XXXXX Xxxxxx X. Xxxxxxxx
Chairman, President & CEO
X. X. Xxxxx & Co.
0000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, XX 00000-0000
Tel: (000)000-0000
Tel: (000)000-0000
August 3, 1998
Xx. Xxxxxx X. Xxxxx
Xxx Xxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Dear Bob:
This letter agreement specifies the terms of your consulting
arrangement with X. X. Xxxxx & Co.-Xxxx. ("Xxxxx"), which will commence on
September 1, 1998 (i.e., immediately after you retire as an active employee of
Grace). You will serve as a consultant to Grace, at the request of X. X. Xxxxx
& Co., a Delaware corporation (and the parent of Grace). If you agree with the
terms of this letter, please sign where indicated below and return this letter
to me.
Services And Base Compensation
As you and I have discussed, your duties as a consultant to Xxxxx will
include assisting Xxxxx (and X. X. Xxxxx & Co.) with respect to the management
of asbestos- related litigation, as well as other litigation, involving Xxxxx
and X. X. Xxxxx & Co., and their subsidiaries and affiliates, and other
projects mutually agreed to by you and Xxxxx's General Counsel (the
"Litigation/Projects"). You will report to, and receive assignments from, the
General Counsel of Grace (or his designee).
During the "Initial Term" (as defined below) you will be available to
perform services for a total of 910 hours. (In counting such hours, travel time
to-and-from work locations -- e.g., the Boca Raton office, time on airplanes or
other modes of transportation -- will not be counted.) You will maintain
regular office hours at a Grace office in Boca Raton, Florida, as agreed
between you and Xxxxx's General Counsel. You will be provided by Xxxxx with
office space and secretarial support for those office hours, at that location,
at no cost to you.
As compensation for the services that you provide hereunder during the
Initial Term you will receive $150,000, accruing and payable in 24 equal
bi-monthly installments (each in the gross amount of $6,250). As further
compensation for those services, you may receive an award described under the
"Additional Compensation" section below.
2
If, during the Initial Term, you perform services under this
consulting agreement for more than 910 hours, you will receive an additional
payment for each additional hour. That additional payment, along with the
manner of payment, will be agreed between you and Grace, when (and if) it
becomes clear that your services will be required for more than 910 hours
during the Initial Term. (The payments specified in the immediately preceding
paragraph, and any additional compensation amount payable to you under this
paragraph, are collectively referred to as your "Base Compensation".)
In no event may your Base Compensation during the Initial Term exceed
$300,000.
In order to effectuate these Base Compensation provisions, it will, of
course, be necessary for you to keep Xxxxx apprised of the hours you perform
services hereunder. Therefore, as soon as practicable after the end of each
calendar month during the Initial Term, you will report, in writing (in a
manner acceptable to Grace), to Xxxxx's General Counsel the actual number of
hours you performed services hereunder during the preceding calendar month,
along with a brief description of the specific services performed.
Grace will reimburse you for reasonable and necessary (which terms
shall be interpreted in accordance with Xxxxx's practices with respect to its
senior officers) expenses (including travel expenses) directly related to
services performed by you for Grace pursuant to this letter agreement. In
addition, you will be entitled to the following prerequisites on the same basis
as senior officers of Grace: an annual executive physical, financial planning
advice and a company car, to the same extent that these items are available to
Grace senior officers. Also, if you travel on Grace business by air, you will
be permitted to fly first-class. Reimbursement of authorized expenditures will,
of course, be made only upon you providing itemized records of those
expenditures and related receipts that are acceptable to Xxxxx. Periodically,
you will submit to Xxxxx's General Counsel a statement (in a form that is
acceptable to Xxxxx) that specifies a list of the reimbursable expenses
incurred by you that are related to such services and the appropriate records
and receipts regarding such expenses.
Term
The initial term of your consulting arrangement under this letter
agreement will be for a period of 1 year commencing on September 1, 1998 (the
"Commencement Date") and ending on August 31, 1999 (the "Initial Term Ending
Date") (such initial term is referred to in this letter agreement as the
"Initial Term"). The term of your consulting agreement may be extended for
succeeding periods on terms agreed by you and Xxxxx.
This letter agreement will terminate and your Base Compensation will
cease to accrue immediately upon your failure or inability to observe or
perform your agreements, duties or responsibilities hereunder (including your
voluntary cessation of services hereunder), as determined by Xxxxx. Further,
this letter agreement and your consulting arrangement is subject to termination
by Xxxxx or you at any time for any reason, upon at least 60 days' notice to
the other party. Upon such termination, your Base Compensation shall cease to
accrue.
3
Additional Compensation
Effective August 31, 1998, you will be awarded 40,000 additional
compensation units (the "Initial Units"). If you continue as a consultant under
this letter agreement until the Initial Term Ending Date, the 40,000 Initial
Units will become non-forfeitable as of that Date. Depending on your
performance during the Initial Term, the Grace Compensation Committee may
increase the number of Initial Units awarded to you by an amount not exceeding
25%. Any such increase will be based upon the recommendation of Xxxxx's General
Counsel. That recommendation will be based upon the General Counsel's
evaluation of your overall performance as a consultant and your contribution to
the financial condition of Grace and its parent.
If, before the Initial Term Ending Date, Grace terminates your
consulting arrangement (except as provided in the next paragraph), or if you
die or become unable to perform your consulting duties as a result of your
physical disability (as determined by Xxxxx), then the above-mentioned 40,000
Initial Units (which may be increased by a number not exceeding 25%, by the
Compensation Committee, in accordance with the immediately preceding paragraph)
will nevertheless become non-forfeitable as of the Initial Term Ending Date.
(In the event of your death, the Initial Units will become non-forfeitable on
behalf of, and exercisable by, your estate.)
If, before the Initial Term Ending Date, you voluntarily terminate
your consulting arrangement, or if Grace terminates your consulting arrangement
because of your failure to observe or perform your agreements, duties or
responsibilities hereunder (as determined by Xxxxx), then no Initial Units will
be awarded to you.
If the Initial Units become non-forfeitable, you may elect to receive
a payment (or payments) from Grace, as a result of a valid election on any
business day during the "Election Period" (as defined below). Each such payment
will be calculated in accordance with the following formula: the price of a
share of X. X. Xxxxx & Co. Common Stock ("Grace Common Stock") on the NYSE at
the close of business on a date elected by you in accordance with the election
procedures described below (the "Election Date") minus $17.03125 (which was the
average price of such a share on July 9, 1998).
The election procedure that you must follow in order to make a valid
election to exercise any number of Initial Units is as follows: Xxxxx's highest
ranking human resources official (or his or her designee) must receive your
written request to exercise a specific number of Initial Units, between 8:30
a.m. and 4:00 p.m. on the business day you propose to exercise any number of
Initial Units (i.e., the proposed Election Date). That written request (which
may be faxed) must be signed by you. Regarding any such request received by
Xxxxx after 4:00 p.m. on any business day, the Election Date will be the next
following business day. Once submitted, such a request may not be revoked. (You
should note that it will be your responsibility to assure that Xxxxx receives
your written election in a timely manner. Therefore, you may wish to call Xxxxx
to confirm receipt, if you fax or otherwise send the election to Xxxxx.)
4
Any payment due to you as a result of a valid election will be made as
soon as practicable after the Election Date (and you will not be permitted to
defer any payment due as a result of such an election).
If your first valid election to exercise Initial Units contains a
request to exercise less than 100% of your Initial Units, then you may exercise
your remaining (i.e., unexercised) Initial Units in one or more subsequent
elections during the Election Period. Each Initial Unit may only be exercised
once.
Elections may be made only during the Election Period, and you will
forfeit all rights to all unexercised Initial Units and payments attributable
thereto, as of 4:00 p.m. on the last day of the Election Period.
Notwithstanding the foregoing, you will forfeit all rights to all
unexercised Initial Units, and payments attributable thereto, if at any time
you engage in actions that are injurious to Grace (or its parent or
subsidiaries), monetarily or otherwise, or if you fail to adhere to any
agreement between you and Grace (or its parent or subsidiaries).
If any event occurs, before or after the Initial Term Ending Date,
which results in an adjustment with respect to options on Grace Common Stock
held by Grace employees, then the above formula will be equitably adjusted as
determined by the Grace Compensation Committee consistent with the adjustment
made with respect to such options. In all other respects, if any determinations
or clarifications are necessary or appropriate to the administration of, or
payments related to, Initial Units, that Committee will be solely responsible
for providing those determinations and clarifications, and its good-faith
determinations and clarifications will be binding on you, Xxxxx and all other
interested parties.
"Exercise Period" means the period commencing on the Initial Term
Ending Date and ending on the 3rd anniversary of that Date.
Additional Arrangements
At your request, Xxxxx will maintain for you subscriptions to
work-related professional publications, at a cost not to exceed $1,000 during
any 12-month period during the term of this letter agreement.
For the term of this agreement, you will be covered under the
"Directors and Officers" liability insurance policies, and general liability
(including excess liability) insurance policies, maintained by Xxxxx, on the
same terms as applicable to senior officers of Xxxxx. If you would like to
discuss the provisions of that coverage, please call Xxxx Xxxxxx.
5
Business Travel Accident Insurance
You will be covered, at no cost to you, for $600,000 under Xxxxx's
Business Travel Accident Insurance Plan applicable to outside directors and
consultants. If you would like to discuss the provisions of that coverage,
please call Xxxx Xxxxxx. You will not, of course, be entitled to participate in
any other employee benefit program maintained by Xxxxx for active employees. Of
course, any Grace employee benefits inuring to you as a result of your prior
employment with Xxxxx are not affected by the terms of this letter agreement.
General
The following provisions of this letter agreement shall survive the
termination of this letter agreement.
You will not (except in the performance of your duties under this
letter agreement) at any time make or cause to be made any copies or summaries
of any reports, manuals, records or other printed or otherwise recorded
materials of any kind belonging to, or in the possession of, Grace or any
parent or affiliate of Grace. You will have no right or interest in any such
material, and you agree that (except in the performance of your services
hereunder), you will not, without prior written consent of Xxxxx, remove any
such material from any premises of Grace or any parent or affiliate of Grace,
and that you will surrender all such material to Grace immediately upon the
termination of this letter agreement or any time prior to such termination upon
the request of Xxxxx.
Without the prior written consent of Xxxxx, you will not at any time
(whether during or after the term of this letter agreement):
(i) use for your own benefit or purposes, or for the benefit or
purposes of any other person, firm, corporation or business
entity, or
(ii) disclose (except in the performance of your duties under this
letter agreement) in any manner to any person, firm, corporation
or business entity,
any trade secrets, data, knowledge or information belonging to, or relating to
the affairs of, Grace or any parent, subsidiary or affiliate of Grace.
Notwithstanding any other provision of this letter agreement to the
contrary, this letter agreement does not supersede, but is in addition to, any
non-competition or confidentiality agreement or understanding between you and
Grace or any parent, subsidiary or affiliate of Grace. The rights and remedies
of Grace under this letter agreement are independent of, and separate and
distinct from, its rights and remedies under any such other agreement or
understanding, and no default or termination under any such other agreement or
understanding shall in any way affect the obligations of you or the rights and
remedies of Grace under this letter agreement.
6
You will promptly disclose to Grace (and to no one else) all
improvements and ideas that relate to the Litigation/Projects, which are made
or conceived by you alone or in conjunction with others during the term of this
letter agreement, or made or conceived within one year after the termination of
this letter agreement.
This letter agreement may be amended or superseded, and any of its
terms may be waived, only by a written instrument signed by you and Xxxxx
specifically stating that it amends or supersedes this letter agreement, or
waives any such term.
All services under this letter agreement will be performed by you as
an independent contractor, and not as an employee of Grace. During the term of
your consulting arrangement, you are, of course, not authorized to: (i) enter
into contracts on behalf of Xxxxx or (ii) otherwise commit Grace to any legally
binding obligations.
No representation, promise or inducement has been made by or on behalf
of you or Grace related to your consulting arrangement that is not set forth in
this letter agreement.
You acknowledge that Xxxxx's remedy at law for any breach of any of
your duties or obligations enumerated under this "General" section would be
inadequate, that damages would be difficult or impossible to ascertain, and
that you consent that temporary and permanent injunctive relief may be granted
in accordance with equity in any proceeding which may be brought to enforce any
provision of this section without the necessity of proof of actual damage.
The failure of either you or Grace to require performance of the other
party's duties or obligations under this letter agreement at any time shall in
no manner affect either party's right to enforce any provision of this letter
agreement at a subsequent time, and the waiver by you or Grace of any right
arising out of any breach of this letter agreement shall not be construed as a
waiver of any right arising out of any other or subsequent breach of this
letter agreement.
If the scope of any restriction contained in this letter agreement is
too broad to permit enforcement of such restriction to its full extent, then
such restriction shall be enforced to the maximum extent permitted at law and
in equity, and in that event, you hereby consent that such scope may be
judicially modified accordingly in any proceeding brought to enforce such
restriction.
7
This letter agreement is governed by and construed and enforced in
accordance with the laws of the State of New York, other than the
conflict-of-laws provisions of that State that would otherwise require the
application of the law of any other jurisdiction.
Bob, I look forward to working with you in your new capacity as a
consultant working on the Litigation/Projects.
Sincerely,
Accepted and Agreed to: Accepted and Agreed
by X. X. Xxxxx & Co.
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