TABLE OF CONTENTS

 

1.	Preamble	12
2.	Corporate Structure and statutes	13
3.	Special Resolutions	14
4.	Supervisory Board	19
5.	Advisory Board	20
6.	Advisory Board Meetings and Resolutions	21
7.	Managing Directors	23
8.	Management of the Joint Venture	24
9.	Affiliate Transactions	24
10.	Annual Accounts and Dividend Policy	24
11.	Information Rights	25
12.	Proportionate Shareholdings	27
13.	Disposal of Shares	28
14.	Trade Sale	28
15.	Initial Public Offering	32
16.	Transfers to Affiliates	39
17.	Pre-Emption Right	40
18.	Drag-Along Right	41
19.	Tag-Along Right	42
20.	Duration and Termination of the Company	43

 

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21.	Deadlock Provision	43
22.	Non-Compete	44
23.	Joint and Several Liability	46
24.	Confidentiality	46
25.	Miscellaneous	47
26.	Authorised Agent	51
27.	Severability	51

 

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DEFINITIONS

 

In this Agreement

 

“ Advisory Board ” and “ Advisory Boards ”	shall have the meaning given to it in section 5.1;
“ Advisory Board By-laws ”	shall have the meaning given to it in section 2.3(b);
“ Affiliate ”	shall have the meaning given to it in section 13.1(a);
“ Affiliate Transaction ”	shall have the meaning given to it in section 3.2(g);
“ Agreement ”	shall mean this agreement;
“ Annual Budget ”	shall have the meaning given to it in section 8;
“ Articles of Association ”	shall have the meaning given to it in section 2.3(a);
“ Business Day ”	shall have the meaning given to it in section 11.2(a);
“ Closing ”	shall have the meaning given to it in section 3.1;
“ Delaware LLC Act ”	shall have the meaning given to it in section 3.1;
“ Drag-Along Notice ”	shall have the meaning given to it in section 18.2;
“ Drag-Along Right ”	shall have the meaning given to it in section 18.1;
“ Drag-Along Shareholder ”	shall have the meaning given to it in section 18.1;
“ Dragged Shares ”	shall have the meaning given to it in section 18.1;
“ Dual Track Process ”	shall have the meaning given to it in section 14.2(b)(i);
“ Equity Securities ”	shall have the meaning given to it in section 3.1(c);
“ Exit Event ”	shall have the meaning given to it in section 20.1;
“ Final Offer ”	shall have the meaning given to it in section 14.2(e);

 

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“ Finnish HoldCo ”	shall have the meaning given to it in the deed caption;
“ Functional Additive Business ”	shall have the meaning given to it in section 1.1;
“ IFRS ”	shall have the meaning given to it in section 3.2(e);
“ IFRS Accounts ”	shall have the meaning given to it in section 11.1;
“ Implementation Agreement ”	shall have the meaning given to it in section 1.3;
“ Initial Period ”	shall have the meaning given to it in section 1.4;
“ Initial Public Offering ”	shall have the meaning given to it in section 15.1;
“ Investment Bank ”	shall have the meaning given to it in section 14.2(a);
“ Investment Bank Analysis ”	shall have the meaning given to it in section 14.2(a);
“ Joint Venture ”	shall have the meaning given to it in section 1.4;
“ Joint Venture Accounts ”	shall have the meaning given to it in section 10.1;
“ Joint Venture By-laws ”	shall have the meaning given to it in section 2.3(c);
“ Joint Venture Company ” and “ Joint Venture Companies ”	shall have the meaning given to it in section 3.1(c);
“ Joint Venture Subsidiary ” and “ Joint Venture Subsidiaries ”	shall have the meaning given to it in section 2.2(c);
“ JV Europe ”	shall have the meaning given to it in the deed caption;
“ JV US ”	shall have the meaning given to it in the deed caption;
“ Kemira ”	shall have the meaning given to it in the deed caption;
“ Kemira Advisory Board Members ”	shall have the meaning given to it in section 5.3(b);
“ Kemira Germany ”	shall have the meaning given to it in the deed caption;

 

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“ Kemira Inc.”	shall have the meaning given to it in the deed caption;
“ Kemira TiO2 ”	shall have the meaning given to it in the deed caption;
“ Kemira TiO2 Pigments Business ”	shall have the meaning given to it in section 1.1;
“ Lock-Up ”	shall have the meaning given to it in section 15.2(g);
“ Management Board ” and “ Management Boards ”	shall have the meaning given to it in section 7.1;
“ Master Agreement ”	shall have the meaning given to it in section 1.3;
“ Non-Requesting Shareholder ”	shall have the meaning given to it in section 14.2;
“ Offer ”	shall have the meaning given to it in section 21.1;
“ Offer Notice ”	shall have the meaning given to it in section 21.1;
“ Offeree ”	shall have the meaning given to it in section 21.1;
“ Offeror ”	shall have the meaning given to it in section 21.1;
“ Other Business ”	Shall have the meaning given to it in section 22.4(a);
“ Party ” and “ Parties ”	shall have the meaning given to them in the deed caption;
“ Price Range ”	shall have the meaning given to it in section 14.2(a);
“ Private Equity Funds ”	shall have the meaning given to it in section 22.4(a);
“ Prohibited Business ”	shall have the meaning given to it in section 22.1;
“ Purchase Option ”	shall have the meaning given to it in section 17.1;
“ Requesting Shareholder ”	shall have the meaning given to it in section 14.2;
“ Restricted Management Matter ”	shall have the meaning given to it in section 3.2;
“ Rockwood ”	shall have the meaning given to it in the deed caption;

 

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“ Rockwood Advisory Board Members ”	shall have the meaning given to it in section 5.3(a);
“ Rockwood Germany ”	shall have the meaning given to it in the deed caption;
“ Rockwood Holdings ”	shall have the meaning given to it in the deed caption;
“ Rockwood TiO2 Pigments Business ”	shall have the meaning given to it in section 1.1;
“ Rockwood Water Business ”	shall have the meaning given to it in section 1.1;
“ Sachtleben ”	shall have the meaning given to it in the deed caption;
“ Sachtleben Corp ”	shall have the meaning given to it in the deed caption;
“ Sale Period ”	shall have the meaning given to it in section 17.2;
“ Sales Process ”	shall have the meaning given to it in section 14.2;
“ Sales Process Request ”	shall have the meaning given to it in section 14.2;
“ SEC ”	shall have the meaning given to it in section 15.2(c)
“ Securities Act ”	shall have the meaning given to it in section 3.1(d);
“ Selling Shareholder ”	shall have the meaning given to it in section 17.1;
“ Shareholder ” and “ Shareholders ”	shall have the meaning given to them in section 2.2;
“ Shares ” and “ Share ”	shall have the meaning given to them in section 2.2;
“ Special Majority Matter ”	shall have the meaning given to it in section 3.1;
“ Statutes ”	shall have the meaning given to it in section 2.3;
“ Structure Paper ”	shall have the meaning given to it in section 3.1(f);
“ Tag-Along Notice ”	shall have the meaning given to it in section 19.1;

 

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“ Tag-Along Right ”	shall have the meaning given to it in section 19.1;
“ Tagged Shares ”	shall have the meaning given to it in section 19.1;
“ TiO2 Pigments Business ” and “ TiO2 Pigments Businesses ”	shall have the meaning given to it in section 1.1;
“ Trade Sale ”	shall have the meaning given to it in section 14.1;
“ Transaction ”	shall have the meaning given to it in section 1.3;
“ Transfer ”	shall have the meaning given to it in section 13.1;
“ US GAAP ”	shall have the meaning given to it in section 3.2(e); and
“ Violation ”	shall have the meaning given to it in section 15.3(a).

 

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ANNEXES

 

Annex 2.2(c)	Joint Venture Subsidiaries;
Annex 2.3(a)	Articles of Association;
Annex 2.3(b)	Advisory Board By-laws;
Annex 2.3(c)	Joint Venture By-laws of JV Europe;
Annex 3.1(k)	Instructions to accounting firm;
Annex 7.2	Initial Directors;
Annex 8	Content of Annual Budget;
Annex 11.2(a)	Form of financial reporting package;
Annex 21.1	Normalised EBITDA calculation method;
Annex 21.2(b)	Form of guarantee;
Annex 21.3	Form of Offer for acquisition of Shares; and
Annex 22.5(b)	List of key employees.

 

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SHAREHOLDERS’ AND JOINT VENTURE AGREEMENT

 

THIS AGREEMENT IS MADE ON 21 May 2008 BY AND AMONG

 

1.                                        Rockwood Holdings, Inc., 100 Overlook Center, Princeton, NJ 08540, USA

 

hereinafter referred to as “ Rockwood Holdings ”;

 

2.                                        Rockwood Specialties Group, Inc., 100 Overlook Center, Princeton, NJ 08540, USA

 

hereinafter referred to as “ Rockwood ”;

 

3.                                        Rockwood Specialties Group GmbH, Königsberger Straße 1, 60487 Frankfurt am Main, Germany, registered in the commercial register of the lower court of Frankfurt am Main under registration number HR B 5 79 24

 

hereinafter referred to as “ Rockwood Germany ”;

 

4.                                        Sachtleben Chemie GmbH, Dr.-Rudolf Sachtleben-Straße 4, 47189 Duisburg, Germany, registered in the commercial register of the lower court of Duisburg under registration number HR B 1 96 69

 

hereinafter referred to as “ Sachtleben ”;

 

5.                                        Sachtleben Corporation, a Delaware corporation with business address 140 Grand Street, Suite 400, White Plains, NY 10601, USA

 

hereinafter referred to as “ Sachtleben Corp ”;

 

6.                                        Deukalion Einhundertvierundzwanzigste Vermögensverwaltungs-GmbH, Königsberger Straße 1, 60487 Frankfurt am Main, Germany, registered in the commercial register of the lower court of Frankfurt am Main under registration number HR B 8 05 60, to be renamed White Pigments Holding GmbH

 

hereinafter referred to as “ JV Europe ”;

 

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7.                                        White Pigments Holding Oy, Finland, a limited liability company under establishment

 

hereinafter referred to as “ Finnish HoldCo ”;

 

8.                                        Kemira Oyj, Porkkalankatu 3, FI-00180 Helsinki, Finland, with business identification number 0109823-0

 

hereinafter referred to as “ Kemira ”;

 

9.                                        Kemira Pigments Oy, Porkkalankatu 3, FI-00180 Helsinki, Finland, with business identification number 0948159-2

 

hereinafter referred to as “ Kemira TiO2 ”;

 

10.                                  Kemira Specialty Inc., USA, with its principal place of business at 151 Veterans Drive, Northvale, NJ 07647, USA

 

hereinafter referred to as “ Kemira Inc. ”;

 

11.                                  Kemira Germany GmbH, registered in the commercial register of the lower court of Cologne under registration number HRB 57319

 

hereinafter referred to as “ Kemira Germany ”;

 

and

 

12.                                  White Pigments LLC, a Delaware limited liability company, 100 Overlook Center, Princeton, NJ 08540, USA

 

hereinafter referred to as “ JV US ”.

 

In the following, Rockwood Holdings, Rockwood, Rockwood Germany, Sachtleben, Sachtleben Corp, JV Europe, Finnish HoldCo, Kemira, Kemira TiO2, Kemira Inc., Kemira Germany and JV US are referred to as each a “ Party ” and collectively the “ Parties ”.

 

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NOW IT IS HEREBY AGREED:

 

1.              PREAMBLE

 

1.1            Rockwood and Kemira are both companies active in a variety of business fields in the specialty chemicals sector. Both Parties are, amongst other businesses, engaged in the titanium dioxide business (i.e. the sale and manufacturing of titanium dioxide and related co-products and services), provided that (i) Rockwood’s titanium dioxide business also includes the manufacturing of barium-based and zinc-based inorganic fine white pigments and additives (the “ Functional Additive Business ”) but excludes the manufacturing of polyaluminium chloride and polyaluminium nitrate-based flocculants (collectively the “ Rockwood Water Business ”) as currently conducted by Sachtleben and Sachtleben Corp (Rockwood’s titanium dioxide business so defined, the “ Rockwood TiO2 Pigments Business ”); and Kemira’s titanium dioxide business also includes sales and manufacturing of certain other than titanium dioxide based products and services to the cosmetics industry (the “ Kemira TiO2 Pigments Business ”). The Rockwood TiO2 Pigments Business and the Kemira TiO2 Pigments Business are each also referred to as a “ TiO2 Pigments Business ” and collectively as the “ TiO2 Pigments Businesses ”.

 

1.2            In order to jointly pursue future business opportunities in the field of the production and marketing of titanium dioxide pigments, Rockwood and Kemira have decided to combine their respective TiO2 Pigments Business by forming a joint venture in the form of a newly established German limited liability company.

 

1.3            On the date hereof, the Parties have entered into a certain Master Agreement (the “ Master Agreement ”) setting out the structure and the transactions to be implemented in order to establish such joint venture (such transactions, as they are described in more detail in the Master Agreement, collectively the “ Transaction ”) as well as the contractual terms and conditions governing the joint venture. The Transaction will be implemented mainly through a certain Agreement regarding the Implementation of the Titanium Dioxide Joint Venture which was also entered into on the date hereof (the “ Implementation Agreement ”). Capitalized terms used but not defined in this Agreement shall have the same meaning as ascribed to such term in the Master Agreement and/or the Implementation Agreement, as the case may be.

 

1.4            Unless otherwise agreed, JV Europe and JV US (collectively, the “ Joint Venture ”) shall be jointly operated at least until 1 January 2011 (the “ Initial Period ”).

 

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2.              CORPORATE STRUCTURE AND STATUTES

 

2.1            JV Europe is a newly established German limited liability company which, following the consummation of the Transaction, has a registered share capital in the amount of EUR 25,000 (in words: Euro twenty-five thousand). JV US is a Delaware limited liability company, which following the consummation of the Transaction, will have two members, Rockwood and Kemira.

 

2.2            Following the consummation of the Transaction,

 

(a)            Rockwood Germany will hold shares in JV Europe in the amount of EUR 15,250 (in words: Euro fifteen thousand two hundred fifty) equaling 61 per cent of the total registered share capital of JV Europe; and Kemira will hold shares in JV Europe in the amount of EUR 9,750 (in words: Euro nine thousand seven hundred fifty) equaling 39 per cent of the total registered share capital of JV Europe;

 

(b)            Rockwood will hold limited liability company interests of JV US equaling 61 per cent of the total issued and outstanding limited liability company interests of JV US; and Kemira will hold limited liability company interests of JV US equaling 39 per cent of the total issued and outstanding limited liability company interests of JV US; and

 

(c)            the Joint Venture will own the TiO2 Pigments Businesses including the shares (held directly and indirectly) in the entities as set out in Annex 2.2(c)  (each, a “ Joint Venture Subsidiary ” and collectively the “ Joint Venture Subsidiaries ”).

 

Rockwood, Rockwood Germany  and Kemira are also referred to as each a “ Shareholder ” and collectively the “ Shareholders ”, and the shares in JV Europe and the limited liability company interests of JV US from time to time are also referred to as the “ Shares ” and each a “ Share ”.

 

2.3            The Parties shall, to the extent this is required and within their respective corporate or limited liability company powers to do so, amend and restate, in each case in their entirety, the following statutes of JV Europe and JV US as soon as reasonably practicable after the date hereof but in any event prior to and with effect from the Closing Date:

 

(a)            the articles of association of JV Europe substantially as set out in Annex 2.3(a)  and the limited liability company agreement of JV US, which shall (i) to the extent legally possible, implement the terms of this Agreement, including creation of an Advisory Board (as defined below) and (ii) provide for the treatment of JV US as a corporation for US tax purposes (collectively, the “ Articles of Association ”);

 

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(b)            the by-laws of the Advisory Board (as defined below) of JV Europe, substantially as set out in Annex 2.3(b)  (the “Advisory Board By-laws ”); and

 

(c)            the by-laws of the Management Board (as defined below) of JV Europe substantially as set out in Annex 2.3(c)  (the “ Joint Venture By-laws ”)

 

(collectively, and together with the certificate of formation of JV US, the “ Statutes ”) or otherwise cause the Statutes to be in the forms substantially set forth in Annexes 2.3(a), 2.3(b) and 2.3(c).

 

Following the Closing, the Parties shall in good faith agree on the final wording of the Statutes (if either Party requests amendments thereto) in order to properly reflect the provisions of this Agreement, the Master Agreement and the Implementation Agreement.

 

2.4            To the extent there is a conflict between the Statutes and this Agreement, this Agreement shall, to the extent permitted by applicable law, prevail. Each Shareholder shall vote its Shares and shall take all such other actions that may be necessary to ensure that the Statutes facilitate and do not at any time conflict with, any provision of this Agreement. The foregoing shall apply mutatis mutandis with regard to the articles of association, certificates of formation, certificates of incorporation, by-laws, partnership agreements, limited liability company agreements or other statutes of the Joint Venture Subsidiaries.

 

3.              SPECIAL RESOLUTIONS

 

3.1            Without prejudice to unanimous consent or majority requirements under applicable law, including German law or the Delaware Limited Liability Company Act (the “ Delaware LLC Act ”), and notwithstanding anything to the contrary contained in this Agreement and/or the Statutes, JV Europe, JV US and the Shareholders agree that following the closing of the Transaction (the “ Closing ”) each of the following actions (including, but not limited to, any action or resolution of a shareholders’ or members’ meeting, the management or any other corporate or limited liability company body) shall require the prior affirmative approval of all shareholders or members of JV Europe or JV US, as the case may be (each, a “ Special Majority Matter ”):

 

(a)		any changes of the Statutes, including any change to the corporate or limited liability company purpose of the Joint Venture;
(b)		any transfer, disposal, pledge or encumbrance of Shares;

 

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(c)                                   any (i) issuance or re-issuance from treasury of any equity securities or other ownership interests or rights to acquire, or securities or other interests convertible or exchangeable for, equity securities or other ownership interests (collectively, “ Equity Securities ”) of JV Europe, JV US or any Joint Venture Subsidiary (each a “ Joint Venture Company ” and collectively the “ Joint Venture Companies ”); or (ii) transfer of any Equity Securities by any Joint Venture Company (other than to another Joint Venture Company);

 

(d)                                  (i) the registration of any of the Equity Securities of a Joint Venture Company under the Securities Act of 1933, as amended (the “ Securities Act ”); or (ii) application for admission or listing of any Equity Securities on a stock exchange;

 

(e)                                   any redemption, re-purchase or other acquisition by any Joint Venture Company of Equity Securities issued by any Joint Venture Company, except for Equity Securities of the Joint Venture Subsidiaries to the extent they are redeemed, re-purchased or acquired by another Joint Venture Company;

 

(f)                                     any capital decreases or reorganizations of any Joint Venture Company, including without limitation, in-kind contributions, de-mergers either by split-up, spin-off or hive-down, mergers or conversions within the meaning of section 1 of the German Reorganization Act ( Umwandlungsgesetz; UmwG ), or any other transactions that have a similar effect, except where such reorganization (i) is provided for in the Master Agreement or the step paper of Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft dated 21 May 2008 (the “ Structure Paper ”); or (ii) involves solely Joint Venture Companies and would not entail any material disadvantage for the Shareholders (including tax disadvantages);

 

(g)                                  the approval, commitment or making by any Joint Venture Company (except in favour of another Joint Venture Company) of any dividends (in cash or in kind) except where such dividend distribution is provided by this Agreement or the Master Agreement;

 

(h)                                  except as provided for in the Master Agreement or the Structure Paper, any conclusion of enterprise agreements ( Unternehmensverträge ) (including domination or profit and loss transfer agreements) within the meaning of section 291, 292 of the German Stock Corporation Act ( Aktiengesetz, AktG ) or similar agreements (such as silent partnership agreements or profit-related loan agreements) by any Joint Venture Company, except for agreements with another Joint Venture Company;

 

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(i)                                        (i) any liquidation, dissolution, commencement of bankruptcy, or similar proceedings with respect to any Joint Venture Company, or the admission in writing by any Joint Venture Company of its bankruptcy, insolvency or general inability to pay debts as they become due; (ii) the appointment of any liquidator and the dismissal of any liquidator; and (iii) the adoption of any liquidation balance sheet, the liquidation financial statements as well as the discharge of the liquidators, except in each case as required by applicable law;

 

(j)                                      any resolution, commitment or agreement that would require the Shareholders to make an investment in, or loan to, any Joint Venture Company;

 

(k)                                   adoption of the audited annual accounts and the apportionment of the net income of JV Europe and JV US for each fiscal year, except where otherwise is provided for in this Agreement, provided that

 

(i)             if the respective shareholders cannot reach an agreement with regard to the audited annual accounts within a period of four weeks following the shareholders’ or members’ meeting in which such matter was submitted for approval, the audited annual accounts of JV Europe and JV US for the respective fiscal year shall be finally determined with, absent manifest errors, binding effect upon the Parties by a reputable accounting firm acting as an independent expert and in line with the instructions set out in Annex 3.1(k) . If the Shareholders cannot agree on the independent expert within an additional period of five weeks following the shareholders’ or members’ meeting in which such matter was submitted for approval or the mutually agreed independent expert refuses to act as such, the independent expert shall be appointed, upon request of either Rockwood or Kemira, by the German Institute of Chartered Accountants ( Institut der Wirtschaftsprüfer – IDW ); and

 

(ii)            if Rockwood and Kemira cannot reach an agreement with regard to the apportionment of the net income for a specific fiscal year, section 10.3 shall apply;

 

(l)             any material change of the long-term business strategy of either, JV Europe or JV US compared to the long term business strategy in place for the TiO2 Pigments Businesses at the date hereof or, if such long term strategy was subsequently amended pursuant to an agreement amongst the Shareholders, the long term business strategy in place after such amendment except with regard to

 

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(i)             the production, marketing and sale of titanium dioxide pigments,

 

(ii)            the production, marketing and sale of products of the Functional Additives Business (except for the introduction of new product lines that can be expected to negatively affect the short or long term profitability of the Joint Venture in a material manner); and

 

(iii)           the disposal, sale and processing of by-products of titanium dioxide (including copperas and filter salts) or of the Functional Additive Business; and

 

(m)           the appointment and removal of one (1) managing director of JV Europe or one (1) member of the Management Board of JV US, it being understood that such approval right shall only have the effect that of all of the managing directors of JV Europe and of all of the members of the Management Board  of JV US appointed at any given time, at least one (1) managing director of JV Europe and one (1) member of the Management Board of  JV US at all times have been appointed with the approval of Kemira, it being understood that the initial managing directors and members of the Management Board JV US as set out in this Agreement are deemed to be approved by Kemira.

 

3.2            Without prejudice to unanimous consent or majority requirements under applicable laws including German law and the Delaware LLC Act, and notwithstanding anything to the contrary contained in this Agreement and/or the Statutes, JV Europe, JV US and the Shareholders agree that following the Closing each of the following actions (including, but not limited to, any action or resolution of a shareholders’ or members’ meeting, the management or any other corporate or limited liability company body) shall require the prior affirmative approval of the Advisory Board of JV Europe or JV US, as the case may be, including the prior affirmative approval of the Advisory Board members designated by Rockwood and Kemira (each, a “ Restricted Management Matter ”):

 

(a)            any capital expenditure with a value in excess of EUR 10,000,000 in an individual case unless such measure is required due to the replacement or maintenance of assets or pursuant to applicable law;

 

(b)            any acquisition by a Joint Venture Company with a value in excess of EUR 10,000,000 in the individual case;

 

(c)            any sale, disposal or lease of

 

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(i)             any material part of the TiO2 Pigments Businesses (irrespective of whether at fair market value or not); or

 

(ii)            any assets

 

(1)            with a fair market value in excess of EUR 10,000,000 in an individual case or, with view to all previous sales, disposals or leases of assets by the Joint Venture in any given fiscal year, and

 

(2)            irrespective of their fair market value, if such sale, disposal or lease would cause the aggregate fair market value of all assets sold, disposed of or leased in such fiscal year to exceed EUR 10,000,000;

 

(d)            any incurrence of or the entering into any agreement that would permit the incurrence of financial debt of the Joint Ventures resulting in a breach of applicable financial covenants under the credit facilities pursuant to which the Joint Venture borrows monies from financial institutions.

 

(e)            any material amendment of or deviation from the accounting principles and policies to be applied by a Joint Venture Company in accordance with this Agreement, except where such amendment or deviation, as the case may be is required due to a change in applicable law and/or International Financial Reporting Standards (“ IFRS ”) or US Generally Accepted Accounting Principles (“ US GAAP ”), as the case may be, or required or otherwise reasonably advisable in connection with the consolidation of a Joint Venture Company by Rockwood and Rockwood’s direct or indirect parents;

 

(f)             the termination or settlement by any Joint Venture Company of any material litigation with a value in excess of EUR 5,000,000;

 

(g)            any agreement of the Joint Venture Companies with either Kemira or Rockwood or any of their respective Affiliates (as defined below) with a value in excess of EUR 250,000, except for

 

(i)             agreements between two Joint Venture Companies; and

 

(ii)            agreements for purchase and supplies on terms and conditions no less favorable to the Joint Venture Companies than could have been obtained on an arms’ length basis

 

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(each such transaction, an “ Affiliate Transaction ”); and

 

(h)            any agreement or commitment to effect any of the foregoing matters.

 

3.3            The Shareholders undertake to procure that no Special Majority Matters nor any Restricted Management Matters will be implemented by any of the Joint Venture Companies following the Closing without the prior affirmative approval of Kemira and Rockwood or the members appointed by them to the Advisory Boards, as the case may be, irrespective of the corporate or limited liability company body which has to decide on such action pursuant to applicable law.

 

3.4            The rights of a Shareholder contained in this section 3 shall, except where otherwise is mandated by applicable law, terminate for such Shareholder at such time as the relevant Shareholder’s combined direct and indirect ownership interests in the Joint Venture (including shares, limited liability company interests and other ownership interests held by Affiliates of the relevant Shareholder) has fallen below 20 per cent.

 

4.              SUPERVISORY BOARD

 

4.1            Sachtleben has currently and, following the implementation of the Transaction, will continue to have a statutory supervisory board ( Aufsichtsrat ) pursuant to the German One Third Participation Act ( Drittelbeteiligungsgesetz ). The shareholders’ representatives for the supervisory board will be elected by Sachtleben’s shareholders’ meeting in accordance with statutory law, provided that Kemira shall be entitled if it so wishes to designate one of such shareholders’ representatives to be elected by the shareholders’ meeting of Sachtleben, provided, however, that section 3.4 shall apply with regard to Kemira’s right. Pursuant to Sachtleben’s articles of association, the statutory supervisory board has only information but no consent rights with regard to the dealings of Sachtleben, except where such rights are given under mandatory law, in which case the representatives of the Shareholders shall, to the extent permissible cast their votes in accordance with the terms of this Agreement.

 

4.2            Except to the extent otherwise is mandated by applicable law, no supervisory board shall be established at the level of JV Europe. If and to the extent applicable law requires the establishment of a supervisory board at the level of JV Europe, such supervisory board shall be established in addition to and not instead of the Advisory Board and the Shareholders shall take all such actions including making amendments of the Articles of Association of JV Europe in order to establish such supervisory board, provided that they shall ensure, to the extent legally permissible, that the establishment of such supervisory board does not affect or amend the corporate

 

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governance principles and the allocation of rights and obligations under this Agreement (including its Annexes). The Shareholders shall further vote their Shares in JV Europe such that Rockwood and Kemira are always represented on such supervisory board of JV Europe (taking into consideration that a certain number of seats on such supervisory board will be reserved for employee representatives) in the same proportion as they are represented on the Supervisory Board as provided for under section 4.1.

 

5.              ADVISORY BOARD

 

5.1            Following the Closing, JV Europe and JV US shall each have an advisory board (each such board, an “ Advisory Board ” and collectively the “ Advisory Boards ”). Each of the Advisory Boards shall be a body that solely represents the Shareholders and their interests (i.e. the Advisory Boards shall not be a body representing the best interest of the enterprise ( Unternehmensinteresse ) but a body representing the best interests of the Shareholders). Correspondingly, subject to requirements under mandatory applicable law, the individuals serving on the Advisory Boards shall be entitled to act solely in the best interest of the Shareholder they represent.

 

5.2            The Advisory Boards shall have those powers assigned to them by this Agreement and the relevant Articles of Association. The internal organization of the Advisory Board, the procedures and formalities to be complied with by the Advisory Boards shall be those set forth in this Agreement and the relevant Statutes.

 

5.3            The Advisory Boards shall each consist of a total of five members including the chairman ( Vorsitzender des Beirates ). Of the five advisory board members of each Advisory Board:

 

(a)                                   Rockwood shall be entitled to designate three members including the chairman (the “ Rockwood Advisory Board Members ”), and to demand the removal of any or all of the Rockwood Advisory Board Members; and

 

(b)                                  Kemira shall be entitled to designate two members (the “ Kemira Advisory Board Members ”), and to demand the removal of any or all of the Kemira Advisory Board Members;

 

provided that the composition of the Advisory Board of JV Europe shall at all times be identical to the composition of the Advisory Board of JV US and the Shareholders shall procure that if a certain individual is either appointed to an Advisory Board or ceases to be a member of an Advisory Board, a corresponding change shall be made to the respective other Advisory Board without undue delay.

 

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5.4            The initial Advisory Boards of JV Europe and JV US shall each consist of the following members:

 

(a)            Seifi Ghasemi, as chairman, Robert J. Zatta and Thomas J. Riordan as the Rockwood Advisory Board Members; and

 

(b)            Matti Lapinleimu and Hannu Virolainen as the Kemira Advisory Board Members.

 

5.5            Members of the Advisory Boards are appointed and removed by shareholders’ or members’ resolution of JV Europe or JV US, as the case may be. Each Shareholder is obliged to promptly vote in a shareholders’ or members’ meeting of JV Europe or JV US, as the case may be, upon the appointment and the removal of the other Shareholders’ designees in accordance with sections 5.3 and 5.4 and as notified in writing by such other Shareholder.

 

5.6            Other than the customary reimbursement of out-of pocket expenses, members of the Advisory Board shall not be entitled to any kind of remuneration.

 

5.7            The rights of a Shareholder contained in this section 5 shall terminate for such Shareholder at such time as the relevant Shareholder’s combined direct and indirect ownership interests in the Joint Venture (including shares, limited liability company interests and other ownership interests held by Affiliates of the relevant Shareholder) has fallen below 20 per cent.

 

6.              ADVISORY BOARD MEETINGS AND RESOLUTIONS

 

6.1            Following the Closing, the Advisory Boards shall meet on a regular basis, at least four times each calendar year to discuss all matters of JV Europe and JV US, respectively, provided that the Advisory Board of JV Europe shall also discuss all matters that affect the Joint Venture as a whole. The meetings of the Advisory Boards take place either at JV Europe’s or JV US’ respective principal place of business, or, if all members of the Advisory Boards agree, elsewhere or by way of telephone or video-conferencing or by way of a combination of these options. To the extent possible and practicable with view to the agenda of the relevant meetings, the meetings of the Advisory Board of JV Europe and the meetings of the Advisory Board of JV US shall always occur on one and the same day and in one and the same place. A meeting of an Advisory Board shall be convened if it is necessary pursuant to this Agreement, the law or JV Europe’s or JV US’ respective Statutes and if a convocation appears otherwise necessary in the interests of JV Europe or JV US, or if a member of the Advisory Board requires that such meeting be convened, stating the purpose.

 

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6.2                                  A meeting of an Advisory Board is convened by its chairman or, if he or she refuses to convene such meeting in spite of a relevant request or has not done so within one week after the receipt of such request, by any other member of the relevant Advisory Board requiring the meeting to be convened, by registered letter, e-mail or facsimile to the other members of the Advisory Board, accompanied by the agenda. The notice period for convening a meeting of an Advisory Board is at least two weeks and commences on the day the invitation is being dispatched. Compliance with periods of notice and formalities of convening the meeting and the notification of the agenda can be waived if all members of the relevant Advisory Board agree to this.

 

6.3                                  A meeting of an Advisory Board has a quorum only if at least four members of the Advisory Board are duly represented in such meeting. Absent of such quorum, a new meeting shall be convened in accordance with the terms set forth in this section 6. This second meeting has a quorum for the items of the agenda for the meeting in which the absence of a quorum became evident, regardless of how many members of the relevant Advisory Board are represented, provided that this was expressly stated in the new invitation.

 

6.4                                  The chairman of an Advisory Board or in his absence, the longest-serving member of the relevant Advisory Board, establishes that the meeting has a quorum and decides on the voting procedure.

 

6.5                                  Written minutes of the resolutions of the meetings of an Advisory Board shall be prepared, signed by the chairman, a copy of which shall be sent to each member. Evidence that the invitation to the meeting was sent out timely shall be kept safely with JV Europe’s company books.

 

6.6                                  To the extent resolutions need not be passed in an Advisory Board meeting, they can be passed outside a formal meeting if all members of the relevant Advisory Board declare their agreement to the proposed voting procedure or participate in the voting. The chairman of the relevant Advisory Board initiates the passing of a resolution, stating the subject matter, the proposed resolution, the voting procedure and the time-limit for voting. A memorandum on the subject-matter, procedure and result of the voting shall be prepared, signed by the chairman and a copy of which shall be sent to each member of the relevant Advisory Board.

 

6.7                                  The Advisory Boards shall in particular be responsible for deciding upon Restricted Management Matters and all such other management matters that require the prior consent of the Advisory Boards pursuant to the Statutes. Subject to applicable law, following the Closing the Management Board of the relevant entity shall obtain the relevant Advisory Board’s consent prior to executing any of the Restricted Management Matters, unless compliance with this

 

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requirement will, in the relevant Management Board’s prudent forecast, cause serious harm to JV Europe or JV US, as the case may be, and/or the relevant Joint Venture Subsidiaries in which case a ratification of the relevant Restricted Management Matter by the relevant Advisory Board shall be sought by the relevant Management Board.

 

6.8                                  Resolutions of the Advisory Board shall generally be passed with simple majority of the members of the Advisory Board, provided that resolutions regarding a Restricted Management Matter (or a Special Majority Matter if such matter requires a decision of an Advisory Board) shall require an unanimous vote of the respective Advisory Board. Its resolutions can only be challenged by an action within one month following the day the relevant resolution was passed.

 

7.                                        MANAGING DIRECTORS

 

7.1                                  JV Europe shall, on a day to day basis, be managed by its board of directors which shall consist of at least two managing directors ( Geschäftsführer ), while  JV US shall, on a day to day basis, be managed by its board of directors which shall also consist of at least two directors (each such board, a “ Management Board ” and collectively the “ Management Boards ”). Individuals serving on the Management Board of JV Europe may (but are not required to) be at the same time a member of the Management Board of JV US and vice versa .

 

7.2                                  The Management Boards of JV Europe and JV US shall as of the Closing be composed as set out in Annex 7.2 . Members of the Management Boards shall, subject to section 3.1(m), be appointed and removed by shareholders’ or members’ resolution of JV Europe or JV US, as the case may be.

 

7.3                                  The CEO of the Joint Venture shall, unless the Shareholders decide otherwise

 

(a)                                   be a member of the Management Board of JV Europe; and

 

(b)                                  may be a member of the Management Board of JV US.

 

7.4                                  JV Europe and JV US shall each be represented by the joint signature of two members of the respective Management Board or, with respect to JV Europe, by the signature of one member of the Management Board of JV Europe together with the holder of a registered power of attorney ( Prokurist ) or, with respect to JV US, by the signature of one or more officers of JV US with approval of the Managing Board of JV US.

 

7.5                                  The requirements as to the composition of the Management Boards contained in this section 7

 

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shall terminate at such time as one of the Shareholders’ combined direct and indirect ownership interests in the Joint Venture (including shares, limited liability company interests or other ownership interests held by Affiliates of the relevant Shareholder) has fallen below 20 per cent.

 

8.                                        MANAGEMENT OF THE JOINT VENTURE

 

Following the Closing, the Joint Venture shall be managed in compliance with this Agreement, the respective Statutes and the annual business plan adopted by the Advisory Board (the “ Annual Budget ”) and otherwise in accordance with applicable laws. The Annual Budget set out in Annex 8 will be based on a budget presentation which shall include financial information (profit and loss statement, balance sheet, capital expenditures and cash flow). Further, the Parties undertake that they will cooperate in the running of the Joint Venture’s business to the effect that the business of the Joint Venture, including its subsidiaries from time to time, shall be conducted and managed for the benefit of all Shareholders with the aim to maximize value and profits and in line with applicable laws and best business practice.

 

9.                                        AFFILIATE TRANSACTIONS

 

Following the Closing, JV Europe and JV US shall regularly account for all payments (including fees and cost reimbursements) of any kind made by the Joint Venture Companies under any Affiliate Transaction. For the avoidance of doubt, it is hereby set forth that the foregoing sentence shall apply irrespective of whether such agreement or arrangement (i) has already been in place at the date hereof or is entered into after the date hereof; or (ii) was approved by the relevant Advisory Board.

 

10.                                  ANNUAL ACCOUNTS AND DIVIDEND POLICY

 

10.1          Following the Closing, JV Europe and JV US shall, in addition to what may be required under applicable law, prepare their annual accounts (stand alone and consolidated) and quarterly accounting reports, in each case in accordance with the accounting standards then applied by Rockwood Holdings (currently US GAAP) (collectively, the “ Joint Venture Accounts ”).

 

10.2          The annual accounts of JV Europe and JV US and, to the extent required by applicable law, the Joint Venture Subsidiaries, shall be audited by Deloitte or any other independent auditor of international standing designated by Rockwood and the Shareholders agree to take all such actions and make all such declarations including the voting of their Shares in JV Europe and JV US as is required in order to appoint or cause the appointment of such independent auditor of the relevant entity.

 

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10.3          JV Europe and JV US shall always distribute any net income shown in the relevant audited annual accounts as adopted by the relevant shareholders’ or members’ meeting, unless the Shareholders resolve otherwise or a distribution appears inappropriate with a view to (i) JV Europe’s and JV US’ liquidity position and (ii) the terms and conditions of the documentation underlying the third party financing as described in section 2.4 of the Master Agreement.

 

11.                                  INFORMATION RI