Document:

Exhibit 10.1

 

ROCKWOOD
HOLDINGS, INC.

FORM OF STOCK
OPTION AGREEMENT

(Time-Vesting)

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

Section 1.1.                                   - Affiliate

 

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

 

Section 1.2.                                   - Cause

 

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

 

 

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

 

Section 1.3.                                   - Change of Control

 

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

 

(i)                                     any
Person (other than the Company or any employee benefit plans sponsored by the
Company) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s
outstanding Voting Securities (which term shall mean securities which under
ordinary circumstances are entitled to vote for the election of directors of
the Board) other than through the purchase of Voting Securities directly from
the Company through a private placement;

 

(ii)                                  individuals
who constitute the Board (the “Board”) on the date hereof (the “Incumbent Board”)
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors comprising the Incumbent Board shall
from and after such election be deemed to be a member of the Incumbent Board;

 

(iii)                               a
merger or consolidation involving the Company or its stock or an acquisition by
the Company, directly or indirectly or through one or more subsidiaries, of
another entity or its stock or assets in exchange for the stock of the Company
is consummated, unless, immediately following such transaction, 50.1% or
more of the then outstanding Voting Securities of the surviving or resulting
corporation or entity will be (or is) then beneficially owned, directly or
indirectly, by the individuals and entities who were the beneficial owners of
the Company’s outstanding Voting Securities immediately prior to such
transaction (treating, for purposes of determining whether the 50.1% continuity
test is met, any ownership of the Voting Securities of the surviving or
resulting corporation or entity that results from a stockholder’s ownership of
the stock of, or other ownership interest in, the corporation or other entity
with which the Company is merged or consolidated as not owned by persons who
were beneficial owners of the Company’s outstanding Voting Securities
immediately prior to the transaction); or

 

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

 

2

 

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

 

Section 1.4.                                   - Disability

 

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

 

Section 1.5.                                   – Good Reason

 

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

 

Section 1.6.                                   Grant Date

 

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

 

Section 1.7.                                   - Group

 

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

 

Section 1.8.                                   - Option

 

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

 

3

 

Section 1.9.                                   - Person

 

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

 

Section 1.10.                             - Plan

 

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

 

Section 1.11.                             - Retirement

 

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

 

Section 1.12.                             - Secretary

 

“Secretary” shall mean the Secretary of the
Company.

 

ARTICLE II

 

GRANT OF OPTIONS

 

Section 2.1.                                   - Grant of Option

 

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

 

Section 2.2.                                   - Exercise Price

 

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

 

Section 2.3.                                   – No  Guarantee of Employment

 

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

 

4

 

Section 2.4.                                   - Adjustments in Option
Pursuant to Merger, Consolidation, etc.

 

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

 

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

 

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

 

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

 

5

 

ARTICLE III

 

PERIOD OF EXERCISABILITY

 

Section 3.1.                                   - Commencement of
Exercisability

 

(a)                                  So long as the Optionee
continues to be employed by the Company or its Subsidiaries through the
applicable vesting date, the Option shall become exercisable pursuant to the
following schedule:

 

	
   

  	
   

  	
  Percentage of Shares

  	
   

  
	
  Date Option Becomes Exercisable

  	
   

  	
   As to Which the Option Granted Is Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2009

  	
   

  	
  33 1/3%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2010

  	
   

  	
  66 2/3%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2011

  	
   

  	
  100%

  	
   

  

 

(b)                                 Notwithstanding the foregoing,
the Option shall become immediately exercisable as to 100% of the shares of
Common Stock subject to such Option  as
follows (but only to the extent such Option has not otherwise terminated or
become exercisable): (i) in the event that the Optionee’s employment is
terminated by the Company and its Subsidiaries without Cause or the Optionee
resigns with Good Reason within the two-year period that commences on the
effective date of a Change of Control, but only if such termination occurs at
least six months after the Grant Date; or (ii) in the event the Optionee’s
employment is terminated as a result of the Optionee’s death or Disability.

 

(c)                                  Notwithstanding the foregoing,
the Option shall become immediately exercisable as to 50% of the shares of
Common Stock subject to such Option (but only to the extent such Option has not
otherwise terminated or become exercisable) in the event that the Optionee’s
employment is terminated by the Company and its Subsidiaries without Cause or
the Optionee resigns with Good Reason within the two-year period that commences
on the effective date of a Change of Control, but only if such termination
occurs within six months of the Grant Date.

 

(d)                                 Notwithstanding the foregoing,
no portion of the Option (which does not otherwise become exercisable or vested
in accordance with Section 3.1(a), (b) or (c) above) shall
become exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee for any reason and any Option, which
is unexercisable or not vested as of the Optionee’s termination of employment,
shall be immediately cancelled and/or forfeited by the Optionee without
consideration therefor.

 

6

 

Section 3.2.                                   - Expiration of Option

 

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

 

(a)                                  The seventh anniversary of the
Grant Date, so long as the Optionee remains employed through such anniversary;
or

 

(b)                                 The seventh anniversary of the Grant
Date, if the Optionee’s employment is terminated by reason of Retirement; or

 

(c)                                  The first anniversary of the
date of the Optionee’s termination of employment due to the Optionee’s death or
Disability; or

 

(d)                                 Ninety (90) days after the
Optionee’s termination of employment by the Company for any reason, or by the
Optionee for any reason, in either case except as set forth in Section 3.2(c) above;
or

 

(e)                                  Immediately upon termination, if
the Optionee’s employment is terminated by the Company for Cause; or

 

(f)                                    If the Committee so determines
pursuant to Section 2.4(b)(i), the effective date of a Change of Control;
or

 

(g)                                 If the Committee so determines
pursuant to Section 9 of the Plan, the effective date of either the merger
or consolidation of the Company into another Person, or the exchange or
acquisition by another Person of all or substantially all of the Company’s
assets or 80% or more of its then outstanding voting stock, or the
recapitalization, reclassification, liquidation or dissolution of the Company.  At least ten (10) days prior to the
effective date of such merger, consolidation, exchange, acquisition,
recapitalization, reclassification, liquidation or dissolution, the Committee
shall give the Optionee notice of such event if the Option has then neither
been fully exercised nor become unexercisable under this Section 3.2.

 

ARTICLE IV

 

EXERCISE OF OPTION

 

Section 4.1.                                   - Person Eligible to Exercise

 

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

 

7

 

Section 4.2.                                   - Partial Exercise

 

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

 

Section 4.3.                                   - Manner of Exercise

 

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

 

(a)                                  Notice in writing signed by the
Optionee or the other person then entitled to exercise the Option or portion
thereof, stating that the Option or portion thereof is thereby exercised, such
notice complying with all applicable rules established by the Committee;

 

(b)                                 Full payment (in cash, by check
or by a combination thereof) for the shares with respect to which such Option
or portion thereof is exercised;

 

(c)                                  A bona fide written
representation and agreement, in a form satisfactory to the Committee, signed
by the Optionee or other person then entitled to exercise such Option or
portion thereof, stating that the shares of stock are being acquired for his
own account, for investment and without any present intention of distributing
or reselling said shares or any of them except as may be permitted under the
Securities Act of 1933, as amended (the “Act”), and then applicable rules and
regulations thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the Company against and
hold it free and harmless from any loss, damage, expense or liability resulting
to the Company if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above; provided,
however, that the Committee may, in its reasonable discretion, take whatever
additional actions it deems reasonably necessary to ensure the observance and
performance of such representation and agreement and to effect compliance with
the Act and any other federal or state securities laws or regulations;

 

(d)                                 Full payment to the Company of
all amounts which, under federal, state or local law, it is required to
withhold upon exercise of the Option; and

 

(e)                                  In the event the Option or
portion thereof shall be exercised pursuant to Section 4.1 by any person
or persons other than the Optionee, appropriate proof of the right of such
person or persons to exercise the Option.

 

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

 

8

 

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

 

Section 4.4.                                   - Conditions to Issuance of
Stock Certificates

 

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

 

(a)                                  The obtaining of approval or other
clearance from any state or federal governmental agency which the Committee
shall, in its reasonable and good faith discretion, determine to be necessary
or advisable; and

 

(b)                                 The lapse of such reasonable
period of time following the exercise of the Option as the Committee may from
time to time establish for reasons of administrative convenience.

 

Section 4.5.                                   - Rights as Stockholder

 

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

 

ARTICLE V

 

MISCELLANEOUS

 

Section 5.1.                                   - Administration

 

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

 

9

 

Section 5.2.                                   - Option Not Transferable

 

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

 

Section 5.3.                                   - Shares to Be Reserved

 

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

 

Section 5.4.                                   - Notices

 

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

 

Section 5.5.                                   - Titles

 

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

 

Section 5.6.                                   - Applicability of Plan

 

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

 

Section 5.7.                                   - Amendment

 

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

 

10

 

Section 5.8.                                   - Governing Law

 

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

 

Section 5.9.                                   - Arbitration

 

In the event of any controversy among the parties hereto arising out
of, or relating to, this Agreement which cannot be settled amicably by the
parties, such controversy shall be finally, exclusively and conclusively
settled by mandatory arbitration conducted in New York expeditiously in
accordance with the American Arbitration Association rules, by a single
independent arbitrator.  If the parties
are unable to agree on the selection of an arbitrator, then any party may
petition the American Arbitration Association for the appointment of the
arbitrator, which appointment shall be made within ten days of the petition
therefor.  Either the Company or the
Optionee  may
institute such arbitration proceeding by giving written notice to the other
party.  The arbitrator shall hold a
hearing within 30 days of his or her appointment.  In preparation for their presentation at such
hearing, each party may depose a maximum of four people.  Each such deposition shall last no more than
six hours.  Each side may file with the
arbitrator one brief, not in excess of 30 pages, excluding exhibits.  Each side shall have no more than eight hours
to present its position to the arbitrator. 
The hearing shall be no more than three days in length.  The decision of the arbitrator shall be final
and binding upon all parties hereto and shall be rendered pursuant to a written
decision, which contains a detailed recital of the arbitrator’s reasoning.  Judgment upon the award rendered may be
entered in any court having jurisdiction thereof.

 

Section 5.10.                             Signature in Counterparts

 

This
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.

 

[Signatures on next
page.]

 

11

 

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

 

	
   

  	
   

  	
  ROCKWOOD HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Optionee’s
  Taxpayer Identification Number:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
  Aggregate
  number of shares 

  	
   

  	
   

  
	
  of Common
  Stock for which 

  	
   

  	
   

  
	
  the Option
  granted 

  	
   

  	
   

  
	
  hereunder is
  exercisable 

  	
   

  	
   

  
	
  (100% of
  total number of shares): 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
                ;
  of which

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
                
  shall be incentive stock options and 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
                  shall be non-qualified stock options.

  	
   

  	
   

  

 

12Exhibit 10.2

 

ROCKWOOD
HOLDINGS, INC.

FORM OF RESTRICTED
STOCK UNIT AWARD AGREEMENT

(Time and
Performance Vesting)

 

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

 

WHEREAS, the Company desires to grant the
Employee both time-based and performance-based restricted stock unit awards as
provided for hereunder (the “Restricted Stock Unit
Awards”), ultimately payable in shares of common stock of the
Company, par value $0.01 per share (the “Common Stock”),
pursuant to the 2008 Amended and Restated Stock Purchase and Option Plan for
Rockwood Holdings, Inc. and Subsidiaries 
(the “Plan”), the terms of which are
hereby incorporated by reference and made a part of this Agreement; and

 

WHEREAS, the committee of the Company’s Board
appointed to administer the Plan (the “Committee”) has determined that it would
be to the advantage and best interest of the Company and its shareholders to
grant the shares of Common Stock provided for herein to the Employee as an
incentive for increased efforts during his term of office with the Company or
an Affiliate, and has advised the Company thereof and instructed the
undersigned officers to grant said Restricted Stock Unit Awards.

 

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

 

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

 

2.                                       Vesting.

 

(a)                                  Time-Based
RSUs.

 

 

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

 

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

 

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

 

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

 

(i)                                 Service
Vesting Requirement.

 

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

 

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

 

2

 

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

 

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

 

(ii)                                  Performance
Vesting Requirement.

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

12.                                 Notices.  Any notice to be given under the terms of
this Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Employee shall be addressed to him
at the address given beneath his signature hereto.  By a notice given pursuant to this Section 12,
either party may hereafter designate a different address for notices to be
given to him.  Any notice which is
required to be given to the Employee shall, if the Employee is then deceased,
be given to the Employee’s personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section 12.  Any notice
shall have been deemed duly given when enclosed in a properly sealed envelope
or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service

 

13.                                 Governing
Law.  The laws of the State of
Delaware (or if the Company reincorporates in another state, the laws of that
state) shall govern the interpretation, validity and performance of the terms
of this Agreement regardless of the law that might be applied under principles
of conflicts of laws.

 

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

 

14.                                 Signature
in Counterparts.  This Agreement may
be signed in counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

 

[Signatures
on next page.]

 

7

 

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

 

 

	
   

  	
  ROCKWOOD HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [NAME]

  

 

8

 

Schedule I

 

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

 

	
  2009
  Actual Adjusted EBITDA

  Performance as Compared to 2009

  Budgeted Adjusted EBITDA (70% of

  Target Performance-Based Units)

  	
   

  	
  % of
  EBITDA RSUs Vested*

  
	
  Less than 90%

  	
   

  	
  0%

  
	
  90%

  	
   

  	
  50%

  
	
  100%

  	
   

  	
  100%

  
	
  Greater than 120%

  	
   

  	
  200%

  

 

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

 

	
  2009
  Actual Adjusted EPS Performance as

  Compared to 2009 Budgeted Adjusted EPS

  (30% of Target Performance-Based Units)

  	
   

  	
  % of EPS
  RSUs Vested*

  
	
  Less than 90%

  	
   

  	
  0%

  
	
  90%

  	
   

  	
  50%

  
	
  100%

  	
   

  	
  100%

  
	
  Greater than 120%

  	
   

  	
  200%

  

 

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

 

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

 

9

 

Appendix A

 

Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

(i)  any Person (which term shall mean any individual,
corporation, partnership, group, association or other “person,” as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, other than the Company or any employee benefit plans
sponsored by the Company) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under such Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s
outstanding Voting Securities (which term shall mean securities which under
ordinary circumstances are entitled to vote for the election of directors)
other than through the purchase of Voting Securities directly from the Company
through a private placement;

 

(ii)  individuals who constitute the Board on the date hereof (the
“Incumbent Board”) cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors comprising the
Incumbent Board shall from and after such election be deemed to be a member of
the Incumbent Board;

 

(iii)  a merger or consolidation involving the Company or its
stock or an acquisition by the Company, directly or indirectly or through one
or more subsidiaries, of another entity or its stock or assets in exchange for
the stock of the Company is consummated, unless, immediately following
such transaction, 50.1% or more of the then outstanding Voting Securities of
the surviving or resulting corporation or entity will be (or is) then
beneficially owned, directly or indirectly, by the individuals and entities who
were the beneficial owners of the Company’s outstanding Voting Securities
immediately prior to such transaction (treating, for purposes of determining
whether the 50.1% continuity test is met, any ownership of the Voting
Securities of the surviving or resulting corporation or entity that results
from a stockholder’s ownership of the stock of, or other ownership interest in,
the corporation or other entity with which the Company is merged or
consolidated as not owned by persons who were beneficial owners of the Company’s
outstanding Voting Securities immediately prior to the transaction); or

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

12

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