EXHIBIT 10.12


 


2008-2010 Long-Term Cash Award


 


	
  Granted to:

  	
  «First» «Last»

  
	
  Effective Date of
  Grant:

  	
  September 2008

  
	
  Targeted Cash Award:

  	
  $

  
	
  Performance Period:

  	
  January 1, 2008 –
  December 31, 2010

  



 


Under the long-term
incentive program of W.R. Grace & Co (the “Company”), the Compensation
Committee (the “Committee”) of the Board of Directors of the Company has
granted you a Long-Term Cash Award under which you may earn a cash payout in an
amount equal to (or, in certain circumstances, greater or less than) the
Targeted Cash Award set forth above, over the Performance Period.


 


You will earn this
Targeted Cash Award if the performance objectives described in Annex B
for the Performance Period are met.  If
the performance objectives are only partially achieved or are over-achieved,
the amount you actually earn under this Award will be decreased (or eliminated)
or increased as set forth in Annex B.


 


The award will be
calculated and paid to you, net of the applicable taxes.


 


The consequences of a
change in or termination of your employment status during the Performance
Period are described in the attached Administrative Practices (Annex C).


 


In all matters regarding
the administration of the Long-Term Incentive Award, the Committee has full and
sole jurisdiction, subject to the provisions of Annex C.


 


Long-Term Incentive
Awards are being granted only to a limited number of key employees of the
Company and its subsidiaries.  This Award
should, consequently, be treated confidentially.


 


 


	
   

  	
  W.R. Grace &
  Co.

  	
   

  
	
   

  	
  

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Alfred Festa

  	
   

  
	
   

  	
  Chairman, President and
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Acceptance of the foregoing is acknowledged this 

  
	
   

  	
  day of
                                ,
  2008.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature of Participant)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Please print full name)

  	
   

  



 

















 


Annex B


 


Calculation of 
2008-2010 LTIP- Cash Award


 


Your 2008-2010 Long Term
Cash award payout will be based on the 3-year compound annual growth rate
(CAGR) in total Grace core earnings before interest and taxes (core EBIT).  Payouts are contingent upon achievement of
target CAGR for the 3-year performance period. 
The target CAGR is 6%, using 2007
results as the base year.


 


The core earnings before
interest and taxes (core EBIT) in 2007 were $297.1 million (reflecting
adjustment for Grace’s recent change in accounting for U.S. inventories from
LIFO to FIFO).  The chart below details
six scenarios at different assumed growth rates.  The target growth is highlighted.


 


	
  Assumed

  	
   

  	
  Base

  	
   

  	
  Performance Period

  	
   

  	
  Total

  	
   

  
	
  Growth

  	
   

  	
  Period

  	
   

  	
  Growth Targets

  	
   

  	
  Growth

  	
   

  
	
  Rates

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  08-10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.50

  	
  %

  	
  297.1

  	
   

  	
  301.6

  	
   

  	
  306.1

  	
   

  	
  310.7

  	
   

  	
  918.4

  	
   

  
	
  3.00

  	
  %

  	
  297.1

  	
   

  	
  306.0

  	
   

  	
  315.2

  	
   

  	
  324.6

  	
   

  	
  945.8

  	
   

  
	
  6.00

  	
  %

  	
  297.1

  	
   

  	
  314.9

  	
   

  	
  333.8

  	
   

  	
  353.9

  	
   

  	
  1002.6

  	
   

  
	
  10.00

  	
  %

  	
  297.1

  	
   

  	
  326.8

  	
   

  	
  359.5

  	
   

  	
  395.4

  	
   

  	
  1081.7

  	
   

  
	
  15.00

  	
  %

  	
  297.1

  	
   

  	
  341.7

  	
   

  	
  392.9

  	
   

  	
  451.9

  	
   

  	
  1186.5

  	
   

  
	
  25.00

  	
  %

  	
  297.1

  	
   

  	
  371.4

  	
   

  	
  464.2

  	
   

  	
  580.3

  	
   

  	
  1415.9

  	
   

  
																	



 


Actual results for each
year of the performance period are adjusted for the change in pension expense
and LITP expense as compared to the base period.


 


The Long-Term Cash Award
payout will vary with actual results as shown in the chart below:


 




	
  CAGR Level Achieved

  	
   

  	
  Payout

  (rounded to the nearest whole

  percentage)

  
	
  25%

  	
   

  	
  200%

  
	
  15%

  	
   

  	
  147%

  
	
  10%

  	
   

  	
  121%

  
	
  6%

  	
   

  	
  100%

  
	
  3%

  	
   

  	
  50%

  
	
  3%<

  	
   

  	
  Prorated

  






 

















 


For the 2008-2010 LTIP,
cash payments will be made in two installments – 50% of what is earned based on
performance for 2008 and 2009, but no more than 50% of your target for the
first two years, will be paid in March 2010, and the balance will be paid
in March 2011.


 


Example:


 


A sample calculation of
the Long-Term Cash Award Earned is provided below.  Assume that your Targeted Award is
$20,400.  $13,600 would be earned after
Year 2 assuming a 6% growth per year. 
Therefore the payment in March 2010 would be $6,800, 50% of what is
earned.


 


	
  CAGR Level

  Achieved

  	
   

  	
  Payout in March

  2010

  	
   

  	
  Payout in March

  2011

  	
   

  	
  Total Payout

  	
   

  
	
  25

  	
  %

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  34,000

  	
   

  	
  $

  	
  40,800

  	
   

  
	
  15

  	
  %

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  23,188

  	
   

  	
  $

  	
  29,988

  	
   

  
	
  10

  	
  %

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  17,885

  	
   

  	
  $

  	
  24,685

  	
   

  
	
  6

  	
  %

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  13,600

  	
   

  	
  $

  	
  20,400

  	
   

  
	
  3

  	
  %

  	
  $

  	
  3,400

  	
   

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  10,200

  	
   

  



 





















 


Annex C


 


W. R. GRACE &
CO.


Administrative Practices –
Long-Term Cash Award Program


2008-2010
Performance Period


 


Definitions


 


“Award Payment”: An
Interim Long-Term Cash Award Payment or Remaining Long-Term Award Payment, as
applicable.


 


“Board of Directors”: The Board of Directors of the
Company


 


“Committee”: The
Compensation Committee of the Board of Directors.


 


“Company”: W. R. Grace &
Co., a Delaware Corporation and/or, if applicable in the context, one or more
of its Subsidiaries.


 


“Incomplete Long-Term
Cash Awards”: A Long-Term Cash Award for which the Performance Period has not
been completed as of the date referenced.


 


“Interim Long-Term Cash
Award Payment”: As defined on page 4, provided that such payment will not
exceed 50% of the Participant’s Targeted Award for the first two years,
regardless of Company performance at the time of payment.


 


“Key Employee”: An
officer or other senior, full-time employee of the Company, who, in the opinion
of the Company, can contribute significantly to the growth and successful
operations of the Company.


 


“Long-Term Cash Award
Program”: An undertaking by the Company to financially reward a Key Employee at
the end of a Performance Period, which undertaking is contingent upon or
measured by the attainment over the Performance Period of specified performance
objectives determined (on a consolidated or unconsolidated basis) by changes in
the 3-year compound annual growth rate (CAGR) in Total Grace’s core earnings
before interest and taxes (core EBIT).


 


“Long-Term Cash Award”: A
cash award, to be paid in the future, which is granted to Key Employees under
the Company’s long-term incentive program.


 


“Long-Term Cash Award
Earned”: The amount of cash earned by a Participant pursuant to the terms of a
Long-Term Cash Award.


 


“Participant”: A Key
Employee who is, or who is proposed to be, a recipient of a Long-Term Cash
Award.


 


“Performance Period”:
Except as provided herein, a period of three calendar years over which a
Long-Term Cash Award may be earned, as approved by the Committee.  The first Performance Period under this Plan
will commence effective January 1, 2008 and will end on December 31,
2010.  Performance Periods with respect
to different Long-Term Cash Awards to the same individual may overlap.


 


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“Total Grace Core EBIT”:
The core earnings before interest and taxes (core EBIT)” of the Company as
reported on (and calculated in accordance with) the statement of W. R. Grace &
Co. Continuing Operations- Segment Basis.


 


“Remaining Long-Term Cash
Award Payment”: As defined on Page 4, the second installment of the
Long-Term Cash Award that may be paid after the end of the Performance Period,
based on Company performance for the entire Performance Period.


 


“Subsidiary”: A
corporation, partnership, limited liability company or other form of business
association of which shares of common stock or other ownership interests (i) having
more than 50% of the voting power regularly entitled to vote for directors (or
equivalent management rights) or (ii) regularly entitled to receive more
than 50% of the dividends (or their equivalents) paid on the common stock (or
other ownership interests), are owned, directly or indirectly, by the Company.


 


“Targeted Cash Award”:
The amount of cash award specified in writing for a Participant as his or her “Targeted
Cash Award” for a Performance Period and which is subject to and covered by the
terms and conditions of a Long-Term Cash Award. 
This amount may be different from the Long-Term Cash Award Earned by an individual.


 


Plan Administration


 


The Plan shall be
administered by the Committee, provided that no member of the Committee shall
be eligible to receive a Long-Term Cash Award while serving on the Committee.


 


The Committee shall
approve (i) the performance measurements and objectives for each Long-Term
Cash Award and (ii) the Performance Period over which a Long-Term Cash
Award is to be earned.


 


The Committee shall
approve (i) the Grace Leadership Team members who are to be granted
Long-Term Cash Awards and (ii) the Targeted Award subject to each
Long-Term Cash Award.  The Committee (or
the designee of the Committee, which may include the Chief Executive Officer of
the Company) shall approve awards for all other Key Employees.


 


Long-Term Cash Awards


 


The Committee may, at any
time or from time to time, grant Long-Term Cash Awards to Key Employees.


 


Each Long-Term Cash Award
shall be evidenced by a written instrument containing such terms and conditions
as the Committee shall approve, provided the instrument is consistent with
these practices.


 


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No Long-Term Cash Award,
nor any payment or right thereunder, shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, encumbrance or charge, except
by will or the laws of descent and distribution, or by the terms of a
Participant’s Designation of Beneficiary, if any, on file with the Company.


 


In the case of a Key
Employee who becomes a Participant after the beginning of a Performance Period,
the Committee may ratably reduce the amount of the Targeted Award covered by
such Employee’s Long-Term Cash Award or otherwise appropriately adjust the
terms of the Long-Term Cash Award to reflect the fact that the Key Employee is
to be a Participant for only part of the Performance Period.


 


It is the intention of
the Committee that Long-Term Cash Awards be related to the results of the core
operations affected by the management actions taken by the Participants.  Subject to the administrative practices that
apply to termination or change in employment status and to the amendment or
discontinuance of Long-Term Cash Awards, the performance objectives applicable
to Long-Term Cash Awards will remain unchanged during the Performance Period
except as follows:


 


In general, acquisitions
and divestments will be included in the performance results.


 


Termination or Change in Employment
Status


 


A Participant shall
forfeit all rights to any Award Payment, if, prior to the date of payment of
such Award Payment, the Participant (1) resigns without the consent of the
Committee, (2) retires under a retirement plan of the Company or
Subsidiary before age 62 without the consent of the Committee, or (3) is
terminated for cause.


 


If a Participant retires
under a retirement plan of the Company or Subsidiary at or after age 62, or
ceases employment as a result of death or disability, or ceases employment as a
result of an involuntary termination after a Change in Control of the Company
(as defined herein), during a Performance Period, then his rights in any
Incomplete Long-Term Cash Award related to that Performance Period shall
thereupon vest, and he shall be entitled to receive any Award Payment of any
Long-Term Cash Award Earned he would otherwise have received (at the time he
would have otherwise received the Award Payment), except that the amount of any
Long-Term Cash Award Earned shall be reduced ratably in proportion to the
portion of the Performance Period during which the Participant was not an
employee.  If a Participant ceases
employment with the Company for any of the reasons specified in this paragraph,
after the completion of any Performance Period (but before the payment of the
Remaining Long-Term Cash Award Payment related to the completed Performance
Period), then his rights to any Long-Term Cash Award Earned and to such Award
Payment related to the completed Performance Period shall thereupon vest, and
he shall be entitled to receive such Award Payment at the time he would have
otherwise received the Payment.


 


If a Participant ceases
employment with the Company for any reason other than those indicated in the
previous two paragraphs (including by reason of involuntary termination not for
cause, except as provided above with respect to involuntary termination after a



 


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Change in Control of the
Company, or transfer of employment to a buyer of any business unit of the
Company), then his rights in any Incomplete Long-Term Cash Award, and any Award
Payment that is unpaid as of the date the Participant ceases such employment,
shall be forfeited, unless the Committee (or the designee of the Committee,
which may include the Chief Executive Officer of the Company) determines to
make an exception.   All such
determinations, if any, shall be final and binding on all parties.


 


Except as modified by the
provisions of the second and third paragraphs of this section, payments due to
Participants pursuant to the applicable preceding paragraphs, above, shall be
calculated and made in accordance with the provisions described under the
section entitled “Calculation of Long-Term Cash Awards Earned: Form of
Payment”.


 


A leave of absence, if
approved by the Committee, shall not be deemed a termination or change of
employment status for the purposes of this section, but, unless the Committee
otherwise directs, any Long-Term Cash Award Earned that a Participant would
otherwise have received under a Long-Term Cash Award Program shall be reduced
ratably in proportion to the portion of the Performance Period during which the
Participant was on such leave of absence.


 


Any consent, approval or
direction which the Committee may give under this section in respect of an
event or transaction may be given before or after the event or transaction.


 


Calculation of Long-Term Cash Awards
Earned: Form of Payment


 


Long-Term Cash Awards
Earned will be paid to a Participant in two installments (1) the first
installment shall be paid in March (and no later than March 13th) of the third and final year
of the Performance Period and shall be equal to 50% of what is earned based on
the Company’s performance for the first two calendar years of the applicable
Performance Period, but no more than 50% of the Participant’s Targeted Award
for the first two years (the “Interim Long-Term Cash Award Payment”), and (2) the
balance, if any, of the Long-Term Cash Award Earned will be paid in March (and
no later than March 13th)  after the end of the third and final year of
the Performance Period (the “Remaining Long-Term Cash Award Payment”).


 


The Committee shall
determine the extent to which the performance objectives of a Long-Term Cash
Award have been achieved during the Performance Period and the amount of any
Long-Term Cash Awards Earned (and the amount of any Award Payment).  All calculations in this regard shall be made
in accordance with the generally accepted accounting principles customarily
applied by the Company and shall be submitted to the Committee for its review
and approval.  The determination of the
Committee shall be final and binding. 
Payments under this Program are intended to be exempt from Section 409A
of the Internal Revenue Code; and the provisions of these “Administrative
Practices” shall be interpreted and administered in that manner.


 


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Treatment of Large Corporate Acquisitions
and Divestments


 


Notwithstanding
any other provision of the Plan to the contrary, the Total Grace Core EBIT for
the Performance Period shall be adjusted to account for any business
acquisition that occurs during the Performance Period, which has a purchase
price to the Company of more than $50 million (a “Significant Acquisition), as
follows:


 


(a)          with
respect to the calendar year during the Performance Period in which the
Significant Acquisition closes, the Total Grace Core EBIT will be decreased by
the result of the following formula — the EBIT of the Significant Acquisition
(the “Base SA EBIT”) for the full calendar year prior to the calendar year that
the Significant Acquisition closes (the “Pre-Acquisition Calendar Year”), which
shall be calculated by the Company in the same manner as the Company calculated
the Total Grace Core EBIT, multiplied by (the number of full months remaining
in the calendar year that the Significant Acquisition closed divided by 12);


 


(b)         with
respect to the first subsequent full calendar year (if any) during the
Performance Period after the Significant Acquisition closes, the Total Grace
Core EBIT shall be further decreased by the following formula — the Base SA EBIT
for the Pre-Acquisition Calendar Year multiplied by 1.06; and with respect to
the second subsequent calendar year (if any) during the Performance Period
after the Significant Acquisition closes, the Total Grace Core EBIT shall be
further decreased by the following formula — the Base SA EBIT for the
Pre-Acquisition Calendar Year multiplied by 1.06, the result of which is
further multiplied by 1.06.


 


Also, notwithstanding any
other provision of the Plan to the contrary, in the event that the Company
divests any of its businesses, which results in total proceeds to the Debtors
of more than $50 million (a “Significant Divestiture”) during the Performance
Period, the Total Grace Core EBIT for the Performance Period shall be increased
to account for the Significant Divestiture using the approach that is the
converse of the approach specified above with respect to Significant
Acquisitions; so that the effect of a Significant Divestiture upon the Total
Grace Core EBIT shall be neutralized in the same manner as the effect of a
Significant Acquisition described above; and any realized gains or losses that
result from the Significant Divestiture shall not be included in the Total
Grace Core EBIT.


 


General


 


Nothing in this document
nor in any instrument executed pursuant hereto shall confer upon a Participant
any right to continue in the employ of the Company or a Subsidiary, or shall
affect the right of the Company or a Subsidiary to terminate his or her
employment with or without cause.


 


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The Company or a
Subsidiary may make such provisions as it may deem appropriate for the
withholding or any taxes that the Company or a Subsidiary determines it is
required to withhold in connection with any Long-Term Cash Award Earned.


 


Nothing in a Long-Term
Cash Award is intended to be a substitute for, or shall preclude or limit the
establishment or continuation of, any other plan, practice, or arrangement for
the payment of compensation or benefits to employees generally, or to any class
or group of employees, which the Company or a Subsidiary now has or may
hereafter lawfully put into effect, including, without limitation, any
retirement, pension, group insurance, annual bonus, stock purchase, stock bonus
or stock option plan; provided, however, that no amounts awarded or paid
pursuant to any Long-Term Cash Award shall be included or counted as
compensation for the purposes of any employee benefit plan of the Company or a
Subsidiary where contributions to the plan, or the benefits received from the
plan, are measured or determined in whole or in part, by the amount of the
employee’s compensation.


 


The grant of a Long-Term
Cash Award to an employee of a Subsidiary shall be contingent on the approval
of the Long-Term Cash Award by the Subsidiary and the Subsidiary’s agreement
that (i) the Company may administer such Award on its behalf and (ii) the
Subsidiary will make, or reimburse the Company for, the payments called for by
the Long-Term Cash Award.  The provisions
of this paragraph and the obligations of the Subsidiary so undertaken may be
waived, in whole or in the part, from time to time by the Company.


 


Amendments and Discontinuance


 


In the event
acquisitions, divestments, substantial changes in tax or other laws or in
accounting principles or practices, natural disasters or other extraordinary
events render fulfillment of the performance objectives of a Long-Term Cash
Award impossible or impracticable, or result in the achievement of the
performance objectives without appreciable effort by the Participant, the
Committee may, but shall not be obligated to, amend any such Long-Term Cash
Award in any appropriate manner so that the Participant may earn Long-Term Cash
Awards comparable to those that might have been earned if the extraordinary
event had not occurred.


 


The Chief Executive
Officer of the Company may approve such technical changes and clarifications to
the Long-Term Cash Award Program as necessary, provided such changes or
clarifications do not vary substantially from the terms and conditions outlined
in this description.


 


Payments under this
Program are intended to be exempt from Section 409A of the Internal
Revenue Code; and the provisions of these “Administrative Practices” shall be
interpreted and administered in that manner.


 


In the event a Change in
Control of the Company (as defined herein) shall occur or the Board of
Directors has reason to believe that a Change of Control may occur, the
Committee may, with respect to any one or more Long-Term Cash Awards, (i) reduce
the 


 


6

















 


length of a Performance
Period to not less than one year, (ii) make ratable adjustments to
performance objectives and Targeted Awards, (iii) change the methods of
measuring the performance objectives, (iv) accelerate the payment of any
Long-Term Cash Awards Earned or any Award Payment, and (v) take other
action deemed by it to be appropriate and in the best interests of the Company
under the circumstances.  For the
purposes of this paragraph:


 


(A)        “Change
in Control of the Company” means and shall be deemed to have occurred if (a) the
Company determines that any “person” (as such term is used in Section 13(d) and
14 (d) of the Securities Exchange Act of 1934), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of stock
of the Company, has become the “beneficial owner” (as defined in Rule 13d-3
under such Act), directly or indirectly, of 20% or more of the outstanding
common stock of the Company (provided, however, that a Change in Control shall
not be deemed to have occurred if such person has become the beneficial owner
of 20% or more of the outstanding Common Stock as the results of a sale of
Common Stock by the Company that has been approved by the Board of Directors);
or pursuant to a plan of reorganization which has been confirmed by the U.S.
District Court or Bankruptcy Court having jurisdiction of the Company’s Chapter
11 case, Case No. 01-01139 (JJF), pursuant to an order of such Court which
is final and nonappealable, and becomes effective); (ii) individuals who
are Continuing Directors cease to constitute a majority of any class of
directors of the Board; (iii) there occurs a reorganization, merger,
consolidation or other corporate transaction involving the Company (a  “Corporate Transaction”), in each case, with
respect to which the stockholders of the Company immediately prior to such
Corporate Transaction do not, immediately after the Corporate Transaction, own
50% or more of the combined voting power of the corporation resulting from such
Corporate Transaction, provided that this clause (iii) shall not apply to
a Corporate Transaction which is pursuant to section 363 of the Bankruptcy
Code, or is pursuant to a plan of reorganization which has been confirmed by
the U.S. District Court or Bankruptcy Court having jurisdiction of the Company’s
chapter 11 case, Case No. 01-01139 (JJF), pursuant to an order of such
Court which is final and nonappealable, and becomes effective, or (iv) the
shareholders of the Company approve a complete liquidation or dissolution of
the Company.


 


(B)          “Continuing
Director” means any member of the Board of Directors who was such a member on
the date on which this Program was approved by the Board of Directors, and any
successor to a Continuing Director who is approved as a nominee or elected to
succeed to a Continuing Director by a majority of Continuing Directors who are
then members of the Board of Directors.


 


The granting of Long-Term
Cash Awards may be amended or discontinued by the Committee at any time.


 


No amendment or
discontinuance of Long-Term Cash Awards shall, without a Participant’s consent,
adversely affect his rights in any Long-Term Cash Awards theretofore granted to
him, except that, if the Committee so directs, all Incomplete 


 


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Long-Term Cash Awards may
be terminated prospectively with the same effect as a termination of employment
under the second paragraph of the section entitled “Termination or Change in
Employment Status”.


 


8