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Exhibit 10.2    
    

 
 

AMENDED AND RESTATED MANAGEMENT STOCKHOLDER'S AGREEMENT    
    

        This Amended and Restated Management Stockholder's Agreement (this "Agreement") is entered into as of
October 15, 2004 between Rockwood Holdings, Inc., a Delaware corporation (the "Company"), and the undersigned person (the
"Management Stockholder") (the Company and the Management Stockholder being hereinafter collectively referred to as the
"Parties"). All capitalized terms not immediately defined are hereinafter defined in Section 26 hereof. 

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

        WHEREAS,
the Management Stockholder previously entered into a Management Stockholder's Agreement, dated as of September 15, 2001, between the Company and the Management
Stockholder (the "Existing Management Stockholder's Agreement") pursuant to which he contributed $460,000 to the Company in cash in exchange for 920
shares (the "Existing Purchased Stock") of common stock, par value $0.01 per share, of the Company (such common stock, together with any securities
issued in respect thereof or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, reorganization, merger, consolidation, exchange or other
similar reorganization, the "Common Stock"); 

        WHEREAS,
the Management Stockholder previously received an option to acquire 3,680 shares of Common Stock (the "Existing Option") subject
to the terms and conditions of the Existing Management Stockholder's Agreement, the 2000 Stock Purchase and Option Plan of the Company and its Subsidiaries (the "Old Option
Plan") and Stock Option Agreement dated as of September 15, 2001, entered into by and between the Company and the Management Stockholder (the
"Existing Stock Option Agreement"), which Existing Option vests over time as to 50% of the shares of Common Stock subject to the Existing Option and
vests over time and in the event and to the extent certain performance targets are achieved as to the remaining 50%; 

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

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

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

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

        1.    Purchased Shares; Issuance of Options.    

        (a)   The
Management Stockholder shall, subject to the terms and conditions hereinafter set forth, on or about October 15, 2004 (the "Investment
Date"), be granted the opportunity to purchase, and the Management Stockholder shall contribute $175,000 to the Company in cash in exchange for 350 shares 

 

of
Common Stock, at a per share purchase price of $500.00, which price is equal to the per share purchase price paid for shares of Common Stock by the KKR Millennium Fund, L.P., KKR Partners III, L.P.
and KKR European Fund, Limited Partnership (together with KKR 1996 Fund L.P. and KKR Partners II, L.P., the "KKR Fund") and DLJ Merchant Banking
Partners III, L.P., DLJ Offshore Partners III-1, C.V., DLJ Offshore Partners III-2, C.V., DLJ Offshore Partners III, C.V., DLJ MB Partners III GmbH & Co. KG, Millennium
Partners II, L.P. and MBP III Plan Investors, L.P. (together, the "DLJ Fund") in connection with the acquisition by certain subsidiaries of the Company
of four businesses of Dynamit Nobel pursuant to a sale and purchase agreement by and among mg technologies ag, MG North America Holdings Inc. and certain subsidiaries of the Company dated as of
April 19, 2004 (the "Purchase Agreement") (all such shares acquired by the Management Stockholder, the "Purchased
Stock"). 

        (b)   Subject
to the terms and conditions hereinafter set forth and as set forth in the Option Plan, and upon receipt by the Company of the Management Stockholder's
contribution set forth in Section 1(a) and as of the Investment Date, (A) the Company shall issue to the Management Stockholder the New Time/Performance Option to acquire such number of
shares of Common Stock as is equal to four times the number of Purchased Stock, at an exercise price of $500.00 per share, and the Parties shall execute a time/performance stock option agreement dated
as of the Investment Date (the "Time/Performance Stock Option Agreement"), and deliver to each other copies thereof, concurrently with the issuance of
the New Time/Performance Option. The New Time/Performance Option shall vest over time as to 50% of the shares of Common Stock subject to the New Time/Performance Option and shall vest, as to the
remaining 50%, over time and in the event and to the extent certain performance targets are achieved, in each case, pursuant to the terms set forth in the Time/Performance Stock Option Agreement and
in accordance with the Option Plan; and (B) the Company shall issue to the Management Stockholder the New Performance Option to acquire 920 shares of Common Stock, at an exercise price of
$500.00 per share, and the Parties shall execute a performance stock option agreement dated as of the Investment Date (the "Performance Stock Option
Agreement" and together with the Time/Performance Stock Option Agreement, the "New Stock Option Agreements"), and deliver to
each other copies thereof, concurrently with the issuance of the New Performance Option. The New Performance Option shall vest over time as to 100% of the shares of Common Stock subject to the New
Performance Option, and in the event and to the extent certain performance targets are achieved pursuant to the terms set forth in the Performance Stock Option Agreement and in accordance with the
Option Plan. 

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

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

        (a)   The
Management Stockholder agrees and acknowledges that he will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(any such act being referred to herein as a "transfer") any shares of the Existing Purchased Stock and the Purchased Stock and, at the time of exercise, any shares of the Common Stock issued upon
exercise of the Existing Option (the "Existing Option Stock" and, together with the Existing Purchased Stock the "Existing
Stock") or the New Options (the "New Option Stock" and, together with the Purchased Stock, the "New
Stock" and the Existing Stock together with the New Stock and any other shares of Common Stock otherwise acquired and/or held by the Management Stockholder Entities, the
"Stock"), except as otherwise 

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provided
for herein. The Management Stockholder also agrees and acknowledges that he will not transfer any shares of the Stock unless: 

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

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

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

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

"THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE AMENDED AND RESTATED MANAGEMENT STOCKHOLDER'S AGREEMENT DATED AS OF OCTOBER 15,
2004 BETWEEN ROCKWOOD HOLDINGS, INC. (THE "COMPANY") AND THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY). 

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

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

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

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

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

        3.    Transferability of Stock.    The Management Stockholder agrees that he will not transfer any shares of the
Existing Stock at any time commencing on the Initial Investment date prior to the fifth anniversary of the Initial Date and that he will not transfer any Shares of the New Stock at any time commencing
on the Investment Date and prior to the fifth anniversary of the Investment Date; provided, however, that, subject to compliance with
Section 2(a), the Management Stockholder may transfer shares of the Stock during such applicable time pursuant to one of the following exceptions: (a) transfers permitted by clauses
(y) and (z) of Section 2(a); (b) transfers made pursuant to Sections 5 or 6; (c) a sale of shares of Common Stock pursuant to an effective registration
statement under the Act filed by the Company (excluding any registration on Form S-8, S-4 or any successor or similar forms) pursuant to Section 10 of this
Agreement or (d) transfers permitted pursuant to the Amended and Restated Sale Participation Agreement entered into by and between the Management Stockholder and the KKR Fund as of
October 15, 2004. No transfer of any such shares in violation hereof shall be made or recorded on the books of the Company and any such transfer shall be void ab initio and of no effect.
Notwithstanding anything in this Agreement to the contrary, this Section 3 shall terminate and be of no further force or effect upon the occurrence of a Change of Control. 

        4.    Right of First Refusal.    If, at any time after the fifth anniversary of the Initial Investment Date with
respect to the Existing Stock or the Investment Date with respect to the New Stock, and in each case, prior to the date of consummation of a Public Offering, the Management Stockholder receives a bona
fide offer to purchase any or all of his Stock (the "Third Party Offer") from a third party (the
"Offeror"), which the Management Stockholder wishes to accept, the Management Stockholder shall cause the Third Party Offer to be reduced to writing and
shall notify the Company in writing of his wish to accept the Third Party Offer. The Management Stockholder's notice to the Company shall 

4

 

contain
an irrevocable offer to sell such Stock to the Company (in the manner set forth below) at a purchase price equal to the price contained in, and on the same terms and conditions of, the Third
Party Offer, and shall be accompanied by a copy of the Third Party Offer (which shall identify the Offeror). At any time within 30 calendar days after the date of the receipt by the Company of the
Management Stockholder's notice, the Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the shares of Stock covered by the Offer, pursuant to
Section 4(a). 

        (a)   The
Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the shares of Stock covered by the Third Party Offer at the
same price and on substantially the same terms and conditions as the Third Party Offer (or, if the Third Party Offer includes any consideration other than cash, then at the sole option of the Company,
at the equivalent all cash price, determined in good faith by the Company's Board of Directors), by delivering a certified bank check or checks in the appropriate amount (or by wire transfer of
immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) (and any such non-cash consideration to be paid) to the Management
Stockholder at the principal office of the Company against delivery of certificates or other instruments representing the shares of Stock so purchased, appropriately endorsed by the Management
Stockholder. If at the end of the 30 calendar-day period, the Company has not tendered the purchase price for such shares in the manner set forth above, the Management Stockholder may,
during the succeeding 60 calendar-day period, sell not less than all of the shares of Stock covered by the Third Party Offer, to the Offeror on terms no less favorable to the Management
Stockholder than those contained in the Third Party Offer. Promptly after such sale, the Management Stockholder shall notify the Company of the consummation thereof and shall furnish such evidence of
the completion and time of completion of such sale and of the terms thereof as may reasonably be requested by the Company. If, at the end of 60 calendar days following the expiration of the 30
calendar-day period during which the Company is entitled hereunder to purchase the Stock, the Management Stockholder has not completed the sale of such shares of the Stock as aforesaid,
all of the restrictions on sale, transfer or assignment contained in this Agreement shall again be in effect with respect to such shares of his Stock. 

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

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

        (a)   Except
as otherwise provided herein, if, prior to the fifth anniversary of the Initial Investment Date with respect to the Existing Stock or the Existing Option or the
Investment Date with respect to the New Stock or the New Options, the Management Stockholder's employment is terminated as a result of the death or Permanent Disability of the Management Stockholder,
then the applicable Management Stockholder Entities shall, for 60 calendar days (the "Put Period") following 181 calendar days after the date of death
or Permanent Disability, have the right to: 

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

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

5

 

Excess
Price, such Options shall be terminated pursuant to the terms of Section 3.2(e) of the applicable Stock Option Agreement. 

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

        (c)   Notwithstanding
anything in Section 5(a) to the contrary and subject to Section 11(a), if there exists and is continuing a default or an event of default
on the part of the Company or any subsidiary of the Company under any loan, guarantee or other agreement under which the Company or any subsidiary of the Company has borrowed money or if the
repurchase referred to in Section 5(a) would result in a default or an event of default on the part of the Company or any subsidiary of the Company under any such agreement or if a repurchase
would not be permitted under the Delaware General Corporation Law (the "DGCL") or would otherwise violate the DGCL (or if the Company
reincorporates in another state, the business corporation law of such state) (each such occurrence being an "Event"), the Company shall not be obligated
to repurchase any of the Stock or the Options from the applicable Management Stockholder Entities, until the first business day which is 10 calendar days after all of the foregoing Events have ceased
to exist (the "Repurchase Eligibility Date"); provided, however, that (i) the number of shares of
Stock subject to repurchase under this Section 5(c) shall be that number of shares of Stock, and (ii) in the case of a repurchase of outstanding Options pursuant to Section 5(a),
the number of Exercisable Option Shares for purposes of calculating the Option Excess Price payable under this Section 5(c) shall be the number of Exercisable Option Shares, specified in the
Put Notice and held by the applicable Management Stockholder Entities, at the time of delivery of a Put Notice in accordance with Section 5(b) hereof. All Options exercisable as of the date of
a Put Notice, in the case of a repurchase pursuant to Section 5(a), shall continue to be exercisable until the repurchase of such Options pursuant to such Put Notice, provided that to the
extent any Options are exercised after the date of such Put Notice, the number of Exercisable Option Shares for purposes of calculating the Option Excess Price shall be reduced accordingly. 

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

6

 

giving
of the Put Notice. In connection with repayment of the note at the earliest date it can do so without default or violation, the Company may prepay the note at any time without premium or
penalty. 

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

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

        (a)    Termination for Cause by the Company and Other Call Events.    Except as otherwise provided herein, if, prior
to the fifth anniversary of the Initial Investment Date with respect to the Existing Stock and the Existing Option or the Investment Date with respect to the New Stock and the New Options,
(i) the Management Stockholder's active employment with the Company (and/or, if applicable, its subsidiaries) is terminated by the Company (or any subsidiary) for Cause, (ii) the
beneficiaries of a Management Stockholder's Trust shall include any person or entity other than the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants (including
adopted) or (iii) the Management Stockholder shall otherwise effect a transfer of any of the Stock other than as permitted in this Agreement (other than as may be required by applicable law or
an order of a court having competent jurisdiction) after notice from the Company of such impermissible transfer and a reasonable opportunity to cure such transfer (each, a
"Section 6(a) Call Event"): 

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

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

        (b)    Termination without Good Reason by the Management Stockholder.    Except as otherwise provided herein, if,
prior to the fifth anniversary of the Initial Investment Date with respect to the Existing Stock and the Existing Option or the Investment Date with respect to the New Stock and the New Options, the
Management Stockholder's active employment with the Company (and/or, if applicable, its subsidiaries) is terminated by the Management Stockholder without Good Reason (a
"Section 6(b) Call Event"): 

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

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

7

 

Stock
Option Agreement) has not occurred, the commencement of the Call Period shall be delayed with respect to such Performance Option until the occurrence of such Financial Statement Approval Date. 

        (c)    Termination for Good Reason by Management Stockholder or without Cause by the Company.    Except as otherwise
provided herein, if, prior to the fifth anniversary of the Initial Investment Date with respect to the Existing Stock and the Existing Option or the Investment Date with respect to the New Stock and
the New Options, the Management Stockholder's employment is terminated (i) by the Management Stockholder with Good Reason or (ii) by the Company without Cause (each, a
"Section 6(c) Call Event"): 

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

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

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

        (d)    Termination for Death or Disability.    Except as otherwise provided herein, if, prior to the fifth anniversary
of the Initial Investment Date with respect to the Existing Stock and the Existing Option or the Investment Date with respect to the New Stock and the New Options, the Management Stockholder's
employment is terminated as a result of the death or Permanent Disability of the Management Stockholder (each a "Section 6(d) Call Event"): 

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

        (B)  with
respect to the Options then subject to this Section 6(d), if the Company exercises its right to repurchase the Stock granted under Section 6(d)(A),
the Company shall purchase all of such Options held by the applicable Management Stockholder Entities that are then exercisable for an amount equal to the product of (x) the excess, if any, of
the Fair Market Value Per Share over the Option Exercise Price and (y) the number of Exercisable Options. Upon payment of the 

8

 

foregoing
Option Excess Price, such Options shall be terminated. In the event the foregoing Option Excess Price is zero or a negative number, all such outstanding exercisable Options held by the
applicable Management Stockholder Entities shall be automatically terminated without any payment in respect thereof. For the purposes of this clause (B), to the extent any Performance Option
(as such term is defined in the applicable Stock Option Agreement) then subject to Section 6(d) is not exercisable during the Call Period because the applicable Financial Statement Approval
Date (as such term is defined in the applicable Stock Option Agreement) has not occurred, the commencement of the Call Period shall be delayed with respect to such Performance Option until the
occurrence of such Financial Statement Approval Date. 

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

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

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

        (g)   The
Company shall use its reasonable best efforts to make payment in respect of the applicable Repurchase Price and any payment with respect to the Options to be paid
pursuant to this Section 6 at the earliest date it can do so without such default or violation. Notwithstanding the 

9

 

foregoing,
in the event payment of the applicable Repurchase Price and any payment with respect to the Options are delayed, the Company shall pay to the Management Stockholder, when payment of the
applicable Repurchase Price and any payment with respect to the Options are made, interest on the applicable Repurchase Price and any applicable payment with respect to the Options to be paid to the
Management Stockholder, which shall have accrued at the Prime Rate plus one percent (or if not paid within one year, three percent for the six month period after such one-year period). In
the event that the Company's exercise of its call right is delayed pursuant to the foregoing, a promissory note in a mutually agreed form shall be delivered by the Company to the Management
Stockholder to evidence the obligation to pay the applicable Repurchase Price and any applicable payment with respect to the Options not later than the last calendar day of the eighteenth month
following the tenth business day after the giving of the Call Notice. 

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

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

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

        9.    The Company's Representations and Warranties.    

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

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

        (c)   In
the event and to the extent that the exemption under Section 280G(b)(5)(B) of the Code is not available to exclude the benefits of this Agreement from
inclusion in any excess parachute excise tax calculation under Section 4999 of the Code, which results in any such excise tax liability being imposed upon the Management Stockholder Entities,
the Company and the Management Stockholder Entities shall use their reasonable best efforts to cooperate to reduce or eliminate any such excise tax liability. 

        10.    "Piggyback" Registration Rights.    Until the later of (i) one year after the occurrence of a
(A) Public Offering relating to sales by the KKR Fund and any investment partnerships and investment 

10

 

limited
liability companies affiliated with the KKR Fund or (B) Qualified Public Offering and (ii) with respect to the Existing Stock, the sixth anniversary of the Initial Investment
Date or, with respect to the New Stock, the sixth anniversary of the Investment Date: 

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

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

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

        (d)   If
a Proposed Registration involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of shares of
Stock requested to be included in the Proposed Registration exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of
the shares of Stock offered in such Public Offering as contemplated by the Company, then the Company will include in the Proposed Registration (i) first, 100% of the shares of Stock the Company
proposes to sell and (ii) second, to the extent of the number of shares of Stock requested to be included in such registration which, in the 

11

 

opinion
of such managing underwriter, can be sold without having the adverse effect referred to above, the number of shares of Stock which the "Holders" (as defined in the Registration Rights
Agreement), including, without limitation, the Management Stockholder and all Other Management Stockholders have requested to be included in the Proposed Registration, such amount to be allocated pro
rata among all requesting Holders on the basis of the relative number of shares of Stock then held by each such Holder (including the exercisable Options) (provided that any shares thereby allocated
to any such Holder that exceed such Holder's request will be reallocated among the remaining requesting Holders in like manner). 

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

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

        11.    Pro Rata Repurchases; Dividends.    

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

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

        12.    Rights to Negotiate Repurchase Price.    Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing, redeeming or otherwise acquiring for value shares of Stock or Options from the Management Stockholder, at any time, upon such terms and conditions, and for such price, as may
be mutually agreed upon between the Parties, whether or not at the time of such purchase, redemption or acquisition circumstances exist which specifically grant the Company the right to purchase
shares of Stock or any Options under the terms of this Agreement; provided, that no such purchase, redemption or acquisition shall be consummated, and
no agreement with respect to any such purchase, redemption or acquisition shall be entered into, without the prior written consent of the Board of Directors of the Company. 

12

   
        13.    Covenant Regarding 83(b) Election.    Except as the Company may otherwise agree in writing, the Management
Stockholder hereby covenants and agrees that he will make an election provided pursuant to Treasury Regulation 1.83-2 with respect to the Stock, including without limitation, the
Stock to be acquired pursuant to Section 1(a) and the Stock to be acquired upon each exercise of the Management Stockholder's Stock Options; and Management Stockholder further covenants and
agrees that he will furnish the Company with copies of the forms of election the Management Stockholder files within 30 calendar days after the date hereof, and within 30 calendar days after each
exercise of Management Stockholder's Stock Options and with evidence that each such election has been filed in a timely manner. 

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

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

        16.    Management Stockholder's Employment by the Company.    Nothing contained in this Agreement or in any other
agreement entered into by the Company and the Management Stockholder contemporaneously with the execution of this Agreement (i) obligates the Company or any subsidiary of the Company to employ
the Management Stockholder in any capacity whatsoever or (ii) prohibits or restricts the Company (or any such subsidiary) from terminating the employment of the Management Stockholder at any
time or for any reason whatsoever, with or without Cause, and the Management Stockholder hereby acknowledges and agrees that neither the Company nor any other person has made any representations or
promises whatsoever to the Management Stockholder concerning the Management Stockholder's employment or continued employment by the Company or any subsidiary of the Company. 

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

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

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

        20.    Closing.    Except as otherwise provided herein, the closing of each purchase and sale of shares of Stock,
pursuant to this Agreement shall take place at the principal office of the Company on 

13

 

the
tenth business day following delivery of the notice by either Party to the other of its exercise of the right to purchase or sell such Stock hereunder. 

        21.    Applicable Law; Jurisdiction; Arbitration; Legal Fees.    

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

        (b)   In
the event of any controversy among the parties hereto arising out of, or relating to, this Agreement which cannot be settled amicably by the parties, such controversy
shall be finally, exclusively and conclusively settled by mandatory arbitration conducted expeditiously in accordance with the American Arbitration Association rules, by a single independent
arbitrator. If the parties are unable to agree on the selection of an arbitrator, then any party may petition the American Arbitration Association for the appointment of the arbitrator, which
appointment shall be made within 10 calendar days of the petition therefor. Either the Company or the Management Stockholder may institute such arbitration proceeding by giving written notice to the
other party. A hearing shall be held by the arbitrator in New York within 30 calendar days of his or her appointment. In preparation for their presentation of such hearing, each party may depose a
maximum of four people. Each such deposition shall last no more than 6 hours. Each side may file with the arbitrator one brief not in excess of 30 pages, excluding exhibits. Each side shall
have no more than 8 hours to present its position to the arbitrator. The hearing shall be no more than 3 days in length. The decision of the arbitrator shall be final and binding upon
all parties hereto and shall be rendered pursuant to a written decision which contains a detailed recital of the arbitrator's reasoning. Judgment upon the award rendered may be entered in any court
having jurisdiction thereof. 

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

        (d)   In
the event of any arbitration or other disputes with regard to this Agreement or any other document or agreement referred to herein, the party that does not prevail
shall pay the legal fees and disbursements of the prevailing party promptly upon presentation of invoices thereof. 

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

        23.    Miscellaneous.    

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

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

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

        24.    Notices.    All notices and other communications provided for herein shall be in writing and shall be deemed to
have been duly given if delivered by hand (whether by overnight courier or 

14

 

otherwise)
or sent by registered or certified mail, return receipt requested, postage prepaid, or by overnight delivery or telecopy, to the Party to whom it is directed: 

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

 Rockwood
Holdings, Inc.

100 Overlook Center

Princeton, NJ 08540

Attn: Thomas J. Riordan

 

with
a copy to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attn: Roxane F. Reardon, Esq. 

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

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

        (a)   In
consideration of the Company entering into this Agreement with the Management Stockholder, the Management Stockholder hereby agrees effective as of the date of the
Management Stockholder's commencement of employment with the Company, without the Company's prior written consent, the Management Stockholder shall not, directly or indirectly, (i) at any time
during or after the Management Stockholder's employment with the Company, disclose any Confidential Information pertaining to the business of the Company or any of its subsidiaries, except when
required to perform his or her duties to the Company or one of its subsidiaries, by law or judicial process; or (ii) at any time during the Non-Compete Period, directly or
indirectly (A) be engaged in or have financial interest (other than an 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) in any business which competes with any business of the Company or any of its subsidiaries or (B) solicit or offer employment to any
person who has been employed by the Company or any of its subsidiaries at any time during the six months immediately preceding the termination of the Management Stockholder's employment. If the
Management Stockholder is bound by any other agreement with the Company regarding the use or disclosure of confidential information, the provisions of this Agreement shall be read in such a way as to
further restrict and not to permit any more extensive use or disclosure of confidential information. 

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

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

15

 

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

        "Agreement"
shall have the meaning set forth in the introductory paragraph. 

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

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

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

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

        "Cause"
shall mean (i) the Management Stockholder's willful and continued failure to perform duties, which are within the control of the Management Stockholder and consistent with
such Management Stockholder's title and position, that is not cured within 15 calendar days following written notice of such failure, (ii) conviction of or plea of guilty or no contest to a
(x) felony or (y) crime involving moral turpitude, (iii) 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 Management Stockholder of the material terms of this Agreement concerning any non-compete, non-solicitation or
confidentiality provisions, following notice of such breach (which notice may be oral or written) or (v) any violation 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. 

        "Change
of Control" means (i) sales of all or substantially all of the assets of the Company to a Person who is not KKR or an affiliate of KKR, (ii) a sale by KKR or any of
its affiliates of the voting stock of the Company resulting in more than 50% of the voting stock of the Company being held by a Person or group that does not include KKR or any of its affiliates or
(iii) a merger, consolidation, recapitalization or reorganization of the Company with or into another Person which is not an affiliate of KKR; if and only if as a result of any of the foregoing
events in (i)-(iii) KKR or affiliates of KKR lose the ability, without the approval of a Person who is not an affiliate of KKR, to elect a majority of the Board of Directors of the Company (or
the resulting entity). Notwithstanding the foregoing, if any of the transactions described in (i)-(iii) of the preceding sentence shall occur and the other Person involved in such transaction
(or its ultimate parent entity) is an operating company controlled by KKR or an affiliate of KKR prior to such transaction (an "Alternate KKR Entity"),
then the determination of whether a change of control has occurred shall be made by measuring (i)-(iii) above (including the ability to elect a majority of the Board) as if the Alternate KKR
Entity was not an affiliate of KKR and by treating the voting power of the Alternate KKR Entity in the Company (or the resulting entity) as if it were held by a Person unaffiliated with KKR. 

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

        "Company"
shall have the meaning set forth in the introductory paragraph. 

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

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

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

16

 

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

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

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

        "Existing
Management Stockholder's Agreement" shall have the meaning set forth in the second "whereas" paragraph. 

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

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

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

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

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

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

        "Good
Reason" shall mean (i) a reduction in the Management Stockholder'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 either (x) 10% of the Management Stockholder's base salary in any
12-month period or (y) an aggregate of 20% of the Management Stockholder's base salary immediately prior to the Closing Date, (ii) a substantial reduction in Management
Stockholder's duties and responsibilities, which continues beyond 15 calendar days after written notice by the Management Stockholder to the Company of such reduction, (iii) the elimination or
reduction of Management Stockholder's eligibility to participate in the Company's benefit programs that is inconsistent with the eligibility of similarly situated employees of the Company to
participate therein, (iv) a transfer of the Management Stockholder'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 Management Stockholder 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 Management Stockholder within 15 calendar days after the date such payment becomes due. 

        "Initial
Investment Date" shall mean November 1, 2001. 

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

        "KKR"
shall mean Kohlberg Kravis Roberts & Co. L.P. 

17

 

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

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

        "Management
Stockholder Entities" shall mean the Management Stockholder, the Management Stockholder's Estate and the Management Stockholder's Trust, collectively. 

        "Management
Stockholder's Estate" shall mean the conservators, guardians, executors, administrators, testamentary trustees, legatees or beneficiaries of the Management Stockholder. 

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

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

        "New
Performance Option" shall have the meaning set forth in the fifth "whereas" paragraph. 

        "New
Stock" shall have the meaning set forth in Section 2(a) hereof. 

        "New
Time/Performance Option" shall have the meaning set forth in the fifth "whereas" paragraph. 

        "Non-Compete
Period" shall mean the period of time beginning on the effective date of the Management Stockholder's commencement of employment with the Company or a subsidiary
and
ending on the date that is twelve months after the date of termination of employment of such Management Stockholder; provided, however, in the event
that the Management Stockholder's employment is terminated without Cause by the Company or for Good Reason by the Management Stockholder, the Non-Compete Period shall be for such period
(not to exceed twelve months) as the Company (x) pays the Management Stockholder not less than his or her annual rate of base salary and (y) provides, at the Company's expense, the
Management Stockholder with medical and dental benefits, in both cases of (x) and (y) as in effect immediately prior to the date of termination of employment. 

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

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

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

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

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

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

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

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

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

        "Other
Management Stockholders' Agreements" shall have the meaning set forth in the first whereas paragraph. 

18

 

        "Parties"
shall have the meaning set forth in the introductory paragraph. 

        "Performance
Stock Option Agreement" shall have the meaning set forth in Section 1(b). 

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

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

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

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

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

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

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

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

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

        "Registration
Rights Agreement" shall mean that registration rights agreement, dated as of November 20, 2000, among the Company, KKR 1996 Fund L.P., KKR Partners II, L.P. and KKR
Millennium Fund, L.P., as the same may be amended, modified or supplemented from time to time. 

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

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

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

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

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

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

        "SEC"
shall mean the Securities and Exchange Commission. 

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

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

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

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

19

 

        "Stock"
shall have the meaning set forth in Section 2(a) hereof. 

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

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

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

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

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

20

 

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

	 	 	ROCKWOOD HOLDINGS, INC.
	

 	
 	

By:	
 	

/s/  THOMAS J. RIORDAN      

	 	 	 	 	Name:   Thomas J. Riordan

Title:     Senior Vice President
	

 	
 	

MANAGEMENT STOCKHOLDER:
	

 	
 	

/s/  ROBERT J. ZATTA      
 Robert J. Zatta
	

 	
 	

ADDRESS:
	

 	
 	

c/o Rockwood Holdings, Inc.
	

 	
 	

100 Overlook Center

	

 	
 	

Princeton, NJ 08540

21

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Exhibit 10.2

AMENDED AND RESTATED MANAGEMENT STOCKHOLDER'S AGREEMENTQuickLinks
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Exhibit 10.3    
    

STOCK OPTION AGREEMENT

(Time Option/Performance Option)  

        This Stock Option Agreement (the "Agreement"), dated as of October 15, 2004 (the "Grant Date"), is made by and between Rockwood Holdings, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), and Robert J. Zatta, an employee of the Company or a Subsidiary or an Affiliate (as defined below) of the Company, hereinafter referred
to as "Optionee." 

        WHEREAS,
the Committee (as defined in the Plan), appointed to administer the Plan, has determined that it would be to the advantage and best interest of the Company and its shareholders
to grant the Optionee an option to purchase shares of its common stock, par value $0.01 per share (the "Common Stock") as an incentive for increased efforts during the Optionee's term of employment
with the Company or its Subsidiaries or Affiliates; 

        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 1

DEFINITIONS  

        Whenever the following terms are used in this Agreement, they shall have the meaning specified in the Plan or 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 of the Company 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 Optionee of the material terms of the Management Stockholder's Agreement concerning any non-compete, non-solicitation
or confidentiality, 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 (i) sales of all or substantially all of the assets of the Company to a Person who is not Kohlberg Kravis Roberts & Co. Ltd ("KKR") or
an affiliate of KKR (collectively, the "KKR Partnerships"), (ii) a sale by KKR or any of its respective affiliates resulting in more than 50% of the voting stock of the Company being held by a
Person or Group that does not include KKR or any of its respective affiliates, or (iii) a merger, consolidation, recapitalization or reorganization of the Company with or into another Person
which is not an affiliate of KKR; if, and only if, as a result of any of the foregoing events in clauses (i), (ii) or (iii) above, the KKR Partnerships lose the ability, without the
approval of any Person (applicable to the respective foregoing events in clauses (i), (ii) or (iii) above) who is not an affiliate of KKR, to elect a majority of the Board of Directors
("Board") of the Company (or the resulting entity). Notwithstanding the foregoing, if any of the transactions 

 

described
in clauses (i), (ii) or (iii) of the preceding sentence shall occur and the other Person involved in such transaction (or its ultimate parent entity) is an operating company
controlled by KKR or an affiliate of KKR prior to such transaction (an "Alternate KKR Entity"), then the determination of whether a change of control has occurred shall be made by determining whether
an event set forth in clauses (i), (ii) or (iii) above has occurred (including the ability to elect a majority of the Board) if the Alternate KKR Entity is treated as being unaffiliated
with KKR and by treating the voting power of the Alternate KKR Entity in the Company (or the resulting entity) as if it were held by a Person unaffiliated with KKR. 

        Section
1.4.    —Code    

        "Code"
shall mean the Internal Revenue Code of 1986, as amended. 

        Section
1.5.    —Financial Statement Approval Date    

        "Financial
Statement Approval Date" shall mean the date on which the audited financial statements of the Company for any given Fiscal Year 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 of the calendar year immediately following the applicable Fiscal Year). 

        Section
1.6.    —Fiscal Year    

        "Fiscal
Year" shall mean each fiscal year of the Company. 

        Section
1.7.    —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
1.8.    —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
1.9.    —Initial Vesting Date    

        "Initial
Vesting Date" shall mean the Grant Date. 

        Section
1.10.    —Interim Termination Event    

        "Interim
Termination Event" shall mean any event that terminates the Optionee's employment described in Section 3.2(b) or (c) below, which occurs after December 31
of any given calendar year but prior to the Financial Statement Approval Date occurring in the immediately following calendar year. 

2

 

        Section
1.11.    —Management Stockholder's Agreement    

        "Management
Stockholder's Agreement" shall mean that certain Amended and Restated Management Stockholder's Agreement dated as of October 15, 2004 between the Optionee and the
Company. 

        Section
1.12.    —Options    

        "Options"
shall mean the Time 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) and the Performance Option (which shall in its entirety be an option that is not an incentive stock option) 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. 

        Section
1.13.    —Performance Option    

        "Performance
Option" shall mean an Option with respect to which the commencement of exercisability is governed by Section 3.1(b) hereof. 

        Section
1.14.    —Performance Target    

        "Performance
Target" shall have the meaning as set forth in Appendix A attached hereto. 

        Section
1.15.    —Permanent Disability    

        "Permanent
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 days. 

        Section
1.16.    —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
1.17.    —Plan    

        "Plan"
shall mean the Amended and Restated 2003 Stock Purchase and Option Plan for Rockwood Holdings, Inc. and Subsidiaries, as amended from time to time. 

        Section
1.18.    —Pronouns    

        The
masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates. 

        Section
1.19.    —Retirement    

        "Retirement"
shall mean retirement at age 65 or over (or such other age as may be approved by the Board of Directors of the Company) after having been employed by the Company or a
Subsidiary for at least three years. 

        Section
1.20.    —Secretary    

        "Secretary"
shall mean the Secretary of the Company. 

        Section
1.21.    —Time Option    

        "Time
Option shall mean an Option with respect to which the commencement of exercisability is governed by Section 3.1(a) hereof. 

3

 

        Section
1.22.    —Vesting Date    

        "Vesting
Date" shall mean each anniversary of the Initial Vesting Date on which the Time Option becomes exercisable pursuant to Section 3.1(a)(i) hereof. 

ARTICLE II

GRANT OF OPTIONS  

        Section
2.1.    —Grant of Options    

        For
good and valuable consideration, on and as of the date hereof the Company irrevocably grants to the Optionee a Time Option and/or a Performance Option to purchase any part or all of
an aggregate of the number of shares set forth with respect to each such Option 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 Options shall be $500.00 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 Subsidiary or Affiliate 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. 

        Section
2.4.    —Adjustments in Options Pursuant to Merger, Consolidation, etc.    

        Subject
to Sections 8 and 9 of the Plan, in the event that the outstanding shares of the stock subject to an 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. 

ARTICLE III

PERIOD OF EXERCISABILITY  

        Section
3.1.    —Commencement of Exercisability    

        (a)  Time Option.  

4

 

        (i)
So long as the Optionee continues to be employed by the Company or its Subsidiaries, the Time Option shall become exercisable pursuant to the following schedule: 

	Date Time Option Becomes Exercisable
 
	 	Percentage of Time Option

Shares Granted As to Which

Time Option Is Exercisable
	 
	After the first anniversary of the Initial Vesting Date	 	20	%
	After the second anniversary of the Initial Vesting Date	 	40	%
	After the third anniversary of the Initial Vesting Date	 	60	%
	After the fourth anniversary of the Initial Vesting Date	 	80	%
	After the fifth anniversary of the Initial Vesting Date	 	100	%

        (ii)
That portion of the Option intended to be an "incentive stock option" within the meaning of Section 422 of the Code ("ISO") and that portion of the Option that is not
intended to be an ISO ("NQSO") shall each become exercisable ratably in accordance with the above schedule. For example, following the first anniversary of the Initial Vesting Date, 20% of the ISOs
and 20% of the NQSOs shall be exercisable, while 40% of the ISOs and 40% of the NQSOs shall be exercisable following the second anniversary of the Initial Vesting Date, and so on. 

        (iii)
Notwithstanding the foregoing, the Time Option shall become immediately exercisable as to 100% of the shares of Common Stock subject to such Time Option immediately prior to a
Change of Control (but only to the extent such Time Option has not otherwise terminated or become exercisable). 

        (b)
Performance Option.  

        (i)
The Performance Option shall become exercisable with respect to 20% of the shares of Common Stock subject to such Performance Option in respect of each Fiscal Year (beginning with
the 2004 Fiscal Year) upon the achievement by the Company of the Performance Targets established in respect of each such Fiscal Year and set forth on Appendix A attached hereto;  provided, however,
that such Performance Option shall only become exercisable as to 20% of the shares of Common Stock subject to such Performance Option
(each such 20% of the shares, a "Tranche") on December 31 of each such Fiscal Year upon the occurrence of the Financial Statement Approval Date applicable to such Fiscal Year so long as either
(i) the Optionee remains employed with the Company on the applicable Financial Statement Approval Date or (ii) an Interim Termination Event occurs between such December 31 and the
applicable Financial Statement Approval Date. If the Company does not achieve its Performance Target for any given Fiscal Year (a "Missed Year"), the Performance Option shall not become exercisable in
respect of such Fiscal Year, as set forth in the immediately preceding sentence; provided, however, that  if the Company achieves the Performance Target as
established for any Fiscal Year subsequent to a Missed Year,  then any prior percentage of the Performance Option (the exercisability of which had not previously occurred) in respect of prior Missed
Years shall
become exercisable (but only to the extent such Performance Option has not otherwise terminated or become exercisable). Notwithstanding the foregoing, the Performance Option shall become exercisable
as to 100% of the shares of Common Stock subject to such Performance Option (to the extent such Performance Option has not otherwise terminated or become exercisable) on the eighth anniversary of the
Grant Date. 

        (ii)
Notwithstanding the foregoing, upon the occurrence of a Change of Control prior to December 31, 2008, the Performance Option (to the extent such Performance Option has not
otherwise terminated) shall be exercisable with respect to the number of shares of Common Stock equal to the total number of shares of Common Stock subject to the Performance Option multiplied by a
fraction, (i) the numerator of which is the number of shares of Common Stock that 

5

 

have
previously become exercisable in respect of prior Fiscal Years, plus, with respect to the Tranche that could have become vested in respect the Fiscal Year in which the Change of Control occurs,
if the Board determines, in its good faith discretion, that, as of the date of the Change of Control, the Company would, but for the Change of Control, have achieved the Performance Target for such
year, a pro rata portion of such Tranche (based on the number of days that have elapsed in such Fiscal Year through the date of the Change of Control, relative to 365 days) (the
"Pro-Rata Fiscal Year") and (ii) the denominator of which is the maximum number of shares that could have become vested in such completed Fiscal Years (whether or not they actually
vested), plus a pro-rata portion of the maximum number of shares that could have become vested for the Fiscal Year in which the Change of Control occurred.
(See Exhibit I for an example of the application of this Section 3.1(b)(ii).) Notwithstanding the foregoing provisions of this
Section 3.1(b), if the Board determines, in its good faith discretion, that, as of the date of the Change of Control, the Company achieved the applicable Performance Target set forth in
Appendix A hereto, the Option shall become exercisable in full. The Board shall make such determination based on an interpolation of the applicable Fiscal Year goals set forth in
Appendix A. 

        (c)
Notwithstanding the foregoing, no Option which does not otherwise become exercisable in accordance with Section 3.1(b)(i) 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 non-exercisable as of the Optionee's termination of
employment (other than any Option which becomes exercisable in accordance with Section 3.1(b)(i)) shall be immediately cancelled. 

        Section
3.2.    —Expiration of Options    

        Except
as otherwise provided in Section 5 or 6 of the Management Stockholder's Agreement, the Optionee may not exercise the Options to any extent after the first to occur of the
following events: 

        (a)
The tenth anniversary of the Grant Date; 

        (b)
The tenth anniversary of the Grant Date if the Optionee's employment is terminated by reason of death or Permanent Disability; 

        (c)
The first anniversary of the date of the Optionee's termination of employment by reason of Retirement, by the Company or any of its Subsidiaries without Cause (other than by reason
of Permanent Disability) or by the Optionee for Good Reason; 

        (d)
The date of an Optionee's termination of employment with the Company or any of its Subsidiaries by the Optionee for any reason other than as set forth in Section 3.2(b) or
(c) above (without regard to Section 5 or 6 of the Management Stockholder's Agreement); 

        (e)
The date of an Optionee's termination of employment by the Company or any of its Subsidiaries for Cause; 

        (f)
The date the Option is terminated pursuant to Section 5 or 6 of the Management Stockholder's Agreement; 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 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 previously fully exercised nor become unexercisable under this Section 3.2. 

6

 

ARTICLE IV

EXERCISE OF OPTIONS  

        Section
4.1.    —Person Eligible to Exercise    

        Except
as otherwise provided in the Management Stockholder's Agreement, during the lifetime of the Optionee, only he 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 his 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. 

        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
and indicating the extent to which the portion of the Option being exercised constitutes Incentive Stock Options, 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 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. 

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 

7

 

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. In addition to the foregoing, after a Public Offering (as defined in the Management Stockholder's Agreement), 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 in accordance with applicable law. 

        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 of Directors 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. 

        Section
5.2.    —Options Not Transferable    

        Except
as provided in the Management Stockholder's Agreement, neither the Options 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 

8

 

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 Options, 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 that 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 and Management Stockholder's Agreement    

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

        Section
5.7.    —Amendment    

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

        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 

9

 

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. 

[signatures on next page]  

10

 

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

	 	 	ROCKWOOD HOLDINGS. INC.
	

 	
 	

By	

/s/  THOMAS J. RIORDAN      
 Thomas J. Riordan
	 	 	Its:	Senior Vice President

	

 	
 	

OPTIONEE:
	

 	
 	

/s/  ROBERT J. ZATTA      
 Robert J. Zatta
	

 	
 	

100 Overlook Center

	

 	
 	

Princeton, NJ 08540
 Address

Aggregate
number of shares

of Common Stock for which

the Time Option granted

hereunder is exercisable

(50% of total number of shares): 

700,
of which 

200
shall be incentive stock options and 

500
shall be non-qualified stock options. 

Aggregate
number of shares

of Common Stock

for which the Performance Option

granted hereunder is exercisable

(50% of total number of shares): 

700,
all of which shall be non-qualified stock options. 

11

 
Appendix A

Performance Targets  

        The Performance Targets are based on the Company's achievement of the following implied equity values calculated as 8.0x the applicable fiscal year's Consolidated
EBITDA (as defined below), minus the year-end Net Debt (as defined below, and, with Consolidated EBITDA, "Equity Values"): 

	Fiscal Year
	 	Equity Values

	

2004:	
 	

$868.7 million
	

2005:	
 	

$1,290.1 million
	

2006:	
 	

$1,822.2 million
	

2007:	
 	

$2,401.6 million
	

2008:	
 	

$2,785.0 million

For
purposes hereof, 

        (a)    "Consolidated
EBITDA" is as defined 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 Current
Report on Form 8-K filed with the Securities and Exchange Commission on August 4, 2004 ("Credit Agreement"). 

        (b)    "Net
Debt" is "Consolidated Total Debt" as defined in the Credit Agreement, plus (i) all net indebtedness of Rockwood Specialties International, Inc. and
Rockwood Specialties Consolidated, Inc. for borrowed money outstanding on such date and (ii) all Capitalized Lease Obligations of Rockwood Specialties International, Inc. and
Rockwood Specialties Consolidated, Inc. outstanding on such date. 

        The
Board shall, in good faith, fairly and appropriately adjust the effect(s) of any significant acquisitions, divestitures, foreign exchange movements, changes in capital structure, and
other non-recurring or extraordinary events that may affect the Equity Values, based on an objective determination that such an adjustment is reasonably necessary. The Board's
determination of such adjustment shall be based on the Company's accounting as set forth in its books and records and on the financial plan of the Company pursuant to which the Equity Values were
originally established. 

12

 
Exhibit I

Example  

Assumptions:  

	(1)
	100
shares of stock subject to the option (irrespective of whether such options have previously been exercised).

	(2)
	FY
2004 Performance Target achieved, the option vested, and was exercised, as to 20 shares.

	(3)
	FY
2005 Performance Target not achieved.

	(4)
	FY
2006: Change of Control occurs mid-year; Board determines the Company is on target to achieve FY 2006 Performance Target. 

Result:  

        Based on the special Change of Control vesting schedule, the proportion of the total shares subject to the option (irrespective of any prior exercise) is
determined as follows: 

	Total Shares subject to option
	 	Change of Control Vesting Fraction
	 	 
	 	 

	100	 	20 + 10	 	=	 	60 shares
	 	 	50	 	 	 	 

Since
20 shares have already vested, an additional 40 shares of the original 100 shares would become vested upon the Change of Control. 

13

QuickLinks

Exhibit 10.3

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