Document:

Exhibit 10.1

 

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) entered
into as of November 13, 2008 (the “Effective Date”) by and between Rockwood
Holdings, Inc. (the “Company”) and Seifollah Ghasemi (the “Executive”).

 

WHEREAS, the Company and Executive are parties to an Employment
Agreement dated as of September 28, 2001, as amended by the First
Amendment to the Employment Agreement dated as of August 9, 2004 and by
the Second Amendment to the Employment Agreement dated as of September 24,
2004 (the “Original Employment Agreement”);

 

WHEREAS, the Company and Executive desire to amend and restate the
Original Employment Agreement and continue the employment of Executive on the
terms set forth herein, effective as of the date hereof;

 

NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the parties
agree as follows:

 

1.                                       Term of Employment.  Subject to the provisions of Section 8
of this Agreement, Executive shall continue to be employed by the Company
through August 1, 2009 (the “Initial Term”) on the terms and subject to
the conditions set forth in this Agreement. 
Following the Initial Term, the Agreement shall automatically be renewed
for additional terms of one year on each anniversary of the last day of the
Initial Term (the Initial Term and any annual extensions of the term of this
Agreement, together, the “Employment Term”), subject to Section 8 of this
Agreement, unless the Company or the Executive provides the other party with
written notice at least sixty (60) days prior to the expiration of the
Employment Term of the intent not to renew the Employment Term.  Notwithstanding the foregoing, (i) the
Employment Term shall automatically terminate on the August 1st next following
Executive’s attainment of age 75 unless the Company and the Executive otherwise
agree, and (ii) at the Company’s option, any notice of nonrenewal given by
the Company may specify that it is also a termination without Cause (as
hereinafter defined) by the Company, to be effective as of the date such notice
is given, in which case the Employment Term shall terminate immediately and the
sixty (60) day notice period shall be deemed to be waived by the Executive.

 

2.                                       Position.

 

a.                                       During the Employment Term,
Executive shall serve as the Chairman and Chief Executive Officer of the
Company and its subsidiaries and shall serve as a director on the Board of
Directors of the Company (the “Board”). 
The Executive shall report to the Board. 
In such positions, Executive shall have such duties and authority
commensurate with the position of a chairman and chief executive officer of a
company of similar size and nature and as the Board shall otherwise determine
from time to time.  The Executive shall
primarily perform his duties hereunder at the Company’s offices located in
Princeton, New Jersey (or at

 

 

such other office location as
may be within a thirty-five (35) mile radius from the Company’s current offices
in Princeton, New Jersey), unless the Executive consents in writing to the
relocation of the Company’s offices, in which case the Executive shall
primarily perform his duties hereunder at such new location(s).

 

b.                                      During the Employment Term,
Executive will devote substantially all of Executive’s business time, and will
devote Executive’s personal efforts, to the performance of Executive’s duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would materially conflict or materially
interfere with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided, however,
that nothing herein shall preclude Executive, (i) subject to the prior
approval of the Board, from accepting appointment to or continue to serve on
any board of directors or trustees of any business corporation or any
charitable organization or (ii) from managing his personal and family
investments; provided, however, in each case, and in the
aggregate, that such activities do not materially conflict or materially
interfere with the performance of Executive’s duties hereunder or conflict with
Section 9.

 

3.                                       Base Salary.  During the Employment Term, the Company shall
pay Executive a base salary at the annual rate of $1,300,000, payable in
substantially equal periodic payments in accordance with the Company’s
practices for other executive employees, as such practices may be determined
from time to time.  Executive shall be
entitled to such increases in Executive’s base salary, if any, as may be
determined from time to time in the sole discretion of the Board.  Executive’s annual base salary, as in effect
from time to time, is hereinafter referred to as the “Base Salary.”  Once increased, the Executive’s Base Salary
shall not be decreased below such increased amount.

 

4.                                       Annual Bonus. With respect to each full
fiscal year during the Employment Term, Executive shall be eligible to earn an
annual bonus award (an “Annual Bonus”), with a target bonus amount equal to
150% of Executive’s Base Salary (the “Target Bonus”) based upon the achievement
of reasonable performance goals established by the Board, provided, that
to the extent that any portion of the achievement of the goals or amount of the
Annual Bonus shall be based on a subjective criteria, that portion of the
achievement of the goals or Annual Bonus shall be as determined in the sole,
good faith discretion of the Board.  In
addition, in the sole discretion of the Board, Executive may be eligible to
earn an Annual Bonus in excess of the Target Bonus.  In addition, the Board shall establish
certain threshold performance goals, which the Company must achieve before
Executive shall be entitled to earn any Annual Bonus.  All Annual Bonus amounts shall otherwise be
paid in accordance with the Company’s annual incentive plan or policy, but in
all cases within 2-1/2 months following the close of the fiscal year.

 

In the event the Company is required to prepare a restatement of its
financial results for a fiscal year and the Board in good faith determines that
the need for such restatement was due to the intentional misconduct of one or
more of the senior executive officers of the Company, Executive shall, within
60 days of receiving notice of such Board determination (which notice shall
state the reasons for the need for the restatement, identify the misconduct and
include calculations of the impact thereof), reimburse the Company, net of
taxes, for all excess remuneration (as defined below) received by Executive in
connection with the Annual Bonus 

 

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received by Executive with
respect to such fiscal year.  For
purposes of this provision, the term “excess remuneration” means the excess of
the Annual Bonus payment made to Executive for such fiscal year over the
payment that would have been made to Executive for such fiscal year had
Executive’s payment been calculated based on the financial statements as
restated, as determined in the good faith discretion of the Board.

 

5.                                       Equity Arrangements.  During the Employment Term, Executive shall
be eligible to be granted equity awards on such terms and conditions as may be
determined by the Compensation Committee of the Board.

 

Executive’s equity arrangements, to the extent not inconsistent
herewith, shall be governed by the terms and conditions of certain documents,
including a Management Stockholder’s Agreement, the Stock Purchase and Option
Plan for Key Employees of Rockwood Holdings, Inc. and Subsidiaries (the “Stock
Incentive Plan”), Restricted Stock Unit Award Agreement, Share Option
Agreement, Sale Participation Agreement, and Registration Rights Agreement, in
the forms attached to the Original Employment Agreement (collectively, the “Management
Equity Documents”).

 

6.                                       Employee Benefits.

 

a.                                       During the Employment Term,
Executive shall be entitled to participate in the Company’s employee benefit
plans (other than annual bonus and incentive plans described in Section 4)
as in effect from time to time (collectively “Employee Benefits”), on the same
basis as those benefits are generally made available to other senior executives
of the Company.  Such plans and programs
currently include the following:

 

(i)                                     Rockwood
Health Care Benefits (medical, pharmaceutical, dental and vision),

 

(ii)                                  Rockwood
Long-Term Disability Plan,

 

(iii)                               Rockwood
Life and Accident Plan,

 

(iv)                              Rockwood
Health Care and Dependent Care Reimbursement Account,

 

(v)                                 Senior
Executive Health Plan,

 

(vi)                              Personal
Excess Liability Insurance Program, and

 

(vii)                           Rockwood
Retirement Plus Program (Profit Share/401(k) and Money Purchase Plan).

 

b.                                      The Company shall also pay to
Executive during the Employment Term the sum of $50,000 per month (the “Supplemental
Pension Benefit”) which shall be paid monthly.

 

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7.                                       Business Expenses and
Perquisites.

 

a.                                       Expenses.  During the Employment Term, reasonable
business expenses incurred by Executive in the performance of Executive’s
duties hereunder shall be reimbursed by the Company in accordance with Company
policies (but in no event later than the last day of the calendar year next
following the calendar year in which the expenses were incurred).

 

b.                                      Company Car.  During the Employment Term, the Executive
will be provided (at no after-tax cost to Executive) with use of a Company
automobile, including reimbursement on a monthly basis for expenses associated
with operating the automobile including gas, insurance and maintenance.  The reimbursements and tax gross-up payments
called for by this Section 7(b) shall be paid in accordance with the
Company’s reimbursement policy for senior executives (but in no event later
than the last day of the calendar year next following the calendar year in
which the Executive pays the expenses or related taxes, respectively).

 

c.                                       Other Perquisites.  Executive shall be entitled to such other
perquisites as shall be agreed to by Executive and the Company.

 

8.                                       Termination.  The Employment Term and Executive’s
employment hereunder may be terminated by either party at any time and for any
reason; provided, however, that Executive will be required to
give the Company at least one hundred eighty (180) days advance written notice
of any resignation of Executive’s employment; provided, further, however,
that the Company may, in its discretion, waive all or any portion of such
notice requirement.  In the event that
the Company waives all or any portion of such notice requirement and therefore
causes Executive’s employment to be terminated, in no event shall such waiver
constitute a termination without Cause by the Company (as described in Section 8(c) below).  In addition, Executive’s notice requirement
hereunder shall be subject to the notice provisions of Section 8(c) below.

 

a.                                       By the Company For Cause or By
Executive Resignation Without Good Reason.

 

(i)                  The Employment Term and
Executive’s employment hereunder may be terminated by the Company for Cause (as
defined below) immediately, without prior written notice thereof, and shall
terminate automatically (subject to the notice requirements, which may be
waived by the Company, as described above in this Section 8) upon
Executive’s resignation without Good Reason (as defined in Section 8(c)).

 

(ii)               For purposes of this Agreement, “Cause”
shall mean (A) Executive’s willful and continued refusal to perform
duties, which are within the control of Executive and consistent with such
Executive’s title and position, that is not cured within 15 days following
receipt by the Executive of written notice from the Company of such failure, (B) Executive’s
conviction of or plea of guilty or no contest to a (x) felony, (y) 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), 

 

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other than as a result of
vicarious liability under any environmental criminal statute), (iii) Executive’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 Executive of the material
term of Section 9 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 Executive) is not cured within 15 days
following receipt by the Executive of written notice from the Company that it
reasonably believes Executive is in breach of any such covenants; provided,
however, that Cause shall cease to exist as an event on the 60th day following actual and substantiated knowledge of the
Cause event by the chairman of the compensation or audit committee of the Board
unless, prior to such date, the Company has given Executive written notice of
the event constituting Cause and Executive’s opportunity to cure.  For purposes of this subsection, no act, or
failure to act, on Executive’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.

 

(iii)            If Executive’s employment is
terminated by the Company for Cause, or if Executive resigns without Good
Reason, Executive shall be entitled to receive:

 

(A)                              the
Base Salary and any accrued but unpaid Supplemental Pension Benefit through the
date of termination and any earned but unpaid Annual Bonus for the prior year
and any accrued but unpaid vacation;

 

(B)                                reimbursement
for any unreimbursed business expenses properly incurred by Executive in
accordance with Company policy prior to the date of Executive’s termination;
and

 

(C)                                such
employee benefits (described in Section 6(a) above), if any, as to
which Executive may be entitled under the employee benefit plans of the Company
(the amounts described in clauses (A) through (C) hereof being
referred to as the “Accrued Rights”).

 

Following such termination of Executive’s employment by the Company for
Cause or resignation by Executive without Good Reason, except as set forth in
this Section 8(a)(iii), Executive shall have no further rights to any
compensation or any other benefits under this Agreement other than for rights
to indemnification and directors and officers liability insurance as provided
herein; provided, however, that the treatment of any equity rights
held by Executive immediately prior to any such termination shall be subject to
the applicable terms of the Management Equity Documents.

 

b.                                      Disability or Death.

 

(i)                  The Employment Term and
Executive’s employment hereunder shall terminate upon Executive’s death and may
be terminated by the Company if a determination is made, at the request of
Executive or upon the reasonable request of the Company set forth in a notice
to Executive, by a physician selected by the Company and Executive, that
Executive is 

 

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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 (such inability is hereinafter referred to as “Disability” or
being “Disabled”).  Any question as to
the existence of the Disability of Executive as to which Executive and the
Company cannot agree shall be determined in writing by a qualified independent
physician mutually acceptable to Executive and the Company.  If Executive and the Company cannot agree as
to a qualified independent physician, each shall appoint such a physician and
those two physicians shall select a third who shall make such determination in
writing.  The determination of Disability
made in writing to the Company and Executive shall be final and conclusive for
all purposes of the Agreement. 
Notwithstanding the foregoing, in the event that as a result of mental
or physical incapacity Executive earlier incurs a “separation from service”
within the meaning of Section 409A, Executive will be deemed to have a
termination of employment by reason of Disability under this Agreement as of
such date.  In the event Executive is
determined to be Disabled, the Company shall, pursuant to a Company employee
benefit plan or otherwise, cause Executive to continue to receive the then Base
Salary (or such other salary continuation as may be provided pursuant to any
Company employee benefit plan) and welfare benefits (in accordance with the
applicable Company employee benefit plan under which Executive receives such
benefits immediately prior to such Disability) until the earlier to occur of (x) six
months after the date Executive is determined to be Disabled and (y) such
time as Executive commences coverage pursuant to the Company’s long-term
disability plan.

 

(ii)               Upon termination of Executive’s
employment hereunder for either Disability or death, Executive or Executive’s
estate (as the case may be) shall be entitled to receive:

 

(A)                              the
Accrued Rights; and

 

(B)                                a
lump sum pro rata portion of the Annual Bonus, if any, that Executive would
have been entitled to receive pursuant to Section 4 hereof for the fiscal
year in which such termination occurs based upon the percentage of the fiscal
year that shall have elapsed through the date of Executive’s termination of
employment, payable when such Annual Bonus would have otherwise been payable
had Executive’s employment not terminated, based on the Target for the fiscal
year in which termination occurs.

 

Following Executive’s termination of employment due to death or
Disability, except as set forth in this Section 8(b)(ii), Executive shall
have no further rights to any compensation or any other benefits under this
Agreement other than for rights to indemnification and directors and officers
liability insurance as provided herein; provided, however, that
the treatment of any equity rights held by Executive immediately prior to any
such termination shall be subject to the applicable terms of the Management
Equity Documents.

 

c.                                       By the Company Without Cause or
Resignation by Executive for Good Reason.

 

(i)                  The Employment Term and
Executive’s employment hereunder may be terminated by the Company without Cause
immediately, without prior written notice thereof, or 

 

6

 

by Executive’s resignation for
Good Reason (subject to the notice requirements, which may be waived by the
Company, as described above in this Section 8, and to the provision of Section 8(c)(ii),
below).  In addition to the foregoing, a
notice of non-extension of the Employment Term by the Company shall be deemed
to be a termination of the Executive’s employment without Cause as of the date
the Company notifies Executive of such non-extension.

 

(ii)               For purposes of this Agreement, “Good
Reason” shall mean, without Executive’s consent, (A) a reduction in
Executive’s base salary or annual bonus opportunity, (B) a substantial
reduction in Executive’s duties, authorities, and responsibilities or removal
from Executive of the title of Chief Executive Officer of the Company, (C) the
Executive’s removal from, or failure to be re-elected to the Board, (D) the
elimination or reduction of Executive’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, (E) a transfer of
Executive’s primary workplace by more than thirty-five (35) miles from the
Company’s offices in Princeton, New Jersey, (F) any failure by the Company
to pay when due any payment owed to Executive within 15 days after the date
such payment becomes due or (G) 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 Executive, 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
days after receipt from Executive 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 day following the later of its occurrence or
Executive’s knowledge thereof, unless Executive has given the Company written
notice thereof prior to such date.

 

(iii)            If Executive’s employment is
terminated by the Company without Cause (other than by reason of death or
Disability) or if Executive resigns for Good Reason, Executive shall be
entitled to receive:

 

(A)                              the
Accrued Rights

 

(B)                                a
lump sum pro rata portion of any Annual Bonus, if any, that Executive would
have been entitled to receive pursuant to Section 4 hereof for the fiscal
year in which such termination occurs (but only to the extent of achievement of
the applicable performance standards for such year) based upon the percentage
of the fiscal year that shall have elapsed through the date of Executive’s
termination of employment, payable when such Annual Bonus would have otherwise
been payable had Executive’s employment not terminated; provided, however,
that to the extent the Annual Bonus is subject to the exercise of negative
discretion, such discretion shall not be exercised to reduce Executive’s Annual
Bonus by a greater percentage than is applied generally to senior executives
subject to such discretion;

 

(C)                                in
lieu of any other cash severance or termination benefits otherwise payable to
Executive under any other plans, programs or arrangements of the Company or its
affiliates and subject to Executive’s continued compliance with the 

 

7

 

provisions of Section 9,
payment of an amount equal to two times the sum of (x) Executive’s then
Base Salary and (y) the average of Executive’s Annual Bonuses, if any,
earned or payable in respect of the two full fiscal years of the Company prior
to the date of Executive’s termination of employment, payable in substantially
equal monthly installments over the twenty-four (24) month period following the
date of such termination; provided, however, that if there occurs
a Change of Control (as defined in Section 8(g)) which qualifies as a “change
of control” for purposes of Section 409A of the Internal Revenue Code of
1986, as amended (“Section 409A”) and the Executive’s employment
terminates pursuant to this Section 8(c) within two years following
the Change of Control, then the amount to which Executive shall be entitled
hereunder (including the amount payable under Section 8(c)(iii)(D)) shall
be paid in one lump sum; and

 

(D)                               during
each of the twelve (12) months following the date of Executive’s termination of
employment, the Company shall make the additional $50,000 payment described in Section 6(b) of
this Agreement.

 

For the avoidance of doubt, it is understood and agreed that if a
Change of Control occurs after the Executive’s termination of employment, the
amounts payable to Executive under this Section 8(c)(iii)(C) shall
continue to be paid in monthly installments and shall not be accelerated.  Following Executive’s termination of
employment by the Company without Cause (other than by reason of Executive’s
death or Disability) or by Executive’s resignation for Good Reason, except as
set forth in this Section 8(c)(iii), Executive shall have no further
rights to any compensation or any other benefits under this Agreement other
than for rights to indemnification and directors and officers liability
insurance as provided herein; provided, however, that the
treatment of any equity rights held by Executive immediately prior to any such
termination shall be subject to the applicable terms of the Management Equity
Documents.

 

(iv)           If Executive’s employment is automatically terminated on the
August 1st next following Executive’s attainment of age
75 in accordance with Section 1 of this Agreement, Executive shall be
entitled to receive:

 

(A)                              the
Accrued Rights;

 

(B)                                a
lump sum pro rata portion of any Annual Bonus, if any, that Executive would
have been entitled to receive pursuant to Section 4 hereof for the fiscal
year in which such termination occurs (but only to the extent of achievement of
the applicable performance standards for such year) based upon the percentage
of the fiscal year that shall have elapsed through the date of Executive’s
termination of employment, payable when such Annual Bonus would have otherwise
been payable had Executive’s employment not terminated; provided, however,
that to the extent the Annual Bonus is subject to the exercise of negative
discretion, such discretion shall not be exercised to reduce Executive’s Annual
Bonus by a greater percentage than is applied generally to senior executives
subject to such discretion; and

 

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(C)                                his
entitlement under outstanding equity awards determined as though his termination
occurred by reason of retirement or involuntary termination by the Company,
whichever is more favorable to the Executive.

 

d.                                      Notice of Termination; Payment
of Lump Sum Amounts.  (i) Any purported termination of
employment by the Company or by Executive (other than due to Executive’s death)
as set forth above in this Section 8 shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 12(k) hereof.  For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of employment under the provision so indicated. 
Notwithstanding any other provision of this Agreement, the provisions of
this Section 8 shall exclusively govern Executive’s rights upon
termination of employment with the Company and its affiliates.

 

(ii)               For purposes of this Section 8,
(w) the Accrued Rights described in Section 8(a)(iii)(A) and all
amounts required to be paid in a lump sum pursuant to any subsection of this Section 8
(other than the Annual Bonus under Section 8(b)(ii)(B), Section 8(c)(iii)(B) and
Section 8(c)(iv)(B)) shall be required to be made within thirty (30)
business days after the date of the termination of Executive’s employment, (x) the
Accrued Rights described in Section 8(a)(iii)(C) shall be paid in
accordance with the applicable benefit plan, (y) the Annual Bonus under Section 8(b)(ii)(B),
Section 8(c)(iii)(B) and Section 8(c)(iv)(B) shall be paid
at such time as the Annual Bonus would have been payable had Executive’s
employment not terminated, and (z) all reimbursements of expenses pursuant
to this Section 8 will be paid in accordance with Company policy (but in
no event later than the last day of the calendar year next following the
calendar year in which the expenses were incurred).

 

e.                                       Board/Committee Resignation.  Upon termination of Executive’s employment
for any reason, Executive agrees to resign, as of the date of such termination,
from the Board (and any committees thereof) and the Board of Directors (and any
committees thereof) of any of the Company’s affiliates.

 

f.                                         Special 409A Provisions. 
Notwithstanding
the provisions of Section 8 or 11, if Executive is a specified employee
within the meaning of Section 409A, in accordance with the election made
by the Company for determining specified employees, any amounts payable under
this Agreement or any other payments to which Executive may be entitled on
account of a “separation from service” within the meaning of Section 409A
which constitute “deferred compensation” within the meaning of Section 409A
and which are otherwise scheduled to be paid during the first six months
following Executive’s termination of employment (other than any payments that
are permitted under Section 409A to be paid within six months following
termination of employment of a specified employee) shall be suspended until the
six-month anniversary of Executive’s termination of employment (or the
Executive’s death if sooner), at which time all payments that were suspended
shall be paid to Executive (or his estate) in a lump sum, together with
interest on each suspended payment at the prime rate (as reported in the Wall
Street Journal) from the date of suspension to the date of payment.  For purposes of Section 409A, each
payment under Section 8  (and each
other severance plan payment) will be treated as a separate payment.  A termination of employment shall not be 

 

9

 

deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits upon or following a termination of employment unless such
termination is also a “separation from service” within the meaning of Section 409A.  Payment or reimbursement of each of the
business expenses and tax gross-up payments called for by this Agreement
(including those under Sections 7, 8, and 11) with respect to any calendar year
shall not affect the amount eligible for payment or reimbursement in any other
calendar year, and such payments and reimbursements may not be exchanged for
cash or another benefit.  If any amounts
are due to be paid to Executive within a specified period, the date of payment
within such period shall be in the sole discretion of the Company.

 

g.                                      Change of Control.  For purposes of this Agreement, a Change of
Control shall mean the earliest date at which:

 

(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, 70% 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 70% continuity test is met, any ownership of the Voting
Securities of the surviving or resulting corporation or entity that results
from a stockholder’s ownership of the stock of, or other ownership interest in,
the corporation or other entity with which the Company is merged or
consolidated as not owned by persons who were beneficial owners of the Company’s
outstanding Voting Securities immediately prior to the transaction); or

 

(iv)           all or substantially all of the assets of the Company are
sold or transferred to a Person as to which (A) the Incumbent Board does
not have authority (whether by law or contract) to directly control the use or
further disposition of such assets and (B) the financial results of the
Company and such Person are not consolidated for financial reporting purposes.

 

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9.                                       Non-Competition.

 

a.                                       Executive acknowledges and
recognizes the highly competitive nature of the businesses of the Company and
its affiliates and accordingly agrees, effective as of the date of Executive’s
commencement of employment with the Company, without the Company’s prior
written consent, Executive shall not, directly or indirectly, (i) at any
time during or after Executive’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 Executive’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 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 Executive 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) provided, at least five percent (5%) of
the gross revenues of the Company and its subsidiaries in the full fiscal year
of the Company immediately preceding the fiscal year in which Executive’s
termination of employment occurs or is expected to provide such level of gross
revenues in the fiscal year of such termination (any such business which so
competes, a “Competitor”) or (B) solicit or offer employment to any person
(other than Executive’s secretary or other personal assistant who reports directly
to Executive) who has been employed by the Company or any of its subsidiaries
at any time during the six months immediately preceding the termination of
Executive’s employment.  Notwithstanding
the foregoing, nothing herein shall prevent Executive 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 Executive may be
employed is not itself a Competitor.  If
Executive 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 Executive continues to be
employed by the Company and (I) with respect to any termination of employment
described in Sections 8(a) or (b) above, one year and (II) with
respect to any termination of employment described in Section 8(c) above,
two years, and (y) “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 proprietary and
confidential information of the Restricted Group, and “Restricted Group” shall
mean, collectively, the Company, its subsidiaries, and their respective
affiliates.

 

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.

 

11

 

10.                                 Specific Performance.  Executive acknowledges and agrees that the
Company’s remedies at law for a breach or threatened breach of any of the
provisions of Section 9 would be inadequate and the Company would suffer
irreparable damages as a result of such breach or threatened breach.  In recognition of this fact, Executive agrees
that, in the event of such a breach or threatened breach, in addition to any
remedies at law, the Company or its successors or assigns, without posting any
bond, may, in addition to other rights and remedies existing in their favor,
immediately apply to any court of competent jurisdiction to equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available;
provided, further, that in the event Executive actually breaches any of the
provisions of Section 9, in addition to the foregoing, the Company or its
successors or assigns shall also be entitled to cease making any payments or
providing any benefit otherwise required by this Agreement.

 

11.                                 Gross-Up.

 

(a)                                  If
any benefit or payment by the Company or a successor (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise, including any acceleration of vesting or payment) (a “Payment”) is
determined to be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, being herein collectively referred to as the “Excise Tax”), then
Executive shall be entitled to receive an additional payment (the “Gross-Up
Payment”) in an amount such that the net amount of such additional payment retained
by Executive, after payment of all federal, state and local income and
employment taxes (including, without limitation, any federal, state and local
income and employment taxes and Excise Tax imposed on the Gross-Up Payment),
shall be equal to the Excise Tax imposed on the Payment.

 

(b)                                 Subject
to the provisions of Section 11(c), all determinations required to be made
under this Section 11, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by an independent
accounting firm of nationally recognized standing selected by the Company and
which is not serving as accountant or auditor for the Company or the
individual, entity or group effecting the Change in Control (the “Accounting
Firm”).  The Accounting Firm shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the receipt of the notice from Executive that there
has been a Payment or such earlier time as is requested by the Company.  Any Gross-Up Payment shall be paid by the
Company to Executive within ten business days of the receipt of the Accounting
Firm’s determination (but in no event later than the end of the calendar year
next following the calendar year in which Executive remits the related
taxes).  Any determination by the
Accounting Firm shall be binding upon the Company and Executive.  As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments will not have been made by the Company which should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder.  In the event that the Company exhausts its
remedies pursuant to Section 11(c), and Executive is thereafter required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred, and the amount of the
Underpayment shall be promptly paid by the Company to or for 

 

12

 

Executive’s benefit (but in no event later
than the end of the calendar year next following the calendar year in which
Executive remits the related taxes).

 

(c)                                  Executive
shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of a
Gross-Up Payment.  Such notification
shall be given as soon as practicable but no later than ten business days after
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall:

 

(i)                                     give
the Company any information reasonably requested by the Company relating to
such claim;

 

(ii)                                  take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without limitation
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;

 

(iii)                               cooperate
with the Company in good faith in order effectively to contest such claim; and

 

(iv)                              permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or federal, state and local income and employment tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Section 11(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a
refund or to contest the claim in any permissible manner, and Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs Executive to pay such claim and sue for a refund, the Company shall pay
and assume responsibility for the tax; and further provided that any extension
of the statute of limitations relating to payment of taxes for Executive’s
taxable year with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. 
The Company’s control of the contest, however, shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

 

13

 

(d)                                 If,
after the Company’s payment of tax pursuant to Section 11(c), Executive
becomes entitled to receive any refund with respect to such claim, Executive
shall (subject to the Company’s complying with the requirements of Section 11(c))
promptly pay over to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).  If, after the Company’s payment of tax
pursuant to Section 11(c), a determination is made that Executive shall
not be entitled to any refund with respect to such claim and the Company does
not notify Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such payment
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

 

(e)                                  In
the event that the Excise Tax is subsequently determined to be less than
initially determined by the Accounting Firm, Executive shall pay to the Company
at the time that the amount of such reduction in Excise Tax is determined (but,
if previously paid to the taxing authorities, not prior to the time the amount
of such reduction is refunded to Executive or otherwise realized as a benefit
by Executive) the portion of the Gross-Up Payment that would not have been paid
if the Excise Tax as subsequently determined had been applied in initially
calculating the Gross-Up Payment, with the amount of such repayment determined
by the Accounting Firm.

 

12.                                 Miscellaneous.

 

a.                                       Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of laws principles thereof.

 

b.                                      Entire Agreement/Amendments.  This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company.  There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the parties
with respect to the subject matter herein other than those expressly set forth
herein.  This Agreement may not be
altered, modified, or amended except by written instrument signed by the
parties hereto.

 

c.                                       No Waiver.  The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party’s rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.

 

d.                                      Severability.  In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.

 

e.                                       Assignment.  This Agreement shall not be assignable by
Executive.  This Agreement may be
assigned by the Company to a successor in interest to substantially all of the
business operations of the Company.  The
Company may also assign this Agreement to an affiliate, but such assignment
shall not release the Company from its obligations hereunder and such
assignment shall not result in a change in the positions and titles 

 

14

 

Executive holds with the
Company upon his commencement of employment hereunder.  Upon such assignment, the rights and
obligations of the Company hereunder shall become the rights and obligations of
such affiliate or successor person or entity.

 

f.                                         Mitigation/Set Off.  The Company’s obligation to pay Executive the
amounts provided and to make the arrangements provided hereunder shall not be
subject to set-off, counterclaim or recoupment of amounts owed by Executive to
the Company or its affiliates except, with regard to amounts not subject to Section 409A,
for any specific, stated amounts owed by the Executive to the Company.  In the event of any termination of employment
hereunder, the Executive shall be under no obligation to seek other employment
and there shall be no offset against any amounts due Executive under this
Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain.

 

g.                                      Indemnification.  The Company shall indemnify and hold harmless
the Executive to the fullest extent permitted by law or the by-laws of the
Company for any action or inaction of Executive while serving as an officer or
director of the Company or, at the Company’s request, as an officer or director
of any other entity or as a fiduciary of any benefit plan, except for any
activity by the Executive that constitutes gross negligence or is
self-enriching.  The Company shall cover
the Executive under directors and officers liability insurance both during and,
while potential liability exists, after the Employment Term in the same amount
and to the same extent as the Company covers its other senior officers and
directors.

 

h.                                      Legal Fees.  The Company shall pay the Executive’s
reasonable legal fees and costs associated with negotiating and entering into
this Agreement in a timely manner upon receipt from the Executive of the
appropriate documentation (but in no event later than the last day of the
calendar year next following the calendar year in which such fees and costs
were incurred).

 

i.                                          Arbitration.  All disputes and controversies arising under
or in connection with this Agreement, other than the seeking of injunctive or
equitable relief pursuant to Section 9 hereof, shall be settled by
arbitration conducted before one arbitrator sitting in the State of New York,
or such other location agreed to by the parties hereto, in accordance with the rules for
expedited resolution of commercial disputes of the American Arbitration
Association then in effect.  The
determination of the arbitrator shall be final and binding on the parties.  Judgment may be entered on the award of the
arbitrator in any court having proper jurisdiction.  The arbitrator shall determine in the award
which party has prev ailed and, if the Executive is the prevailing party, the
amount of fees and expenses of the counsel of the Executive shall be reimbursed
by the Company within 60 days after the arbitrator’s decision in such arbitration.  If the arbitrator determines that the Company
has prevailed in such arbitration, the Executive shall bear his own legal fees,
without reimbursement by the Company.

 

j.                                          Successors; Binding Agreement.  This Agreement shall inure to the benefit of
and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees.

 

15

 

k.                                       Notice.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered by hand or overnight
courier or three days after it has been mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth below Agreement, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

 

If to the Company:

 

Rockwood Holdings, Inc. 

100 Overlook Center 

Princeton, New Jersey 08540 

Attention:  Senior Vice President, Law &
Administration

 

With a copy to:

 

Sheldon R. Erikson 

Chairman, Compensation Committee 

c/o Rockwood Holdings, Inc. 

100 Overlook Center 

Princeton, New Jersey  08540

 

 

If to Executive:

 

To the most recent address of Executive set forth in the personnel
records of the Company.

 

l.                                          Executive Representation.  Executive hereby represents to the Company
that the execution and delivery of this Agreement by Executive and the Company
and the performance by Executive of Executive’s duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any employment
agreement or other agreement or policy to which Executive is a party or
otherwise bound.

 

m.                                    Cooperation.  Executive shall provide his reasonable
cooperation in connection with any action or proceeding (or any appeal from any
action or proceeding) which relates to events occurring during Executive’s
employment hereunder; provided  that, the Company shall pay all
expenses related to the Executive’s cooperation.  This provision shall survive any termination
of this Agreement.  This provision shall
survive any termination of this Agreement, without implication of the survival
of any other provision of this Agreement.

 

n.                                      Withholding Taxes.  The Company may withhold from any amounts
payable under this Agreement such Federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.

 

16

 

o.                                      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.

 

p.                                      Section 409A.  This Agreement is intended to comply with Section 409A
and any ambiguities shall be interpreted consistent with such intention.  Executive and the Company agree to cooperate
to make such amendments to the terms of this Agreement as may be necessary to
comply with Section 409A on terms that are economically equivalent to
those set forth in this Agreement.

 

[Signatures on next page.]

 

17

 

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

 

 

	
  ROCKWOOD HOLDINGS, INC.

  	
   

  	
  SEIFOLLAH GHASEMI

  
	
   

  	
   

  	
   

  
	
  /s/ Sheldon R. Erikson

  	
   

  	
  /s/ Seifollah Ghasemi

  
	
  By: Sheldon R. Erikson

  	
   

  	
   

  
	
  Title:
  Chairman, Compensation Committee

  	
   

  	
   

  

 

18Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of November 13,
2008 (the “Effective Date”), by and between Rockwood Specialties, Inc., a
Delaware corporation (the “Company”) and Robert J. Zatta (the “Executive”);

 

WHEREAS,
the Company desires to employ Executive as its Senior Vice President and Chief
Financial Officer;

 

WHEREAS,
Executive desires to be so employed.

 

NOW,
THEREFORE, Executive and the Company agree as follows:

 

1.                                       Employment;
Term.  The Company agrees to employ
the Executive, and the Executive agrees to serve in the employ of the Company,
in the position and with the responsibilities, duties and authority set forth
in Section 2 and on the other terms and conditions set forth in this
Agreement.  The Executive’s employment
shall constitute “at will” employment. 
Subject to Section 7, the Executive’s employment may be terminated
at any time and for any reason.  The
Executive’s employment shall automatically terminate at the end of the month in
which Executive attains age 70, unless the Company and the Executive otherwise
agree.  Certain rights and obligations of
the Executive and the Company shall survive the termination of Executive’s
employment, as set forth in this Agreement.

 

2.                                       Position,
Duties.  The Executive shall serve in
the position of Senior Vice President and Chief Financial Officer of the
Company.  The Executive shall perform,
faithfully and diligently, such service and duties, and shall have such
responsibilities, appropriate to said position, as shall be assigned to
him.  The Executive shall report directly
to the Chief Executive Officer  of
the Company.  The Executive agrees to
devote his entire business time, best efforts, skills and attention to
fulfilling the performance of his duties and responsibilities hereunder.  The Executive shall be based in Princeton,
New Jersey, except for travel required by Company business.

 

3.                                       Salary.  In consideration of the performance by the
Executive of the services set forth in Section 2 and his observance of the
other covenants set forth herein, the Company shall pay to the Executive, and
the Executive shall accept, a base salary at the rate of $473,800 per annum,
payable in accordance with the standard payroll practices of the Company.  The Executive’s salary shall be reviewed at
least annually for potential increase, in accordance with the Company’s
practice in the U.S.

 

4.                                       Bonus.  During the employment term, the Executive
will be eligible to earn an annual bonus award (“Annual Bonus”), with a target
bonus amount equal to 100% of Executive’s Base Salary (the “Target Bonus”)
based upon the achievement of performance goals established by the Board.  All Annual Bonus amounts shall be paid in
accordance with the terms and conditions of the Company’s annual incentive plan
or policy.  In addition, the Executive
will be eligible to participate in the Company’s long-term incentive plans
available to senior

 

 

executives of the Company in accordance with
the terms and conditions of such plans, as in effect from time to time.

 

In the event the Company is required to prepare a restatement of its
financial results for a fiscal year and the Board in good faith determines that
the need for such restatement was due to the intentional misconduct of one or
more of the senior executive officers of the Company, Executive shall, within
60 days of receiving notice of such Board determination (which notice shall
state the reasons for the need for the restatement, identify the misconduct and
include calculations of the impact thereof), reimburse the Company, net of
taxes, for all excess remuneration (as defined below) received by Executive in
connection with the Annual Bonus received by Executive with respect to such
fiscal year.  For purposes of this
provision, the term “excess remuneration” means the excess of the Annual Bonus
payment made to Executive for such fiscal year over the payment that would have
been made to Executive for such fiscal year had Executive’s payment been
calculated based on the financial statements as restated, as determined in the
good faith discretion of the Board.

 

5.                                       Expense
Reimbursement.  During the employment
term, the Company shall reimburse the Executive for all reasonable and
necessary out-of-pocket expenses incurred by him in connection with the
performance of his duties hereunder, upon the presentation of proper accounts
therefor in accordance with the Company’s policies (but in no event later than
the last day of the calendar year next following the calendar year in which the
expenses were incurred).

 

6.                                       Benefits.

 

6.1                                 Generally.  During the employment term, the Executive
will be eligible to participate in all benefit plans and programs offered by
the Company from time to time to its employees of comparable seniority, subject
to the terms and conditions of such plans and programs as in effect from time
to time.  Such plans and programs
currently include the following:

 

(i)                                     Rockwood
Health Care Benefits (medical, pharmaceutical, dental and vision),

 

(ii)                                  Rockwood
Long-Term Disability Plan,

 

(iii)                               Rockwood
Life and Accident Plan,

 

(iv)                              Rockwood
Health Care and Dependent Care Reimbursement Account,

 

(v)                                 Senior
Executive Health Plan,

 

(vi)                              Personal
Excess Liability Insurance Program,

 

(vii)                           Rockwood
Retirement Plus Program (Profit Share/401(k) and Money Purchase Plan), and

 

(viii)                        Supplemental
Executive Savings Plan.

 

2

 

6.2                                 Vacation.  During the employment term, the Executive
shall be entitled to four (4) weeks vacation on an annual basis, which must
be used in the year granted and not carried over from year to year.

 

6.3                                 Company Car.  During the employment term, the Executive
will be provided (at no after-tax cost) with use of a Company automobile,
including reimbursement on a monthly basis for expenses associated with
operating the automobile including gas, insurance and maintenance.  The reimbursements and tax gross-up payments
called for by this Section 6.3 (as well as by Sections 7.4, 7.5 and 7.6)
shall be paid in accordance with the Company’s reimbursement policy for senior
executives (but in no event later than the last day of the calendar year next
following the calendar year in which the Executive pays the expenses or related
taxes, respectively).  Payment or
reimbursement of such amounts with respect to any calendar year shall not
affect the amount eligible for payment or reimbursement in any other calendar
year, and such payments and reimbursements may not be exchanged for cash or
another benefit.

 

7.                                       Termination
of Employment.

 

7.1                                 Death.  In the event of the death of the Executive,
the Company shall pay to the estate or other legal representative of the
Executive, within ninety (90) days of the Executive’s death, (i) the
salary accrued to the date of the Executive’s death and not theretofore paid, (ii) any
earned but unpaid Annual Bonus for the fiscal year preceding the fiscal year in
which such termination occurs and (iii) a lump sum pro rata portion of any
Annual Bonus that Executive would have been entitled to receive pursuant to Section 4
for the fiscal year in which such termination occurs based upon the percentage
of the fiscal year that shall have elapsed through the date of Executive’s
termination of employment, payable when such Annual Bonus would have otherwise
been payable had Executive’s employment not terminated, based on the Target for
the fiscal year in which termination occurs. 
Rights and benefits of the estate or other legal representative of the
Executive under the benefit plans and programs of the Company shall be determined
in accordance with the terms and conditions of such plans and programs.  Neither the estate nor other legal
representative of the Executive nor the Company shall have any further rights
or obligations under this Agreement except as provided in this Section 7.1.

 

7.2                                 Disability.  Upon Executive’s permanent disability, the
Company shall have the right to terminate Executive’s employment with the
Company hereunder immediately with written notice.  For these purposes, permanent disability
shall mean the Executive failing to perform his duties on a full-time basis for
a period of more than six (6) consecutive months during any 12-month
period due to a physical or mental disability or infirmity.  Notwithstanding the foregoing, in the event
that as a result of mental or physical incapacity Executive earlier incurs a “separation
from service” within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended (“Section 409A”), Executive will be deemed to
have a termination of employment by reason of permanent disability under this
Agreement.  In the event of Executive’s
termination be reason of permanent disability, the Company shall pay to the
Executive, within ninety (90) days of the Executive’s termination, (i) the
salary accrued to the date of such termination and not theretofore paid, (ii) any
earned but unpaid Annual Bonus for the fiscal year preceding the fiscal year in
which such termination occurs and (iii) a lump sum pro rata portion of any
Annual Bonus that Executive would have been entitled to receive pursuant to Section 4
for the fiscal year in which such termination occurs based upon the 

 

3

 

percentage of the
fiscal year that shall have elapsed through the date of Executive’s termination
of employment, payable when such Annual Bonus would have otherwise been payable
had Executive’s employment not terminated, based on the Target for the fiscal
year in which termination occurs.  Rights
and benefits of the Executive under the benefit plans and programs of the
Company shall be determined in accordance with the terms and conditions of such
plans and programs. Neither the Executive nor the Company shall have any
further rights or obligations under this Agreement, except as provided in this Section 7.2
and Section 8.

 

7.3                                 Termination by the Company For Cause.   If the Company terminates the Executive’s
employment for Cause (as defined in Section 9(a)), the Company shall pay
to the Executive, within ninety (90) days of the Executive’s termination, the
salary accrued to the date of termination and not theretofore paid and any
earned but unpaid Annual Bonus for the fiscal year preceding the fiscal year in
which such termination occurs.  Executive
will not be entitled to the Pro-Rata Bonus. 
Rights and benefits of the Executive under the benefit plans and
programs of the Company shall be determined in accordance with the terms and
conditions of such plans and programs. 
Neither the Executive nor the Company shall have any further rights or
obligations under this Agreement, except as provided in this Section 7.3
and Section 8.

 

7.4                                 Termination by the Company Without Cause Prior to a
Change in Control.  If the
Company terminates the Executive’s employment prior to a Change in Control (as
defined in Section 9(c)), other than pursuant to Section 7.1 (Death),
7.2 (Disability), or 7.3 (Cause), the Company shall pay to the Executive,
within ninety (90) days of the Executive’s termination, the salary accrued to
the date of termination and not theretofore paid to the Executive and any
earned but unpaid Annual Bonus for the fiscal year preceding the fiscal year in
which such termination occurs.  In
addition, Executive shall be entitled to receive a lump sum pro rata portion of
the Annual Bonus, if any, that Executive would have been entitled to receive
pursuant to Section 4 hereof for the fiscal year in which such termination
occurs (but only to the extent of achievement of the applicable performance
standards for such year) based upon the percentage of the fiscal year that
shall have elapsed through the date of Executive’s termination of employment,
payable when such Annual Bonus would have otherwise been payable had Executive’s
employment not terminated; provided, however, that to the extent the Annual
Bonus is subject to the exercise of negative discretion, such discretion shall
not be exercised to reduce Executive’s Annual Bonus by a greater percentage
than is applied generally to senior executives subject to such discretion.  In addition, subject to Executive’s compliance
with the provisions of Section 8 and in lieu of any severance otherwise
payable to Executive under any severance plan or policy maintained by the
Company, the Company shall:

 

(i)                                     pay
to Executive for the duration of the Severance Period (as defined below) a
monthly amount, in accordance with the Company’s normal payroll practice, equal
to the sum of (x) his monthly base salary and (y) 1/12th
of his average Annual Bonus paid with respect to the last two fiscal years
ending immediately prior to his termination of employment.  The Severance Period shall be a number of
full or partial months, not to exceed 24 months, equal to the sum of eighteen
months plus two weeks plus (A) if the Executive has less than 10 years of
service with the Company (or its affiliates and predecessors), one week for
each year of service or (B) if the Executive has 10 or more years of
service with the Company (or its affiliates and predecessors), two weeks for
each year of service;

 

4

 

(ii)                                  continue
Executive’s Health Care Benefits under COBRA until the earlier of (x) the
date on which Executive’s COBRA eligibility ceases, or (y) the twelve (12)
month anniversary of Executive’s termination of employment;

 

(iii)                               pay,
in lieu of continuation of benefits under the plans listed in Section 6.1(ii),
(iii), (iv), (v) and (vi), a lump-sum amount of $50,000, which shall be
paid within 60 days of Executive’s termination of employment;

 

(iv)                              provide
continued use (at not after-tax cost as provided in Section 6.3) of
Executive’s Company automobile for a period of twelve (12) months; and

 

(v)                                 pay
to the Executive, at the end of the twelve (12) month period following
termination of employment, an amount equal to the maximum amount that the
Company would have been obligated to contribute on his behalf as matching
contributions to the Company’s qualified and non-qualified retirement plans for
such twelve (12) month period, based on the Executive’s most recent deferral
elections with respect to such plans, plus the maximum amount that the Company
would have been obligated to contribute on his behalf as non-elective
contributions to the Company’s qualified and non-qualified retirement plans for
such twelve (12) month period, based on his salary in effect immediately prior
to his termination of employment, in each case to the extent such amounts would
have been vested at the end of the twelve (12) month period under the terms of
such plans had he remained in employment for such period;

 

provided, however,
that the Company’s obligations under this Section 7.4 shall terminate if
Executive does not execute and deliver to the Company a release in the form
attached hereto as Appendix A within forty-five (45) days of termination of
employment or revokes such release within any applicable revocation
period.  The rights and benefits of the
Executive under the benefit plans and programs of the Company (other than any
severance plan or policy) shall be determined in accordance with the terms and
conditions of such plans and programs. 
Neither the Executive nor the Company shall have any further rights or
obligations under this Agreement, except as provided in this Section 7.4
and Section 8.

 

7.5                                 Termination by Executive With Good Reason Prior to
a Change in Control.  If,
prior to a Change in Control, the Executive terminates his employment with the
Company within one hundred and eighty (180) days of the occurrence of an event
giving rise to Good Reason (as defined in Section 9(b)), the Company shall
pay to the Executive, within ninety (90) days of the Executive’s termination,
the salary accrued to the date of termination and not theretofore paid to the
Executive and any earned but unpaid Annual Bonus for the fiscal year preceding
the fiscal year in which such termination occurs.  In addition, Executive shall be entitled to
receive a lump sum pro rata portion of the Annual Bonus, if any, that Executive
would have been entitled to receive pursuant to Section 4 hereof for the
fiscal year in which such termination occurs (but only to the extent of
achievement of the applicable performance standards for such year) based upon
the percentage of the fiscal year that shall have elapsed through the date of
Executive’s termination of employment, payable when such Annual Bonus would have
otherwise been payable had Executive’s employment not terminated; provided,
however, that to the extent the Annual Bonus is subject to the exercise of
negative discretion, such discretion shall not be exercised to reduce Executive’s
Annual Bonus by a greater 

 

5

 

percentage than is
applied generally to senior executives subject to such discretion.  In addition, subject to Executive’s
compliance with the provisions of Section 8 and in lieu of any severance otherwise
payable to Executive under any severance plan or policy maintained by the
Company, the Company shall:

 

(i)                                     pay
to Executive for the duration of the Severance Period a monthly amount, in
accordance with the Company’s normal payroll practice, equal to the sum of (x) his
monthly base salary at the rate in effect immediately prior to Executive’s
termination of employment (or, if higher, at the rate in effect immediately
prior to the event giving rise to the Good Reason condition) and (y) 1/12th
of his average Annual Bonus paid with respect to the last two fiscal years
ending immediately prior to his termination of employment;

 

(ii)                                  continue
Executive’s Health Care Benefits under COBRA until the earlier of (x) the
date on which Executive’s COBRA eligibility ceases, or (y) the twelve (12)
month anniversary of Executive’s termination of employment;

 

(iii)                               pay,
in lieu of continuation of benefits under the plans listed in Section 6.1(ii),
(iii), (iv), (v) and (vi), a lump-sum amount of $50,000, which shall be
paid within 60 days of Executive’s termination of employment;

 

(iv)                              provide
continued use (at no after-tax cost as provided in Section 6.3) of
Executive’s Company automobile for a period of twelve (12) months; and

 

(v)                                 pay
to the Executive, at the end of the twelve (12) month period following
termination of employment, an amount equal to the maximum amount that the
Company would have been obligated to contribute on his behalf as matching
contributions to the Company’s qualified and non-qualified retirement plans for
such twelve (12) month period, based on the Executive’s most recent deferral
elections with respect to such plans, plus the maximum amount that the Company
would have been obligated to contribute on his behalf as non-elective
contributions to the Company’s qualified and non-qualified retirement plans for
such twelve (12) month period, based on his salary in effect immediately prior
to his termination of employment (or, if higher, at the rate in effect
immediately prior to the event giving rise to the Good Reason condition), in
each case to the extent such amounts would have been vested at the end of the
twelve (12) month period under the terms of such plans had he remained in
employment for such period;

 

provided, however,
that the Company’s obligations under this Section 7.5 shall terminate if
Executive does not execute and deliver to the Company a release in the form
attached hereto as Appendix A within forty-five (45) days of termination of
employment or revokes such release within any applicable revocation
period.  The rights and benefits of the
Executive under the benefit plans and programs of the Company (other than any
severance plan or policy) shall be determined in accordance with the terms and
conditions of such plans and programs. 
Neither the Executive nor the Company shall have any further rights or
obligations under this Agreement, except as provided in this Section 7.5
and Section 8.

 

6

 

7.6                                 Termination by the Company Without Cause or Termination
by Executive With Good Reason Following a Change in Control.  If, following the occurrence of a Change
in Control, the Company (or successor) terminates the Executive’s employment
other than pursuant to Section 7.1 (Death), 7.2 (Disability), or 7.3
(Cause), or the Executive terminates his employment within one hundred and
eighty (180) days of the occurrence of an event giving rise to Good Reason, the
Company (or successor) shall pay to the Executive, within sixty (60) days of
the Executive’s termination, the salary accrued to the date of termination and
not theretofore paid to the Executive and any earned but unpaid Annual Bonus
for the fiscal year preceding the fiscal year in which such termination
occurs.  In addition, Executive shall be
entitled to receive a lump sum pro rata portion of the Annual Bonus, if any,
that Executive would have been entitled to receive pursuant to Section 4
hereof for the fiscal year in which such termination occurs (but only to the
extent of achievement of the applicable performance standards for such year)
based upon the percentage of the fiscal year that shall have elapsed through
the date of Executive’s termination of employment, payable when such Annual
Bonus would have otherwise been payable had Executive’s employment not
terminated; provided, however, that to the extent the Annual Bonus is subject
to the exercise of negative discretion, such discretion shall not be exercised
to reduce Executive’s Annual Bonus by a greater percentage than is applied
generally to senior executives subject to such discretion.  In addition, subject to Executive’s
compliance with the provisions of Section 8 and in lieu of any severance
otherwise payable to Executive under any severance plan or policy maintained by
the Company, the Company (or successor) shall:

 

(i)                                     pay
the Executive, within sixty (60) days of termination, a cash lump sum payment
in an amount equal to the number of months (including partial months) in the
Severance Period multiplied by the sum of (x) his monthly base salary at
the rate in effect immediately prior to Executive’s termination of employment
(or, if higher, at the rate in effect immediately prior to the event giving
rise to the Good Reason condition) and (y) 1/12th of his
average Annual Bonus paid with respect to the last two fiscal years ending
immediately prior to his termination of employment;

 

(ii)                                continue Executive’s
Health Care Benefits under COBRA until the earlier of (x) the date on
which Executive’s COBRA eligibility ceases, or (y) the twelve (12) month
anniversary of Executive’s termination of employment;

 

(iii)                             pay, in lieu of
continuation of benefits under the plans listed in Section 6.1(ii), (iii),
(iv), (v) and (vi), a lump-sum amount of $50,000, which shall be paid
within 60 days of Executive’s termination of employment;

 

(iv)                              provide
continued use (at no after-tax cost as provided in Section 6.3) of a
Company automobile for a period of twelve (12) months; and

 

(v)                                 pay
to the Executive, at the end of the twelve (12) month period following
termination of employment, an amount equal to the maximum amount that the
Company (or successor) would have been obligated to contribute on his behalf as
matching contributions to the Company’s (or successor’s) qualified and
non-qualified retirement plans for such twelve (12) month period, based on the
Executive’s most recent deferral elections with respect to such plans, plus the
maximum amount that the 

 

7

 

Company (or successor) would have been
obligated to contribute on his behalf as non-elective contributions to the
Company’s (or successor’s) qualified and non-qualified retirement plans for
such twelve (12) month period, based on his salary in effect immediately prior
to his termination of employment (or, if higher, at the rate in effect
immediately prior to the event giving rise to the Good Reason condition), in
each case to the extent such amounts would have been vested at the end of the
twelve (12) month period under the terms of such plans had he remained in employment
for such period;

 

(vi)                              provide
to the Executive outplacement support for a period of up to twelve (12) months
following termination of employment; and

 

(vii)                           provide
to the Executive the Gross-Up Payment (as defined in Section 10(a)) in
accordance with  Section 10.

 

Notwithstanding the foregoing provisions of this Section 7.6, if
the Change in Control fails to qualify as a “change of control” for purposes of
Section 409A of the Internal Revenue Code or if Section 409A
otherwise so requires, the accrued and unpaid salary and Annual Bonus referred
to in the first paragraph of this Section 7.6 shall be paid within ninety
(90) days of the Executive’s termination, and the amounts described in clauses (x) and
(y) of clause (i) of this Section 7.6 shall be paid monthly, in
accordance with the company’s normal payroll practice, for the duration of the
Severance Period.

 

The rights and benefits of the Executive under the benefit plans and
programs of the Company (other than any severance plan or policy) shall be
determined in accordance with the terms and conditions of such plans and
programs.  Neither the Executive nor the
Company shall have any further rights or obligations under this Agreement,
except as provided in this Section 7.6 and Section 8.

 

For the avoidance of doubt, it is understood and agreed that if a
Change of Control occurs after the Executive’s termination of employment and
his termination was not in anticipation of such Change of Control, the
provisions of this Section 7.6 shall not apply.

 

7.7                                 Termination at Age 70.  If Executive’s employment is automatically
terminated at the end of the month in which Executive attains age 70 as
provided in Section 1 of this Agreement, the Company shall pay to the
Executive, within ninety (90) days of the Executive’s termination, the salary
accrued to the date of termination and not theretofore paid to the Executive
and any earned but unpaid Annual Bonus for the fiscal year preceding the fiscal
year in which such termination occurs. 
In addition, Executive shall be entitled to receive a lump sum pro rata
portion of the Annual Bonus, if any, that Executive would have been entitled to
receive pursuant to Section 4 hereof for the fiscal year in which such
termination occurs (but only to the extent of achievement of the applicable
performance standards for such year) based upon the percentage of the fiscal
year that shall have elapsed through the date of Executive’s termination of
employment, payable when such Annual Bonus would have otherwise been payable
had Executive’s employment not terminated; provided, however, that to the
extent the Annual Bonus is subject to the exercise of negative discretion, such
discretion shall not be exercised to reduce Executive’s Annual Bonus by a
greater percentage than is applied generally to senior executives subject to
such discretion.  In addition, Executive’s
entitlement under 

 

8

 

outstanding equity
awards will be determined as though his termination occurred by reason of
retirement or involuntary termination by the Company, whichever is more
favorable to Executive.

 

The rights and benefits of the Executive under the benefit plans and
programs of the Company (other than any severance plan or policy) shall be
determined in accordance with the terms and conditions of such plans and
programs.  Neither the Executive nor the
Company shall have any further rights or obligations under this Agreement,
except as provided in this Section 7.7 and Section 8.

 

7.8                                 Voluntary Resignation and Other Termination.  If, whether prior to or following a Change in
Control, the Executive’s employment with the Company terminates for any reason
other than pursuant to Section 7.1 (Death), 7.2 (Disability), 7.3 (Cause),
7.4 (Without Cause), 7.5 (With Good Reason), 7.6 (Without Cause or With Good
Reason Following a Change of Control) or 7.7 (At Age 70), including by reason
of voluntary resignation  by the
Executive, the Company shall pay to the Executive, within ninety (90) days of
the Executive’s termination, the salary accrued to the date of termination and
not theretofore paid and any earned but unpaid Annual Bonus for the fiscal year
preceding the fiscal year in which such termination occurs.  Executive will not be entitled to any portion
of the Annual Bonus for the fiscal year in which such termination occurs.  Rights and benefits of the Executive under
the benefit plans and programs of the Company shall be determined in accordance
with the terms and conditions of such plans and programs.  Neither the Executive nor the Company shall
have any further rights or obligations under this Agreement, except as provided
in this Section 7.8 and Section 8.

 

7.9                                 Special 409A Provisions.  Notwithstanding any provision of this
Agreement to the contrary, if Executive is a specified employee within the
meaning of Section 409A, as determined by the Board of Directors of the
Company in accordance with Section 409A, any amounts payable under this
Agreement or any other payments to which Executive may be entitled on account
of a “separation from service” within the meaning of Section 409A which
constitute “deferred compensation” within the meaning of Section 409A and
which are otherwise scheduled to be paid during the first six months following
Executive’s termination of employment (other than any payments that are
permitted under Section 409A to be paid within six months following
termination of employment of a specified employee) shall be suspended until the
six-month anniversary of Executive’s termination of employment, at which time
all payments that were suspended shall be paid to Executive in a lump sum,
together with interest on each suspended payment at the prime rate (as reported
in the Wall Street Journal) from the date of suspension to the date of payment.
 For purposes of Section 409A,
each payment under this Section 7 will be treated as a separate
payment.  A termination of employment
shall not be deemed to have occurred for purposes of any provision of this
Agreement providing for the payment of any amounts or benefits upon or
following a termination of employment unless such termination is also a “separation
from service” within the meaning of Section 409A.  Payment or reimbursement of each of the
business expenses and tax gross-up payments called for by this Agreement with
respect to any calendar year shall not affect the amount eligible for payment
or reimbursement in any other calendar year, and such payments and
reimbursements may not be exchanged for cash or another benefit.  If any amounts are due to be paid to Executive
within a specified period, the date of payment within such period shall be in
the sole discretion of the Company.

 

9

 

8.             Restrictive
Covenants.  (a) During the “Restriction
Period” (as defined below), Executive will not, anywhere the Company conducts
business (i) directly or indirectly, engage or participate in, or render
services to (whether as officer, director, agent, owner, operator, member,
shareholder, manager, consultant, strategic partner, employee or otherwise) any
business that is directly or indirectly engaged in or that is competitive with
the business of Company or any of its affiliates (a “Competing Business”).  For purposes of the foregoing, Executive will
not be in breach of this Section 8(a) by reason of his ownership,
directly or indirectly, of two percent or less of a Competing Business’ voting
capital stock if (i) such Competing Business is publicly traded and (ii) Executive
does not, directly or indirectly, control the operation or management of such
Competing Business.  For purposes of this
Agreement, the “Restriction Period” shall mean the period commencing on
the date hereof and ending at the completion of: (i) in the case of
Executive’s voluntary resignation of employment with the Company without Good
Reason whether before or after a Change of Control, a period of up to twelve
(12) months after Executive’s termination of employment, as specified by the
Company within thirty (30) days of Executive’s termination of employment,
provided that the Company agrees to continue to pay, and continues to pay,
Executive his base salary during the period so specified in accordance with the
Company’s normal payroll practice; or (ii) in the case of the termination
of Executive’s employment with the Company for any other reason whether before
or after a Change of Control, the Severance Period;

 

(b)           During
the Restriction Period, Executive agrees that he will not, directly or
indirectly, (i) solicit for employment, recruit or hire, either as an
employee, a consultant or an independent contractor, any person who is or was
during the preceding twelve (12) months an employee of the Company or any of
its affiliates, (ii) induce or attempt to induce any person who is or was
during the preceding twelve (12) months an employee of the Company or any of
its affiliates to terminate his or her employment with the Company or its
affiliates, (iii) solicit, interfere with, divert or take away or attempt
to interfere with, divert or take away, any transaction, agreement, business
opportunity or business relationship in which the Company or any of its
affiliates is or was during the preceding twelve (12) months involved, or (iv) otherwise
engage or participate in any effort or act to induce any person to discontinue
a relationship with the Company or any of its affiliates.

 

(c)           From
and after the date of this Agreement, Executive shall maintain the
confidentiality of, and shall not use for the benefit of himself or others, any
Confidential Information (as hereinafter defined) regarding the business,
operations, properties or personnel of the Company and its affiliates;
provided, however, that this Section 8(c) shall not restrict any
disclosure by Executive of any Confidential Information that is required by
applicable law (but only such portion of the Confidential Information that he
is legally required to disclose) and only if Executive shall give the Company
notice and a reasonable opportunity to contest such disclosure or seek an
appropriate protective order.  “Confidential
Information” means, but is not limited to, information, not generally known,
about the Company’s and its affiliates’ processes, formulas, devices, products,
potential products, specifications, computer programs, contract negotiations,
terms of agreements, materials sources, supplier contacts, business
developments, customer lists, financial information, research, development,
manufacturing, purchasing, accounting, engineering, marketing, merchandising,
selling, trade relations and technical services.

 

10

 

(d)           With
respect to any Inventions (as hereinafter defined) and any Works of Authorship
(as hereinafter defined) made or conceived by Executive, either solely or
jointly with others, (1) during Executive’s past, present or future
employment by the Company or its affiliates or (2) within one year after
termination of his employment if based on Confidential Information, Executive
agrees:

 

(i)            To
promptly and fully inform the Company in writing of such Inventions or Works of
Authorship.

 

(ii)           To
assign (and Executive does hereby irrevocably assign) to the Company all of
Executive’s rights to such Works of Authorship or Inventions, and to
Applications for Letters Patent and to Letters Patent granted upon such
Inventions.

 

(iii)          To
acknowledge and deliver promptly to the Company (without charge to the Company
but at the expense of the Company) such written instruments and to do such
other acts as may be necessary in the opinion of the Company to obtain
copyrights and maintain Letters Patent and to vest the entire right and title
thereto in the Company.

 

“Inventions” means discoveries, improvements
and ideas (whether patentable or not) relating to any activities of the Company
or its affiliates.  “Works of Authorship”
means any original work or authorship within the purview of the copyright laws
of the United States, and it is intended that all Works of Authorship created
in the course of Executive’s employment with the Company or its affiliates will
be works made for hire within the meaning of such copyright laws.

 

Except as listed on Schedule A to this
Agreement, Executive will not assert any rights under any Inventions or Works
of Authorship that relate to any past, present or possible future business of
the Company or its affiliates as having been made or acquired by Executive
prior to being employed by the Company.

 

(e)           Executive
acknowledges and agrees that the restrictions contained in this Section 8
are reasonable and necessary protection of the immediate interests of the
Company, and any violation of these restrictions would cause substantial injury
to the Company and that the Company would not have entered into this Agreement
without receiving the protective covenants contained in this Section 8.  In the event of a breach or a threatened
breach by Executive of these restrictions, the Company will be entitled to an
injunction restraining Executive from such breach or threatened breach (without
the necessity of proving the inadequacy as a remedy of money damages or the
posting of bond); provided, however, that the right to injunctive relief will
not be construed as prohibiting the Company from pursuing any other available
remedies, whether at law or in equity, for such breach or threatened breach.

 

(f)            Immediately
upon termination of the Executive’s employment, the Executive shall return to
the Company all documents (including all copies), material, and property
belonging to the Company and its affiliates, including, but not limited to,
manuals, policies, financial records, legal documents, customer lists,
prospective customer lists, training materials and marketing materials.

 

11

 

9.             Definitions.  As used in this Agreement, the following
terms shall have the following meanings:

 

(a)           “Cause”
means:

 

(i)            the
Executive’s willful and continued failure to substantially perform his duties
(other than any such failure resulting from incapacity due to physical or
mental illness), after written notice from the Company requesting such
substantial performance is delivered to Executive, which notice identifies in
reasonable detail the manner in which the Company believes the Executive has
not substantially performed his duties and provides a reasonable period in
which to cure such failure, or

 

(ii)           any
act of fraud, embezzlement or theft on the Executive’s part against the Company
or its affiliates.

 

(b)           “Good
Reason” means:

 

(i)            a
reduction in Executive’s duties or responsibilities;

 

(ii)           a
reduction in Executive’s compensation or Target Bonus opportunity or a material
reduction in employment benefits;

 

iii)            a
material breach by the Company of this Agreement; or

 

(iv)          a
change of the Company’s headquarters or of Executive’s principal place of
employment of more than 35 miles;

 

provided, however, that such event will not
constitute Good Reason unless Executive has provided the Company notice of the
existence of a Good Reason condition no more than 90 days after its initial
existence and the Company has failed to remedy the condition within 30 days
after such notice.

 

(c)           “Change
in Control” means the earliest date at which:

 

(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 

 

12

 

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, 70% 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 70% 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.

 

10.           Gross-Up.  (a) If any benefit or payment by the
Company or a successor (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, including any
acceleration of vesting or payment) (a “Payment”) is determined to be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, being herein
collectively referred to as the “Excise Tax”), then Executive shall be entitled
to receive an additional payment (the “Gross-Up Payment”) in an amount such
that the net amount of such additional payment retained by Executive, after
payment of all federal, state and local income and employment taxes (including,
without limitation, any federal, state and local income and employment taxes and
Excise Tax imposed on the Gross-Up Payment), shall be equal to the Excise Tax
imposed on the Payment.

 

(b)           Subject
to the provisions of Section 10(c), all determinations required to be made
under this Section 10, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by an independent
accounting firm of nationally recognized standing selected by the Company and
which is not serving as accountant or auditor for the Company or the
individual, entity or group effecting the Change in Control (the “Accounting
Firm”).  The Accounting Firm shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the receipt of the notice from Executive that there
has been a Payment or such earlier time as is requested by the Company.  Any Gross-Up Payment shall be paid by the
Company to Executive within ten business days of the receipt of the Accounting
Firm’s determination.  Any determination
by the Accounting Firm shall be binding upon the Company and Executive.  As a result of the uncertainty in the
application of 

 

13

 

Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments will not have been made by the Company which should have been
made (“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company
exhausts its remedies pursuant to Section 10(c), and Executive is
thereafter required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred, and the
amount of the Underpayment shall be promptly paid by the Company to or for
Executive’s benefit.

 

(c)           Executive
shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of a
Gross-Up Payment.  Such notification
shall be given as soon as practicable but no later than ten business days after
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall:

 

(i)            give
the Company any information reasonably requested by the Company relating to
such claim;

 

(ii)           take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without limitation
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;

 

(iii)          cooperate
with the Company in good faith in order effectively to contest such claim; and

 

(iv)          permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or federal, state and local income and employment tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Section 10(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a
refund or to contest the claim in any permissible manner, and Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs Executive to pay such claim and sue for a refund, the Company shall pay
and assume all responsibility for the tax; and further provided that any
extension of the statute of limitations relating to payment of taxes for 

 

14

 

Executive’s taxable year with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount.  The Company’s control
of the contest, however, shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

 

(d)           If,
after the Company’s payment of tax pursuant to Section 10(c), Executive
becomes entitled to receive any refund with respect to such claim, Executive
shall (subject to the Company’s complying with the requirements of Section 10(c))
promptly pay over to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).  If, after the Company’s payment of tax
pursuant to Section 10(c), a determination is made that Executive shall
not be entitled to any refund with respect to such claim and the Company does
not notify Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such payment
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

 

(e)           In
the event that the Excise Tax is subsequently determined to be less than
initially determined by the Accounting Firm, Executive shall pay over to the
Company at the time that the amount of such reduction in Excise Tax is
determined (but, if previously paid to the taxing authorities, not prior to the
time the amount of such reduction is refunded to Executive or otherwise
realized as a benefit by Executive) the portion of the Gross-Up Payment that
would not have been paid if the Excise Tax as subsequently determined had been
applied in initially calculating the Gross-Up Payment, with the amount of such
repayment determined by the Accounting Firm.

 

11.           Arbitration.  Any dispute or controversy arising under,
related to or in connection with this Agreement shall be settled exclusively by
arbitration before a single arbitrator in New York, New York, in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association.  The arbitrator’s award
shall be final and binding on all parties to this Agreement.  Judgment may be entered on an arbitrator’s
award in any court having competent jurisdiction.

 

12.           Assignment.  This Agreement is personal to Executive and
shall not be assignable by Executive. 
This Agreement shall inure to the benefit of and be enforceable by
Executive and Executive’s legal representatives and heirs.  This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.  The Company shall require any successor (by
merger or otherwise) to expressly assume this Agreement.

 

13.           Mitigation/Set
Off.  The Company’s obligation to pay
Executive the amounts provided and to make the arrangements provided hereunder
shall not be subject to set-off, counterclaim or recoupment of amounts owed by
Executive to the Company or its affiliates except, to the extent permitted by Section 409A,
for any specific, stated amounts owed by the Executive to the Company.  In the event of any termination of employment
hereunder, the Executive shall be under no obligation to seek other employment
and there shall be no offset against any amounts due Executive under this
Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain.

 

15

 

14.           Severability.  A determination that any provision of this
Agreement is invalid or unenforceable shall not affect the validity or
enforceability of any other provision hereof. 
Any provision of this Agreement which is rendered or held invalid,
illegal or unenforceable in any respect in any jurisdiction shall be
ineffective, but such ineffectiveness shall be limited as follows: (a) if
such provision is rendered or held invalid, illegal or unenforceable in such
jurisdiction only as to a particular person or persons or under any particular
circumstance or circumstances, such provision shall be ineffective, but only in
such jurisdiction and only with respect to such particular person or persons or
under such particular circumstance or circumstances, as the case may be; (b) without
limitation of clause (a), such provision shall in any event be ineffective only
as to such jurisdiction and only to the extent of such invalidity, illegality
or unenforceability, and such invalidity, illegality or unenforceability in
such jurisdiction shall not render invalid, illegal or unenforceable such
provision in any other jurisdiction; and (c) without limitation of clause (a) or
(b), such ineffectiveness shall not render invalid, illegal or unenforceable
this Agreement or any of the remaining provisions hereof.

 

15.           Withholding.  The Company may withhold from any amounts
payable under this Agreement such federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

 

16.           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the law of the State of New York
without reference to principles of conflicts of law.

 

17.           Entire
Agreement.  This Agreement
constitutes the entire Agreement between the parties with respect to the
subject matter hereof and supersedes in its entirety any and all prior
agreements, understandings, or representations relating to the subject matter
hereof, including the Agreement between Rockwood Specialties Inc. (“RSI”) and
the Executive dated March 21, 2001, as amended by the Letter Agreement
between RSI and the Executive dated October 19, 2004.  No modification of this Agreement shall be
valid unless made in writing and signed by the parties hereto.

 

18.           Interpretation.  All parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event any ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the Company and
Executive and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the day and year first above set forth.

 

	
   

  	
  ROCKWOOD HOLDINGS, INC,

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sheldon R. Erikson

  
	
   

  	
   

  	
  Name:  Sheldon R. Erikson

  
	
   

  	
   

  	
  Title:  Chairman, Compensation
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Robert J. Zatta

  
	
   

  	
  Robert J. Zatta

  

 

16

 

Appendix A

 

EMPLOYMENT AGREEMENT

 

WAIVER AND RELEASE AGREEMENT

 

(1)   In consideration for the supplemental severance
pay and supplemental severance benefits to be provided to me under the terms of
the EMPLOYMENT AGREEMENT DATED AS OF                            ,
         , I, on
behalf of myself and my heirs, executors, administrators, attorneys and
assigns, hereby waive, release and forever discharge ROCKWOOD HOLDINGS, INC., and it Affiliates (hereinafter
collectively referred to as the “Employer”) together with the Employer’s
parent, subsidiaries, divisions and affiliates, whether direct or indirect, its
and their joint ventures and joint venturers (including their respective
directors, officers, employees, shareholders, partners and agents, past,
present, and future), and each of its and their respective successors and
assigns (hereinafter collectively referred to as “Releasees”), from any and all
known or unknown actions, causes of action, claims or liabilities of any kind
which have or could be asserted against the Releasees arising out of or related
to my employment with and/or separation from employment with the Employer
and/or any of the other Releasees up to and including the date of this Waiver
and Release Agreement, including but not limited to:

 

(a)                                  claims,
actions, causes of action or liabilities arising under Title VII of the Civil
Rights Act, as amended, the Age Discrimination in Employment Act, as amended (“ADEA”),
the Employee Retirement Income Security Act, as amended, the Rehabilitation
Act, as amended, the Americans with Disabilities Act, as amended, the Family
and Medical Leave Act, as amended, and/or any other federal, state, municipal,
or local employment discrimination statutes (including, but not limited to,
claims based on sex, attainment of benefit plan rights, race, religion,
national origin, marital status, sexual orientation, ancestry, harassment,
parental status, handicap, disability, retaliation, and veteran status); and/or

 

(b)                                 claims,
actions, causes of action or liabilities arising under any other federal,
state, municipal, or local statute, law, ordinance or regulation; and/or

 

(c)                                  any
other claim whatsoever including, but not limited to, claims for severance pay,
claims based upon breach of contract, wrongful termination, defamation,
intentional infliction of emotional distress, tort, personal injury, invasion
of privacy, violation of public policy, negligence and/or any other common law,
statutory or other claim whatsoever arising out of or relating to my employment
with and/or separation from employment with the Employer and/or any of the
other Releasees, but excluding the filing of an administrative charge of
discrimination, any claims which I may make under state workers’ compensation
or unemployment laws, and/or any claims which by law I cannot waive.

 

(2)   I also agree never to sue any of the Releasees or
become party to a lawsuit on the basis of any claim of any type whatsoever
arising out of or related to my employment with and/or separation from
employment with the Employer and/or any of the other Releasees, except I may
bring a lawsuit to challenge this Waiver and Release Agreement under the ADEA.

 

 

(3)   I further acknowledge and agree in the event that
I breach the provisions of paragraph (2) above, then (a) the Employer
shall be entitled to apply for and receive an injunction to restrain any
violation of paragraph (2) above, (b) the Employer shall not be
obligated to continue payment of the supplemental severance pay and
availability of supplemental severance benefits to me, (c) I shall be
obligated to pay to the Employer its costs and expenses in enforcing this
Waiver and Release Agreement and defending against such lawsuit (including
court costs, expenses and reasonable legal fees), and (d) as an
alternative to (c), at the Employer’s option, I shall be obligated upon demand
to repay to the Employer all but $100 of the supplemental severance pay and
cost of the supplemental severance benefits paid or made available to me.  I further agree that the foregoing covenants
shall not affect the validity of this Waiver and Release Agreement and shall
not be deemed a penalty nor a forfeiture.

 

(4)   I further waive my right to any monetary recovery
should any federal, state, or local administrative agency pursue any claims on
my behalf arising out of or related to my employment with and/or separation
from employment with the Employer and/or any of the other Releasees.

 

(5)   I further waive, release, and discharge Releasees
from any reinstatement rights which I have or could have and I acknowledge that
I have not suffered any on-the-job injury for which I have not already filed a
claim.

 

(6)   I further agree that if I breach the Confidential
Information provisions of the Plan, then (a) the Employer shall be
entitled to apply for and receive an injunction to restrain such breach, (b) the
Employer shall not be obligated to continue payment of the supplemental
severance pay and availability of supplemental severance benefits to me, and (c) I
shall be obligated to pay to the Employer its costs and expenses in enforcing
the Confidential Information provisions of the Plan (including court costs,
expenses and reasonable legal fees).

 

(7)   I acknowledge that I have been given at least
[forty-five (45)] [twenty-one (21)] days to consider this Waiver and Release
Agreement thoroughly and I was encouraged to consult with my personal attorney,
if desired, before signing below.

 

(8)   I understand that I may revoke this Waiver and
Release Agreement within seven (7) days after its signing and that any
revocation must be made in writing and submitted within such seven (7) day
period to the Plan Administrator.  I
further understand that if I revoke this Waiver and Release Agreement, I shall
not receive the supplemental severance pay nor the supplemental severance
benefits.

 

(9)   I also understand that the supplemental severance
pay and supplemental severance benefits which I will receive in exchange for
signing and not later revoking this Waiver and Release Agreement are in
addition to anything of value to which I already am entitled.

 

(10)       I FURTHER UNDERSTAND THAT THIS WAIVER AND RELEASE
AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

(11)       I acknowledge and agree that if any provision of
this Waiver and Release Agreement is found, held or deemed by a court of
competent jurisdiction to be void, unlawful or 

 

2

 

unenforceable
under any applicable statute or controlling law, the remainder of this Waiver
and Release Agreement shall continue in full force and effect.

 

(12)       This Waiver and Release Agreement is deemed made
and entered into in the State of New Jersey, and in all respects shall be
interpreted, enforced and governed under applicable federal law and in the
event reference shall be made to State law, the internal laws of the State of
New Jersey shall apply without regard to its conflicts of law provisions.  Any dispute under this Waiver and Release
Agreement shall be adjudicated by a court of competent jurisdiction in the
State of New Jersey.

 

(13)       I further acknowledge and agree that I have
carefully read and fully understand all of the provisions of this Waiver and
Release Agreement and that I voluntarily enter into this Waiver and Release
Agreement by signing below.

 

 

	
   

  	
   

  
	
   

  	
  (Name of
  Eligible Employee - Please Print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature
  of Eligible Employee)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Date)

  
	
   

  	
   

  
	
   

  	
  PLEASE
  RETURN TO:

  
	
   

  	
   

  
	
   

  	
  Human
  Resource Administrator

  
	
   

  	
  [INSERT NAME OF EMPLOYING COMPANY]

  
	
   

  	
   

  
	
   

  	
  [STREET ADDRESS]

  
	
   

  	
   

  
	
   

  	
  [CITY, STATE, ZIP CODE]

  

 

3

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