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Exhibit 10.27
GRACE
PAUL J. NORRIS
Chairman, President & Chief Executive
Officer
W. R. Grace & Co.
7500 Grace Drive
Columbia, MD 21044
(410) 531-4404
Fax: (410) 531-4414
email paul.j.norris@grace.com
November 17, 2003
Mr. Alfred E. Festa
14713 Goddingham Court
Midlothian, VA 23113
Dear Fred:
This letter agreement specifies the terms
of your employment with W. R. Grace &
Co. (the "Company") as President and Chief
Operating Officer (collectively, the
"COO"), which was approved by the Company's
Board of Directors (the "Board") and
Compensation Committee of the Board on
November 6, 2003. In addition, this
agreement was authorized by the U. S.
Bankruptcy Court with jurisdiction over
the Company's Chapter 11 cases on November
13, 2003.
Also, please note that I have agreed with
the Board to relinquish the title of
"President" of the Company, effective as of
your first day of employment with
the Company, which is today, November 17,
2003. I am extremely pleased that you
will be joining the Company and believe you
will make a valuable contribution to
our future.
If you agree with the terms of this letter
agreement, please sign where
indicated below and return one fully
executed copy to me. An additional copy of
this letter is also enclosed for your
records.
RESPONSIBILITIES
Your employment with the Company begins
today, November 17, 2003. (As all other
Company Headquarters employees, you will
actually be employed by W. R. Grace &
Co.-Conn., but will be an elected officer
of both W. R. Grace & Co. and W. R.
Grace & Co.-Conn.) Your title will be
"President and Chief Operating Officer" of
the Company, and you will report directly
to me.
Your principal obligations, duties and
responsibilities will be those generally
inherent in the office and title of COO. In
that regard, each of the Company's
businesses will report directly to you,
including Davison Catalysts, Davison
Silicas and Grace Performance Chemicals.
Your office will be located at the
Company's Headquarters in Columbia,
Maryland.
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Alfred E. Festa
November 17, 2003
Page 2
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TERM OF AGREEMENT
The term of your employment under this
letter agreement will be for a period of
three years, beginning on the date your
employment with the Company commences,
November 17, 2003, and ending on November
16, 2006 (such period is referred to
in this agreement as your "Initial
Employment Term").
If your employment as COO of the Company
(or in any other position) continues
after the Initial Employment Term, and no
other contrary arrangements have been
mutually agreed in writing between you and
the Board, then the arrangements
described in this agreement will be
discontinued and you will be an employee of
the Company "at will" subject to the same
requirements as similarly situated
employees of the Company at that time,
except as provided under the following
section entitled "Severance Pay
Arrangement".
COMPENSATION
1. Your initial annual base
salary as COO will be $550,000.00. Thereafter,
your base salary
will be subject to periodic reviews on the same basis and
at the same
intervals as are applicable to other senior officers of the
Company.
Your salary will
cease to accrue immediately upon your termination of
employment with
the Company, even if your termination occurs during your
Initial
Employment Term and whether or not your termination is
voluntary.
(Note, however,
the provisions under "Severance Pay Arrangement.")
2. You will be eligible to
participate in the Company's Annual Incentive
Compensation
Program. For 2003 and 2004, your targeted award under the
Program will be
100% of your base salary earned during the applicable
calendar year.
For 2005 and thereafter, your targeted award will be 75% (or
greater, as
determined by the Board) of your annual base salary earned
during the
applicable calendar year. Any payments to you under the Program
will be made at
the same time and in the same manner as payments to other
participants in
the Program. Under the Program, awards for a calendar year
are generally
paid during March of the following calendar year. A Program
participant is
not entitled to payment of an award for a calendar year, if
the participant
is not an active employee of the Company on the date the
award is
actually paid. Awards under this Program are subject to Board
approval and are
contingent upon individual performance and financial
results of the
Company. In general, the amount of award paid to any
participant may
range from 0% to 200% of the participant's targeted award
for the year,
depending on individual performance and the extent to which
the Company
achieves (or surpasses) certain financial goals. These and the
other provisions
of the Program will apply to you in the same manner as
applicable to
other Program participants, except as specified below with
regard to an
award for 2003.
3. Notwithstanding the
foregoing, the award payment you will receive under the
Annual Incentive
Compensation Program for 2003 will not be less than the
result of the
following calculation: your targeted award for that year
(i.e., 100% of
your annual base salary as of December 31, 2003), multiplied
by a fraction
where the numerator is the number of days during 2003 that
you are an
employee of the Company and the denominator is 365. However, as
indicated above,
you will only receive a payment
<PAGE>
Alfred E. Festa
November 17, 2003
Page 3
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under the
Program for 2003 if you are an active employee of the Company
on
the date that
the payments for that year are made to all participants in
March 2004.
4. As described in this
paragraph, you will be eligible for a targeted award
under the
Company's currently effective Long-Term Incentive Plans (the
"LTIPs") for the
following performance periods: 2002-2004 and 2003-2005.
The amount of
the targeted award applicable to you under each of those
LTIPs shall be
$687,000 (i.e., 125% of your starting annual base salary).
However, any
award payment to which you become entitled under any of the
LTIPs shall be
pro-rated to reflect the percentage of days during the
applicable
performance period that you were an active employee of the
Company.
In all other
respects, the terms of each of your LTIP awards shall be the
same as the
terms governing the awards of the other participants under the
applicable
LTIP.
You shall also
be considered for awards under any other stock or cash based
incentive
programs maintained by the Company during your employment, at
such times such
awards are considered for other senior officers of the
Company or at
such other times the Board deems appropriate, at the sole
discretion of
the Board.
5. Consistent with your
election as an officer of the Company, the Company
will enter into an
Executive Severance Agreement with you. In general, the
terms of that
agreement would provide for a severance payment of 3 times
the sum of your
annual base salary plus your targeted annual incentive
compensation
award, and certain other benefits, in the event your
employment
terminates under certain conditions following a
change-in-control of the Company.
The form and
provisions of your Executive Severance Agreement will be the
same as
applicable to other elected officers of the Company. A copy of
the
Agreement has
previously been provided to you.
SEVERANCE PAY ARRANGEMENT
If your employment is terminated by the
Company without "Cause" (as defined
below) or by you as a result of
"Constructive Discharge" (as defined below),
during your Initial Employment Term, you
will be entitled to the severance
payment described in the next sentence. The
severance payment will be 1.5 times
a dollar amount equal to 175% of your
annual base salary at the time your
employment is terminated. The severance
payment may be made to you in
installments, at the same time and in the
same manner as salary continuation
payments, over a period of 18 months
beginning as of the date you are
terminated. However, at your option, the
entire severance payment may be paid to
you in a single lump-sum as soon as
practical after your termination (if
approved by the Compensation Committee). In
all other respects, your severance
pay arrangement shall be governed by the
terms of the W. R. Grace & Co.
Severance Pay Plan for Salaried
Employees.
You will also be entitled to the severance
payment described in the prior
paragraph if you decide to terminate your
employment with the Company in the
event that the Board does not offer you the
position of Chief Executive Officer
of the Company following my departure from
the Company, and elects another
individual as my successor to that
position; provided that you comply with the
notice requirements specified in the next
sentence. In order to be
<PAGE>
Alfred E. Festa
November 17, 2003
Page 4
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entitled to the severance payment under
these circumstances, you must comply
with the following notification
requirements: (1) you must deliver to the
Chairman of the Compensation Committee of
the Board (the "Comp Committee
Chairman") written notice of your intention
to terminate your employment (your
"Termination Notice") no later than 30 days
after the date the Company publicly
announces that the Board has elected
another individual as my successor as Chief
Executive Officer and (2) your Termination
Notice must specify your last date of
employment with the Company, which must be
no earlier than 30 days, and no later
than 90 days, after the date your
Termination Notice is delivered to the Comp
Committee Chairman. Of course, if and when
these circumstances arise, you and
the Board may agree in writing to
alternative arrangements regarding your
employment status and the appropriate
notice requirements.
You will not, in any event, however, be
entitled to the severance payment
described above if, at the time your
employment terminates, your employment
terminates as the result of your death, or
you are entitled to payments under
your Executive Severance Agreement
described above, or to disability income
payments under the Grace "LTD Plan" and/or
"ESP Plan" described below.
Also, if you receive a severance payment
under this letter agreement, you will
not be entitled to any other severance pay
from the Company.
DEFINITI
