Exhibit 10.3


 


EXECUTION COPY


 


AMENDED AND RESTATED MANAGEMENT STOCKHOLDER’S AGREEMENT


 


This
Amended and Restated Management Stockholder’s Agreement (this “Agreement”)
is entered into as of September 24, 2004 between Rockwood Holdings, Inc., a
Delaware corporation (the “Company”), and the undersigned person (the “Management
Stockholder”) (the Company and the Management Stockholder being hereinafter
collectively referred to as the “Parties”).  All capitalized terms not immediately defined are hereinafter
defined in Section 25 hereof.


 


WHEREAS,
this Agreement is one of several other agreements (“Other Management
Stockholders’ Agreements”) which have been, or which in the future will be,
entered into between the Company and other individuals who are or will be key
employees of the Company or one of its subsidiaries (collectively, the “Other
Management Stockholders”); and


 


WHEREAS,
the Management Stockholder previously entered into a Management Stockholder’s
Agreement, dated as of November 1, 2001, between the Company and the Management
Stockholder (the “Existing Management Stockholder’s Agreement”) pursuant
to which he contributed $500,000 to the Company in cash in exchange for 1,000
shares (the “Existing Purchased Stock”) of common stock, par value $0.01
per share, of the Company (such common stock, together with any securities
issued in respect thereof or in substitution therefor, in connection with any
stock split, dividend or combination, or any reclassification, reorganization,
merger, consolidation, exchange or other similar reorganization, the “Common
Stock”);


 


WHEREAS,
the Management Stockholder previously received an option to acquire 12,000
shares of Common Stock (the “Existing Option”) subject to the terms and
conditions of the Existing Management Stockholder’s Agreement, the 2000 Stock
Purchase and Option Plan of the Company and its Subsidiaries (the “Old
Option Plan”) and Stock Option Agreement dated as of November 1, 2001,
entered into by and between the Company and the Management Stockholder (the “Existing
Stock Option Agreement”), which Existing Option vests over time as to 100%
of the shares of Common Stock subject to the Existing Option;


 


WHEREAS,
the Management Stockholder previously received a grant of 2,000 restricted
stock units, under which the Management Stockholder is entitled to receive one
share of Common Stock (such Common Stock, the “Existing Restricted Stock”)
for each restricted stock unit (a “Restricted Stock Unit”), subject to
and pursuant to the terms of the Old Option Plan and the Restricted Stock Unit
Award Agreement dated as of November 1, 2001, entered into by and between the
Company and the Management Stockholder (the “Restricted Stock Unit Award
Agreement”);


 


WHEREAS,
the Management Stockholder has been selected by the Company to be permitted to
contribute to the Company additional cash in exchange for additional shares of
Common Stock;


 

















 


WHEREAS,
the Management Stockholder has been selected by the Company, as of the date
hereof, to receive an additional time/performance option to purchase shares of
Common Stock (the “New Time/Performance Option”) and an additional time
option to purchase shares of Common Stock (the “New Time Option” and
together with the New Time/Performance Option, the “New Options” and
collectively with the Existing Option, the “Options”) pursuant to the
terms set forth below and the terms of the Amended and Restated 2003 Stock
Purchase and Option Plan of the Company and its Subsidiaries (the “Option
Plan”) and the New Stock Option Agreements (as such term is defined below);


 


WHEREAS,
the Management Stockholder and the Company desire to enter into this Agreement
to amend and restate the Existing Management Stockholder’s Agreement and to set
forth the terms and conditions of the Management Stockholder’s rights with
respect to the Existing Purchased Stock, the Existing Option, the Existing
Restricted Stock, the Purchased Stock (as such term is defined below) and the
New Options.


 


NOW
THEREFORE, to implement the foregoing and in consideration of the grant of New
Options and of the mutual agreements contained herein, the Parties agree as
follows:


 


1.     Purchased Shares; Issuance of Options.


 


(a)   The Management Stockholder shall, subject to
the terms and conditions hereinafter set forth, on or about September 24, 2004
(the “Investment Date”), be granted the opportunity to purchase, and the
Management Stockholder shall contribute $1,500,000 to the Company in cash in
exchange for 3,000 shares of Common Stock, at a per share purchase price of
$500.00, which price is equal to the per share purchase price paid for shares
of Common Stock by the KKR Millennium Fund, L.P., KKR Partners III, L.P. and
KKR European Fund, Limited Partnership (together with KKR 1996 Fund L.P. and
KKR Partners II, L.P., the “KKR Fund”) and DLJ Merchant Banking Partners
III, L.P., DLJ Offshore Partners III-1, C.V., DLJ Offshore Partners III-2,
C.V., DLJ Offshore Partners III, C.V., DLJ MB Partners III GmbH & Co. KG,
Millennium Partners II, L.P. and MBP III Plan Investors, L.P. (together, the “DLJ
Fund”) in connection with the acquisition by certain subsidiaries of the
Company of four businesses of Dynamit Nobel pursuant to a sale and purchase
agreement by and among mg technologies ag, MG North America Holdings Inc. and
certain subsidiaries of the Company dated as of April 19, 2004 (the “Purchase
Agreement”) (all such shares acquired by the Management Stockholder, the “Purchased
Stock”).


 


(b)   Subject to the terms and conditions
hereinafter set forth and as set forth in the Option Plan, (A) upon receipt by
the Company of the Management Stockholder’s contribution set forth in Section
1(a) and as of the Investment Date, the Company shall issue to the Management
Stockholder the New Time/Performance Option to acquire such number of shares of
Common Stock as is equal to five times the number of Purchased Stock (15,000
shares of Common Stock), at an exercise price of $500.00 per share, and the
Parties shall execute a time/performance stock option agreement dated as of the
Investment Date (the “Time/Performance Stock Option Agreement”), and
deliver to each other copies thereof, concurrently with the issuance of the New
Time/Performance Option.  The New
Time/Performance Option shall vest over time as to 40% of the shares of Common
Stock subject


 


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to the New Time/Performance Option and shall vest,
as to the remaining 60%, over time and in the event and to the extent certain
performance targets are achieved, in each case, pursuant to the terms set forth
in the Time/Performance Stock Option Agreement and in accordance with the
Option Plan and (B) as of the Investment Date, the Company shall issue to the
Management Stockholder the New Time Option to acquire 250 shares of Common
Stock, at an exercise price of $500.00 per share, and the Parties shall execute
a time stock option agreement dated as of the Investment Date (the “Time
Stock Option Agreement” and together with the Time/Performance Stock Option
Agreement, the “New Stock Option Agreements”), and deliver to each other
copies thereof, concurrently with the issuance of the New Time Option.  The New Time Option shall vest over time as
to 100% of the shares of Common Stock subject to the New Time Option pursuant
to the terms set forth in the Time Stock Option Agreement and in accordance
with the Option Plan.


 


(c)   The Company shall have no obligation to sell
any Purchased Stock to any person who (i) is a resident or citizen of a state
or other jurisdiction in which the sale of the Common Stock to him or her would
constitute a violation of the securities or “blue sky” laws of such
jurisdiction or (ii) is not an employee of the Company or any of its
subsidiaries on the date hereof.


 


2.     Management Stockholder’s Representations,
Warranties and Agreements.


 


(a)   The
Management Stockholder agrees and acknowledges that he will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being referred to herein as a “transfer”) any shares
of the Existing Purchased Stock, the Purchased Stock and the Existing
Restricted Stock, and, at the time of exercise, any shares of the Common Stock
issued upon exercise of the Existing Option (the “Existing Option Stock”
and, together with the Existing Purchased Stock and the Existing Restricted
Stock, the “Existing Stock”), the New Time Option (the “New Time
Option Stock”) or the New Time/Performance Option (the “New
Time/Performance Option Stock”), except as otherwise provided for
herein.  The Management Stockholder also
agrees and acknowledges that he will not transfer any shares of the Stock
unless:


 


(i)    the
transfer is pursuant to an effective registration statement under the
Securities Act of 1933, as amended, and the rules and regulations in effect
thereunder (the “Act”), and in compliance with applicable provisions of
state securities laws; or


 


(ii)   (A) counsel
for the Management Stockholder (which counsel shall be reasonably acceptable to
the Company) shall have furnished the Company with an opinion, satisfactory in
form and substance to the Company, that no such registration is required
because of the availability of an exemption from registration under the Act and
(B) if the Management Stockholder is a citizen or resident of any country other
than the United States, or the Management Stockholder desires to effect any
transfer in any such country, counsel for the Management Stockholder (which
counsel shall be reasonably satisfactory to the Company) shall have furnished
the Company with an opinion or other advice reasonably satisfactory in form and
substance to the Company to the effect that such transfer will comply with the
securities laws of such jurisdiction.


 


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Notwithstanding
the foregoing, the Company acknowledges and agrees that any of the following
transfers are deemed to be in compliance with this Agreement and no opinion of
counsel is required in connection therewith: (x) a transfer made pursuant to
clauses (c) and (d) of Section 3 or Sections 4, 5 or 6 hereof, (y) a transfer
upon the death or Permanent Disability of the Management Stockholder to the
Management Stockholder’s Estate in accordance with the terms of this Agreement;
and (z) a transfer of the Existing Stock made after the Initial Investment
Date, a transfer of the New Time Option Stock after January 1, 2003 and a
transfer of the New Stock made after the Investment Date, in compliance with
the federal securities laws to a Management Stockholder’s Trust; provided that,
in the case of (y) and (z), such transfer is made expressly subject to this
Agreement and that the transferee agrees in writing to be bound by the terms
and conditions hereof.


 


(b)           The certificate (or certificates) representing the Stock shall bear the
following legend:


 


“THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF THE AMENDED AND RESTATED MANAGEMENT STOCKHOLDER’S AGREEMENT DATED
AS OF SEPTEMBER 24, 2004 BETWEEN ROCKWOOD HOLDINGS, INC. (THE “COMPANY”) AND
THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE COMPANY).


 


(c)            The Management Stockholder acknowledges that
he has been advised that (i) a restrictive legend in the form set forth in
Section 2(b) hereof shall be placed on the certificates representing the Stock
and (ii) a notation shall be made in the appropriate records of the Company
indicating that the Stock is subject to restrictions on transfer and
appropriate stop transfer restrictions will be issued to the Company’s transfer
agent with respect to the Stock.  The
Management Stockholder also acknowledges that (1) the Management Stockholder
must bear the economic risk of the investment in the Stock until the Stock is
subsequently registered under the Act or unless an exemption from such
registration is available, (2) when and if shares of the Stock may be disposed
of without registration in reliance on Rule 144 under the Act, such disposition
can be made only in limited amounts in accordance with the terms and conditions
of such Rule (if the Management Stockholder is a Rule 405 Affiliate) and (3) if
the Rule 144 exemption is not available, public resale without registration
will require compliance with some other exemption under the Act.


 


(d)           If any shares of the Stock are to be disposed of in accordance with
Rule 144 under the Act or otherwise, the Management Stockholder shall promptly
notify the Company of such intended disposition and shall deliver to the
Company at or prior to the time of such disposition such documentation as the
Company may reasonably request in connection with such sale and, in the case of
a disposition pursuant to Rule 144, shall deliver to the Company an executed
copy of any notice on Form 144 required to be filed with the SEC.


 


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(e)            The Management Stockholder agrees that, if
any shares of the Stock are offered to the public pursuant to an effective
registration statement under the Act (other than registration of securities
issued under an employee plan), the Management Stockholder will not effect any
public sale or distribution of any shares of the Stock not covered by such
registration statement from the time of the receipt of a notice from the
Company that the Company has filed or imminently intends to file such
registration statement to, or within 180 calendar days after, the effective
date of such registration statement, unless otherwise agreed to in writing by
the Company.


 


(f)            The Management Stockholder represents and
warrants that (i) he has received and reviewed the available information
relating to the Stock and (ii) he has been given the opportunity to obtain any
additional information or documents and to ask questions and receive answers
about such information, the Company and the business and prospects of the
Company which he deems necessary to evaluate the merits and risks related to
his investment in the Stock and to verify the information contained in the
information received as indicated in this Section 2(f), and he has relied
solely on such information.


 


(g)           The Management Stockholder further represents and warrants that (i) his
financial condition is such that he can afford to bear the economic risk of
holding the Stock for an indefinite period of time and has adequate means for
providing for his current needs and personal contingencies, (ii) he can afford
to suffer a complete loss of his or her investment in the Stock, (iii) he
understands and has taken cognizance of all risk factors related to the
purchase of the Stock and (iv) his knowledge and experience in financial and
business matters are such that he is capable of evaluating the merits and risks
of his purchase of the Stock as contemplated by this Agreement.


 


3.     Transferability of Stock.  The
Management Stockholder agrees that he will not transfer (i) any shares of the
Existing Stock at any time commencing on the Initial Investment Date and prior
to the fifth anniversary of the Initial Investment Date, (ii) any shares of the
New Time Option Stock at any time commencing on January 1, 2003 and prior to
January 1, 2008 and (iii) any shares of the New Stock at any time commencing on
the Investment Date and prior to the fifth anniversary of the Investment Date; provided,
however, that, subject to compliance with Section 2(a), the Management
Stockholder may transfer shares of the Stock during such applicable time
pursuant to one of the following exceptions: (a) transfers permitted by clauses
(y) and (z) of Section 2(a); (b) transfers made pursuant to Sections 5 or 6;
(c) a sale of shares of Common Stock pursuant to an effective registration
statement under the Act filed by the Company (excluding any registration on
Form S-8, S-4 or any successor or similar forms) pursuant to Section 10 of this
Agreement or (d) transfers permitted pursuant to the Amended and Restated Sale
Participation Agreement entered into by and between the Management Stockholder
and the KKR Fund as of September 24, 2004. 
No transfer of any such shares in violation hereof shall be made or
recorded on the books of the Company and any such transfer shall be void ab
initio and of no effect. 
Notwithstanding anything in this Agreement to the contrary, this Section
3 shall terminate and be of no further force or effect upon the occurrence of a
Change of Control.


 


4.     Right of First Refusal.  If,
at any time after (i) the fifth anniversary of the Initial Investment Date with
respect to the Existing Stock, (ii) January 1, 2008 with respect to the


 


5

















 


New Time Option Stock or
(iii) the fifth anniversary of the Investment Date with respect to the New
Stock, and, in each of clauses (i), (ii) and (iii), prior to the date of
consummation of a Public Offering, the Management Stockholder receives a bona
fide offer to purchase any or all of his Stock (the “Third Party Offer”)
from a third party (the “Offeror”), which the Management Stockholder
wishes to accept, the Management Stockholder shall cause the Third Party Offer
to be reduced to writing and shall notify the Company in writing of his wish to
accept the Third Party Offer.  The
Management Stockholder’s notice to the Company shall contain an irrevocable
offer to sell such Stock to the Company (in the manner set forth below) at a
purchase price equal to the price contained in, and on the same terms and
conditions of, the Third Party Offer, and shall be accompanied by a copy of the
Third Party Offer (which shall identify the Offeror).  At any time within 15 calendar days after the date of the receipt
by the Company of the Management Stockholder’s notice, the Company shall have
the right and option to purchase, or to arrange for a third party to purchase,
all of the shares of Stock covered by the Offer, pursuant to Section 4(a).


 


(a)   The Company shall have the right and option
to purchase, or to arrange for a third party to purchase, all of the shares of
Stock covered by the Third Party Offer at the same price and on substantially
the same terms and conditions as the Third Party Offer (or, if the Third Party
Offer includes any consideration other than cash, then at the sole option of
the Company, at the equivalent all cash price, determined in good faith by the
Company’s Board of Directors), by delivering a certified bank check or checks
in the appropriate amount (or by wire transfer of immediately available funds,
if the Management Stockholder Entities provide to the Company wire transfer
instructions) (and any such non-cash consideration to be paid) to the
Management Stockholder at the principal office of the Company against delivery
of certificates or other instruments representing the shares of Stock so
purchased, appropriately endorsed by the Management Stockholder.  If at the end of the 15 calendar-day period,
the Company has not tendered the purchase price for such shares in the manner
set forth above, the Management Stockholder may, during the succeeding 90
calendar-day period, sell not less than all of the shares of Stock covered by
the Third Party Offer, to the Offeror on terms no less favorable to the
Management Stockholder than those contained in the Third Party Offer.  Promptly after such sale, the Management
Stockholder shall notify the Company of the consummation thereof and shall
furnish such evidence of the completion and time of completion of such sale and
of the terms thereof as may reasonably be requested by the Company.  If, at the end of 90 calendar days following
the expiration of the 30 calendar-day period during which the Company is
entitled hereunder to purchase the Stock, the Management Stockholder has not
completed the sale of such shares of the Stock as aforesaid, all of the
restrictions on sale, transfer or assignment contained in this Agreement shall
again be in effect with respect to such shares of his Stock.


 


(b)   Notwithstanding anything in this Agreement to
the contrary, this Section 4 shall terminate and be of no further force or
effect upon the occurrence of a Change of Control.


 


5.     The
Management Stockholder’s Right to Resell Stock and Options to the Company Upon
Death or Disability.


 


(a)   Except as otherwise provided herein, if,
prior to (i) the fifth anniversary of the Initial Investment Date with respect
to the Existing Stock or the Existing Option, (ii) January 1, 2008 with respect
to the New Time Option Stock or the New Time Option or (iii) the fifth


 


6

















 


anniversary of the
Investment Date with respect to the New Stock or the New Time/Performance
Option, the Management Stockholder’s employment is terminated as a result of
the death or Permanent Disability of the Management Stockholder, then the
applicable Management Stockholder Entities shall, for 60 calendar days (the “Put
Period”) following 181 calendar days after the date of death or Permanent
Disability, have the right to:


 


(A)
with respect to the Stock then subject to this Section 5(a), sell to the
Company, and the Company shall be required to purchase, on one occasion, all or
any portion of the shares of such Stock then held by the Management Stockholder
Entities, at a per share price equal to the Fair Market Value Per Share; and


 


(B)
with respect to any outstanding Options then subject to this Section 5(a), sell
to the Company, and the Company shall be required to purchase, all or any
portion of such Options held by the applicable Management Stockholder Entities
that are then exercisable for an amount equal to the product of (x) the excess,
if any, of the Fair Market Value Per Share over the Option Exercise Price and
(y) the number of Exercisable Option Shares. 
Upon payment of the foregoing Option Excess Price, such Options shall be
terminated pursuant to the terms of Section 3.2(e) of the applicable Stock Option
Agreement.


 


(b)   To exercise his or its rights pursuant to
Section 5(a), the applicable Management Stockholder Entities must send a
written notice to the Company, at any time during the Put Period, of his or its
intention to resell shares of Stock and Options in exchange for the payment
referred in Section 5(a) and shall indicate the number of shares of Stock to be
resold and the number of Options to be resold (the “Put Notice”).  The completion of the purchase shall take
place at the principal office of the Company on the tenth business day after
the giving of the Put Notice.  The
applicable Repurchase Price and any payment with respect to the Options as
described above shall be paid by delivery to the applicable Management
Stockholder Entities, of a certified bank check or checks in the appropriate
amount payable to the order of each of the applicable Management Stockholder
Entities (or by wire transfer of immediately available funds, if the applicable
Management Stockholder Entities provide to the Company wire transfer
instructions), against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents cancelling the
Options so terminated appropriately endorsed or executed by the applicable
Management Stockholder Entities or any duly authorized representative.


 


(c)   Notwithstanding anything in Section 5(a) to
the contrary and subject to Section 11(a), if there exists and is continuing a
default or an event of default on the part of the Company or any subsidiary of
the Company under any loan, guarantee or other agreement under which the
Company or any subsidiary of the Company has borrowed money or if the
repurchase referred to in Section 5(a) would result in a default or an event of
default on the part of the Company or any subsidiary of the Company under any
such agreement or if a repurchase would not be permitted under the Delaware
General Corporation Law (the “DGCL”) or would otherwise violate the DGCL
(or if the Company reincorporates in another state, the business corporation
law of such state) (each such occurrence being an “Event”), the Company
shall not be obligated to repurchase any of the Stock or the Options from the
applicable Management Stockholder Entities, until the first business day which
is 10 calendar days after all of the foregoing Events have ceased to exist (the
“Repurchase Eligibility Date”); provided, however,


 


7

















 


that (i) the number of
shares of Stock subject to repurchase under this Section 5(c) shall be that
number of shares of Stock, and (ii) in the case of a repurchase of outstanding
Options pursuant to Section 5(a), the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price payable under this Section 5(c)
shall be the number of Exercisable Option Shares, specified in the Put Notice
and held by the applicable Management Stockholder Entities, at the time of
delivery of a Put Notice in accordance with Section 5(b) hereof.  All Options exercisable as of the date of a
Put Notice, in the case of a repurchase pursuant to Section 5(a), shall
continue to be exercisable until the repurchase of such Options pursuant to
such Put Notice, provided that to the extent any Options are exercised after
the date of such Put Notice, the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price shall be reduced accordingly.


 


(d)   The Company shall use its reasonable best
efforts to make payment in respect of the applicable Repurchase Price and any
payment with respect to the Options to be paid pursuant to this Section 5 at
the earliest date it can do so without such default or violation.  Notwithstanding the foregoing, in the event
payment of the Repurchase Price and any payment with respect to the Options to
be paid pursuant to Section 5(a) is delayed pursuant to Section 5(c), (i) the
Company shall pay to the Management Stockholder, when payment of the Repurchase
Price is made, interest on the amount of the Repurchase Price to the Management
Stockholder, which shall have accrued at the prime rate (as reported by
JPMorgan Chase Bank at its principal location in New York, New York (the “Prime
Rate”)) plus one percent (or if not paid within one year, three percent for the
six month period after such one-year period), and (ii) a promissory note in a
mutually agreed form shall be delivered by the Company to the Management
Stockholder to evidence the obligation to pay the Repurchase Price not later
than the last calendar day of the eighteenth month following the tenth business
day after the giving of the Put Notice. 
In connection with repayment of the note at the earliest date it can do
so without default or violation, the Company may prepay the note at any time
without premium or penalty.


 


(e)   Notwithstanding anything in this Agreement to
the contrary, except for any payment obligation of the Company, which has
arisen prior to such termination pursuant to this Agreement, this Section 5
shall terminate and be of no further force or effect upon the occurrence of a
Change of Control.


 


6.      The
Company’s Right to Repurchase Stock and Options of Management Stockholder Upon
Certain Terminations of Employment and Other Events.


 


(a)   Termination for Cause by
the Company and Other Call Events.  Except as otherwise provided
herein, if, prior to (i) the fifth anniversary of the Initial Investment Date
with respect to the Existing Stock and the Existing Option, (ii) January 1,
2008 with respect to the New Time Option Stock and the New Time Option or (iii)
the fifth anniversary of the Investment Date with respect to the New Stock and
the New Time/Performance Option, (i) the Management Stockholder’s active
employment with the Company (and/or, if applicable, its subsidiaries) is
terminated by the Company (or any subsidiary) for Cause, (ii) the beneficiaries
of a Management Stockholder’s Trust shall include any person or entity other
than the Management Stockholder, his spouse (or ex-spouse) or his lineal
descendants (including adopted) or (iii) the Management Stockholder shall
otherwise effect a transfer of any of the Stock other than as permitted in this


 


8

















 


Agreement (other than as may
be required by applicable law or an order of a court having competent
jurisdiction) after notice from the Company of such impermissible transfer and
a reasonable opportunity to cure such transfer (each, a “Section 6(a) Call
Event”):


 


(A)
with respect to the Stock then subject to this Section 6(a), the Company shall
have the right to repurchase all of the shares of such Stock then held by the applicable
Management Stockholder Entities at a per share purchase price equal to the
lesser of (A) the Base Price and (B) the Fair Market Value Per Share;


 


(B)
with respect to the Options then subject to this Section 6(a), all Options
(whether or not then exercisable) held by the applicable Management Stockholder
Entities will terminate immediately without payment in respect thereof; and


 


(C)
with respect to any outstanding Restricted Stock Units, all unvested Restricted
Stock Units shall terminate immediately, pursuant to the terms of the
Restricted Stock Unit Award Agreement, without payment in respect thereof.


 


(b)   Termination without Good
Reason by the Management Stockholder.  Except as otherwise provided
herein, if, prior to (i) the fifth anniversary of the Initial Investment Date
with respect to the Existing Stock and the Existing Option, (ii) January 1,
2008 with respect to the New Time Option Stock and the New Time Option or (iii)
the fifth anniversary of the Investment Date with respect to the New Stock and
the New Time/Performance Option, the Management Stockholder’s active employment
with the Company (and/or, if applicable, its subsidiaries) is terminated by the
Management Stockholder without Good Reason (a “Section 6(b) Call Event”):


 


(A)
with respect to the Stock then subject to this Section 6(b), the Company shall
have the right to repurchase all of the shares of such Stock then held by the
applicable Management Stockholder Entities at a per share purchase price equal
to the Fair Market Value Per Share; and


 


(B)
with respect to the Options then subject to this Section 6(b), if the Company
exercises its right to repurchase the Stock granted under Section 6(b)(A), the
Company shall purchase all of such Options held by the applicable Management
Stockholder Entities that are then exercisable for an amount equal to the
product of (x) the excess, if any, of the Fair Market Value Per Share over the
Option Exercise Price and (y) the number of Exercisable Option Shares.  Upon payment of the foregoing Option Excess
Price, such Options shall be terminated. 
In the event the foregoing Option Excess Price is zero or a negative
number, all such outstanding exercisable Options shall be automatically
terminated without any payment in respect thereof.  For the purposes of this clause (B), to the extent any
Performance Option (as such term is defined in the applicable Stock Option
Agreement) then subject to this Section 6(b) is not exercisable during the Call
Period because the applicable Financial Statement Approval Date (as such term
defined in the applicable Stock Option Agreement) has not occurred, the
commencement of the Call Period shall be delayed with respect to such
Performance Option until the occurrence of such Financial Statement Approval
Date.


 


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(c)   Termination for Good Reason
by Management Stockholder or without Cause by the Company. 
Except as otherwise provided herein, if, prior to (i) the fifth
anniversary of the Initial Investment Date with respect to the Existing Stock
and the Existing Option, (ii) January 1, 2008 with respect to the New Time
Option Stock and the New Time Option or (iii) the fifth anniversary of the
Investment Date with respect to the New Stock and the New Time/Performance
Option, the Management Stockholder’s employment is terminated (i) by the
Management Stockholder with Good Reason or (ii) by the Company without Cause
(each, a “Section 6(c) Call Event”):


 


(A)
with respect to the Stock then subject to this Section 6(c), the Company shall
have the right to repurchase all of the shares of Stock then held by the
applicable Management Stockholder Entities at a per share purchase price equal
to the Fair Market Value Per Share; and


 


(B)
with respect to the Options then subject to this Section 6(c), if the Company
exercises its right to repurchase the Stock granted under Section 6(c)(A), the
Company shall purchase all of such Options held by the applicable Management
Stockholder Entities that are then exercisable for an amount equal to the product
of (x) the excess, if any, of the Fair Market Value Per Share over the Option
Exercise Price and (y) the number of Exercisable Option Shares.  Upon payment of the foregoing Option Excess
Price, such Options shall be terminated. 
In the event the foregoing Option Excess Price is zero or a negative
number, all such outstanding exercisable Options shall be automatically
terminated without any payment in respect thereof.  For the purposes of this clause (B), to the extent any
Performance Option (as such term is defined in the applicable Stock Option
Agreement) then subject to Section 6(c) is not exercisable during the Call
Period because the applicable Financial Statement Approval Date (as such terms
is defined in the applicable Stock Option Agreement) has not occurred, the
commencement of the Call Period shall be delayed with respect to such
Performance Option until the occurrence of such Financial Statement Approval
Date.


 


In
addition, in the event the foregoing call is made by the Company and, within 90
calendar days thereafter, (i) an initial Public Offering occurs, (ii) a Change
of Control occurs or (iii) a Stock Sale occurs, the Company will pay the
Management Stockholder the excess, if any, of the amount that would have been
paid pursuant to the foregoing clauses (A) and (B) of this Section 6(c) if the
price at which the Common Stock is sold in the Public Offering, Change of
Control or Stock Sale, as applicable, was substituted for the Fair Market Value
Per Share above, over the Repurchase Price and any payment with respect to the
Options originally paid by the Company pursuant to this Section 6(c) when the
call was made.


 


(d)   Termination for Death or
Disability.  Except as otherwise provided herein, if,
prior to (i) the fifth anniversary of the Initial Investment Date with respect
to the Existing Stock and the Existing Option, (ii) January 1, 2008 with
respect to the New Time Option Stock and the New Time Option or (iii) the fifth
anniversary of the Investment Date with respect to the New Stock and the New
Time/Performance Option, the Management Stockholder’s employment is terminated
as a result of the death or Permanent Disability of the Management Stockholder
(each a “Section 6(d) Call Event”):


 


10

















 


(A)
with respect to the Stock then subject to this Section 6(d), the Company shall
have the right to repurchase all of the shares of such Stock then held by the
applicable Management Stockholder Entities, at a per share price equal to the
Fair Market Value Per Share; and


 


(B)
with respect to the Options then subject to this Section 6(d), if the Company
exercises its right to repurchase the Stock granted under Section 6(d)(A), the
Company shall purchase all of such Options held by the applicable Management
Stockholder Entities that are then exercisable for an amount equal to the
product of (x) the excess, if any, of the Fair Market Value Per Share over the
Option Exercise Price and (y) the number of Exercisable Options.  Upon payment of the foregoing Option Excess
Price, such Options shall be terminated. 
In the event the foregoing Option Excess Price is zero or a negative
number, all such outstanding exercisable Options held by the applicable
Management Stockholder Entities shall be automatically terminated without any
payment in respect thereof.  For the
purposes of this clause (B), to the extent any Performance Option (as such term
is defined in the applicable Stock Option Agreement) then subject to Section
6(d) is not exercisable during the Call Period because the applicable Financial
Statement Approval Date (as such term is defined in the applicable Stock Option
Agreement) has not occurred, the commencement of the Call Period shall be
delayed with respect to such Performance Option until the occurrence of such Financial
Statement Approval Date.


 


In
addition, in the event the foregoing call is made by the Company and, within 90
calendar days thereafter, (i) an initial Public Offering occurs, (ii) a Change
of Control occurs or (iii) a Stock Sale occurs, the Company will pay the
Management Stockholder the excess, if any, of the amount that would have been
paid pursuant to the foregoing clauses (A) and (B) of this Section 6(d) if the
price at which the Common Stock is sold in the Public Offering, Change of
Control or Stock Sale, as applicable, was substituted for the Fair Market Value
Per Share above, over the Repurchase Price and any payment with respect to the
Options originally paid by the Company pursuant to this Section 6(d) when the
call was made.


 


(e)   Call Notice.  The
Company shall have a period of 60 calendar days from the date of any Call Event
or, if later, with respect to a Section 6(a) Call Event, the date after
discovery of, and the applicable cure period for, an impermissible transfer
constituting a Section 6(a) Call Event (such period, the “Call Period”),
in which to give notice in writing to the Management Stockholder of its
election to exercise its rights and obligations pursuant to this Section 6 (“Call
Notice”).  The completion of the
purchases pursuant to the foregoing shall take place at the principal office of
the Company on the tenth business day after the giving of the Call Notice.  The applicable Repurchase Price and any
payment with respect to the Options as described in this Section 6 shall be paid
by delivery to the applicable Management Stockholder Entities of a certified
bank check or checks in the appropriate amount payable to the order of each of
the applicable Management Stockholder Entities (or by wire transfer of
immediately available funds, if the Management Stockholder Entities provide to
the Company wire transfer instructions) against delivery of certificates or
other instruments representing the Stock so purchased and appropriate documents
cancelling the Options so terminated, appropriately endorsed or executed by the
applicable Management Stockholder Entities or its authorized representative.


 


11

















 


(f)    Delay of Call. 
Notwithstanding any other provision of this Section 6 to the contrary and
subject to Section 11(a), if there exists and is continuing any Event, the
Company shall delay the repurchase of any of the Stock or the Options (pursuant
to a Call Notice timely given in accordance with Section 6(e) hereof) from the
applicable Management Stockholder Entities until the Repurchase Eligibility
Date; provided, however, that (i) the number of shares of Stock
subject to repurchase under this Section 6 shall be that number of shares of
Stock, and (ii) in the case of a repurchase pursuant to Section 6(b), Section
6(c) or 6(d), the number of Exercisable Option Shares for purposes of
calculating the Option Excess Price payable under this Section 6 shall be the
number of Exercisable Option Shares, held by the applicable Management
Stockholder Entities at the time of delivery of a Call Notice in accordance
with Section 6(e) hereof.  All Options
exercisable as of the date of a Repurchase Notice, in the case of a repurchase
pursuant to Section 6(b), 6(c) or 6(d), shall continue to be exercisable until
the repurchase of such Options pursuant to such Call Notice, provided that to
the extent that any Options are exercised after the date of such Call Notice,
the number of Exercisable Option Shares for purposes of calculating the Option
Excess Price shall be reduced accordingly.


 


(g)   The Company shall use its reasonable best
efforts to make payment in respect of the applicable Repurchase Price and any
payment with respect to the Options to be paid pursuant to this Section 6 at
the earliest date it can do so without such default or violation.  Notwithstanding the foregoing, in the event
payment of the applicable Repurchase Price and any payment with respect to the
Options are delayed, the Company shall pay to the Management Stockholder, when
payment of the applicable Repurchase Price and any payment with respect to the
Options are made, interest on the applicable Repurchase Price and any
applicable payment with respect to the Options to be paid to the Management
Stockholder, which shall have accrued at the Prime Rate plus one percent (or if
not paid within one year, three percent for the six month period after such
one-year period).  In the event that the
Company’s exercise of its call right is delayed pursuant to the foregoing, a
promissory note in a mutually agreed form shall be delivered by the Company to
the Management Stockholder to evidence the obligation to pay the applicable
Repurchase Price and any applicable payment with respect to the Options not
later than the last calendar day of the eighteenth month following the tenth
business day after the giving of the Call Notice.


 


(h)   Notwithstanding anything in this Agreement to
the contrary, this Section 6 shall terminate and be of no further force or
effect upon the occurrence of a Change of Control.


 


7.     Adjustment of Repurchase Price.


 


In determining the applicable repurchase price of the Stock and
Options, as provided for in Sections 5 and 6, above, appropriate adjustments
shall be made for any stock dividends, splits, combinations, recapitalizations
or any other adjustment in the number of outstanding shares of Stock in order
to maintain, as nearly as practicable, the intended operation of the provisions
of Sections 5 and 6.


 


8.     Additional Grants of Stock Options.  The
Company may from time to time grant to the Management Stockholder, in addition
to the Options, options under the Option Plan to purchase shares of Common
Stock at the Base Price or at a different option exercise price (such options
together with the Options, the “Stock Options”).


 


12

















 


9.     The Company’s Representations and Warranties.


 


(a)   The Company represents and warrants to the
Management Stockholder that (i) this Agreement has been duly authorized,
executed and delivered by the Company and is enforceable against the Company in
accordance with its terms and (ii) the Stock, when issued and delivered in
accordance with the terms hereof, will be duly and validly issued, fully paid
and nonasssessable.


 


(b)   The Company will file periodic reports under
the Act and the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and regulations adopted by the SEC thereunder, to the
extent the Company is required to file them under the Exchange Act, to enable
the Management Stockholder to sell shares of Stock without registration under
the Act within the limitations of the exemptions provided by (A) Rule 144 under
the Act, as such Rule may be amended from time to time, or (B) any similar rule
or regulation hereafter adopted by the SEC, subject to the transfer
restrictions set forth in Section 3. 
Notwithstanding anything contained in this Section 9(b), the Company may
de-register under Section 12 of the Exchange Act if it is then permitted to do
so pursuant to the Exchange Act and the rules and regulations thereunder and,
in such circumstances, shall not be required hereby to file any reports which
may be necessary in order for Rule 144 or any similar rule or regulation under
the Act to be available.  Nothing in
this Section 9(b) shall be deemed to limit in any manner the restrictions on
sales of Stock contained in this Agreement.


 


(c)   Notwithstanding the foregoing, as soon as
reasonably practicable after the occurrence of a Public Offering, the Company
shall file and, thereafter, maintain (subject to the Company’s good faith
determination to so maintain) a registration statement on Form S-8 and a Form
S-3, as necessary with respect to the shares of Stock subject to this
Agreement.


 


10.   “Piggyback” Registration Rights. 
Until the later of (i) one year after the occurrence of a (A) Public
Offering relating to sales by the KKR Fund and any investment partnerships and
investment limited liability companies affiliated with the KKR Fund or (B)
Qualified Public Offering and (ii) with respect to the Existing Stock, the
sixth anniversary of the Initial Investment Date or, with respect to the New
Stock, the sixth anniversary of the Investment Date:


 


(a)   The Management Stockholder hereby agrees to
be bound by all of the terms, conditions and obligations of the Registration
Rights Agreement, as in effect on the date hereof (subject to any amendments
thereto to which the Management Stockholder has agreed to be bound), and shall
have all of the rights and privileges of the Registration Rights Agreement, in
each case as if the Management Stockholder were an original party (other than
the Company) thereto, subject to applicable and customary underwriter
restrictions; provided, however, that at no time shall the
Management Stockholder have any rights to request registration under Section 3
of the Registration Rights Agreement; and provided  further, that
the Management Stockholder shall not be bound by any amendments to the
Registration Rights Agreement unless the Management Stockholder consents
thereto provided that such consent will not be unreasonably withheld.  All Stock purchased or held by the
applicable Management Stockholder Entities pursuant to this Agreement shall be
deemed to be “Registrable Securities” as defined in the Registration Rights
Agreement.


 


13

















 


(b)   In the event of a proposed registered sale of
Common Stock by any entity or entities in the KKR Fund and any investment
partnerships and investment limited liability companies affiliated with the KKR
Fund in accordance with the terms of the Registration Rights Agreement, the
Company will promptly notify the Management Stockholder in writing (a “Notice”)
of such proposed registration (a “Proposed Registration”).  If within 15 calendar days of the receipt by
the Management Stockholder of such Notice, the Company receives from the
applicable Management Stockholder Entities a written request (a “Request”)
to register shares of Stock held by the applicable Management Stockholder
Entities (which Request will be irrevocable unless otherwise mutually agreed to
in writing by the Management Stockholder and the Company), shares of Stock will
be so registered as provided in this Section 10; provided, however,
that for each such registration statement only one Request, which shall be
executed by the applicable Management Stockholder Entities, may be submitted
for all Registrable Securities held by the applicable Management Stockholder
Entities.


 


(c)   The maximum number of shares of Stock which
will be registered pursuant to a Request will be the lowest of (i) the number
of shares of Stock then held by the Management Stockholder Entities, including
all shares of Stock which the Management Stockholder Entities are then entitled
to acquire under unexercised Options to the extent then exercisable, multiplied
by a fraction, the numerator of which is the aggregate number of shares of
Stock being sold by the KKR Fund and any investment partnerships and investment
limited liability companies affiliated with the KKR Fund and the denominator of
which is the aggregate number of shares of Stock owned by the KKR Fund and any
investment partnerships and investment limited liability companies affiliated
with the KKR Fund; (ii) the maximum number of shares of Stock which the Company
can register in the Proposed Registration without adverse effect on the
offering in the view of the managing underwriters (reduced pro rata with all
Other Management Stockholders) as more fully described in subsection (d) of
this Section 10; and (iii) the maximum number of shares which the Management
Stockholder (pro rata based upon the aggregate number of shares of Stock the
Management Stockholder and all Other Management Stockholders have requested to
be registered) is permitted to register under the Registration Rights
Agreement.


 


(d)   If a Proposed Registration involves an
underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of shares of Stock requested to be
included in the Proposed Registration exceeds the number which can be sold in
such offering, so as to be likely to have an adverse effect on the price,
timing or distribution of the shares of Stock offered in such Public Offering
as contemplated by the Company, then the Company will include in the Proposed
Registration (i) first, 100% of the shares of Stock the Company proposes to
sell and (ii) second, to the extent of the number of shares of Stock requested
to be included in such registration which, in the opinion of such managing
underwriter, can be sold without having the adverse effect referred to above,
the number of shares of Stock which the “Holders” (as defined in the
Registration Rights Agreement), including, without limitation, the Management
Stockholder and all Other Management Stockholders have requested to be included
in the Proposed Registration, such amount to be allocated pro rata among all
requesting Holders on the basis of the relative number of shares of Stock then
held by each such Holder (including the exercisable Options) (provided that any
shares thereby allocated to any such Holder that exceed such Holder’s request
will be reallocated among the remaining requesting Holders in like manner).


 


14

















 


(e)   Upon delivering a Request the Management
Stockholder will, if requested by the Company, execute and deliver a custody
agreement and power of attorney in form and substance satisfactory to the
Company with respect to the shares of Stock to be registered pursuant to this
Section 10 (a “Custody Agreement and Power of Attorney”).  The Custody Agreement and Power of Attorney
will provide, among other things, that the Management Stockholder will deliver
to and deposit in custody with the custodian and attorney-in-fact named therein
a certificate or certificates representing such shares of Stock (duly endorsed
in blank by the registered owner or owners thereof or accompanied by duly
executed stock powers in blank) and irrevocably appoint said custodian and
attorney-in-fact as the Management Stockholder’s agent and attorney-in-fact
with full power and authority to act under the Custody Agreement and Power of
Attorney on the Management Stockholder’s behalf with respect to the matters
specified therein.


 


(f)    The Management Stockholder agrees that he or
she will execute such other agreements as the Company may reasonably request to
further evidence the provisions of this Section.


 


11.   Pro Rata Repurchases; Dividends. 
(a)  Notwithstanding anything to
the contrary contained in Section 4, 5 or 6, if at any time consummation of any
purchase or payment to be made by the Company pursuant to this Agreement and
the Other Management Stockholders Agreements would result in an Event, then the
Company shall make purchases from, and payments to, the Management Stockholder
and Other Management Stockholders pro rata (on the basis of the proportion of
the number of shares of Stock each such Management Stockholder and all Other
Management Stockholders have elected or are required to sell to the Company)
for the maximum number of shares of Stock and Options permitted without
resulting in an Event (the “Maximum Repurchase Amount”).  The provisions of Sections 5(c) and 6(f)
shall apply in their entirety to payments and repurchases with respect to
shares of Stock and Options which may not be made due to the limits imposed by
the Maximum Repurchase Amount under this Section 11(a).  Until all of such Stock and Options are
purchased and paid for by the Company, the Management Stockholder and the Other
Management Stockholders whose Stock and Options are not purchased or paid in
accordance with this Section 11(a) shall have priority, on a pro rata basis,
over other purchases of Stock and Options by the Company pursuant to this
Agreement and Other Management Stockholders’ Agreements.


 


(b)   No dividends on the Common Stock are expected
to be paid by the Company prior to a Public Offering.  In the event any dividends are paid with respect to the Stock,
the Management Stockholder will be treated in the same manner as all other
Management Stockholders with respect to shares of Stock then owned by the
Management Stockholder, in accordance, as applicable, with Sections 8 and 9 of
the Option Plan.


 


12.   Rights to Negotiate Repurchase Price. 
Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing, redeeming or otherwise acquiring for value shares of
Stock or Options from the Management Stockholder, at any time, upon such terms
and conditions, and for such price, as may be mutually agreed upon between the Parties,
whether or not at the time of such purchase, redemption or acquisition
circumstances exist which specifically grant the Company the right to purchase
shares of Stock or any Options under the terms of this Agreement; provided,
that no such purchase, redemption or acquisition shall be


 


15

















 


consummated, and no
agreement with respect to any such purchase, redemption or acquisition shall be
entered into, without the prior written consent of the Board of Directors of
the Company.


 


13.   Notice of Change of Beneficiary. 
Immediately prior to any transfer of Stock to a Management Stockholder’s
Trust, the Management Stockholder shall provide the Company with a copy of the
instruments creating the Management Stockholder’s Trust and with the identity
of the beneficiaries of the Management Stockholder’s Trust.  The Management Stockholder shall notify the
Company as soon as practicable prior to any change in the identity of any
beneficiary of the Management Stockholder’s Trust.


 


14.   Recapitalizations, etc.  The
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Stock or the Options, to any and all shares of capital
stock of the Company or any capital stock, partnership units or any other
security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split,
combination, recapitalization, liquidation, reclassification, merger,
consolidation or otherwise.


 


15.   Management Stockholder’s Employment by the
Company.  Notwithstanding the foregoing, nothing contained
in this Agreement (i) obligates the Company or any subsidiary of the Company to
employ the Management Stockholder in any capacity whatsoever or (ii) prohibits
or restricts the Company (or any such subsidiary) from terminating the
employment of the Management Stockholder at any time or for any reason
whatsoever, with or without Cause, and the Management Stockholder hereby
acknowledges and agrees that, other than as set forth in the Employment
Agreement, neither the Company nor any other person has made any
representations or promises whatsoever to the Management Stockholder concerning
the Management Stockholder’s employment or continued employment by the Company
or any subsidiary of the Company.


 


16.   State Securities Laws.  The
Company hereby agrees to use its best efforts to comply with all state
securities or “blue sky” laws which might be applicable to the sale of the
Stock and the issuance of the Options to the Management Stockholder.


 


17.   Binding Effect.  The
provisions of this Agreement shall be binding upon and accrue to the benefit of
the parties hereto and their respective heirs, legal representatives,
successors and assigns.  In the case of
a transferee permitted under Section 2(a) or Section 3 hereof, such transferee
shall be deemed the Management Stockholder hereunder; provided, however,
that no transferee (including without limitation, transferees referred to in
Section 2(a) or Section 3 hereof) shall derive any rights under this Agreement
unless and until such transferee has delivered to the Company a valid
undertaking and becomes bound by the terms of this Agreement.


 


18.   Amendment.  This Agreement may be amended
only by a written instrument signed by the Parties hereto and may not be
amended or modified in any event without the prior written approval of the
Board of Directors of the Company.


 


16

















 


19.   Closing.  Except as otherwise provided
herein, the closing of each purchase and sale of shares of Stock, pursuant to
this Agreement shall take place at the principal office of the Company on the
tenth business day following delivery of the notice by either Party to the
other of its exercise of the right to purchase or sell such Stock hereunder.


 


20.   Applicable Law; Jurisdiction; Arbitration.


 


(a)   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 law.


 


(b)   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 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 10 calendar days of the
petition therefor.  Either the Company
or the Management Stockholder may institute such arbitration proceeding by
giving written notice to the other party. 
A hearing shall be held by the arbitrator in New York within 30 calendar
days of his or her appointment.  In
preparation for their presentation of such hearing, each party may depose a
maximum of four people.  Each such deposition
shall last no more than 6 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 8 hours to present its position to the arbitrator.  The hearing shall be no more than 3 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.  All expenses of such
arbitration, including the fees and expenses of the counsel of the Management
Stockholder, shall be reimbursed by the Company unless the arbitrator
determines that the Company has prevailed in such arbitration, in which case
the Management Stockholder shall bear his own legal fees, without reimbursement
by the Company.


 


(c)   Notwithstanding the foregoing, the Management
Stockholder acknowledges and agrees that the Company shall be entitled to
injunctive or other relief in order to enforce the covenant not to compete,
covenant not to solicit and/or confidentiality covenants as set forth in
Section 25(a) of this Agreement.


 


21.   Assignability of Certain Rights by the
Company.  The Company shall have the right to assign
any or all of its rights or obligations to purchase shares of Stock pursuant to
Sections 4, 5 and 6 hereof; provided, however, that the Company
shall remain obligated to perform its obligations notwithstanding such
assignment in the event that such assignee fails to perform the obligations so
assigned to it.


 


17

















 


22.   Miscellaneous.


 


(a)   In this Agreement all references to “dollars”
or “$” are to United States dollars.


 


(b)   If any provision of this Agreement shall be
declared illegal, void or unenforceable by any court of competent jurisdiction,
the other provisions shall not be affected, but shall remain in full force and
effect.


 


(c)   The Company shall have the right to deduct
from any cash payment made under this Agreement to the applicable Management
Stockholder Entities any federal, state or local income or other taxes required
by law to be withheld with respect to such payment.


 


23.   Notices.  All notices and other
communications provided for herein shall be in writing and shall be deemed to
have been duly given if delivered by hand (whether by overnight courier or
otherwise) or sent by registered or certified mail, return receipt requested,
postage prepaid, or by overnight delivery or telecopy, to the Party to whom it
is directed:


 


(a)   If to the Company, to it at the following
address:


 


Rockwood
Holdings, Inc.

100 Overlook Center

Princeton, NJ 08540

Attn:    Thomas J. Riordan


 


with a copy to:


 


Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York  10017

Attn:    Roxane F. Reardon, Esq.


 


(b)   If to the Management Stockholder, to him at
the address set forth below under his signature; or at such other address as
either party shall have specified by notice in writing to the other.


 


24.   Confidential Information; Covenant Not to
Compete; Assignment of Inventions.


 


(a)   In consideration of the Company entering into
this Agreement with the Management Stockholder, the Management Stockholder
hereby agrees effective as of the date of the Management Stockholder’s
commencement of employment with the Company, without the Company’s prior
written consent, the Management Stockholder shall not, directly or indirectly,
(i) at any time during or after the Management Stockholder’s employment with
the Company, disclose any Confidential Information pertaining to the business
of the Company or any of its subsidiaries, except in connection with the
performance of the Management Stockholder’s duties hereunder as he deems in
good faith reasonably necessary or desirable, or when required by law,
administrative or judicial process; or (ii) at any time during the Noncompete
Period (as


 


18

















 


hereinafter defined)
directly or indirectly, (A) be engaged in or have a financial interest (other
than a passive ownership position of less than 5% in any company whose shares
are publicly traded or any non-voting non-convertible debt securities in any
company or any investment the Management Stockholder owns through a mutual
fund, private equity fund or other pooled account) in any business which
competes with a business of the Company or any of its subsidiaries, which
business of the Company (or any of its subsidiaries) provides, or is reasonably
expected to provide, at least five percent (5%) of the gross revenues of the
Company or any subsidiary thereof (any such business which so competes, a
“Competitor”) or (B) solicit or offer employment to any person (other than the
Management Stockholder’s secretary or other personal assistant who reports
directly to the Management Stockholder) who has been employed by the Company or
any of its subsidiaries at any time during the six months immediately preceding
the termination of the Management Stockholder’s employment.  Notwithstanding the foregoing, nothing
herein shall prevent the Management Stockholder from working for a, subsidiary,
division or other entity of an entity that controls, directly or indirectly,
another subsidiary, division or other entity, that is a Competitor, so long as
the entity, subsidiary or division by which the Management Stockholder may be
employed is not itself a Competitor and does not provide services or products
to a Competitor.  If the Management
Stockholder is bound by any other agreement with the Company regarding the use or
disclosure of confidential information, the provisions of this Agreement shall
be read in such a way as to further restrict and not to permit any more
extensive use or disclosure of confidential information.  For purposes of this Section 9, (x) “Noncompete
Period” shall be defined as the period during which the Management Stockholder
continues to be employed by the Company and (I) with respect to any termination
of employment described in Sections 8(a) or (b) of the Employment Agreement,
one year and (II) with respect to any termination of employment described in
Section 8(c) of the Employment Agreement, two years.  If the Management Stockholder is bound by any other agreement
with the Company regarding the use or disclosure of confidential information, the
provisions of this Agreement shall be read in such a way as to further restrict
and not to permit any more extensive use or disclosure of confidential
information.


 


(b)   Notwithstanding clause (a) above, if at any
time a court holds that the restrictions stated in such clause (a) are
unreasonable or otherwise unenforceable under circumstances then existing, the
parties hereto agree that the maximum period, scope or geographic area
determined to be reasonable under such circumstances by such court will be
substituted for the stated period, scope or area.  Because the Management Stockholder’s services are unique and
because the Management Stockholder has had access to Confidential Information,
the parties hereto agree that money damages will be an inadequate remedy for
any breach of this Agreement.  In the
event of a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce, or prevent any
violations of, the provisions hereof (without the posting of a bond or other
security).


 


25.   Definitions.  As used herein, the following
terms shall have the meanings specified in this Section 25 unless the context
otherwise requires (it being understood that defined terms in this Agreement
shall include in the singular number the plural and in the plural the
singular).


 


19

















 


“Act”
shall have the meaning set forth in Section 2(a)(i) hereof.


 


“Agreement”
shall have the meaning set forth in the introductory paragraph.


 


“Base
Price” shall, for purposes of this Agreement, be $500.00 per share.


 


“Call
Event” shall mean any of Section 6(a) Call Event, Section 6(b) Call Event,
Section 6(c) Call Event or Section 6(d) Call Event, as applicable.


 


“Call
Notice” shall have the meaning set forth in Section 6(e) hereof.


 


“Call
Period” shall have the meaning set forth in Section 6(e) hereof.


 


“Cause”
shall mean (i) the Management Stockholder’s willful and continued refusal to
perform duties, which are within the control of the Management Stockholder and
consistent with such Management Stockholder’s title and position, that is not
cured within 15 calendar days following receipt by the Management Stockholder
of written notice from the Company of such failure, (ii) the Management
Stockholder’s conviction of or plea of guilty or no contest to a (x) felony,
(y) a misdemeanor involving the Company or (z) misdemeanor not involving the
Company, which results in material and demonstrable harm to the business or
reputation of the Company (in each case of (x), (y) or (z), other than as a
result of vicarious liability under any environmental criminal statute), (iii)
the Management Stockholder’s willful malfeasance or misconduct (x) relating to
the Company which is demonstrably injurious to the Company or its subsidiaries,
other than in a manner that is insignificant or inconsequential or (y) not
involving the Company, but which results in material, adverse and demonstrable
harm to the Company or its subsidiaries or (iv) a breach by the Management
Stockholder of the material terms of Section 25 of this Agreement, following
notice of such breach (which notice may be oral or written) that (if, in the
good faith discretion of the Board, is able to be cured by the Management
Stockholder) is not cured within 15 calendar days following receipt by the
Management Stockholder of written notice from the Company that it reasonably
believes the Management Stockholder is in breach of any such covenants;
provided, however, that Cause shall cease to exist as an event on the 60th
calendar day following actual and substantiated knowledge of the Cause event by
a non-employee member of the Board affiliated with KKR.  For purposes of this subsection, no act, or
failure to act, on the Management Stockholder’s part shall be considered
“willful” unless done or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best interests
of the Company.


 


“Change
of Control” means (i) sales of all or substantially all of the assets of the
Company to a Person who is not KKR or an affiliate of KKR, (ii) a sale by KKR
or any of its affiliates of the voting stock of the Company resulting in more
than 50% of the voting stock of the Company being held by a Person or group
that does not include KKR or any of its affiliates or (iii) a merger,
consolidation, recapitalization or reorganization of the Company with or into
another Person which is not an affiliate of KKR; if and only if as a result of
any of the foregoing events in (i)-(iii) KKR or affiliates of KKR lose the
ability, without the approval of a Person who is not an affiliate of KKR, to
elect a majority of the Board of Directors of the Company (or the resulting
entity).  Notwithstanding the foregoing,
if any of the transactions described in (i)-(iii) of the preceding sentence
shall occur and the other Person involved in such transaction (or its


 


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ultimate parent entity) is an operating
company controlled by KKR or an affiliate of KKR prior to such transaction (an
“Alternate KKR Entity”), then the determination of whether a change of
control has occurred shall be made by measuring (i)-(iii) above (including the
ability to elect a majority of the Board) as if the Alternate KKR Entity was
not an affiliate of KKR and by treating the voting power of the Alternate KKR
Entity in the Company (or the resulting entity) as if it were held by a Person
unaffiliated with KKR.


 


“Common
Stock” shall have the meaning set forth in the second “whereas” paragraph.


 


“Company”
shall have the meaning set forth in the introductory paragraph.


 


“Confidential
Information” shall mean all non-public information concerning trade secret,
know-how, software, developments, inventions, processes, technology, designs,
the financial data, strategic business plans or any proprietary or confidential
information, documents or materials in any form or media, including any of the
foregoing relating to research, operations, finances, current and proposed
products and services, vendors, customers, advertising and marketing, and other
non-public, proprietary, and confidential information of the Restricted Group.


 


“Custody
Agreement and Power of Attorney” shall have the meaning set forth in Section
10(e) hereof.


 


“DGCL”
shall have the meaning set forth in Section 5(c) hereof.


 


“Employment
Agreement” shall mean that employment agreement dated September 28, 2001
between the Company and the Management Stockholder, as amended as of August 9,
2004 and as of September 24, 2004, as the same may be amended, modified or
supplemented from time to time.


 


“Event”
shall have the meaning set forth in Section 5(c) hereof.


 


“Exchange
Act” shall have the meaning set forth in Section 9(b) hereof.


 


“Exercisable
Option Shares” shall mean the shares of Common Stock which, at the Repurchase
Calculation Date, could be purchased by the Management Stockholder upon
exercise of his or her outstanding and exercisable Options.


 


“Existing
Management Stockholder’s Agreement” shall have the meaning set forth in the
second “whereas” paragraph.


 


“Existing
Option” shall have the meaning set forth in the third “whereas” paragraph.


 


“Existing
Option Agreement” shall have the meaning set forth in the third “whereas”
paragraph.


 


“Existing
Option Stock” shall have the meaning set forth in Section 2(a) hereof.


 


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“Existing
Purchased Stock” shall have the meaning set forth in the second “whereas”
paragraph.


 


“Existing
Restricted Stock” shall have the meaning set forth in the fourth “whereas”
paragraph.


 


“Existing
Stock” shall have the meaning set forth in Section 2(a) hereof.


 


“Fair
Market Value Per Share” shall mean, on the Repurchase Calculation Date, (i)
prior to a Public Offering, the fair market value per share of the Common
Stock, as applicable, as determined by the Board of Directors of the Company in
good faith (which value shall not be reduced to reflect the illiquidity or
minority rights associated with any shares of Common Stock held by the
Management Stockholder) (the “Board Determination”) or (ii) after a
Public Offering, the price per share equal to (A) the average of the last sale
price of the Common Stock for the five trading days ending on the Repurchase
Calculation Date on each stock exchange on which the Common Stock may at the
time be listed or, (B) if there shall have been no sales on any such exchanges
on the Repurchase Calculation Date on any given day, the average of the closing
bid and asked prices on each such exchange for the five trading days ending on
the Repurchase Calculation Date or, (C) if there is no such bid and asked price
on the Repurchase Calculation Date, on the next preceding date when such bid
and asked price occurred or, (D) if the Common Stock shall not be so listed,
the average of the closing sales prices as reported by NASDAQ for the five
trading days ending on the Repurchase Calculation Date in the over-the-counter
market.


 


“Good
Reason” shall mean, without the Management Stockholder’s consent, (A) a
reduction in the Management Stockholder’s base salary or annual bonus
opportunity, (B) a substantial reduction in the Management Stockholder’s
duties, authorities, and responsibilities or removal from the Management
Stockholder of the title of Chief Executive Officer of the Company, (C) the
Management Stockholder’s removal from, or failure to be re-elected to the
Board, (D) the elimination or reduction of the Management Stockholder’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, provided, however, that any adverse change to
the terms of the Supplemental Pension Benefit shall be deemed an event of Good
Reason, (D) a transfer of the Management Stockholder’s primary workplace by
more than thirty-five (35) miles from the Company’s offices in Princeton, New
Jersey, (E) any failure by the Company to pay when due any payment owed to the
Management Stockholder within 15 calendar days after the date such payment
becomes due or (F) failure of any successor to the Company (whether direct or
indirect and whether by merger, acquisition, consolidation or otherwise) to assume
in a writing delivered to the Management Stockholder, upon the assignee
becoming such, the obligations of the Company hereunder; provided that either
of the events described in clauses (A) and (B) of this Section 8(c)(ii) shall
constitute Good Reason only if the Company fails to cure such event within 30
calendar days after receipt from the Management Stockholder of written notice
of the event which constitutes Good Reason; and provided, further, that “Good
Reason” shall cease to exist for an event on the 60th calendar day
following the later of its occurrence or the Management Stockholder’s knowledge
thereof, unless the Management Stockholder has given the Company written notice
thereof prior to such date.


 


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“Initial
Investment Date” shall mean November 1, 2001.


 


“Investment
Date” shall have the meaning set forth in Section 1(a) hereof.


 


“KKR”
shall mean Kohlberg Kravis Roberts & Co. L.P.


 


“KKR
Fund” shall have the meaning set forth in Section 1(a) hereof.


 


“Management
Stockholder” shall have the meaning set forth in the introductory paragraph.


 


“Management
Stockholder Entities” shall mean the Management Stockholder, the Management
Stockholder’s Estate and the Management Stockholder’s Trust, collectively.


 


“Management
Stockholder’s Estate” shall mean the conservators, guardians, executors,
administrators, testamentary trustees, legatees or beneficiaries of the
Management Stockholder.


 


“Management
Stockholder’s Trust” shall mean a limited partnership, limited liability
company, trust or custodianship, the beneficiaries of which may include only
the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants
(including adopted) or, if at any time after any such transfer there shall be
no then living spouse or lineal descendants, then to the ultimate beneficiaries
of any such limited partnership, limited liability company, trust or
custodianship or to the estate of a deceased beneficiary.


 


“Maximum
Repurchase Amount” shall have the meaning set forth in Section 11(a) hereof.


 


“New
Time Option” shall have the meaning set forth in the sixth “whereas” paragraph.


 


“New
Time Option Stock” shall have the meaning set forth in Section 2(a) hereof.


 


“New
Stock” shall mean collectively the Purchased Stock and the New Time/Performance
Option Stock.


 


“New
Time/Performance Option” shall have the meaning set forth in the sixth
“whereas” paragraph.


 


“New
Time/Performance Option Stock” shall have the meaning set forth in Section 2(a)
hereof.


 


“Notice”
shall have the meaning set forth in Section 10(b) hereof.


 


“Offeror”
shall have the meaning set forth in Section 4 hereof.


 


“Old
Option Plan” shall have the meaning set forth in the second “whereas”
paragraph.


 


“Options”
shall have the meaning set forth in the sixth “whereas” paragraph.


 


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“Option
Excess Price” shall mean the aggregate amount paid by the Company in respect of
Exercisable Option Shares pursuant to Section 5 or 6, as applicable.


 


“Option
Exercise Price” shall mean the exercise price of the shares of Common Stock
covered by the applicable Option.


 


 “Option Plan” shall mean the Amended and
Restated 2003 Stock Purchase and Option Plan of Rockwood Holdings, Inc. and its
Subsidiaries.


 


“Option
Stock” shall have the meaning set forth in Section 2(a) hereof.


 


“Other
Management Stockholders” shall have the meaning set forth in the first whereas
paragraph.


 


“Other
Management Stockholders’ Agreements” shall have the meaning set forth in the
first “whereas” paragraph.


 


“Parties”
shall have the meaning set forth in the introductory paragraph.


 


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


 


“Person”
shall mean “person,” as such term is used for purposes of Section 13(d) or
14(d) of the Exchange Act.


 


“Prime
Rate” shall have the meaning set forth in Section 5(d) hereof.


 


“Proposed
Registration” shall have the meaning set forth in Section 10(b) hereof.


 


“Public
Offering” shall mean the sale of shares of Common Stock to the public
subsequent to the date hereof pursuant to a registration statement under the
Act which has been declared effective by the SEC (other than a registration
statement on Form S-4, Form S-8 or any other similar forms).


 


“Purchased
Stock” shall have the meaning set forth in Section 1(a) hereof.


 


“Put
Notice” shall have the meaning set forth in Section 5(b) hereof.


 


“Put
Period” shall have the meaning set forth in Section 5(a) hereof.


 


“Qualified
Public Offering” shall mean a Public Offering which results in an active
trading market of 35% or more of the Common Stock.


 


“Registration
Rights Agreement” shall mean that registration rights agreement, dated as of
November 20, 2000, among the Company, KKR 1996 Fund L.P., KKR Partners II, L.P.
and


 


24

















 


KKR Millennium Fund, L.P., as the same may be
amended, modified or supplemented from time to time.


 


“Repurchase
Calculation Date” shall mean the last calendar day of the month preceding the
later of (i) the month in which the event giving rise to the right to
repurchase occurs and (ii) the month in which the Repurchase Eligibility Date
occurs.


 


“Repurchase
Eligibility Date” shall have the meaning set forth in Section 5(c) hereof.


 


“Repurchase
Price” shall mean the amount to be paid in respect of the Stock to be purchased
by the Company pursuant to Section 5(a), Section 6(a), 6(b), 6(c) or 6(d), as
applicable.


 


“Request”
shall have the meaning set forth in Section 10(b) hereof.


 


“Restricted
Group” shall mean, collectively, the Company, its subsidiaries, the KKR Fund
and their respective affiliates.


 


“Restricted
Stock Unit” shall have the meaning set forth in the fourth “whereas” paragraph.


 


“Restricted
Stock Unit Award Agreement” shall have the meaning set forth in the fourth
“whereas” paragraph.


 


“Rule
405 Affiliate” shall mean an affiliate of the Company as defined under Rule 405
of the rules and regulations promulgated under the Securities Act of 1933, as
amended.


 


“SEC”
shall mean the Securities and Exchange Commission.


 


“Section
6(a) Call Event” shall have the meaning set forth in Section 6(a) hereof.


 


“Section
6(b) Call Event” shall have the meaning set forth in Section 6(b) hereof.


 


“Section
6(c) Call Event” shall have the meaning set forth in Section 6(c) hereof.


 


“Section
6(d) Call Event” shall have the meaning set forth in Section 6(d) hereof.


 


“Stock”
shall mean collectively the Existing Stock, the New Stock, the New Time Option
Stock and any other shares of Common Stock otherwise acquired and/or held by
the Management Stockholder Entities.


 


“Stock
Option Agreement” shall mean any of the Time/Performance Stock Option Agreement,
the Time Stock Option Agreement, or the Existing Stock Option Agreement, as
amended as of the Investment Date, as applicable.


 


“Stock
Options” shall have the meaning set forth in Section 8 hereof.


 


“Stock
Sale” shall mean sale of Common Stock by the Company, KKR or an affiliate of
KKR to a third party.


 


25

















 


“Third
Party Offer” shall have the meaning set forth in Section 4(a) hereof.


 


“Time
Stock Option Agreement” shall have the meaning set forth in Section 1(b).


 


“Time/Performance
Stock Option Agreement” shall have the meaning set forth in Section 1(b)
hereof.


 


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IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.


 


	
   

  	
  ROCKWOOD
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas J. Riordan

  	
   

  
	
   

  	
   

  	
  Name:
  Thomas J. Riordan

  
	
   

  	
   

  	
  Title:
  Vice President, Law & Administration

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MANAGEMENT
  STOCKHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Seifollah Ghasemi

  	
   

  
	
   

  	
  Name:
  Seifollah Ghasemi

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS:

  
	
   

  	
   

  
	
   

  	
  c/o
  Rockwood Holdings, Inc.

  100 Overlook Center

  Princeton, NJ  08540

  



 


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