Exhibit 10.2

 

SHORT-TERM INCENTIVE PLAN
FOR ROCKWOOD HOLDINGS, INC. AND SUBSIDIARIES

 

1.             PURPOSE OF THE PLAN

 

The purpose of the Plan is to enable the Company and its Subsidiaries to
attract, retain, motivate and reward executive officers and key employees by
providing them with the opportunity to earn competitive compensation directly
linked to the Company’s performance.

 

2.             DEFINITIONS

 

The following capitalized terms used in the Plan have the respective meanings
set forth in this Section:

 

(A)           “BOARD” SHALL MEAN 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” SHALL MEAN THE COMPENSATION COMMITTEE OF THE BOARD (OR
SUCH OTHER COMMITTEE OR SUBCOMMITTEE THEREOF AS THE BOARD MAY DESIGNATE).

 

(D)           “COMPANY” SHALL MEAN ROCKWOOD HOLDINGS, INC., A DELAWARE
CORPORATION.

 

(E)           “COVERED EMPLOYEE” SHALL HAVE THE MEANING SET FORTH IN
SECTION 162(M) OF THE CODE.

 

(F)            “PARTICIPANT” SHALL MEAN EACH EXECUTIVE OFFICER OF THE COMPANY
AND OTHER KEY EMPLOYEE OF THE COMPANY OR A SUBSIDIARY WHOM THE COMMITTEE
DESIGNATES AS A PARTICIPANT UNDER THE PLAN.

 

(G)           “PERFORMANCE PERIOD” SHALL MEAN EACH FISCAL YEAR OR MULTI-YEAR
CYCLE AS DETERMINED BY THE COMMITTEE.

 

(H)           “PLAN” SHALL MEAN THE ROCKWOOD HOLDINGS, INC. SHORT-TERM INCENTIVE
PLAN, AS SET FORTH HEREIN AND AS MAY BE AMENDED FROM TIME TO TIME.

 

(I)            “SHARE” SHALL MEAN A SHARE OF COMMON STOCK OF THE COMPANY.

 

(J)            “SUBSIDIARY” SHALL MEAN A SUBSIDIARY CORPORATION, AS DEFINED IN
SECTION 424(F) OF THE CODE (OR ANY SUCCESSOR SECTION THERETO).

 

3.             ADMINISTRATION

 

The Plan shall be administered and interpreted by the Committee; provided,
however, that the Board may, in its sole discretion, take any action designated
to the Committee under this Plan as it may deem necessary; provided that, to the
extent Section 162(m) of the Code is applicable to the Company and the Plan, in
no event shall the Plan be administered or interpreted in a manner which would
cause any award intended to be qualified as “performance-based

 

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compensation” under Section 162(m) of the Code to fail to so qualify. Any
determination made by the Committee under the Plan shall be final and
conclusive. The Committee may employ such legal counsel, consultants and agents
(including counsel or agents who are employees of the Company or a Subsidiary)
as it may deem desirable for the administration of the Plan and may rely upon
any opinion received from any such counsel or consultant or agent and any
computation received from such consultant or agent. All expenses incurred in the
administration of the Plan, including, without limitation, for the engagement of
any counsel, consultant or agent, shall be paid by the Company. No member or
former member of the Board or the Committee shall be liable for any act,
omission, interpretation, construction or determination made in connection with
the Plan other than as a result of such individual’s willful misconduct. The
Committee may delegate its authority under this Plan; provided that, to the
extent Section 162(m) of the Code is applicable to the Company and the Plan, the
Committee shall in no event delegate its authority with respect to the
compensation of the Chief Executive Officer of the Company, the four most highly
compensated executive officers (as determined under Section 162(m) of the Code
and regulations thereunder) of the Company or any other individual whose
compensation the Board or Committee reasonably believes may become subject to
Section 162(m) of the Code.

 

4.             BONUSES

 

(A)           PERFORMANCE CRITERIA. NO LATER THAN 90 DAYS AFTER EACH PERFORMANCE
PERIOD BEGINS (OR SUCH OTHER DATE AS MAY BE REQUIRED OR PERMITTED UNDER
SECTION 162(M) OF THE CODE TO THE EXTENT APPLICABLE TO THE COMPANY AND THE
PLAN), THE COMMITTEE SHALL ESTABLISH THE PERFORMANCE OBJECTIVE OR OBJECTIVES
THAT MUST BE SATISFIED IN ORDER FOR A PARTICIPANT TO RECEIVE A BONUS FOR EACH
SUCH PERFORMANCE PERIOD. NOTWITHSTANDING THE FOREGOING, WITH RESPECT TO THE
PERFORMANCE PERIOD DURING WHICH THE EFFECTIVE DATE (AS DEFINED IN SECTION 6(A))
OCCURS, THE COMMITTEE SHALL ESTABLISH THE PERFORMANCE OBJECTIVE OR OBJECTIVES
THAT MUST BE SATISFIED IN ORDER FOR A PARTICIPANT TO RECEIVE A BONUS FOR SUCH
PERFORMANCE PERIOD BY NO LATER THAN 60 DAYS AFTER THE EFFECTIVE DATE. ANY SUCH
PERFORMANCE OBJECTIVES WILL BE BASED UPON THE RELATIVE OR COMPARATIVE
ACHIEVEMENT OF ONE OR MORE OF THE FOLLOWING CRITERIA, AS DETERMINED BY THE
COMMITTEE: (I) EARNINGS BEFORE OR AFTER TAXES (INCLUDING EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION OR AS OTHERWISE CALCULATED UNDER
ROCKWOOD SPECIALTIES GROUP, INC.’S SENIOR SECURED CREDIT AGREEMENT (AS MAY BE
AMENDED OR REFINANCED FROM TIME TO TIME)); (II) NET INCOME; (III) OPERATING
INCOME; (IV) EARNINGS PER SHARE; (V) BOOK VALUE PER SHARE; (VI) RETURN ON
STOCKHOLDERS’ EQUITY; (VII) EXPENSE MANAGEMENT; (VIII) RETURN ON INVESTMENT;
(IX) IMPROVEMENTS IN CAPITAL STRUCTURE; (X) PROFITABILITY OF AN IDENTIFIABLE
BUSINESS UNIT OR PRODUCT; (XI) MAINTENANCE OR IMPROVEMENT OF PROFIT MARGINS;
(XII) STOCK PRICE; (XIII) MARKET SHARE; (XIV) REVENUES OR SALES; (XV) COSTS;
(XVI) CASH FLOW; (XVII) WORKING CAPITAL; (XVIII) RETURN ON ASSETS; (XIX) ASSETS
UNDER MANAGEMENT; AND (XX) TOTAL RETURN. THE FOREGOING CRITERIA MAY RELATE TO
THE COMPANY, ONE OR MORE OF ITS SUBSIDIARIES OR ONE OR MORE OF ITS DIVISIONS OR
UNITS, OR ANY COMBINATION OF THE FOREGOING, AND MAY BE APPLIED ON AN ABSOLUTE
BASIS AND/OR BE RELATIVE TO ONE OR MORE PEER GROUP COMPANIES OR INDICES, OR ANY
COMBINATION THEREOF, ALL AS THE COMMITTEE SHALL DETERMINE.

 

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(B)           TARGET INCENTIVE BONUSES. NO LATER THAN 90 DAYS AFTER EACH
PERFORMANCE PERIOD BEGINS (OR SUCH OTHER DATE AS MAY BE REQUIRED OR PERMITTED
UNDER SECTION 162(M) OF THE CODE TO THE EXTENT APPLICABLE TO THE COMPANY AND THE
PLAN), THE COMMITTEE SHALL ESTABLISH TARGET INCENTIVE BONUSES FOR EACH
INDIVIDUAL PARTICIPANT WILL BE ELIGIBLE TO EARN IN RESPECT OF SUCH PERFORMANCE
PERIOD UPON THE ACHIEVEMENT OF THE PERFORMANCE OBJECTIVE OR OBJECTIVES
ESTABLISHED FOR SUCH PERFORMANCE PERIOD. NOTWITHSTANDING THE FOREGOING, WITH
RESPECT TO THE PERFORMANCE PERIOD DURING WHICH THE EFFECTIVE DATE OCCURS, THE
COMMITTEE SHALL, TO THE EXTENT NOT ALREADY ESTABLISHED, ESTABLISH TARGET
INCENTIVE BONUSES FOR EACH INDIVIDUAL PARTICIPANT BY NO LATER THAN 60 DAYS AFTER
THE EFFECTIVE DATE.

 

(C)           MAXIMUM AMOUNT PAYABLE. AS SOON AS PRACTICABLE AFTER THE
PERFORMANCE PERIOD ENDS BUT IN NO EVENT LATER THAN THE DATE THAT IS 75 DAYS
AFTER THE END OF THE TAXABLE YEAR IN RESPECT OF WHICH THE APPLICABLE BONUSES ARE
PAYABLE, THE COMMITTEE SHALL DETERMINE (I) WHETHER AND TO WHAT EXTENT ANY OF THE
PERFORMANCE OBJECTIVES ESTABLISHED FOR THE RELEVANT PERFORMANCE PERIOD UNDER
SECTION 4(A) HAVE BEEN SATISFIED AND (II) FOR EACH PARTICIPANT WHO IS EMPLOYED
BY THE COMPANY OR ONE OF ITS SUBSIDIARIES ON THE LAST DAY OF THE PERFORMANCE
PERIOD FOR WHICH THE BONUS IS PAYABLE, THE ACTUAL BONUS TO WHICH SUCH
PARTICIPANT SHALL BE ENTITLED, TAKING INTO CONSIDERATION THE EXTENT TO WHICH THE
PERFORMANCE OBJECTIVES HAVE BEEN MET AND SUCH OTHER FACTORS AS THE COMMITTEE MAY
DEEM APPROPRIATE. ANY PROVISION OF THIS PLAN NOTWITHSTANDING, IN NO EVENT SHALL
ANY PARTICIPANT RECEIVE A BONUS UNDER THIS PLAN IN RESPECT OF ANY FISCAL YEAR OF
THE COMPANY IN EXCESS OF $10 MILLION.

 

(D)           NEGATIVE DISCRETION. NOTWITHSTANDING ANYTHING ELSE CONTAINED IN
SECTION 4(C) TO THE CONTRARY, THE COMMITTEE SHALL HAVE THE RIGHT, IN ITS
ABSOLUTE DISCRETION, (I) TO REDUCE OR ELIMINATE THE AMOUNT OTHERWISE PAYABLE TO
ANY PARTICIPANT UNDER SECTION 4(C) BASED ON INDIVIDUAL PERFORMANCE OR ANY OTHER
FACTORS THAT THE COMMITTEE, IN ITS DISCRETION, SHALL DEEM APPROPRIATE AND
(II) TO ESTABLISH RULES OR PROCEDURES THAT HAVE THE EFFECT OF LIMITING THE
AMOUNT PAYABLE TO EACH PARTICIPANT TO AN AMOUNT THAT IS LESS THAN THE MAXIMUM
AMOUNT OTHERWISE AUTHORIZED UNDER SECTION 4(C).

 

(E)           DEATH OR DISABILITY. IF A PARTICIPANT DIES OR BECOMES DISABLED
PRIOR TO THE LAST DAY OF THE PERFORMANCE PERIOD FOR WHICH THE BONUS IS PAYABLE,
SUCH PARTICIPANT MAY RECEIVE AN ANNUAL BONUS EQUAL TO THE BONUS OTHERWISE
PAYABLE TO SUCH PARTICIPANT BASED UPON ACTUAL COMPANY PERFORMANCE FOR THE
APPLICABLE PERFORMANCE PERIOD OR, IF DETERMINED BY THE COMMITTEE, BASED UPON
ACHIEVING TARGETED PERFORMANCE OBJECTIVES, MULTIPLIED BY A FRACTION, THE
NUMERATOR OF WHICH IS THE NUMBER OF DAYS THAT HAVE ELAPSED DURING THE
PERFORMANCE PERIOD IN WHICH THE PARTICIPANT’S DEATH OR DISABILITY OCCURS PRIOR
TO AND INCLUDING THE DATE OF THE PARTICIPANT’S DEATH OR DISABILITY AND THE
DENOMINATOR OF WHICH IS THE TOTAL NUMBER OF DAYS IN THE PERFORMANCE PERIOD OR
SUCH OTHER AMOUNT AS THE COMMITTEE MAY DEEM APPROPRIATE.

 

(F)            OTHER TERMINATION OF EMPLOYMENT. UNLESS OTHERWISE DETERMINED BY
THE COMMITTEE AND EXCEPT AS MAY OTHERWISE BE PROVIDED IN SECTION 4(E) ABOVE, NO

 

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BONUSES SHALL BE PAYABLE UNDER THIS PLAN TO ANY PARTICIPANT WHOSE EMPLOYMENT
TERMINATES PRIOR TO THE LAST DAY OF THE PERFORMANCE PERIOD.

 

5.             PAYMENT

 

(A)           IN GENERAL. EXCEPT AS OTHERWISE PROVIDED HEREUNDER, PAYMENT OF ANY
BONUS AMOUNT DETERMINED UNDER SECTION 4 SHALL BE MADE TO EACH PARTICIPANT AS
SOON AS PRACTICABLE AFTER THE COMMITTEE CERTIFIES THAT ONE OR MORE OF THE
APPLICABLE PERFORMANCE OBJECTIVES HAVE BEEN ATTAINED OR, IN THE CASE OF ANY
BONUS PAYABLE UNDER THE PROVISIONS OF SECTION 4(D), AFTER THE COMMITTEE
DETERMINES THE AMOUNT OF ANY SUCH BONUS.

 

(B)           FORM OF PAYMENT. THE COMMITTEE SHALL DETERMINE WHETHER ANY BONUS
PAYABLE UNDER THIS PLAN IS PAYABLE IN CASH, OR IN RESTRICTED STOCK, RESTRICTED
STOCK UNITS, STOCK APPRECIATION RIGHTS OR OPTIONS (OF EQUIVALENT VALUE) AWARDED
UNDER THE 2005 AMENDED AND RESTATED STOCK PURCHASE AND OPTION PLAN FOR ROCKWOOD
HOLDINGS, INC. AND SUBSIDIARIES (AS AMENDED FROM TIME TO TIME), OR ANY
COMBINATION THEREOF.

 

6.             GENERAL PROVISIONS

 

(A)           EFFECTIVENESS OF THE PLAN. THE PLAN SHALL BECOME EFFECTIVE ON THE
DATE ON WHICH IT IS ADOPTED BY THE BOARD (THE “EFFECTIVE DATE”), SUBJECT TO THE
APPROVAL OF THE STOCKHOLDERS OF THE COMPANY. THE PLAN SHALL EXPIRE ON THE TENTH
ANNIVERSARY OF THE EFFECTIVE DATE.

 

(B)           CODE SECTION 162(M) COMPLIANCE. NOTWITHSTANDING ANYTHING SET FORTH
IN THIS PLAN TO THE CONTRARY, UNTIL SUCH TIME AS THE COMPANY IS NO LONGER WITHIN
THE “RELIANCE PERIOD” (AS SUCH TERM IS DEFINED IN TREASURY REGULATION
1.162-27(F)(2)) (THE “RELIANCE PERIOD”), THE BOARD OR THE COMMITTEE MAY, BUT IS
NOT REQUIRED, TO ADMINISTER AND MAINTAIN THIS PLAN, AND GRANT TARGET INCENTIVE
BONUSES, AND PAY BONUSES, UNDER THIS PLAN, TO THOSE EMPLOYEES WHO ARE COVERED
EMPLOYEES IN COMPLIANCE WITH THE PROVISIONS OF SECTION 162(M) OF THE CODE AS THE
SAME WOULD APPLY UPON EXPIRATION OF THE RELIANCE PERIOD.

 

(C)           AMENDMENT AND TERMINATION. THE BOARD OR THE COMMITTEE MAY AT ANY
TIME AMEND, SUSPEND, DISCONTINUE OR TERMINATE THE PLAN; PROVIDED, HOWEVER, THAT
NO SUCH AMENDMENT, SUSPENSION, DISCONTINUANCE OR TERMINATION SHALL ADVERSELY
AFFECT THE RIGHTS OF ANY PARTICIPANT IN RESPECT OF ANY CALENDAR YEAR WHICH HAS
ALREADY COMMENCED AND, TO THE EXTENT SECTION 162(M) OF THE CODE IS APPLICABLE TO
THE COMPANY AND THE PLAN, NO SUCH ACTION SHALL BE EFFECTIVE WITHOUT APPROVAL BY
THE STOCKHOLDERS OF THE COMPANY TO THE EXTENT NECESSARY TO CONTINUE TO QUALIFY
THE AMOUNTS PAYABLE HEREUNDER TO COVERED EMPLOYEES AS UNDER SECTION 162(M) OF
THE CODE.

 

(D)           DESIGNATION OF BENEFICIARY. EACH PARTICIPANT MAY DESIGNATE A
BENEFICIARY OR BENEFICIARIES (WHICH BENEFICIARY MAY BE AN ENTITY OTHER THAN A
NATURAL PERSON) TO RECEIVE ANY PAYMENTS WHICH MAY BE MADE FOLLOWING THE
PARTICIPANT’S DEATH. SUCH DESIGNATION MAY BE CHANGED OR CANCELED AT ANY TIME
WITHOUT THE CONSENT OF ANY

 

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SUCH BENEFICIARY. ANY SUCH DESIGNATION, CHANGE OR CANCELLATION MUST BE MADE IN A
FORM APPROVED BY THE COMMITTEE AND SHALL NOT BE EFFECTIVE UNTIL RECEIVED BY THE
COMMITTEE. IF NO BENEFICIARY HAS BEEN NAMED, OR THE DESIGNATED BENEFICIARY OR
BENEFICIARIES SHALL HAVE PREDECEASED THE PARTICIPANT, THE BENEFICIARY SHALL BE
THE PARTICIPANT’S SPOUSE OR, IF NO SPOUSE SURVIVES THE PARTICIPANT, THE
PARTICIPANT’S ESTATE. IF A PARTICIPANT DESIGNATES MORE THAN ONE BENEFICIARY, THE
RIGHTS OF SUCH BENEFICIARIES SHALL BE PAYABLE IN EQUAL SHARES, UNLESS THE
PARTICIPANT HAS DESIGNATED OTHERWISE.

 

(E)           NO RIGHT TO CONTINUED EMPLOYMENT OR AWARDS. NOTHING IN THIS PLAN
SHALL BE CONSTRUED AS CONFERRING UPON ANY PARTICIPANT ANY RIGHT TO CONTINUE IN
THE EMPLOYMENT OF THE COMPANY OR ANY OF ITS SUBSIDIARIES. NO PARTICIPANT SHALL
HAVE ANY CLAIM TO BE GRANTED ANY AWARD, AND THERE IS NO OBLIGATION FOR
UNIFORMITY OF TREATMENT OF PARTICIPANTS OR BENEFICIARIES. THE TERMS AND
CONDITIONS OF AWARDS AND THE COMMITTEE’S DETERMINATIONS AND INTERPRETATIONS WITH
RESPECT THERETO NEED NOT BE THE SAME WITH RESPECT TO EACH PARTICIPANT (WHETHER
OR NOT THE PARTICIPANTS ARE SIMILARLY SITUATED).

 

(F)            NO LIMITATION ON CORPORATE ACTIONS. NOTHING CONTAINED IN THE PLAN
SHALL BE CONSTRUED TO PREVENT THE COMPANY OR ANY SUBSIDIARY FROM TAKING ANY
CORPORATE ACTION WHICH IS DEEMED BY IT TO BE APPROPRIATE OR IN ITS BEST
INTEREST, WHETHER OR NOT SUCH ACTION WOULD HAVE AN ADVERSE EFFECT ON ANY AWARDS
MADE UNDER THE PLAN. NO EMPLOYEE, BENEFICIARY OR OTHER PERSON SHALL HAVE ANY
CLAIM AGAINST THE COMPANY OR ANY SUBSIDIARY AS A RESULT OF ANY SUCH ACTION.

 

(G)           NONALIENATION OF BENEFITS. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NO
PARTICIPANT OR BENEFICIARY SHALL HAVE THE POWER OR RIGHT TO TRANSFER,
ANTICIPATE, OR OTHERWISE ENCUMBER THE PARTICIPANT’S INTEREST UNDER THE PLAN. THE
COMPANY’S OBLIGATIONS UNDER THIS PLAN ARE NOT ASSIGNABLE OR TRANSFERABLE EXCEPT
TO (I) A CORPORATION WHICH ACQUIRES ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S
ASSETS OR (II) ANY CORPORATION INTO WHICH THE COMPANY MAY BE MERGED OR
CONSOLIDATED. THE PROVISIONS OF THE PLAN SHALL INURE TO THE BENEFIT OF EACH
PARTICIPANT AND THE PARTICIPANT’S BENEFICIARIES, HEIRS, EXECUTORS,
ADMINISTRATORS OR SUCCESSORS IN INTEREST.

 

(H)           WITHHOLDING. A PARTICIPANT MAY BE REQUIRED TO PAY TO THE COMPANY
OR ANY SUBSIDIARY AND THE COMPANY OR ANY SUBSIDIARY SHALL HAVE THE RIGHT AND IS
HEREBY AUTHORIZED TO WITHHOLD FROM ANY PAYMENT DUE UNDER THIS PLAN OR FROM ANY
COMPENSATION OR OTHER AMOUNT OWING TO THE PARTICIPANT, APPLICABLE WITHHOLDING
TAXES WITH RESPECT TO ANY PAYMENT UNDER THIS PLAN AND TO TAKE SUCH ACTION AS MAY
BE NECESSARY IN THE OPINION OF THE COMPANY TO SATISFY ALL OBLIGATIONS FOR THE
PAYMENT OF SUCH WITHHOLDING TAXES.

 

(I)            SEVERABILITY. IF ANY PROVISION OF THIS PLAN IS HELD
UNENFORCEABLE, THE REMAINDER OF THE PLAN SHALL CONTINUE IN FULL FORCE AND EFFECT
WITHOUT REGARD TO SUCH UNENFORCEABLE PROVISION AND SHALL BE APPLIED AS THOUGH
THE UNENFORCEABLE PROVISION WERE NOT CONTAINED IN THE PLAN.

 

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(J)            GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(K)           HEADINGS. HEADINGS ARE INSERTED IN THIS PLAN FOR CONVENIENCE OF
REFERENCE ONLY AND ARE TO BE IGNORED IN A CONSTRUCTION OF THE PROVISIONS OF THE
PLAN.

 

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