Document:

Exhibit 10.9

SUPPLEMENT TO
PLEDGE AGREEMENT - ADDITIONAL PLEDGOR

THIS SUPPLEMENT TO
PLEDGE AGREEMENT - ADDITIONAL PLEDGOR (this “Supplement”), dated as of
September 15, 2006, is executed by BUCKEYE GP HOLDINGS L.P.,  a limited partnership formed under the laws
of the State of Delaware (the “Borrower”), in favor of SUNTRUST BANK, a
Georgia banking corporation, as Administrative Agent (the “Administrative
Agent”), on its behalf and on behalf of the other banks and lending
institutions (the “Lenders”) from time to time party to the Credit
Agreement dated as of August 9, 2006, by and
among the Borrower, the Lenders, the Administrative Agent, and SunTrust Bank as
Issuing Bank (as amended, restated, supplemented, or otherwise modified from
time to time, the “Credit Agreement”). 
Terms used herein but not defined herein shall have the meaning defined
for those terms in the Pledge Agreement (as defined below).

W I T N E S S E T
H:

WHEREAS,
MainLine Sub LLC (the “Pledgor”) executed that certain Pledge Agreement,
dated as of August 9, 2006, in favor of the Administrative Agent (as amended,
restated, supplemented or otherwise modified from time to time, the “Pledge
Agreement”), pursuant to which the Pledgor has pledged membership interests to the Administrative Agent, for itself and the benefit of
the Secured Parties;

WHEREAS,
the Pledgor merged into the Borrower, and at the request of the Administrative
Agent and Lenders, Borrower is entering into this Supplement to acknowledge
that it takes ownership of all collateral subject to the Pledge Agreement;

NOW, THEREFORE, in
consideration of the premises the Borrower hereby agrees as follows:

SECTION 1.  Pledge.   As security for the payment and performance
of the Secured Obligations, the Borrower hereby:

(a)       pledges, hypothecates, assigns, charges,
mortgages, delivers, sets over, conveys and transfers to the Administrative
Agent, for the benefit of the Secured Parties, and grants to the Administrative
Agent, for the ben­efit of the Secured Parties, a security inter­est in all of
Borrower’s right, title and interest in and to:

(i)            the membership interests of the
limited liability company (the “LLC”) more particularly described in Schedule I
hereto and the certificates, if any, evidencing such membership interests (the “Pledged
Membership Interests”) and all cash, instruments and other property from
time to time received, receivable or otherwise distributed in exchange for any
and all of such Pledged Membership Interests except as expressly provided for
in Section 8 of the Pledge Agreement;

 

(ii)           to the extent
applicable, all of Pledgor’s rights, title and interests pursuant to the
Pledged Membership Interests whether now owned or hereafter acquired, including
all of Pledgor’s rights, title and interests in, to and under such LLC’s
limited liability company agreement, operating agreement, and any other
organizational documents (as such agreements have heretofore been and may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, collectively, the “LLC Agreement”), including the right to vote
with respect to and to manage and administer the business of such LLC, together
with all other rights, interests, claims and other property of Pledgor in any
manner arising out of or relating to its membership interests in such LLC,
whatever their respective kind or character, whether they are tangible or
intangible property, and wheresoever they may exist or be located, and further
including, without limitation, (1) all rights of Pledgor to receive
distributions of any kind, in cash or otherwise, due or to become due under or
pursuant to each such LLC Agreement or otherwise in respect of such LLC, (2)
all rights of Pledgor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to each such LLC, (3) all claims of Pledgor for
damages arising out of, or for the breach of, or for a default under, each such
LLC Agreement, (4) any certificated or uncertificated security evidencing any
of the foregoing issued by such LLC to Pledgor, (5) any interest of Pledgor in
the entries on the books of any financial intermediary pertaining to Pledgor’s
interest as a member in the LLC and (6) to the extent not included in the
foregoing, all proceeds of any and all of the foregoing; and

(iii)          any additional membership
interests in such LLC from time to time acquired by Pledgor in any manner
(which membership interests shall be deemed to be part of the Pledged
Membership Interests), and any certificates representing such additional
membership interests, if any, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such membership interests.

(b)           de­livers to the
Administrative Agent, for the ben­efit of the Secured Parties, all of Borrower’s
right, title and interest in and to the certificates and instruments, if any,
evidencing the Pledged Collateral, ac­companied by instruments of transfer or
assign­ment, duly executed in blank.

SECTION 2.  Joinder.  Borrower by its signature below becomes a
Pledgor under the Pledge Agreement with the same force and effect as if
originally named therein as a Pledgor and the Borrower hereby (i) agrees
to all the terms and provisions of the Pledge Agreement applicable to it as
Pledgor thereunder and (ii) represents and warrants that the
representations and warranties made by it as a Pledgor thereunder are true and
correct on and as of the date hereof.  Each
reference to a Pledgor in the Pledge Agreement shall be deemed to include the
Borrower.  The Pledge Agreement is hereby
incorporated herein by reference.

SECTION 3.  Representations
and Warranties.  The Borrower
represents and warrants to the Administrative Agent and the Secured Parties
that this Supplement has been duly authorized, executed and delivered by it and
that each of this Supplement and the Pledge Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.

 

SECTION 4.  Binding Effect.  This Supplement shall be­come effective when
it shall have been executed by the Borrower and thereafter shall be binding
upon the Borrower and shall inure to the benefit of the Administrative Agent
and the Secured Parties.  Upon the
effective­ness of this Supplement, this Supplement shall be deemed to be a part
of and shall be subject to all the terms and conditions of  the Pledge Agreement.  The Borrower shall not have the right to as­sign
its rights hereun­der or any interest herein without the prior written consent
of the Lenders.

SECTION 5.  Governing Law.  THIS SUPPLEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF NEW YORK.

SECTION 6.  Execution in Counterparts.  This Supple­ment may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

SECTION 7.  Notices
to Borrower.  All communications and
notices hereunder shall be in writing and given as provided in Section 21
of the Pledge Agreement.  All
communications and notices hereunder to the Borrower shall be given to it at
the address set forth under its signature below, with a copy to the Borrower.

IN WITNESS WHEREOF, the Borrower has duly executed this
Supplement to the Pledge Agreement as of the day and year first above written.

	
  

  	
  BUCKEYE GP HOLDINGS L.P.

  
	
   

  	
  By: MainLine
  Management LLC, its General

  Partner

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ ROBERT B. WALLACE

  	
   

  
	
   

  	
  Name: 

  	
  Robert B. Wallace

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President -
  Finance

  	
   

  
	
   

  	
   

  	
  and Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5 Radnor Corporate Center

  
	
   

  	
  Suite 500

  
	
   

  	
  100 Matsonford Road

  
	
   

  	
  Radnor, PA 19087

  
	
   

  	
  Telecopier No.: 610/971-9296

  
	
   

  	
  Telephone No.: 610/254-4600

  
	
   

  	
  Attention: Senior Vice President, Finance

  
						

 

 

Schedule I

to

SUPPLEMENT TO PLEDGE AGREEMENT

	
  Name of LLC

  	
   

  	
  Place of

  Organization

  	
   

  	
  Pledgor’s

  Membership

  Interests

  	
   

  	
  Certificate

  No(s).

  	
   

  	
  Pledgor’s

  Percentage of

  Membership

  Interests

  Issued and

  Outstanding

  	
   

  
	
  Buckeye GP LLC

  	
   

  	
  Delaware

  	
   

  	
  100%
  of

  membership

  interest issued

  and

  outstanding

  	
   

  	
  0

  	
   

  	
  100

  	
  %Exhibit
10.1

2006-2008 Long-Term Cash Award

	
  Granted to:

  	
   

  	
  «Firstname» «Lastname»

  
	
  Effective Date of Grant:

  	
   

  	
  November 3, 2006

  
	
  Targeted Award:

  	
   

  	
  «Target»

  
	
  Performance Period:

  	
   

  	
  January 1, 2006 — December 31, 2008

  

 

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 Award set forth above, over the Performance Period.

You will earn this
Targeted 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 Cash Award, the Committee has
full and sole jurisdiction, subject to the provisions of Annex C.

Long-Term Cash
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

  
	
   

  	
   

  	
   

  	
   

  	
  CEO, President

  
	
   

  	
   

  	
   

  	
   

  	
  Acceptance of the foregoing is acknowledged this
  ____________ day of _______________, 2006.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Signature of Participant)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Please print full name)

  

 

 

Annex B

CALCULATION
OF 2006-2008 LTIP

Your 2006-2008 LTIP 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
2005 results as the base year.

The core earnings before interest and taxes (core
EBIT) in 2005 was $201.5 million.  The
chart below details six scenarios at different assumed growth rates.  The target growth is highlighted.

 

	
  Assumed

  Growth

  	
   

  	
  Base

  Period

  	
   

  	
  Performance Period

  Growth Targets

  	
   

  	
  Total

  Growth 

  	
   

  	
  LTIP

  	
   

  	
  Cumulative

  Reported

  	
   

  
	
  Rates

  	
   

  	
  2005

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  	
  06-08 (1)

  	
   

  	
  Pool

  	
   

  	
  Earnings (2)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    1.50%

  	
   

  	
  201.5

  	
   

  	
  204.5

  	
   

  	
  207.6

  	
   

  	
  210.7

  	
   

  	
  622.8

  	
   

  	
    3.0

  	
   

  	
  619.8

  	
   

  
	
    3.00%

  	
   

  	
  201.5

  	
   

  	
  207.5

  	
   

  	
  213.8

  	
   

  	
  220.2

  	
   

  	
  641.5

  	
   

  	
    5.9

  	
   

  	
  635.6

  	
   

  
	
    6.00%

  	
   

  	
  201.5

  	
   

  	
  213.6

  	
   

  	
  226.4

  	
   

  	
  240.0

  	
   

  	
  680.0

  	
   

  	
  11.8

  	
   

  	
  668.2

  	
   

  
	
  10.00%

  	
   

  	
  201.5

  	
   

  	
  221.7

  	
   

  	
  243.8

  	
   

  	
  268.2

  	
   

  	
  733.7

  	
   

  	
  14.3

  	
   

  	
  721.9

  	
   

  
	
  15.00%

  	
   

  	
  201.5

  	
   

  	
  231.7

  	
   

  	
  266.5

  	
   

  	
  306.5

  	
   

  	
  804.7

  	
   

  	
  17.3

  	
   

  	
  792.9

  	
   

  
	
  25.00%

  	
   

  	
  201.5

  	
   

  	
  251.9

  	
   

  	
  314.8

  	
   

  	
  393.6

  	
   

  	
  960.3

  	
   

  	
  23.6

  	
   

  	
  948.5

  	
   

  

(1)             All
results include full recognition/accrual of Annual Incentive Compensation
Program and, for achievement levels above 6% (i.e., 10%, 15%, and 25%), all
totals include accruals for Long-Term Incentive Program Payments

(2)             Cumulative
Reported Earnings represent the 3-year core EBIT earnings required at the
respective assumed growth rates.  Up to
the first $11.8 million (target CAGR 6%) is deducted from reported results.  Payouts over target ($11.8 million) must be
accrued as part of reported earnings.

 

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 2006-2008
LTIP, cash payments will be made in two installments — 50% of what is earned
based on current performance at the end of 2007, but no more than 50% of target
for the first two years, will be paid in March 2008, and the balance will be
paid in March 2009.

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 2008 would be $6,800, 50% of what is
earned.

 

	
  CAGR Level

  Achieved

  	
   

  	
  Payout in

  March 2008

  	
   

  	
  Payout in

  March 2009

  	
   

  	
  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

2006-2008
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, 2006 and 

 1
 

 

will end on December 31,
2008.  Performance Periods with respect
to different Long-Term Cash Awards to the same individual 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- 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 Award”: The
amount of cash award specified in writing for a Participant as his or her “Targeted
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.

 2
 

 

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
Change in Control of the Company, or transfer of employment to a buyer of any
business 

 3
 

 

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 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
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.

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 

 4
 

 

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.

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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.

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.

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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 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.

 7
 

 

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 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

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