Exhibit 10.27
GRACE
XXXX X. XXXXXX
Chairman, President & Chief Executive
Officer
X. X. Xxxxx & Co.
0000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
Fax: (000) 000-0000
email xxxx.x.xxxxxx@xxxxx.xxx
November 17, 2003
Xx. Xxxxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Dear Xxxx:
This letter agreement specifies the terms of your employment with X. X. Xxxxx &
Co. (the "Company") as President and Chief Operating Officer (collectively, the
"COO"), which was approved by the Company's Board of Directors (the "Board") and
Compensation Committee of the Board on November 6, 2003. In addition, this
agreement was authorized by the U. S. Bankruptcy Court with jurisdiction over
the Company's Chapter 11 cases on November 13, 2003.
Also, please note that I have agreed with the Board to relinquish the title of
"President" of the Company, effective as of your first day of employment with
the Company, which is today, November 17, 2003. I am extremely pleased that you
will be joining the Company and believe you will make a valuable contribution to
our 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 of
this letter is also enclosed for your records.
RESPONSIBILITIES
Your employment with the Company begins today, November 17, 2003. (As all other
Company Headquarters employees, you will actually be employed by X. X. Xxxxx &
Co.-Xxxx., but will be an elected officer of both X. X. Xxxxx & Co. and X. X.
Xxxxx & Co.-Xxxx.) Your title will be "President and Chief Operating Officer" of
the Company, and you will report directly to me.
Your principal obligations, duties and responsibilities will be those generally
inherent in the office and title of COO. In that regard, each of the Company's
businesses will report directly to you, including Xxxxxxx Catalysts, Xxxxxxx
Silicas and Grace Performance Chemicals. Your office will be located at the
Company's Headquarters in Columbia, Maryland.
Xxxxxx X. Xxxxx November 17, 2003 Page 2
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TERM OF AGREEMENT
The term of your employment under this letter agreement will be for a period of
three years, beginning on the date your employment with the Company commences,
November 17, 2003, and ending on November 16, 2006 (such period is referred to
in this agreement as your "Initial Employment Term").
If your employment as COO of the Company (or in any other position) continues
after the Initial Employment Term, and no other contrary arrangements have been
mutually agreed in writing between you and the Board, then the arrangements
described in this agreement will be discontinued and you will be an employee of
the Company "at will" subject to the same requirements as similarly situated
employees of the Company at that time, except as provided under the following
section entitled "Severance Pay Arrangement".
COMPENSATION
1. Your initial annual base salary as COO will be $550,000.00. Thereafter,
your base salary will be subject to periodic reviews on the same basis and
at the same intervals as are applicable to other senior officers of the
Company.
Your salary will cease to accrue immediately upon your termination of
employment with the Company, even if your termination occurs during your
Initial Employment Term and whether or not your termination is voluntary.
(Note, however, the provisions under "Severance Pay Arrangement.")
2. You will be eligible to participate in the Company's Annual Incentive
Compensation Program. For 2003 and 2004, your targeted award under the
Program will be 100% of your base salary earned during the applicable
calendar year. For 2005 and thereafter, your targeted award will be 75% (or
greater, as determined by the Board) of your annual base salary earned
during the applicable calendar year. Any payments to you under the Program
will be made at the same time and in the same manner as payments to other
participants in the Program. Under the Program, awards for a calendar year
are generally paid during March of the following calendar year. A Program
participant is not entitled to payment of an award for a calendar year, if
the participant is not an active employee of the Company on the date the
award is actually paid. Awards under this Program are subject to Board
approval and are contingent upon individual performance and financial
results of the Company. In general, the amount of award paid to any
participant may range from 0% to 200% of the participant's targeted award
for the year, depending on individual performance and the extent to which
the Company achieves (or surpasses) certain financial goals. These and the
other provisions of the Program will apply to you in the same manner as
applicable to other Program participants, except as specified below with
regard to an award for 2003.
3. Notwithstanding the foregoing, the award payment you will receive under the
Annual Incentive Compensation Program for 2003 will not be less than the
result of the following calculation: your targeted award for that year
(i.e., 100% of your annual base salary as of December 31, 2003), multiplied
by a fraction where the numerator is the number of days during 2003 that
you are an employee of the Company and the denominator is 365. However, as
indicated above, you will only receive a payment
Xxxxxx X. Xxxxx November 17, 2003 Page 3
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under the Program for 2003 if you are an active employee of the Company on
the date that the payments for that year are made to all participants in
March 2004.
4. As described in this paragraph, you will be eligible for a targeted award
under the Company's currently effective Long-Term Incentive Plans (the
"LTIPs") for the following performance periods: 2002-2004 and 2003-2005.
The amount of the targeted award applicable to you under each of those
LTIPs shall be $687,000 (i.e., 125% of your starting annual base salary).
However, any award payment to which you become entitled under any of the
LTIPs shall be pro-rated to reflect the percentage of days during the
applicable performance period that you were an active employee of the
Company.
In all other respects, the terms of each of your LTIP awards shall be the
same as the terms governing the awards of the other participants under the
applicable LTIP.
You shall also be considered for awards under any other stock or cash based
incentive programs maintained by the Company during your employment, at
such times such awards are considered for other senior officers of the
Company or at such other times the Board deems appropriate, at the sole
discretion of the Board.
5. Consistent with your election as an officer of the Company, the Company
will enter into an Executive Severance Agreement with you. In general, the
terms of that agreement would provide for a severance payment of 3 times
the sum of your annual base salary plus your targeted annual incentive
compensation award, 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. A copy of the
Agreement has previously been provided to you.
SEVERANCE PAY ARRANGEMENT
If your employment is terminated by the Company without "Cause" (as defined
below) or by you as a result of "Constructive Discharge" (as defined below),
during your Initial Employment Term, you will be entitled to the severance
payment described in the next sentence. The severance payment will be 1.5 times
a dollar amount equal to 175% of your annual base salary at the time your
employment is terminated. The severance payment may 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, the entire severance payment may be paid to
you in a single lump-sum as soon as practical after your termination (if
approved by the Compensation Committee). In all other respects, your severance
pay arrangement shall be governed by the terms of the X. X. Xxxxx & Co.
Xxxxxxxxx Pay Plan for Salaried Employees.
You will also be entitled to the severance payment described in the prior
paragraph if you decide to terminate your employment with the Company in the
event that the Board does not offer you the position of Chief Executive Officer
of the Company following my departure from the Company, and elects another
individual as my successor to that position; provided that you comply with the
notice requirements specified in the next sentence. In order to be
Xxxxxx X. Xxxxx November 17, 2003 Page 4
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entitled to the severance payment under these circumstances, you must comply
with the following notification requirements: (1) you must deliver to the
Chairman of the Compensation Committee of the Board (the "Comp Committee
Chairman") written notice of your intention to terminate your employment (your
"Termination Notice") no later than 30 days after the date the Company publicly
announces that the Board has elected another individual as my successor as Chief
Executive Officer and (2) your Termination Notice must specify your last date of
employment with the Company, which must be no earlier than 30 days, and no later
than 90 days, after the date your Termination Notice is delivered to the Comp
Committee Chairman. Of course, if and when these circumstances arise, you and
the Board may agree in writing to alternative arrangements regarding your
employment status and the appropriate notice requirements.
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" described below.
Also, if you receive a severance payment under this letter agreement, you will
not be entitled to any other severance pay from the Company.
DEFINITION OF CAUSE
"Cause", for purposes of this letter agreement, means:
(i) Commission by you of a criminal act (i.e., any act which, if successfully
prosecuted by the appropriate authorities would constitute a crime under
State or Federal law) or of willful misconduct (including but not limited
to violating written policies of the Company), which has had or will have
a direct material adverse effect upon the business affairs, reputation,
properties, operations or results of operations or financial condition of
Company,
(ii) Refusal or failure of you to comply with the mandates of the CEO or the
Board (unless any such mandates by the CEO or the Board constitute
Constructive Discharge, and you have determined to terminate your
employment as a result thereof), or failure by you to substantially
perform your duties as COO, other than such failure resulting from your
total or partial incapacity due to physical or mental illness, which
refusal or failure has not been cured within 30 days after notice has
been given to you, or
(iii) Material breach of any of the terms of this agreement by you, which
breach has not been cured within 30 days after notice has been given to
you.
DEFINITION OF CONSTRUCTIVE DISCHARGE
"Constructive Discharge," for purposes of this letter agreement, means the
occurrence of any of the following without your prior written consent:
(i) any demotion from the position of COO of the Company (provided that this
provision shall not apply if you are appointed or elected to one or more
other positions within the Company that are in addition to your position
as COO, at the same time that you retain the COO position);
Xxxxxx X. Xxxxx November 17, 2003 Page 5
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(ii) the relocation of your principle office to a location more than 35 miles
away from the current site of the Company's Headquarters in Columbia,
Maryland;
(iii) any material diminution in your level of authority from that of COO or
any assignment to you of any duties that are not consistent with the
position of COO; other than authority or duties that (i) may be
appropriate to another position with the Company that you hold in
addition to the position of COO, (ii) are assigned to you as a result of
your election as CEO, (iii) result from any requirement or request from
the CEO or the Board that is reasonably related to your position as COO
(or any other position you may hold with the Company at the time you
retain your position as COO), or (iv) results from an inadvertent failure
or oversight of the CEO or Board that is remedied within 30 days after
your written notice thereof has been received by the "Comp Committee
Chairman" (as defined above);
(iv) the Company imposes upon you compensation arrangements that do not comply
with this letter agreement; or
(v) any material breach of this letter agreement by the Company.
Notwithstanding the forgoing:
o any termination of employment by you will not be deemed to be a
termination as a result of Constructive Discharge, unless (i) you provide
to the Comp Committee Chairman written notice of your decision to
terminate your employment that sets forth in reasonable detail the
specific conduct or occurrence that you deem constitutes Constructive
Discharge and the specific provision of this letter agreement upon which
you rely and (ii) the Company does not cure such conduct or occurrence
within 30 days after such notice has been received by the Chairman;
o your right to terminate your employment on the basis of Constructive
Discharge shall be deemed waived by you if you do not provide such notice
to the Comp Committee Chairman within 60 days after you become aware of
all material facts regarding the conduct or occurrence that your deem
constitutes Constructive Discharge.
OTHER BENEFIT PROGRAMS
As a senior 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):
o The X. X. Xxxxx & Co. Retirement Plan for Salaried Employees ("Grace
Salaried Retirement Plan")
o The X. X. Xxxxx & Co. Supplemental Executive Retirement Plan
o The X. X. Xxxxx & Co. Salaried Employee Savings & Investment Plan
o The X. X. Xxxxx & Co. Savings & Investment Plan Replacement Payment
Program
o The X. X. Xxxxx & Co. Long-Term Disability Income Plan ("LTD Plan")
o Executive Salary Protection Plan ("ESP Plan")
o The X. X. Xxxxx & Co. Voluntary Group Accident Insurance Plan
o The X. X. Xxxxx & Co. Business Travel Accident Insurance Plan
o The X. X. Xxxxx & Co. Group Term Life Insurance Program
o Personal Excess Liability Insurance
Xxxxxx X. Xxxxx November 17, 2003 Page 6
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o The X. X. Xxxxx & Co. Group Medical Plan
o The X. X. Xxxxx & Co. Dental Plan
o Retiree Medical Coverage
In addition, during your employment with the Company, you shall also be entitled
to participate in all other employee/executive perquisite, pension and welfare
benefit plans and programs made available to the Company's senior level
executives or to its employees generally, as such plans or programs may be in
effect, and amended, from time to time.
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 hereunder in accordance
with the provisions of this letter agreement (except those liabilities that
result from any behavior by you that is enumerated in the "Cause" definition of
this agreement). 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, if reasonably available, such policy or policies of insurance as
it reasonably may deem appropriate to effect this indemnification.
DISPUTE RESOLUTION
Any dispute, controversy or claim arising out of or relating to this letter
agreement, or a breach thereof, shall be settled by arbitration in accordance
with the laws of the State of Maryland, without respect to the conflict of laws
rules thereof, and the arbitration shall be conducted in Maryland or such other
location as the Company and you may mutually agree in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as such
rules are in effect in New York, NY on the date of the delivery of a demand for
arbitration, which shall be effectuated by the demanding party providing notice
to the other party in accordance with the provisions below under the heading
"Notices". The parties expressly acknowledge that they are waiving their rights
to seek remedies in court, including without limitation the right (if any) to a
jury trial.
There shall be three arbitrators, one to be chosen by each party at will within
10 business days from the date of delivery of demand for arbitration and the
third arbitrator to be selected by the two arbitrators chosen. If the two
arbitrators are unable to select a third arbitrator within 10 business days
after the last of the two arbitrators is chosen by the parties, the third
arbitrator shall be designated, on application by either party, by the American
Arbitration Association.
The decision of a majority of the arbitrators shall be final and binding on the
parties and their respective heirs, executors, administrators, personal
representatives, successors and assigns. Judgment upon any award of the
arbitrators may be entered in any court of competent jurisdiction, or
application may be made to any such court for the judicial acceptance of the
award and for an order of enforcement.
Xxxxxx X. Xxxxx November 17, 2003 Page 7
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RELOCATION
As specified above, your office will be located in Columbia, Maryland, which
will require you to relocate to the Columbia area. Therefore, you will be
entitled to receive principal residence relocation assistance under the
Company's relocation policy applicable to the relocation of active employees. A
copy of that policy has previously been provided to you.
FINANCIAL COUNSELING PROGRAM
As an officer of the Company, you will be eligible to participate in the
Company's Financial Counseling Program. This Program provides you with financial
and estate planning and income tax preparation assistance. The Company will pay
up to $4,000 per calendar year for reasonable, supportable expenses, except that
the maximum amount for the first year of your participation will be $9,000.
COMPANY CAR
The Company will arrange for you to lease, at the Company's expense, an
automobile for use on Company business and for your personal use. The terms of
the coverage will be the same as those provided for other officers of the
Company, including a purchase price cap of $50,000.
EXECUTIVE PHYSICAL PROGRAM
As an officer of the Company, you will be eligible to receive a Company-paid
annual executive physical examination.
NOTICES
Except as otherwise provided herein, you and the Company agree that any notices
and other communications permitted or required under this letter agreement shall
be in writing and shall be given by hand delivery to the other party or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight courier service, addressed as follows:
If to you:
Xxxxxx X. Xxxxx
X. X. Xxxxx & Co.
0000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Company:
X. X. Xxxxx & Co.
Attention: General Counsel
0000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxx November 17, 2003 Page 8
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or to such other addresses as either party furnishes to the other in writing in
accordance with this notice provision. Notices and communications shall be
effective when actually received by the addressee.
NO MITIGATION; NO SET OFF
In the event of any termination of employment hereunder, you shall be under no
obligation to seek other employment and there shall be no offset against any
amounts due to you under this letter agreement on account of any remuneration
attributable to any subsequent employment you may obtain. The amounts payable
hereunder shall not be subject to setoff, counterclaim, recoupment, defense or
other right which the Company may have against you.
SUCCESSORS
Except as otherwise provided herein, this letter agreement is personal to you,
and without the prior written consent of the Company shall not be assignable by
you other than by will or the laws of descent and distribution. This agreement
shall inure to the benefit of and be enforceable by your legal representatives.
This agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns. Except as provided herein, this agreement shall not
be assignable by the Company without your prior written consent. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. "Company" means the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this agreement by operation of law
or otherwise.
SURVIVORSHIP
The respective rights and obligations of the parties hereunder shall survive any
termination of your employment to the extent necessary to effect those rights
and obligations.
VACATION
As an officer of the Company, you shall be entitled to four weeks paid vacation
per full calendar year of employment with the Company.
LEGAL FEES
The Company will also reimburse you for reasonable legal expenses, not to exceed
$10,000, which you incur with respect to reviewing this letter agreement.
CONFIDENTIALITY AND NON-COMPETE AGREEMENTS
In order to commence employment with the Company, you will be required to sign
the Company's standard employment agreement (the "Standard Agreement"), which
includes agreements regarding the confidentiality of Company information and
non-competition, and similar provisions.
Xxxxxx X. Xxxxx November 17, 2003 Page 9
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You and the Company agree that, to the extent that the terms the Standard
Agreement differ from the terms of this letter agreement, then the terms of this
letter agreement (and not the Standard Agreement) shall control your employment
relationship with the Company, and that 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 supercede any terms of this letter agreement. A copy
of the Standard Agreement that you will be required to sign has previously been
provided to you.
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 right 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 provision of this
agreement, which shall remain if full force and effect.
This letter agreement may be amended, superseded or canceled only by a written
instrument specifically stating that it amends, supersedes or cancels this
agreement, executed by you and the Company.
If you have any questions regarding any expectations of your new position,
please call me.
If you have any questions regarding the compensation and Company benefit plans
and programs, please feel free to call W. Xxxxx XxXxxxx, Senior Vice President,
Administration, at (000) 000-0000.
Xxxxxx X. Xxxxx November 17, 2003 Page 10
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Xxxx, we are very excited about your joining the Grace organization and look
forward to a productive and mutually rewarding relationship.
Sincerely,
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Chairman, President & Chief Executive Officer
X. X. Xxxxx & Co.
Attachment
cc: X. X. XxXxxxx
AGREED AND ACCEPTED:
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
11/17/2003
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Date
