)Any litigation, arbitration, proceeding or dispute is started or threatened or there are any circumstances likely to give rise to any litigation, arbitration, proceeding or dispute, in each case which, if adversely determined, might reasonably be expected to have a Material Adverse Effect.

(b)Paragraph (a) shall not apply to any litigation, arbitration or administrative proceedings which are vexatious or frivolous.

33.15Cessation of business

Any Obligor suspends or ceases (or threatens to suspend or cease) to carry on all or a material part of its business except as part of a Permitted Merger, Permitted Transaction or a Permitted Disposal.

33.16Acceleration

(a)On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders, by notice to the Company:

(i)cancel the Total Commitments whereupon they shall immediately be cancelled;

(ii)declare that all or part of the Utilisations, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable;

(iii)declare that all or part of the Utilisations be payable on demand, whereupon they shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders; and/or

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(iv)declare that full cash cover in respect of each Letter of Credit or Bank Guarantee is immediately due and payable whereupon it shall become immediately due and payable.

(b)Promptly after being notified by the Agent of the Acceleration Date, each Ancillary Lender shall by notice to the Company:

(i)cancel its Ancillary Commitment whereupon it shall immediately be cancelled;

(ii)declare that all or the corresponding part of the utilisations under any Ancillary Facility provided by that Ancillary Lender, together with accrued interest, full cash cover in respect of all or the corresponding part of the contingent liabilities of that Ancillary Lender under that Ancillary Facility, and all or the corresponding part of all other amounts accrued or outstanding in respect of that Ancillary Facility be immediately due and payable, whereupon they shall become immediately due and payable; and/or

(iii)declare that all or the corresponding part of the utilisations under any Ancillary Facility provided by that Ancillary Lender, together with accrued interest, full cash cover in respect of all or the corresponding part of the contingent liabilities of that Ancillary Lender under that Ancillary Facility, and all or the corresponding part of all other amounts accrued or outstanding in respect of that Ancillary Facility be payable upon demand, whereupon they shall immediately become payable on demand by that Ancillary Lender (on the instructions of the Agent, if so directed by the Majority Lenders).

(c)No Ancillary Lender may cancel the whole or any part of its Ancillary Commitment, declare that all or part of the utilisations under an Ancillary Facility provided by that Ancillary Lender be immediately due and payable or require the payment of cash cover in respect of all or any part of any contingent liabilities of that Ancillary Lender under an Ancillary Facility unless the Agent has delivered a notice to the Company pursuant to sub-paragraph (ii) of paragraph (a) of this Clause 26.16.

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SECTION 9

CHANGES TO PARTIES

34.CHANGES TO THE LENDERS

34.1Assignments and transfers by the Lenders

Subject to this Clause 27, a Lender (the “Existing Lender”) may:

(a)assign any of its rights; or

(b)transfer by novation any of its rights and obligations,

to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”).

34.2Conditions of assignment or transfer

(a)The consent of the Company is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is (i) prior to the Syndication Date, provided the New Lender is on the list of potential syndicate members agreed by the Company and the Agent, (ii) to another Existing Lender or an Affiliate of a Existing Lender or (iii) made while an Event of Default is continuing.

(b)The consent of the Company to an assignment or transfer must not be unreasonably withheld or delayed.  The Company will be deemed to have given its consent five Business Days after the Existing Lender has requested it unless consent is expressly refused by the Company within that time.

(c)The consent of the Company to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Cost.

(d)The consent of the Issuing Bank to an assignment or transfer is required in accordance with paragraph (a) of Clause 7.2 (Assignments and transfers).

(e)An assignment will only be effective on:

(i)receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender; and

(ii)performance by the Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

(f)A transfer will only be effective if the procedure set out in Clause 27.5 (Procedure for transfer) is complied with.

(g)Any assignment or transfer by an Existing Lender to a New Lender shall only be effective if it transfers or assigns the Existing Lender’s share of each Facility pro rata.

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(h)If:

(i)a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

(ii)as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 16 (Tax gross-up and indemnities) or Clause 17 (Increased Costs),

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

34.3Assignment or transfer fee

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of €2,000.

34.4Limitation of responsibility of Existing Lenders

(a)Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(i)the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;

(ii)the financial condition of any Obligor;

(iii)the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or

(iv)the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

and any representations or warranties implied by law are excluded.

(b)Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i)has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and

(ii)will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

(c)Nothing in any Finance Document obliges an Existing Lender to:

(i)accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 27; or

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(ii)support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.

34.5Procedure for transfer

(a)Subject to the conditions set out in Clause 27.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender.  The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

(b)The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

(c)On the Transfer Date:

(i)to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);

(ii)each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

(iii)the Agent, the Arranger, the Security Agent, the New Lender, the other Lenders, the Issuing Bank and any relevant Ancillary Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arranger, the Security Agent, the Issuing Bank, any relevant Ancillary Lender and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and

(iv)the New Lender shall become a Party as a “Lender”.

34.6Copy of Transfer Certificate to Company

The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Company a copy of that Transfer Certificate.

34.7Disclosure of information

Any Lender may disclose to any of its Affiliates and any other person:

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(a)to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement;

(b)with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor;

(c)to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation; or

(d)for whose benefit that Lender charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 27.8 (Security over Lenders’ rights),

any information about any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs (a), (b) and (d) (in respect of 26.8 (b) (Creditors’ process)) above, the person to whom the information is to be given has entered into a Confidentiality Undertaking.  This Clause supersedes any previous agreement relating to the confidentiality of this information.

34.8Security over Lenders’ rights

In addition to the other rights provided to Lenders under this Clause 27, each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including:

(a)any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and

(b)in the case of any Lender which is a fund, any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as Security for those obligations or securities,

except that no such charge, assignment or Security shall:

(i)release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or

(ii)require any payments to be made by an Obligor or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

35.CHANGES TO THE OBLIGORS

35.1Assignments and transfer by Obligors

No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

35.2Additional Borrowers

(a)Subject to compliance with the provisions of paragraphs (c) and (d) of Clause 23.6 (“Know your customer” checks), the Company may request that any of its wholly owned Subsidiaries becomes an Additional Borrower.  That Subsidiary shall become an Additional Borrower if:

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(i)all the Lenders participating in the relevant Facility approve the addition of that Subsidiary;

(ii)the Company delivers to the Agent a duly completed and executed Accession Letter;

(iii)the Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and

(iv)the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent) in relation to that Additional Borrower, each in form and substance satisfactory to the Agent.

(b)The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent).

35.3Resignation of a Borrower

(a)In this Clause 28.3 (Resignation of a Borrower), Clause 28.5 (Resignation of a Guarantor) and Clause 28.7 (Resignation and release of Security on disposal), “Third Party Disposal” means the disposal of an Obligor to a person which is not a member of the Group where that disposal is permitted under Clause 25.4 (Disposals) or made with the approval of the Majority Lenders (and the Parent has confirmed this is the case).

(b)If a Borrower is the subject of a Third Party Disposal, the Company may request that such Borrower (other than the Company) ceases to be a Borrower by delivering to the Agent a Resignation Letter.

(c)The Agent shall accept a Resignation Letter and notify the Company and the other Finance Parties of its acceptance if:

(i)the Company has confirmed that no Default is continuing or would result from the acceptance of the Resignation Letter;

(ii)the Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents;

(iii)where the Borrower is also a Guarantor (unless its resignation has been accepted in accordance with Clause 28.5 (Resignation of a Guarantor)), its obligations in its capacity as Guarantor continue to be legal, valid, binding and enforceable and in full force and effect (subject to the Legal Reservations) and the amount guaranteed by it as a Guarantor is not decreased (and the Company has confirmed this is the case); and

(iv)the Company has confirmed that it shall ensure that any relevant Net Sale Proceeds will be applied in accordance with Clause 11.5 (Mandatory prepayment — Net Sale Proceeds).

(d)Upon notification by the Agent to the Company of its acceptance of the resignation of a Borrower, that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents as a Borrower except that the resignation shall not take effect (and the Borrower will continue to have rights and obligations under the Finance Documents) until the date on which the Third Party Disposal takes effect.

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(e)The Agent may, at the cost and expense of the Company, require a legal opinion from counsel to the Agent confirming the matters set out in paragraph (c)(iii) above and the Agent shall be under no obligation to accept a Resignation Letter until it has obtained such opinion in form and substance satisfactory to it.

35.4Additional Guarantors

(a)Subject to compliance with the provisions of paragraphs (c) and (d) of Clause 23.6 (“Know your customer” checks), the Company may request that any of its wholly owned Subsidiaries become an Additional Guarantor.  That Subsidiary shall become an Additional Guarantor if:

(i)(except in the case of an Additional Guarantor incorporated in a jurisdiction of incorporation of an existing Obligor) the Agent approves the addition of that Subsidiary;

(ii)the Company delivers to the Agent a duly completed and executed Accession Letter; and

(iii)the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Agent.

(b)The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent).

35.5Resignation of a Guarantor

(a)The Company may request that a Guarantor (other than the Company) ceases to be a Guarantor by delivering to the Agent a Resignation Letter if that Guarantor is being disposed of by way of a Third Party Disposal (as defined in Clause 28.3 (Resignation of a Borrower)) and the Company has confirmed this is the case.

(b)The Agent shall accept a Resignation Letter and notify the Company and the Lenders of its acceptance if:

(i)the Company has confirmed that no Default is continuing or would result from the acceptance of the Resignation Letter;

(ii)no payment is due from the Guarantor under Clause 21.1 (Guarantee and indemnity);

(iii)where the Guarantor is also a Borrower, it is under no actual or contingent obligations as a Borrower and has resigned and ceased to be a Borrower under Clause 28.3 (Resignation of a Borrower); and

(iv)the Company has confirmed that it shall ensure that the Net Sale Proceeds will be applied, in accordance with Clause 11.5 (Mandatory Prepayment — Net Sale Proceeds).

(c)The resignation of that Guarantor shall not be effective until the date of the relevant Third Party Disposal at which time that company shall cease to be a Guarantor and shall have no further rights or obligations under the Finance Documents as a Guarantor.

35.6Repetition of Representations

Delivery of an Accession Letter constitutes confirmation by the relevant Subsidiary that the Repeating Representations and each of the representations set out in Clauses 22.5 (Validity and admissibility in evidence), 22.7 (Deduction of Tax) and 22.8 (No filing or stamp taxes) are true

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and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.

35.7Resignation and release of security on disposal

(a)If a Borrower or Guarantor is or is proposed to be the subject of a Third Party Disposal then:

(i)where that Borrower or Guarantor created Security pursuant to any Finance Document over any of its assets or business in favour of the Security Agent, or Security pursuant to any Finance Document in favour of the Security Agent was created over the shares (or equivalent) of that Borrower or Guarantor, the Security Agent may at the cost and request of the Company, release those assets, business or shares (or equivalent) and issue certificates of non-crystallisation;

(ii)the resignation of that Borrower or Guarantor and related release of Security pursuant to any Finance Document referred to in paragraph (i) above shall not become effective until the date of that disposal; and

(iii)if the disposal of that Borrower or Guarantor is not made, the Resignation Letter of that Borrower or Guarantor and the related release of Security referred to in paragraph (i) above shall have no effect and the obligations of the Borrower or Guarantor and the Security pursuant to any Finance Document created or intended to be created by or over that Borrower or Guarantor shall continue in full force and effect.

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SECTION 10

THE FINANCE PARTIES

36.ROLE OF THE AGENT, THE SECURITY AGENT AND THE ARRANGER

36.1Appointment of the Agent and the Security Agent

(a)Each other Finance Party appoints the Agent to act as its agent under and in connection with the Finance Documents.

(b)Each other Finance Party appoints the Security Agent to act as security trustee under and in connection with the Finance Documents.

(c)Each other Finance Party authorises each of the Agent and the Security Agent to exercise the rights, powers, authorities and discretions specifically given to it under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

(d)For the avoidance of doubt, each other Finance Party authorises the Agent to execute and deliver the Subordination Agreement.

36.2Duties of the Agent and the Security Agent

(a)The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.

(b)Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

(c)If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.

(d)If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or the Arranger) under this Agreement it shall promptly notify the other Finance Parties.

(e)The Agent shall promptly send to the Security Agent such certification as the Security Agent may require pursuant to paragraph 7 (Basis of distribution) of Schedule 7 (Security Agency provisions).

(f)The duties of the Agent and the Security Agent under the Finance Documents are solely mechanical and administrative in nature.

36.3Role of the Arranger

Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.

36.4Role of the Security Agent

The Security Agent shall not be an agent of (except as expressly provided in any Finance Document) any Finance Party under or in connection with any Finance Document.

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36.5No fiduciary duties

(a)Nothing in this Agreement constitutes the Agent, the Security Agent (except as expressly provided in any Finance Document) or the Arranger as a trustee or fiduciary of any other person.

(b)Neither the Agent, the Security Agent (except as expressly provided in any Finance Document) nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

36.6Business with the Group

The Agent, the Security Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

36.7Rights and discretions of the Agent and the Security Agent

(a)The Agent and the Security Agent may rely on:

(i)any representation, notice or document believed by it to be genuine, correct and appropriately authorised ; and

(ii)any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(b)The Agent and the Security Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders or, as the case may be, as security trustee for the Finance Parties) that:

(i)no Default has occurred (unless it has actual knowledge of a Default arising under Clause 26.1 (Non-payment));

(ii)any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

(iii)any notice or request made by the Company (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.

(c)Each of the Agent and the Security Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(d)Each of the Agent and the Security Agent may act in relation to the Finance Documents through its personnel and agents.

(e)The Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

(f)Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent, the Security Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

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36.8Majority Lenders’ instructions

(a)Unless a contrary indication appears in a Finance Document, the Agent and the Security Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent or Security Agent (as the case may be) in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent or Security Agent, as the case may be) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.

(b)Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.

(c)Each of the Agent and the Security Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

(d)In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), each of the Agent and the Security Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

(e)Neither the Agent nor the Security Agent is authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document.

36.9Responsibility for documentation

Neither the Agent, the Security Agent nor the Arranger:

(a)is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Security Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the Information Memorandum; or

(b)is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document.

36.10Exclusion of liability

(a)Without limiting paragraph (b) below (and without prejudice to the provisions of paragraph (e) of Clause 33.11 (Disruption to Payment Systems etc)), neither the Agent nor the Security Agent will be liable including without limitation for negligence or any other category of liability whatsoever for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

(b)No Party (other than the Agent or the Security Agent) may take any proceedings against any officer, employee or agent of the Agent or the Security Agent in respect of any claim it might have against the Agent or the Security Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent or the Security Agent may rely on this Clause.

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(c)Neither the Agent nor the Security Agent will be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by it if it has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by it for that purpose.

(d)Nothing in this Agreement shall oblige the Agent or the Arranger to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arranger.

36.11Lenders’ indemnity to the Agent and the Security Agent

Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent and the Security Agent, within three Business Days of demand, against any cost, loss or liability including without limitation for negligence or any other category of liability whatsoever incurred by the Agent or the Security Agent (otherwise than by reason of its gross negligence or wilful misconduct) (or in the case of any cost, loss or liability pursuant to Clause 33.11 (Disruption to Payment Systems etc.) notwithstanding the Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent or, as the case may be, Security Agent under the Finance Documents (unless it has been reimbursed by an Obligor pursuant to a Finance Document).

36.12Resignation of the Agent or the Security Agent

(a)The Agent or the Security Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom, Germany or Finland as successor by giving notice to the other Finance Parties and the Company.

(b)Alternatively the Agent or the Security Agent may resign by giving notice to the other Finance Parties and the Company, in which case the Majority Lenders (after consultation with the Company) may appoint a successor Agent or, as the case may be, Security Agent in each case acting through an office in the United Kingdom, Germany or Finland.

(c)If the Majority Lenders have not appointed a successor Agent or, as the case may be, Security Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the Agent or, as the case may be, Security Agent (after consultation with the Company) may appoint a successor Agent or Security Agent.

(d)The retiring Agent or Security Agent shall, at its own cost, make available to its successor such documents and records and provide such assistance as its successor may reasonably request for the purposes of performing its functions as Agent or Security Agent under the Finance Documents.

(e)The resignation notice of the Agent or Security Agent shall only take effect upon the appointment of a successor.

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(f)Upon the appointment of a successor, the retiring Agent or Security Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 29. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

(g)After consultation with the Company, the Majority Lenders may, by notice to the Agent or, as the case may be, the Security Agent, require it to resign in accordance with paragraph (b) above.  In this event, the Agent or, as the case may be, the Security Agent shall resign in accordance with paragraph (b) above.

36.13Confidentiality

(a)The Agent (in acting as agent for the Finance Parties) and the Security Agent (in acting as security trustee for the Finance Parties) shall be regarded as acting through its respective agency or security trustee division which in each case shall be treated as a separate entity from any other of its divisions or departments.

(b)If information is received by another division or department of the Agent or, as the case may be, the Security Agent, it may be treated as confidential to that division or department and the Agent or, as the case may be, the Security Agent shall not be deemed to have notice of it.

36.14Relationship with the Lenders

(a)The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

(b)Each Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4 (Mandatory Cost formulae).

36.15Credit appraisal by the Lenders

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent, the Security Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

(a)the financial condition, status and nature of each member of the Group;

(b)the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, Security, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;

(c)whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, Security, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and

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(d)the adequacy, accuracy and/or completeness of the Information Memorandum and any other information provided by the Agent, the Security Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, Security, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

36.16Reference Banks

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in consultation with the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

36.17Management time of the Agent and the Security Agent

If an Event of Default has occurred and is continuing, any amount payable to the Agent or the Security Agent under Clause 18.3 (Indemnity to the Agent and the Security Agent), Clause 20 (Costs and expenses) and Clause 29.11 (Lenders’ indemnity to the Agent and the Security Agent) shall include the cost of utilising its management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as it may notify to the Company and the Lenders, and is in addition to any fee paid or payable to it under Clause 15 (Fees).

36.18Security Agency provisions

The provisions of Schedule 7 (Security Agency provisions) shall bind each Party.

36.19Deduction from amounts payable by the Agent or the Security Agent

If any Party owes an amount to the Agent or the Security Agent under the Finance Documents the Agent or the Security Agent (as the case may be) may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent or the Security Agent (as the case may be) would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed.  For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.

37.PARALLEL DEBT

(a)Each Obligor hereby irrevocably and unconditionally undertakes to pay to the Security Agent amounts equal to any amounts owing from time to time by that Obligor to any Finance Party under any Finance Document as and when those amounts are due.

(b)Each Obligor and the Security Agent acknowledge that the obligations of each Obligor under paragraph (a) are several and are separate and independent from, and shall not in any way affect, the corresponding obligations of that Obligor to any Finance Party under any Finance Document (its “Corresponding Debt”) provided that:

(i)the amounts for which each Obligor is liable under paragraph (a) (its “Parallel Debt”) shall be decreased to the extent that its Corresponding Debt has been irrevocably paid or (in the case of guarantee obligations) discharged; and

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(ii)the Corresponding Debt of each Obligor shall be decreased to the extent that its Parallel Debt has been irrevocably paid or (in the case of guarantee obligations) discharged; and

(iii)the Parallel Debt of an Obligor shall not exceed its Corresponding Debt.

(c)For the purpose of this Clause 30, the Security Agent acts in its own name and not as a trustee, and its claims in respect of the Parallel Debt shall not be held on trust. The Security granted under the Secured Documents to the Security Agent to secure the Parallel Debt is granted to the Security Agent in its capacity as creditor of the Parallel Debt and shall not be held on trust.

(d)All monies received by the Security Agent pursuant to this Clause, and all amounts received by the Security Agent from or by the enforcement of any Security granted to secure the Parallel Debt, shall be applied in accordance with paragraph 15 (Order of application) of Schedule 7 (Security Agency provisions) of this Agreement.

(e)Without limiting or affecting the Security Agent’s rights against the Obligors (whether under this Clause or under any other provision of the Finance Document), each Obligor acknowledges that:

(i)nothing in this Clause shall impose any obligation on the Security Agent to advance any sum to any Obligor or otherwise under any Finance Document, except in its capacity as Senior Lender; and

(ii)for the purpose of any vote taken under any Finance Document, the Security Agent shall not be regarded as having any participation or commitment other than those which it has in its capacity as a Lender.

38.CONDUCT OF BUSINESS BY THE FINANCE PARTIES

No provision of this Agreement will:

(a)interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

(b)oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

(c)oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

39.SHARING AMONG THE FINANCE PARTIES

39.1Payments to Finance Parties

If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from an Obligor other than in accordance with Clause 33 (Payment mechanics) and applies that amount to a payment due under the Finance Documents then:

(a)the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Agent;

(b)the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 33 (Payment

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mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

(c)the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 33.5 (Partial payments).

39.2Redistribution of payments

The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause 33.5 (Partial payments).

39.3Recovering Finance Party’s rights

(a)On a distribution by the Agent under Clause 32.2 (Redistribution of payments), the Recovering Finance Party will be subrogated to the rights of the Finance Parties which have shared in the redistribution.

(b)If and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph (a) above, the relevant Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.

39.4Reversal of redistribution

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

(a)each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 32.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and

(b)that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed.

39.5Exceptions

(a)This Clause 32 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.

(b)A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(i)it notified that other Finance Party of the legal or arbitration proceedings; and

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(ii)that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

39.6Loss sharing

(a)In this Clause:

“Loss Sharing Date” means the date (if any) on which the Agent exercises any of its rights under paragraph (a)(ii) and/or (a)(iv) of Clause 26.16 (Acceleration) or the date (if any) on which the Facilities are cancelled under Clause 11.3 (Change of control).

(b)If, at any time after the Loss Sharing Date, for any reason:

(i)any outstandings under Facility B or any Ancillary Facility will not be repaid and/or discharged; and

(ii)any resulting loss is not shared between the Facility B Lenders and the Ancillary Lenders pro rata to the amount which their respective exposures, whether drawn or undrawn, bore to their total exposure, whether drawn or undrawn, as at the Loss Sharing Date,

the Facility B Lenders and the Ancillary Lenders shall make such payments between themselves as the Agent shall require to ensure that after taking into account such payments, any such loss is shared between the Facility B Lenders and the Ancillary Lenders pro rata to the amount which their respective exposures, whether drawn or undrawn, bore to their total exposure, whether drawn or undrawn, as at the Loss Sharing Date.

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SECTION 11

ADMINISTRATION

40.PAYMENT MECHANICS

40.1Payments to the Agent

(a)On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor (subject to Clause 33.10 (Payments to the Security Agent) )or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

(b)Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre in a Participating Member State or London) with such bank as the Agent specifies.

40.2Distributions by the Agent

Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 33.3 (Distributions to an Obligor) and Clause 33.4 (Clawback) and Clause 33.10 (Payments to the Security Agent), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London).

40.3Distributions to an Obligor

The Agent and the Security Agent may (with the consent of the Obligor or in accordance with Clause 34 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

40.4Clawback

(a)Where a sum is to be paid to the Agent or the Security Agent under the Finance Documents for another Party, the Agent or, as the case may be, the Security Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

(b)If the Agent or the Security Agent pays an amount to another Party and it proves to be the case that it had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid shall on demand refund the same to the Agent or, as the case may be, the Security Agent together with interest on that amount from the date of payment to the date of receipt by the Agent or, as the case may be, the Security Agent, calculated by it to reflect its cost of funds.

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40.5Partial payments

(a)If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:

(i)first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent, the Security Agent, the Issuing Bank or the Arranger under the Finance Documents;

(ii)secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement or any Ancillary Facility Document;

(iii)thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement or any Ancillary Facility Document and any amount due but unpaid under Clauses 7.4 (Claims under a Letter of Credit or Bank Guarantee) and 7.5 (Indemnities); and

(iv)fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents or any Ancillary Finance Document,

provided that the Agent shall not make any such payments to any Ancillary Lender prior to the Agent delivering a notice to the Company pursuant to paragraphs (a) (ii) or (a) (iv) of Clause 26.16 (Acceleration) or any date on which the Facilities are cancelled pursuant to Clause 11.3 (Change of control).

(b)The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

(c)Paragraphs (a) and (b) above will override any appropriation made by an Obligor.

40.6No set-off by Obligors

All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

40.7Business Days

(a)Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

(b)During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

40.8Currency of account

(a)Subject to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from an Obligor under any Finance Document.

(b)A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated on its due date.

(c)Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

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(d)Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

(e)Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.

40.9Change of currency

(a)Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(i)any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Company); and

(ii)any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).

(b)If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.

40.10Payments to the Security Agent

Notwithstanding any other provision of any Finance Document, at any time after any Security created by or pursuant to any Security Document becomes enforceable, the Security Agent may require:

(a)any Obligor to pay all sums due under any Finance Document; or

(b)the Agent to pay all sums received or recovered from an Obligor under any Finance Document,

in each case as the Security Agent may direct for application in accordance with the terms of the Security Documents.

40.11Disruption to Payment Systems etc.

If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is notified by the Company that a Disruption Event has occurred:

(a)the Agent may, and shall if requested to do so by the Company, consult with the Company with a view to agreeing with the Company such changes to the operation or administration of the Facilities as the Agent may deem necessary in the circumstances;

(b)the Agent shall not be obliged to consult with the Company in relation to any changes mentioned in paragraph (a) if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

(c)the Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

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(d)any such changes agreed upon by the Agent and the Company shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 39 (Amendments and Waivers);

(e)the Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 33.11; and

(f)the Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.

41.SET-OFF

A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation.  If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

42.NOTICES

42.1Communications in writing

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

42.2Addresses

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

(a)in the case of the Company, that identified with its name in the signature pages below;

(b)in the case of each Lender, each Ancillary Lender or any other Original Obligor, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and

(c)in the case of the Agent, the Issuing Bank and the Security Agent, that identified with its name in the signature pages below,

or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.

42.3Delivery

(a)Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

(i)if by way of fax, when received in legible form; or

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(ii)if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

and, if a particular department or officer is specified as part of its address details provided under Clause 35.2 (Addresses), if addressed to that department or officer.

(b)Any communication or document to be made or delivered to the Agent or the Security Agent will be effective only when actually received by the Agent and then only if it is expressly marked for the attention of the department or officer identified with its signature below (or any substitute department or officer as it shall specify for this purpose).

(c)All notices from or to an Obligor shall be sent through the Agent.

(d)Any communication or document made or delivered to the Company in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.

42.4Notification of address and fax number

Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 35.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.

42.5Electronic communication

(a)Any communication to be made between the Agent and a Lender or the Company under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender or the Company:

(i)agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

(ii)notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(iii)notify each other of any change to their address or any other such information supplied by them.

(b)Any electronic communication made between the Agent and a Lender or the Company will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender or the Company to the Agent only if it is addressed in such a manner as the Agent shall specify for this purpose.

42.6English language

(a)Any notice given under or in connection with any Finance Document must be in English.

(b)All other documents provided under or in connection with any Finance Document must be:

(i)in English; or

(ii)if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

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43.CALCULATIONS AND CERTIFICATES

43.1Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

43.2Certificates and Determinations

Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

43.3Day count convention

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

44.PARTIAL INVALIDITY

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

45.REMEDIES AND WAIVERS

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy.  The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

46.AMENDMENTS AND WAIVERS

46.1Required consents

(a)Subject to Clause 39.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.

(b)The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause.

46.2Exceptions

(a)An amendment or waiver that has the effect of changing or which relates to:

(i)the definition of “Majority Lenders” in Clause 1.1 (Definitions);

(ii)an extension to the date of payment of any amount under the Finance Documents (other than an amount owing under Clause 11.5 (Mandatory prepayment — Net Sale Proceeds) or Clause 11.7 (Mandatory prepayment — Insurance Proceeds);

119

(iii)a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;

(iv)an increase in or an extension of any Commitment;

(v)a change to the Borrowers or Guarantors other than in accordance with Clause 28 (Changes to the Obligors);

(vi)any provision which expressly requires the consent of all the Lenders;

(vii)Clause 2.2 (Finance Parties’ rights and obligations), Clause 11.3 (Change of Control), Clause 27 (Changes to the Lenders), Clause 32 (Sharing among the Finance Parties) or this Clause 39; or

(viii)the release of any Security created pursuant to any Security Document or of any asset charged thereunder (except as provided in any Security Document or made pursuant to a Permitted Disposal),

shall not be made without the prior consent of all the Lenders.

(b)An amendment or waiver which relates to the rights or obligations of the Agent, the Security Agent, the Issuing Bank, any Ancillary Lender or the Arranger may not be effected without the consent of the Agent, the Security Agent, the Issuing Bank, any Ancillary Lender or, as the case may be the Arranger.

47.COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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SECTION 12

GOVERNING LAW AND ENFORCEMENT

48.GOVERNING LAW

This Agreement is governed by English law.

49.ENFORCEMENT

49.1Jurisdiction

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

(b)The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(c)This Clause 42.1 is for the benefit of the Finance Parties only.  As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction.  To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

49.2Service of process

Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales):

(a)irrevocably appoints Clifford Chance Secretaries Limited at 10, Upper Bank Street, London E14 5JJ as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and

(b)agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

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SCHEDULE 4

THE ORIGINAL PARTIES

PART I

THE ORIGINAL OBLIGORS

Name of Original Borrower	Registration number (or equivalent, if any)
SACHTLEBEN CHEMIE GMBH	HR B 1 96 69
FINNISH HOLDCO	2196924-0
KEMIRA PIGMENTS OY	0948159-2
Name of Original Guarantor	Registration number (or equivalent, if any)
SACHTLEBEN CHEMIE GMBH	HR B 1 96 69
FINNISH HOLDCO	2196924-0
KEMIRA PIGMENTS OY	0948159-2

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PART II

THE ORIGINAL LENDERS

Name of Original Lender	Facility A Commitment	Facility B Commitment
	(€)	(€)
Skandinaviska Enskilda Banken AB (publ)	150,000,000	15,000,000
Nordea Bank Finland Plc	150,000,000	15,000,000

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SIGNATURE PAGES

The Company

Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs - GmbH

Address:Dr. — Rudolf — Sachtleben — Str. 4
47198, Duisburg
Germany

Fax: +49 (2066) 22-3201

Email: w.d.griebler@sachtleben.de

Attention: Wolf-Dieter Griebler

By: DR MARCUS BRUNE

The Original Borrowers

Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs - GmbH

By: DR MARCUS BRUNE

Sachtleben Chemie GmbH

By: DR MARTIN BURGHOLTE PROF WOLF-DIETER GRIEBLER

White Pigments Holding Oy

By: UDO PINGER

Kemira Pigments Oy

By: HANNU VIROLAINEN

The Original Guarantors

Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs - GmbH

By: DR MARCUS BRUNE

124

Sachtleben Chemie GmbH

By: DR MARTIN BURGHOLTE PROF WOLF-DIETER GRIEBLER

White Pigments Holding Oy

By: UDO PINGER

Kemira Pigments Oy

By: HANNU VIROLAINEN

The Arranger

Merchant Banking, Skandinaviska Enskilda Banken AB (publ)

By: MALCOLM CROW ÅSA SAMUELSSON

Nordea Bank Finland plc

By: ESA RAITANEN JUHA-MATTI PELTOMAA

The Original Lenders

Skandinaviska Enskilda Banken AB (publ)

By: MALCOLM CROW ÅSA SAMUELSSON

Nordea Bank Finland Plc

By: ESA RAITANEN JUHA-MATTI PELTOMAA

125

The Agent

Merchant Banking, Skandinaviska Enskilda Banken AB (publ)

Address:	Skandinaviska Enskilda Banken AB (publ)
	Rissneleden 110
	SE-106 40 Stockholm
Attention:	SCO
E-mail:	sco@seb.se
Fax number:	+ 46 8 611 03 84
With a copy to:
Address:	Loan Agency
	Capital Markets, SEB
	Scandinavian House
	2 Cannon Street
	London EC4M 6XX
E-mail:	agency@seb.co.uk
Fax number:	+ 44 207 329 2304
By: MALCOLM CROW		ÅSA SAMUELSSON
The Security Agent
Merchant Banking, Skandinaviska Enskilda Banken AB (publ)
Address:	Loan Agency
	Capital Markets, SEB
	Scandinavian House
	2 Cannon Street
	London EC4M 6XX
E-mail:	agency@seb.co.uk
Fax number:	+ 44 207 329 2304
Attention:	Loan Agency

By: MALCOLM CROW ÅSA SAMUELSSON

The Issuing Bank

Merchant Banking, Skandinaviska Enskilda Banken AB (publ)

By: MALCOLM CROW ÅSA SAMUELSSON

126

SIGNATURES

The Company

Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs - GmbH

Address:	Dr. — Rudolf — Sachtleben — Str. 4
	47198, Duisburg Germany

Fax: +49 (2066) 22-3201

Email: w.d.griebler@sachtleben.de

Attention: Wolf-Dieter Griebler

By:	/s/ MARCUS BRUNE	/s/ UDO PINGER
	Marcus Brune	Udo Pinger

The Original Borrowers

Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs - GmbH

By:	/s/ MARCUS BRUNE	/s/ UDO PINGER
	Marcus Brune	Udo Pinger

Sachtleben Chemie GmbH

By:	/s/ WOLF-DIETER GRIEBLER	/s/ ANDREAS GRUENEWALD
	Wolf-Dieter Griebler	Andreas Gruenewald

White Pigments Holding Oy

By:	/s/ CLEMONS ROLLMANN
	Clemons Rollmann

Kemira Pigments Oy

By:	/s/ KLAUS KORHOPEN	/s/ TERHI ILVONEN
	Klaus Korhopen	Terhi Ilvonen

The Original Guarantors

Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs - GmbH

By:	/s/ MARCUS BRUNE	/s/ UDO PINGER
	Marcus Brune	Udo Pinger

127

Sachtleben Chemie GmbH

By:	/s/ WOLF-DIETER GRIEBLER	/s/ ANDREAS GRUENEWALD
	Wolf-Dieter Griebler	Andreas Gruenewald

White Pigments Holding Oy

By:	/s/ CLEMONS ROLLMANN
	Clemons Rollmann

Kemira Pigments Oy

By:	/s/ KLAUS KORHOPEN	/s/ TERHI ILVONEN
	Klaus Korhopen	Terhi Ilvonen

The Agent

Merchant Banking, Skandinaviska Enskilda Banken AB (publ)

Address:	Skandinaviska Enskilda Banken AB (publ)
	Rissneleden 110
	SE-106 40 Stockholm
Attention:	SCO
E-mail:	sco@seb.se
Fax number:	+ 46 8 611 03 84
With a copy to:
Address:	Loan Agency
	Capital Markets, SEB
	Scandinavian House
	2 Cannon Street
	London EC4M 6XX
E-mail:	agency@seb.co.uk
Fax number:	+ 44 207 329 2304

By:	/s/ MICHAEL I. DICKS	/s/ ÅSA SAMUELSSON
	Michael I. Dicks	Åsa Samuelsson

128

EX-12

Exhibit 12

ROCKWOOD SPECIALTIES GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Year Ended December 31,
($ in millions, except ratios)	2008			2007		2006		2005		2004
Determination of Earnings (Losses):
(Loss) income from continuing operations before taxes and minority interest	$	(742.1	)	$	151.7	$	121.4	$	198.4	$	(161.2	)
Add:
Interest expense (a)	231.1			219.3		199.9		196.4		130.6
Rent expense (b)	9.4			8.2		8.4		7.6		5.7
Total (losses) earnings as defined	$	(501.6	)	$	379.2	$	329.7	$	402.4	$	(24.9	)
Fixed charges:
Interest expense (a)	$	231.1		$	219.3	$	199.9	$	196.4	$	130.6
Rent expense (b)	9.4			8.2		8.4		7.6		5.7
Capitalized interest	—			—		0.3		0.3		—
Total fixed charges	$	240.5		$	227.5	$	208.6	$	204.3	$	136.3
Ratio of earnings to fixed charges (c)	—			1.7		1.6		2.0		—

(a)Interest expense includes amortization of debt expenses.

(b)Rents included in the computation consist of one-third of rental expense, which we believe to be a conservative estimate of an interest factor in our leases, which are not material.

(c)Earnings were insufficient to cover fixed charges by $742.1 million and $161.2 million for the years ended December 31, 2008 and 2004, respectively. Earnings for the year ended December 31, 2008 included a non-cash pre-tax goodwill impairment charge of $809.5 million.

1

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Seifi Ghasemi, certify that:

1.   I have reviewed this Annual Report on Form 10-K of Rockwood Specialties Group, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 11, 2009

/s/ SEIFI GHASEMI

Seifi Ghasemi

Chairman and Chief Executive Officer

1

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Robert J. Zatta, certify that:

1.   I have reviewed this Annual Report on Form 10-K of Rockwood Specialties Group, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 11, 2009

/s/ ROBERT J. ZATTA

Robert J. Zatta

Senior Vice President and Chief Financial Officer

1

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Rockwood Specialties Group, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Seifi Ghasemi, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 11, 2009

/s/ SEIFI GHASEMI

Seifi Ghasemi

Chairman and Chief Executive Officer

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 or any other provision of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

1

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Rockwood Specialties Group, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Zatta, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 11, 2009

/s/ ROBERT J. ZATTA

Robert J. Zatta

Senior Vice President and Chief Financial Officer

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 or any other provision of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

1