Document:

Exhibit 10.03_2013.12.31

EXHIBIT 10.3

SETTLEMENT AGREEMENT WITH RESPECT TO SETTLEMENT OF THE BANK LENDER APPEALS BETWEEN AND AMONG W. R. GRACE & CO., ON BEHALF OF ITSELF AND THE GRACE DEBTORS, AND THE BANK LENDER GROUP
This SETTLEMENT AGREEMENT, entered into as of December 23, 2013 between W. R. Grace & Co. (“Grace”) and the Grace Debtors1 in the chapter 11 bankruptcy cases consolidated for administrative purposes as In re W. R. Grace & Co., et al., Debtors, Case No. 01-1139 (the “Bankruptcy Case”), in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) and certain holders of claims under the Pre-petition Credit Facilities (collectively, the “Bank Lender Group”).2 
____________________________________________________________ 
1 The Grace Debtors consist of the following 62 entities: W. R. Grace & Co. (f/k/a Grace Specialty     Chemicals, Inc.), W. R. Grace & Co.‐Conn., A‐1 Bit & Tool Co., Inc., Alewife Boston Ltd., Alewife Land Corporation, Amicon, Inc., CB Biomedical, Inc. (f/k/a Circe Biomedical, Inc.), CCHP, Inc., Coalgrace, Inc., Coalgrace II, Inc., Creative Food N Fun Company, Darex Puerto Rico, Inc., Del Taco Restaurants,     Inc., Dewey and Almy, LLC (f/k/a Dewey and Almy Company), Ecarg, Inc., Five Alewife Boston Ltd., G C Limited Partners I, Inc. (f/k/a Grace Cocoa Limited Partners I, Inc.), G C Management, Inc. (f/k/a Grace Cocoa Management, Inc.), GEC Management Corporation, GN Holdings, Inc., GPC Thomasville Corp., Gloucester New Communities Company, Inc., Grace A‐B Inc., Grace A‐B II Inc., Grace Chemical Company of Cuba, Grace Culinary Systems, Inc., Grace Drilling Company, Grace Energy Corporation, Grace Environmental, Inc., Grace Europe, Inc., Grace H‐G Inc., Grace H‐G II Inc., Grace Hotel Services Corporation, Grace International Holdings, Inc. (f/k/a Dearborn International Holdings, Inc.), Grace Offshore Company, Grace PAR Corporation, Grace Petroleum Libya Incorporated, Grace Tarpon Investors, Inc., Grace Ventures Corp., Grace Washington, Inc., W. R. Grace Capital Corporation, W. R. Grace Land Corporation, Gracoal, Inc., Gracoal II, Inc., Guanica‐Caribe Land Development Corporation, Hanover Square Corporation, Homco International, Inc., Kootenai Development Company, L B Realty, Inc., Litigation Management, Inc. (f/k/a GHSC Holding, Inc., Grace JVH, Inc., Asbestos Management, Inc.), Monolith Enterprises, Incorporated, Monroe Street, Inc., MRA Holdings Corp. (f/k/a Nestor‐BNA Holdings Corporation), MRA Intermedco, Inc. (f/k/a Nestor‐BNA, Inc.), MRA Staffing Systems, Inc. (f/k/a British Nursing Association, Inc.), Remedium Group, Inc. (f/k/a Environmental Liability Management, Inc., E&C Liquidating Corp., Emerson & Cuming, Inc.), Southern Oil, Resin & Fiberglass, Inc., Water Street Corporation, Axial Basin Ranch Company, CC Partners (f/k/a Cross Country Staffing), Hayden‐Gulch West Coal Company and H‐G Coal Company.
2 The Bank Lender Group includes the following institutions: Bank of America, N.A.; Glendon Capital Management LP (f/k/a Barclays Bank PLC); BBT Fund, L.P.; BBT Master Fund, L.P.; Caspian Capital Partners, L.P.; Caspian Select Credit Master  Fund, Ltd.; Caspian Solitude Master Fund, L.P.; Consumer Program Administrators, Inc.; Farallon Capital Management LLC (as investment manager of AFC Investors Trust, BFC Investors Trust, CFC Investors Trust, EFC Investors Trust, HFC Investors Trust, MFC Investors Trust and VFC Investors Trust); Halcyon Loan Trading Fund LLC; HCN LP; HLF LP; HLTS Fund II LLP; Intermarket Corp.; JPMorgan Chase Bank, N.A.; LLT Ltd.; LMA SPC for and on behalf of the MAP98 Segregated Portfolio; Loeb Arbitrage Offshore Partners, Ltd.; Macquarie Bank Limited; Mariner LDC; MSD Credit Opportunity Master Fund, L.P.; Nomura Waterstone Market Neutral Fund; Oceana Master Fund Ltd.; OCP Investment Trust; Onex Debt Opportunity Fund, Ltd.; Onex Senior Credit II, LP; Onex Senior Credit Fund, L.P.; Pentwater Equity Opportunities Master Fund Ltd.; Prime Capital Master SPC, GOT WAT MAC Segregated Portfolio; PWCM Master Fund Ltd.; Royal Bank of Scotland, PLC; SOLA Ltd.; Solus Core Opportunities L.P.; Solus Core Opportunities Master Fund Ltd.; Taconic Master Fund 1.5 L.P.; Taconic Opportunity Master Fund L.P.; Thracia LLC; Ultra Master Ltd.; Visium Asset Management, LP; Waterstone Distressed Opportunities Fund, Ltd.; Waterstone Market Neutral Mac51, Ltd.; Waterstone Market Neutral Master Fund, Ltd.; Waterstone MF Fund, Ltd.; Waterstone Offshore AD Fund, Ltd.; and Waterstone Offshore ER Fund, Ltd., together with certain funds affiliated with or managed by such entities (collectively, the “Bank Lender Group.”  Other than HLTS Fund II LLP and Farallon Capital Management LLC, all of the current members of the Bank Lender Group were also members as of the filing of the Bank Lender Group’s opening brief in the Third Circuit.

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WHEREAS, on March 28, 2003 the administrative agent under the Pre-petition Credit Facilities3 (the “Agent”) timely filed Claim Nos. 9159 and 9168 (the “Proofs of Claim”) in the Bankruptcy Case for amounts due under the Pre-Petition Credit Facilities.  On June 13, 2008 the Debtors filed their Objection to the Unsecured Claims Asserted Under the Debtors’ Credit Agreements Dated as of May 14, 1998 and May 5, 1999 [Docket No. 18922].  On May 19, 2009 the Bankruptcy Court issued its Memorandum Opinion and Order with respect to Debtors’ Objection to the Unsecured Claims Asserted Under the Debtors’ Credit Agreements Dated as of May 14, 1998, and May 5, 1999 [Docket No. 21747] (the “Claims Order”); and
WHEREAS on May 29, 2009 the Bank Lender Group filed its Notice of Appeal of the Claims Order [Docket No. 21911] (the “Claims Order Appeal”) which was docketed in the District Court as Case No. 09-807; and
WHEREAS, the Plan Proponents filed the First Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code of W. R. Grace & Co., et al., the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants’ Representative, and the Official Committee of Equity Security Holders as Modified Through December 23, 2010 [Docket No. 26368] (the “Plan”); and;
WHEREAS, on January 31, 2011, the Bankruptcy Court issued its Memorandum Opinion Regarding Objections to Confirmation of First Amended Joint Plan of Reorganization and Recommended Supplemental Findings of Fact and Conclusions of Law [Docket No. 26154] and Recommended Findings of Fact, Conclusions of Law and Order Regarding Confirmation of First Amended Joint Plan of Reorganization as Modified Through December 23, 2010 [Docket No. 26155].  On February 15, 2011 (the “Confirmation Date,” see Plan, § 1.1.88) the Bankruptcy Court issued its Order Clarifying Memorandum Opinion and Order Confirming Joint Plan as Amended Through December 23, 2010 [Docket No. 26289] (collectively with Docket Nos. 26154 and 26155, the “Confirmation Order”); and
WHEREAS, the Confirmation Order was timely appealed to the District Court for the District of Delaware, Case No. 11-199 (the “Lead District Court Appeal Case”); and
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3 As defined in the Plan, “Pre-Petition Credit Facilities” mean (i) the Credit Agreement, dated as of May 14,     1998, among Grace-Conn., the Parent, the several banks from time to time parties thereto, the co-agents thereto, The Chase Manhattan Bank as administrative agent, and Chase Securities Inc. as arranger; and (ii) the 364-Day Credit Agreement, dated as of May 5, 1999, as amended by the First Amendment dated as of May 3, 2000, among Grace-Conn., the Parent, the several banks from time to time parties thereto, Bank of America National Trust and Savings Association as syndication agent, The Chase Manhattan Bank as administrative agent, Chase Securities Inc. as book manager, and First Union National Bank as documentation agent.

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WHEREAS, on March 28, 2011 the District Court entered an order in the Claims Order Appeal [Case No. 09-807, Docket No. 5], consolidating the Claims Order Appeal with the Lead District Court Appeal Case; and
WHEREAS, on January 30, 2012, the District Court issued its Memorandum Opinion [Docket No. 165] and Order [Docket No. 166] denying or overruling all objections to the Plan and Confirmation Order, among other actions, and confirming the Plan in its entirety; and
WHEREAS, on June 11, 2012, the District Court issued its Consolidated Order Regarding Motions for Reconsideration [Docket No. 215] granting the motions of several parties to clarify or amend its Memorandum Opinion.  In conjunction with its consolidated order, the District Court issued its Amended Memorandum Opinion [Docket No. 217] and Order [Docket No. 218] clarifying and expanding the discussion in its prior opinion and, once more, denying or overruling all objections to the Plan and Confirmation Order and confirming the Plan in its entirety; and 
WHEREAS, certain parties appealed the Confirmation Order to the United States Court of Appeals for the Third Circuit (the “Third Circuit”),4 including certain appeals filed by the Bank Lender Group (the “Bank Lender Appeals”);5 and
WHEREAS, the Plan provides that the Bank Lender Group shall be paid, on the Effective Date, the principal amount of their claims (the “Principal”), plus outstanding and undisputed pre-petition interest, plus post-petition interest calculated at the rate prescribed by § 3.1.9(b)(i)(A) of the Plan (the “Plan Rate”) (the “Undisputed Interest”); and 
WHEREAS, the main dispute in the Bank Lender Appeals is whether the holders of claims under the Pre-petition Credit Facilities are entitled to postpetition interest at the contract default rate provided under the Pre-petition Credit Facilities (the “Contract Default Rate”), as opposed to postpetition interest arising from the Pre-petition Credit Facilities at the Plan Rate; and
WHEREAS, the Plan acknowledges that the claims of the Bank Lender Group are subject to a pending objection and litigation concerning the amount of post-petition interest to which they are entitled (Plan, § 3.1.9(d)(i)); and
WHEREAS, Grace and the Bank Lender Group desire to resolve the Bank Lender Appeals, including the Proofs of Claim and the Claims Order Appeal (the “Settlement”).
BASED ON THE FOREGOING, Grace (on behalf of itself and the other Grace Debtors) and the Bank Lender Group hereby agree on the following terms of the Settlement:
____________________________________________________________ 
4 Third Circuit case nos. 12-1402, 12-1403, 12-1404, 12-1405, 12-1521, 12-2807, 12-2904, 12-2917, 12-    2923, 12-2924, 12-2966, 12-2967, and 12-3143.
5Third Circuit case nos. 12-1402, 12-1403, 12-1404, 12-1405 and 12-2924.

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	I ADDITIONAL DEFINITIONS

	A.    “Final Order” shall mean an order, the operation or effect of which has not been stayed, reversed, or amended and as to which order the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue, or rehear shall have been waived in writing by all entities possessing such right, or, in the event that an appeal, writ of certiorari, or reargument or rehearing thereof has been sought, such order shall have been affirmed by the highest court to which such order was appealed, or from which reargument or rehearing was sought or certiorari has been denied, and the time to take any further appeal, petition for certiorari, or move for reargument or rehearing shall have expired; provided, however, that the possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure or any analogous rule under the Federal Rules of Bankruptcy Procedure may be filed with respect to such order shall not cause such order not to be a Final Order.

	B.    “Parties” shall mean, collectively, each of Grace, the Grace Debtors and the Bank Lender Group (each, a “Party”).

	C.    “Settlement Approval Order” shall mean an order entered by the Bankruptcy Court approving the Settlement as the result of the Motion described in Section II.C. below.
D.    “Settlement Effective Date” shall mean the day on which the Settlement Approval Order entered by the Bankruptcy Court has become a Final Order.

	
		
	II.    THE SETTLEMENT AND THE PARTIES’ OBLIGATIONS WITH RESPECT THERETO

	A.    Grace’s Settlement Payment
	On the effective date of the Plan (the “Plan Effective Date”), Grace shall transfer the following sums in Cash (as defined in the Plan) to the Agent: (a) $971 million of Principal/Undisputed Interest through December 31, 2013 (the “Plan Payment”), (b) $129 million, which includes reimbursement of the Bank Lenders Group’s legal fees (the “Settlement Payment”), and (c) interest on the Plan Payment and the Settlement Payment for the period from January 1, 2014 to the Plan Effective Date in accordance with Section II.B below ((a), (b) and (c) collectively, the “Lender Payment”).  The Lender Payment shall be in full and final satisfaction of all amounts due and owing under the Pre-petition Credit Facilities, the Proofs of Claim, the Plan, or otherwise.

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	B.    Grace’s Obligation to Pay Interest on the Plan Payment and the Settlement Payment
	(a) Beginning on January 1, 2014 and continuing until the earlier of February 1, 2014 or the Plan Effective Date, simple interest shall accrue on the Plan Payment and the Settlement Payment at the rate of 3.25% per annum.
(b) If the Plan Effective Date has not occurred by January 31, 2014, then beginning on February 1, 2014 and continuing until the Plan Effective Date, simple interest shall accrue on the Plan Payment and the Settlement Payment at the rate of 5.0% per annum.
(c) To the extent the interest paid pursuant to this Section II.B exceeds the Plan Rate, such supplemental interest is paid by the Debtors in settlement of the Debtors’ objection to the Proofs of Claim, the Claims Order Appeal and the Bank Lender Appeals.

	C.    Settlement Approval Motion
	As soon as practicable after the execution of this Settlement Agreement by the Parties, Grace shall file a motion and proposed order in the Bankruptcy Court approving the Settlement (the “Motion”), provided, however, that such Motion shall be in a form reasonably satisfactory to the Bank Lender Group.  Such Motion shall include a request that the Bankruptcy Court waive the stay provided for in Rule 6004(h) of the Federal Rules of Bankruptcy Procedure.  Grace shall in good faith use its commercially reasonable efforts to obtain, and the other Parties shall support, entry of the Settlement Approval Order at the earliest possible date in light of applicable notice requirements.  The Bank Lender Group shall support Grace’s efforts to obtain entry of the Settlement Approval Order.

	D.    Bank Lender Group’s Obligations
	Within three (3) business days of the Settlement Effective Date the Bank Lender Group shall file such documents as are appropriate in the Third Circuit to cause the Bank Lender Appeals to be withdrawn with prejudice and without costs.

	E.    Obligations of the Parties with Respect to the Bank Lender Appeals
	As soon as practicable after the execution of this Settlement Agreement by the Parties, the Parties shall jointly communicate the fact of the Settlement to the Third Circuit, and request that the Third Circuit not rule on the Bank Lender Appeal.

	
		
	III.    MISCELLANEOUS

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	A.    Retention of Jurisdiction by Bankruptcy Court
	The Bankruptcy Court shall retain exclusive jurisdiction to hear any matters or disputes arising from or relating to this Settlement Agreement.

	B.    Entire Agreement
	This Settlement Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions between Parties.  This Settlement Agreement cannot be amended, modified, or waived except by a writing signed by the Parties.

	C.    Counterparts
	This Settlement Agreement may be executed in several counterparts, each of which, when so executed, shall be deemed an original, but all of which together shall constitute one and the same instrument, and facsimile or electronic signatures transmitted to the other party shall be binding.

	D.    Joint Drafting
	For purposes of interpretation of this Settlement Agreement, the Parties shall be deemed to have jointly drafted this Settlement Agreement and this Settlement Agreement shall not be interpreted in favor or against any of the Parties because such Party or its counsel drafted this Settlement Agreement or any provision of this Settlement Agreement.

	E.    Authorization of Signatories
	The persons executing this Settlement Agreement represent that they are authorized to execute this Settlement Agreement on behalf of the Parties for whom they are signing.

	F.    Further Assurances
	In connection with this Settlement Agreement and the transactions contemplated hereby, each Party may execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform its obligations hereunder.

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	G.    Termination
	This Settlement Agreement may not be terminated unless (a) the Third Circuit rules on the Bank Lender Appeal despite this Settlement Agreement or (b) the Bankruptcy Court denies entry of the Settlement Approval Order.  If either of these events occur, any Party may terminate the Settlement Agreement by written notice to the other Parties, in which case this Settlement Agreement shall be of no force and effect; provided, however, that the Parties shall confer within 10 days after entry of any such order, and no termination notice may be given until after such conference has occurred, but such notice must be given within 14 days after such conference.

	H.    Cooperation
	The Parties shall cooperate with each other in good faith in all respects to effectuate the purposes of this Settlement Agreement.

	I.    Costs
	Each Party shall bear its own fees and costs in connection with this Settlement Agreement and the Proofs of Claim, Bank Lender Appeals and Claims Order Appeal which are being resolved by this Settlement Agreement, including attorney’s fees.

	
		
	

Dated:  December 23, 2013
	W. R. GRACE & CO. on behalf of itself and the Grace Debtors 
 
 
By   /s/ MARK A. SHELNITZ    
   Name:  Mark A. Shelnitz    
   Title: V. P. and General Counsel   

	

Dated:  December 23, 2013
	BANK LENDER GROUP 
 
 
By   /s/ ANDREW ROSENBERG    
   Name: Andrew Rosenberg    
   Title:   

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KE 28986871.10Exhibit 10.18_2013.12.31

W. R. Grace & Co.    T 410.531-4574        
7500 Grace Drive    F 410.531-4414
Columbia, MD 21044    E fred.festa@grace.com
W grace.com

Fred Festa
Chairman, President and Chief Executive Officer

Exhibit 10.18

June 19, 2009

Ms. Pamela Kaufman Wagoner

Dear Pamela:

This letter agreement specifies the terms of your employment with W. R. Grace & Co. (the “Company”), which will be presented for approval to the Board of Directors (the “Board”) of the Company and/or the Compensation Committee of the Board, as applicable, on July 1, 2009. I am extremely pleased that you have agreed to join the Company and believe that you will make a valuable contribution to the Company’s 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 is also enclosed for your records.

Position and Responsibilities

At its July 1, 2009, meeting, I will recommend that the Board elect you to the position of Vice President & Chief Human Resources Officer of the Company (and of its subsidiary, W. R. Grace & Co. - Conn.), to be effective as of your commencement of employment with the Company.  If the Board, as expected, follows my recommendation, then the following terms of this letter agreement will apply.

Your employment with the Company will commence on July 13, 2009. Your title will be “Vice President & Chief Human Resources Officer”, and you will be regarded as an “executive officer” of the Company.  (As all other Company employees, you will actually be employed by W. R. Grace & Co. - Conn., a 100% owned subsidiary of the Company, but will be elected an officer of both W. R. Grace & Co. and W. R. Grace & Co. - Conn.)

You will be an employee of the Company “at will” with no definite term of employment, and you will be subject to the same requirements as other salaried employees of the Company, except as provided under this letter agreement.

You will be head of, and responsible for, the corporate human resources functions of the Company, and you will report directly to me, in my capacity as Chairman, President and Chief Executive Officer, of the Company. Your office will be located at the Company headquarters in Columbia, Maryland.

Compensation

2    June 19, 2009

		
	1.
	Your initial annual base salary as Vice President & Chief Human Resources Officer will be $310,000.00. Thereafter, your base salary will be subject to periodic reviews on the same basis and at the same intervals as are applicable to other officers of the Company.

    
Your salary will cease to accrue immediately upon your termination of employment with the Company, regardless of the reason for such termination. (Note, however, the provisions under “Severance Pay Arrangement”.)

		
	2. 
	You will participate in the Company's Annual Incentive Compensation Program (the “AICP”). For the 2009 calendar year, your targeted award under the Program will be 60 percent of your base salary earnings during 2009, based on the applicable financial performance of the Company and your personal achievement during that year, subject to the terms of the following paragraphs.  The cash payment you actually receive under the Program for 2009 (your “2009 AICP Payment”) will be paid to you in March 2010 at the same time other Program participants receive their payments for 2009.

Under the Program, there are two financial performance targets that affect the calculation of the 2009 AICP payments for all Program participants.  First, in order for any such payment to be made to any participant, the Company must achieve a specific “earnings before income tax” target for 2009 (the “EBIT Target”).  Second, if the EBIT Target is achieved, then the amount available to be distributed to participants as 2009 AICP payments will be determined by the degree that certain cash flow targets for 2009 are achieved.  (You will receive further information concerning these targets in a separate letter.)

The amount of your 2009 AICP Payment will be pro-rated, to reflect the portion of the 2009 calendar year during which you are employed by the Company. (Since your employment will commence on July 13, 2009, the amount of your 2009 AICP Payment will be adjusted by multiplying that amount by the following fraction 5.5 / 12 (i.e., 5.5 months / 12 months.)  Also, regardless of the results of this pro-ration, you will be paid a 2009 AICP Payment of no less than $125,000, provided that the EBIT Target (and the minimum cash flow target to produce any AICP payment) is achieved for 2009.  If that Target is not achieved, you will not receive any 2009 AICP Payment, nor will any other Program participant.

Finally, the other terms governing your 2009 AICP Payment, will be the same as the terms governing the 2009 AICP payments to other Program participants.  In accordance with those terms (and notwithstanding any other provision of this letter agreement), you will only receive a 2009 AICP Payment if you are employed by the Company on the date in March 2010 when the 2009 AICP payments are made to Program participants. You will not be entitled to that Payment if you terminate your employment with the Company, or are terminated by the Company, prior to that March 2010 payment date.  

3    June 19, 2009

Please note that, with respect to future AICP awards, the Program design and incentive targets are reviewed and adjusted from time to time, as appropriate, based on Company goals and competitive practice. These and the other provisions of the Program will apply to you in the same manner as applicable to other Program participants.

		
	3.
	You will be eligible for a targeted award under the Company’s Long-Term Incentive Plan (the “LTIP”) for the 2009 - 2011 performance period and for the 2008-2010 performance period, as described in this section.  Under each LTIP, 50 percent of the total targeted award will be in the form of a cash incentive opportunity, and 50 percent will be in the form of a stock option grant.  Your targeted award value under the 2009-2011 LTIP will be $300,000; awarded as a targeted cash incentive opportunity of $150,000; and a stock option grant of 30,440 shares of Company common stock; each of which will be pro-rated for your actual time of active employment during the LTIP’s performance period.  Your targeted award value under the 2008-2010 LTIP will be $400,000; awarded as a targeted cash incentive opportunity of $200,000; and a stock option grant of 40,590 shares; each of which will be pro-rated for your actual time of active employment during the LTIP’s performance period.  The “strike price” of those options will be the market price of a share of Company common stock on the date the grant is approved by the Board – anticipated to be July 1, 2009 – or the market price on your date of hire, whichever is later.

The terms of your award under these LTIPs, will be the same as the terms governing the awards to the other participants under the applicable LTIP, including vesting schedule for the stock options and the requirement of active employment with the Company on the date an LTIP cash payment is made to the LTIP participants, in order to be entitled to such a payment.  (You will receive further information regarding the LTIPs in a separate memo.)
		
	4.
	Consistent with your election as an officer of the Company, the Board will be requested to authorize the Company to enter into a written Executive Severance Agreement, or a so-called “golden parachute”, with you. In general, the terms of that agreement will provide for a severance payment of 3.00 times the sum of your annual base salary plus your targeted annual incentive compensation award (adjusted in accordance with the terms of that agreement), 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. Please refer to the Executive Severance Agreement itself for definition of “change in control”, “employment termination” and other particulars of this arrangement.

    
Severance Pay Arrangement

If you are involuntarily terminated by the Company [without just cause or] under circumstances in which you would qualify for severance pay under the terms of the Grace Severance Pay Plan for Salaried Employees (the “Grace Severance Plan”), then you will be entitled to a severance payment 

4    June 19, 2009

of 1.5 times a dollar amount equal to your annual base salary at the time your employment is terminated. This severance pay arrangement shall be governed by the terms of the Grace Severance Plan, except of course for the calculation of the amount of severance pay. Under that Plan, the total severance payment would 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, under the current terms of the Grace Severance Plan, the entire severance payment may be paid to you in a single lump sum as soon as practical after your termination. 

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” mentioned below. Also, if you receive the severance payment described above in this letter, you will not be entitled to any other severance pay from the Company.

409A Provisions. Notwithstanding any other provision of this letter agreement to the contrary, if you become entitled to severance pay under this agreement, at a time that the Company determines that you are a “specified employee”, within the meaning of section 409A(a)(2)(B) of the Internal Revenue Code (the “Code”), you will not be paid any of that pay prior to a date that is 6 months after your “separation from service” (within the meaning of section 409A(2)(A)(i)) from the Company or your date of death if sooner; provided, however, if your employment is terminated involuntarily and you become entitled to such severance pay, then you may receive, prior to that date, an amount of severance pay under this agreement (when added to the severance benefits you receive under any other plan or program of the Company, which is deemed to be a “nonqualified deferred compensation plan” (as defined by section 409A(d)(1) of the Code), that does not exceed an amount that is 2-times the compensation limit under Code section 401(a)(17) at the time of your termination, or 2-times your annual compensation at that time, if lesser.  It is quite likely that you would be a “specified employee” if and when you become entitled to severance pay hereunder. Pamela, please note that the provisions under this paragraph do not grant you any additional benefits, but instead these provisions are solely intended to help assure that your severance benefits described above will be paid in a manner that does not violate the provisions of Code section 409A.  

Finally, please note that all payments and benefits under this letter agreement (as well as under the other agreements, programs, policies and plans of the Company) are intended to be exempt from Code section 409A or, with respect to any such payments and benefits that are not so exempt, to be in compliance with that Code section; and the provisions of this letter agreement (and those other agreements, programs, policies and plans) shall be interpreted and administered in that manner.

Sign-on Bonus

5    June 19, 2009

The Company will pay you a sign-on bonus of $225,000 on July 24, 2009 (which is the first regular Company pay date immediately following your employment start date of July 13, 2009), subject to the repayment provisions specified in the next sentence. You agree to repay to the Company the full amount of this bonus if you voluntary terminate your employment with the Company within the first 12 months of your employment, i.e., anytime prior to July 12, 2010. In that event, such repayment must be made in full, no later than your last day of active employment with the Company.

Executive Physical

You will also be eligible for an annual “executive physical” performed at Johns Hopkins Hospital in Baltimore, at Company expense.  The terms of the physical will be the same as applicable to other elected officers of the Company based in Maryland.

Other Benefit Programs

As an officer of the Company, you will also be eligible to participate in the following benefit plans and programs (subject to the continuation and the actual provisions of the plans and programs, as amended from time to time):

		
	•
	The W. R. Grace & Co. Retirement Plan for Salaried Employees (“Grace Salaried Retirement Plan”)

•    The W. R. Grace & Co. Supplemental Executive Retirement Plan
•    The W. R. Grace & Co. Salaried Employee Savings & Investment Plan
		
	•
	The W. R. Grace & Co. Savings & Investment Plan Replacement Payment Program

•    The W. R. Grace & Co. Long-Term Disability Income Plan (“LTD Plan”)
•    Executive Salary Protection Plan (“ESP Plan”)
•    The W. R. Grace & Co. Voluntary Group Accident Insurance Plan
•    The W. R. Grace & Co. Business Travel Accident Insurance Plan
•    The W. R. Grace & Co. Group Term Life Insurance Program
•    Personal Excess Liability Insurance (with a current limit of $6 million)
•    The W. R. Grace & Co. Group Medical Plan
•    The W. R. Grace & Co. Dental Plan
•    Retiree Medical Coverage

In addition, during your employment with the Company, you shall also be entitled to participate in all other employee/executive perquisites, pension and welfare benefit plans and programs made available to the Company's executives or to its employees generally, as such plans or programs may be in effect, and amended, from time to time.

Vacation

6    June 19, 2009

As an officer of the Company, you will be entitled to four weeks paid vacation per full calendar year.

Indemnification

The Company shall, to the extent permitted by applicable law, indemnify you and hold you harmless from and against any and all losses and liabilities you may incur as a result of your performance of your duties as an officer or employee of the Company. In addition, the Company shall indemnify and hold you harmless against any and all losses and liabilities that you may incur, directly or indirectly, as a result of any third party claims brought against you (other than by any taxing authority) with respect to the Company's performance of (or failure to perform) any commitment made to you under this agreement. The Company shall obtain such policy or policies of insurance as it reasonably may deem appropriate to effect this indemnification.

Confidentiality and Non-Compete Agreements

As a condition of employment, you will be required to sign the Company’s standard employment agreement (the “Standard Agreement” copy attached), which includes agreements regarding the confidentiality of Company information and non-competition, and similar provisions. To the extent that the terms of the Standard Agreement differ from the terms of this letter agreement, the terms of this letter agreement (and not the Standard Agreement) shall control your employment relationship with the Company. In addition, the provisions of item 5 of the Standard Agreement are not applicable to the terms of this letter agreement, in that the Standard Agreement does not supersede any terms of this agreement.

Miscellaneous

You and the Company acknowledge this letter agreement, and the other written agreements referred to herein, contain the entire understanding of the parties concerning the subject matter hereof. You and the Company acknowledge that this agreement supersedes any prior agreement between you and the Company concerning the subject matter hereof. Except as expressly otherwise provided herein, this agreement shall not adversely affect your rights to participate in, or receive any benefit under, any incentive, severance or other benefit plan or program in which you may from time to time participate.

If any provision of this agreement is held invalid or unenforceable in whole or in part, such provision, to the extent it is invalid or unenforceable, shall be revised to the extent necessary to make the provision, or part hereof, valid and enforceable, consistent with the intentions of the parties hereto. Any provision of this agreement that is held invalid or unenforceable, in whole or in part, shall not affect the validity and enforceability of the other provisions of this agreement, which shall remain in full force and effect.
    

7    June 19, 2009

This letter agreement may be amended, superseded or canceled only by a written instrument specifically stating that it amends, supersedes or cancels this letter, executed by you and the Company.

If you have any specific questions regarding the compensation programs and benefits noted above, please call Brian McGowan.

Pamela, again, I am very excited about your decision to join Grace and look forward to a productive and rewarding relationship.

Sincerely,

/s/ Fred

Alfred E. Festa
Chairman, President & Chief Executive Officer
W. R. Grace & Co.

Attachment

cc:    W. Brian McGowan

AGREED AND ACCEPTED:

/s/ Pamela K. Wagoner

Date:    6/19/09

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