**EXHIBIT 10.1**

 

**2007-2009 Long-Term Cash Award**

 
| Granted to:              |   | «Firstname» «Lastname»         |
|--------------------------|--------|----------------------------------------------------|
| Effective Date of Grant: |   | September 2007                                     |
| Targeted Award:          |   | «Target»                                 |
| Performance Period:      |   | January 1, 2007 — December 31, 2009 |

 

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

 

You will earn this Targeted Award if the performance objectivesdescribed in Annex B for the Performance Period are met. If the performanceobjectives are only partially achieved or are over-achieved, the amount youactually earn under this Award will be decreased (or eliminated) or increasedas set forth in Annex B.

 

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

 

The consequences of a change in or termination of your employmentstatus during the Performance Period are described in the attachedAdministrative Practices (Annex C).

 

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

 

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

 
|   | W.R. Grace & Co.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | /s/ Alfred Festa                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | By:

Alfred Festa

CEO, President                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Acceptance of the foregoing is acknowledged this                                    day  of                          ,  2007. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|   | (Signature of Participant)                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|   | (Please print full name)                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |

 

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**Annex B**

**CALCULATION OF 2007-2009 LTIP**

 

Your 2007-2009 LTIP award payout will be based on the 3-year compoundannual growth rate (CAGR) in total Grace core earnings before interest andtaxes (core EBIT). Payouts are contingent upon achievement of target CAGR forthe 3-year performance period. The target CAGR is **6%**, using 2006 results as the base year.

 

The core earnings before interest and taxes (core EBIT) in 2006 was$240.2 million. The chart below details six scenarios at different assumedgrowth rates. The target growth is highlighted.

 
| ** **                         | ** ** | **Base Period** | ** ** | **Performance Period  Growth Targets** | ** ** | ** ** | ** ** |
|------------------------------------|------------|----------------------|------------|--------------------------------------------------|------------|------------|------------|
| **Assumed Growth Rates** | ** ** | **2006**             | ** ** | **2007**                                         | ** ** | **2008**   | ** ** | **2009** | ** ** | **Total Growth 07-09** | ** ** |
| 1.50%                              |       | 240.2                |       | 243.8                                            |       | 247.5      |       | 251.2 |   | 742.5 |   |
| 3.00%                              |       | 240.2                |       | 247.4                                            |       | 254.8      |       | 262.4 |   | 764.6 |   |
| 6.00%                              |       | 240.2                |       | 254.6                                            |       | 269.9      |       | 286.1 |   | 810.6 |   |
| 10.00%                             |       | 240.2                |       | 264.2                                            |       | 290.6      |       | 319.7 |   | 874.5 |   |
| 15.00%                             |       | 240.2                |       | 276.2                                            |       | 317.6      |       | 365.2 |   | 959.0 |   |
| 25.00%                             |       | 240.2                |       | 300.3                                            |       | 375.4      |       | 469.3 |   | 1145.0 |   |

 

Actual results for each year of the performance period are adjusted forthe 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 shownin 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 2007-2009 LTIP, cash payments will be made in twoinstallments—50% of what is earned based on performance for 2007 and 2008, butno more than 50% of your target for the first two years, will be paid inMarch 2009, and the balance will be paid in March 2010.

 

Example:

 

A sample calculation of the Long-Term Cash Award Earned is providedbelow. Assume that your Targeted Award is $20,400. $13,600 would be earnedafter Year 2 assuming a 6% growth per year. Therefore the payment inMarch 2009 would be $6,800, 50% of what is earned.

 
| **CAGR Level Achieved** | ** ** | **Payout in March 2009** | ** ** | **Payout in March 2010** | ** ** | **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 |   |

 

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**Annex C**

 

**W. R. GRACE & CO.**

**Administrative Practices — Long-Term CashAward Program**

**2007-2009 Performance Period**

 

**Definitions**

 

“Award Payment”: An Interim Long-Term Cash Award Payment or RemainingLong-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 whichthe Performance Period has not been completed as of the date referenced.

 

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

 

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

 

“Long-Term Cash Award Program”: An undertaking by the Company tofinancially reward a Key Employee at the end of a Performance Period, whichundertaking is contingent upon or measured by the attainment over thePerformance Period of specified performance objectives determined (on aconsolidated or unconsolidated basis) by changes in the 3-year compound annualgrowth 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, whichis granted to Key Employees under the Company’s long-term incentive program.

 

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

 

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

 

“Performance Period”: Except as provided herein, a period of threecalendar years over which a Long-Term Cash Award may be earned, as approved bythe Committee. The first Performance Period under this Plan will commenceeffective January 1, 2007 and will end on December 31, 2009.Performance Periods with respect to different Long-Term Cash Awards to the sameindividual may overlap.

 

“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- SegmentBasis.

 

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

 

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

 

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

 

**Plan Administration**

 

The Plan shall be administered by the Committee, provided that nomember of the Committee shall be eligible to receive a Long-Term Cash Awardwhile serving on the Committee.

 

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

 

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

 

**Long-Term Cash Awards**

 

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

 

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

 

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

 

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

 

It is the intention of the Committee that Long-Term Cash Awards berelated to the results of the core operations affected by the managementactions taken by the Participants. Subject to the administrative practices thatapply to termination or change in employment status and to the amendment ordiscontinuance of Long-Term Cash Awards, the performance objectives applicableto Long-Term Cash Awards will remain unchanged during the Performance Periodexcept as follows:

 

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

 

**Termination or Change in Employment Status**

 

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

 

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

 

If a Participant ceases employment with the Company for any reasonother than those indicated in the previous two paragraphs (including by reasonof involuntary termination not for cause, except as provided above with respectto involuntary termination after a Change in Control of the Company, ortransfer of employment to a buyer of any business unit of the Company), then hisrights in any Incomplete Long-Term Cash Award, and any Award Payment that isunpaid as of the date the Participant ceases such employment, shall beforfeited, unless the Committee (or the designee of the Committee, which mayinclude the Chief Executive Officer of the Company) determines to make anexception. All such determinations, if any, shall be final and binding on allparties.

 

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

 

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

 

Any consent, approval or direction which the Committee may give underthis section in respect of an event or transaction may be given before or afterthe 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 twoinstallments (1) the first installment shall be paid in March of the thirdand final year of the Performance Period and shall be equal to 50% of what isearned based on the Company’s performance for the first two calendar years ofthe applicable Performance Period, but no more than 50% of the Participant’sTargeted Award for the first two years (the “Interim Long-Term Cash AwardPayment”), and (2) the balance, if any, of the Long-Term Cash Award Earnedwill be paid in March after the end of the third and final year of thePerformance Period (the “Remaining Long-Term Cash Award Payment”).

 

The Committee shall determine the extent to which the performanceobjectives of a Long-Term Cash Award have been achieved during the PerformancePeriod and the amount of any Long-Term Cash Awards Earned (and the amount of anyAward Payment). All calculations in this regard shall be made in accordancewith the generally accepted accounting principles customarily applied by theCompany and shall be submitted to the Committee for its review and approval.The determination of the Committee shall be final and binding.

 

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**Treatment of Large Corporate Acquisitions andDivestments**

 

Notwithstanding any other provision of the Plan to the contrary, theTotal Grace Core EBIT for the Performance Period shall be adjusted to accountfor any business acquisition that occurs during the Performance Period, whichhas a purchase price to the Company of more than $50 million (a “SignificantAcquisition), as follows:

 

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

 

(b)                                 with respect to thefirst subsequent full calendar year (if any) during the Performance Periodafter the Significant Acquisition closes, the Total Grace Core EBIT shall befurther decreased by the following formula—the Base SA EBIT for thePre-Acquisition Calendar Year multiplied by 1.06; and with respect to thesecond subsequent calendar year (if any) during the Performance Period afterthe Significant Acquisition closes, the Total Grace Core EBIT shall be furtherdecreased by the following formula—the Base SA EBIT for the Pre-AcquisitionCalendar Year multiplied by 1.06, the result of which is further multiplied by1.06.

 

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

 

**General**

 

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

 

The Company or a Subsidiary may make such provisions as it may deemappropriate for the withholding or any taxes that the Company or a Subsidiarydetermines it is required to withhold in connection with any Long-Term Cash AwardEarned.

 

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 otherplan, practice, or arrangement for the payment of compensation or benefits toemployees generally, or to any class or group of employees, which the Companyor 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 noamounts awarded or paid pursuant to any Long-Term Cash Award shall be includedor counted as compensation for the purposes of any employee benefit plan of theCompany or a Subsidiary where contributions to the plan, or the benefitsreceived from the plan, are measured or determined in whole or in part, by theamount of the employee’s compensation.

 

The grant of a Long-Term Cash Award to an employee of a Subsidiaryshall be contingent on the approval of the Long-Term Cash Award by theSubsidiary and the Subsidiary’s agreement that (i) the Company mayadminister such Award on its behalf and (ii) the Subsidiary will make, orreimburse the 

 

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Company for, the payments called for by the Long-Term Cash Award. Theprovisions of this paragraph and the obligations of the Subsidiary soundertaken may be waived, in whole or in the part, from time to time by theCompany.

 

**Amendments and Discontinuance**

 

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

 

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

 

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 ofControl may occur, the Committee may, with respect to any one or more Long-TermCash Awards, (i) reduce the length of a Performance Period to not lessthan one year, (ii) make ratable adjustments to performance objectives andTargeted Awards, (iii) change the methods of measuring the performanceobjectives, (iv) accelerate the payment of any Long-Term Cash AwardsEarned or any Award Payment, and (v) take other action deemed by it to beappropriate and in the best interests of the Company under the circumstances.For the purposes of this paragraph:

 

(A)                              “Change in Control of theCompany” means and shall be deemed to have occurred if (a) the Companydetermines 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 otherfiduciary holding securities under an employee benefit plan of the Company or acorporation owned, directly or indirectly, by the stockholders of the Companyin substantially the same proportions as their ownership of stock of theCompany, has become the “beneficial owner” (as defined in Rule 13d-3 undersuch Act), directly or indirectly, of 20% or more of the outstanding commonstock of the Company (provided, however, that a Change in Control shall not bedeemed 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 CommonStock by the Company that has been approved by the Board of Directors); orpursuant to a plan of reorganization which has been confirmed by the U.S.District Court or Bankruptcy Court having jurisdiction of the Company’s Chapter11 case, Case No. 01-01139 (JJF), pursuant to an order of such Court whichis final and nonappealable, and becomes effective); (ii) individuals whoare Continuing Directors cease to constitute a majority of any class ofdirectors of the Board; (iii) there occurs a reorganization, merger,consolidation or other corporate transaction involving the Company (a “CorporateTransaction”), in each case, with respect to which the stockholders of theCompany immediately prior to such Corporate Transaction do not, immediatelyafter the Corporate Transaction, own 50% or more of the combined voting powerof the corporation resulting from such Corporate Transaction, provided thatthis clause (iii) shall not apply to a Corporate Transaction which ispursuant to section 363 of the Bankruptcy Code, or is pursuant to a planof reorganization which has been confirmed by the U.S. District Court or BankruptcyCourt having jurisdiction of the Company’s chapter 11 case, CaseNo. 01-01139 (JJF), pursuant to an order of such Court which is final andnonappealable, and becomes effective, or (iv) the shareholders of theCompany approve a complete liquidation or dissolution of the Company.

 

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

 

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

 

No amendment or discontinuance of Long-Term Cash Awards shall, withouta Participant’s consent, adversely affect his rights in any Long-Term CashAwards theretofore granted to him, except that, if the Committee so directs,all Incomplete Long-Term Cash Awards may be terminated prospectively with thesame effect as a termination of employment under the second paragraph of thesection entitled “Termination or Change in Employment Status”.

 

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