Exhibit 10.1

 

ROCKWOOD HOLDINGS, INC.

FORM OF STOCK OPTION AGREEMENT

(Time-Vesting)

 

THIS AGREEMENT, dated as of [December     ], 2008 is made by and between
Rockwood Holdings, Inc., a Delaware corporation (hereinafter referred to as the
“Company”), and [NAME], an employee of the Company or a Subsidiary (as defined
below) or Affiliate (as defined below) of the Company, hereinafter referred to
as “Optionee.”  Any capitalized terms herein not otherwise defined in Article I
shall have the meaning set forth in the 2008 Amended and Restated Stock Purchase
and Option Plan For Rockwood Holdings, Inc. and Subsidiaries.

 

WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase
shares of its common stock, par value $0.01 per share (the “Common Stock”);

 

WHEREAS, the Company wishes to carry out the Plan, the terms of which are hereby
incorporated by reference and made a part of this Agreement; and

 

WHEREAS, the committee of the Company’s Board appointed to administer the Plan
(the “Committee”) has determined that it would be to the advantage and best
interest of the Company and its shareholders to grant the Option (as defined
below) provided for herein to the Optionee as an incentive for increased efforts
during the Optionee’s term of office with the Company or one of its Subsidiaries
or Affiliates, and has advised the Company thereof and instructed the
undersigned officers to issue said Option.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto do hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Whenever the following terms are used in this Agreement, they shall have the
meaning specified below unless the context clearly indicates to the contrary.

 

SECTION 1.1.                                   - AFFILIATE

 

“Affiliate” shall mean, with respect to the Company, any entity directly or
indirectly controlling, controlled by, or under common control with, the Company
or any other entity designated by the Board of Directors in which the Company or
an Affiliate has an interest.

 

SECTION 1.2.                                   - CAUSE

 

“Cause” shall mean (i) the Optionee’s willful and continued failure to perform
duties, which are within the control of the Optionee and consistent with such
Optionee’s title and position, that is not cured within 15 days following
written notice of such failure, (ii) the Optionee’s conviction of or plea of
guilty or no contest to a (x) felony or (y) crime involving moral turpitude,
(iii) the Optionee’s willful malfeasance or misconduct which is injurious to the

 

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Company or its Subsidiaries, other than in a manner that is insignificant or
inconsequential, (iv) a breach by the Optionee of the material terms of any
non-compete, non-solicitation or confidentiality covenants or agreements by
which the Optionee may be bound, following notice of such breach (which notice
may be oral or written) or (v) any violation by the Optionee of any material
written Company policy after written notice of such breach, if such violation is
shown by the Company to be reasonably expected to result in material injury to
the business, reputation or financial condition of the Company.

 

SECTION 1.3.                                   - CHANGE OF CONTROL

 

“CHANGE OF CONTROL” SHALL MEAN THE EARLIEST TO OCCUR OF:

 

(I)                                     ANY PERSON (OTHER THAN THE COMPANY OR
ANY EMPLOYEE BENEFIT PLANS SPONSORED BY THE COMPANY) IS OR BECOMES THE
“BENEFICIAL OWNER” (AS DEFINED IN RULE 13D-3 UNDER THE EXCHANGE ACT), DIRECTLY
OR INDIRECTLY, OF SECURITIES OF THE COMPANY REPRESENTING 30% OR MORE OF THE
COMBINED VOTING POWER OF THE COMPANY’S OUTSTANDING VOTING SECURITIES (WHICH TERM
SHALL MEAN SECURITIES WHICH UNDER ORDINARY CIRCUMSTANCES ARE ENTITLED TO VOTE
FOR THE ELECTION OF DIRECTORS OF THE BOARD) OTHER THAN THROUGH THE PURCHASE OF
VOTING SECURITIES DIRECTLY FROM THE COMPANY THROUGH A PRIVATE PLACEMENT;

 

(II)                                  INDIVIDUALS WHO CONSTITUTE THE BOARD (THE
“BOARD”) ON THE DATE HEREOF (THE “INCUMBENT BOARD”) CEASE FOR ANY REASON TO
CONSTITUTE AT LEAST A MAJORITY THEREOF, PROVIDED THAT ANY PERSON BECOMING A
DIRECTOR SUBSEQUENT TO THE DATE HEREOF WHOSE ELECTION, OR NOMINATION FOR
ELECTION BY THE COMPANY’S SHAREHOLDERS, WAS APPROVED BY A VOTE OF AT LEAST A
MAJORITY OF THE DIRECTORS COMPRISING THE INCUMBENT BOARD SHALL FROM AND AFTER
SUCH ELECTION BE DEEMED TO BE A MEMBER OF THE INCUMBENT BOARD;

 

(III)                               A MERGER OR CONSOLIDATION INVOLVING THE
COMPANY OR ITS STOCK OR AN ACQUISITION BY THE COMPANY, DIRECTLY OR INDIRECTLY OR
THROUGH ONE OR MORE SUBSIDIARIES, OF ANOTHER ENTITY OR ITS STOCK OR ASSETS IN
EXCHANGE FOR THE STOCK OF THE COMPANY IS CONSUMMATED, UNLESS, IMMEDIATELY
FOLLOWING SUCH TRANSACTION, 50.1% OR MORE OF THE THEN OUTSTANDING VOTING
SECURITIES OF THE SURVIVING OR RESULTING CORPORATION OR ENTITY WILL BE (OR IS)
THEN BENEFICIALLY OWNED, DIRECTLY OR INDIRECTLY, BY THE INDIVIDUALS AND ENTITIES
WHO WERE THE BENEFICIAL OWNERS OF THE COMPANY’S OUTSTANDING VOTING SECURITIES
IMMEDIATELY PRIOR TO SUCH TRANSACTION (TREATING, FOR PURPOSES OF DETERMINING
WHETHER THE 50.1% CONTINUITY TEST IS MET, ANY OWNERSHIP OF THE VOTING SECURITIES
OF THE SURVIVING OR RESULTING CORPORATION OR ENTITY THAT RESULTS FROM A
STOCKHOLDER’S OWNERSHIP OF THE STOCK OF, OR OTHER OWNERSHIP INTEREST IN, THE
CORPORATION OR OTHER ENTITY WITH WHICH THE COMPANY IS MERGED OR CONSOLIDATED AS
NOT OWNED BY PERSONS WHO WERE BENEFICIAL OWNERS OF THE COMPANY’S OUTSTANDING
VOTING SECURITIES IMMEDIATELY PRIOR TO THE TRANSACTION); OR

 

(IV)                              ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
COMPANY ARE SOLD OR TRANSFERRED TO A PERSON AS TO WHICH (A) THE INCUMBENT BOARD
DOES NOT HAVE AUTHORITY (WHETHER BY LAW OR CONTRACT) TO DIRECTLY CONTROL THE USE
OR FURTHER DISPOSITION OF SUCH ASSETS AND (B) THE FINANCIAL RESULTS OF THE
COMPANY AND SUCH PERSON ARE NOT CONSOLIDATED FOR FINANCIAL REPORTING PURPOSES.

 

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Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
unless such transaction or occurrence constitutes a change in ownership or
effective control within the meaning of Section 409A(a)(2)(A)(v) of the Code.

 

SECTION 1.4.                                   - DISABILITY

 

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

 

SECTION 1.5.                                   – GOOD REASON

 

“Good Reason” shall mean without the Optionee’s consent, (i) a reduction in the
Optionee’s base salary or annual bonus opportunity (other than a reduction in
base salary that is offset by an increase in bonus opportunity upon the
attainment of reasonable financial targets, which reduction may not exceed 10%
of the Optionee’s base salary in any 12 month period), (ii) a substantial
reduction in the Optionee’s duties and responsibilities, which continues beyond
15 days after written notice by the Optionee to the Company of such reduction,
(iii) the elimination or reduction of the Optionee’s eligibility to participate
in the Company’s benefit programs that is inconsistent with the eligibility of
similarly situated employees of the Company to participate therein, (iv) a
transfer of the Optionee’s primary workplace by more than 35 miles from the
current workplace, (v) any serious chronic mental or physical illness of an
immediate family member that requires the Optionee to terminate his or her
employment with the Company because of a substantial interference with his or
her duties at the Company or (vi) any failure by the Company to pay when due any
payment owed to the Optionee within 15 days after the date such payment becomes
due.

 

SECTION 1.6.                                   GRANT DATE

 

“Grant Date” shall mean December 12, 2008, the date on which the Option provided
for in this Agreement is granted.

 

SECTION 1.7.                                   - GROUP

 

“Group” shall mean two or more Persons acting together as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring, holding or
disposing of securities of the Company.

 

SECTION 1.8.                                   - OPTION

 

“Option” shall mean the Option (which shall, in part and to the extent permitted
by applicable law and as set forth on the signature page hereto, be an
“incentive stock option”, within the meaning of Section 422 of the Code) to
purchase Common Stock granted under this Agreement.  To the extent that, for any
reason, an Option intended to be an incentive stock option does not qualify as
an incentive stock option, it shall be deemed an option that is not an incentive
stock option.

 

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SECTION 1.9.                                   - PERSON

 

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

 

SECTION 1.10.                             - PLAN

 

“Plan” shall mean the 2008 Amended and Restated Stock Purchase and Option Plan
for Rockwood Holdings, Inc. and Subsidiaries, as it may be amended from time to
time.

 

SECTION 1.11.                             - RETIREMENT

 

“Retirement” shall mean retirement at age 62 or over (or such other age as may
be approved by the Board) after having been employed by the Company or a
Subsidiary for at least five full years.

 

SECTION 1.12.                             - SECRETARY

 

“Secretary” shall mean the Secretary of the Company.

 

ARTICLE II

 

GRANT OF OPTIONS

 

SECTION 2.1.                                   - GRANT OF OPTION

 

For good and valuable consideration, on and as of the Grant Date, the Company
irrevocably grants to the Optionee an Option to purchase any part or all of an
aggregate of the number of shares set forth on the signature page hereof of its
Common Stock upon the terms and conditions set forth in this Agreement.

 

SECTION 2.2.                                   - EXERCISE PRICE

 

Subject to Section 2.4, the exercise price of the shares of Common Stock covered
by the Option shall be $9.18 per share without commission or other charge (which
is the fair market value per share of the Common Stock on the Grant Date).

 

SECTION 2.3.                                   – NO  GUARANTEE OF EMPLOYMENT

 

Nothing in this Agreement or in the Plan shall confer upon the Optionee any
right to continue in the employ of the Company or any of its Subsidiaries or
Affiliates or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries or Affiliates, which are hereby expressly reserved,
to terminate the employment of the Optionee at any time for any reason
whatsoever, with or without cause.

 

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SECTION 2.4.                                   - ADJUSTMENTS IN OPTION PURSUANT
TO MERGER, CONSOLIDATION, ETC.

 

(a) Subject to Sections 8 and 9 of the Plan, in the event that the outstanding
shares of the stock subject to the Option are, from time to time, changed into
or exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares, or other corporate event, the Committee shall make, as appropriate and
equitable, an adjustment in the number and kind of shares and/or the amount of
consideration as to which or for which, as the case may be, such Option, or
portions thereof then unexercised, shall be exercisable and/or, other than in an
event that is a Change of Control, shall pay to the Optionee a dividend in
respect of the shares of Common Stock subject to the Option, in any event in
order to allow the Optionee to participate in such corporate event in an
equitable manner.  Any such adjustment made by the Committee shall be final and
binding upon the Optionee, the Company and all other interested persons.

 

(b) Subject to Sections 8 and 9 of the Plan, in the event of a Change of Control
in which all of the then outstanding Common Stock will be cancelled and
converted into the right to receive a cash payment per share of Common Stock
(such cash payment, the “Change of Control Consideration”), the Committee may,
in its discretion, either: (i) cause the Option (to the extent then outstanding
and not previously exercised) to, effective as of the effective date of such a
Change of Control, be converted into a right to receive a cash payment (payable
as soon as practicable after the Change of Control) equal to the product of
(x) the excess, if any, of (A) the Change of Control Consideration, over (B) the
exercise price per share of Common Stock subject to such Option, multiplied by
(y) the total number of shares of Common Stock subject to such Option; or
(ii) cause the Option (to the extent then outstanding and not previously
exercised) to, effective as of the effective date of such a Change of Control,
be substituted for new options to purchase shares of common stock of an
acquiring or surviving entity (or any other entity that may provide for such a
substitute award under Section 424 of the Code) (or, to the extent permitted
under Section 409A of the Code, be substituted for stock appreciation rights
settled in cash or other equity or equity-based awards) that will substantially
preserve the otherwise applicable terms of the Option, as determined by the
Committee in its sole discretion.  In the event that the exercise price of any
Option is equal to or greater than the Change of Control Consideration, such
Option shall be automatically cancelled and have no further force or effect
without payment of any consideration in respect thereof.

 

(c) In the event of a Change of Control in which Section 2.4(b) hereof does not
apply, the Committee shall take any such other actions as may be in accordance
with Sections 8 and 9 of the Plan and Section 2.4(a) of this Agreement in
connection with the Option, or portions thereof unexercised.

 

(d) All actions taken by the Committee under this Section 2.4 shall be final and
binding upon the Optionee, the Company and all other interested persons.

 

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ARTICLE III

 

PERIOD OF EXERCISABILITY

 

SECTION 3.1.                                   - COMMENCEMENT OF EXERCISABILITY

 

(A)                                  SO LONG AS THE OPTIONEE CONTINUES TO BE
EMPLOYED BY THE COMPANY OR ITS SUBSIDIARIES THROUGH THE APPLICABLE VESTING DATE,
THE OPTION SHALL BECOME EXERCISABLE PURSUANT TO THE FOLLOWING SCHEDULE:

 

 

 

Percentage of Shares

 

Date Option Becomes Exercisable

 

 As to Which the Option Granted Is Exercisable

 

 

 

 

 

December 31, 2009

 

33 1/3%

 

 

 

 

 

December 31, 2010

 

66 2/3%

 

 

 

 

 

December 31, 2011

 

100%

 

 

(B)                                 NOTWITHSTANDING THE FOREGOING, THE OPTION
SHALL BECOME IMMEDIATELY EXERCISABLE AS TO 100% OF THE SHARES OF COMMON STOCK
SUBJECT TO SUCH OPTION  AS FOLLOWS (BUT ONLY TO THE EXTENT SUCH OPTION HAS NOT
OTHERWISE TERMINATED OR BECOME EXERCISABLE): (I) IN THE EVENT THAT THE
OPTIONEE’S EMPLOYMENT IS TERMINATED BY THE COMPANY AND ITS SUBSIDIARIES WITHOUT
CAUSE OR THE OPTIONEE RESIGNS WITH GOOD REASON WITHIN THE TWO-YEAR PERIOD THAT
COMMENCES ON THE EFFECTIVE DATE OF A CHANGE OF CONTROL, BUT ONLY IF SUCH
TERMINATION OCCURS AT LEAST SIX MONTHS AFTER THE GRANT DATE; OR (II) IN THE
EVENT THE OPTIONEE’S EMPLOYMENT IS TERMINATED AS A RESULT OF THE OPTIONEE’S
DEATH OR DISABILITY.

 

(C)                                  NOTWITHSTANDING THE FOREGOING, THE OPTION
SHALL BECOME IMMEDIATELY EXERCISABLE AS TO 50% OF THE SHARES OF COMMON STOCK
SUBJECT TO SUCH OPTION (BUT ONLY TO THE EXTENT SUCH OPTION HAS NOT OTHERWISE
TERMINATED OR BECOME EXERCISABLE) IN THE EVENT THAT THE OPTIONEE’S EMPLOYMENT IS
TERMINATED BY THE COMPANY AND ITS SUBSIDIARIES WITHOUT CAUSE OR THE OPTIONEE
RESIGNS WITH GOOD REASON WITHIN THE TWO-YEAR PERIOD THAT COMMENCES ON THE
EFFECTIVE DATE OF A CHANGE OF CONTROL, BUT ONLY IF SUCH TERMINATION OCCURS
WITHIN SIX MONTHS OF THE GRANT DATE.

 

(D)                                 NOTWITHSTANDING THE FOREGOING, NO PORTION OF
THE OPTION (WHICH DOES NOT OTHERWISE BECOME EXERCISABLE OR VESTED IN ACCORDANCE
WITH SECTION 3.1(A), (B) OR (C) ABOVE) SHALL BECOME EXERCISABLE AS TO ANY
ADDITIONAL SHARES OF COMMON STOCK FOLLOWING THE TERMINATION OF EMPLOYMENT OF THE
OPTIONEE FOR ANY REASON AND ANY OPTION, WHICH IS UNEXERCISABLE OR NOT VESTED AS
OF THE OPTIONEE’S TERMINATION OF EMPLOYMENT, SHALL BE IMMEDIATELY CANCELLED
AND/OR FORFEITED BY THE OPTIONEE WITHOUT CONSIDERATION THEREFOR.

 

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SECTION 3.2.                                   - EXPIRATION OF OPTION

 

The Optionee may not exercise the Option to any extent after the first to occur
of the following events:

 

(A)                                  THE SEVENTH ANNIVERSARY OF THE GRANT DATE,
SO LONG AS THE OPTIONEE REMAINS EMPLOYED THROUGH SUCH ANNIVERSARY; OR

 

(B)                                 THE SEVENTH ANNIVERSARY OF THE GRANT DATE,
IF THE OPTIONEE’S EMPLOYMENT IS TERMINATED BY REASON OF RETIREMENT; OR

 

(C)                                  THE FIRST ANNIVERSARY OF THE DATE OF THE
OPTIONEE’S TERMINATION OF EMPLOYMENT DUE TO THE OPTIONEE’S DEATH OR DISABILITY;
OR

 

(D)                                 NINETY (90) DAYS AFTER THE OPTIONEE’S
TERMINATION OF EMPLOYMENT BY THE COMPANY FOR ANY REASON, OR BY THE OPTIONEE FOR
ANY REASON, IN EITHER CASE EXCEPT AS SET FORTH IN SECTION 3.2(C) ABOVE; OR

 

(E)                                  IMMEDIATELY UPON TERMINATION, IF THE
OPTIONEE’S EMPLOYMENT IS TERMINATED BY THE COMPANY FOR CAUSE; OR

 

(F)                                    IF THE COMMITTEE SO DETERMINES PURSUANT
TO SECTION 2.4(B)(I), THE EFFECTIVE DATE OF A CHANGE OF CONTROL; OR

 

(G)                                 IF THE COMMITTEE SO DETERMINES PURSUANT TO
SECTION 9 OF THE PLAN, THE EFFECTIVE DATE OF EITHER THE MERGER OR CONSOLIDATION
OF THE COMPANY INTO ANOTHER PERSON, OR THE EXCHANGE OR ACQUISITION BY ANOTHER
PERSON OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS OR 80% OR MORE OF ITS
THEN OUTSTANDING VOTING STOCK, OR THE RECAPITALIZATION, RECLASSIFICATION,
LIQUIDATION OR DISSOLUTION OF THE COMPANY.  AT LEAST TEN (10) DAYS PRIOR TO THE
EFFECTIVE DATE OF SUCH MERGER, CONSOLIDATION, EXCHANGE, ACQUISITION,
RECAPITALIZATION, RECLASSIFICATION, LIQUIDATION OR DISSOLUTION, THE COMMITTEE
SHALL GIVE THE OPTIONEE NOTICE OF SUCH EVENT IF THE OPTION HAS THEN NEITHER BEEN
FULLY EXERCISED NOR BECOME UNEXERCISABLE UNDER THIS SECTION 3.2.

 

ARTICLE IV

 

EXERCISE OF OPTION

 

SECTION 4.1.                                   - PERSON ELIGIBLE TO EXERCISE

 

During the lifetime of the Optionee, only the Optionee may exercise an Option or
any portion thereof.  After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when an Option becomes unexercisable under
Section 3.2, be exercised by the Optionee’s personal representative or by any
person empowered to do so under the Optionee’s will or under the then applicable
laws of descent and distribution.

 

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SECTION 4.2.                                   - PARTIAL EXERCISE

 

Any exercisable portion of an Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.2;
provided, however, that any partial exercise shall be for whole shares of Common
Stock only.

 

SECTION 4.3.                                   - MANNER OF EXERCISE

 

An Option, or any exercisable portion thereof, may be exercised solely by
delivering to the Secretary or his office all of the following prior to the time
when the Option or such portion becomes unexercisable under Section 3.2:

 

(A)                                  NOTICE IN WRITING SIGNED BY THE OPTIONEE OR
THE OTHER PERSON THEN ENTITLED TO EXERCISE THE OPTION OR PORTION THEREOF,
STATING THAT THE OPTION OR PORTION THEREOF IS THEREBY EXERCISED, SUCH NOTICE
COMPLYING WITH ALL APPLICABLE RULES ESTABLISHED BY THE COMMITTEE;

 

(B)                                 FULL PAYMENT (IN CASH, BY CHECK OR BY A
COMBINATION THEREOF) FOR THE SHARES WITH RESPECT TO WHICH SUCH OPTION OR PORTION
THEREOF IS EXERCISED;

 

(C)                                  A BONA FIDE WRITTEN REPRESENTATION AND
AGREEMENT, IN A FORM SATISFACTORY TO THE COMMITTEE, SIGNED BY THE OPTIONEE OR
OTHER PERSON THEN ENTITLED TO EXERCISE SUCH OPTION OR PORTION THEREOF, STATING
THAT THE SHARES OF STOCK ARE BEING ACQUIRED FOR HIS OWN ACCOUNT, FOR INVESTMENT
AND WITHOUT ANY PRESENT INTENTION OF DISTRIBUTING OR RESELLING SAID SHARES OR
ANY OF THEM EXCEPT AS MAY BE PERMITTED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), AND THEN APPLICABLE RULES AND REGULATIONS THEREUNDER, AND
THAT THE OPTIONEE OR OTHER PERSON THEN ENTITLED TO EXERCISE SUCH OPTION OR
PORTION THEREOF WILL INDEMNIFY THE COMPANY AGAINST AND HOLD IT FREE AND HARMLESS
FROM ANY LOSS, DAMAGE, EXPENSE OR LIABILITY RESULTING TO THE COMPANY IF ANY SALE
OR DISTRIBUTION OF THE SHARES BY SUCH PERSON IS CONTRARY TO THE REPRESENTATION
AND AGREEMENT REFERRED TO ABOVE; PROVIDED, HOWEVER, THAT THE COMMITTEE MAY, IN
ITS REASONABLE DISCRETION, TAKE WHATEVER ADDITIONAL ACTIONS IT DEEMS REASONABLY
NECESSARY TO ENSURE THE OBSERVANCE AND PERFORMANCE OF SUCH REPRESENTATION AND
AGREEMENT AND TO EFFECT COMPLIANCE WITH THE ACT AND ANY OTHER FEDERAL OR STATE
SECURITIES LAWS OR REGULATIONS;

 

(D)                                 FULL PAYMENT TO THE COMPANY OF ALL AMOUNTS
WHICH, UNDER FEDERAL, STATE OR LOCAL LAW, IT IS REQUIRED TO WITHHOLD UPON
EXERCISE OF THE OPTION; AND

 

(E)                                  IN THE EVENT THE OPTION OR PORTION THEREOF
SHALL BE EXERCISED PURSUANT TO SECTION 4.1 BY ANY PERSON OR PERSONS OTHER THAN
THE OPTIONEE, APPROPRIATE PROOF OF THE RIGHT OF SUCH PERSON OR PERSONS TO
EXERCISE THE OPTION.

 

In addition to the foregoing, the Optionee may, in the Committee’s good faith
discretion, make payment of the exercise price (as required in
Section 4.3(b) above) in shares of Common Stock that the Optionee has held for
at least six months or otherwise pursuant to an irrevocable broker loan program
established by the Committee; and may also pay any taxes required to be withheld
and paid upon any exercise (as required in Section 4.3(d) above) pursuant to an
irrevocable broker loan program established by the Committee.

 

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Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares.  Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein. 
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.

 

SECTION 4.4.                                   - CONDITIONS TO ISSUANCE OF STOCK
CERTIFICATES

 

The shares of stock deliverable upon the exercise of an Option, or any portion
thereof, may be either previously authorized but unissued shares or issued
shares, which have then been reacquired by the Company.  Such shares shall be
fully paid and nonassessable.  The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:

 

(A)                                  THE OBTAINING OF APPROVAL OR OTHER
CLEARANCE FROM ANY STATE OR FEDERAL GOVERNMENTAL AGENCY WHICH THE COMMITTEE
SHALL, IN ITS REASONABLE AND GOOD FAITH DISCRETION, DETERMINE TO BE NECESSARY OR
ADVISABLE; AND

 

(B)                                 THE LAPSE OF SUCH REASONABLE PERIOD OF TIME
FOLLOWING THE EXERCISE OF THE OPTION AS THE COMMITTEE MAY FROM TIME TO TIME
ESTABLISH FOR REASONS OF ADMINISTRATIVE CONVENIENCE.

 

SECTION 4.5.                                   - RIGHTS AS STOCKHOLDER

 

The holder of an Option shall not be, nor have any of the rights or privileges
of, a stockholder of the Company in respect of any shares purchasable upon the
exercise of the Option or any portion thereof unless and until certificates
representing such shares shall have been issued by the Company to such holder.

 

ARTICLE V

 

MISCELLANEOUS

 

SECTION 5.1.                                   - ADMINISTRATION

 

The Committee shall have the power to interpret the Plan and this Agreement and
to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules. 
All actions taken and all interpretations and determinations made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.  No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to the Plan or the Options.  In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan and this Agreement.

 

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SECTION 5.2.                                   - OPTION NOT TRANSFERABLE

 

Neither the Option nor any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Optionee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers by will or by the applicable laws of descent and distribution.

 

SECTION 5.3.                                   - SHARES TO BE RESERVED

 

The Company shall at all times during the term of the Option reserve and keep
available such number of shares of stock as will be sufficient to satisfy the
requirements of this Agreement.

 

SECTION 5.4.                                   - NOTICES

 

Any notice to be given under the terms of this Agreement to the Company shall be
addressed to the Company in care of its Secretary, and any notice to be given to
the Optionee shall be addressed to him at the address given beneath his
signature hereto.  By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to him.  Any
notice, which is required to be given to the Optionee, shall, if the Optionee is
then deceased, be given to the Optionee’s personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4.  Any notice shall have been deemed duly
given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.

 

SECTION 5.5.                                   - TITLES

 

Titles are provided herein for convenience only and are not to serve as a basis
for interpretation or construction of this Agreement.

 

SECTION 5.6.                                   - APPLICABILITY OF PLAN

 

The Option and the shares of Common Stock issued to the Optionee upon exercise
of the Option shall be subject to all of the terms and provisions of the Plan,
to the extent applicable to the Option and such shares.  In the event of any
conflict between this Agreement and the Plan, the terms of the Plan shall
control.

 

SECTION 5.7.                                   - AMENDMENT

 

This Agreement may be amended only by a writing executed by the parties hereto,
which specifically states that it is amending this Agreement.

 

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SECTION 5.8.                                   - GOVERNING LAW

 

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

 

SECTION 5.9.                                   - ARBITRATION

 

IN THE EVENT OF ANY CONTROVERSY AMONG THE PARTIES HERETO ARISING OUT OF, OR
RELATING TO, THIS AGREEMENT WHICH CANNOT BE SETTLED AMICABLY BY THE PARTIES,
SUCH CONTROVERSY SHALL BE FINALLY, EXCLUSIVELY AND CONCLUSIVELY SETTLED BY
MANDATORY ARBITRATION CONDUCTED IN NEW YORK EXPEDITIOUSLY IN ACCORDANCE WITH THE
AMERICAN ARBITRATION ASSOCIATION RULES, BY A SINGLE INDEPENDENT ARBITRATOR.  IF
THE PARTIES ARE UNABLE TO AGREE ON THE SELECTION OF AN ARBITRATOR, THEN ANY
PARTY MAY PETITION THE AMERICAN ARBITRATION ASSOCIATION FOR THE APPOINTMENT OF
THE ARBITRATOR, WHICH APPOINTMENT SHALL BE MADE WITHIN TEN DAYS OF THE PETITION
THEREFOR.  EITHER THE COMPANY OR THE OPTIONEE MAY INSTITUTE SUCH ARBITRATION
PROCEEDING BY GIVING WRITTEN NOTICE TO THE OTHER PARTY.  THE ARBITRATOR SHALL
HOLD A HEARING WITHIN 30 DAYS OF HIS OR HER APPOINTMENT.  IN PREPARATION FOR
THEIR PRESENTATION AT SUCH HEARING, EACH PARTY MAY DEPOSE A MAXIMUM OF FOUR
PEOPLE.  EACH SUCH DEPOSITION SHALL LAST NO MORE THAN SIX HOURS.  EACH SIDE MAY
FILE WITH THE ARBITRATOR ONE BRIEF, NOT IN EXCESS OF 30 PAGES, EXCLUDING
EXHIBITS.  EACH SIDE SHALL HAVE NO MORE THAN EIGHT HOURS TO PRESENT ITS POSITION
TO THE ARBITRATOR.  THE HEARING SHALL BE NO MORE THAN THREE DAYS IN LENGTH.  THE
DECISION OF THE ARBITRATOR SHALL BE FINAL AND BINDING UPON ALL PARTIES HERETO
AND SHALL BE RENDERED PURSUANT TO A WRITTEN DECISION, WHICH CONTAINS A DETAILED
RECITAL OF THE ARBITRATOR’S REASONING.  JUDGMENT UPON THE AWARD RENDERED MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.

 

SECTION 5.10.                             SIGNATURE IN COUNTERPARTS

 

THIS AGREEMENT MAY BE SIGNED IN COUNTERPARTS, EACH OF WHICH SHALL BE AN
ORIGINAL, WITH THE SAME EFFECT AS IF THE SIGNATURES THERETO AND HERETO WERE UPON
THE SAME INSTRUMENT.

 

[Signatures on next page.]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.

 

 

 

ROCKWOOD HOLDINGS, INC.

 

 

 

 

 

By

 

 

 

Its:

 

 

 

 

 

 

 

 

 

OPTIONEE:

 

 

 

 

 

 

 

 

 

 

 

Address

 

 

 

 

 

Optionee’s Taxpayer Identification Number:

 

 

 

 

 

 

 

Aggregate number of shares

 

 

of Common Stock for which

 

 

the Option granted

 

 

hereunder is exercisable

 

 

(100% of total number of shares):

 

 

 

 

 

              ; of which

 

 

 

 

 

               shall be incentive stock options and

 

 

 

 

 

               shall be non-qualified stock options.

 

 

 

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