Exhibit 10.2 [RPM Letterhead] - -------------------------------------------------------------------------------- RONALD A. RICE VICE PRESIDENT - ADMINISTRATION ASSISTANT SECRETARY April 12, 2002 Mr. James A. Karman Vice Chairman RPM, INC. P.O. Box 777 Medina, OH 44258 RE: Succession and Post-Retirement Consulting Dear Jim: During the past year, as you are well aware, the Compensation Committee, on behalf of the entire Board, has been engaged in a thorough review of the executive management transition and succession process. In order to facilitate a smooth and orderly transition of responsibilities within RPM's executive management team upon your retirement on January 1, 2003, the Compensation Committee has considered and recommended that RPM retain your continued services as a Consultant. The significant events leading up to your retirement and the overall terms of your consulting relationship with RPM have been mutually agreed to as follows: 1) Effective October 11, 2002 you will step down as Vice Chairman of RPM. However, you have agreed to continue to serve as Board member in Class II until the expiration of that term or until a successor has been duly elected. 2) Effective January 1, 2003, you will retire from employee status. 3) For the seventeen (17) month period, January 1, 2003 through May 31, 2004 (the "Consulting Period"), you have agreed to maintain a commitment to RPM by utilizing your professional experience and business relationships to assist in the area of investor relations (or such other areas), as may be reasonably requested from time-to-time by the Company. The Compensation Committee has recognized and RPM agrees that your continued commitment beyond retirement, as a Consultant, will bring meaningful value to the Company and its shareholders. Given the material benefits to RPM, the Company has agreed to the following compensation and benefits transition and structure: 1. EMPLOYMENT AGREEMENT DATED FEBRUARY 1, 2001 -- By the terms of this Agreement, and coincident with your retirement date, your Employment Period will expire on January 1, 2003. Accordingly, you will no longer be entitled to further payment of your active employee Base Salary and will no longer be entitled to participate in the Benefit Plans, except as required by law, the terms of the Benefit Plans, or as provided for during the Consulting Period (see below). 4/12/02 PAGE 2 2. CONSULTING PERIOD -- During the seventeen (17) month Consulting Period, the Company will pay you a gross amount of $970,417 (which will be paid in equal monthly installments throughout the Consulting Period) for your services as Consultant and Board Member. In addition, during the Consulting Period, you will also be entitled to the following benefits at the Company's sole cost and expense: a. Use of your current Company Car, whereupon at the end of the Consulting Period, the Company will purchase and transfer full ownership to you; b. Continued coverage under the Company's Health Insurance Plan for you and your eligible dependent; c. Continued payment of the standard monthly membership dues during the Consulting Period for one country club, and the quarterly membership dues for The Union Club; and d. Continuation of financial planning services, as currently provided. The Company believes the arrangements described above provide RPM with assurance of an orderly and effective transition and provides the management team continued access to your unique knowledge, insights and experience. This letter constitutes the entire agreement concerning this subject matter and supersedes all prior and contemporaneous agreements, if any. Sincerely yours, RPM, INC. /s/ Ronald A. Rice Ronald A. Rice Vice President -- Administration and Assistant Secretary cc Compensation Committee Frank C. Sullivan P. Kelly Tompkins --------------------------------------------------------------------------- I HAVE READ, UNDERSTAND AND ACCEPT ALL OF THE TERMS AND CONDITIONS AS SET FORTH IN THIS LETTER AGREEMENT. /s/ James A. Karman May 24, 2002 ------------------------------ -------------- (Signature) Date /s/ Mary Hall Crawford 5-24-02 ------------------------------ -------------- (Witness) Date