Exhibit 10.1
[letterhead of W. R. Grace & Co.]
May 1, 1995
Mr. Albert J. Costello
417 Devonshire Drive
Franklin Lakes, NJ 07417
Dear Mr. Costello:
On behalf of the Board of Directors of W. R. Grace &
Company (the "Board"), I am pleased to welcome you. This let-
ter sets forth the terms on which you have agreed to be em-
ployed by the Company effective as of May 1, 1995.
Positions: Chairman of the Board, President, Chief
Executive Officer and member of the Board
Starting Date: May 1, 1995 as President and Chief
Executive Officer. Election to the
Board will be promptly after the Company's
1995 Annual Meeting.
Term: Through April 30, 1998; in May of 1997, the
Board will notify you of its intention re-
garding renewal or nonrenewal of your em-
ployment.
Base Salary: $900,000 per year, subject to annual review.
Bonus: For the period May 1 to December 31, 1995
-- minimum $900,000, payable after year-
end.
1996 and thereafter -- subject to perfor-
mance under the Annual Incentive Compensa-
tion Plan or a successor plan.
PAGE
Mr. Albert J. Costello
May 1, 1995
Page 2
Stock Options: Non-statutory stock options to purchase
300,000 shares to be granted under the 1994
Stock Incentive Plan, at the market price
on May 1, 1995, to vest as follows:
100,000 shares -- May 1, 1996
100,000 shares -- May 1, 1997
100,000 shares -- May 1, 1998
Long-Term In-
centive Plans: Effective May 1, 1995 (and based on May 1,
1995 stock price), participation on same
basis as other senior executives of the
Company (prorated from May 1, 1995) for
1993-1995, 1994-1996 and 1995-1997 cycles.
Participation on the same basis as other
senior executives of the Company beginning
with 1996-1998 cycle.
Insurance: Whole life policy, premium paid by Company,
providing coverage of two times base salary
Pension: Participation in all qualified and non-
qualified pension, retirement and savings
plans on the same basis as other senior
executives of the Company
Relocation: Payment of customary relocation expenses,
including temporary housing, closing costs
and moving expenses
Change of
Control: Change of control severance protection on
the same terms as other senior executives
of the Company
Other: Comprehensive program of executive ben-
efits, stock options and perquisites on the
same basis as other senior executives of
the Company
Physical: We understand that you had a complete
physical examination in late 1994, the re-
sults of which were satisfactory
PAGE
Mr. Albert J. Costello
May 1, 1995
Page 3
It is intended that you and the Company will enter
into a more formal employment agreement as soon as possible,
which will incorporate the terms of this letter and such other
terms and provisions as are appropriate for contracts of this
nature and are approved by the Board or its authorized desig-
nees.
If the foregoing correctly expresses our agreement,
please so indicate by signing the enclosed copy of this letter
in the space provided below and returning it to the Company.
W. R. GRACE & CO.
By:/s/ Thomas A. Holmes
Thomas A. Holmes
AGREED AND ACCEPTED:
/s/ Albert J. Costello
Albert J. Costello