Exhibit 10.2


 


ROCKWOOD
HOLDINGS, INC.


FORM OF RESTRICTED
STOCK UNIT AWARD AGREEMENT


(Time and
Performance Vesting)


 


THIS AGREEMENT (the “Agreement”), is made, effective as of [December 12,]
2008 (the “Grant Date”) between Rockwood Holdings, Inc.,
a Delaware corporation (hereinafter called the “Company”),
and [NAME], an employee of the Company or
an Affiliate, hereinafter referred to as the “Employee”.  For purposes of this Agreement, capitalized
terms not otherwise defined above or below, or in the Plan, shall have the
meanings set forth in Appendix A attached to this Agreement and incorporated by
reference herein.


 


WHEREAS, the Company desires to grant the
Employee both time-based and performance-based restricted stock unit awards as
provided for hereunder (the “Restricted Stock Unit
Awards”), ultimately payable in shares of common stock of the
Company, par value $0.01 per share (the “Common Stock”),
pursuant to the 2008 Amended and Restated Stock Purchase and Option Plan for
Rockwood Holdings, Inc. and Subsidiaries 
(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 shares of Common Stock provided for herein to the Employee as an
incentive for increased efforts during his term of office with the Company or
an Affiliate, and has advised the Company thereof and instructed the
undersigned officers to grant said Restricted Stock Unit Awards.


 


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:


 


1.                                       Grant
of the Restricted Stock Units. 
Subject to the terms and conditions of the Plan and the additional terms
and conditions set forth in this Agreement, the Company hereby grants to the
Employee the opportunity to vest in (i) up to [insert
number of time-based RSUs] RSUs, which shall vest in accordance with
Section 2(a) herein (the “Time-Based RSUs”)
and (ii) performance-based RSUs, which shall vest in accordance with Section 2(b) herein
(the “Performance-Based RSUs”) up to [insert 200% of Target Performance-Based RSUs]
Performance-Based RSUs (the “Maximum Performance-Based
RSUs”), of which [insert target number of
Performance-Based RSUs] Performance-Based RSUs represent your “Target Performance-Based RSUs.”  An “RSU” represents the right to receive one share of Common
Stock, and Performance-Based RSUs, together with the Time-Based RSUs, the “RSUs”.  The RSUs
shall vest and become nonforfeitable in accordance with Section 2 hereof.


 


2.                                       Vesting.


 


(a)                                  Time-Based
RSUs.


 

















 


(i)                                     Unless
otherwise provided in this Agreement, so long as the Employee continues to be
employed by the Company or its Subsidiaries, the Employee shall become vested
in a number of Time-Based RSUs equal to [NUMBER] on December 31, 2011 (the
“Vesting Date”).  Unless otherwise provided in Section 2(c) below,
promptly on or after the Vesting Date (but in no event later than 75 days after
the end of the calendar year in which the Vesting Date occurs (i.e., by no later than March 15, 2012)), the Company
shall distribute to the Employee a number of shares of Common Stock equal to
the number of Time-Based RSUs that become vested in accordance with this Section 2(a)(i).


 


(ii)                                  If,
prior to the Vesting Date (and absent the occurrence of any Change of Control),
the Employee’s employment with Company and its Subsidiaries is terminated (x) for
any reason by the Employee (other than due to the Employee’s death, Disability
or Retirement) or (y) by the Company and its Subsidiaries for Cause, then
the Time-Based RSUs shall be forfeited by the Employee without consideration as
of such termination date and this Agreement shall terminate without payment in
respect thereof.


 


(iii)                               If,
prior to the Vesting Date (and absent the occurrence of any Change of Control),
the Employee’s employment with the Company and its Subsidiaries is terminated (x) by
the Company and its Subsidiaries other than for Cause or (y) by the
Employee due to the Employee’s death, Disability or Retirement, then this
Agreement shall remain outstanding and, on the Vesting Date, the Employee shall
be entitled to receive a distribution of a number of shares of Common Stock
equal to the product of (i) the total number of Time-Based RSUs granted
hereunder and (ii) a fraction, the numerator of which is equal to the
number of days between (and including) the Grant Date and the date such
employment so terminates, and the denominator of which is equal to 1097 (such
fraction, the “Proration Factor”).  The distribution of these shares of Common
Stock (such shares, the “Prorated Time-Based Shares”)
will occur in 2012, as soon as practicable following January 1, 2012 (but
not later than December 31, 2012).


 


(b)                                 Performance-Based
RSUs.  The vesting of the
Performance-Based RSUs shall be subject to the satisfaction of the conditions
set forth in both subsection (i)(A) or (B), as applicable, and
subsection (ii) of this Section 2(b):


 


(i)                                 Service
Vesting Requirement.


 


(A)  Unless otherwise provided in this Agreement, so long as the
Employee continues to be employed by the Company or its Subsidiaries through
the Vesting Date, the Employee shall, on the Vesting Date, become vested in a
number of Performance-Based RSUs (not to exceed the number of Maximum
Performance Based RSUs set forth in Section 1 above), determined based on
the formulas set forth in Section 2(b)(ii) below.


 


(B)  If, prior to the Vesting Date (and absent the occurrence of
any Change of Control), the Employee’s employment with Company and its
Subsidiaries is terminated (x) for any reason by the Employee (other than
due to the Employee’s death, Disability or Retirement) or (y) by the
Company and its Subsidiaries for Cause, then the 


 


2

















 


Performance-Based RSUs shall be forfeited by the Employee without consideration
as of such termination date and this Agreement shall terminate without payment
in respect thereof.


 


(C)  If, prior to the Vesting Date (and absent the occurrence of
any Change of Control), the Employee’s employment with the Company and its Subsidiaries
is terminated (x) by the Company and its Subsidiaries other than for Cause
or (y) by the Employee due to the Employee’s death, Disability or
Retirement, then this Agreement shall remain outstanding and, as of the Vesting
Date, the Employee shall become entitled to receive a distribution of a number
of shares of Common Stock equal to the product of (i) the number of
Performance-Based RSUs in which the Employee would have become vested pursuant
to Section 2(b)(ii) below, if the Employee had remained employed with
the Company or a Subsidiary through the Vesting Date, and (ii) the
Proration Factor (such shares, the “Prorated Performance-Based
Shares”).


 


(ii)                                  Performance
Vesting Requirement.


 


(A)  The Performance-Based RSUs shall, so long as the Employee
remains employed with the Company or its Subsidiaries through the Vesting Date
(or the provisions of Section 2(b)(i)(C) otherwise apply), vest on
the Vesting Date as follows:  up to 100%
of the Maximum Performance-Based RSUs awarded hereunder shall become vested if
and to the extent that, during fiscal year 2009 of the Company (the “Performance Period”), (x) the 2009 Actual Adjusted
EBITDA, as compared to the 2009 Budgeted Adjusted EBITDA, and (y) the 2009
Actual Adjusted EPS, as compared to the 2009 Budgeted Adjusted EPS, is
achieved, in each case by certain specified percentages, relative to a targeted
2009 Budgeted Adjusted EBITDA amount (the “2009 EBITDA Target”)
and a 2009 Budgeted Adjusted EPS amount (the “2009 EPS
Target”), respectively, all as set forth on Schedule I attached
hereto and incorporated by reference herein.


 


(B)  Whether and to what extent the Performance-Based RSUs have
become vested shall be determined by the Committee at its first meeting after
the Financial Statement Approval Date following the end of the Performance
Period (the “Determination Date”), upon the
Committee’s certification of achievement of the applicable performance goals
set forth in Section 2(b)(ii) above.


 


(C)  Notwithstanding anything set forth in this Section 2(b) to
the contrary, if the Board does not establish, within the first 120 days of
calendar year 2009, any or either of the 2009 EBITDA Target or the 2009 EPS
Target, the Performance-Based RSUs shall, so long as the Employee remains
employed with the Company or its Subsidiaries through the Vesting Date (or an
event described in Section 2(b)(i)(C) occurs), become 100% vested as
to the number of Target Performance-Based RSUs awarded hereunder, and all other
Performance-Based RSUs granted hereunder shall be forfeited without
consideration.


 


(iii)                               Settlement
of Performance-Based RSUs.  Promptly
after the Vesting Date (but in no event later than 75 days after the end of the
calendar year in which the Vesting Date occurs (i.e.,
by no later than March 15, 2012)), the Company shall distribute to the 


 


3

















 


Employee a number of shares of Common Stock equal to the number of
Performance-Based RSUs that become vested in accordance with Section 2(b) hereof.  Any number of Performance-Based RSUs that do
not become vested in accordance with Section 2(b) hereof (to the
extent not already previously forfeited pursuant to Section 2(b)(i)(B) above)
shall, effective as of the Vesting Date, be forfeited by the Employee without
consideration and this Agreement shall terminate without payment in respect
thereof.


 


(c)                                  Effect
of Change of Control. 
Notwithstanding anything set forth in Section 2(a) or (b) above,
if there occurs a Change of Control, the following rules shall apply with
respect to the RSUs granted hereunder:


 


(i)                                     With
respect to the Time-Based RSUs, if a Change of Control occurs prior to the
Vesting Date, and the Employee is still employed with the Company or its
Subsidiaries upon the occurrence of such Change of Control, all Time-Based RSUs
granted hereunder shall immediately vest and become converted into the right to
receive a cash payment equal to the product of (x) the total number of
such Time-Based RSUs and (y) the price per share paid for one share of
Common Stock in the Change of Control transaction (such price, the “CIC Price”), which cash payment shall be made as soon as
practicable following the Change of Control (but in no event later than 90 days
following such event); and


 


(ii)                                  With
respect to the Performance-Based RSUs, if a Change of Control occurs, and the
Employee is still employed with the Company or its Subsidiaries upon the
occurrence of such Change of Control, if


 


(A) such Change of Control occurs prior
to the Determination Date, only the number of Target Performance-Based RSUs
granted hereunder shall immediately vest (and all other Performance-Based RSUs
shall be forfeited by the Employee without consideration), and shall become
converted into the right to receive a cash payment equal to the product of (x) the
total number of such Performance-Based RSUs and (y) the CIC Price (and all
other Performance-Based RSUs granted hereunder shall be forfeited upon such
event), but if


 


(B) such Change of Control occurs after the Determination Date but
before the date the Performance-Based RSUs are settled under Section 2(b)(iii) above,
only the number of Performance-Based RSUs granted hereunder that become vested
under Section 2(b)(ii) above shall become converted into the right to
receive a cash payment equal to the product of (x) the total number of
such Performance-Based RSUs and (y) the CIC Price (and all other
Performance-Based RSUs granted hereunder shall be forfeited upon such event);


 


and in either event described in clause (A) or (B) above
occurs, such cash payment shall be made as soon as administratively practicable
following the Vesting Date (but in no event later than December 31, 2012);


 


4

















 


(iii)  Notwithstanding Section 2(c)(ii) above, if,
following the occurrence of a Change of Control but prior to the Vesting Date, (A) the
Employee’s employment is terminated by the Company and its Subsidiaries without
Cause or by the Employee for Good Reason, the timing of the payment of the
amount otherwise due and payable under Section 2(c)(ii)(A) or (B), as
applicable, shall be accelerated and shall be paid to the Employee as soon as
practicable following such termination of employment; or (B) the Employee’s
employment with the Company and its Subsidiaries is terminated by the Company
and its Subsidiaries for Cause or by the Employee for any reason (other than
due to the Employee’s death, Disability, Retirement or by the Employee for Good
Reason), then the Performance-Based RSUs and the right to receive any cash as
set forth in Section 2(c)(ii)(A) or (B), as applicable, shall be
forfeited by the Employee without consideration and this Agreement shall
terminate without payment in respect thereof; but if


 


(iv)  the Employee has ceased to be employed with the Company or
its Subsidiaries prior to such Change of Control under circumstances set forth
in Section 2(a)(iii) and Section 2(b)(i)(C) above, the
Employee shall, in lieu of the number of Prorated Time-Based Shares and
Prorated Performance-Based Shares otherwise distributable pursuant to Section 2(a)(iii) and
Section 2(b)(i)(C), instead be entitled to receive a cash payment, equal
to the product of (x) the total number of such Time-Based Shares and
Prorated Performance-Based Shares and (y) the CIC Price. This cash payment
shall be made as soon as practicable following the Change of Control (but in no
event later than 90 days following such event).


 


3.                                       Dividend
Equivalents.  With respect to each
cash dividend or distribution (if any) paid with respect to Common Stock to
holders of record on and after the Grant Date, a number of shares of Common
Stock shall be accrued on the books and records of the Company, in an amount
equal to the product of (i) the amount of such dividend or distribution
paid with respect to one share of Common Stock, multiplied by (ii) the
number of vested RSUs (if any) granted hereunder then held by the
Employee.  At such time(s) thereafter
as the Employee receives a distribution of shares of Common Stock in respect of
his or her vested RSUs granted hereunder pursuant to the applicable provision
of Section 2 above, the Company shall also distribute to the Employee such
number of shares of Common Stock accrued under this Section 3 that relate
to the vested RSUs in respect of which such distribution of shares is otherwise
being made.  In the event of any stock
dividend, the provisions of Section 8 of the Plan shall apply to this
Restricted Stock Unit Award.


 


4.                                       Limitation
on Obligations.  The Company’s
obligation with respect to the RSUs 
granted hereunder is limited solely to the delivery to the Employee of
shares of Common Stock on the date when such shares are due to be delivered
hereunder, and in no way shall the Company become obligated to pay cash in
respect of such obligation, unless as otherwise provided for herein.  This Restricted Stock Unit Award shall not be
secured by any specific assets of the Company or any of its Subsidiaries, nor
shall any assets of the Company or any of its subsidiaries be designated as
attributable or allocated to the satisfaction of the Company’s obligations
under this Agreement.


 


5

















 


5.                                       
Rights as a Stockholder.  The
Employee shall not have any rights of a common stockholder of the Company
unless and until the Employee becomes entitled to receive the shares of Common
Stock pursuant to Section 2 above. 
As soon as practicable following the date that the Employee becomes
entitled to receive the shares of Common Stock pursuant to Section 2,
certificates for the Common Stock shall be delivered to the Employee or to the
Employee’s legal guardian or representative.


 


6.                                       Transferability.  The RSUs 
shall not be subject to alienation, garnishment, execution or levy of
any kind, and any attempt to cause any such awards to be so subjected shall not
be recognized.  The shares of Common
Stock acquired by the Employee pursuant to Section 2 of this Agreement may
not at any time be transferred, sold, assigned, pledged, hypothecated or
otherwise disposed of unless such transfer, sale, assignment, pledge, hypothecation
or other disposition complies with applicable securities laws.


 


7.                                       
Purchaser’s Employment by the Company.  
Nothing contained in this Agreement obligates the Company or any
Subsidiary to employ the Employee in any capacity whatsoever or prohibits or
restricts the Company (or any Subsidiary) from terminating the employment, if
any, of the Employee at any time or for any reason whatsoever, with or without
Cause, and the Employee hereby acknowledges and agrees that neither the Company
nor any other Person has made any representations or promises whatsoever to the
Employee concerning the Employee’s employment or continued employment by the
Company or any Affiliate thereof.


 


8.                                       Change
in Capitalization.  In the event of
any change in the outstanding Common Stock by reason of a stock split,
spin-off, stock dividend, stock combination or reclassification,
recapitalization or merger, change of control, or similar event, the provisions
of Section 8 of the Plan shall govern the treatment of this Restricted Stock
Unit Award.


 


9.                                       Withholding.   It shall be a condition of the obligation of
the Company upon delivery of Common Stock to the Employee pursuant to Section 2
above that the Employee pay to the Company such amount as may be requested by
the Company for the purpose of satisfying any liability for any federal, state
or local income or other taxes required by law to be withheld with respect to
such Common Stock.  The Company shall be
authorized to take such action as may be necessary, in the opinion of the Company’s
counsel (including, without limitation, withholding Common Stock otherwise
deliverable to the Employee hereunder and/or withholding amounts from any
compensation or other amount owing from the Company to the Employee), to
satisfy the obligations for payment of the minimum amount of any such
taxes.  In addition, if the Company’s
accountants determine that there would be no adverse accounting implications to
the Company, the Employee may be permitted to elect to use Common Stock
otherwise deliverable to the Employee hereunder to satisfy any such
obligations, subject to such procedures as the Company’s accountants may
require.  The Employee is hereby advised
to seek his own tax counsel regarding the taxation of the grant of RSUs made
hereunder.


 


10.                                   Securities Laws.  Upon the delivery of any Common Stock to the
Employee, the Company may require the Employee to make or enter into such
written representations, warranties and agreements as the Committee may
reasonably request in order to 


 


6

















 


comply with applicable securities laws or with this Agreement.  The delivery of the Common Stock hereunder
shall be subject to all applicable laws, rules and regulations and to such
approvals of any governmental agencies as may be required.


 


11.                                 Section 409A
of the Code.  In the event that it is
reasonably determined by the Company that, as a result of the deferred
compensation tax rules under Section 409A of the Code (and any
related regulations or other pronouncements thereunder) (“the Deferred Compensation Tax Rules”), benefits that the
Employee is entitled to under the terms of this Agreement may not be made at
the time contemplated by the terms hereof or thereof, as the case may be,
without causing Employee to be subject to tax under the Deferred Compensation
Tax Rules, the Company shall, in lieu of providing such benefit when otherwise
due under this Agreement, instead provide such benefit on the first day on
which such provision would not result in the Employee incurring any tax
liability under the Deferred Compensation Tax Rules; which day, if the Employee
is a “specified employee” (within the meaning of the Deferred Compensation Tax
Rules), may, in the event the benefit to be provided is due to the Employee’s “separation
from service” (within the meaning of the Deferred Compensation Tax Rules) with
the Company and its Subsidiaries, shall be the first day following the
six-month period beginning on the date of such separation from service.


 


12.                                 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 Employee shall be addressed to him
at the address given beneath his signature hereto.  By a notice given pursuant to this Section 12,
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 Employee shall, if the Employee is then deceased,
be given to the Employee’s personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section 12.  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


 


13.                                 Governing
Law.  The laws of the State of
Delaware (or if the Company reincorporates in another state, the laws of that
state) 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.


 


15.                                 Restricted
Stock Unit Award Subject to Plan.  
The Restricted Stock Unit Award shall be subject to all applicable terms
and provisions of the Plan, to the extent applicable to the Common Stock.   In the event of any conflict between this
Agreement and the Plan, the terms of the Plan shall control.


 


14.                                 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.]


 


7

















 


IN WITNESS
WHEREOF, the parties hereto have executed this Agreement effective as of the
date hereof.               


 


 


	
   

  	
  ROCKWOOD HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [NAME]

  



 


8

















 


Schedule I


 


70% of the Target Performance-Based RSUs (the
“EBITDA RSUs”) shall vest subject to the
achievement of the 2009 EBITDA Target, as follows:


 


	
  2009
  Actual Adjusted EBITDA

  Performance as Compared to 2009

  Budgeted Adjusted EBITDA (70% of

  Target Performance-Based Units)

  	
   

  	
  % of
  EBITDA RSUs Vested*

  
	
  Less than 90%

  	
   

  	
  0%

  
	
  90%

  	
   

  	
  50%

  
	
  100%

  	
   

  	
  100%

  
	
  Greater than 120%

  	
   

  	
  200%

  



 


30% of the Target Performance-Based RSUs (the
“EPS RSUs”) shall vest subject to the
achievement of the 2009 EPS Target, as follows:


 


	
  2009
  Actual Adjusted EPS Performance as

  Compared to 2009 Budgeted Adjusted EPS

  (30% of Target Performance-Based Units)

  	
   

  	
  % of EPS
  RSUs Vested*

  
	
  Less than 90%

  	
   

  	
  0%

  
	
  90%

  	
   

  	
  50%

  
	
  100%

  	
   

  	
  100%

  
	
  Greater than 120%

  	
   

  	
  200%

  



 


With respect to both the EBITDA RSUs and the
EPS RSUs, the number of EBITDA RSUs and EPS RSUs that shall become vested
hereunder shall be interpolated for any achievement of the 2009 EBITDA Target
and 2009 EPS Target, respectively, which falls between the above amounts as
applicable.


 


The
Company shall communicate to the Employee the 2009 EBITDA Target and the 2009
EPS Target as soon as administratively practicable following the date the Board
and/or the Committee establishes such targets.


 


9

















 


Appendix A


 


Definitions


 


“2009 Actual Adjusted EBITDA” shall mean the Adjusted EBITDA as
reported in the Company’s Form 10-K filed with the Securities Exchange
Commission in respect of the 2009 fiscal year of the Company.


 


“2009 Actual Adjusted EPS” shall mean the earnings per share of the
Company, on a fully diluted basis, as reported in the Company’s Form 10-K
filed with the Securities Exchange Commission in respect of the 2009 fiscal
year of the Company, adjusted for non-recurring and unusual items and budgeted
exchange rates for currencies other than the United States dollar to be
converted into the United States dollar.


 


“2009 Budgeted Adjusted EBITDA” shall mean the budgeted Adjusted EBITDA
in respect of the 2009 fiscal year of the Company, as determined and approved
by the Board and/or the Committee, which is anticipated to be so determined and
approved by no later than April 30, 2009.


 


“2009 Budgeted Adjusted EPS” shall mean the budgeted earnings per share
of the Company, on a fully diluted basis, in respect of the 2009 fiscal year of
the Company, with budgeted exchange rates for currencies other than the United
States dollar to be converted into the United States dollar, as determined and
approved by the Board and/or the Committee, which is anticipated to be so
determined and approved by no later than April 30, 2009.


 


“Adjusted EBITDA” shall mean EBITDA adjusted for all items, as
applicable, set forth in the definition of “Consolidated EBITDA” in the Credit
Agreement dated as of July 30, 2004 among Rockwood Specialties Group, Inc.,
Rockwood Specialties Limited, Rockwood Specialties International, Inc.,
the lenders party thereto, Credit Suisse First Boston, acting through its
Cayman Islands Branch, as administrative agent and collateral agent, and UBS
Securities LLC and Goldman Sachs Credit Partners L.P., as co-syndication agents
thereunder, filed as Exhibit 10.1 to Rockwood Specialties Group, Inc.’s
Report on Form 8-K filed with the Securities and Exchange Commission on August 4,
2004 (“Credit Agreement”), except that, for the purposes of this Agreement, any
component of EBITDA that is translated in currencies other than United States
dollars shall be converted into United States dollars using budgeted exchange
rates.


 


“Cause” shall mean (i) the Employee’s willful and continued
failure to perform duties, which are within the control of the Employee and
consistent with such Employee’s title and position, that is not cured within 15
days following written notice of such failure, (ii) the Employee’s
conviction of or plea of guilty or no contest to a (x) felony or (y) crime
involving moral turpitude, (iii) the Employee’s willful malfeasance or
misconduct which is injurious to the Company or its Subsidiaries, other than in
a manner that is insignificant or inconsequential, (iv) a breach by
Employee of the material terms of any non-compete, non-solicitation or
confidentiality covenants or agreements by which the Employee may be bound,
following notice of such breach (which notice may be oral or written) or (v) any
violation by the Employee of any material 


 


10

















 


written Company policy after written notice of such breach, if such
violation is shown by the Company to be reasonably expected to result in
material injury to the business, reputation or financial condition of the
Company.


 


 “Change in Control” shall mean
the earliest to occur of the following:


 


(i)  any Person (which term shall mean any individual,
corporation, partnership, group, association or other “person,” as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, 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 such 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)
other than through the purchase of Voting Securities directly from the Company
through a private placement;


 


(ii)  individuals who constitute 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.


 


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.


 


11

















 


“Disability” shall mean a determination, made at the request of the
Employee or upon the reasonable request of the Company set forth in a notice to
the Employee, by a physician selected by the Company and the Employee, that the
Employee 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.


 


“Financial Statement Approval Date” shall mean the date on which the
audited financial statements of the Company for the 2009 fiscal year of the
Company have been finally approved by the auditing firm engaged by the Company
to review such statements (which approval shall in no event occur later than March 31,
2010).


 


“Good Reason”
shall mean without the Employee’s consent, (i) a reduction in the Employee’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
Employee’s base salary in any 12 month period), (ii) a substantial
reduction in the Employee’s duties and responsibilities, which continues beyond
15 days after written notice by the Employee to the Company of such reduction, (iii) the
elimination or reduction of the Employee’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 Employee’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 Employee to terminate his or her
employment with 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 Employee within 15 days after the date such payment becomes
due.


 


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


 


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