W R Grace & Co · 10-12B · On 3/13/98

Filed On 3/13/98   ·   SEC File 1-13953   ·   Accession Number 950123-98-2517

Registration of Securities (General Form)   ·   Form 10
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-12B      Grace Specialty Chemicals, Inc.                      173    978K 
 2: EX-4.1      Form of Rights Agreement                              34    157K 
 3: EX-10.1     Form of Employee Benefits Allocation Agreement        19     78K 
 4: EX-10.2     Form of Tax Sharing Agreement                         27     93K 
 5: EX-10.20    Form of Executive Severance Agreement                 23     64K 
 6: EX-10.25    Option Agreement                                       2     13K 
 7: EX-21       Subsidiaries of New Grace                              8     33K 

10-12B   ·   Grace Specialty Chemicals, Inc.
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

 FORM 10

 GENERAL FORM FOR REGISTRATION OF SECURITIES
 PURSUANT TO SECTION 12(b) OR 12(g) OF
 THE SECURITIES EXCHANGE ACT OF 1934
 -----------------------

 GRACE SPECIALTY CHEMICALS, INC.
 (TO BE RENAMED W. R. GRACE & CO.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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                DELAWARE                               65-0773649             
    (STATE OR OTHER JURISDICTION OF       (I.R.S. EMPLOYER IDENTIFICATION NO.)
     INCORPORATION OR ORGANIZATION)                                           

          ONE TOWN CENTER ROAD                                                
          BOCA RATON, FLORIDA                            33486                
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)             

 REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561)362-2000
--------------------

 SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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          TITLE OF EACH CLASS            NAME OF EACH EXCHANGE ON WHICH
          TO BE SO REGISTERED            EACH CLASS IS TO BE REGISTERED
          -------------------            ------------------------------
                                                                       
COMMON STOCK, PAR VALUE $0.01 PER SHARE     NEW YORK STOCK EXCHANGE    
    PREFERRED SHARE PURCHASE RIGHTS         NEW YORK STOCK EXCHANGE    

 SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE

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 GRACE SPECIALTY CHEMICALS, INC.

I. INFORMATION INCLUDED IN INFORMATION STATEMENT AND INCORPORATED IN FORM 10 BY 
REFERENCE 

CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

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ITEM                                                                                                    
NO.           ITEM CAPTION                          LOCATION IN PROXY STATEMENT                         
----          ------------                          ---------------------------                         
                                                                                                        
1.    Business............................ "SUMMARY"; "THE SPIN-OFF -- Manner of Effecting the          
                                           Spin-off"; "BUSINESS OF NEW GRACE AND GRACE SPECIALTY        
                                           CHEMICALS"; and "Management's Discussion and Analysis of     
                                           Results of Operations and Financial Condition (included      
                                           in Annexes F and G)."                                        

2.    Financial Information............... "GRACE SUMMARY SELECTED FINANCIAL DATA"; "NEW GRACE PRO      
                                           FORMA FINANCIAL INFORMATION"; "Management's Discussion       
                                           and Analysis of Results of Operations and Financial          
                                           Condition (included in Annexes F and G)"; "Annex F"; and     
                                           "Annex G."                                                   

3.    Properties.......................... "BUSINESS OF NEW GRACE AND GRACE SPECIALTY CHEMICALS."       

4.    Security Ownership of Certain                                                                     
          Owners and Management........... "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS"; and       
                                           "SECURITY OWNERSHIP OF MANAGEMENT."                          

5.    Directors and Executive Officers.... "MANAGEMENT"; and "LIABILITY AND INDEMNIFICATION OF DIRECTORS
                                           AND OFFICERS."                                               

6.    Executive Compensation.............. "Annex E."                                                   

7     Certain Relationships and Related                                                                 
          Transactions.................... "CERTAIN RISK FACTORS"; "THE SPIN-OFF -- Relationships after 
                                           the Spin-off"; "MANAGEMENT"; "BUSINESS OF NEW GRACE AND      
                                           GRACE SPECIALTY CHEMICALS -- Legal Proceedings and           
                                           Regulatory Matters"; and "Annex E."                          

8.    Legal Proceedings................... "BUSINESS OF NEW GRACE AND GRACE SPECIALTY CHEMICALS -- Legal
                                           Proceedings and Regulatory Matters."                         

9.    Market Price of and Dividends on                                                                  
          the Registrant's Common Equity                                                                
          and Related Stockholder                                                                       
          Matters......................... "SUMMARY"; "CERTAIN RISK FACTORS"; and "THE SPIN-OFF --      
                                           Listing and Trading of New Grace Common Stock."              

11.   Description of Registrant's                                                                       
          Securities to be Registered..... "DESCRIPTION OF NEW GRACE CAPITAL STOCK"; and "CERTAIN       
                                           ANTI-TAKEOVER PROVISIONS."                                   

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ITEM                                                                                                    
NO.           ITEM CAPTION                          LOCATION IN PROXY STATEMENT                         
----          ------------                          ---------------------------                         
                                                                                                        

12.   Indemnification of Directors and                                                                  
          Officers........................ "LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS."   

13.   Financial Statements and                                                                          
          Supplementary Data.............. "GRACE SUMMARY SELECTED FINANCIAL DATA"; "NEW GRACE PRO FORMA
                                           FINANCIAL INFORMATION"; "Management's Discussion and Analysis
                                           of Results of Operations and Financial Condition (included in
                                           Annexes F and G)"; "Annex F"; and "Annex G."                 

15.   Financial Statements and Exhibits.                                                                
          (a) Financial Statements and                                                                  
          Schedules....................... "GRACE SUMMARY SELECTED FINANCIAL DATA"; "NEW GRACE PRO FORMA
                                           FINANCIAL INFORMATION"; "Annex F"; and "Annex G."            

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 II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT

Item 10. Recent Sales of Unregistered Securities                                

   On August 12, 1997, Grace Specialty Chemicals, Inc. ("New Grace")
         issued 1,000 shares of its common stock to W. R. Grace & Co. ("Grace"),
       its direct parent, for consideration of $1,000. In the opinion of New
Grace, this transaction is exempt from registration under the 
       Securities Act of 1933, as amended, by virtue of Section 4(2) thereof
in that such transaction did not involve any public offering. 

Item 14. Changes in and Disagreements with Accountants on Accounting and        
Financial Disclosure.                                                           

None.                                                         

Item 15. Financial Statements and Exhibits.                                     

(a)  Financial Statements:                                    

                The following financial statements are filed as part of this
Registration Statement:                     

(1) CAPITALIZATION                          

(2) GRACE SUMMARY SELECTED FINANCIAL DATA   

         (3) NEW GRACE PRO FORMA SUMMARY FINANCIAL INFORMATION

(4) PRO FORMA FINANCIAL INFORMATION         

                  (A) Unaudited Pro Forma Condensed Consolidated Balance
Sheet                       

                    (B) Unaudited Pro Forma Condensed Consolidated Statement
of Operations               

                   (C) Notes to Unaudited Pro Forma Condensed Consolidated
             Balance Sheet and Statement of Operations

                (5) ANNEX F (W. R. Grace & Co. Financial Information for the
Year Ended December 31, 1996)       

                (6) ANNEX G (W. R. Grace & Co. Financial Information for the
Quarter Ended September 30, 1997)   

Financial Statement Schedules:              

  Supplemental schedules are omitted because of the absence of the
conditions under which they are required.                     

(b)  Exhibits:                                                

              2.1  Form of Distribution Agreement, by and among Grace, W. R.
                   Grace & Co.-Conn. ("Grace-Conn.") and New Grace (attached
                   as Annex B to the Joint Proxy Statement/Prospectus, dated
                     February 13, 1998, of Grace and Sealed Air Corporation (the
"Joint Proxy Statement/ Prospectus")) 

              3.1  Form of Amended and Restated Certificate of Incorporation
          of New Grace (attached as Annex A to New Grace's
             Information Statement, dated February 13, 1998 (the
"Information Statement"))             

                3.2  Form of Amended and Restated By-Laws of New Grace (attached
  as Annex B to the Information Statement)

              *4.1  Form of Rights Agreement, by and between New Grace and The
Chase Manhattan Bank, as Rights Agent 

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     4.2  Indenture, dated as of September 29, 1992, among
                    Grace-Conn., Grace and Bankers Trust Company (incorporated
                 by reference to Exhibit 4.2 to Grace's Annual Report on
         Form 10-K for the year ended December 31, 1992)

            4.3  Supplemental Indenture, dated as of September 24, 1996,
                   among Grace-Conn., Grace, Grace Holding, Inc. and Bankers
                     Trust Company, to Indenture, dated as of September 29, 1992
                   (incorporated by reference to Exhibit 4.4 to Grace's Form
8-K filed October 10, 1996)           

                4.4  Indenture, dated as of January 28, 1993, among Grace-Conn.,
                     Grace and The Bank of New York (successor to NationsBank of
                     Georgia, N.A.) (incorporated by reference to Exhibit 4.4 to
               Grace's Annual Report on Form 10-K for the year ended
December 31, 1992)                    

            4.5  Supplemental Indenture, dated as of September 24, 1996,
                    among Grace-Conn., Grace, Grace Holding, Inc. and The Bank
                 of New York, to Indenture, dated as of January 28, 1993
                   (incorporated by reference to Exhibit 4.5 to Grace's Form
8-K filed October 10, 1996)           

         *10.1  Form of Employee Benefits Allocation Agreement, by and
among Grace, Grace-Conn. and New Grace

     *10.2  Form of Tax Sharing Agreement, by and among Grace,
Grace-Conn. and Sealed Air Corporation

            10.3  Form of New Grace 1998 Stock Incentive Plan (attached as
                Annex C to the Information Statement) 10.4 Form of New
                   Grace 1998 Stock Plan for Nonemployee Directors (attached
  as Annex D to the Information Statement)

             10.5  Grace 1996 Stock Incentive Plan, as amended (incorporated
                   by reference to Exhibit 10.1 to Grace's Form 10-Q for the
period ended March 31, 1997)          

            10.6  Grace 1996 Stock Retainer Plan for Nonemployee Directors
                    (incorporated by reference to Exhibit 10.2 to Grace's Form
8-K filed October 10, 1996)           

            10.7  Grace Supplemental Executive Retirement Plan, as amended
                (incorporated by reference to Exhibit 10.03 to Grace's
                    Annual Report on Form 10-K for the year ended December 31,
1996)                                 

      10.8  Grace Executive Salary Protection Plan, as amended
                (incorporated by reference to Exhibit 10.04 to Grace's
                    Annual Report on Form 10-K for the year ended December 31,
1996)                                 

             10.9  Grace 1981 Stock Incentive Plan, as amended (incorporated
                by reference to Exhibit 10.3 to Grace's Form 8-K filed
October 10, 1996)                     

             10.10 Grace 1986 Stock Incentive Plan, as amended (incorporated
                by reference to Exhibit 10.4 to Grace's Form 8-K filed
October 10, 1996)                     

             10.11 Grace 1989 Stock Incentive Plan, as amended (incorporated
                by reference to Exhibit 10.5 to Grace's Form 8-K filed
October 10, 1996)                     

             10.12 Grace 1994 Stock Incentive Plan, as amended (incorporated
                by reference to Exhibit 10.6 to Grace's Form 8-K filed
October 10, 1996)                     

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               10.13 Forms of Stock Option Agreements (incorporated by reference
                    to Exhibit 10(h) to Grace's Annual Report on Form 10-K for
the year December 31, 1991)           

       10.14 Information concerning Grace Incentive Compensation
              Program, Deferred Compensation Program and Long-Term
                    Incentive Program (incorporated by reference to pages 7-12
                   and 26-36 to Grace's Proxy Statement filed April 7, 1997)

              10.15 Form of Long-Term Incentive Program Award (incorporated by
                     reference to Exhibit 10.13 to Grace's Form S-1 filed August
2, 1996)                              

              10.16 Form of Stock Option Agreements (incorporated by reference
                    to Exhibit 10.14 to Grace's Form S-1 filed August 2, 1996)

           10.17 Grace Retirement Plan for Outside Directors, as amended
                (incorporated by reference to Exhibit 10.13 to Grace's
                    Annual Report on Form 10-K for the year ended December 31,
1996)                                 

           10.18 Form of Executive Severance Agreement between Grace and
             officers elected prior to May 1996 (incorporated by
                     reference to Exhibit 10.22 to Grace's Form S-1 filed August
2, 1996)                              

           10.19 Form of Executive Severance Agreement between Grace and
                officers elected in or after May 1996 (incorporated by
                     reference to Exhibit 10.23 to Grace's Form S-1 filed August
2, 1996)                              

          *10.20 Form of Executive Severance Agreement between Grace and
officers                              

          10.21 Employment Agreement, dated as of May 1, 1995, between
                    Grace and Albert J. Costello (incorporated by reference to
                     Exhibit 10.1 to Grace's Form 10-Q for the period ended June
30, 1995)                             

           10.22 Amendment dated August 9, 1996 to Employment Agreement,
              dated as of May 1, 1995, between Grace and Albert J.
                Costello (incorporated by reference to Exhibit 10.7 to
  Grace's Form 8-K filed October 10, 1996)

          10.23 Option Agreement between Grace and Albert J. Costello,
                     dated May 1, 1995, as amended (incorporated by reference to
                  Exhibit 10.8 to Grace's Form 8-K filed October 10, 1996)

          10.24 Option Agreement between Grace and Albert J. Costello,
                   dated March 6, 1996 (incorporated by reference to Exhibit
         10.37 to Grace's Form S-1 filed August 2, 1996)

         *10.25 Option Agreement between Grace and Albert J. Costello,
dated March 5, 1997                   

           10.26 Employment Agreement, dated as of May 15, 1995, between
                 Grace and Larry Ellberger (incorporated by reference to
                     Exhibit 10.28 to Grace's Annual Report on Form 10-K for the
year ended December 31, 1996)         

         10.27 Restricted Stock Award Agreement, dated June 6, 1995,
                 between Grace and Larry Ellberger, as amended by letter
                   agreement, dated August 26, 1996, between Larry Ellberger
                  and Grace (incorporated by reference to Exhibit 10.29 to
               Grace's Annual Report on Form 10-K for the year ended
December 31, 1996)                    

            10.28 Letter Agreement, dated December 10, 1996, between Grace
                   and Larry Ellberger (incorporated by reference to Exhibit
                  10.30 to Grace's Annual Report on Form 10-K for the year
ended December 31, 1996)              

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         10.29 Distribution Agreement by and among Grace, a New York
                     corporation subsequently renamed Fresinius National Medical
                  Care Holdings, Inc., Grace-Conn. and Fresinius AG, dated
                     February 4, 1996 (incorporated by reference to Exhibit 2 to
  Grace's Form 8-K filed February 6, 1996)

               10.30 Form of Indemnification Agreement between Grace and certain
                  directors (incorporated by reference to Exhibit 10.39 to
Grace's Form S-1 filed August 2, 1996)

               10.31 Form of Indemnification Agreement between Grace and certain
                  directors (incorporated by reference to Exhibit 10.37 to
               Grace's Annual Report on Form 10-K for the year ended
December 31, 1996)                    

             10.32 364-Day Credit Agreement, dated as of May 16, 1997, among
                Grace-Conn., Grace, the several banks parties thereto,
                    NationsBank, N.A. (South), as documentation agent, and The
                Chase Manhattan Bank, as administrative agent for such
                     banks (incorporated by reference to Exhibit 10.1 to Grace's
       Form 10-Q for the period ended June 30, 1997)

     10.33 Credit Agreement, dated as of May 16, 1997, among
                    Grace-Conn., Grace, the several banks parties thereto, and
                    The Chase Manhattan Bank, as administrative agent for such
                     banks (incorporated by reference to Exhibit 10.2 to Grace's
       Form 10-Q for the period ended June 30, 1997)

*21    Subsidiaries of New Grace                    

------------------                                                              
* Filed herewith                                                                

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 SIGNATURE

       Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be   
signed on its behalf by the undersigned, thereunto duly authorized.             

                                   GRACE SPECIALTY CHEMICALS, INC.

                             By:/s/ Albert J. Costello
                                           ---------------------------------
                                   Name:  Albert J. Costello
                          Title: President

March  13, 1998                                                                 

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INFORMATION STATEMENT 
GRACE SPECIALTY CHEMICALS, INC. 
(TO BE RENAMED W. R. GRACE & CO.) 
COMMON STOCK

W. R. Grace & Co. (Grace) is sending you this Information Statement,  
together with a Joint Proxy Statement/ Prospectus that describes the proposed   
combination of Grace's packaging business with the business of Sealed Air       
Corporation (Sealed Air). Grace intends to combine these businesses by first    
transferring all of its specialty chemicals businesses to a new company, Grace  
Specialty Chemicals, Inc. (New Grace), spinning off New Grace to Grace          
stockholders (the Spin-off), and then combining with Sealed Air (the Merger). We
refer to Grace after the Spin-off and the Merger as "New Sealed Air."           

    This Information Statement relates to the shares of New Grace that will be
issued to you in the Spin-off. It provides important information about New      
Grace. You should read the entire document carefully. For information about New 
Grace's businesses, earnings and financial position, please review "Business of 
New Grace and Grace Specialty Chemicals" beginning on page 23 and the pro forma 
financial information beginning on page 16. You should also pay particular      
attention to the information set forth in "Certain Risk Factors" beginning on   
page 11. For more detailed information on the transactions, including the       
proposals relating to the Spin-off and the Merger that will be considered at    
Grace's special meeting of stockholders, see the Joint Proxy                    
Statement/Prospectus.                                                           

     If completed, the Spin-off and Merger will result in the following changes:

GRACE STOCKHOLDERS WILL OWN:                                                    

- 100% of New Grace; and                                              

    - a 63% equity interest in New Sealed Air, through ownership of New Sealed
Air common and convertible preferred stock.                       

NEW GRACE WILL:                                                                 

- own and operate Grace's specialty chemicals businesses;             

 - retain Grace's asbestos, environmental and certain other liabilities;

   - receive approximately $1.2 billion from Grace (the Cash Transfer) prior
to the Spin-off; and                                              

- be renamed "W. R. Grace & Co."                                      

NEW SEALED AIR WILL:                                                            

 - own and operate Grace's packaging business and the business of Sealed
Air;                                                              

 - be recapitalized so that Grace stockholders will own shares of common
      stock of New Sealed Air and shares of a new series of voting convertible
     preferred stock of New Sealed Air (with stockholders of Sealed Air also
receiving shares of New Sealed Air common stock in the Merger);   

 - retain the obligation to repay the approximately $1.2 billion of debt
used to finance the Cash Transfer; and                            

- be renamed "Sealed Air Corporation."                                

     The diagrams on the following pages show the effects of these transactions.

     These transactions will occur only if they are approved by the stockholders
of Grace and Sealed Air and the parties either satisfy or waive the other       
conditions described in the Joint Proxy Statement/Prospectus. The Spin-off and  
Merger are expected to be tax-free to Grace and its stockholders for U.S.       
federal income tax purposes.                                                    

 We expect New Grace's stock to be listed on the New York Stock Exchange
under the symbol "GRA."                                                         
------------------------

 NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS DETERMINED IF THIS DOCUMENT IS ACCURATE OR ADEQUATE OR APPROVED  
THE NEW GRACE COMMON STOCK TO BE ISSUED. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.                                                               
------------------------

THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A  
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.                                 

The date of this Information Statement is February 13, 1998.

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The following diagrams illustrate the proposed transactions in general
terms and are not comprehensive. For a more complete description of the proposed
transactions, see "The Spin-off" on page 14 of this Information Statement and   
"The Distribution and Merger Agreements" on page 65 of the Joint Proxy          
Statement/Prospectus.                                                           

[CURRENT STRUCTURE FLOW CHART]

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[CASH TRANSFER FLOW CHART AND SPINOFF FLOW CHART] 
---------------                                                                 

* Grace and a packaging subsidiary will borrow a total of approximately $1.2    
billion and transfer the borrowed funds to New Grace or a subsidiary of New 
Grace.                                                                      

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[RECAPITALIZATION FLOW CHART AND MERGER FLOW CHART] 

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[POST-TRANSACTION STRUCTURE FLOW CHART] 

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NEW GRACE INFORMATION STATEMENT 

TABLE OF CONTENTS 

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                                                                PAGE
                                                                ----
                                                                    
QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS................      4 
SUMMARY.....................................................      5 
  New Grace.................................................      5 
  The Spin-off and the Merger...............................      5 
  Tax Consequences of the Spin-off..........................      6 
  Certain Risk Factors......................................      6 
CAPITALIZATION..............................................      7 
GRACE SUMMARY SELECTED FINANCIAL DATA.......................      8 
NEW GRACE PRO FORMA SUMMARY FINANCIAL INFORMATION...........     10 

CERTAIN RISK FACTORS........................................     11 
  No Operating History as an Independent Company............     11 
  Asbestos-Related Matters..................................     11 
  No Prior Market for New Grace Common Stock................     11 
  Dividend Policy and Share Repurchases.....................     12 
  Restrictions on New Grace to Protect Tax-Free Treatment...     12 
  Certain Anti-Takeover Provisions..........................     13 
  Environmental Matters.....................................     13 
  Competition...............................................     13 

THE SPIN-OFF................................................     14 
  Manner of Effecting the Spin-off..........................     14 
  Certain Federal Income Tax Consequences...................     14 
  Conditions; Termination...................................     14 
  Relationships after the Spin-off..........................     15 
  Listing and Trading of New Grace Common Stock.............     15 

REGULATORY MATTERS..........................................     15 

PRO FORMA FINANCIAL INFORMATION.............................     16 
  Unaudited Pro Forma Condensed Consolidated Balance                
     Sheet..................................................     16 
  Unaudited Pro Forma Condensed Consolidated Statement of           
     Operations.............................................     17 
  Notes to Unaudited Pro Forma Condensed Consolidated               
     Balance Sheet and Statement of Operations..............     21 

BUSINESS OF NEW GRACE AND GRACE SPECIALTY CHEMICALS.........     23 
  Overview and Strategy.....................................     23 
  Specialty Chemicals Industry Overview.....................     23 
  Products and Markets......................................     24 
  Research Activities.......................................     27 
  Patents and Other Intellectual Property Matters...........     27 
  Environmental, Health and Safety Matters..................     27 
  Legal Proceedings and Regulatory Matters..................     28 
  Properties................................................     33 

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                                                                ----
                                                                    
MANAGEMENT..................................................     35 
  Board of Directors........................................     35 
  Committees of the Board of Directors......................     37 
  Compensation of Directors.................................     37 
  Executive Officers........................................     38 
  Executive Compensation and Employee Benefits prior to the         
     Spin-off...............................................     38 
  Executive Compensation and Employee Benefits following the        
     Spin-off...............................................     38 
  Compensation Committee Interlocks and Insider                     
     Participation..........................................     39 

CERTAIN AGREEMENTS BETWEEN NEW SEALED AIR AND NEW GRACE.....     40 

CERTAIN RELATIONSHIPS AND TRANSACTIONS......................     40 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.............     41 

BENEFICIAL OWNERSHIP OF MANAGEMENT..........................     41 

DESCRIPTION OF NEW GRACE CAPITAL STOCK......................     42 
  Authorized Capital Stock..................................     42 
  New Grace Common Stock....................................     42 
  New Grace Preferred Stock.................................     42 
  New Grace Rights..........................................     42 
  Preemptive Rights.........................................     44 

CERTAIN ANTI-TAKEOVER PROVISIONS............................     45 
  Classified Board of Directors.............................     45 
  Number of Directors; Removal; Filling Vacancies...........     46 
  No Stockholder Action by Written Consent; Special                 
     Meetings...............................................     46 
  Advance Notice Provisions for Stockholder Nominations and         
     Stockholder Proposals..................................     46 
  New Grace Preferred Stock.................................     47 
  Rights to Purchase Securities and Other Property..........     48 
  Amendment of Certain Provisions of the New Grace                  
     Certificate of Incorporation and the New Grace                 
     By-laws................................................     49 
  New Grace Rights..........................................     49 
  Certain Anti-Takeover Features............................     49 
  Anti-Takeover Statute.....................................     49 

LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS.....     51 
  Limitation of Liability of Directors......................     51 
  Indemnification of Directors and Officers.................     51 
  Certain Other Information.................................     52 

WHERE STOCKHOLDERS CAN FIND MORE INFORMATION................     53 

STOCKHOLDER PROPOSALS.......................................     53 

INDEX OF DEFINED TERMS......................................     54 

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ANNEXES                                                                    
A    --   Form of Amended and Restated Certificate of Incorporation of     
            New Grace.................................................  A-1
B    --   Form of Amended and Restated By-laws of New Grace...........  B-1
C    --   Form of New Grace 1998 Stock Incentive Plan.................  C-1
D    --   Form of New Grace 1998 Stock Plan for Nonemployee                
            Directors.................................................  D-1
E    --   Grace 1997 Proxy Excerpt....................................  E-1
F    --   Grace Financial Information for the Year Ended December 31,      
            1996 (including the Consolidated Financial Statements,         
            Financial Summary and Management's Discussion and Analysis     
            of Results of Operations and Financial Condition).........  F-1
G    --   Grace Financial Information for the Quarter Ended September      
            30, 1997 (including the Third Quarter Financial Statements     
            and Management's Discussion and Analysis of Results of         
            Operations and Financial Condition).......................  G-1

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS

Q.  WHEN WILL THE SPIN-OFF OF NEW GRACE OCCUR?                                  

A.  We expect to complete the Spin-off shortly after the Grace and Sealed Air   
stockholder meetings, late in the 1998 first quarter, so long as Grace  
stockholders approve the Spin-off and Merger, and other conditions      
   (including approval of the Merger by Sealed Air stockholders) are satisfied
or waived.                                                              

Q.  WHAT WILL BE NEW GRACE'S BUSINESSES?                                        

A.  After the Spin-off, New Grace will operate the specialty chemicals          
businesses currently owned by Grace: Grace Davison, Grace Construction  
 Products and Darex Container Products. Please read the information on New
Grace's business and the associated risks beginning on pages 11 and 23. 

Q.  WHAT WILL I RECEIVE IN THE PROPOSED TRANSACTIONS?                           

A.  As a result of the Spin-off, for every share of Grace common stock you own, 
you will receive one share of New Grace common stock, together with an  
associated preferred share purchase right similar to the rights you have
  with your existing Grace shares. Just before the Merger, your Grace common
stock will be recapitalized (the Recapitalization). As a result of the  
   Recapitalization, Grace stockholders will also receive shares of New Sealed
 Air common and convertible preferred stock representing, in total, 63% of
    New Sealed Air. Within a few weeks after the transactions are completed, you
will receive your New Grace common stock and written instructions for   
exchanging your existing Grace common stock for shares of New Sealed Air
common and convertible preferred stock.                                 

Q.  DO I HAVE TO PAY TAXES ON THE RECEIPT OF NEW GRACE COMMON STOCK?            

A.  The Spin-off is expected to be tax-free to Grace stockholders for U.S.      
   federal income tax purposes. After the transactions are completed, you will
    receive information on the allocation of your tax basis among your shares of
    New Grace and New Sealed Air. To review the tax consequences of the Spin-off
and Merger in greater detail, see the Joint Proxy Statement/Prospectus. 

Q.  WILL NEW GRACE PAY DIVIDENDS?                                               

A.  New Grace is not currently expected to pay dividends.                       

Q.  WILL MY NEW GRACE STOCK BE LISTED ON THE NEW YORK STOCK EXCHANGE?           

A.  Yes, we anticipate that New Grace common stock will be listed for trading   
under the symbol "GRA."                                                 

Q.  WHAT DO I NEED TO DO NOW?                                                   

A.  Complete, sign and mail your proxy card in the enclosed return envelope as  
soon as possible, so that your shares will be represented at the Grace  
   stockholder meeting. YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATES AT THIS
    TIME. If you continue to hold your Grace shares at the time of the Spin-off,
   you will automatically receive New Grace shares. After the Merger, you will
receive instructions for exchanging your Grace stock for New Sealed Air 
common and convertible preferred stock, as well as cash instead of      
fractional shares, as described in the Joint Proxy Statement/Prospectus.

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SUMMARY 

     This summary highlights selected information from this document. It may not
contain all of the information that is important to you. To better understand   
the transactions, and for a more complete description of the Spin-off and the   
Merger, you should carefully read this entire document, the Joint Proxy         
Statement/Prospectus and the other documents we refer to. See "Where            
Stockholders Can Find More Information."                                        

   If you have questions about Grace or New Grace or your holdings in either
company, please contact:                                                        

W. R. Grace & Co.       
One Town Center Road    
Boca Raton, FL 33486    
(800) 354-8917          

NEW GRACE (SEE PAGE 23)                                                         

New Grace will be the parent company of W. R. Grace & Co.-Conn. (Grace
Specialty Chemicals*), which is primarily engaged in specialty chemicals        
businesses on a worldwide basis. Grace Specialty Chemicals primarily operates   
through the following three units:                                              

    - Grace Davison manufactures catalysts, including fluid cracking catalysts
that "crack" crude oil into transportation fuels and other        
petroleum-based products, as well as polyolefin catalysts that are
  critical in the manufacture of polyethylene resins for plastic film,
high-performance pipe and household containers. Grace Davison also
  manufactures silica and zeolite adsorbents, which are used in a wide
      variety of products, such as plastics, toothpastes, paints and insulated
       glass, as well as in the refining of edible oils. Grace Davison accounted
for approximately 43% of Grace Specialty Chemicals' 1996 sales and
revenues from continuing operations.                              

  - Grace Construction Products produces construction chemicals, including
     performance-enhancing concrete admixtures, cement additives and masonry
    products; and specialty building materials, including fireproofing and
waterproofing materials. Grace Construction Products accounted for
     approximately 25% of Grace Specialty Chemicals' 1996 sales and revenues
from continuing operations.                                       

 - Darex Container Products produces container and closure sealants that
     protect food and beverages from bacteria and other contaminants, extend
     shelf life and preserve flavor, and coatings used in the manufacture of
     cans and closures. Darex Container Products accounted for approximately
       16% of Grace Specialty Chemicals' 1996 sales and revenues from continuing
operations.                                                       

   Grace Specialty Chemicals' strategy has been and, following the Spin-off,
will be to enhance stockholder value by profitably growing its specialty        
chemical businesses on a global basis and achieving high levels of financial    
performance. To achieve these objectives, Grace Specialty Chemicals plans to (i)
use the funds to be received in the Cash Transfer to repay borrowings and to    
invest in its businesses; (ii) invest in research and development activities,   
with the goals of introducing new value-added products and services and         
enhancing manufacturing processes; (iii) make selected strategic acquisitions;  
and (iv) continue to implement process improvements and cost-management         
initiatives, including rigorous controls on working capital and capital         
spending. These plans are designed to make Grace Specialty Chemicals a          
high-performance company focused on the strengths of its global specialty       
chemicals businesses.                                                           

THE SPIN-OFF AND THE MERGER (SEE PAGE 14)                                       

Grace and Sealed Air have agreed to combine Sealed Air with Grace's   
packaging business, which we refer to as the "Packaging Business." In order to  
separate the Packaging Business from Grace's other                              

---------------                                                                 

* Information concerning Grace Specialty Chemicals in this Information Statement
is given on a pro forma basis, excluding Grace's packaging business (but    
including specialty chemicals businesses sold in 1996 and 1997).            
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businesses (which we refer to as the "Specialty Chemicals Businesses") and to   
complete the Spin-off and the Merger, we will take the following steps:         

  - Grace will separate the Packaging Business and the Specialty Chemicals
Businesses into separate groups of subsidiaries.                  

- Grace and a Packaging Business subsidiary will then make the Cash   
Transfer ($1.2 billion, subject to adjustment) to Grace Specialty 
      Chemicals, funded by new debt incurred by Grace and a Packaging Business
subsidiary.                                                       

    - Grace will transfer the stock of Grace Specialty Chemicals to New Grace,
    so that Grace Specialty Chemicals becomes a wholly owned subsidiary of
New Grace.                                                        

 - Grace will distribute the shares of New Grace common stock to Grace's
stockholders, completing the Spin-off.                            

   - Grace (then consisting only of the Packaging Business and the debt used
     to finance the Cash Transfer) will be recapitalized, so that each share
      of Grace common stock will be exchanged for a fraction of a share of New
 Sealed Air common stock and a fraction of a share of New Sealed Air
     convertible preferred stock. The actual amount of New Sealed Air common
      and convertible preferred stock that you will receive will be calculated
    shortly after the Recapitalization, using the formulas described under
    "The Distribution and Merger Agreements -- Reorganization of Grace" on
page 65 of the Joint Proxy Statement/Prospectus.                  

    Immediately after the Recapitalization, a wholly owned subsidiary of Grace
will be merged into Sealed Air in the Merger, so that Grace will become the     
parent company of both Sealed Air and the Packaging Business. We refer to the   
Spin-off, the Cash Transfer, the Recapitalization, the Merger and related       
transactions as the "Transactions."                                             

    As a result of the Transactions, former stockholders of Grace will own (i)
100% of the Specialty Chemicals Businesses, through their ownership of New Grace
common stock, and (ii) a 63% interest (on an as-converted basis) in the         
Packaging Business and the businesses of Sealed Air, through their ownership of 
New Sealed Air common and convertible preferred stock.                          

   Immediately after the Transactions, New Grace will change its name to "W.
R. Grace & Co." and Grace will change its name to "Sealed Air Corporation."     

TAX CONSEQUENCES OF THE SPIN-OFF                                                

For U.S. federal income tax purposes, the Spin-off is expected to be  
tax-free to Grace and its stockholders. For a description of the material U.S.  
federal income tax consequences of the Transactions to Grace and its            
stockholders, please refer to "The Reorganization and Merger -- Certain United  
States Federal Income Tax Consequences" on page 32 of the Joint Proxy           
Statement/Prospectus.                                                           

CERTAIN RISK FACTORS (SEE PAGE 11)                                              

   Stockholders should carefully review the matters discussed under "Certain
Risk Factors."                                                                  

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CAPITALIZATION

     The table below shows the capitalization of Grace at September 30, 1997 and
the pro forma capitalization of New Grace at that date, giving effect to the    
Transactions and other related transactions described in the notes to the       
unaudited pro forma condensed consolidated balance sheet and statement of       
operations. You should read this table along with those notes, our consolidated 
financial statements for the year ended December 31, 1996 (the Consolidated     
Financial Statements) and our unaudited consolidated financial statements for   
the quarter ended September 30, 1997 (the Third Quarter Financial Statements),  
included in Annexes F and G, respectively, to this Information Statement.       

                                                                · Download Table

                                                               SEPTEMBER 30, 1997   
                                                             -----------------------
                                                               GRACE       NEW GRACE
                                                             HISTORICAL    PRO FORMA
                                                             ----------    ---------
                                                              (DOLLARS IN MILLIONS, 
                                                                EXCEPT PAR VALUE)   
                                                                                    
Debt, including short-term debt.............................  $1,104.2      $   --  
Shareholders' equity:                                                               
  Grace common stock:                                                               
     Common stock, $.01 par value: 300,000,000 shares                               
     authorized; 80,316,000 issued; 74,092,000                                      
     outstanding............................................  $     .8          --  
  New Grace common stock:                                                           
     Common stock, $.01 par value: 300,000,000 shares                               
     authorized; 74,092,000 outstanding.....................        --      $   .7  
  Paid in capital...........................................     593.1       258.7  
  Retained earnings.........................................     377.0          --  
  Cumulative translation adjustments........................    (154.0)      (67.0) 
  Deferred compensation trust...............................      (5.2)       (5.2) 
  Treasury stock, at cost...................................    (331.7)         --  
                                                              --------      ------  
     Total shareholders' equity.............................     480.0       187.2  
                                                              --------      ------  
     Total capitalization...................................  $1,584.2      $187.2  
                                                              ========      ======  

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GRACE SUMMARY SELECTED FINANCIAL DATA 

The tables below show summary selected financial data of Grace. The   
information for the years ended December 31, 1992 through 1996 is based on the  
Consolidated Financial Statements, which have been audited by Price Waterhouse  
LLP, independent certified public accountants. The information for the          
nine-month periods ended September 30, 1997 and 1996 is based on the unaudited  
Third Quarter Financial Statements, which, in the opinion of management, include
all adjustments necessary for a fair presentation. Certain amounts in prior     
periods have been restated to conform to the current period's basis of          
presentation. Operating results for the nine months ended September 30, 1997 are
not necessarily indicative of the results for the year ended December 31, 1997. 

It is important that you read this selected consolidated financial    
information together with "Management's Discussion and Analysis of Results of   
Operations and Financial Condition," the Consolidated Financial Statements and  
the Third Quarter Financial Statements included elsewhere in this Information   
Statement.                                                                      

                                                        · Enlarge/Download Table

                                                                                       NINE MONTHS ENDED 
                                             YEARS ENDED DECEMBER 31,                    SEPTEMBER 30,   
                               ----------------------------------------------------   -------------------
                                 1996       1995       1994       1993       1992       1997       1996  
                               --------   --------   --------   --------   --------   --------   --------
                                              (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)               
                                                                                                         
STATEMENT OF OPERATIONS DATA:                                                                            
Sales and revenues...........  $3,454.1   $3,552.6   $3,128.5   $2,824.7   $2,985.2   $2,460.7   $2,603.2
Income/(loss) from continuing                                                                            
  operations.................     213.8     (179.6)     (35.1)      28.1        7.7      222.5      333.0
Earnings/(loss) per share                                                                                
  from continuing                                                                                        
  operations.................      2.32      (1.87)      (.38)       .30        .08       2.92       3.42
Dividends declared per common                                                                            
  share......................       .50      1.175       1.40       1.40       1.40       .415       .375
BALANCE SHEET DATA (AT END OF                                                                            
  PERIOD):                                                                                               
Total assets.................  $4,945.8   $6,360.6   $6,230.6   $6,108.6   $5,598.6   $4,200.0   $5,346.8
Long-term debt...............   1,073.0    1,295.5    1,098.8    1,173.5    1,354.5    1,062.7      741.6
Total liabilities............   4,313.4    5,128.8    4,726.1    4,591.0    4,053.6    3,720.0    4,076.4
Total equity.................     632.4    1,231.8    1,504.5    1,517.6    1,545.0      480.0    1,270.4

RECENT RESULTS                                                                  

   On February 3, 1998, Grace reported income from continuing operations for
the fourth quarter of 1997 of $26.1 million, or $.35 per share, compared to a   
loss of $1.44 per share in the prior-year quarter. Included in the results for  
the 1997 quarter were special charges that reduced earnings by $.58 per share.  
Results for the 1997 quarter also reflected a $.06 per share negative impact on 
earnings due to foreign currency translation and a nonrecurring charge of $.05  
per share reflecting an adjustment to the carrying values of certain capitalized
assets.                                                                         

     The special charges in the 1997 quarter included an asset impairment charge
of $34.4 million ($24.5 million after-tax), primarily comprised of the write-off
of capitalized software projects no longer needed in Grace's operations, the    
write-down of certain production equipment of the Packaging Business, and the   
write-off of certain corporate research facilities; and restructuring charges of
$15.1 million ($9.2 million after-tax), consisting of costs for corporate and   
international staff reductions relating to the Spin-off and Merger. Also        
included in the 1997 quarter was an unbudgeted charge of $13 million ($8 million
after-tax) for long-term incentive compensation plans, resulting from the       
continued above-market performance of Grace common stock in the quarter. Other  
costs related to the Spin-off and Merger were $1.7 million ($1.1 million        
after-tax).                                                                     

Sales (excluding divested businesses) were $852 million in the 1997   
quarter, up 2% from the prior-year level of $832 million. Excluding the effect  
of currency translation, sales were up 8% compared to the 1996 quarter.         

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     Full-year 1997 income from continuing operations was $249 million, or $3.36
per share, compared to $214 million, or $2.32 per share, in 1996. In addition to
the fourth quarter special charges, full-year 1997 earnings included an         
after-tax gain of $63 million ($.85 per share) from the second quarter sale of  
Grace's specialty polymers business and an after-tax restructuring charge of $8 
million ($.11 per share) associated with the second quarter reorganization of   
the Packaging Business. Currency translation had a $.20 per share negative      
impact on full-year results. Income from continuing operations for the full-year
1996 included after-tax charges of $70 million ($.76 per share) for             
restructuring and $149 million ($1.62 per share) for asbestos and after-tax     
gains of $210 million ($2.28 per share) on sales of businesses.                 

Full-year 1997 net income was $261 million, including $12 million from
discontinued operations, primarily relating to Grace's divested cocoa business  
unit, as well as the gains and charges discussed above. Net income of $2.9      
billion in 1996 included a $2.5 billion gain from the disposition of Grace's    
former health care unit.                                                        

 Sales for 1997 (excluding divested units) increased 3% over 1996, or 8%
before currency translation.                                                    

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NEW GRACE PRO FORMA SUMMARY FINANCIAL INFORMATION 

The tables below show pro forma summary financial information for New 
Grace. It is important that you read this pro forma summary financial           
information together with the unaudited pro forma financial information included
elsewhere in this Information Statement. The pro forma financial information in 
these tables may not be indicative of the future financial position or results  
of operations of New Grace as a separate, stand-alone company. Operating results
for the nine months ended September 30, 1997 are not necessarily indicative of  
the results for the year ended December 31, 1997. See "Grace Summary Selected   
Financial Data -- Recent Results."                                              

                                                        · Enlarge/Download Table

                                                                               Nine Months Ended 
                                               Years Ended December 31,          September 30,   
                                            ------------------------------    -------------------
                                            1996(a)    1995(b)    1994(b)     1997(a)    1996(b) 
                                            --------   --------   --------    --------   --------
                                                (Dollars in millions, except per share data)     
                                                                                                 
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS DATA:                                                
Sales and revenues........................  $1,718.7   $1,860.5   $1,711.0    $1,114.1   $1,336.2
Income/(loss) from continuing                                                                    
  operations..............................     145.2     (299.6)    (167.6)      135.4      267.2
Primary earnings per share from continuing                                                       
  operations..............................      1.54      (3.07)     (1.78)       1.78       2.75

                                                                · Download Table

                                                              SEPTEMBER 30, 1997
                                                              ------------------
                                                                                
UNAUDITED PRO FORMA BALANCE SHEET DATA (AT END OF PERIOD):                      
Total assets................................................       $2,516.7     
Long-term debt..............................................             --     
Total liabilities...........................................        2,329.5     
Total equity................................................          187.2     

---------------                                                                 
(a) The unaudited pro forma summary financial information for New Grace has been
  derived from the historical consolidated statement of operations of Grace,
adjusted to reflect the separation of the Packaging Business and the    
  reduction in interest expense expected to result from the use of the funds
 received in the Cash Transfer to repay borrowings. This pro forma summary
financial information has been prepared on the assumption that the      
Transactions occurred on January 1, 1996.                               

(b) The unaudited pro forma summary financial information for New Grace has been
  derived from the historical consolidated statement of operations of Grace,
adjusted to reflect the separation of the Packaging Business and an     
   allocation of interest expense to the Packaging Business based on the ratio
  of the net assets of the Packaging Business to Grace's total capital. This
   pro forma summary financial information also differs from the unaudited pro
forma summary financial information for New Grace for the year ended    
 December 31, 1996 and the nine months ended September 30, 1997 in that it
does not give effect to the Cash Transfer or the resultant repayment of 
Grace Specialty Chemicals borrowings using funds received in the Cash   
Transfer.                                                               

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CERTAIN RISK FACTORS

    In evaluating New Grace and the Specialty Chemicals Businesses, you should
carefully review the following risk factors, together with the other information
in this Information Statement. You should also carefully review "Certain Risk   
Factors" in the Joint Proxy Statement/Prospectus.                               

We also caution you that this Information Statement contains          
forward-looking statements, which include all statements regarding New Grace's  
expected financial position, results of operations, cash flows, dividends,      
financing plans, business strategy, budgets, capital and other expenditures,    
competitive positions, growth opportunities for existing products, benefits from
new technology, plans and objectives of management, and markets for stock.      
Although we believe that our expectations reflected in such forward-looking     
statements are based on reasonable assumptions, such expectations may not prove 
to be correct. Important factors that could cause actual results to differ      
materially from the expectations reflected in our forward-looking statements    
include those set forth below as well as general economic, business and market  
conditions, customer acceptance of new products, efficacy of new technology,    
changes in U.S. and non-U.S. laws and regulations, costs or difficulties        
relating to the establishment of New Grace as an independent entity and         
increased competitive and/or customer pressures.                                

NO OPERATING HISTORY AS AN INDEPENDENT COMPANY                                  

 New Grace was formed in August 1997 to facilitate the Transactions. New
Grace, in the form in which it will exist after the Transactions, does not have 
an independent history as a stand-alone public company. For many years, the     
Packaging Business has generated funds from operations that have been used in   
the Specialty Chemicals Businesses and for Grace's general corporate purposes,  
such as dividends and share repurchases. Following the Spin-off, New Grace will 
not have access to the cash flow of the Packaging Business.                     

ASBESTOS-RELATED MATTERS                                                        

  Grace Specialty Chemicals is a defendant in property damage and personal
injury lawsuits relating to previously sold asbestos-containing products and    
anticipates that it and/or New Grace will be named as a defendant in additional 
asbestos-related lawsuits in the future. We cannot predict whether and to what  
extent asbestos-related property damage lawsuits and claims will be brought     
against us in the future, or the expenses involved in defending against and     
disposing of such lawsuits and claims. At September 30, 1997, the liability     
recorded on Grace's books with respect to the defense and disposition of        
asbestos-related lawsuits and claims was $910.5 million, including a current    
liability of $135.0 million. In addition, at September 30, 1997, Grace had      
recorded a receivable of $295.4 million, reflecting amounts that Grace believes 
will ultimately be recovered from insurance carriers with respect to its        
asbestos-related lawsuits and claims. For information regarding noncash charges 
previously recorded by Grace in respect of its asbestos-related lawsuits and    
claims, see "Asbestos-Related Liability" in Note 2 to the Consolidated Financial
Statements included in Annex F to this Information Statement. We believe that we
do have adequate experience to reasonably estimate the number of                
asbestos-related personal injury claims that will be brought against us through 
2001 and have recorded non-cash charges for those claims. New Grace's ultimate  
exposure with respect to its asbestos-related lawsuits and claims will depend on
the number and nature of claims filed and the extent to which insurance will    
cover damages for which it may be held liable, amounts paid in settlement and   
litigation costs. See "Business of New Grace and Grace Specialty                
Chemicals -- Legal Proceedings and Regulatory Matters" for further information. 

NO PRIOR MARKET FOR NEW GRACE COMMON STOCK                                      

   There is no current public trading market for New Grace common stock. New
Grace will apply to list its common stock on the New York Stock Exchange, Inc.  
(the "NYSE") under the symbol "GRA." New Grace expects approximately 75,000,000 
million shares to initially be issued and outstanding, approximately 4,000,000  
million shares to be subject to outstanding options and approximately 16,000    
holders of record.                                                              

     We expect "when-issued" trading in New Grace common stock to develop before
the time when the Spin-off occurs (the "Time of Spin-off"); this means that     
shares may be traded before the Time of Spin-off                                
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and before New Grace stock certificates are issued. We cannot predict the prices
at which New Grace common stock may trade, either before the Spin-off on a      
"when-issued" basis or after the Spin-off. Until an orderly market develops, the
trading prices of such stock may fluctuate significantly. The trading prices of 
New Grace common stock will be determined by the marketplace and may be         
influenced by many factors, including the depth and liquidity of the market for 
such shares, investor perceptions of New Grace and the industries in which it   
participates, New Grace's dividend policy and general economic and market       
conditions. Such prices may also be affected by certain anti-takeover provisions
of the Amended and Restated Certificate of Incorporation of New Grace (the "New 
Grace Certificate"), the Amended and Restated By-laws of New Grace (the "New    
Grace By-laws") and the New Grace Rights (as defined below), in each case as in 
effect following the Spin-off. See "-- Restrictions on Grace to Protect Tax-Free
Treatment" and "Certain Anti-Takeover Provisions."                              

   The New Grace common stock will be freely transferable, except for shares
of New Grace common stock received by "affiliates" of New Grace under the       
Securities Act. Persons who may be deemed affiliates of New Grace after the     
Spin-off generally include its directors and executive officers, as well as any 
principal stockholders of New Grace. See "Security Ownership of Certain         
Beneficial Owners" and "Beneficial Ownership of Management." Affiliates of New  
Grace will be permitted to sell their shares of New Grace common stock only     
pursuant to an effective registration statement under the Securities Act or an  
exemption from the registration requirements of the Securities Act, such as the 
exemption afforded by Rule 144 under the Securities Act. New Grace does not     
currently intend to file any such registration statement under the Securities   
Act. Based on the number of shares of New Grace common stock expected to be held
by directors and executive officers of New Grace following the Spin-off,        
approximately 74,900,000 shares of New Grace common stock will be available for 
sale pursuant to such exemptions.                                               

DIVIDEND POLICY AND SHARE REPURCHASES                                           

  New Grace does not intend to pay dividends on the New Grace common stock
following the Spin-off. In addition, although New Grace may repurchase shares of
its common stock from time to time as circumstances allow, the declaration and  
payment of cash dividends and the repurchase of shares will be at the sole      
discretion of the New Grace Board of Directors (the "New Grace Board") and will 
depend on New Grace's ability to declare and pay dividends and to repurchase    
shares under its credit and financing agreements, as well as on the future      
operating results and financial condition of New Grace, its capital requirements
and future prospects, general business conditions and other factors. See        
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition -- Financial Condition -- Liquidity and Capital Resources" included in
Annexes F and G and "-- Restrictions on Grace to Protect Tax-Free Treatment" and
"Certain Anti-Takeover Provisions."                                             

RESTRICTIONS ON NEW GRACE TO PROTECT TAX-FREE TREATMENT                         

  To protect the tax-free treatment of the Transactions under U.S. federal
income tax laws, Grace and Sealed Air have agreed that, for two years after the 
Merger, subject to certain exceptions:                                          

- New Grace and its affiliates may not repurchase 20% or more of New  
    Grace's equity securities (subject to certain additional limitations).

- New Grace and its affiliates may not issue or sell New Grace equity 
 securities, and they may not solicit, support or participate in any
    tender offer for New Grace equity securities, or approve or permit any
     business combination or other transaction, that (alone or together with
       the Merger) will result in one or more persons obtaining a 50% or greater
interest in New Grace.                                            

     - New Grace must continue to operate the Specialty Chemicals Businesses and
 may not sell or otherwise dispose of more than 60% of the Specialty
     Chemicals Businesses' assets except in the ordinary course of business.

  - The subsidiaries engaged in the Specialty Chemicals Businesses may not
voluntarily dissolve, liquidate, merge, consolidate or reorganize.

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    These restrictions may limit the ability of New Grace to engage in certain
business transactions that otherwise might be advantageous for New Grace and its
stockholders, and could deter potential acquisitions of control of New Grace.   
The restrictions are designed to protect the tax-free treatment of the          
Transactions for U.S. federal income tax purposes. Accordingly, New Grace may   
engage in a restricted transaction so long as it (i) obtains a ruling from the  
Internal Revenue Service ("IRS") or an opinion of tax counsel that the          
transaction will not adversely affect the tax-free treatment of the Transactions
and (ii) indemnifies New Sealed Air against adverse tax consequences arising    
from the transaction. See "The Reorganization and Merger -- Certain United      
States Federal Income Tax Consequences" in the Joint Proxy Statement/           
Prospectus.                                                                     

CERTAIN ANTI-TAKEOVER PROVISIONS                                                

    The New Grace Certificate, the New Grace By-laws, the New Grace Rights and
the Delaware General Corporation Law (the "Delaware Law") contain provisions    
that could delay or prevent a change in control of New Grace in a transaction   
not approved by the New Grace Board. In addition, the New Grace Board has       
adopted certain other programs, plans and agreements with its management and/or 
employees which may make such a change of control more expensive. See           
"-- Certain Federal Income Tax Consequences" and "Certain Anti-Takeover         
Provisions."                                                                    

ENVIRONMENTAL MATTERS                                                           

     Like others in similar businesses, Grace is, and New Grace will be, subject
to extensive U.S. federal, state and local and foreign environmental laws and   
regulations. Although New Grace's environmental policies and practices are      
designed to ensure compliance with these laws and regulations, future           
developments (including increasingly stringent regulation) could require New    
Grace to make unforeseen expenditures relating to environmental matters.        
Although the amount of future expenditures for such matters cannot be determined
with any degree of certainty, based on the facts presently known to us, we do   
not believe that such costs will have a material effect on New Grace's financial
position, results of operations, or liquidity. See "Management's Discussion and 
Analysis of Results of Operations and Financial Condition -- Environmental      
Matters," included in Annexes F and G, and "Business of New Grace and Grace     
Specialty Chemicals -- Environmental, Health and Safety Matters" and "-- Legal  
Proceedings and Regulatory Matters -- Environmental Proceedings."               

COMPETITION                                                                     

New Grace's Specialty Chemicals Businesses are in highly competitive  
industries. The Specialty Chemicals Businesses are market leaders in most of    
their product lines and are subject to significant competition from other       
manufacturers worldwide. Competition is based on, among other things,           
technological capability, product performance, customer service and price.      

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THE SPIN-OFF

   In the Spin-off, holders of Grace common stock will receive a dividend of
one share of New Grace common stock for each share of Grace common stock held of
record at the Time of Spin-off. The terms and conditions of the Spin-off are set
forth in the Distribution Agreement by and among Grace, Grace Specialty         
Chemicals and New Grace (the "Distribution Agreement"), and the Agreement and   
Plan of Merger, dated as of August 14, 1997, by and among Grace, a Packaging    
Business subsidiary and Sealed Air (the "Merger Agreement," and, together with  
the Distribution Agreement and related agreements, the "Transaction             
Agreements"). See "Certain Agreements between Grace and New Grace." Following   
the Spin-off, New Grace will be the parent company of Grace Specialty Chemicals 
(which, in turn, will continue to own and operate the Specialty Chemicals       
Businesses), and New Sealed Air's operations will consist of the Packaging      
Business, which will be combined with Sealed Air in the Merger.                 

Holders of record of Grace common stock with inquiries relating to the
Spin-off should contact ChaseMellon Shareholder Services, L.L.C. (the           
"Distribution Agent") by telephone at (800) 648-8392 or should contact W. R.    
Grace & Co. in writing at One Town Center Road, Boca Raton, Florida 33486-1010  
or by telephone at (800) 354-8917.                                              

MANNER OF EFFECTING THE SPIN-OFF                                                

At the Time of Spin-off, Grace will effect the Spin-off by delivering 
certificates representing all of the issued and outstanding shares of New Grace 
common stock to the Distribution Agent, which, in turn, will distribute such    
shares on the basis of one share of New Grace common stock for each share of    
Grace common stock held of record at the Time of Spin-off. No holder of Grace   
common stock will be required to pay any cash or other consideration for the    
shares of New Grace common stock, or to surrender or exchange shares of Grace   
common stock, in order to receive shares of New Grace common stock. It is       
expected that certificates representing shares of New Grace common stock will be
mailed by the Distribution Agent to holders of Grace common stock as promptly as
practicable after the Time of Spin-off, and that such mailing will occur at     
approximately the same time as the mailing of the instructions for exchanging   
Grace stock certificates for New Sealed Air common and convertible preferred    
stock.                                                                          

    Shares Outstanding following the Spin-off.  The actual number of shares of
New Grace common stock to be distributed in the Spin-off will equal the number  
of shares of Grace common stock outstanding at the Time of Spin-off. Based upon 
the shares of Grace common stock outstanding on February 11, 1998, approximately
75,000,000 shares of New Grace common stock will be distributed in the Spin-off.
Following the Spin-off, approximately 225,000,000 shares of New Grace common    
stock will remain authorized but unissued, of which approximately 21,000,000    
will be reserved for issuance pursuant to employee and director stock plans. In 
the Spin-off and the Merger, employee stock options to purchase Grace common    
stock that are held by persons employed in the Packaging Business will be       
converted into options to purchase New Sealed Air common stock, and all other   
employee stock options to purchase Grace common stock will be converted into    
options to purchase New Grace common stock; in either case, options remaining   
outstanding following the Spin-off and the Merger will be adjusted to preserve  
their economic value. See "Management -- Executive Compensation and Employee    
Benefits following the Spin-off."                                               

  Intercompany Transactions.  Prior to the Spin-off, Grace and a Packaging
Business subsidiary will effect the Cash Transfer to the Specialty Chemicals    
Businesses by borrowing approximately $1.2 billion and transferring cash to the 
Specialty Chemicals Businesses in that amount, subject to certain adjustments as
described in the Distribution Agreement. See "Certain Agreements between Grace  
and New Grace."                                                                 

CERTAIN FEDERAL INCOME TAX CONSEQUENCES                                         

   For a description of the material U.S. federal income tax consequences of
the Transactions to Grace and Grace's stockholders, please refer to "The        
Reorganization and Merger -- Certain United States Federal Income Tax           
Consequences" in the Joint Proxy Statement/Prospectus.                          

CONDITIONS; TERMINATION                                                         

   The Spin-off is conditioned upon, among other things, (i) the approval of
the Transactions by Grace stockholders, (ii) the satisfaction or waiver of all  
conditions to the Transactions set forth in the Merger                          
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Agreement and the Distribution Agreement, and (iii) the compliance of the       
Transactions with applicable U.S. federal and state securities laws.            

     The Spin-off will be consummated immediately prior to the Recapitalization,
and the Recapitalization will be consummated immediately prior to the Merger.   
The Spin-off and the Recapitalization will each be consummated only after the   
satisfaction or waiver of all conditions to the Merger. In addition,            
consummation of the Spin-off is a condition to the consummation of the Merger.  
The Distribution Agreement may be terminated, and the Spin-off may be abandoned,
only following termination of the Merger Agreement, by and in the sole          
discretion of the Board of Directors of Grace (the "Grace Board"), without the  
approval of Grace's stockholders or any other party. See "The Reorganization and
Merger -- Conditions; Termination" in the Joint Proxy Statement/Prospectus. In  
the event of such termination or abandonment, Grace will have no liability to   
any person under the Distribution Agreement or any obligation to effect the     
Spin-off.                                                                       

RELATIONSHIPS AFTER THE SPIN-OFF                                                

 As a result of the Spin-off, New Sealed Air will cease to be affiliated
with New Grace and Grace Specialty Chemicals, and New Grace will operate as a   
separate publicly held company. After the Spin-off, shares of New Grace common  
stock will trade independently from shares of New Sealed Air common and         
convertible preferred stock. See "Certain Agreements between New Sealed Air and 
New Grace" and "Certain Relationships and Transactions."                        

LISTING AND TRADING OF NEW GRACE COMMON STOCK                                   

    The New Grace common stock is expected to be listed on the NYSE, under the
symbol "GRA." There is currently no public trading market for New Grace common  
stock. The prices at which New Grace common stock may trade prior to or         
following the Spin-off cannot be predicted. See "Certain Risk Factors -- No     
Prior Market for New Grace Common Stock." A when-issued trading market is       
expected to develop prior to the Time of Spin-off. The term "when-issued" means 
that shares can be traded before the Spin-off occurs and New Grace stock        
certificates are actually available or issued. The prices at which the shares of
New Grace common stock may trade on a when-issued basis or after the Spin-off   
cannot be predicted.                                                            

 At the Time of Spin-off, New Grace expects to have approximately 16,000
stockholders of record, based upon the number of holders of record of Grace     
common stock as of February 11, 1998. The transfer agent and registrar for the  
New Grace common stock will be ChaseMellon Shareholder Services, L.L.C. The     
number of shares covered by options to acquire Grace common stock and their     
exercise prices will be adjusted following the Spin-off to preserve the economic
value that they had prior to the Spin-off.                                      

New Grace common stock will be freely transferable, except for shares 
received by "affiliates" of New Grace under the Securities Act of 1933, as      
amended (the "Securities Act"). Persons who may be deemed to be affiliates of   
New Grace generally include its directors and executive officers, as well as any
principal stockholders of New Grace. Affiliates of New Grace may sell their     
shares of New Grace common stock only pursuant to an effective registration     
statement under the Securities Act or an exemption from the registration        
requirements of the Securities Act, such as the exemptions afforded by Section  
4(2) of the Securities Act and Rule 144 under the Securities Act. New Grace does
not currently intend to file any such registration statement under the          
Securities Act.                                                                 

REGULATORY MATTERS

Other than as described in the Joint Proxy Statement/Prospectus, all  
material U.S. federal or state and foreign regulatory approvals required in     
connection with the Spin-off have been obtained. For a discussion of U.S. and   
foreign regulatory approvals with respect to the Transactions, please refer to  
"The Reorganization and Merger -- Regulatory Matters" in the Joint Proxy        
Statement/Prospectus.                                                           

The Merger Agreement requires Grace and Sealed Air to use reasonable  
efforts to promptly make any filings or take other actions necessary to obtain  
required governmental approvals. In addition, the Distribution Agreement        
provides that Grace, Grace Specialty Chemicals and New Grace will cooperate to  
obtain all necessary consents and approvals, and to make all necessary filings  
and applications, that may be required for the consummation of the transactions 
contemplated by the Distribution Agreement.                                     

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PRO FORMA FINANCIAL INFORMATION 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET                        

The table below shows the unaudited pro forma condensed consolidated  
balance sheet of New Grace. This balance sheet is based on the historical       
consolidated balance sheet of Grace at September 30, 1997 and assumes that the  
Transactions had occurred on that date. It is intended to give you an idea of   
what New Grace's business would have looked like had the Transactions already   
occurred.                                                                       

     It is important that you read this pro forma condensed consolidated balance
sheet together with the Consolidated Financial Statements included in Annex F,  
and the Third Quarter Financial Statements included in Annex G, to this         
Information Statement. You should not rely on this balance sheet as being       
indicative of the financial position of New Grace that would have resulted if   
the Transactions had occurred on September 30, 1997.                            

                                                        · Enlarge/Download Table

                                                                             SEPTEMBER 30, 1997                      
                                                       --------------------------------------------------------------
                                                                                         PRO FORMA                   
                                                                                        ADJUSTMENTS                  
                                                         GRACE        PACKAGING     --------------------    NEW GRACE
                                                       HISTORICAL    BUSINESS(A)     DEBIT       CREDIT     PRO FORMA
                                                       ----------    -----------    --------    --------    ---------
                                                                           (DOLLARS IN MILLIONS)                     
                                                                                                                     
ASSETS                                                                                                               
  Current Assets                                                                                                     
    Cash and cash equivalents.........................  $   66.2                    $1,240.8(b) $1,104.2(b)          
                                                                                                   155.8(b) $   47.0 
    Notes and accounts receivable, net................     616.0      $  272.8                                 343.2 
    Other current assets..............................     539.3         256.6           1.8(c)                284.5 
                                                        --------                                            -------- 
        Total Current Assets..........................   1,221.5                                               674.7 
  Properties and equipment, net.......................   1,771.5       1,082.3                                 689.2 
  Other assets........................................   1,207.0          71.7          17.5(b)              1,152.8 
                                                        --------                                            -------- 
        Total Assets..................................  $4,200.0                                            $2,516.7 
                                                        ========                                            ======== 
LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                 
  Current Liabilities                                                                                                
    Short-term debt...................................  $   41.5                        41.5(b)             $     -- 
    Other current liabilities.........................   1,008.0         205.9                       4.8(c)    806.9 
                                                        --------                                            -------- 
        Total Current Liabilities.....................   1,049.5                                               806.9 
  Long-term debt......................................   1,062.7                     1,062.7(b)                   -- 
  Other liabilities...................................     832.3          95.7          30.3(c)     40.8(c)    747.1 
  Noncurrent liabilities for asbestos-related                                                                        
    litigation........................................     775.5                                               775.5 
                                                        --------                                            -------- 
        Total Liabilities.............................   3,720.0                                             2,329.5 
                                                        --------                                            -------- 
Commitments and Contingencies                                                                                        
  Shareholders' Equity                                                                                               
    Common stock......................................       0.8                         0.1(d)                  0.7 
    Paid in capital...................................     593.1                        33.6(d)                      
                                                                                       300.8(e)                258.7 
    Retained earnings.................................     377.0       1,468.8         138.3(b)  1,240.8(b)          
                                                                                        13.5(c)    300.8(e)          
                                                                                       298.0(d)                   -- 
    Cumulative translation adjustments................    (154.0)        (87.0)                                (67.0)
    Deferred compensation trust.......................      (5.2)                                               (5.2)
    Treasury stock, at cost...........................    (331.7)                                  331.7(d)       -- 
                                                        --------                                            -------- 
        Total Shareholders' Equity....................     480.0                                               187.2 
                                                        --------                                            -------- 
        Total Liabilities and Shareholders' Equity....  $4,200.0                                            $2,516.7 
                                                        ========                                            ======== 

    THE NOTES TO THIS UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
ARE AN INTEGRAL PART OF THE PRO FORMA FINANCIAL INFORMATION PRESENTED.          

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS              

The table below shows the unaudited pro forma condensed consolidated  
statement of operations of New Grace. This statement of operations is based on  
the historical consolidated statement of operations of Grace and assumes that   
the Transactions occurred on January 1, 1996. It is intended to give you an idea
of what New Grace's business would have looked like had the Transactions already
occurred.                                                                       

It is important that you read this pro forma condensed consolidated   
statement of operations together with the Consolidated Financial Statements     
included in Annex F, and the Third Quarter Financial Statements included in     
Annex G, to this Information Statement. You should not rely on this statement of
operations as being indicative of the historical results that New Grace would   
have had if the Transactions had already occurred, or the results that New Grace
will experience after the Transactions.                                         

                                                        · Enlarge/Download Table

                                                            YEAR ENDED DECEMBER 31, 1996              
                                              --------------------------------------------------------
                                                                            PRO FORMA                 
                                                                           ADJUSTMENTS                
                                                GRACE       PACKAGING    ---------------    NEW GRACE 
                                              HISTORICAL   BUSINESS(F)   DEBIT    CREDIT    PRO FORMA 
                                              ----------   -----------   -----    ------    ----------
                                                  (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)     
                                                                                                      
Sales and revenues...........................  $3,454.1     $1,735.4                         $1,718.7 
Other income.................................      38.9          8.0                             30.9 
                                               --------     --------                         -------- 
     Total...................................   3,493.0      1,743.4                          1,749.6 
                                               --------     --------                         -------- 
Cost of goods sold and operating expenses....   2,071.0      1,079.5                            991.5 
Selling, general and administrative                                                                   
  expenses...................................     713.3        281.7                            431.6 
Depreciation and amortization................     184.4         92.0                             92.4 
Interest expense and related financing                                                                
  costs......................................      71.6          2.0              $54.2(g)       15.4 
Research and development expenses............      93.9         43.5                             50.4 
Restructuring costs and asset impairments....     107.5         74.9                             32.6 
Provision relating to asbestos-related                                                                
  liabilities and insurance coverage.........     229.1           --                            229.1 
Gain on sales of businesses..................    (326.4)          --                           (326.4)
                                               --------     --------                         -------- 
     Total...................................   3,144.4      1,573.6                          1,516.6 
                                               --------     --------                         -------- 
Income from continuing operations before                                                              
  income taxes...............................     348.6        169.8                            233.0 
Provision for income taxes...................     134.8         66.0     $19.0(h)                87.8 
                                               --------     --------                         -------- 
Income from continuing operations............  $  213.8     $  103.8                         $  145.2 
                                               ========     ========                         ======== 
Earnings per share:                                                                                   
     Primary.................................  $   2.27                                      $   1.54 
     Fully diluted...........................  $   2.26                                      $   1.53 
Weighted average shares of common stock                                                               
  outstanding (in thousands):                                                                         
     Primary.................................    94,085                                        94,085 
     Fully diluted...........................    94,480                                        94,480 
(CONT.)                                                                                               

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                                                        · Enlarge/Download Table

                                                        NINE MONTHS ENDED SEPTEMBER 30, 1997          
                                              --------------------------------------------------------
                                                                            PRO FORMA                 
                                                                           ADJUSTMENTS                
                                                GRACE       PACKAGING    ---------------    NEW GRACE 
                                              HISTORICAL   BUSINESS(F)   DEBIT    CREDIT    PRO FORMA 
                                              ----------   -----------   -----    ------    ----------
                                                  (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)     
                                                                                                      
Sales and revenues...........................  $2,460.7     $1,346.6                         $1,114.1 
Other income.................................      36.5          3.4                             33.1 
                                               --------     --------                         -------- 
     Total...................................   2,497.2      1,350.0                          1,147.2 
                                               --------     --------                         -------- 
Cost of goods sold and operating expenses....   1,492.4        813.3                            679.1 
Selling, general and administrative                                                                   
  expenses...................................     467.9        226.7                            241.2 
Depreciation and amortization................     145.5         78.8                             66.7 
Interest expense and related financing                                                                
  costs......................................      58.6           --              $51.7(g)        6.9 
Research and development expenses............      66.9         33.1                             33.8 
Restructuring costs..........................      12.4          8.4                              4.0 
Gain on sales of businesses..................    (103.1)          --                           (103.1)
                                               --------     --------                         -------- 
     Total...................................   2,140.6      1,160.3                            928.6 
                                               --------     --------                         -------- 
Income from continuing operations before                                                              
  income taxes...............................     356.6        189.7                            218.6 
Provision for income taxes...................     134.1         69.0     $18.1(h)                83.2 
                                               --------     --------                         -------- 
Income from continuing operations............  $  222.5     $  120.7                         $  135.4 
                                               ========     ========                         ======== 
Earnings per share:                                                                                   
     Primary.................................  $   2.92                                      $   1.78 
     Fully diluted...........................  $   2.91                                      $   1.77 
Weighted average shares of common stock                                                               
  outstanding (in thousands):                                                                         
     Primary.................................    76,180                                        76,180 
     Fully diluted...........................    76,572                                        76,572 

   THE NOTES TO THIS UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS ARE AN INTEGRAL PART OF THE PRO FORMA FINANCIAL INFORMATION          
PRESENTED.                                                                      

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS              

The table below shows the unaudited pro forma condensed consolidated  
statement of operations of New Grace for the years ended December 31, 1994 and  
1995 and the nine months ended September 30, 1996. This statement of operations 
is based on the historical consolidated statement of operations of Grace,       
adjusted to reflect the separation of the Packaging Business and an allocation  
of interest expense to the Packaging Business based on the ratio of the net     
assets of the Packaging Business to Grace's total capital. This unaudited pro   
forma condensed consolidated statement of operations also differs from the      
unaudited pro forma condensed consolidated statement of operations on the       
preceding page in that it does not give effect to the Cash Transfer or the      
resultant repayment of Grace Specialty Chemicals borrowings using funds received
in the Cash Transfer.                                                           

It is important that you read this pro forma condensed consolidated   
statement of operations together with the Consolidated Financial Statements     
included in Annex F, and the Third Quarter Financial Statements included in     
Annex G, to this Information Statement. You should not rely on this statement of
operations as being indicative of the historical results that would actually    
have resulted for New Grace had the Packaging Business been separated from Grace
on January 1, 1994.                                                             

                                                        · Enlarge/Download Table

                                                                  YEAR ENDED DECEMBER 31, 1994              
                                                    --------------------------------------------------------
                                                                                  PRO FORMA                 
                                                                                 ADJUSTMENTS                
                                                      GRACE       PACKAGING    ---------------    NEW GRACE 
                                                    HISTORICAL   BUSINESS(F)   DEBIT    CREDIT    PRO FORMA 
                                                    ----------   -----------   -----    ------    ----------
                                                        (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)     
                                                                                                            
Sales and revenues................................   $3,128.5     $1,417.5                         $1,711.0 
Other income......................................       42.0          3.0                             39.0 
                                                     --------     --------                         -------- 
     Total........................................    3,170.5      1,420.5                          1,750.0 
                                                     --------     --------                         -------- 
Cost of goods sold and operating expenses.........    1,832.6        844.6                            988.0 
Selling, general and administrative expenses......      785.9        248.2                            537.7 
Depreciation and amortization.....................      164.6         59.9                            104.7 
Interest expense and related financing costs......       49.5          2.3               26.6(i)       20.6 
Research and development expenses.................       99.6         37.7                             61.9 
Provision relating to asbestos-related liabilities                                                          
  and insurance coverage..........................      316.0           --                            316.0 
                                                     --------     --------                         -------- 
     Total........................................    3,248.2      1,192.7                          2,028.9 
                                                     --------     --------                         -------- 
(Loss)/income from continuing operations before                                                             
  income taxes....................................      (77.7)       227.8                           (278.9)
(Benefit from)/provision for income taxes.........      (42.6)        78.0       9.3(h)              (111.3)
                                                     --------     --------                         -------- 
(Loss)/income from continuing operations..........   $  (35.1)    $  149.8                         $ (167.6)
                                                     ========     ========                         ======== 
Loss per share:                                                                                             
     Primary......................................   $   (.38)                                     $  (1.78)
     Fully diluted................................       --(1)                                         --(1)
Weighted average shares of common stock                                                                     
  outstanding (in thousands):                                                                               
     Primary......................................     94,561                                        94,561 
     Fully diluted................................     94,595                                        94,595 

------------------------                                                        
(1) Not presented as the effect is anti-dilutive.                               

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                                                        · Enlarge/Download Table

                                                                  YEAR ENDED DECEMBER 31, 1995              
                                                    --------------------------------------------------------
                                                                                  PRO FORMA                 
                                                                                 ADJUSTMENTS                
                                                      GRACE       PACKAGING    ---------------    NEW GRACE 
                                                    HISTORICAL   BUSINESS(F)   DEBIT    CREDIT    PRO FORMA 
                                                    ----------   -----------   -----    ------    ----------
                                                        (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)     
                                                                                                            
Sales and revenues................................   $3,552.6     $1,692.1                         $1,860.5 
Other income......................................       41.2          4.3                             36.9 
                                                     --------     --------                         -------- 
     Total........................................    3,593.8      1,696.4                          1,897.4 
                                                     --------     --------                         -------- 
Cost of goods sold and operating expenses.........    2,151.2      1,023.8                          1,127.4 
Selling, general and administrative expenses......      913.7        297.0                            616.7 
Depreciation and amortization.....................      186.1         76.6                            109.5 
Interest expense and related financing costs......       71.3          3.0               41.4(i)       26.9 
Research and development expenses.................      111.6         42.8                             68.8 
Restructuring costs and asset impairments.........      169.0         17.7                            151.3 
Provision relating to asbestos-related liabilities                                                          
  and insurance coverage..........................      275.0           --                            275.0 
                                                     --------     --------                         -------- 
     Total........................................    3,877.9      1,460.9                          2,375.6 
                                                     --------     --------                         -------- 
(Loss)/income from continuing operations before                                                             
  income taxes....................................     (284.1)       235.5                           (478.2)
(Benefit from)/provision for income taxes.........     (104.5)        88.6      14.5(h)              (178.6)
                                                     --------     --------                         -------- 
(Loss)/income from continuing operations..........   $ (179.6)    $  146.9                         $ (299.6)
                                                     ========     ========                         ======== 
Loss per share:                                                                                             
     Primary......................................   $  (1.84)                                     $  (3.07)
     Fully diluted................................       --(1)                                         --(1)
Weighted average shares of common stock                                                                     
  outstanding (in thousands):                                                                               
     Primary......................................     97,669                                        97,669 
     Fully diluted................................     98,011                                        98,011 

                                                        · Enlarge/Download Table

                                                             NINE MONTHS ENDED SEPTEMBER 30, 1996          
                                                   --------------------------------------------------------
                                                                                 PRO FORMA                 
                                                                                ADJUSTMENTS                
                                                     GRACE       PACKAGING    ---------------    NEW GRACE 
                                                   HISTORICAL   BUSINESS(F)   DEBIT    CREDIT    PRO FORMA 
                                                   ----------   -----------   -----    ------    ----------
                                                       (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)     
                                                                                                           
Sales and revenues................................  $2,603.2     $1,267.0                         $1,336.2 
Other income......................................       6.3          4.6                             21.7 
                                                    --------     --------                         -------- 
     Total........................................   2,629.5      1,271.6                          1,357.9 
                                                    --------     --------                         -------- 
Cost of goods sold and operating expenses.........   1,565.7        785.9                            779.8 
Selling, general and administrative expenses......     546.5        210.7                            335.8 
Depreciation and amortization.....................     134.2         69.2                             65.0 
Interest expense and related financing costs......      54.9          1.5               37.5(i)       15.9 
Research and development expenses.................      75.0         33.2                             41.8 
Restructuring costs...............................      53.7         37.0                             16.7 
Gain on sales of businesses.......................    (326.4)          --                           (326.4)
                                                    --------     --------                         -------- 
     Total........................................   2,103.6      1,137.5                            928.6 
                                                    --------     --------                         -------- 
Income from continuing operations before income                                                            
  taxes...........................................     525.9        134.1                            429.3 
Provision for income taxes........................     192.9         43.9      13.1(h)               162.1 
                                                    --------     --------                         -------- 
Income from continuing operations.................  $  333.0     $   90.2                         $  267.2 
                                                    ========     ========                         ======== 
Earnings per share:                                                                                        
     Primary......................................  $   3.42                                      $   2.75 
     Fully diluted................................  $   3.40                                      $   2.72 
Weighted average shares of common stock                                                                    
  outstanding (in thousands):                                                                              
     Primary......................................    97,166                                        97,166 
     Fully diluted................................    98,015                                        98,015 

---------------                                                                 
(1) Not presented as the effect is anti-dilutive.                               

   THE NOTES TO THIS UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS ARE AN INTEGRAL PART OF THE PRO FORMA FINANCIAL INFORMATION          
PRESENTED.                                                                      

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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE 
SHEET AND STATEMENT OF OPERATIONS 
(DOLLARS IN MILLIONS, EXCEPT PAR VALUE) 
------------------------

    For accounting purposes, New Grace will receive the Cash Transfer and will
be deemed to receive a 63.0% equity interest in New Sealed Air and to           
immediately distribute such interest to the holders of Grace common stock;      
however, the receipt and distribution of the interest in New Sealed Air are not 
reflected in the pro forma condensed consolidated balance sheet and statement of
operations.                                                                     
------------------------

  (a) Reflects the separation of $1,381.8 (the net assets of the
  Packaging Business). The separation of the assets and liabilities of the
Packaging Business has been accounted for as a dividend to Grace      
  stockholders and, therefore, is not reflected in the pro forma condensed
consolidated statement of operations.                                 

(b) The Distribution Agreement provides that, prior to the  
   Transactions, Grace and a Packaging Business subsidiary will borrow funds
  and will transfer the net cash proceeds of such borrowings (estimated at
    $1,240.8, subject to adjustment as provided in the Distribution Agreement)
to Grace Specialty Chemicals; included in the Cash Transfer is        
  approximately $40.8, which represents costs to be borne by the Packaging
Business in connection with the Transactions. A substantial portion of
these proceeds is expected to be used to repay all of Grace Specialty 
  Chemicals borrowings, resulting in an aggregate reduction of $1,104.2 in
    its debt (consisting of $1,062.7 in long-term debt and $41.5 in short-term
   debt). In the event that all Grace Specialty Chemicals borrowings are not
     repaid, the pro forma condensed consolidated balance sheet would reflect an
     increase in cash and cash equivalents and debt, and the pro forma condensed
    consolidated statement of operations would reflect an increase in interest
    expense and related financing costs. The net cash proceeds remaining after
   the repayment of borrowings are expected to be used for general corporate
  purposes of New Grace. It is expected that New Grace will incur expenses
    totaling approximately $138.3 (net of $17.5 in tax benefits) in connection
with the Transactions, comprised primarily of debt retirement costs,  
non-U.S. taxes, and investment banking, legal and accounting fees.    

          (c) As provided in the Merger Agreement, New Grace will retain certain
assets and liabilities of the Packaging Business subsequent to the    
    Transactions. These retained assets and liabilities (including the related
deferred tax assets and liabilities) are primarily comprised of U.S.  
 pension plan assets and accruals related to other postretirement health
care and life insurance benefits, long-term incentive compensation,   
environmental remediation and certain tax benefits.                   

      (d) In connection with the Spin-off, holders of Grace Common Stock
  will receive one share of New Grace common stock for each share of Grace
 common stock held of record at the Time of Spin-off. The treasury stock
    held by Grace at September 30, 1997 is to be retired prior to December 31,
   1997 and therefore will not be transferred to New Grace and is eliminated
     in the pro forma adjustments. As a result of the retirement of the treasury
   stock, (i) the $331.7 of treasury stock will be eliminated, (ii) retained
  earnings will decrease by $298.0, (iii) paid in capital will decrease by
$33.6 and (iv) common stock will decrease by $0.1.                    

          (e) Represents an adjustment to eliminate a retained deficit resulting
from the Transactions and the retirement of Grace's treasury stock    
(discussed in note (d) above) against paid in capital.                

          (f) Represents the results of operations of the Packaging Business for
   the periods presented. Amounts have been derived from the Grace Packaging
   Special-Purpose Combined Financial Statements included in the Joint Proxy
Statement/Prospectus and have been adjusted to conform to Grace's     
historical classifications.                                           

      (g) For the year ended December 31, 1996, the assumed reduction in
debt as of January 1, 1996 would have the pro forma effect of reducing
   total interest expense and related financing costs by $54.2. For the nine
months ended September 30, 1997, the assumed reduction in debt as of  
January 1, 1996                                                       
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would have the pro forma effect of reducing total interest expense and
related financing costs by $51.7. The pro forma condensed consolidated
 statement of operations reflects interest expense and related financing
   costs incurred on borrowings outstanding during the respective periods in
excess of the Cash Transfer.                                          

      (h) Based on the U.S. federal statutory corporate tax rate of 35%.

      (i) In the Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the years ended December 31, 1994 and 1995 and the nine
     months ended September 30, 1996, interest expense has been allocated to the
  Packaging Business based on the ratio of the net assets of the Packaging
Business as compared to Grace's total capital, resulting in interest  
 expense of $26.6 for 1994, $41.4 for 1995 and $37.5 for the nine months
ended September 30, 1996.                                             
------------------------

    For historical financial information for Grace (including the Consolidated
Financial Statements, the Third Quarter Financial Statements and Management's   
Discussion and Analysis of Results of Operations and Financial Condition), see  
Annexes F and G to this Information Statement.                                  

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BUSINESS OF NEW GRACE AND GRACE SPECIALTY CHEMICALS 

   New Grace was incorporated in August 1997 as a wholly owned subsidiary of
Grace and currently has no assets. Prior to the Spin-off, Grace Specialty       
Chemicals will transfer the Packaging Business to a Packaging Business          
subsidiary and will distribute the stock of that subsidiary to Grace. Grace will
then contribute to New Grace all of the capital stock of Grace Specialty        
Chemicals and effect the Spin-off. Immediately following the Spin-off, the name 
of New Grace will be changed to "W. R. Grace & Co." New Grace's principal       
executive offices are located at One Town Center Road, Boca Raton, Florida      
33486-1010, and its telephone number is (561) 362-2000.                         

OVERVIEW AND STRATEGY                                                           

     Grace Specialty Chemicals is one of the world's leading specialty chemicals
companies. It began operating the Specialty Chemicals Businesses in 1954, when  
it acquired both the Dewey and Almy Chemical Company and the Davison Chemical   
Company.                                                                        

Grace Specialty Chemicals' businesses are catalysts and silica-based  
products; construction chemicals and specialty building materials; and container
sealants and coatings. Grace Specialty Chemicals believes that each of these    
businesses is an industry leader, offers high-value-added products, employs     
leading technology and has a global presence. Grace Specialty Chemicals'        
products and systems serve highly specialized market segments; accordingly,     
competition tends to be based primarily on technological capability, customer   
service, product quality, and, to a lesser extent, price. Grace Specialty       
Chemicals believes that it provides highly differentiated, superior products and
services through investments in research and development, manufacturing and     
technical facilities that enable Grace Specialty Chemicals to take advantage of 
expanding global opportunities, and technology platforms capable of providing   
multiple products to satisfy customers' specific needs.                         

   Grace Specialty Chemicals' strategy has been and, following the Spin-off,
will be to enhance stockholder value by profitably growing the Specialty        
Chemicals Businesses on a global basis and achieving high levels of financial   
performance. To achieve these objectives, Grace Specialty Chemicals plans to (i)
use the funds received in the Cash Transfer to repay borrowings and to invest in
its businesses; (ii) invest in research and development activities, with the    
goals of introducing new value-added products and services and enhancing        
manufacturing processes; (iii) make selected strategic acquisitions; and (iv)   
continue to implement process improvements and cost-management initiatives,     
including rigorous controls on working capital and capital spending. These plans
are designed to make Grace Specialty Chemicals a high-performance company       
focused on the strengths of its global specialty chemicals businesses.          

 From 1994 through 1996, Grace Specialty Chemicals' capital expenditures
totaled $561.7 million (including $178.3 million in 1996). These expenditures   
were primarily directed towards the expansion of existing facilities and the    
construction of new facilities. Grace Specialty Chemicals anticipates that its  
capital expenditures for 1997 will approximate $120 million.                    

   In the future, Grace Specialty Chemicals intends to continue its emphasis
on internal growth. In addition, it may effect acquisitions, joint ventures and 
strategic alliances that afford synergies or other benefits necessary to fulfill
strategic objectives of a business (such as a key technology or opportunities   
for geographic expansion) or that provide a combination of a close fit with an  
existing business with the potential for exceptional returns.                   

At year-end 1996, Grace Specialty Chemicals had approximately 6,000   
full-time employees worldwide in its continuing operations.                     

SPECIALTY CHEMICALS INDUSTRY OVERVIEW                                           

   Specialty chemicals, such as those produced by Grace Specialty Chemicals,
are high-value-added products used as intermediates in a wide variety of        
products and processes; they are produced in relatively small volumes and must  
satisfy well-defined performance requirements and specifications. Specialty     
chemicals are often critical components of the end products and processes in    
which they are used; consequently, they are tailored to customer needs, which   
generally results in a close relationship between the specialty chemicals       
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producer and the customer. Rapid response to changing customer needs and        
reliability of product and supply are important competitive factors in specialty
chemicals businesses.                                                           

 The management of Grace Specialty Chemicals believes that, in specialty
chemicals businesses, technological leadership (resulting from continuous       
innovation through research and development), combined with product             
differentiation and superior customer service, lead to high operating margins.  
Grace Specialty Chemicals believes that its businesses are characterized by     
market features that reward the higher research and development and customer    
service costs associated with its strategy.                                     

PRODUCTS AND MARKETS                                                            

  Catalysts and Silica-Based Products.  Grace Specialty Chemicals' Davison
unit ("Grace Davison"), founded in 1832, is composed of two primary product     
groups: (i) catalysts and (ii) silica products and adsorbents. These products   
principally apply silica, alumina and zeolite technology and are designed and   
manufactured to meet the varying specifications of such diverse customers as    
major oil refiners, plastics and chemical manufacturers, and consumer products  
companies. Grace Davison believes that its technological expertise provides a   
competitive edge, allowing it to quickly design products that meet changing     
customer specifications and to develop new products that expand its existing    
technology. For example, Grace Davison estimates that a substantial portion of  
its 1996 fluid cracking catalyst sales was attributable to products introduced  
in the previous five years.                                                     

 Grace Davison produces refinery catalysts, including (i) fluid cracking
catalysts used by petroleum refiners to convert crude oil into more valuable    
transportation fuels (such as gasoline and jet and diesel fuels) and other      
petroleum-based products, and (ii) hydroprocessing catalysts that remove certain
impurities (such as nitrogen, sulfur and heavy metals) from crude oil prior to  
the use of fluid cracking catalysts. Grace Davison also develops and            
manufactures fluid cracking catalyst additives used to reduce emissions and for 
combustion and octane enhancement. Oil refining is a highly specialized         
discipline, demanding that products be tailored to meet local variations in     
crude oil and the refinery's product output mix. Grace Davison works regularly  
with most of the approximately 360 refineries in the world, helping to find the 
most appropriate catalyst formulations for the refiners' changing needs. Grace  
Davison's business has benefited in recent years, in part, from refiners' use of
heavier crude oils, and could be adversely affected by an increase in the       
availability of lighter crude oil, which generally requires less fluid cracking 
catalysts to refine. Grace Davison's business is also affected by the capacity  
utilization of refiners' cracking units, as disproportionately greater amounts  
of fluid cracking catalysts are used at higher levels of capacity utilization.  
Competition in the refinery catalyst business is based on technology, product   
performance, customer service and price. Grace Davison believes it is one of the
world leaders in refinery catalysts and the largest supplier of fluid cracking  
catalysts in the world.                                                         

Grace Davison is a major producer of polyolefin catalysts and catalyst
supports, essential components in the manufacture of high density and linear low
density polyethylene resins used in products such as plastic film,              
high-performance plastic pipe and plastic household containers. Grace Davison   
catalysts are used in manufacturing nearly half of all such resins produced     
worldwide. The polyolefin catalyst business is technology-intensive and focused 
on providing products formulated to meet customer specifications. Manufacturers 
generally compete on a worldwide basis, and competition has recently intensified
due to evolving technologies, particularly the use of metallocenes. Grace       
Davison believes that metallocenes represent a revolutionary development in the 
making of plastics, allowing plastics manufacturers to design polymers with     
exact performance characteristics. Grace Davison is continuing to work on the   
development and commercialization of metallocene catalysts.                     

   Silica products and zeolite adsorbents produced by Grace Davison are used
in a wide variety of industrial and consumer applications. For example, silicas 
are used in coatings as flatting agents (i.e., to reduce gloss), in plastics to 
improve handling, in toothpastes as thickeners and cleaners, in foods to carry  
flavors and prevent caking, and in the purification of edible oils. Zeolite     
adsorbents are used between the two panes of insulated glass to adsorb moisture 
and are used in process applications to separate certain chemical components    
from mixtures. Competition is based on product performance, customer service and
price.                                                                          

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    Grace Davison's sales and revenues were $732 million in 1996, $700 million
in 1995 and $615 million in 1994; approximately 51% of Grace Davison's 1996     
sales and revenues were generated in North America, 35% in Europe, 12% in Asia  
Pacific and 2% in Latin America. Sales of catalysts accounted for 26% of the    
total sales and revenues of Grace Specialty Chemicals' continuing operations in 
1996, 23% in 1995 and 22% in 1994. Sales of silica products and zeolite         
adsorbents accounted for 17% of the total sales and revenues of Grace Specialty 
Chemicals' continuing operations in 1996, 14% in 1995 and 13% in 1994. At       
year-end 1996, Davison employed approximately 2,700 people worldwide in 10      
facilities (six in the U.S. and one each in Canada, Germany, Brazil and         
Malaysia). Grace Davison's principal U.S. manufacturing facilities are located  
in Baltimore, Maryland and Lake Charles, Louisiana. Grace Davison has a direct  
selling force and distributes its products directly to over 19,000 customers,   
the largest of which accounted for approximately 6% of Grace Davison's 1996     
sales and revenues.                                                             

  Most raw materials used in the manufacture of Grace Davison products are
available from multiple sources, and, in some instances, are produced by Grace  
Davison. Because of the diverse applications of products using Grace Davison    
technology and the geographic areas in which such products are used, seasonality
does not have a significant effect on Grace Davison's businesses.               

  Construction Products.  Grace Specialty Chemicals' construction products
business ("Grace Construction Products") is a leading supplier of specialty     
chemicals and building materials to the nonresidential (commercial and          
government) construction industry, and to a lesser extent, the residential      
construction industry. Its products fall into two main groups: (i) specialty    
construction chemicals (principally concrete admixtures, cement additives and   
masonry products) that add strength, control corrosion, and enhance the handling
and application of concrete; and (ii) specialty building materials that prevent 
water damage to structures (such as water- and ice-proofing products for        
residential use and waterproofing systems for commercial structures) and protect
structural steel against collapse due to fire. In North America, Grace          
Construction Products also manufactures and distributes vermiculite products    
used in construction and other industrial applications.                         

 Grace Construction Products has introduced a number of new products and
product enhancements in recent years. These new products and enhancements       
include an admixture that reduces concrete shrinkage and helps prevent cracking;
a product that enables contractors to pour and "work" concrete in colder        
temperatures; an admixture that inhibits corrosion and prolongs the life of     
concrete structures; new roof underlayments that provide added protection from  
ice and wind-driven rain; and enhancements to fireproofing products that make   
Grace Construction Products' fireproofing systems more price-competitive for    
smaller jobs. In addition to customer acceptance of these and other product     
introductions, Grace Construction Products' growth is dependent on the          
advancement of less developed economies (since, as economies develop, they      
typically increase their usage of ready-mix concrete, which allows for the      
application of more concrete admixtures).                                       

The materials produced by Grace Construction Products are sold to an  
extremely broad range of customers, including cement manufacturers, ready-mix   
and pre-stressed concrete producers, local contractors, specialty subcontractors
and applicators, masonry block manufacturers, building materials distributors   
and other industrial manufacturers, as well as construction specifiers, such as 
architects and structural engineers. For some of these customer groups (such as 
contractors), cost and ease of application are the key factors in making        
purchasing decisions; for others (such as architects and structural engineers), 
product performance and adaptability are the critical factors. In view of this  
diversity, and because Grace Construction Products' business requires intensive 
sales and customer service efforts, Grace Construction Products maintains a     
separate sales and technical support team for each of its product groups. This  
sales and support team sells products under global contracts, under U.S. or     
regional contracts and on a job-by-job basis. Consequently, Grace Construction  
Products competes globally with several large construction materials suppliers  
and regionally and locally with numerous smaller competitors. In recent years,  
the cement manufacturing business and the contracting business have experienced 
substantial consolidation, particularly in markets outside the U.S. Competition 
is based largely on technical support and service, product performance,         
adaptability of the product and price.                                          

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   Grace Construction Products' 1996 sales and revenues totaled $435 million
(64% in North America, 19% in Asia Pacific, 17% in Europe and less than 1% in   
Latin America), versus $397 million in 1995 and $387 million in 1994. Sales of  
specialty construction chemicals accounted for 15% of the total sales and       
revenues of Grace Specialty Chemicals' continuing operations in 1996, 12% in    
1995 and 11% in 1994. In addition, sales of specialty building materials        
accounted for 11% of the total sales and revenues of Grace Specialty Chemicals' 
continuing operations in 1996, 9% in 1995 and 11% in 1994. At year-end 1996,    
Grace Construction Products employed approximately 1,900 people at 56 production
facilities (26 in North America, 11 in Southeast Asia, seven in each of         
Australia/New Zealand and Europe, four in Latin America and one in Japan) and 76
sales offices worldwide. Grace Construction Products' capital expenditures tend 
to be relatively lower, and sales and marketing expenditures tend to be         
relatively higher, than those of Grace Specialty Chemicals' other businesses.   

   The construction business is cyclical, in response to economic conditions
and construction demand. The construction market experienced slow but steady    
growth through 1996 and into 1997 from a cyclical low in 1991. During this time,
management of Grace Construction Products has focused its efforts on            
streamlining its range of products by introducing new higher-value products,    
eliminating lower-growth and lower-margin products and reducing costs. For      
example, during this period, Grace Construction Products restructured its global
research activities and implemented a lower cost structure by consolidating     
manufacturing operations and streamlining its management structure. The         
construction business is also seasonal due to weather conditions. Grace         
Construction Products seeks to increase profitability and minimize the impact of
cyclical and seasonal downturns in regional economies by introducing technically
advanced value-added products, expanding geographically, and developing business
opportunities in renovation construction markets. However, there can be no      
assurance that Grace Construction Products' attempts to minimize the impact of  
the cyclicality and seasonality of the construction business will succeed, and  
such cyclicality and seasonality could adversely affect Grace Construction      
Products' business and results of operations.                                   

    The raw materials used by Grace Construction Products can be obtained from
multiple sources, including commodity chemical producers, petroleum companies   
and paper manufacturers. In most instances, there are at least two alternative  
suppliers for each of the principal raw materials used by Grace Construction    
Products. The worldwide supply of calcium lignin, a wood pulping by-product used
as a raw material in the production of concrete admixtures, had been decreasing 
as paper mills converted to new manufacturing processes. In 1996, additional    
supplies of calcium lignin became available, alleviating the shortage. However, 
there is no assurance that the additional supplies will remain available in     
sufficient quantities or at satisfactory prices.                                

Container Sealants and Coatings.  Grace Specialty Chemicals' container
sealants and coatings business ("Darex Container Products") consists primarily  
of three product lines: container sealants, closure sealants and coatings for   
metal packaging. Container sealants are applied to food and beverage cans, as   
well as to other rigid containers (such as industrial product containers and    
aerosol cans), to ensure a hermetic seal between the lid and the body of the    
container. Closure sealants are used to seal pry-off and twist-off metal crowns,
as well as roll-on pilfer proof and plastic closures, for the glass and plastic 
container markets (primarily in beverage and food applications). Coatings are   
used in the manufacture of cans and closures to protect the metal against       
corrosion, to protect the contents against the influences of metal, to ensure   
proper adhesion of sealing compounds to metal surfaces, and to provide base     
coats for inks and for decorative purposes. These products are principally sold 
to third parties that manufacture containers or perform canning and bottling for
food and beverage companies. Darex Container Products is expanding its product  
offering and is seeking to improve sales growth through new technologies, such  
as its oxygen-scavenging compounds. These new compounds are combined with       
closure sealants to eliminate oxygen in capped beer and beverage bottles, which 
management believes significantly extends shelf life of the product. Darex      
Container Products is commercially producing oxygen-scavenging compounds for    
several breweries and is testing such compounds with other breweries. Darex     
Container Products is also expanding in developing regions. However, future     
sales growth will likely be impacted by the trend toward can systems requiring  
fewer seams, as well as the increasing use of plastic and glass containers.     
Competition is based on providing high-quality customer service at customer     
sites, as well as on price, quality and reliability. In addition, because of the
relative concentration of the canning and bottling market, maintaining          
relationships with leading container manufacturers, canners and                 

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bottlers, and assisting them as they install new production equipment and       
reengineer processes, are key elements for success.                             

 Darex Container Products' sales and revenues were $275 million in 1996,
$280 million in 1995 and $253 million in 1994. Its products are marketed        
internationally, with 37% of 1996 sales and revenues in Europe, 24% in North    
America, 23% in Asia Pacific and 16% in Latin America. At year-end 1996, Darex  
Container Products employed approximately 1,400 people at 21 production         
facilities (seven in each of Latin America and Asia Pacific, four in North      
America and three in Europe) and 37 sales offices worldwide. Although the raw   
materials used in Darex Container Products' operations, including resins, rubber
and latices, are generally available from multiple sources, the prices of       
certain raw materials experienced upward pressure during most of 1996 and, to a 
lesser extent, 1997. Darex Container Products is seeking to establish global    
supply arrangements that would tend to alleviate this pressure; however, no     
assurance can be given that such arrangements can be entered into on acceptable 
terms. Although demand for container packaging and sealant products tends to    
increase slightly during the second and third quarters, the impact of such      
seasonality is not significant to Darex Container Products.                     

   Grace Specialty Chemicals is considering strategic alternatives for Darex
Container Products. These alternatives include acquiring one or more            
complementary businesses; entering into joint ventures or other combinations    
with such businesses; or selling Darex Container Products. However, there is no 
assurance as to whether or when any of these strategic alternatives will be     
accomplished.                                                                   

RESEARCH ACTIVITIES                                                             

Grace Specialty Chemicals engages in research and development programs
directed toward the development of new products and processes, and the          
improvement of, and development of new uses for, existing products and          
processes. Research is carried out by product line laboratories in North        
America, Europe, Asia and Latin America and includes research in catalysts and  
construction materials. Grace Specialty Chemicals' research and development     
strategy will be to develop technology platforms on which new products will be  
based, while focusing development efforts in each business unit on the          
improvement of existing products and/or the adaptation of existing products to  
customer needs.                                                                 

Research and development expenses relating to continuing operations   
amounted to $50 million in 1996, $66 million in 1995 and $62 million in 1994    
(including expenses incurred in funding external research projects). The amount 
of research and development expenses relating to government- and                
customer-sponsored projects (as opposed to projects sponsored by Grace Specialty
Chemicals) was not material.                                                    

PATENTS AND OTHER INTELLECTUAL PROPERTY MATTERS                                 

Grace Specialty Chemicals relies on numerous patents and patent       
applications, as well as know-how and other proprietary information. As         
competition in the markets in which Grace Specialty Chemicals does business is  
often based on technological superiority and innovation, with new products being
introduced frequently, the ability to achieve technological innovations and to  
obtain patent or other intellectual property protection is important. There can 
be no assurance that Grace Specialty Chemicals' patents, patent applications or 
other intellectual property will provide sufficient proprietary protection. In  
addition, other companies may independently develop similar systems or processes
that circumvent patents issued to Grace Specialty Chemicals, or may acquire     
patent rights within the fields of Grace Specialty Chemicals' businesses.       

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS                                        

 Manufacturers of specialty chemical products, including Grace Specialty
Chemicals, are subject to stringent regulations under numerous U.S. federal,    
state and local and foreign environmental, health and safety laws and           
regulations relating to the generation, storage, handling, discharge and        
disposition of hazardous wastes and other materials. Grace Specialty Chemicals  
has expended substantial funds in order to comply with such laws and regulations
and expects to continue to do so in the future. The following table sets forth  
Grace Specialty Chemicals' expenditures in the past three years, and its        
estimated expenditures in 1997 and 1998, for (i) the operation and maintenance  
of environmental facilities and the disposal of wastes with respect             
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to continuing operations; (ii) capital expenditures for environmental control   
facilities relating to continuing operations; and (iii) site remediation:       

                                                                · Download Table

                                           (I)                                   
                                       OPERATION OF         (II)         (III)   
                                      FACILITIES AND      CAPITAL        SITE    
                                      WASTE DISPOSAL    EXPENDITURES  REMEDIATION
                                      --------------    ------------  -----------
                                                     ($ IN MILLIONS)             
                                                                                 
1994.................................      $28              $16           $31    
1995.................................       34               12            31    
1996.................................       33               10            20    
1997 (est.)..........................       33                7            34    
1998 (est.)..........................       35                9            39    

 Additional material environmental costs may arise as a result of future
legislation or other developments. Grace Specialty Chemicals' earnings,         
competitive position and other capital expenditures have not been, and are not  
expected to be, materially adversely affected by compliance with environmental  
requirements. See "Management's Discussion and Analysis of Results of Operations
and Financial Condition," included in Annexes F and G.                          

With the goal of continuously improving Grace Specialty Chemicals'    
environmental, health and safety ("EHS") performance, Grace established its     
Commitment to Care(TM) initiative (based on the Responsible Care(R) program of  
the Chemical Manufacturers Association) in 1994 as the program under which all  
Grace Specialty Chemicals' EHS activities are to be implemented. To the extent  
applicable, Commitment to Care extends the basic elements of Responsible Care to
all Grace Specialty Chemicals locations worldwide, embracing specific           
performance objectives in the key areas of product stewardship, employee health 
and safety, community awareness and emergency response, distribution, process   
safety and pollution prevention.                                                

See "-- Legal Proceedings and Regulatory Matters" for information     
concerning environmental proceedings to which Grace Specialty Chemicals is a    
party and "Management's Discussion and Analysis of Results of Operations and    
Financial Condition," included in Annexes F and G, for additional information   
concerning environmental matters.                                               

LEGAL PROCEEDINGS AND REGULATORY MATTERS                                        

    Asbestos Litigation.  Grace Specialty Chemicals is a defendant in property
damage and personal injury lawsuits relating to previously sold                 
asbestos-containing products and anticipates that it will be named as a         
defendant in additional asbestos-related lawsuits in the future. Grace Specialty
Chemicals was a defendant in approximately 43,700 asbestos-related lawsuits at  
September 30, 1997 (17 involving claims for property damage and the remainder   
involving approximately 105,800 claims for personal injury), as compared to     
approximately 41,500 lawsuits at year-end 1996 (31 involving claims for property
damage and the remainder involving approximately 91,500 claims for personal     
injury). In most of these lawsuits, Grace Specialty Chemicals is one of many    
defendants.                                                                     

The plaintiffs in property damage lawsuits generally seek to have the 
defendants absorb the cost of removing, containing or repairing the             
asbestos-containing materials in the affected buildings. Through September 30,  
1997, 139 asbestos property damage cases were dismissed without payment of any  
damages or settlement amounts; judgments were entered in favor of Grace         
Specialty Chemicals in nine cases (excluding cases settled following appeals of 
judgments in favor of Grace Specialty Chemicals); judgments were entered in     
favor of the plaintiffs in seven cases for a total of $60.3 million (none of    
which is on appeal); and 195 property damage cases were settled for a total of  
$476.6 million.                                                                 

Included in the asbestos property damage cases pending against Grace  
Specialty Chemicals and others at September 30, 1997 were the following class   
actions: (i) an action, conditionally certified by the U.S. Court of Appeals for
the Fourth Circuit in 1993 and pending in the U.S. District Court for the       
District of South Carolina, covering all public and private colleges and        
universities in the U.S. whose buildings contain asbestos materials (Central    
Wesleyan College, et al. v. W. R. Grace, et al.); and (ii) a purported class    
action (Anderson                                                                

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Memorial Hospital, et al. v. W. R. Grace & Co., et al.), filed in 1992, in the  
Court of Common Pleas for Hampton County, South Carolina, on behalf of all      
entities that own, in whole or in part, any building containing asbestos        
materials manufactured by Grace Specialty Chemicals or one of the other named   
defendants, other than buildings subject to the class action lawsuit described  
above and any building owned by the federal or any state government. In July    
1994, the claims of most class members in Anderson Memorial Hospital, et al. v. 
W. R. Grace & Co., et al. were dismissed due to a ruling that a South Carolina  
statute prohibits nonresidents from pursuing claims in the South Carolina state 
courts with respect to buildings located outside the state. The plaintiffs have 
requested that the court reconsider its decision.                               

   Through September 30, 1997, approximately 12,600 personal injury lawsuits
involving 29,100 claims were dismissed without payment of any damages or        
settlement amounts (primarily on the basis that Grace Specialty Chemicals       
products were not involved), and approximately 34,100 such suits involving      
approximately 71,300 claims were disposed of for a total of $212.1 million. See 
"-- Insurance Litigation."                                                      

  In 1991, the Judicial Panel on Multi-District Litigation consolidated in
the U.S. District Court for the Eastern District of Pennsylvania, for pre-trial 
purposes, all asbestos personal injury cases pending in the U.S. federal courts,
including approximately 7,000 cases then pending against Grace Specialty        
Chemicals; 3,600 new cases involving 7,200 claims against Grace Specialty       
Chemicals have subsequently been added to the consolidated cases. To date, no   
action has been taken by the court handling the consolidated cases that would   
indicate whether the consolidation will affect Grace Specialty Chemicals' cost  
of disposing of these cases or its defense costs.                               

Grace Specialty Chemicals previously purchased insurance policies with
respect to its asbestos-related lawsuits and claims. Grace Specialty Chemicals  
has settled with and been paid by its primary insurance carriers with respect to
both property damage and personal injury cases and claims. Grace Specialty      
Chemicals also has settled with its excess insurance carriers that wrote        
policies available for property damage cases; those settlements involve amounts 
paid and to be paid to Grace Specialty Chemicals. In addition, Grace Specialty  
Chemicals has settled with many excess insurance carriers that wrote policies   
available for personal injury claims. Grace Specialty Chemicals is currently in 
litigation with certain remaining excess insurance carriers whose policies      
generally represent layers of coverage Grace Specialty Chemicals has not yet    
reached. Such policies are believed by Grace Specialty Chemicals to be available
for asbestos-related personal injury lawsuits. Insurance coverage for           
asbestos-related liabilities has not been commercially available since 1985.    

  Grace Specialty Chemicals' aggregate accrual for asbestos liabilities at
September 30, 1997, was $910.5 million; this amount reflects all                
asbestos-related property damage and personal injury cases and claims then      
pending (except for one property damage case as to which liability is not yet   
estimable because Grace Specialty Chemicals has not yet been able to obtain     
sufficient information through discovery proceedings), as well as personal      
injury claims expected to be filed through 2001. Grace Specialty Chemicals'     
ultimate exposure with respect to its asbestos-related cases and claims will    
depend on the number and nature of claims filed and the extent to which         
insurance will cover damages for which it may be liable, amounts paid in        
settlement and litigation costs. At September 30, 1997, Grace Specialty         
Chemicals had recorded a receivable of $328.4 million, the amount Grace         
Specialty Chemicals estimated to be the probable recovery from its insurance    
carriers with respect to pending and projected asbestos cases and claims. A May 
1994 decision of the U.S. Court of Appeals for the Second Circuit limited the   
amount of insurance coverage available to Grace Specialty Chemicals with respect
to property damage cases. Because Grace Specialty Chemicals' insurance covers   
both property damage and personal injury cases and claims, the May 1994 decision
has had the concomitant effect of reducing the insurance coverage available with
respect to Grace Specialty Chemicals' asbestos personal injury claims. However, 
in Grace Specialty Chemicals' opinion (which is not based on a formal opinion of
counsel), it is probable that recoveries from its insurance carriers, along with
other funds, will be available to satisfy the property damage and personal      
injury cases and claims pending at September 30, 1997, as well as personal      
injury claims expected to be filed in the foreseeable future. Consequently,     
Grace Specialty Chemicals believes that the resolution of its asbestos-related  
litigation will not have a material adverse effect on its consolidated financial
position.                                                                       

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See "-- Insurance Litigation" and Note 2 to the Consolidated Financial
Statements and Note 2 to the Third Quarter Financial Statements, included in    
Annexes F and G, respectively, to this Information Statement, for additional    
information.                                                                    

    Environmental Proceedings.  The following is a description of the material
environmental proceedings in which Grace Specialty Chemicals is involved:       

    Grace Specialty Chemicals (together with certain other companies) has been
designated a "potentially responsible party" ("PRP") by the U.S. Environmental  
Protection Agency ("EPA") with respect to absorbing the costs of investigating  
and remediating pollution at various sites. At year-end 1996, proceedings were  
pending with respect to approximately 30 sites as to which Grace has been       
designated a PRP. U.S. federal law provides that all PRPs may be held jointly   
and severally liable for the costs of investigating and remediating a site.     
Grace Specialty Chemicals is also conducting investigatory and remediation      
activities at sites under the jurisdiction of state and/or local authorities.   

     In November 1995, Grace Specialty Chemicals received a letter from the U.S.
Department of Energy ("DOE") inquiring as to Grace Specialty Chemicals'         
willingness to contribute to the continued cleanup of a former Grace Specialty  
Chemicals property located in Wayne, New Jersey. The letter asserted that Grace 
Specialty Chemicals has a legal duty to pay for the cleanup and that the total  
cost of cleanup may exceed $100 million. The operations conducted by Grace      
Specialty Chemicals at the Wayne site (from 1955 to 1970) included work done on 
radioactive materials under contract with the U.S. government. In 1975, the U.S.
Nuclear Regulatory Commission inspected the site, concluded that it was         
decontaminated in accordance with applicable regulations and released it for    
unrestricted use. In 1984, pursuant to a request from the DOE, Grace Specialty  
Chemicals transferred the Wayne property to the DOE and made a cash payment as a
contribution towards the DOE's cleanup efforts at the site, which was           
acknowledged by the DOE as fulfilling any obligation Grace Specialty Chemicals  
had to contribute to the DOE's cleanup effort while preserving the rights and   
liabilities of the parties under other existing applicable laws. Grace Specialty
Chemicals believes that the resolution of the DOE's claim will not have a       
material adverse effect on its consolidated financial position.                 

  Grace Specialty Chemicals is a party to additional proceedings involving
U.S. federal, state and/or local government agencies and private parties        
regarding Grace Specialty Chemicals' compliance with environmental laws and     
regulations. These proceedings are not expected to result in significant        
sanctions or in any material liability. However, Grace Specialty Chemicals may  
incur material liability in connection with future actions of governmental      
agencies or private parties relating to past or future practices of Grace       
Specialty Chemicals with respect to the generation, storage, handling, discharge
or disposition of hazardous wastes and other materials.                         

   Grace Specialty Chemicals believes that the liabilities for environmental
remediation costs, including costs relating to environmental proceedings, that  
have been recorded in Grace's historical financial statements are adequate. In  
addition, Grace Specialty Chemicals is presently involved in litigation with its
insurance carriers seeking to hold them responsible for certain amounts for     
which Grace Specialty Chemicals may be held liable with respect to such costs.  
The outcome of such litigation, as well as the amounts of any recoveries that   
Grace Specialty Chemicals may receive in connection therewith, is presently     
uncertain. However, Grace Specialty Chemicals believes that the resolution of   
pending environmental proceedings will not have a material adverse effect on the
consolidated financial position or liquidity of New Grace. For further          
information, see "Management's Discussion and Analysis of Results of Operations 
and Financial Condition," included in Annexes F and G.                          

    Insurance Litigation.  Grace Specialty Chemicals is involved in litigation
with certain of its insurance carriers with respect to asbestos-related         
insurance claims and environmental liabilities. The relief sought by Grace      
Specialty Chemicals in these actions would provide insurance that would         
partially offset Grace Specialty Chemicals' estimated exposure with respect to  
amounts previously expended, and that may be expended in the future, by Grace   
Specialty Chemicals to defend claims, satisfy judgments and fund settlements.   
Grace Specialty Chemicals has settled all of its asbestos-related insurance     
coverage actions, with the exception of Maryland Casualty Co. v. W. R. Grace &  
Co., pending in the U.S. District Court for the Southern District of New York.  
The District Court has not yet addressed Grace Specialty Chemicals' claims for  
insurance coverage for its asbestos-related personal injury liabilities.        
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   Prior to 1993, Grace Specialty Chemicals received from insurance carriers
payments totaling $97.7 million, the majority of which represented the aggregate
remaining obligations owed to Grace Specialty Chemicals by those carriers for   
primary-level insurance coverage written for the period from June 30, 1962      
through June 30, 1987. In 1993 and 1994, Grace Specialty Chemicals settled with 
insurance carriers for a total of $300.2 million (portions of which were paid or
will be paid in subsequent years), in reimbursement for amounts expended by     
Grace Specialty Chemicals in connection with asbestos-related litigation. In    
1995, Grace Specialty Chemicals settled with a primary-level insurer for $100   
million, and with other insurers for a total of $200.3 million, including future
payments of approximately $70 million. In 1996, Grace Specialty Chemicals       
settled with additional excess-level insurers for a total of $110.5 million     
(including $19.2 million to be received over the next five years) with respect  
to both product liability and other coverage. As a result of these settlements, 
Grace Specialty Chemicals' asbestos-related insurance claims have been dismissed
as to the primary-level product liability insurance coverage previously sold by 
the relevant insurers to Grace Specialty Chemicals, as well as to many of Grace 
Specialty Chemicals' excess-level liability insurers.                           

  Grace's only two environmental insurance coverage actions are pending in
the U.S. District Court for the Southern District of New York. The first is     
styled Maryland Casualty Co. v. W. R. Grace & Co. Litigation continues in this  
case as to certain primary-level and excess-level carriers that have not settled
with respect to claims for environmental property damage. The second case,      
entitled Uniguard v. W. R. Grace, was filed on December 17, 1997. This          
declaratory judgment action seeks a determination concerning the liability of   
one excess carrier for bodily injury claims as a result of environmental        
contamination.                                                                  

See "Management's Discussion and Analysis of Results of Operations and
Financial Condition," included in Annexes F and G, for additional information.  

Fumed Silica Plant Litigation.  In 1993, Grace Specialty Chemicals and
certain of its subsidiaries initiated legal action in the Belgian courts against
the Flemish government to recover losses resulting from the closing of one      
subsidiary's fumed silica plant in Puurs, Belgium. The action seeks damages in  
excess of four billion Belgian francs (approximately $126.1 million at the      
December 31, 1996 exchange rate), plus interest and lost profits. This claim was
dismissed at the trial court level and is now being appealed. The trial court   
also determined that a subsidiary should repay approximately 239 million Belgian
francs (approximately $7.5 million at the December 31, 1996 exchange rate), plus
interest, to the Flemish government for previously received investment grants;  
this decision is also being appealed.                                           

U.S. Justice Department Lawsuit.  The U.S. Justice Department has     
intervened in a qui tam lawsuit, originally filed in June 1995, pending in the  
U.S. District Court for the Northern District of California (United States ex   
rel. Robert Costa and Ronald Thornburg, et al. v. Baker & Taylor, Inc., et al.).
The complaint in this lawsuit alleges that Baker & Taylor Books, a book         
wholesaler sold by Grace in 1992, overcharged public schools, libraries and     
federal agencies during the last ten years, including the period during which   
Baker & Taylor Books was owned by Grace. Grace and Baker & Taylor, Inc. (the    
entity that currently operates Baker & Taylor Books) have been named as         
defendants. The lawsuit seeks unspecified damages, punitive damages and civil   
penalties, as well as attorneys' fees and expenses and such other relief as the 
Court may deem proper. At this time, Grace is unable to determine the liability,
if any, to which it may be subject as a result of this lawsuit.                 

Stockholder Litigation.  W. R. Grace & Co., a New York corporation    
subsequently renamed Fresenius Medical Care Holdings, Inc. ("Grace New York"),  
and former members of the Grace New York Board of Directors (as well as J. P.   
Bolduc, who resigned as president and chief executive officer and a director of 
Grace New York in March 1995) are defendants in a case entitled Weiser, et al.  
v. Grace, et al. pending in New York State Supreme Court, New York County. The  
consolidated amended complaint in this lawsuit, which purports to be a          
derivative action (i.e., an action brought on behalf of Grace New York),        
alleges, among other things, that the individual defendants breached their      
fiduciary duties to Grace New York (i) by providing J. Peter Grace, Jr. (the    
chairman and a director of Grace New York until his death in April 1995) with   
certain compensation arrangements upon his voluntary retirement as Grace New    
York's chief executive officer in 1992 and (ii) by approving Mr. Bolduc's       
severance arrangements, and that Messrs. Grace and Bolduc breached their        
fiduciary duties by accepting such benefits and payments. The lawsuit seeks     
unspecified                                                                     

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damages, the cancellation of all allegedly improper agreements, the cancellation
of a retirement plan for nonemployee directors (which was terminated by Grace in
1997), the return of all remuneration paid to the directors who are defendants  
while they were in breach of their fiduciary duties to Grace New York,          
attorneys' and experts' fees and costs, and such other relief as the Court deems
proper. A motion to intervene in the case by the California Public Employees'   
Retirement System was granted by the Court in September 1996. Grace has         
appointed a special committee of independent directors to investigate the       
allegations made in the Weiser action and determine whether they should be      
dismissed, pursued or compromised. In January 1998, the special committee       
resolved to seek the dismissal of the Weiser action. Any such dismissal is      
subject to court approval.                                                      

Under the terms of the Distribution Agreement ("NMC Distribution      
Agreement") entered into in connection with the reorganization of Grace New York
in September 1996 (the "NMC Transaction") described in Note 1 to the            
Consolidated Financial Statements, Grace Specialty Chemicals remains financially
responsible for any liabilities incurred by Grace New York and others as a      
result of this lawsuit, including the fees and disbursements of counsel for     
Grace Specialty Chemicals and, subject to certain conditions, counsel for the   
individual defendants (including certain current and former directors of Grace).
The discussions of the NMC Distribution Agreement appearing above and in the    
following paragraphs do not purport to be complete and are qualified in their   
entirety by reference to the NMC Distribution Agreement, which was filed as an  
exhibit to the Joint Proxy Statement-Prospectus of Grace New York dated August  
2, 1996.                                                                        

     Securities and Exchange Commission Investigations.  In 1995, the Securities
and Exchange Commission ("SEC") began a formal investigation with respect to    
Grace New York's prior disclosures regarding benefits and retirement            
arrangements provided to J. Peter Grace, Jr. and certain matters relating to J. 
Peter Grace III, a son of J. Peter Grace, Jr. On September 30, 1997, Grace      
consented to the entry of a cease-and-desist order in settlement of this        
investigation. Under the order, Grace (without admitting or denying the matters 
set forth therein) agreed to cease and desist from further violations of        
Sections 13(a) and 14(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules thereunder. No penalties or fines were assessed  
under the order, and Grace has been advised that the investigation has been     
closed.                                                                         

In April 1996, Grace New York received a formal order of investigation
issued by the SEC directing an investigation into, among other things, whether  
Grace New York violated the U.S. federal securities laws by filing periodic     
reports with the SEC that contained false and misleading financial information. 
Pursuant to this formal order of investigation, Grace New York has provided     
information to the SEC relating to reserves (net of applicable taxes)           
established by Grace New York and its subsidiary, National Medical Care, Inc.   
("NMC"), during the period from January 1, 1990 to 1996 (the "Covered Period"). 
All financial statements filed by Grace New York with the SEC during the Covered
Period (other than unaudited quarterly financial statements), the financial     
statements of NMC included in the NMC Form 10 filed with the SEC in September   
1995, and the Consolidated Financial Statements were covered by unqualified     
opinions issued by Price Waterhouse LLP, independent certified public           
accountants. In connection with the preparation of the September 1995 Form 10,  
NMC reversed the unallocated reserves established 1990, 1991, 1992 and 1993 that
are a subject of this investigation and established reserves in an approximately
equal amount with respect to NMC's investment in Cross Country Healthcare       
Personnel, Inc. and in its German renal products manufacturing facilities for   
fiscal years 1992 and 1994.                                                     

Under the terms of the NMC Distribution Agreement, Grace Specialty    
Chemicals remains financially responsible for any liabilities incurred by Grace 
New York and others as a result of the investigation described above, including 
the fees and disbursements of counsel for Grace Specialty Chemicals and, subject
to certain conditions, counsel for certain former directors and officers of     
Grace.                                                                          

 Claims Relating to NMC.  Grace New York and certain of its officers and
directors are defendants in a lawsuit entitled Murphy, et al. v. W. R. Grace &  
Co., et al., which is pending in the U.S. District Court for the Southern       
District of New York. The first amended class action complaint in this lawsuit, 
which purports to be a class action on behalf of all persons and entities who   
purchased Grace New York's publicly traded securities during the period from    
March 13, 1995 through October 17, 1995 (the "Class Period"), generally alleges 
that                                                                            

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the defendants concealed information, and issued misleading public statements   
and reports, concerning NMC's financial position and business prospects, a      
proposed spin-off of NMC and the matters that are the subject of investigations 
of NMC by the Office of the Inspector General of the U.S. Department of Health  
and Human Services (the "OIG"), in violation of U.S. federal securities laws.   
The lawsuit seeks unspecified damages, attorneys' and experts' fees and costs   
and such other relief as the Court deems proper.                                

  Grace New York and certain of its former officers and directors are also
defendants in a purported derivative action in the U.S. District Court for the  
Southern District of New York (Bennett v. Bolduc, et al.), alleging that such   
individuals breached their fiduciary duties by failing to properly supervise the
activities of NMC in the conduct of its business. The Bennett action seeks      
unspecified damages, attorneys' and experts' fees and costs and such other      
relief as the Court deems proper. A third derivative action relating to NMC     
entitled Bauer v. Bolduc, et al. was filed in October 1995 in the Supreme Court 
of the State of New York for the County of New York. The Bauer action has been  
stayed in favor of the Bennett action.                                          

  Grace and other defendants in the Murphy, Bennett and Bauer actions have
agreed with the plaintiffs to settle those actions. The agreement provides for  
the establishment of a fund of approximately $32 million (less plaintiffs'      
attorneys' fees) to compensate a class of stockholders consisting of purchasers 
of Grace New York stock during the Class Period. As part of the settlements, the
insurance carrier for the directors and officers will cause $10 million to be   
paid to Grace Specialty Chemicals on behalf of the individual defendants named  
in the Murphy, Bennett and Bauer actions. The settlements are contingent upon   
court approval. The net payment to be made by Grace Specialty Chemicals in      
connection with these settlements will be charged against previously established
reserves.                                                                       

Under the terms of the NMC Distribution Agreement, Grace Specialty    
Chemicals remains financially responsible for any liabilities incurred by Grace 
New York and others as a result of the lawsuits described above, including the  
fees and disbursements of counsel for Grace Specialty Chemicals and, subject to 
certain conditions, counsel for the individual defendants (including certain    
former directors and officers of Grace). The NMC Distribution Agreement also    
provides generally for certain cross-indemnities designed to place with Grace   
New York (which has become a subsidiary of Fresenius AG, a German corporation   
not affiliated with Grace) financial responsibility for the liabilities of the  
health care businesses formerly owned by Grace New York (including, without     
limitation, all liabilities relating to compliance or noncompliance with U.S.   
food and drug law, medical and Medicare billing and reimbursement law and other 
health care matters) and to place with Grace Specialty Chemicals financial      
responsibility for the other liabilities of Grace New York and its other        
subsidiaries (including, without limitation, liabilities relating to the        
manufacture or sale of asbestos-containing materials by the Specialty Chemicals 
Businesses). Grace Specialty Chemicals and Grace New York have asserted claims  
against each other for indemnity with respect to claims asserted by third       
parties pursuant to the terms of these provisions.                              

See Note 6 to the Consolidated Financial Statements and "Management's 
Discussion and Analysis of Results of Operations and Financial Condition,"      
included in Annexes F and G, for additional information concerning certain      
litigation and proceedings involving NMC.                                       

PROPERTIES                                                                      

    Grace Specialty Chemicals operates manufacturing and other types of plants
and facilities (including office and other service facilities) throughout the   
world, some of which are shared by two or more of Grace Specialty Chemicals'    
product lines or will be shared by Grace Specialty Chemicals and New Sealed Air 
following the Transactions. Grace Specialty Chemicals considers its major       
operating properties to be in good operating condition and suitable for their   
current use. Although Grace Specialty Chemicals believes that, after taking     
planned expansion into account, the productive capacity of its plants and other 
facilities is generally adequate for current operations and foreseeable growth, 
it conducts ongoing, long-range forecasting of its capital requirements to      
assure that additional capacity will be available when and as needed.           
Accordingly, Grace Specialty Chemicals does not anticipate that its operations  
or income will be materially affected by the absence of available capacity. See 
"Management's Discussion and Analysis of Results of Operations and              

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Financial Condition," included in Annexes F and G, for information regarding    
Grace Specialty Chemicals' capital expenditures.                                

The following table describes Grace Specialty Chemicals' principal    
properties, all of which are owned.                                             

                                                        · Enlarge/Download Table

                                                IMPROVED LAND AREA            PRIMARY          
                                                   (APPROXIMATE               PRODUCT          
LOCATION                                           SQUARE FEET)                LINES           
--------                                        ------------------  ---------------------------
                                                                                               
5500 Chemical Road.............................     1,800,000       Grace Davison              
Baltimore, MD                                                                                  
P.O. Box 3247, Hwy. #27........................     1,500,000       Grace Davison              
Lake Charles, LA                                                                               
In der Hollerhecke.............................     1,200,000       Grace Davison              
67547 Worms, Germany                                                                           
Rue St. Denis,.................................      490,000        Darex Container Products   
Epernon, France                                                     and Grace Construction     
                                                                    Products                   
Ajax Avenue(a).................................      270,000        Grace Construction Products
Slough, England(a)                                                                             

---------------                                                                 
(a) Leased site.                                                                

   Additional information regarding Grace Specialty Chemicals' properties is
set forth in Notes 1, 8 and 11 to the Consolidated Financial Statements.        

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MANAGEMENT

BOARD OF DIRECTORS                                                              

    The New Grace Board is currently composed of certain executive officers of
Grace. Set forth below is information with respect to the individuals who are   
expected to serve as the directors of New Grace following the Spin-off, all of  
whom are currently directors of Grace and will resign from the Grace Board      
contemporaneously with the Transactions. Under the classified board provisions  
of the New Grace Certificate and the New Grace By-laws, these individuals will  
not be required to stand for re-election to the New Grace Board until the year  
in which their respective terms expire. See "Certain Anti-Takeover              
Provisions -- Classified Board of Directors."                                   

CLASS I DIRECTORS -- TERMS EXPIRING IN 1999 

ALBERT J. COSTELLO                                                              
Director of Grace since 1995                                                    
Age: 62                                                                         

Mr. Costello is the chairman, president and chief executive officer of
Grace, positions he has held since May 1995. Before joining Grace, Mr. Costello 
served as president of American Cyanamid Company from 1991 to March 1993 and as 
its chairman of the board and chief executive officer from April 1993 to        
December 1994; he joined American Cyanamid Company in 1957. Mr. Costello        
received a B.S. in chemistry from Fordham University and an M.S. in chemistry   
from New York University. Mr. Costello is a director of Becton, Dickinson and   
Company and FMC Corporation and a trustee of Fordham University and the American
Enterprise Institute for Public Policy Research.                                

MARYE ANNE FOX                                                                  
Director of Grace since 1996                                                    
Age: 50                                                                         

  Dr. Fox is vice president for research and the Waggoner Regents chair in
chemistry of the University of Texas, positions she has held since 1994 and     
1992, respectively; she has been on the faculty of the University of Texas since
1976. Dr. Fox received a B.S. in chemistry from Notre Dame College, an M.S. in  
organic chemistry from Cleveland State University and a Ph.D. in organic        
chemistry from Dartmouth College; she also holds an honorary doctoral degree    
from Notre Dame College. Dr. Fox has served as vice chair of the National       
Science Board and has received numerous honors and awards from a wide variety of
educational and professional organizations. She currently serves on the Texas   
Governor's Science and Technology Council; she has also served on several       
editorial boards and has authored approximately 300 publications, including     
three books and more than 20 book chapters.                                     

THOMAS A. VANDERSLICE                                                           
Director of Grace since 1996                                                    
Age: 66                                                                         

  Mr. Vanderslice began his career with General Electric Company, where he
spent 23 years in various technical, management and executive positions,        
including executive vice president and sector executive of General Electric's   
power systems business. He subsequently served as president and chief operating 
officer of GTE Corporation, as chairman and chief executive officer of Apollo   
Computer, Inc., and, from 1989 to June 1995, as chairman and chief executive    
officer of M/A-COM, Inc., a designer and manufacturer of radio frequency and    
microwave components, devices and subsystems for commercial and defense         
applications. Mr. Vanderslice received a B.S. in chemistry and philosophy from  
Boston College and a Ph.D. in chemistry and physics from Catholic University; he
holds several patents and has written numerous technical articles. He is a      
director of Texaco Inc., a trustee of Boston College, and chairman of the       
Massachusetts High Technology                                                   

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Council. He is also a member of the National Academy of Engineering, the        
American Chemical Society and the American Institute of Physics.                

CLASS II DIRECTORS -- TERMS EXPIRING IN 2000

JOHN F. AKERS                                                                   
Director of Grace since January 1997                                            
Age: 63                                                                         

  Mr. Akers served as chairman of the board and chief executive officer of
International Business Machines Corporation from 1985 until his retirement in   
1993, completing a 33-year career with IBM. He is a director of Hallmark Cards, 
Inc., Lehman Brothers Holdings, Inc., The New York Times Company, PepsiCo, Inc. 
and Springs Industries, Inc. He also serves on the U.S. advisory board of Zurich
Insurance Company and on the advisory board of Directorship. A graduate of Yale 
University with a B.S. in industrial administration, Mr. Akers formerly served  
on the boards of trustees of the California Institute of Technology and the     
Metropolitan Museum of Art, as chairman of the board of governors of United Way 
of America, and as a member of President Bush's Education Policy Advisory       
Committee.                                                                      

JOHN J. MURPHY                                                                  
Director of Grace since March 1997                                              
Age: 66                                                                         

    Mr. Murphy retired in 1996 as chairman of the board of Dresser Industries,
Inc., a supplier of products and technical services to the energy industry. He  
joined Dresser as an engineer in 1952 and spent his entire career with Dresser, 
serving as its chief executive officer from 1983 to 1995. Mr. Murphy is a       
director of CARBO Ceramics, Inc., Kerr-McGee Corporation and PepsiCo, Inc.; a   
former trustee of Southern Methodist University and St. Bonaventure University; 
a former member of the board of the U.S.-Russia Business Council; and a member  
of The Business Council. He received a bachelor's in mechanical engineering from
Rochester Institute of Technology, a masters of business administration from    
Southern Methodist University and an honorary doctorate of commercial science   
from St. Bonaventure University.                                                

CLASS III DIRECTORS -- TERMS EXPIRING IN 2001 

HAROLD A. ECKMANN                                                               
Director of Grace since 1976                                                    
Age: 75                                                                         

Mr. Eckmann retired in 1985 as chairman and chief executive officer of
Atlantic Mutual Insurance Company and Centennial Insurance Company -- The       
Atlantic Companies. He was educated at the U.S. Merchant Marine Academy and the 
University of California. Mr. Eckmann joined The Atlantic Companies in 1949 and 
became president in 1970 and chairman and chief executive officer in 1976.      

JAMES W. FRICK                                                                  
Director of Grace since 1984                                                    
Age: 73                                                                         

   Dr. Frick is president of James W. Frick Associates, a consulting firm to
private colleges and universities. He is also vice president emeritus of the    
University of Notre Dame, having served the University in various capacities    
from 1951 to 1987, including as a member of its board of trustees. Dr. Frick    
holds three degrees from the University of Notre Dame. He is president emeritus 
of the Community Foundation of St. Joseph County, Indiana, a former director of 
Society Bank of South Bend and Society National Bank, Indiana, and a former     
member of the board of trustees of Converse College. He also served a term as a 
member of the board of the Department of Financial Institutions of the State of 
Indiana.                                                                        

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THOMAS A. HOLMES                                                                
Director of Grace since 1989                                                    
Age: 74                                                                         

    Mr. Holmes served as acting president and chief executive officer of Grace
from March to May 1995. He was chairman, president and chief executive officer  
of Ingersoll-Rand Company until his retirement in 1988, having spent his entire 
business career with Ingersoll-Rand Company. He is a graduate of the University 
of Missouri -- Rolla. Mr. Holmes is a director of Newmont Gold Co. and Newmont  
Mining Corp.                                                                    

     Messrs. Eckmann and Holmes and Dr. Frick have agreed to resign from the New
Grace Board effective May 8, 1998, the date on which their terms as directors of
Grace would expire but for the Transactions. It is anticipated that, following  
completion of the Transactions, the New Grace Board (on the recommendation of   
its Nominating Committee) will elect one or more individuals to serve as Class  
III Directors of New Grace, with a term expiring at the Annual Meeting of       
Stockholders of New Grace to be held in 2001.                                   

COMMITTEES OF THE BOARD OF DIRECTORS                                            

There are currently no committees of the New Grace Board. However, the
following committees of the New Grace Board will be established upon completion 
of the Spin-off:                                                                

Audit Committee.  The Audit Committee of the New Grace Board will be  
responsible for reviewing the financial information New Grace provides to       
stockholders and others, New Grace's systems of internal controls, and its      
auditing, accounting and financial reporting processes generally. The Audit     
Committee's specific responsibilities will include recommending to the New Grace
Board the selection of independent certified public accountants to audit the    
annual financial statements of New Grace and its consolidated subsidiaries;     
reviewing the annual financial statements; and meeting with New Grace's senior  
financial officers, internal auditors and independent certified public          
accountants to review the scope and results of the audit and other matters      
regarding New Grace's accounting, financial reporting and internal control      
systems. The members of the Audit Committee are expected to be Messrs. Akers and
Eckmann, Drs. Fox and Frick and Messrs. Murphy (Chair) and Vanderslice.         

    Compensation Committee.  The Compensation Committee of the New Grace Board
will make recommendations to the New Grace Board with respect to the salary and 
annual and long-term incentive compensation of certain officers and other       
high-level employees, as well as with respect to New Grace's benefit plans,     
programs and arrangements generally. The Compensation Committee will also       
administer New Grace's stock incentive plans and determine the recipients and   
terms of stock incentives granted under those plans. The members of the         
Compensation Committee are expected to be Messrs. Akers (Chair) and Eckmann, Dr.
Fox, and Messrs. Holmes, Murphy and Vanderslice.                                

     Nominating Committee.  The Nominating Committee of the New Grace Board will
recommend to the New Grace Board candidates for nomination as directors of New  
Grace. The members of the Nominating Committee are expected to be Mr. Akers,    
Drs. Fox and Frick and Messrs. Holmes and Murphy (Chair).                       

     Corporate Responsibility Committee.  The Corporate Responsibility Committee
of the New Grace Board will advise management on New Grace's role in the public 
sector and its responsibility with respect to matters of public policy. The     
members of the Corporate Responsibility Committee are expected to be Messrs.    
Akers and Eckmann, Drs. Fox (Chair) and Frick and Mr. Murphy.                   

COMPENSATION OF DIRECTORS                                                       

  Under the New Grace compensation program for nonemployee directors, each
nonemployee director will receive an annual retainer of $50,000, of which       
$35,000 will be in the form of shares of New Grace common stock and the balance 
will be in cash or shares of New Grace common stock, at the election of the     
director; each committee chair will receive an additional annual retainer of    
$2,000, in cash or shares of New Grace common stock, at the election of the     
director; and each nonemployee director will receive $2,000 for each New Grace  
Board meeting and $1,000 for each committee meeting attended (except that       
committee chairs                                                                

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will receive $1,200 per committee meeting), in cash or shares of New Grace      
common stock, at the election of the director.                                  

Nonemployee directors will be reimbursed for expenses they incur in   
attending New Grace Board and committee meetings, and New Grace is expected to  
maintain business travel accident insurance coverage for the nonemployee        
directors. In addition, nonemployee directors will receive a fee of $1,000 per  
day for work performed at New Grace's request.                                  

A director will be able to defer payment of all or part of the fees   
received for attending New Grace Board and committee meetings and/or the cash   
retainers (or cash portions of the retainers) referred to above. The deferred   
cash (plus an interest equivalent) will be payable to the director or his or her
heirs or beneficiaries in a lump sum or in quarterly installments over two to 20
years following a date specified by the director (but in no event earlier than  
the director's termination from service). The interest equivalent on deferred   
cash will be computed at the higher of (i) the prime rate plus two percentage   
points or (ii) 120% of the prime rate, in either case, compounded semiannually. 
This program will provide for the payment of additional survivors' benefits in  
certain circumstances. The New Grace common stock portion of the annual retainer
may be deferred and held, and the balance of the annual retainer or other       
retainers and/or fees a director elects to receive in the form of New Grace     
common stock will be deferred and held, in a trust to be established by New     
Grace. Dividends paid on the New Grace common stock held in such trust will be  
reinvested in New Grace common stock; however, such New Grace common stock will 
not be delivered to a director until his or her termination from service (or a  
subsequent date specified by the director).                                     

EXECUTIVE OFFICERS                                                              

    Set forth below is information with respect to the individuals expected to
serve as executive officers of New Grace following the Spin-off. All of the     
individuals have been actively engaged in Grace's business for the past five    
years, other than Mr. Costello (see page 34) and Mr. Ellberger, who was a       
Corporate Vice President and Director of Corporate Development and Planning of  
American Cyanamid Company from October 1991 until 1995. Mr. Ellberger served as 
Grace's acting chief executive officer from October 11, 1997, when Mr. Costello 
suffered a heart attack, until January 5, 1998.                                 

                                                        · Enlarge/Download Table

                NAME AND AGE                                      OFFICE                    
---------------------------------------------  ---------------------------------------------
                                                                                            
Robert H. Beber (64).........................  Executive Vice President and General Counsel 
Robert J. Bettacchi (55).....................  Senior Vice President                        
Albert J. Costello (62)......................  Chairman, President and Chief Executive      
                                               Officer                                      
Larry Ellberger (49).........................  Senior Vice President and Chief Financial    
                                               Officer                                      
James R. Hyde (59)...........................  Senior Vice President                        

EXECUTIVE COMPENSATION AND EMPLOYEE BENEFITS PRIOR TO THE SPIN-OFF              

   For information with respect to the compensation of executive officers of
Grace prior to the Spin-off, see the excerpt from the Proxy Statement, dated    
April 7, 1997, for the 1997 Grace Annual Meeting of Stockholders, attached as   
Annex E to this Information Statement ("Grace 1997 Proxy Excerpt"); such        
information is incorporated herein by reference.                                

EXECUTIVE COMPENSATION AND EMPLOYEE BENEFITS FOLLOWING THE SPIN-OFF             

     Upon completion of the Spin-off, New Grace will assume substantially all of
the obligations of Grace under its executive and other compensation plans,      
programs and arrangements. Consequently, the compensation and benefits to be    
provided to employees of New Grace and its subsidiaries will be similar to those
they currently receive as employees of Grace and its subsidiaries. In addition, 
Grace, as sole stockholder of New Grace, has approved New Grace's 1998 Stock    
Incentive Plan and 1998 Stock Plan for Nonemployee Directors, which are set     
forth in Annexes C and D, respectively, to this Information Statement.          

  Grace has had agreements with its executive and other officers regarding
severance arrangements in the event of a change in control of Grace (see        
"Compensation -- Severance Agreements" in the Grace 1997                        

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Proxy Excerpt). Effective January 1, 1998, the agreements were replaced by new  
agreements providing for substantially the same payments and benefits, except   
that (1) the new agreements do not provide for a "gross-up" payment to cover    
excise taxes that may result from severance payments and provide for reduced    
severance for officers who are within 36 months of normal retirement age (65)   
and (2) Mr. Costello's severance benefits continue to be governed by his        
employment agreement. In addition, under the new agreements, a "change in       
control" does not include the acquisition of 20% or more of the Grace common    
stock as a result of a sale of stock by Grace and includes a transaction in     
which Grace's stockholders do not own 50% or more of the voting power of the    
corporation resulting from such transaction (as compared to more than 60% under 
the prior agreements). The Transactions will not constitute a change in control 
under the above agreements. These agreements will be assumed by New Grace upon  
completion of the Transactions (except for the agreement with J. Gary Kaenzig   
Jr., a Grace officer who will become an employee of New Sealed Air, whose       
agreement will terminate prior to completion of the Transactions).              

Grace's Long-Term Incentive Program ("LTIP") provides for the grant of
contingent "Performance Units" that may be earned over three-year "Performance  
Periods" (see "Compensation -- LTIP" in the Grace 1997 Proxy Excerpt).          
Performance Units previously granted for the 1996-1998 and 1997-1999 Performance
Periods under the LTIP will be vested on a pro rata basis upon completion of the
Transactions and will be calculated and paid in cash as promptly as practicable 
thereafter, based on results achieved through completion of the Transactions.   
The value of the unvested portion of such Performance Units will be calculated  
and fixed based on the price of Grace common stock prior to completion of the   
Transactions and will be paid by New Grace following the end of the respective  
Performance Periods (subject to continued service).                             

   For more information on employee benefits following the Transactions, see
"The Distribution and Merger Agreements -- Reorganization of Grace -- Conversion
of Grace Stock Options" and "Relationship between New Sealed Air and New Grace  
after the Merger -- Employee Benefits Agreement and Other Employee Matters" in  
the Joint Proxy Statement/Prospectus.                                           

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

    The members of the Compensation Committee are expected to be Messrs. Akers
and Eckmann, Dr. Fox, and Messrs. Holmes, Murphy and Vanderslice, each of whom  
is an independent director.                                                     

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CERTAIN AGREEMENTS BETWEEN NEW SEALED AIR 
AND NEW GRACE 

After the Transactions, New Grace and New Sealed Air will be separate 
companies. Prior to the Transactions, Grace (which will become New Sealed Air)  
and New Grace will enter into agreements dealing with many operational issues,  
including:                                                                      

 - the separation of the Packaging Business from the Specialty Chemicals
Businesses;                                                       

    - transitional services to be provided by New Grace and New Sealed Air for
    up to two years following the Transactions and the fees to be paid for
those services; and                                               

  - the allocation of certain tax, employee benefits and other liabilities
between New Grace and New Sealed Air.                             

  Under these agreements, New Grace and New Sealed Air will be required to
compensate each other after the Transactions for losses, damages, claims and    
liabilities resulting from the business of the other and from certain tax       
liabilities. Detailed information about these agreements can be found in "The   
Distribution and Merger Agreements" and "Relationship Between New Sealed Air and
New Grace after the Reorganization and Merger" in the Joint Proxy               
Statement/Prospectus.                                                           

CERTAIN RELATIONSHIPS AND TRANSACTIONS

   The individuals who will serve as directors and executive officers of New
Grace after the Spin-off currently serve as directors and executive officers of 
Grace. For information with respect to certain relationships and transactions   
prior to the Spin-off, see the Grace 1997 Proxy Excerpt.                        

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 

Grace currently owns all of the outstanding shares of New Grace common
stock. The following table sets forth certain information with respect to all   
stockholders anticipated to be the beneficial owners (as discussed below) of    
more than 5% of the New Grace common stock outstanding immediately following the
Spin-off, based upon a review of statements filed with the SEC pursuant to      
Sections 13(d), 13(g) and 16(a) of the Exchange Act with respect to Grace common
stock prior to February 11, 1998.                                               

                                                        · Enlarge/Download Table

                                                                  AMOUNT                 
                                                              AND NATURE OF              
NAME AND ADDRESS                                                BENEFICIAL     PERCENT OF
OF BENEFICIAL OWNER                                            OWNERSHIP(A)    CLASS (B) 
-------------------                                          ----------------  ----------
                                                                                         
FMR Corp. (c)............................................... 7,379,887 shares     9.87%  
  82 Devonshire Street                                                                   
  Boston, Massachusetts 02109                                                            
Lincoln Capital Management Company(d)....................... 7,332,200 shares     9.80%  
  200 South Wacker Drive                                                                 
  Suite 2100                                                                             
  Chicago, Illinois 60606                                                                

---------------                                                                 
(a) Under the rules of the SEC, a person is deemed to be the "beneficial owner" 
  of a security if such person has or shares the power to vote or direct the
    voting of such security or the power to dispose or direct the disposition of
such security. A person is also deemed to be a beneficial owner of any  
securities if that person has the right to acquire beneficial ownership 
within 60 days. Accordingly, more than one person may be deemed to be a 
beneficial owner of the same security. Unless otherwise indicated by    
  footnote, the named person is expected to have sole voting and dispositive
power with respect to the shares to be held.                            

(b) Based on 74,796,863 shares of Grace common stock outstanding as of February 
11, 1998.                                                               

(c) The ownership information set forth herein is based in its entirety on      
  material contained in a Schedule 13G, dated August 8, 1997, filed with the
   SEC by FMR Corp., which certified that the securities were not acquired for
    the purpose of changing or influencing the control of Grace. With respect to
 the shares held, such stockholder stated in such Schedule 13G that it has
sole voting power as to 64,107 shares and sole dispositive power as to  
7,379,887 shares.                                                       

(d) The ownership information set forth herein is based in its entirety on      
  material contained in a Schedule 13G, dated April 28, 1997, filed with the
SEC by Lincoln Capital Management Company, which certified that the     
   securities were not acquired for the purpose of changing or influencing the
  control of Grace. With respect to the shares held, such stockholder stated
 in such Schedule 13G that it has sole voting power as to 3,583,300 shares
and sole dispositive power as to 7,332,200 shares.                      

BENEFICIAL OWNERSHIP OF MANAGEMENT

Grace currently owns all of the outstanding shares of New Grace common
stock. For information with respect to the number of shares of New Grace common 
stock expected to be beneficially owned immediately following the Spin-off by   
(i) the current Grace directors, including the individuals expected to be New   
Grace directors and (ii) certain executive officers of Grace, see the table set 
forth under "Security Ownership of Certain Beneficial Owners -- Security        
Ownership of Grace" in the Joint Proxy Statement/Prospectus.                    

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DESCRIPTION OF NEW GRACE CAPITAL STOCK

  The following description of New Grace capital stock is a summary of the
material terms thereof and is qualified in its entirety by reference to the     
provisions of the New Grace Certificate and the New Grace By-laws, copies of    
which are attached to this Information Statement as Annex A and Annex B,        
respectively.                                                                   

AUTHORIZED CAPITAL STOCK                                                        

    Under the New Grace Certificate, the total number of shares of all classes
of stock that New Grace has authority to issue is 353 million, consisting of 53 
million shares of New Grace preferred stock, and 300 million shares of New Grace
common stock. No shares of New Grace preferred stock are being issued in        
connection with the Spin-off. An aggregate of up to approximately 75,000,000    
shares of New Grace common stock is expected to be distributed in the Spinoff,  
based on the number of shares of Grace common stock outstanding on February 11, 
1998. All shares of New Grace common stock received in the Spin-off will be     
fully paid and nonassessable.                                                   

NEW GRACE COMMON STOCK                                                          

     The holders of New Grace common stock are entitled to one vote per share on
all matters voted on by stockholders, including elections of directors, and,    
except as otherwise required by law or provided in any resolution adopted by the
New Grace Board with respect to any series of New Grace preferred stock, the    
holders of the New Grace common stock exclusively possess all voting power. The 
New Grace Certificate does not provide for cumulative voting in the election of 
directors. Subject to any preferential rights of any outstanding series of New  
Grace preferred stock, the holders of New Grace common stock are entitled to    
such dividends as may be declared from time to time by the New Grace Board from 
funds available therefor, and, upon liquidation, are entitled to receive pro    
rata all assets of New Grace available for distribution to such holders.        

 The transfer agent and registrar for the New Grace common stock will be
ChaseMellon Shareholder Services, L.L.C.                                        

NEW GRACE PREFERRED STOCK                                                       

    The New Grace Board is authorized to provide for the issuance of shares of
New Grace preferred stock in one or more series, to establish the number of     
shares in each series, and to fix the designation, powers, preferences and      
rights of each such series and the qualifications, limitations or restrictions  
thereof. The New Grace Board will authorize and reserve for issuance 3 million  
shares of Junior Participating Preferred Stock, par value $.01 per share, of New
Grace ("New Grace Junior Preferred Stock") for issuance upon exercise of the    
preferred share purchase rights of New Grace (the "New Grace Rights"). See      
"-- New Grace Rights."                                                          

NEW GRACE RIGHTS                                                                

   The New Grace Board has determined that a dividend of one New Grace Right
will be paid in respect of each share of New Grace common stock to the holder of
record thereof at the Time of Spin-off. Pursuant to the Rights Agreement        
relating thereto (the "Rights Agreement"), each New Grace Right entitles the    
registered holder to purchase from New Grace one hundredth of one share of New  
Grace Junior Preferred Stock at a price of $100 per share (the "Purchase        
Price"), subject to adjustment.                                                 

   Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring       
Person") has acquired beneficial ownership of 20% or more of the then           
outstanding shares of New Grace common stock or (ii) 10 business days (or such  
later date as may be determined by action of the New Grace Board prior to such  
time as any person or group becomes an Acquiring Person) following the          
commencement of, or announcement of an intention to make, a tender offer or     
exchange offer the consummation of which would result in the beneficial         
ownership by a person or group of 20% or more of the outstanding shares of New  
Grace common stock (the earlier of such dates being called the "Rights          
Distribution Date"), the New Grace Rights will be evidenced by the certificates 
representing shares                                                             

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of New Grace common stock. The Rights Agreement provides that, until the Rights 
Distribution Date (or the earlier redemption or expiration of the New Grace     
Rights), (i) the New Grace Rights will be transferred with and only with the    
shares of New Grace common stock, (ii) certificates representing shares of New  
Grace common stock will contain a notation incorporating the terms of the New   
Grace Rights by reference, and (iii) the surrender for transfer of any          
certificates representing shares of New Grace common stock will also constitute 
the transfer of the New Grace Rights associated with the shares of New Grace    
common stock represented by such certificate. As soon as practicable following  
the Rights Distribution Date, separate certificates evidencing the New Grace    
Rights ("Rights Certificates") will be mailed to holders of record of the shares
of New Grace common stock as of the close of business on the Rights Distribution
Date and such separate Rights Certificates alone will evidence the New Grace    
Rights.                                                                         

  The Purchase Price payable, and the number of shares of New Grace Junior
Preferred Stock or other securities or property issuable, upon exercise of the  
New Grace Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or       
reclassification of, the shares of New Grace Junior Preferred Stock, (ii) upon  
the grant to holders of the shares of New Grace Junior Preferred Stock of       
certain rights or warrants to subscribe for or purchase shares of New Grace     
Junior Preferred Stock at a price, or securities convertible into shares of New 
Grace Junior Preferred Stock with a conversion price, less than the then-current
market price of the shares of New Grace Junior Preferred Stock or (iii) upon the
distribution to holders of the shares of New Grace Junior Preferred Stock of    
evidences of indebtedness or assets (excluding regular periodic cash dividends  
paid out of earnings or retained earnings or dividends payable in shares of New 
Grace Junior Preferred Stock) or of subscription rights or warrants (other than 
those referred to above). The number of outstanding New Grace Rights and the    
number of hundredths of a share of New Grace Junior Preferred Stock issuable    
upon exercise of each New Grace Right are also subject to adjustment in the     
event of a split of the New Grace common stock or a dividend on the New Grace   
common stock payable in New Grace common stock, or subdivisions, consolidations 
or combinations of the New Grace common stock occurring, in any such case, prior
to the Rights Distribution Date.                                                

Shares of New Grace Junior Preferred Stock that may be purchased upon 
exercise of the New Grace Rights will not be redeemable. Each share of New Grace
Junior Preferred Stock will be entitled to a minimum preferential quarterly     
dividend payment of one dollar per share but will be entitled to an aggregate   
dividend equal to 100 times the dividend declared per share of New Grace common 
stock whenever such dividend is declared. In the event of liquidation, the      
holders of the New Grace Junior Preferred Stock will be entitled to a minimum   
preferential liquidation payment of $100 per share but will be entitled to an   
aggregate payment equal to 100 times the payment made per share of New Grace    
common stock. Each share of New Grace Junior Preferred Stock will have 100      
votes, voting together with the New Grace common stock. Finally, in the event of
any merger, consolidation or other transaction in which New Grace common stock  
is exchanged, each share of New Grace Junior Preferred Stock will be entitled to
receive an amount equal to 100 times the amount received per share of New Grace 
common stock. These rights are protected by customary antidilution provisions.  

     Because of the nature of the dividend, liquidation and voting rights of New
Grace Junior Preferred Stock, the value of the one hundredth interest in a share
of New Grace Junior Preferred Stock that may be purchased upon exercise of each 
New Grace Right should approximate the value of one share of New Grace common   
stock.                                                                          

   In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision will be made so that each holder  
of a New Grace Right, other than New Grace Rights beneficially owned by the     
Acquiring Person (which will become void after such person becomes an Acquiring 
Person), will, after such person becomes an Acquiring Person, have the right to 
receive upon exercise, in lieu of shares of New Grace Junior Preferred Stock,   
that number of shares of New Grace common stock having a market value of two    
times the exercise price of the New Grace Right (such right being referred to as
a "Flip-in Right"). In the event that, at any time on or after the date that any
person has become an Acquiring Person, New Grace is acquired in a merger or     
other business combination transaction or 50% or more of its consolidated assets
or earning power is sold, proper provision will be made so that each holder of a
New Grace Right will thereafter have the right to receive, upon the exercise    
thereof at the then-current exercise price of                                   
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the New Grace Right, that number of shares of common stock of the acquiring     
company which at the time of such transaction will have a market value of two   
times the exercise price of the New Grace Right.                                

   At any time after any person or group of affiliated or associated persons
becomes an Acquiring Person, and prior to the acquisition by such person or     
group of 50% or more of the outstanding shares of New Grace common stock, the   
New Grace Board may exchange the New Grace Rights for New Grace common stock or 
New Grace Junior Preferred Stock (other than New Grace Rights owned by such     
person or group, which will have become void after such person became an        
Acquiring Person), in whole or in part, at an exchange ratio of one share of New
Grace common stock, or one hundredth of a share of New Grace Junior Preferred   
Stock (or of a share of another series of New Grace Preferred Stock having      
equivalent rights, preferences and privileges), per New Grace Right (subject to 
adjustment).                                                                    

With certain exceptions, no adjustment in the Purchase Price will be  
required until cumulative adjustments require an adjustment of at least 1%. No  
fractional shares of New Grace Junior Preferred Stock will be issued (other than
fractions which are integral multiples of one hundredth of a share of New Grace 
Junior Preferred Stock, which may, at the election of New Grace, be evidenced by
depositary receipts) and, in lieu thereof, an adjustment in cash will be made   
based on the market price of the shares of New Grace Junior Preferred Stock on  
the last trading day prior to the date of exercise.                             

    At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding    
shares of New Grace common stock, the New Grace Board may redeem the New Grace  
Rights in whole, but not in part, at a price of $.01 per New Grace Right (the   
"Redemption Price"). The redemption of the New Grace Rights may be made         
effective at such time, on such basis and with such conditions as the New Grace 
Board may determine, in its sole discretion. Immediately upon any redemption of 
the New Grace Rights, the right to exercise the New Grace Rights will terminate 
and the only right of the holders of New Grace Rights will be to receive the    
Redemption Price.                                                               

 The terms of the New Grace Rights may be amended by the New Grace Board
without the consent of the holders of the New Grace Rights, including an        
amendment to lower (i) the threshold at which a person becomes an Acquiring     
Person and (ii) the percentage of New Grace common stock proposed to be acquired
in a tender or exchange offer that would cause the Rights Distribution Date to  
occur, to not less than the greater of (a) the sum of .001% and the largest     
percentage of the outstanding New Grace common stock then known to New Grace to 
be beneficially owned by any person or group of affiliated or associated persons
and (b) 10%, except that, from and after such time as any person or group of    
affiliated or associated persons becomes an Acquiring Person, no such amendment 
may adversely affect the interests of the holders of the New Grace Rights.      

    The New Grace Rights will not be exercisable until the Rights Distribution
Date. The New Grace Rights will expire on the close of business on the 10th     
anniversary of the Time of Spin-off (the "Final Expiration Date"), unless the   
Final Expiration Date is extended or unless the New Grace Rights are earlier    
redeemed or exchanged by New Grace.                                             

 Until a New Grace Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of New Grace, including, without limitation, the
right to vote or to receive dividends.                                          

 The foregoing summary of certain terms of the New Grace Rights does not
purport to be complete and is qualified in its entirety by reference to the form
of the Rights Agreement, which has been filed as an exhibit to the New Grace    
Registration Statement defined and described in "Where Stockholders Can Find    
More Information."                                                              

  The distribution of the New Grace Rights should not be taxable under the
Code to New Grace, New Sealed Air or their respective stockholders. However,    
depending upon the circumstances, stockholders of New Grace may recognize       
taxable income under the Code in the event that the New Grace Rights become     
exercisable.                                                                    

PREEMPTIVE RIGHTS                                                               

    No holder of any stock of New Grace of any class authorized at the Time of
Spin-off will then have any preemptive right to subscribe to any securities of  
New Grace of any kind or class.                                                 

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CERTAIN ANTI-TAKEOVER PROVISIONS

The New Grace Certificate and the New Grace By-laws contain certain   
provisions that could delay or make more difficult the acquisition of New Grace 
by means of a tender offer, a proxy contest or otherwise. Such provisions have  
been implemented to enable New Grace, particularly (but not exclusively) in the 
years immediately following the Spin-off, to develop its business in a manner   
which will foster its long-term growth without disruption caused by the threat  
of a takeover not deemed by the New Grace Board to be in the best interests of  
New Grace and its stockholders. The description of certain aspects of the New   
Grace Certificate and the New Grace By-laws set forth below does not purport to 
be complete and is qualified in its entirety by reference to the New Grace      
Certificate and the New Grace By-laws, which are attached as Annex A and Annex  
B, respectively, to this Information Statement.                                 

CLASSIFIED BOARD OF DIRECTORS                                                   

  The New Grace Certificate and the New Grace By-laws provide that the New
Grace Board will be divided into three classes of directors, with the classes to
be as equal in number as possible. The New Grace Board is expected to consist of
the individuals referred to in "MANAGEMENT -- Board of Directors." The New Grace
Certificate and the New Grace By-laws provide that, of the initial directors of 
New Grace, approximately one-third will continue to serve until the 1999 Annual 
Meeting of Stockholders, approximately one-third will continue to serve until   
the 2000 Annual Meeting of Stockholders and approximately one-third will        
continue until the 2001 Annual Meeting of Stockholders. Of the initial          
directors, Mr. Costello, Dr. Fox and Mr. Vanderslice will serve until the 1999  
Annual Meeting of Stockholders, and Messrs. Akers and Murphy will serve until   
the 2000 Annual Meeting of Stockholders. The term of Messrs. Eckmann and Holmes 
and Dr. Frick expires at the 2001 Annual Meeting of Stockholders; however,      
Messrs. Eckmann and Holmes and Dr. Frick have agreed to resign from the New     
Grace Board effective May 8, 1998, the date on which their terms as directors of
Grace would expire but for the Transactions. It is anticipated that, following  
completion of the Transactions, the New Grace Board (on the recommendation of   
its Nominating Committee) will elect one or more individuals to serve as Class  
III Directors of New Grace, with a term expiring at the 2001 Annual Meeting of  
Stockholders. Starting with the 1999 Annual Meeting of Stockholders, one class  
of directors will be elected each year for a three-year term.                   

The classification of directors will have the effect of making it more
difficult for stockholders to change the composition of the New Grace Board. At 
least two annual meetings of stockholders, instead of one, will generally be    
required to effect a change in a majority of the New Grace Board. Such a delay  
may help ensure that New Grace's directors, if confronted by a holder attempting
to force a proxy contest, a tender or exchange offer, or an extraordinary       
corporate transaction, would have sufficient time to review the proposal as well
as any available alternatives to the proposal and to act in what they believe to
be the best interest of the stockholders. However, the classification provisions
will apply to every election of directors and will increase the likelihood that 
incumbent directors will retain their positions, regardless of whether a change 
in the composition of the New Grace Board would be beneficial to New Grace and  
its stockholders and whether or not a majority of New Grace's stockholders      
believe that such a change would be desirable.                                  

    The classification provisions could also have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or otherwise 
attempting to obtain control of New Grace, even though such an attempt might be 
beneficial to New Grace and its stockholders. In addition, because the          
classification provisions may discourage accumulations of large blocks of New   
Grace common stock by purchasers whose objective is to take control of New Grace
and remove a majority of the New Grace Board, the classification of the New     
Grace Board could tend to reduce the likelihood of fluctuations in the market   
price of the New Grace common stock that might result from accumulations of     
large blocks. Accordingly, stockholders could be deprived of certain            
opportunities to sell their shares of New Grace common stock at a higher market 
price than might otherwise be the case.                                         

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NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES                                 

     The New Grace By-laws provide that, subject to any rights of holders of New
Grace preferred stock to elect directors under specified circumstances, the     
number of directors will be fixed from time to time exclusively pursuant to a   
resolution adopted by directors constituting a majority of the total number of  
directors that New Grace would have if there were no vacancies on the New Grace 
Board (the "Whole Board"). In addition, the New Grace By-laws provide that,     
subject to applicable law and any rights of holders of New Grace preferred      
stock, and unless the New Grace Board otherwise determines, any vacancies will  
be filled only by the affirmative vote of a majority of the remaining directors,
though less than a quorum. Accordingly, absent an amendment to the New Grace    
By-laws, the New Grace Board could prevent any stockholder from enlarging the   
New Grace Board and filling the new directorships with such stockholder's own   
nominees.                                                                       

Under the Delaware Law, unless otherwise provided in a corporation's  
certificate of incorporation, directors serving on a classified board may only  
be removed by the stockholders for cause. The New Grace Certificate does not    
otherwise provide.                                                              

NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS                      

   The New Grace Certificate and the New Grace By-laws provide that, subject
to the rights of any holders of New Grace preferred stock to elect additional   
directors under specified circumstances, stockholder action can be taken only at
an annual or special meeting of stockholders and may not be taken by written    
consent in lieu of a meeting. The New Grace By-laws provide that, subject to the
rights of holders of any series of New Grace preferred stock to elect additional
directors under specified circumstances, special meetings of stockholders can be
called only by the Chairman or the President or by the New Grace Board pursuant 
to a resolution adopted by a majority of the Whole Board. Stockholders are not  
permitted to call, or to require that the Chairman, the President or the New    
Grace Board call, a special meeting of stockholders. Moreover, the business     
permitted to be conducted at any special meeting of stockholders is limited to  
the business brought before the meeting pursuant to the notice of meeting given 
by New Grace.                                                                   

The provisions of the New Grace Certificate and the New Grace By-laws 
prohibiting stockholder action by written consent may have the effect of        
delaying consideration of a stockholder proposal until the next annual meeting. 
These provisions would also prevent the holders of a majority of the voting     
power of the voting stock from unilaterally using the written consent procedure 
to take stockholder action. Moreover, a stockholder could not force stockholder 
consideration of a proposal over the opposition of the Chairman and the New     
Grace Board by calling a special meeting of stockholders prior to the time the  
Chairman or a majority of the Whole Board believes such consideration to be     
appropriate.                                                                    

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER PROPOSALS 

The New Grace By-laws establish an advance notice procedure for       
stockholders to nominate candidates for election as directors or to bring other 
business before meetings of stockholders of New Grace (the "Stockholder Notice  
Procedure").                                                                    

  A stockholder nominee will be eligible for election as a director of New
Grace only if nominated in accordance with the Stockholder Notice Procedure.    
Under the Stockholder Notice Procedure, notice of stockholder nominations to be 
made at an annual meeting (or of any other business to be brought before such   
meeting) must be received by New Grace not less than 60 days nor more than 90   
days prior to the first anniversary of the previous year's annual meeting (or,  
if the date of the annual meeting is more than 30 days before or more than 60   
days after such anniversary date, not earlier than the 90th day prior to such   
meeting and not later than the later of (i) the 60th day prior to such meeting  
or (ii) the 10th day after public announcement of the date of such meeting is   
first made). Notwithstanding the foregoing, in the event that the number of     
directors to be elected is increased and there is no public announcement naming 
all of the nominees for director or specifying the size of the increased New    
Grace Board made by New Grace at least 70 days prior to the first anniversary of
the preceding year's annual meeting, a stockholder's notice will be timely, but 
only                                                                            

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with respect to nominees for any new positions created by such increase, if it  
is received by New Grace not later than the 10th day after such public          
announcement is first made by New Grace.                                        

     The New Grace By-laws provide that only such business may be conducted at a
special meeting as is specified in the notice of meeting. Nominations for       
election to the New Grace Board may be made at a special meeting at which       
directors are to be elected only by or at the New Grace Board's direction or by 
a stockholder who has given timely notice of nomination. Under the Stockholder  
Notice Procedure, such notice must be received by New Grace not earlier than the
90th day before such meeting and not later than the later of (i) the 60th day   
prior to such meeting or (ii) the 10th day after public announcement of the date
of such meeting is first made. Stockholders will not be able to bring other     
business before special meetings of stockholders.                               

  The Stockholder Notice Procedure provides that at an annual meeting only
such business may be conducted as has been brought before the meeting by, or at 
the direction of, the Chairman, the President or the New Grace Board or by a    
stockholder who has given timely written notice (as set forth above) to the     
Secretary of New Grace of such stockholder's intention to bring such business   
before such meeting.                                                            

     Under the Stockholder Notice Procedure, a stockholder's notice to New Grace
proposing to nominate an individual for election as a director must contain     
certain information, including, without limitation, the identity and address of 
the nominating stockholder, the class and number of shares of stock of New Grace
owned by such stockholder, and all information regarding the proposed nominee   
that would be required to be included in a proxy statement soliciting proxies   
for the proposed nominee. Under the Stockholder Notice Procedure, a             
stockholder's notice relating to the conduct of business other than the         
nomination of directors must contain certain information about such business and
about the proposing stockholder, including, without limitation, a brief         
description of the business the stockholder proposes to bring before the        
meeting, the reasons for conducting such business at such meeting, the name and 
address of such stockholder, the class and number of shares of stock of New     
Grace beneficially owned by such stockholder, and any material interest of such 
stockholder in the business so proposed. If the Chairman or other officer       
presiding at a meeting determines that an individual was not nominated, or other
business was not brought before the meeting, in accordance with the Stockholder 
Notice Procedure, such individual will not be eligible for election as a        
director, or such business will not be conducted at such meeting, as the case   
may be.                                                                         

     By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure will afford the New Grace Board an opportunity to consider the 
qualifications of the proposed nominees and, to the extent deemed necessary or  
desirable by the New Grace Board, to inform stockholders about such             
qualifications. By requiring advance notice of other proposed business, the     
Stockholder Notice Procedure will provide a more orderly procedure for          
conducting annual meetings of stockholders and, to the extent deemed necessary  
or desirable by the New Grace Board, will provide the New Grace Board with an   
opportunity to inform stockholders, prior to such meetings, of any business     
proposed to be conducted at such meetings, together with the New Grace Board's  
position regarding action to be taken with respect to such business, so that    
stockholders can better decide whether to attend such a meeting or to grant a   
proxy regarding the disposition of any such business.                           

     Although the New Grace By-laws do not give the New Grace Board any power to
approve or disapprove stockholder nominations for the election of directors or  
proposals for action, they may have the effect of precluding a contest for the  
election of directors or the consideration of stockholder proposals if the      
proper procedures are not followed, and of discouraging or deterring a third    
party from conducting a solicitation of proxies to elect its own slate of       
directors or to approve its own proposal, without regard to whether             
consideration of such nominees or proposals might be harmful or beneficial to   
New Grace and its stockholders.                                                 

NEW GRACE PREFERRED STOCK                                                       

   The New Grace Certificate authorizes the New Grace Board to establish one
or more series of New Grace preferred stock, and to determine, with respect to  
any series of New Grace preferred stock, the terms and rights of such series,   
including (i) the designation of the series; (ii) the number of shares of the   
series,                                                                         
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which number the New Grace Board may thereafter (except where otherwise provided
in the New Grace preferred stock designation) increase or decrease (but not     
below the number of shares thereof then outstanding); (iii) whether dividends,  
if any, will be cumulative or noncumulative and the dividend rate of the series;
(iv) the dates on which dividends, if any, will be payable; (v) the redemption  
rights and price or prices, if any, for shares of the series; (vi) the terms and
amounts of any sinking fund provided for the purchase or redemption of shares of
the series; (vii) the amounts payable on shares of the series in the event of   
any voluntary or involuntary liquidation, dissolution or winding up of the      
affairs of New Grace; (viii) whether the shares of the series will be           
convertible into shares of any other class or series, or any other security, of 
New Grace or any other corporation, and, if so, the specification of such other 
class or series or such other security, the conversion price or prices or rate  
or rates, any adjustments thereof, the date or dates as of which such shares    
shall be convertible and all other terms and conditions upon which such         
conversion may be made; (ix) restrictions on the issuance of shares of the same 
series or of any other class or series; and (x) the voting rights, if any, of   
the holders of such series.                                                     

  The authorized shares of New Grace preferred stock, as well as shares of
New Grace common stock, will be available for issuance without further action by
New Grace's stockholders, unless such action is required by applicable law or   
the rules of any stock exchange or automated quotation system on which New      
Grace's securities may be listed or traded. If the approval of New Grace's      
stockholders is not so required, the New Grace Board does not intend to seek    
stockholder approval.                                                           

    Although the New Grace Board has no intention at the present time of doing
so, it could issue a series of New Grace preferred stock that could, depending  
on the terms of such series, impede the completion of a merger, tender offer or 
other takeover attempt. The New Grace Board will make any determination to issue
such shares based on its judgment as to the best interests of New Grace and its 
stockholders. The New Grace Board, in so acting, could issue New Grace preferred
stock having terms that could discourage an acquisition attempt or other        
transaction that some, or a majority, of New Grace's stockholders might believe 
to be in their best interests or in which stockholders might receive a premium  
for their stock over the then-current market price of such stock.               

RIGHTS TO PURCHASE SECURITIES AND OTHER PROPERTY                                

The New Grace Certificate authorizes the New Grace Board to create and
issue rights entitling the holders thereof to purchase from New Grace shares of 
capital stock or other securities or property. The times at which and terms upon
which such rights are to be issued would be determined by the New Grace Board   
and set forth in the contracts or instruments that evidence such rights. The    
authority of the New Grace Board with respect to such rights includes, but is   
not limited to, determining (i) the purchase price of the capital stock or other
securities or property to be purchased upon exercise of such rights; (ii)       
provisions relating to the times at which and the circumstances under which such
rights may be exercised or sold or otherwise transferred, either together with  
or separately from any other stock or other securities of New Grace; (iii)      
provisions which adjust the number or exercise price of such rights or the      
amount or nature of the stock, other securities or other property receivable    
upon exercise of such rights in the event of a combination, split or            
recapitalization of any stock of New Grace, a change in ownership of New Grace's
stock or other securities or a reorganization, merger, consolidation, sale of   
assets or other occurrence relating to New Grace or any stock of New Grace, and 
provisions restricting the ability of New Grace to enter into any such          
transaction absent an assumption by the other party or parties thereto of the   
obligations of New Grace under such rights; (iv) provisions which deny the      
holder of a specified percentage of the outstanding securities of New Grace the 
right to exercise such rights and/or cause such rights held by such holder to   
become void; (v) provisions which permit New Grace to redeem or exchange such   
rights; and (vi) the appointment of the rights agent with respect to such       
rights. This provision is intended to confirm the New Grace Board's authority to
issue share purchase rights or other rights to purchase stock or securities of  
New Grace or any other corporation. See "-- Preferred Stock Purchase Rights."   

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AMENDMENT OF CERTAIN PROVISIONS OF THE NEW GRACE CERTIFICATE OF INCORPORATION   
AND THE NEW GRACE BY-LAWS                                                       

Under the Delaware Law, stockholders have the right to adopt, amend or
repeal the certificate of incorporation and by-laws of a corporation. In        
addition, if the certificate of incorporation so provides, the by-laws may be   
amended by the board of directors. The New Grace Certificate provides that the  
affirmative vote of the holders of at least 80% of the voting power of the      
outstanding shares of capital stock of New Grace eligible to vote generally in  
the election of directors ("Voting Stock"), voting together as a single class,  
is required to amend provisions of the New Grace Certificate relating to the    
prohibition of stockholder action without a meeting; the number, election and   
term of New Grace's directors; the removal of directors; and the amendment of   
the New Grace By-laws. The New Grace Certificate further provides that the New  
Grace By-laws may be amended by the New Grace Board or by the affirmative vote  
of the holders of at least 80% of the outstanding shares of Voting Stock, voting
together as a single class. These voting requirements will have the effect of   
making it more difficult for stockholders to amend the provisions of the New    
Grace Certificate stated above or the New Grace By-laws, even if a majority of  
New Grace stockholders believe that such amendment would be in their best       
interests.                                                                      

NEW GRACE RIGHTS                                                                

 The Rights Agreement to be adopted by the New Grace Board, as described
above, will permit disinterested stockholders to acquire shares of New Grace    
common stock or common stock of an Acquiring Person at a substantial discount in
the event of certain described changes in control. See "Description of New Grace
Capital Stock -- New Grace Rights."                                             

     The New Grace Rights will have certain anti-takeover effects. The New Grace
Rights will cause substantial dilution to a person or group that attempts to    
acquire New Grace on terms not approved by the New Grace Board, except pursuant 
to an offer conditioned on a substantial number of New Grace Rights being       
acquired. The New Grace Rights should not interfere with any merger or business 
combination approved by the New Grace Board, since the New Grace Rights may be  
redeemed by New Grace at the Redemption Price prior to the time that a person or
group has become an Acquiring Person.                                           

CERTAIN ANTI-TAKEOVER FEATURES                                                  

   The New Grace Certificate, the New Grace By-laws and the New Grace Rights
contain several provisions that may make the acquisition of control of New Grace
difficult or expensive, increase the likelihood that incumbent management will  
retain its positions, and deprive stockholders of opportunities to receive      
premiums over the market value for their shares. In addition, in certain of the 
agreements entered into in connection with the Transactions, each of Grace, New 
Grace and Sealed Air has undertaken to indemnify one another against certain tax
liabilities that could arise were the Spin-off to be taxable, which indemnity   
could diminish the willingness of a third party to acquire New Grace in a       
taxable transaction for some period following the Spin-off. See "Certain        
Agreements between Grace and New Grace."                                        

ANTI-TAKEOVER STATUTE                                                           

Section 203 of the Delaware Law provides that, subject to certain     
exceptions specified therein, a corporation shall not engage in any business    
combination with any "interested stockholder" for a three-year period following 
the date on which such stockholder becomes an interested stockholder unless (i) 
prior to such date, the board of directors of the corporation approves either   
the business combination or the transaction which resulted in the stockholder   
becoming an interested stockholder, (ii) upon consummation of the transaction   
which results in the stockholder becoming an interested stockholder, the        
interested stockholder owns at least 85% of the voting stock (as defined in     
Section 203 of the Delaware Law) of the corporation outstanding at the time the 
transaction commenced (excluding certain shares), or (iii) on or subsequent to  
such date, the business combination is approved by the board of directors of the
corporation and by the affirmative vote of at least 66 2/3% of the outstanding  
voting stock not owned by the interested stockholder. Except as specified in    
Section 203 of the Delaware Law, an "interested stockholder" is defined to      
include (i) any person that is the owner of 15% or more of the outstanding      
voting stock of the corporation, or is an                                       

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affiliate or associate of the corporation and was the owner of 15% or more of   
the outstanding voting stock of the corporation, at any time within three years 
immediately prior to the relevant date and (ii) the affiliates and associates of
any such person.                                                                

    Under certain circumstances, Section 203 of the Delaware Law makes it more
difficult for an interested stockholder to effect various business combinations 
with a corporation for a three-year period, although the stockholders may elect 
to exclude a corporation from the restrictions imposed thereunder; the New Grace
Certificate does not exclude New Grace from such restrictions. It is anticipated
that the provisions of Section 203 of the Delaware Law may encourage companies  
interested in acquiring New Grace to negotiate in advance with the New Grace    
Board, since the stockholder approval requirement would be avoided if a majority
of the directors then in office approve either the business combination or the  
transaction that results in the stockholder becoming an interested stockholder. 
Section 203 of the Delaware Law should encourage persons interested in acquiring
New Grace to negotiate in advance with the New Grace Board, since the higher    
stockholder voting requirements would not be invoked if such person, prior to   
acquiring 15% of New Grace's Voting Stock, obtains the approval of the New Grace
Board for such acquisition or for the proposed business combination transaction 
(unless such person acquires 85% or more of New Grace's voting stock in such    
transaction, excluding certain shares as described above). In the event of a    
proposed acquisition of New Grace, it is believed that the interests of New     
Grace stockholders will best be served by a transaction that results from       
negotiations based upon careful consideration of the proposed terms, such as the
price to be paid to minority stockholders, the form of consideration paid and   
tax effects of the transaction.                                                 

    Section 203 of the Delaware Law will not prevent a hostile takeover of New
Grace. It may, however, make more difficult or discourage a takeover of New     
Grace or the acquisition of control of New Grace by a significant stockholder   
and thus the removal of incumbent management. Any such effect will be enhanced  
by the issuance of the New Grace Rights. Some stockholders may find this        
disadvantageous in that they may not be afforded the opportunity to participate 
in takeovers that are not approved as required by Section 203 of the Delaware   
Law but in which stockholders might receive, for at least some of their shares, 
a substantial premium above the market price at the time of a tender offer or   
other acquisition transaction.                                                  

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LIABILITY AND INDEMNIFICATION 
OF DIRECTORS AND OFFICERS 

LIMITATION OF LIABILITY OF DIRECTORS                                            

   The New Grace Certificate provides that a director will not be personally
liable for monetary damages to New Grace or its stockholders for breach of      
fiduciary duty as a director, except for liability (i) for any breach of the    
director's duty of loyalty to New Grace or its stockholders, (ii) for acts or   
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for paying a dividend or approving a stock repurchase in
violation of Section 174 of the Delaware Law, or (iv) for any transaction from  
which the director derived an improper personal benefit.                        

    While the New Grace Certificate provides directors with protection against
awards for monetary damages for breaches of their duty of care, it does not     
eliminate such duty. Accordingly, the New Grace Certificate will have no effect 
on the availability of equitable remedies such as an injunction or rescission   
based on a director's breach of his or her duty of care. The provisions of the  
New Grace Certificate described above apply to an officer of New Grace only if  
he or she is a director of New Grace and is acting in his or her capacity as    
director, and do not apply to officers of New Grace who are not directors.      

INDEMNIFICATION OF DIRECTORS AND OFFICERS                                       

  The New Grace Certificate provides that each individual who is or was or
had agreed to become a director or officer of New Grace, or each such person who
is or was serving or who had agreed to serve at the request of the New Grace    
Board as an employee or agent of New Grace or as a director, officer, employee  
or agent of another corporation, partnership, joint venture, trust or other     
enterprise, including service with respect to employee benefit plans (also      
including the heirs, executors, administrators or estate of such person), will  
be indemnified by New Grace, in accordance with the New Grace By-laws, to the   
fullest extent permitted by the Delaware Law, as the same exists or may in the  
future be amended (but, in the case of any such amendment, only to the extent   
that such amendment permits New Grace to provide broader indemnification rights 
than said law permitted prior to such amendment). The New Grace Certificate also
specifically authorizes New Grace to enter into agreements with any person      
providing for indemnification greater than or different from that provided by   
the New Grace Certificate.                                                      

   The New Grace By-laws provide that each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit, or   
proceeding, whether civil, criminal, administrative or investigative (a         
"Proceeding"), by reason of the fact that he or she or a person of whom he or   
she is the legal representative is or was a director, officer or employee of New
Grace or is or was serving at the request of New Grace as a director, officer,  
employee or agent of another corporation or of a partnership, joint venture,    
trust or other enterprise, including service with respect to employee benefit   
plans, whether the basis of such Proceeding is alleged action in an official    
capacity as a director, officer, employee or agent or in any other capacity     
while serving as a director, officer, employee or agent, will be indemnified and
held harmless by New Grace to the fullest extent authorized by the Delaware Law 
as the same exists or may in the future be amended (but, in the case of any such
amendment, only to the extent that such amendment permits New Grace to provide  
broader indemnification rights than said law permitted prior to such amendment),
against all expense, liability and loss (including, without limitation,         
attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in     
connection therewith, and such indemnification will continue as to a person who 
has ceased to be a director, officer, employee or agent and will inure to the   
benefit of his or her heirs, executors and administrators; however, except as   
described in the next paragraph with respect to Proceedings seeking to enforce  
rights to indemnification, New Grace will indemnify any such person seeking     
indemnification in connection with a Proceeding (or part thereof) initiated by  
such person only if such Proceeding (or part thereof) was authorized by the New 
Grace Board.                                                                    

Pursuant to the New Grace By-laws, if a claim for indemnification as  
described in the preceding paragraph is not paid in full by New Grace within 30 
days after a written claim has been received by New Grace, the claimant may, at 
any time thereafter, bring suit against New Grace to recover the unpaid amount  
of the claim and, if successful, in whole or in part, the claimant will be      
entitled to also be paid the expense of                                         

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prosecuting such claim. The New Grace By-laws provide that it will be a defense 
to any such action (other than an action brought to enforce a claim for expenses
incurred in defending any Proceeding in advance of its final disposition where  
the required undertaking, if any, has been tendered to New Grace, as discussed  
below) that the claimant has not met the standards of conduct which make it     
permissible under the Delaware Law for New Grace to indemnify the claimant for  
the amount claimed, but the burden of proving such defense will be on New Grace.
Neither the failure of New Grace (including the New Grace Board, independent    
legal counsel or stockholders) to have made a determination prior to the        
commencement of such action that indemnification of the claimant is proper in   
the circumstances because he or she has met the applicable standard of conduct  
set forth in the Delaware Law, nor an actual determination by New Grace         
(including the New Grace Board, independent legal counsel or stockholders) that 
the claimant has not met such applicable standard of conduct, will be a defense 
to the action or create a presumption that the claimant has not met the         
applicable standard of conduct.                                                 

 The New Grace By-laws provide that the right conferred in the New Grace
By-laws to indemnification and the payment of expenses incurred in defending a  
Proceeding in advance of its final disposition will not be exclusive of any     
other right which any person may have or may in the future acquire under any    
statute, provision of the New Grace Certificate or the New Grace By-laws,       
agreement, vote of stockholders or disinterested directors or otherwise. The New
Grace By-laws permit New Grace to maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of New Grace or another     
corporation, partnership, joint venture, trust or other enterprise against any  
expense, liability or loss, whether or not New Grace would have the power to    
indemnify such person against such expense, liability or loss under the Delaware
Law. New Grace intends to obtain directors and officers liability insurance     
providing coverage to its directors and officers. In addition, the New Grace    
By-laws authorize New Grace, to the extent authorized from time to time by the  
New Grace Board, to grant rights to indemnification, and rights to be paid by   
New Grace the expenses incurred in defending any Proceeding in advance of its   
final disposition, to any agent of New Grace to the fullest extent of the       
provisions of the New Grace By-laws with respect to the indemnification and     
advancement of expenses of directors, officers and employees of New Grace.      

   The New Grace By-laws provide that the right to indemnification conferred
therein will be a contract right and will include the right to be paid by New   
Grace the expenses incurred in defending any such Proceeding in advance of its  
final disposition, except that if the Delaware Law requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director 
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service 
to an employee benefit plan) in advance of the final disposition of a Proceeding
will be made only upon delivery to New Grace of an undertaking by or on behalf  
of such director or officer to repay all amounts so advanced if it is ultimately
determined that such director or officer is not entitled to be indemnified under
the New Grace By-laws or otherwise.                                             

  Grace is currently advancing the defense costs being incurred by certain
current and former directors (including the estate of a deceased director) in   
certain of the litigations discussed in the Grace 1997 Proxy Excerpt and in the 
Joint Proxy Statement/Prospectus. As contemplated by Delaware law, such         
individuals (and the estate) are entering into agreements in which they         
undertake to reimburse Grace for such advances in the event it is determined    
that they were not entitled thereto.                                            

CERTAIN OTHER INFORMATION                                                       

There has not been in the past and there is not presently pending any 
litigation or proceeding involving a director, officer, employee or agent of New
Grace, acting in such capacity, in which indemnification would be required or   
permitted by the New Grace By-laws. In addition, the New Grace Board is not     
aware of any threatened litigation or proceeding which may result in a claim for
indemnification under the New Grace By-laws. However, certain litigation and    
proceedings involving such persons in their respective capacities with Grace or 
Grace New York are pending. Under the Distribution Agreement, Grace Specialty   
Chemicals has agreed to indemnify Grace and a Packaging Business subsidiary with
respect to such pending litigations and proceedings. For information with       
respect to the above, see "Business of New Grace and Grace Specialty            
Chemicals -- Legal Proceedings and Regulatory Matters."                         

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WHERE STOCKHOLDERS CAN FIND MORE INFORMATION

Grace files (and New Grace will file) annual, quarterly and current   
reports, proxy statements and other information with the SEC. You may read and  
copy any reports, statements or other information that Grace or New Grace files 
at the SEC's public reference rooms in Washington, D.C., New York, New York and 
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Grace's and New Grace's SEC filings are also     
available to the public from commercial document retrieval services and at the  
world wide web site maintained by the SEC at "http://www.sec.gov".              

  New Grace has filed with the SEC a Registration Statement on Form 10 (as
amended, the "New Grace Registration Statement") under the Exchange Act,        
relating to the shares of New Grace common stock to be issued in the Spin-off.  
This Information Statement, which forms a part of the New Grace Registration    
Statement, does not contain all of the information in the New Grace Registration
Statement and the related exhibits and schedules. Statements in this Information
Statement as to the contents of any contract, agreement or other document are   
summaries only and are not necessarily complete. For complete information as to 
these matters, refer to the applicable exhibit or schedule to the New Grace     
Registration Statement. The New Grace Registration Statement and the related    
exhibits filed by New Grace may be inspected at the public reference facilities 
of the SEC listed above.                                                        

    The principal office of New Grace is located at One Town Center Road, Boca
Raton, FL 33486 (telephone: (561) 362-2000).                                    

     Questions concerning Grace, New Grace, the Spin-off or the Merger should be
directed to One Town Center Road, Boca Raton, FL 33486 (telephone: (800)        
354-8917).                                                                      

STOCKHOLDER PROPOSALS 

Article II of the New Grace By-laws, included as Annex B to this      
Information Statement, sets forth advance notice requirements applicable to     
stockholders desiring to nominate candidates for election as directors or to    
present a proposal or bring other business before an annual meeting of          
stockholders of New Grace. See "Certain Anti-Takeover Provisions -- Advance     
Notice Provisions for Stockholder Nominations and Stockholder Proposals." In    
each case, the notice must be given to the Secretary of New Grace, whose address
is One Town Center Road, Boca Raton, FL 33486. New Grace will not hold an Annual
Meeting of Stockholders in 1998. The New Grace 1999 Annual Meeting of           
Stockholders is expected to be held in May 1999. Notice of any such nomination  
or proposal must be received by December 8, 1998 to be considered at that       
meeting. In addition, to be included in New Grace's proxy statement and form of 
proxy for that meeting, any such nomination or proposal must also comply in all 
respects with the rules and regulations of the SEC and must be received by the  
Secretary of New Grace within the time period specified therein.                

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INDEX OF DEFINED TERMS

                                                                · Download Table

                                      PAGE NO.
                                      --------
                                              
Acquiring Person....................      42  
beneficial owner....................      41  
Class Period........................      32  
Consolidated Financial Statements...       7  
Covered Period......................      32  
Darex Container Products............      26  
Delaware Law........................      13  
Distribution Agent..................      14  
Distribution Agreement..............      14  
DOE.................................      30  
EHS.................................      28  
EPA.................................      30  
Exchange Act........................      32  
Final Expiration Date...............      44  
Flip-in Right.......................      43  
Grace...............................       C  
Grace 1997 Proxy Excerpt............      38  
Grace Board.........................      15  
Grace Construction Products.........      25  
Grace Davison.......................      24  
Grace New York......................      31  
Grace Specialty Chemicals...........       5  
IRS.................................      13  
LTIP................................      39  
Merger..............................       C  
Merger Agreement....................      14  
New Grace...........................       C  
New Grace Board.....................      12  
New Grace By-laws...................      12  
New Grace Certificate...............      12  

                                                                · Download Table

                                      PAGE NO.
                                      --------
                                              
New Grace Junior Preferred Stock....      42  
New Grace Registration Statement....      53  
New Grace Rights....................      42  
New Sealed Air......................       C  
NMC.................................      32  
NMC Distribution Agreement..........      32  
NMC Transaction.....................      32  
NYSE................................      11  
OIG.................................      33  
Packaging Business..................       5  
Proceeding..........................      51  
PRP.................................      30  
Purchase Price......................      42  
Recapitalization....................       4  
Redemption Price....................      43  
Rights Agreement....................      42  
Rights Certificates.................      43  
Rights Distribution Date............      42  
Sealed Air..........................       C  
SEC.................................      32  
Securities Act......................      15  
Spin-off............................       C  
Stockholder Notice Procedure........      46  
Specialty Chemicals Businesses......       6  
Third Quarter Financial                       
  Statements........................       7  
Time of Spin-off....................      12  
Transactions........................       6  
Transaction Agreements..............      14  
Voting Stock........................      49  
Whole Board.........................      46  

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                                                                         ANNEX A

FORM OF 
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
W. R. GRACE & CO. 

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
* * * * * * * 

 1.  The name of the corporation (the "Corporation") is "Grace Specialty
Chemicals, Inc."                                                                

    2.  The original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on August 6, 1997, under the name Grace       
Specialty Chemicals, Inc.                                                       

  3.  This Amended and Restated Certificate of Incorporation has been duly
proposed by resolutions adopted and declared advisable by the Board of Directors
of the Corporation, duly adopted by written consent of the sole stockholder of  
the Corporation in lieu of a meeting and vote and duly executed and acknowledged
by the officers of the Corporation in accordance with the provisions of Sections
103, 228, 242 and 245 of the General Corporation Law of the State of Delaware   
and, upon filing with the Secretary of State in accordance with Section 103,    
shall supercede the original Certificate of Incorporation and shall, as it may  
thereafter be amended in accordance with its terms and applicable law, be the   
Certificate of Incorporation of the Corporation.                                

4.  The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:                 

ARTICLE I 

The name of the corporation (the "Corporation") is:                   

W. R. Grace & Co. 

ARTICLE II

     The address of the Corporation's registered office in the State of Delaware
is The Prentice-Hall Corporation System, Inc., 1013 Centre Road, Wilmington,    
Delaware, County of New Castle. The name of the Corporation's registered agent  
at such address is The Prentice-Hall Corporation System, Inc.                   

ARTICLE III 

The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the     
General Corporation Law of the State of Delaware (the "GCL").                   

ARTICLE IV

  (a) The total number of shares of stock which the Corporation shall have
authority to issue is Three Hundred and Fifty-Three Million (353,000,000),      
consisting of Fifty-Three Million (53,000,000) shares of Preferred Stock, par   
value $.01 per share (the "Preferred Stock"), and Three Hundred Million         
(300,000,000) shares of Common Stock, par value $.01 per share (the "Common     
Stock").                                                                        

(b) The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to provide for the issuance 
of shares of Preferred Stock in series and, by filing a certificate pursuant to 
the applicable law of the State of Delaware ("Preferred Stock Designation"), to 
establish from time to time the number of shares to be included in each such    
series, and to fix the designation, powers,                                     

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preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. The authority of the Board of Directors   
with respect to each series shall include, but not be limited to, determination 
of the following:                                                               

     (1) The designation of the series, which may be by distinguishing
number, letter or title.                                              

     (2) The number of shares of the series, which number the Board of
    Directors may thereafter (except where otherwise provided in the Preferred
     Stock Designation) increase or decrease (but not below the number of shares
thereof then outstanding).                                            

       (3) Whether dividends, if any, shall be cumulative or noncumulative
and the dividend rate of the series.                                  

(4) The dates on which dividends, if any, shall be payable. 

        (5) The redemption rights and price or prices, if any, for shares of
the series.                                                           

          (6) The terms and amount of any sinking fund provided for the purchase
or redemption of shares of the series.                                

          (7) The amounts payable on, and the preferences, if any, of, shares of
the series in the event of any voluntary or involuntary liquidation,  
dissolution or winding up of the affairs of the Corporation.          

         (8) Whether the shares of the series shall be convertible into shares
    of any other class or series, or any other security, of the Corporation or
     any other corporation, and, if so, the specification of such other class or
  series of such other security, the conversion price or prices or rate or
rates, any adjustments thereof, the date or dates at which such shares
 shall be convertible and all other terms and conditions upon which such
conversion may be made.                                               

       (9) Restrictions on the issuance of shares of the same series or of
any other class or series.                                            

   (10) The voting rights, if any, of the holders of shares of the
series.                                                               

     (c) The Common Stock shall be subject to the express terms of the Preferred
Stock and any series thereof. Each share of Common Stock shall be equal to each 
other share of Common Stock. The holders of shares of Common Stock shall be     
entitled to one vote for each such share upon all questions presented to the    
stockholders.                                                                   

Except as may be provided in this Amended and Restated Certificate of 
Incorporation or in a Preferred Stock Designation, or as may be required by law,
the Common Stock shall have the exclusive right to vote for the election of     
directors and for all other purposes, and holders of Preferred Stock shall not  
be entitled to receive notice of any meeting of stockholders at which they are  
not entitled to vote.                                                           

     (d) The Corporation shall be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes and shall
not be bound to recognize any equitable or other claim to, or interest in, such 
share on the part of any other person, whether or not the Corporation shall have
notice thereof, except as expressly provided by applicable law.                 

(e) There shall be designated a series of the Corporation's Preferred 
Stock, as follows:                                                              

   (1) Designation and Amount.  The shares of such series shall be
    designated as "Series A Junior Participating Preferred Stock" (the "Series
A Preferred Stock") and the number of shares constituting the Series A
    Preferred Stock shall be 3,000,000. Such number of shares may be increased
 or decreased by resolution of the Board of Directors; provided, that no
     decrease shall reduce the number of shares of Series A Preferred Stock to a
   number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options,
 rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred Stock.  

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(2) Dividends and Distributions.                            

        (a) Subject to the rights of the holders of any shares of any series
     of Preferred Stock (or any similar stock) ranking prior and superior to the
   Series A Preferred Stock with respect to dividends, the holders of shares
    of Series A Preferred Stock, in preference to the holders of Common Stock,
   and of any other junior stock, shall be entitled to receive, when, as and
  if declared by the Board of Directors out of funds legally available for
     the purpose, quarterly dividends payable in cash on the first day of March,
     June, September and December in each year (each such date being referred to
 herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
 fraction of a share of Series A Preferred Stock, in an amount per share
     (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the  
aggregate per share amount of all cash dividends, and 100 times the   
   aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by  
reclassification or otherwise), declared on the Common Stock since the
   immediately preceding Quarterly Dividend Payment Date or, with respect to
    the first Quarterly Dividend Payment Date, since the first issuance of any
  share of a fraction of a share of Series A Preferred Stock. In the event
     the Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or   
    combination or consolidation of the outstanding shares of Common Stock (by
  reclassification or otherwise than by payment of a dividend in shares of
  Common Stock) into a greater or lesser number of shares of Common Stock,
  then in each such case the amount to which holders of shares of Series A
    Preferred Stock were entitled immediately prior to such event under clause
    (b) of the preceding sentence shall be adjusted by multiplying such amount
 by a fraction, the numerator of which is the number of shares of Common
     Stock outstanding immediately after such event and the denominator of which
   is the number of shares of Common Stock that were outstanding immediately
prior to such event.                                                  

       (b) The Corporation shall declare a dividend or distribution on the
    Series A Preferred Stock as provided in subparagraph (a) of this paragraph
    (2) immediately after it declares a dividend or distribution on the Common
   Stock (other than a dividend payable in shares of Common Stock); provided
    that, in the event no dividend or distribution shall have been declared on
   the Common Stock during the period between any Quarterly Dividend Payment
     Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
    $1 per share on the Series A Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.                   

        (c) Dividends shall begin to accrue and be cumulative on outstanding
     shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
   next preceding the date of issue of such shares, unless the date of issue
     of such shares is prior to the record date for the first Quarterly Dividend
    Payment Date, in which case dividends on such shares shall begin to accrue
 from the date of issue of such shares, or unless the date of issue is a
    Quarterly Dividend Payment Date or is a date after the record date for the
    determination of holders of shares of Series A Preferred Stock entitled to
 receive a quarterly dividend and before such Quarterly Dividend Payment
     Date, in either of which events such dividends shall begin to accrue and be
  cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
     dividends shall not bear interest. Dividends paid on the shares of Series A
   Preferred Stock in an amount less than the total amount of such dividends
    at the time accrued and payable on such shares shall be allocated pro rata
  on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of 
   holders of shares of Series A Preferred Stock entitled to receive payment
    of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.

         (3) Voting Rights.  The holders of shares of Series A Preferred Stock
shall have the following voting rights:                               

      (a) Subject to the provision for adjustment hereinafter set forth,
    each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of   

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    the Corporation. In the event the Corporation shall at any time declare or
    pay any dividend on the Common Stock payable in shares of Common Stock, or
 effect a subdivision or combination or consolidation of the outstanding
     shares of Common Stock (by reclassification or otherwise than by payment of
  a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
    share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such 
 number by a fraction, the numerator of which is the number of shares of
   Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.                                      

        (b) Except as otherwise provided herein, in any other certificate of
    designations creating a series of Preferred Stock or any similar stock, or
   by law, the holders of shares of Series A Preferred Stock and the holders
  of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all  
matters submitted to a vote of stockholders of the Corporation.       

    (c) Except as set forth herein, or as otherwise provided by law,
     holders of Series A Preferred Stock shall have no special voting rights and
     their consent shall not be required (except to the extent they are entitled
  to vote with holders of Common Stock as set forth herein) for taking any
corporate action.                                                     

(4) Certain Restrictions.                                   

        (a) Whenever quarterly dividends or other dividends or distributions
     payable on the Series A Preferred Stock as provided in paragraph (2) are in
arrears, thereafter and until all accrued and unpaid dividends and    
 distributions, whether or not declared, on shares of Series A Preferred
    Stock outstanding shall have been paid in full, the Corporation shall not:

           (i) declare or pay dividends, or make any other distributions, on
  any shares of stock ranking junior (either as to dividends or upon
        liquidation, dissolution or winding up) to the Series A Preferred Stock;

            (ii) declare or pay dividends, or make any other distributions, on
       any shares of stock ranking on a parity (either as to dividends or upon
   liquidation, dissolution or winding up) with the Series A Preferred
     Stock, except dividends paid ratably on the Series A Preferred Stock,
      and all such parity stock on which dividends are payable or in arrears
   in proportion to the total amounts to which the holders of all such
shares are then entitled;                                       

         (iii) redeem or purchase or otherwise acquire for consideration
  shares of any stock ranking junior (either as to dividends or upon
        liquidation, dissolution or winding up) to the Series A Preferred Stock,
 provided that the Corporation may at any time redeem, purchase or
        otherwise acquire shares of any such junior stock in exchange for shares
      of any stock of the Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the Series A 
Preferred Stock; or                                             

            (iv) redeem or purchase or otherwise acquire for consideration any
       shares of Series A Preferred Stock, or any shares of stock ranking on a
     parity with the Series A Preferred Stock, except in accordance with a
      purchase offer made in writing or by publication (as determined by the
        Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the 
        respective series and classes, shall determine in good faith will result
       in fair and equitable treatment among the respective series of classes.

          (b) The Corporation shall not permit any subsidiary of the Corporation
   to purchase or otherwise acquire for consideration any shares of stock of
 the Corporation unless the Corporation could, under subparagraph (a) of
    this paragraph (4), purchase or otherwise acquire such shares at such time
and in such manner.                                                   

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  (5) Reacquired Shares.  Any shares of Series A Preferred Stock
     purchased or otherwise acquired by the Corporation in any manner whatsoever
    shall be retired and cancelled promptly after the acquisition thereof. All
  such shares shall upon their cancellation become authorized but unissued
  shares of Preferred Stock and may be reissued as part of a new series of
    Preferred Stock subject to the conditions and restrictions on issuance set
     forth herein, or in any other certificate of designations creating a series
  of Preferred Stock or any similar stock or as otherwise required by law.

      (6) Liquidation, Dissolution or Winding Up.  Upon any liquidation,
     dissolution or winding up of the Corporation, no distribution shall be made
(1) to the holders of shares of stock ranking junior (either as to    
   dividends or upon liquidation, dissolution or winding up) to the Series A
  Preferred Stock unless, prior thereto, the holders of shares of Series A
     Preferred Stock shall have received $100 per share, plus an amount equal to
    all accrued and unpaid dividends and distributions thereon, whether or not
    declared, to the date of such payment, provided that the holders of shares
    of Series A Preferred Stock shall also be entitled to receive an aggregate
   amount per share, subject to the provision for adjustment hereinafter set
    forth, equal to 100 times the aggregate amount to be distributed per share
  to holders of shares of Common Stock, or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except  
 distributions made ratably on the Series A Preferred Stock and all such
     parity stock in proportion to the total amounts to which the holders of all
    such shares are entitled upon such liquidation, dissolution or winding up.
    In the event the Corporation shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a    
  subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a   
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series A Preferred Stock were entitled     
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a  
  fraction, the numerator of which is the number of shares of Common Stock
  outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.                                                  

        (7) Consolidation, Merger, etc.  In case the Corporation shall enter
   into any consolidation, merger, combination or other transaction in which
     the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
share of Series A Preferred Stock shall at the same time be similarly 
     exchanged or changed into an amount per share, subject to the provision for
   adjustment hereinafter set forth, equal to 100 times the aggregate amount
    of stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time  
     declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the 
    outstanding shares of Common Stock (by re-classification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or 
    lesser number of shares of Common Stock, then in each such case the amount
    set forth in the preceding sentence with respect to the exchange or change
     of shares of Series A Preferred Stock shall be adjusted by multiplying such
 amount by a fraction, the numerator of which is the number of shares of
   Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.                                      

        (8) No Redemption.  The shares of Series A Preferred Stock shall not
be redeemable.                                                        

       (9) Rank.  The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all
series of any other class of the Corporation's Preferred Stock.       

(10) Amendment.  This Amended and Restated Certificate of   
   Incorporation of the Corporation shall not be amended in any manner which
    would materially alter or change the powers, preferences or special rights
    of the Series A Preferred Stock so as to affect them adversely without the
   affirmative vote of the holders of at least two-thirds of the outstanding
shares of Series A Preferred Stock, voting together as a single class.

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ARTICLE V 

     The Board of Directors is hereby authorized to create and issue, whether or
not in connection with the issuance and sale of any of its stock or other       
securities or property, rights entitling the holders thereof to purchase from   
the Corporation shares of stock or other securities of the Corporation or any   
other corporation. The times at which and the terms upon which such rights are  
to be issued will be determined by the Board of Directors and set forth in the  
contracts or instruments that evidence such rights. The authority of the Board  
of Directors with respect to such rights shall include, but not be limited to,  
determination of the following:                                                 

          (1) The initial purchase price per share or other unit of the stock or
    other securities or property to be purchased upon exercise of such rights.

       (2) Provisions relating to the times at which and the circumstances
    under which such rights may be exercised or sold or otherwise transferred,
either together with or separately from, any other stock or other     
securities of the Corporation.                                        

    (3) Provisions which adjust the number or exercise price of such
 rights or amount or nature of the stock or other securities or property
receivable upon exercise of such rights in the event of a combination,
split or recapitalization of any stock of the Corporation, a change in
ownership of the Corporation's stock or other securities or a         
   reorganization, merger, consolidation, sale of assets or other occurrence
     relating to the Corporation or any stock of the Corporation, and provisions
restricting the ability of the Corporation to enter into any such     
   transaction absent an assumption by the other party or parties thereto of
the obligations of the Corporation under such rights.                 

         (4) Provisions which deny the holder of a specified percentage of the
outstanding stock or other securities of the Corporation the right to 
    exercise such rights and/or cause the rights held by such holder to become
void.                                                                 

          (5) Provisions which permit the Corporation to redeem or exchange such
rights.                                                               

      (6) The appointment of a rights agent with respect to such rights.

ARTICLE VI

   In furtherance of, and not in limitation of, the powers conferred by law,
the Board of Directors is expressly authorized and empowered:                   

 (1) to adopt, amend or repeal the By-laws of the Corporation;
     provided, however, that the By-laws adopted by the Board of Directors under
the powers hereby conferred may be amended or repealed by the Board of
    Directors or by the stockholders having voting power with respect thereto,
provided further that in the case of amendments by stockholders, the  
    affirmative vote of the holders of at least 80 percent of the voting power
     of the then outstanding Voting Stock (as defined below), voting together as
   a single class, shall be required to alter, amend or repeal any provision
of the By-laws; and                                                   

         (2) from time to time to determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the 
 accounts and books of the Corporation, or any of them, shall be open to
  inspection of stockholders; and, except as so determined or as expressly
  provided in this Amended and Restated Certificate of Incorporation or in
 any Preferred Stock Designation, no stockholder shall have any right to
  inspect any account, book or document of the Corporation other than such
rights as may be conferred by applicable law.                         

The Corporation may in its By-laws confer powers upon the Board of    
Directors in addition to the foregoing and in addition to the powers and        
authorities expressly conferred upon the Board of Directors by applicable law.  
Notwithstanding anything contained in this Amended and Restated Certificate of  
Incorporation to the contrary, the affirmative vote of the holders of at least  
80 percent of the voting power of the then outstanding Voting Stock, voting     
together as a single class, shall be required to amend, repeal or adopt any     
provision inconsistent with paragraph (1) of this Article VI. For the purposes  
of this Amended and Restated                                                    

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Certificate of Incorporation, "Voting Stock" shall mean the outstanding shares  
of capital stock of the Corporation entitled to vote generally in the election  
of directors.                                                                   

ARTICLE VII 

  Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in this Amended and Restated    
Certificate of Incorporation to elect additional directors under specific       
circumstances, any action required or permitted to be taken by the stockholders 
of the Corporation must be effected at a duly called annual or special meeting  
of stockholders of the Corporation and may not be effected by any consent in    
writing in lieu of a meeting of such stockholders. Notwithstanding anything     
contained in this Amended and Restated Certificate of Incorporation to the      
contrary, the affirmative vote of at least 80 percent of the voting power of the
then outstanding Voting Stock, voting together as a single class, shall be      
required to amend, repeal or adopt any provision inconsistent with this Article 
VII.                                                                            

ARTICLE VIII

  Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in this Amended and Restated    
Certificate of Incorporation to elect additional directors under specified      
circumstances, the number of directors of the Corporation shall be fixed, and   
may be increased or decreased from time to time, in such manner as may be       
prescribed by the By-laws of the Corporation.                                   

   Unless and except to the extent that the By-laws of the Corporation shall
so require, the election of directors of the Corporation need not be by written 
ballot.                                                                         

  The directors, other than those who may be elected by the holders of any
series of Preferred Stock or any other series or class of stock as set forth in 
this Amended and Restated Certificate of Incorporation, shall be divided into   
three classes, as nearly equal in number as possible. One class of directors    
shall be initially elected for a term expiring at the annual meeting of         
stockholders to be held in 1999, another class shall be initially elected for a 
term expiring at the annual meeting of stockholders to be held in 2000, and     
another class shall be initially elected for a term expiring at the annual      
meeting of stockholders to be held in 2001. Members of each class shall hold    
office until their successors are elected and qualified. At each succeeding     
annual meeting of the stockholders of the Corporation, the successors of the    
class of directors whose term expires at that meeting shall be elected by a     
plurality vote of all votes cast at such meeting to hold office for a term      
expiring at the annual meeting of stockholders held in the third year following 
the year of their election.                                                     

  Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in this Amended and Restated    
Certificate of Incorporation to elect additional directors under specified      
circumstances, any director may be removed from office at any time by the       
stockholders, but only for cause.                                               

     Notwithstanding anything contained in this Amended and Restated Certificate
of Incorporation to the contrary, the affirmative vote of the holders of at     
least 80 percent of the voting power of the then outstanding Voting Stock,      
voting together as a single class, shall be required to amend, repeal or adopt  
any provision inconsistent with this Article VIII.                              

ARTICLE IX

    Each person who is or was or has agreed to become a director or officer of
the Corporation, or each such person who is or was serving or who has agreed to 
serve at the request of the Board of Directors or an officer of the Corporation 
as an employee or agent of the Corporation or as a director, officer, employee  
or agent of another corporation, partnership, joint venture, trust or other     
enterprise, including service with respect to employee benefit plans (including 
the heirs, executors, administrators or estate of such person), shall be        
indemnified by the Corporation, in accordance with the By-laws of the           
Corporation, to the fullest extent permitted from time to time by the GCL as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide       
broader                                                                         

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indemnification rights than said law permitted prior to such amendment) or any  
other applicable laws as presently or hereafter in effect. Without limiting the 
generality or the effect of the foregoing, the Corporation may enter into one or
more agreements with any person which provide for indemnification greater than  
or different from that provided in this Article IX. Any amendment or repeal of  
this Article IX shall not adversely affect any right or protection existing     
hereunder in respect of any act or omission occurring prior to such amendment or
repeal.                                                                         

ARTICLE X 

A director of the Corporation shall not be personally liable to the   
Corporation or its stockholders for monetary damages for breach of fiduciary    
duty as a director, except for liability (1) for any breach of the director's   
duty of loyalty to the Corporation or its stockholders, (2) for acts or         
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) under Section 174 of the GCL, or (4) for any transaction  
from which the director derived an improper personal benefit. Any amendment or  
repeal of this Article X shall not adversely affect any right or protection of a
director of the Corporation existing hereunder in respect of any act or omission
occurring prior to such amendment or repeal.                                    

ARTICLE XI

Except as may be expressly provided in this Amended and Restated      
Certificate of Incorporation, the Corporation reserves the right at any time and
from time to time to amend, alter, change or repeal any provision contained in  
this Amended and Restated Certificate of Incorporation or a Preferred Stock     
Designation, and any other provisions authorized by the laws of the State of    
Delaware at the time in force may be added or inserted, in the manner now or    
hereafter prescribed herein or by applicable law, and all rights, preferences   
and privileges of whatsoever nature conferred upon stockholders, directors or   
any other persons whomsoever by and pursuant to this Amended and Restated       
Certificate of Incorporation in its present form or as hereafter amended are    
granted subject to the right reserved in this Article XI; provided, however,    
that any amendment or repeal of Article IX or Article X of this Amended and     
Restated Certificate of Incorporation shall not adversely affect any right or   
protection existing hereunder in respect of any act or omission occurring prior 
to such amendment or repeal; and provided further that no Preferred Stock       
Designation shall be amended after the issuance of any shares of the series of  
Preferred Stock created thereby, except in accordance with the terms of such    
Preferred Stock Designation and the requirements of applicable law.             

     IN WITNESS WHEREOF, Grace Specialty Chemicals, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed by its President and     
attested by its Secretary and has caused its corporate seal to be hereunto      
affixed, this   day of           , 1998.                                        

                                   GRACE SPECIALTY CHEMICALS, INC.

       By:

                                          --------------------------------------
                                           President

Attest:                                                                         
--------------------------------------                                          
Secretary                                     

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                                                                         ANNEX B

FORM OF 
AMENDED AND RESTATED
BY-LAWS 
OF
W. R. GRACE & CO. 
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

ARTICLE I 

OFFICES AND RECORDS 

    Section 1.1.  Delaware Office.  The principal office of the Corporation in
the State of Delaware shall be located in Wilmington, Delaware, and the name and
address of its registered agent is The Prentice-Hall Corporation System, Inc.,  
1013 Centre Road, Wilmington, Delaware.                                         

    Section 1.2.  Other Offices.  The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may   
designate or as the business of the Corporation may from time to time require.  

    Section 1.3.  Books and Records.  The books and records of the Corporation
may be kept outside the State of Delaware at such place or places as may from   
time to time be designated by the Board of Directors.                           

ARTICLE II

STOCKHOLDERS

  Section 2.1.  Annual Meeting.  The annual meeting of the stockholders of
the Corporation shall be held annually (a) on the tenth day of May, or (b) if   
such day be a Saturday, Sunday or a holiday at the place where the meeting is to
be held, on the last business day preceding or on the first business day after  
such tenth day of May, as may be fixed by the Board of Directors, or (c) on such
other date as may be fixed by the Board of Directors.                           

     Section 2.2.  Special Meeting.  Subject to the rights of the holders of any
series of stock having a preference over the Common Stock of the Corporation as 
to dividends or upon liquidation ("Preferred Stock") with respect to such series
of Preferred Stock, special meetings of the stockholders may be called only by  
the Chairman, by the President or by the Board of Directors pursuant to a       
resolution adopted by a majority of the total number of directors which the     
Corporation would have if there were no vacancies (the "Whole Board").          

   Section 2.3.  Place of Meeting.  The Chairman, the President or the Board
of Directors, as the case may be, may designate the place of meeting for any    
annual meeting or for any special meeting of the stockholders called by the     
Chairman, the President or the Board of Directors. If no designation is so made,
the place of meeting shall be the principal office of the Corporation.          

  Section 2.4.  Notice of Meeting.  Written or printed notice, stating the
place, date and time of the meeting and the purpose or purposes for which the   
meeting is called, shall be delivered by the Corporation not less than ten (10) 
days nor more than sixty (60) days before the date of the meeting, either       
personally or by mail, to each stockholder of record entitled to vote at such   
meeting. If mailed, such notice shall be deemed to be delivered when deposited  
in the U.S. mail with postage thereon prepaid, addressed to the stockholder at  
his address as it appears on the stock transfer books of the Corporation. Such  
further notice shall be given as may be required by law. Only such business     
shall be conducted at a special meeting of stockholders as shall have been      
brought before the meeting pursuant to the Corporation's notice of meeting.     
Meetings may be held without notice if all stockholders entitled to vote are    
present, or if notice is waived by those not present in accordance with Section 
6.4 of these By-laws. Any previously scheduled meeting of the stockholders may  
be                                                                              

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postponed, and (unless the Certificate of Incorporation otherwise provides) any 
special meeting of the stockholders may be cancelled, by resolution of the Board
of Directors upon public notice given prior to the date previously scheduled for
such meeting of stockholders.                                                   

    Section 2.5.  Quorum and Adjournment.  Except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority of the        
outstanding shares of the Corporation entitled to vote generally in the election
of directors (the "Voting Stock"), represented in person or by proxy, shall     
constitute a quorum at a meeting of stockholders, except that when specified    
business is to be voted on by a class or series of stock voting as a class, the 
holders of a majority of the voting power of the shares of such class or series 
shall constitute a quorum of such class or series for the transaction of such   
business. The chairman of the meeting or a majority of the shares so represented
may adjourn the meeting from time to time, whether or not there is a quorum. No 
notice of the time and place of adjourned meetings need be given except as      
required by law. The stockholders present at a duly called meeting at which a   
quorum is present may continue to transact business until adjournment,          
notwithstanding the withdrawal of enough stockholders to leave less than a      
quorum.                                                                         

    Section 2.6.  Proxies.  At all meetings of stockholders, a stockholder may
vote by proxy executed in writing (or in any other manner permitted by law) by  
the stockholder, or by his duly authorized attorney-in-fact.                    

  Section 2.7.  Notice of Stockholder Business and Nominations. (A) Annual
Meetings of Stockholders. (1) Nominations of persons for election to the Board  
of Directors of the Corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders (a) pursuant  
to the Corporation's notice of meeting, (b) by or at the direction of the Board 
of Directors or (c) by any stockholder of the Corporation who was a stockholder 
of record at the time of giving of the notice provided for in this Section 2.7, 
who is entitled to vote at the meeting and who complies with the notice         
procedures set forth in this Section 2.7.                                       

(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of   
this Section 2.7, the stockholder must have given timely notice thereof in      
writing to the Secretary of the Corporation, and such other business must       
otherwise be a proper matter for stockholder action. To be timely, a            
stockholder's notice shall be delivered to the Secretary at the principal       
executive offices of the Corporation not later than the close of business on the
60th day nor earlier than the close of business on the 90th day prior to the    
first anniversary of the preceding year's annual meeting; provided, however,    
that in the event that the date of the annual meeting is more than 30 days      
before or more than 60 days after such anniversary date, notice by the          
stockholder to be timely must be so delivered not earlier than the close of     
business on the 90th day prior to such annual meeting and not later than the    
close of business on the later of the 60th day prior to such annual meeting or  
the 10th day following the day on which public announcement of the date of such 
meeting is first made by the Corporation. In no event shall the public          
announcement of an adjournment of an annual meeting commence a new time period  
for the giving of a stockholder's notice as described above. Such stockholder's 
notice shall set forth (a) as to each person whom the stockholder proposes to   
nominate for election or re-election as a director all information relating to  
such person that is required to be disclosed in solicitations of proxies for    
election of directors in an election contest, or is otherwise required, in each 
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as   
amended (the "Exchange Act"), and Rule 14a-11 thereunder (including such        
person's written consent to being named in the proxy statement as a nominee and 
to serving as a director if elected); (b) as to any other business that the     
stockholder proposes to bring before the meeting, a brief description of the    
business desired to be brought before the meeting, the reasons for conducting   
such business at the meeting and any material interest in such business of such 
stockholder and the beneficial owner, if any, on whose behalf the proposal is   
made; and (c) as to the stockholder giving the notice and the beneficial owner, 
if any, on whose behalf the nomination or proposal is made (i) the name and     
address of such stockholder, as they appear on the Corporation's books, and of  
such beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such         
beneficial owner.                                                               

    (3) Notwithstanding anything in the second sentence of paragraph (A)(2) of
this Section 2.7 to the contrary, in the event that the number of directors to  
be elected to the Board of Directors of the Corporation is                      

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increased and there is no public announcement by the Corporation naming all of  
the nominees for election as director or specifying the size of the increased   
Board of Directors at least 70 days prior to the first anniversary of the       
preceding year's annual meeting, a stockholder's notice required by this Section
2.7 shall also be considered timely, but only with respect to nominees for any  
new positions created by such increase, if it shall be delivered to the         
Secretary at the principal executive offices of the Corporation not later than  
the close of business on the 10th day following the day on which such public    
announcement is first made by the Corporation.                                  

(B) Special Meetings of Stockholders.  Only such business shall be    
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of     
persons for election to the Board of Directors may be made at a special meeting 
of stockholders at which directors are to be elected pursuant to the            
Corporation's notice of meeting (a) by or at the direction of the Board of      
Directors or (b) provided that the Board of Directors has determined that       
directors shall be elected at such meeting, by any stockholder of the           
Corporation who is a stockholder of record at the time of giving of notice      
provided for in this Section 2.7, who shall be entitled to vote at the meeting  
and who complies with the notice procedures set forth in this Section 2.7. In   
the event the Corporation calls a special meeting of stockholders for the       
purpose of electing one or more directors to the Board of Directors, any such   
stockholder may nominate a person or persons (as the case may be), for election 
to such position(s) as specified in the Corporation's notice of meeting, if the 
stockholder's notice required by paragraph (A)(2) of this Section 2.7 shall be  
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the 90th day prior to such special    
meeting and not later than the close of business on the later of the 60th day   
prior to such special meeting or the 10th day following the day on which public 
announcement is first made of the date of the special meeting and of the        
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of an adjournment of a special meeting      
commence a new time period for the giving of a stockholder's notice as described
above.                                                                          

  (C) General.  (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 2.7 shall be eligible to serve as      
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures 
set forth in this Section 2.7. Except as otherwise provided by law, the         
Certificate of Incorporation or these By-laws, the chairman of the meeting shall
have the power and duty to determine whether a nomination or any business       
proposed to be brought before the meeting was made or proposed, as the case may 
be, in accordance with the procedures set forth in this Section 2.7 and, if any 
proposed nomination or business is not in compliance with this Section 2.7, to  
declare that such defective proposal or nomination shall be disregarded.        

(2) For purposes of this Section 2.7, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by  
the Corporation with the Securities and Exchange Commission pursuant to Section 
13, 14 or 15(d) of the Exchange Act.                                            

(3) Notwithstanding the foregoing provisions of this Section 2.7, a   
stockholder shall also comply with all applicable requirements of the Exchange  
Act and the rules and regulations thereunder with respect to the matters set    
forth in this by-law. Nothing in this Section 2.7 shall be deemed to affect any 
rights (i) of stockholders to request inclusion of proposals in the             
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or  
(ii) of the holders of any series of Preferred Stock to elect directors under   
specified circumstances.                                                        

     Section 2.8.  Procedure for Election of Directors; Required Vote.  Election
of directors at all meetings of the stockholders at which directors are to be   
elected shall be by ballot, and, subject to the rights of the holders of any    
series of Preferred Stock to elect directors under specified circumstances, a   
plurality of the votes cast thereat shall elect directors. Except as otherwise  
provided by law, the Certificate of Incorporation, or these By-laws, in all     
matters other than the election of directors, the affirmative vote of a majority
of the shares present in person or represented by proxy at the meeting and      
entitled to vote on the matter shall be the act of the stockholders.            

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    Section 2.9.  Inspectors of Elections; Opening and Closing the Polls.  The
Board of Directors by resolution shall appoint one or more inspectors, which    
inspector or inspectors may include individuals who serve the Corporation in    
other capacities, including, without limitation, as officers, employees, agents 
or representatives, to act at meetings of stockholders and make written reports 
thereof. One or more persons may be designated as alternate inspectors to       
replace any inspector who fails to act. If no inspector or alternate has been   
appointed to act or is able to act at a meeting of stockholders, the chairman of
the meeting shall appoint one or more inspectors to act at the meeting. Each    
inspector, before discharging his or her duties, shall take and sign an oath    
faithfully to execute the duties of inspector with strict impartiality and      
according to the best of his or her ability. The inspectors shall have the      
duties prescribed by law.                                                       

    The chairman of the meeting shall fix and announce at the meeting the date
and time of the opening and the closing of the polls for each matter upon which 
the stockholders will vote at a meeting.                                        

ARTICLE III 

BOARD OF DIRECTORS

    Section 3.1.  General Powers.  The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. In addition to  
the powers and authorities by these By-laws expressly conferred upon them, the  
Board of Directors may exercise all such powers of the Corporation and do all   
such lawful acts and things as are not by statute or by the Certificate of      
Incorporation or by these By-laws required to be exercised or done by the       
stockholders.                                                                   

    Section 3.2.  Number, Tenure and Qualifications.  Subject to the rights of
the holders of any series of Preferred Stock to elect directors under specified 
circumstances, the number of directors shall be fixed from time to time         
exclusively pursuant to a resolution adopted by a majority of the Whole Board.  
The directors, other than those who may be elected by the holders of any series 
of Preferred Stock under specified circumstances, shall be divided, with respect
to the time for which they severally hold office, into three classes, as nearly 
equal in number as is reasonably possible, designated Class I, Class II and     
Class III, with the initial term of office of the Class I directors to expire at
the 1999 annual meeting of stockholders, the initial term of office of the Class
II directors to expire at the 2000 annual meeting of stockholders and the       
initial term of office of the Class III directors to expire at the 2001 annual  
meeting of stockholders, with each director to hold office until his or her     
successor shall have been duly elected and qualified. No person shall be        
nominated for election as a director if such person will have attained the age  
of 70 prior to the expiration of his or her term of office, except for any      
person whose election as a director of the Corporation is effective upon the    
distribution of shares of the Corporation's common stock by a Delaware          
corporation formerly named "W. R. Grace & Co." and whose initial term of office 
is scheduled to expire at the 2001 annual meeting of stockholders. At each      
annual meeting of stockholders, commencing with the 1999 annual meeting,        
directors elected to succeed those directors whose terms then expire shall be   
elected for a term of office to expire at the third succeeding annual meeting of
stockholders after their election, with each director to hold office until his  
or her successor shall have been duly elected and qualified.                    

Section 3.3.  Regular Meetings.  A regular meeting of the Board of    
Directors shall be held without other notice than this Section 3.3 immediately  
after, and at the same place as, the Annual Meeting of Stockholders. The Board  
of Directors may fix the time and place for the holding of additional regular   
meetings without notice.                                                        

     Section 3.4.  Special Meetings.  Special meetings of the Board of Directors
shall be called at the request of the Chairman, the President or a majority of  
the directors then in office. The person or persons authorized to call special  
meetings of the Board of Directors may fix the place and time of such meetings. 

    Section 3.5.  Notice.  Notice of any special meeting or notice of a change
in the time or place of any regular meeting of the Board of Directors shall be  
given to each director at his or her business or residence in writing by hand   
delivery, first-class or overnight mail or courier service, telegram or         
facsimile transmission, or orally by telephone. If mailed by first-class mail,  
such notice shall be deemed adequately delivered when deposited in the U.S.     
mails so addressed, with postage thereon prepaid, at least five (5) days before 
such                                                                            
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meeting. If by telegram, overnight mail or courier service, such notice shall be
deemed adequately delivered when the telegram is delivered to the telegraph     
company or the notice is delivered to the overnight mail or courier service     
company at least twenty-four (24) hours before such meeting. If by facsimile    
transmission, such notice shall be deemed adequately delivered when the notice  
is transmitted at least twelve (12) hours before such meeting. If by telephone, 
the notice shall be communicated to the director or his or her representative or
answering machine. If by telephone or by hand delivery, the notice shall be     
given at least twenty-four (24) hours prior to the time set for the meeting.    
Neither the business to be transacted at, nor the purpose of, any regular or    
special meeting of the Board of Directors need be specified in the notice of    
such meeting, except for amendments to these By-laws, as provided under Section 
8.1. A meeting may be held at any time without notice if all the directors are  
present or if those not present waive notice of the meeting in accordance with  
Section 6.4 of these Bylaws.                                                    

     Section 3.6.  Action by Consent of Board of Directors.  Any action required
or permitted to be taken at any meeting of the Board of Directors or of any     
committee thereof may be taken without a meeting if all members of the Board of 
Directors or committee, as the case may be, consent thereto in writing, and the 
writing or writings are filed with the minutes of proceedings of the Board of   
Directors or committee.                                                         

Section 3.7.  Conference Telephone Meetings.  Members of the Board of 
Directors, or any committee thereof, may participate in a meeting of the Board  
of Directors or such committee by means of conference telephone or similar      
communications equipment by means of which all persons participating in the     
meeting can hear each other, and such participation in a meeting shall          
constitute presence in person at such meeting.                                  

    Section 3.8.  Quorum.  Subject to Section 3.9, a number of directors equal
to at least a majority of the Whole Board shall constitute a quorum for the     
transaction of business. If at any meeting of the Board of Directors there shall
be less than a quorum present, a majority of the directors present may adjourn  
the meeting from time to time without further notice. The act of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors. The directors present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal 
of enough directors to leave less than a quorum.                                

   Section 3.9.  Vacancies.  Subject to applicable law and the rights of the
holders of any series of Preferred Stock with respect to such series of         
Preferred Stock, and unless the Board of Directors otherwise determines,        
vacancies resulting from death, resignation, retirement, disqualification,      
removal from office or other cause, and newly created directorships resulting   
from any increase in the authorized number of directors, may be filled only by  
the affirmative vote of a majority of the remaining directors, though less than 
a quorum of the Board of Directors, and directors so chosen shall hold office   
for a term expiring at the annual meeting of stockholders at which the term of  
office of the class to which they have been elected expires and until such      
director's successor shall have been duly elected and qualified. No decrease in 
the number of authorized directors constituting the Whole Board shall shorten   
the term of any incumbent director.                                             

 Section 3.10.  Committees.  The Board of Directors may establish one or
more committees. Each Committee shall consist of two or more directors of the   
Corporation designated by the Board of Directors. The Board of Directors may    
designate one or more directors as alternate members of any committee, who may  
replace any absent or disqualified member at any meeting of the committee. Any  
such committee may to the extent permitted by law exercise such powers and shall
have such responsibilities as shall be specified in the designating resolution. 
In the absence or disqualification of any member of such committee or           
committees, the member or members thereof present at any meeting and not        
disqualified from voting, whether or not constituting a quorum, may unanimously 
appoint another member of the Board of Directors to act at the meeting in the   
place of any such absent or disqualified member. Each committee shall keep      
written minutes of its proceedings and shall report such proceedings to the     
Board of Directors when requested.                                              

   A majority of any committee may determine its action and fix the time and
place of its meetings, unless the Board of Directors shall otherwise provide.   
Notice of such meetings shall be given to each member of the committee in the   
manner provided for in Section 3.5 of these By-laws. The Board of Directors     
shall have the power at any time to fill vacancies in, to change the membership 
of, or to dissolve any such committee. Nothing herein shall be deemed to prevent
the Board of Directors from appointing one or more committees                   
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consisting in whole or in part of persons who are not directors of the          
Corporation; provided, however, that no such committee shall have or may        
exercise any authority of the Board of Directors.                               

The term of office of a committee member shall be as provided in the  
resolution of the Board designating him or her but shall not exceed his or her  
term as a director. If prior to the end of his term, a committee member should  
cease to be a director, he or she shall cease to be a committee member. Any     
member of a committee may resign at any time by giving written notice to the    
Board of Directors, the Chairman, the President or the Secretary. Such          
resignation shall take effect as provided in Section 6.6 of these By-laws in the
case of resignations by directors. Any member of a committee may be removed from
such committee, either with or without cause, at any time, by resolution adopted
by a majority of the whole Board. Any vacancy in a committee shall be filled by 
the Board of Directors in the manner prescribed by these By-laws for the        
original designation of the members of such committee.                          

  Section 3.11.  Committee on Officers' Compensation.  Pursuant to Section
3.10 of these By-laws, the Board of Directors shall designate a committee to    
evaluate the performance of, and to recommend the appropriate level of          
compensation for, officers of the Corporation. Such committee shall have access 
to an advisor not otherwise serving the Corporation. Each member of such        
committee shall be an "independent director," as that term is defined in the    
following sentence. For purposes of this Section 3.11, an "independent director"
shall mean a person who (a) has not been employed by the Corporation within the 
past five years; (b) is not, and is not affiliated with, a firm that is an      
advisor or consultant to the Corporation; (c) is not affiliated with any        
customer or supplier of the Corporation whose purchases from and/or sales to the
Corporation exceed 3% of the sales and revenues of such customer or supplier for
its most recently completed fiscal year; (d) has no personal services contract  
with the Corporation; (e) is not affiliated with a tax-exempt entity, not       
otherwise affiliated with the Corporation, that receives contributions from the 
Corporation that exceed 3% of such entity's gross contributions for its most    
recently completed fiscal year; and (f) is not a member of the "immediate       
family" (as defined in Item 404(a) of Securities and Exchange Commission        
Regulation S-K) of any person described in clauses (a) through (e).             

     Section 3.12.  Removal.  Subject to the rights of the holders of any series
of Preferred Stock with respect to such series of Preferred Stock, any director,
or the entire Board of Directors, may be removed from office at any time by the 
stockholders, but only for cause.                                               

  Section 3.13.  Records.  The Board of Directors shall cause to be kept a
record containing the minutes of the proceedings of the meetings of the Board of
Directors and of the stockholders, appropriate stock books and registers and    
such books of records and accounts as may be necessary for the proper conduct of
the business of the Corporation.                                                

ARTICLE IV

OFFICERS

  Section 4.1.  Elected Officers.  The elected officers of the Corporation
shall be a Chairman, a President, a Secretary, a Treasurer, and such other      
officers (including, without limitation, a Chief Financial Officer) as the Board
of Directors may deem proper from time to time. The Chairman shall be chosen    
from among the directors. Each officer elected by the Board of Directors shall  
have such powers and duties as generally pertain to his or her respective       
office, subject to the specific provisions of this ARTICLE IV. Such officers    
shall also have such powers and duties as may be conferred from time to time by 
the Board of Directors. The Board of Directors may from time to time elect, or  
the Chairman or President may appoint, such assistant officers (including one or
more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and 
Assistant Controllers) as may be necessary or desirable for the conduct of the  
business of the Corporation. Such assistant officers shall have such duties and 
shall hold their offices for such terms as shall be provided in these By-laws or
as may be prescribed by the Board of Directors or by the Chairman or President, 
as the case may be.                                                             

 Section 4.2.  Election and Term of Office.  The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular  
meeting of the Board of Directors held after the annual meeting of the          
stockholders or at any other time as the Board of Directors may deem proper.    
Each officer shall                                                              

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hold office until his successor shall have been duly elected and shall have     
qualified or until his death or until he shall resign, but any officer may be   
removed from office at any time by the affirmative vote of a majority of the    
Whole Board or, except in the case of an officer elected by the Board of        
Directors, by the Chairman or President. Such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.                    

    Section 4.3.  Chairman.  The Chairman shall preside at all meetings of the
stockholders and of the Board of Directors and shall be the Chief Executive     
Officer of the Company. The Chairman shall be responsible for the general       
management of the affairs of the Corporation and shall perform all duties       
incidental to his office which may be required by law and all such other duties 
as are properly required of him by the Board of Directors. He shall make reports
to the Board of Directors and the stockholders, and shall see that all orders   
and resolutions of the Board of Directors and of any committee thereof are      
carried into effect. The Chairman may also serve as President, if so elected by 
the Board of Directors.                                                         

  Section 4.4.  President.  The President shall act in a general executive
capacity and shall assist the Chairman in the administration and operation of   
the Corporation's business and the general supervision of its policies and      
affairs. In the absence of or the inability to act of the Chairman, the         
President shall perform all duties of the Chairman and preside at all meetings  
of stockholders and of the Board of Directors.                                  

    Section 4.5.  Vice Presidents.  Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him by the Board of       
Directors.                                                                      

 Section 4.6.  Chief Financial Officer.  The Chief Financial Officer (if
any) shall be a Vice President and act in an executive financial capacity. He   
shall assist the Chairman and the President in the general supervision of the   
Corporation's financial policies and affairs.                                   

    Section 4.7.  Treasurer.  The Treasurer shall exercise general supervision
over the receipt, custody and disbursement of corporate funds. The Treasurer    
shall cause the funds of the Corporation to be deposited in such banks as may be
authorized by the Board of Directors, or in such banks as may be designated as  
depositaries in the manner provided by resolution of the Board of Directors. He 
shall have such further powers and duties and shall be subject to such          
directions as may be granted or imposed upon him from time to time by the Board 
of Directors, the Chairman or the President.                                    

   Section 4.8.  Secretary.  The Secretary shall keep or cause to be kept in
one or more books provided for that purpose, the minutes of all meetings of the 
Board of Directors, the committees of the Board of Directors and the            
stockholders; he shall see that all notices are duly given in accordance with   
the provisions of these By-laws and as required by law; he shall be custodian of
the records and the seal of the Corporation and affix and attest the seal to all
stock certificates of the Corporation (unless the seal of the Corporation on    
such certificates shall be a facsimile, as hereinafter provided) and affix and  
attest the seal to all other documents to be executed on behalf of the          
Corporation under its seal; and he shall see that the books, reports,           
statements, certificates and other documents and records required by law to be  
kept and filed are properly kept and filed; and in general, he shall perform all
the duties incident to the office of Secretary and such other duties as from    
time to time may be assigned to him by the Board of Directors, the Chairman or  
the President.                                                                  

Section 4.9.  Controller.  The Controller shall have general control, 
charge and supervision of the accounts of the Corporation. He shall see that    
proper accounts are maintained and that all accounts are properly credited from 
time to time. He shall prepare or cause to be prepared the financial statements 
of the Corporation.                                                             

    Section 4.10.  Removal.  Any officer elected by the Board of Directors may
be removed by the affirmative vote of a majority of the Whole Board whenever, in
their judgment, the best interests of the Corporation would be served thereby.  
Any assistant officer appointed by the Chairman or the President may be removed 
by him whenever, in his judgment, the best interests of the Corporation would be
served thereby. No elected officer shall have any contractual rights against the
Corporation for compensation by virtue of such election beyond the date of the  
election of his successor, his death, his resignation or his removal, whichever 
event shall first occur, except as otherwise provided in an employment contract 
or under an employee deferred compensation plan.                                

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    Section 4.11.  Vacancies.  A newly created elected office and a vacancy in
any elected office because of death, resignation, or removal may be filled by   
the Board of Directors for the unexpired portion of the term at any meeting of  
the Board of Directors.                                                         

ARTICLE V 

STOCK CERTIFICATES AND TRANSFERS

Section 5.1.  Stock Certificates and Transfers.  The interest of each 
stockholder of the Corporation shall be evidenced by certificates for shares of 
stock in such form as the appropriate officers of the Corporation may from time 
to time prescribe. The shares of the stock of the Corporation shall be          
transferred on the books of the Corporation by the holder thereof in person or  
by his attorney, upon surrender for cancellation of certificates for at least   
the same number of shares, with an assignment and power of transfer endorsed    
thereon or attached thereto, duly executed, with such proof of the authenticity 
of the signature as the Corporation or its agents may reasonably require.       

    The certificates of stock shall be signed, countersigned and registered in
such manner as the Board of Directors may by resolution prescribe, which        
resolution may permit all or any of the signatures on such certificates to be in
facsimile. In case any officer, transfer agent or registrar who has signed or   
whose facsimile signature has been placed upon a certificate has ceased to be   
such officer, transfer agent or registrar before such certificate is issued, it 
may be issued by the Corporation with the same effect as if he were such        
officer, transfer agent or registrar at the date of issue.                      

   Section 5.2.  Lost, Stolen or Destroyed Certificates.  No certificate for
shares of stock in the Corporation shall be issued in place of any certificate  
alleged to have been lost, destroyed or stolen, except on production of such    
evidence of such loss, destruction or theft and on delivery to the Corporation  
of a bond of indemnity in such amount, upon such terms and secured by such      
surety, as the Board of Directors or any financial officer may in its or his    
discretion require.                                                             

ARTICLE VI

MISCELLANEOUS PROVISIONS

    Section 6.1.  Fiscal Year.  The fiscal year of the Corporation shall begin
on the first day of January and end on the thirty-first day of December of each 
year.                                                                           

Section 6.2.  Dividends.  The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Certificate of 
Incorporation.                                                                  

  Section 6.3.  Seal.  The corporate seal shall have enscribed thereon the
words "Corporate Seal," the year of incorporation and around the margin thereof 
the words "W. R. Grace & Co."                                                   

Section 6.4.  Waiver of Notice.  Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of 
the General Corporation Law of the State of Delaware (the "GCL") or these       
By-laws, a waiver thereof in writing, signed by the person or persons entitled  
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. The attendance of any stockholder at a 
meeting in person or by proxy, without protesting at the beginning of the       
meeting the lack of notice of such meeting, shall constitute a waiver of notice 
of such stockholder. Neither the business to be transacted at, nor the purpose  
of, any annual or special meeting of the stockholders or the Board of Directors 
or committee thereof need be specified in any waiver of notice of such meeting. 

   Section 6.5.  Audits.  The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent      
certified public accountant selected by the Board of Directors, and it shall be 
the duty of the Board of Directors to cause such audit to be done annually.     

Section 6.6.  Resignations.  Any director or any officer or assistant 
officer, whether elected or appointed, may resign at any time by giving written 
notice of such resignation to the Chairman, the President, or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on 
the date said notice is received by the Chairman, the President, or the         
Secretary, or at such later time as is specified therein.                       
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No formal action shall be required of the Board of Directors or the stockholders
to make any such resignation effective.                                         

     Section 6.7.  Indemnification and Insurance.  (A) Each person who was or is
made a party or is threatened to be made a party to or is involved in any       
action, suit, or proceeding, whether civil, criminal, administrative or         
investigative (hereinafter, a "proceeding"), by reason of the fact that he or   
she or a person of whom he or she is the legal representative is or was a       
director or officer of the Corporation or is or was serving at the request of   
the Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans maintained or sponsored by the           
Corporation, whether the basis of such proceeding is alleged action in an       
official capacity as a director, officer, employee or agent or in any other     
capacity while serving as a director, officer, employee or agent, shall be      
indemnified and held harmless by the Corporation to the fullest extent          
authorized by the GCL as the same exists or may hereafter be amended (but, in   
the case of any such amendment, only to the extent that such amendment permits  
the Corporation to provide broader indemnification rights than said law         
permitted the Corporation to provide prior to such amendment), against all      
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA 
excise taxes or penalties and amounts paid or to be paid in settlement)         
reasonably incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director,  
officer, employee or agent and shall inure to the benefit of his or her heirs,  
executors and administrators; provided, however, that except as provided in     
paragraph (C) of this Section 6.7, the Corporation shall indemnify any such     
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was          
authorized by the Board of Directors. The right to indemnification conferred in 
this Section 6.7 shall be a contract right and shall include the right to be    
paid by the Corporation the expenses incurred in defending any such proceeding  
in advance of its final disposition, such advances to be paid by the Corporation
within 20 days after the receipt by the Corporation of a statement or statements
from the claimant requesting such advance or advances from time to time;        
provided, however, that if the GCL requires, the payment of such expenses       
incurred by a director or officer in his or her capacity as a director or       
officer (and not in any other capacity in which service was or is rendered by   
such person while a director or officer, including, without limitation, service 
to an employee benefit plan) in advance of the final disposition of a           
proceeding, shall be made only upon delivery to the Corporation of an           
undertaking by or on behalf of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director or officer is  
not entitled to be indemnified under this Section 6.7 or otherwise.             

(B) To obtain indemnification under this Section 6.7, a claimant shall
submit to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is 
reasonably necessary to determine whether and to what extent the claimant is    
entitled to indemnification. Upon written request by a claimant for             
indemnification pursuant to the first sentence of this paragraph (B), a         
determination, if required by applicable law, with respect to the claimant's    
entitlement thereto shall be made as follows: (1) if requested by the claimant, 
by Independent Counsel (as hereinafter defined), or (2) if no request is made by
the claimant for a determination by Independent Counsel, (i) by the Board of    
Directors by a majority vote of a quorum consisting of Disinterested Directors  
(as hereinafter defined), or (ii) if a quorum of the Board of Directors         
consisting of Disinterested Directors is not obtainable or, even if obtainable, 
such quorum of Disinterested Directors so directs, by Independent Counsel in a  
written opinion to the Board of Directors, a copy of which shall be delivered to
the claimant, or (iii) if a quorum of Disinterested Directors so directs, by the
stockholders of the Corporation. In the event the determination of entitlement  
to indemnification is to be made by Independent Counsel at the request of the   
claimant, the Independent Counsel shall be selected by the Board of Directors   
unless there shall have occurred within two years prior to the date of the      
commencement of the action, suit or proceeding for which indemnification is     
claimed a "Change of Control" (as defined below), in which case the Independent 
Counsel shall be selected by the claimant unless the claimant shall request that
such selection be made by the Board of Directors. If it is so determined that   
the claimant is entitled to indemnification, payment to the claimant shall be   
made within 10 days after such determination.                                   

    (C) If a claim under paragraph (A) of this Section 6.7 is not paid in full
by the Corporation within 30 days after a written claim pursuant to paragraph   
(B) of this Section 6.7 has been received by the                                
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Corporation, the claimant may at any time thereafter bring suit against the     
Corporation to recover the unpaid amount of the claim and, if successful in     
whole or in part, the claimant shall be entitled to be paid also the expense of 
prosecuting such claim. It shall be a defense to any such action (other than an 
action brought to enforce a claim for expenses incurred in defending any        
proceeding in advance of its final disposition where the required undertaking,  
if any is required, has been tendered to the Corporation) that the claimant has 
not met the standard of conduct which makes it permissible under the GCL for the
Corporation to indemnify the claimant for the amount claimed, but the burden of 
proving such defense shall be on the Corporation. Neither the failure of the    
Corporation (including its Board of Directors, Independent Counsel or           
stockholders) to have made a determination prior to the commencement of such    
action that indemnification of the claimant is proper in the circumstances      
because he or she has met the applicable standard of conduct set forth in the   
GCL, nor an actual determination by the Corporation (including its Board of     
Directors, Independent Counsel or stockholders) that the claimant has not met   
such applicable standard of conduct, shall be a defense to the action or create 
a presumption that the claimant has not met the applicable standard of conduct. 

  (D) If a determination shall have been made pursuant to paragraph (B) of
this Section 6.7 that the claimant is entitled to indemnification, the          
Corporation shall be bound by such determination in any judicial proceeding     
commenced pursuant to paragraph (C) of this Section 6.7.                        

(E) The Corporation shall be precluded from asserting in any judicial 
proceeding commenced pursuant to paragraph (C) of this Section 6.7 that the     
procedures and presumptions of this Section 6.7 are not valid, binding and      
enforceable and shall stipulate in such proceeding that the Corporation is bound
by all the provisions of this Section 6.7.                                      

  (F) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this    
Section 6.7 shall not be exclusive of any other right which any person may have 
or hereafter acquire under any statute, provision of the Certificate of         
Incorporation, these By-laws, agreement, vote of stockholders or Disinterested  
Directors or otherwise. No repeal or modification of this Section 6.7 shall in  
any way diminish or adversely affect the rights of any director, officer,       
employee or agent of the Corporation hereunder in respect of any occurrence or  
matter arising prior to any such repeal or modification.                        

(G) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or       
another corporation, partnership, joint venture, trust or other enterprise      
against any expense, liability or loss, whether or not the Corporation would    
have the power to indemnify such person against such expense, liability or loss 
under the GCL. To the extent that the Corporation maintains any policy or       
policies providing such insurance, each such director or officer, and each such 
agent or employee to which rights to indemnification have been granted as       
provided in paragraph (H) of this Section 6.7, shall be covered by such policy  
or policies in accordance with its or their terms to the maximum extent of the  
coverage thereunder for any such director, officer, employee or agent.          

    (H) The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and rights to be paid by   
the Corporation the expenses incurred in defending any proceeding in advance of 
its final disposition, to any employee or agent of the Corporation to the       
fullest extent of the provisions of this Section 6.7 with respect to the        
indemnification and advancement of expenses of directors and officers of the    
Corporation.                                                                    

    (I) If any provision or provisions of this Section 6.7 shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the validity,  
legality and enforceability of the remaining provisions of this Section 6.7     
(including, without limitation, each portion of any paragraph of this By-law    
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself held to be invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (2) to the fullest extent possible, the    
provisions of this Section 6.7 (including, without limitation, each such portion
of any paragraph of this By-law containing any such provision held to be        
invalid, illegal or unenforceable) shall be construed so as to give effect to   
the intent manifested by the provision held invalid, illegal or unenforceable.  

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(J) For purposes of this Section 6.7:                                 

        (1) "Disinterested Director" means a director of the Corporation who
is not and was not a party to the matter in respect of which          
indemnification is sought by the claimant.                            

          (2) "Independent Counsel" means a law firm, a member of a law firm, or
    an independent practitioner, that is experienced in matters of corporation
 law and shall include any person who, under the applicable standards of
     professional conduct then prevailing, would not have a conflict of interest
in representing either the Corporation or the claimant in an action to
determine the claimant's rights under this Section 6.7.               

  (3) "Change of Control" has the meaning given such term in the
Corporation's 1998 Stock Incentive Plan, as the same may be amended or
superseded from time to time.                                         

    (K) Any notice, request or other communication required or permitted to be
given to the Corporation under this Section 6.7 shall be in writing and either  
delivered in person or sent by telecopy, telex, telegram, overnight mail or     
courier service, or certified or registered mail, postage prepaid, return       
receipt requested, to the Secretary of the Corporation and shall be effective   
only upon receipt by the Secretary.                                             

ARTICLE VII 

CONTRACTS, PROXIES, ETC.

Section 7.1.  Contracts.  Except as otherwise required by law, the    
Certificate of Incorporation or these By-laws, any contracts or other           
instruments may be executed and delivered in the name and on the behalf of the  
Corporation by such officer or officers of the Corporation as the Board of      
Directors may from time to time direct. Such authority may be general or        
confined to specific instances as the Board of Directors may determine. The     
Chairman, the President or any Vice President may execute bonds, contracts,     
deeds, leases and other instruments to be made or executed for or on behalf of  
the Corporation. Subject to any restrictions imposed by the Board of Directors  
or the Chairman, the President or any Vice President of the Corporation may     
delegate contractual powers to others under his jurisdiction, it being          
understood, however, that any such delegation of power shall not relieve such   
officer of responsibility with respect to the exercise of such delegated power. 

    Section 7.2.  Proxies.  Unless otherwise provided by resolution adopted by
the Board of Directors, the Chairman, the President or any Vice President may   
from time to time appoint an attorney or attorneys or agent or agents of the    
Corporation, in the name and on behalf of the Corporation, to cast the votes    
which the Corporation may be entitled to cast as the holder of stock or other   
securities in any other corporation, any of whose stock or other securities may 
be held by the Corporation, at meetings of the holders of the stock or other    
securities of such other corporation, or to consent in writing, in the name of  
the Corporation as such holder, to any action by such other corporation, and may
instruct the person or persons so appointed as to the manner of casting such    
votes or giving such consent, and may execute or cause to be executed in the    
name and on behalf of the Corporation and under its corporate seal or otherwise,
all such written proxies or other instruments as he may deem necessary or proper
in the premises.                                                                

ARTICLE VIII

AMENDMENTS

Section 8.1.  Amendments.  These By-laws may be altered, amended, or  
repealed at any meeting of the Board of Directors or of the stockholders,       
provided notice of the proposed change was given in the notice of the meeting   
and, in the case of a meeting of the Board of Directors, in a notice given not  
less than two days prior to the meeting; provided, however, that, in the case of
amendments by stockholders, notwithstanding any other provisions of these       
By-laws or any provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of any particular  
class or series of the capital stock of the Corporation required by law, the    
Certificate of Incorporation or these By-laws, the affirmative vote of the      
holders of at least 80 percent of the voting power of all the then outstanding  
shares of the Voting Stock, voting together as a single class, shall be required
to alter, amend or repeal any provision of these By-laws.                       

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                                                                         ANNEX C

W. R. GRACE & CO. 
(FORMERLY NAMED GRACE SPECIALTY CHEMICALS, INC.)

1998 STOCK INCENTIVE PLAN 

   1.  Purposes.  The purposes of this Plan are (a) to enable Key Persons to
have incentives related to Common Stock, (b) to encourage Key Persons to        
increase their interest in the growth and prosperity of the Company and to      
stimulate and sustain constructive and imaginative thinking by Key Persons, (c) 
to further the identity of interests of Key Persons with the interests of the   
Company's stockholders, and (d) to induce the service or continued service of   
Key Persons and to enable the Company to compete with other organizations       
offering similar or other incentives in obtaining and retaining the services of 
the most highly qualified individuals.                                          

  2.  Definitions.  When used in this Plan, the following terms shall have
the meanings set forth in this section 2.                                       

Board of Directors:  The Board of Directors of the Company.           

     cessation of service (or words of similar import):  When a person ceases to
be an employee of the Company or a Subsidiary. For purposes of this definition, 
if an entity that was a Subsidiary ceases to be a Subsidiary, persons who       
immediately thereafter remain employees of that entity (and are not employees of
the Company or an entity that is a Subsidiary) shall be deemed to have ceased   
service.                                                                        

 Change in Control:  Shall be deemed to have occurred if (a) the Company
determines that any "person" (as such term is used in Sections 13(d) and 14(d)  
of the Exchange Act), 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 the Exchange 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 result of a sale of Common Stock by the Company 
that has been approved by the Board of Directors); (b) individuals who are      
"Continuing Directors" (as defined below) cease to constitute a majority of any 
class of the Board of Directors; (c) 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; or (d) the           
stockholders of the Company approve a complete liquidation or dissolution of the
Company. "Continuing Director" means any member of the Board of Directors who   
was such a member on the date on which this Plan was approved by the Board of   
Directors and any successor to such a Continuing Director who is approved as a  
nominee or elected to succeed a Continuing Director by a majority of Continuing 
Directors who are then members of the Board of Directors.                       

Change in Control Price:  The higher of (a) the highest reported sales
price, regular way, as reported in The Wall Street Journal or another newspaper 
of general circulation, of a share of Common Stock in any transaction reported  
on the New York Stock Exchange Composite Tape or other national exchange on     
which such shares are listed or on NASDAQ during the 60-day period prior to and 
including the date of a Change in Control or (b) if the Change in Control is the
result of a tender or exchange offer or a Corporate Transaction, the highest    
price per share of Common Stock paid in such tender or exchange offer or        
Corporate Transaction; provided, however, that in the case of Incentive Stock   
Options, the Change in Control Price shall be in all cases the Fair Market Value
of the Common Stock on the date such Incentive Stock Option is exercised. To the
extent that the consideration paid in any Corporate Transaction or other        
transaction described above consists in whole or in part of securities or other 
noncash consideration, the value of such securities or other noncash            
consideration shall be determined in the sole discretion of the Board of        
Directors.                                                                      
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Code:  The Internal Revenue Code of 1986, as amended.                 

 Committee:  The Compensation Committee of the Board of Directors of the
Company or any other committee designated by the Board of Directors to          
administer stock incentive and stock option plans of the Company and the        
Subsidiaries generally or this Plan specifically.                               

   Common Stock:  The common stock of the Company, par value $.01 per share,
or such other class of shares or other securities or property as may be         
applicable pursuant to the provisions of section 8.                             

  Company:  W. R. Grace & Co., a Delaware corporation formerly named Grace
Specialty Chemicals, Inc.                                                       

     Continuing Director:  The meaning set forth in the definition of "Change in
Control" above.                                                                 

    Corporate Transaction:  The meaning set forth in the definition of "Change
in Control" above.                                                              

Exchange Act:  The Securities Exchange Act of 1934, as amended.       

Exercise Period:  The meaning set forth in section 14(b) of this Plan.

     Fair Market Value:  (a) The mean between the high and low sales prices of a
share of Common Stock in New York Stock Exchange composite transactions on the  
applicable date, as reported in The Wall Street Journal or another newspaper of 
general circulation, or, if no sales of shares of Common Stock were reported for
such date, for the next preceding date for which such sales were so reported, or
(b) the fair market value of a share of Common Stock determined in accordance   
with any other reasonable method approved by the Committee.                     

     Incentive Stock Option:  A stock option that states that it is an incentive
stock option and that is intended to meet the requirements of Section 422 of the
Code and the regulations thereunder applicable to incentive stock options, as in
effect from time to time.                                                       

issuance (or words of similar import):  The issuance of authorized but
unissued Common Stock or the transfer of issued Common Stock held by the Company
or a Subsidiary.                                                                

     Key Person:  An employee of the Company or a Subsidiary who, in the opinion
of the Committee, has contributed or can contribute significantly to the growth 
and successful operations of the Company or one or more Subsidiaries. The grant 
of a Stock Incentive to an employee shall be deemed a determination by the      
Committee that such person is a Key Person.                                     

Nonstatutory Stock Option:  An Option that is not an Incentive Stock  
Option.                                                                         

 Option:  An option granted under this Plan to purchase shares of Common
Stock.                                                                          

Option Agreement:  An agreement setting forth the terms of an Option. 

  Plan:  The 1998 Stock Incentive Plan of the Company herein set forth, as
the same may from time to time be amended.                                      

     service:  Service to the Company or a Subsidiary as an employee. "To serve"
has a correlative meaning.                                                      

Spread:  The meaning set forth in section 14(b) of this Plan.         

Stock Award:  An issuance of shares of Common Stock or an undertaking 
(other than an Option) to issue such shares in the future.                      

   Stock Incentive:  A stock incentive granted under this Plan in one of the
forms provided for in section 3.                                                

     Subsidiary:  A corporation (or other form of business association) of which
shares (or other ownership interests) having 50% or more of the voting power    
regularly entitled to vote for directors (or equivalent management rights) are  
owned, directly or indirectly, by the Company, or any other entity designated as
such by the Board of Directors; provided, however, that in the case of an       
Incentive Stock Option, the term "Subsidiary" shall mean a Subsidiary (as       
defined by the preceding clause) that is also a "subsidiary                     

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corporation" as defined in Section 424(f) of the Code and the regulations       
thereunder, as in effect from time to time.                                     

3.  Grants of Stock Incentives.  (a) Subject to the provisions of this
Plan, the Committee may at any time and from time to time grant Stock Incentives
under this Plan to, and only to, Key Persons.                                   

(b) The Committee may grant a Stock Incentive to be effective at a    
specified future date or upon the future occurrence of a specified event. For   
the purposes of this Plan, any such Stock Incentive shall be deemed granted on  
the date it becomes effective. An agreement or other commitment to grant a Stock
Incentive that is to be effective in the future shall not be deemed the grant of
a Stock Incentive until the date on which such Stock Incentive becomes          
effective.                                                                      

(c) A Stock Incentive may be granted in the form of:                  

(i) a Stock Award, or                                         

(ii) an Option, or                                              

(iii) a combination of a Stock Award and an Option.               

     4.  Stock Subject to this Plan.  (a) Subject to the provisions of paragraph
(c) of this section 4 and the provisions of section 8, the maximum number of    
shares of Common Stock that may be issued pursuant to Stock Incentives granted  
under this Plan shall not exceed Six Million (6,000,000).                       

 (b) Authorized but unissued shares of Common Stock and issued shares of
Common Stock held by the Company or a Subsidiary, whether acquired specifically 
for use under this Plan or otherwise, may be used for purposes of this Plan.    

     (c) If any shares of Common Stock subject to a Stock Incentive shall not be
issued and shall cease to be issuable because of the termination, in whole or in
part, of such Stock Incentive or for any other reason, or if any such shares    
shall, after issuance, be reacquired by the Company or a Subsidiary from the    
recipient of such Stock Incentive, or from the estate of such recipient, for any
reason, such shares shall no longer be charged against the limitation provided  
for in paragraph (a) of this section 4 and may again be made subject to Stock   
Incentives.                                                                     

(d) Of the total number of shares specified in paragraph (a) of this  
section 4 (subject to adjustment as specified therein), during the term of this 
Plan as defined in section 9, (i) no more than 15% may be subject to Options    
granted to any one Key Person and (ii) no more than 15% may be subject to Stock 
Incentives granted to any one Key Person.                                       

5.  Stock Awards.  Except as otherwise provided in section 12, Stock  
Incentives in the form of Stock Awards shall be subject to the following        
provisions:                                                                     

          (a) For purposes of this Plan, all shares of Common Stock subject to a
    Stock Award shall be valued at not less than 100% of the Fair Market Value
of such shares on the date such Stock Award is granted, regardless of 
 whether or when such shares are issued pursuant to such Stock Award and
whether or not such shares are subject to restrictions affecting their
value.                                                                

          (b) Shares of Common Stock subject to a Stock Award may be issued to a
Key Person at the time the Stock Award is granted, or at any time     
     subsequent thereto, or in installments from time to time. In the event that
     any such issuance shall not be made at the time the Stock Award is granted,
   the Stock Award may provide for the payment to such Key Person, either in
     cash or shares of Common Stock, of amounts not exceeding the dividends that
would have been payable to such Key Person in respect of the number of
shares of Common Stock subject to such Stock Award (as adjusted under 
  section 8) if such shares had been issued to such Key Person at the time
     such Stock Award was granted. Any Stock Award may provide that the value of
     any shares of Common Stock subject to such Stock Award may be paid in cash,
     on each date on which shares would otherwise have been issued, in an amount
equal to the Fair Market Value on such date of the shares that would  
otherwise have been issued.                                           

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         (c) The material terms of each Stock Award shall be determined by the
Committee. Each Stock Award shall be evidenced by a written instrument
   consistent with this Plan. It is intended that a Stock Award would be (i)
  made contingent upon the attainment of one or more specified performance
objectives and/or (ii) subject to restrictions on the sale or other   
   disposition of the Stock Award or the shares subject thereto for a period
of three or more years; provided, however, that (x) a Stock Award may 
include restrictions and limitations in addition to those provided for
    herein and (y) of the total number of shares specified in paragraph (a) of
 section 4 (subject to adjustment as specified therein), up to 3% may be
  subject to Stock Awards not subject to clause (i) or clause (ii) of this
sentence.                                                             

       (d) A Stock Award shall be granted for such lawful consideration as
may be provided for therein.                                          

    6.  Options.  Except as otherwise provided in section 12, Stock Incentives
in the form of Options shall be subject to the following provisions:            

      (a) The purchase price per share of Common Stock shall be not less
   than 100% of the Fair Market Value of a share of Common Stock on the date
    the Option is granted. The purchase price and any withholding tax that may
     be due on the exercise of an Option may be paid in cash, or, if so provided
  in the Option Agreement, (i) in shares of Common Stock (including shares
     issued pursuant to the Option being exercised and shares issued pursuant to
    a Stock Award granted subject to restrictions as provided for in paragraph
(c) of section 5), or (ii) in a combination of cash and such shares;  
   provided, however, that no shares of Common Stock delivered in payment of
  the purchase price may be "immature shares," as determined in accordance
  with generally accepted accounting principles in effect at the time. Any
    shares of Common Stock delivered to the Company in payment of the purchase
    price or withholding tax shall be valued at their Fair Market Value on the
     date of exercise. No certificate for shares of Common Stock shall be issued
     upon the exercise of an Option until the purchase price for such shares has
been paid in full.                                                    

       (b) If so provided in the Option Agreement, the Company shall, upon
  the request of the holder of the Option and at any time and from time to
  time, cancel all or a portion of the Option then subject to exercise and
   either (i) pay the holder an amount of money equal to the excess, if any,
   of the Fair Market Value, at such time or times, of the shares subject to
the portion of the Option so canceled over the purchase price for such
shares, or (ii) issue shares of Common Stock to the holder with a Fair
 Market Value, at such time or times, equal to such excess, or (iii) pay
such excess by a combination of money and shares.                     

       (c) Each Option may be exercisable in full at the time of grant, or
may become exercisable in one or more installments and at such time or
 times or upon the occurrence of such events, as may be specified in the
     Option Agreement, as determined by the Committee. Unless otherwise provided
in the Option Agreement, an Option, to the extent it is or becomes    
 exercisable, may be exercised at any time in whole or in part until the
expiration or termination of such Option.                             

      (d) Each Option shall be exercisable during the life of the holder
 only by him and, after his death, only by his estate or by a person who
  acquires the right to exercise the Option by will or the laws of descent
and distribution. An Option, to the extent that it shall not have been
   exercised or canceled, shall terminate as follows after the holder ceases
  to serve: (i) if the holder shall voluntarily cease to serve without the
  consent of the Committee or shall have his service terminated for cause,
   the Option shall terminate immediately upon cessation of service; (ii) if
the holder shall cease to serve by reason of death, incapacity or     
retirement under a retirement plan of the Company or a Subsidiary, the
 Option shall terminate three years after the date on which he ceased to
serve; and (iii) except as provided in the next sentence, in all other
   cases the Option shall terminate three months after the date on which the
   holder ceased to serve unless the Committee shall approve a longer period
   (which approval may be given before or after cessation of service) not to
    exceed three years. If the holder shall die or become incapacitated during
     the three-month period (or such longer period as the Committee may approve)
     referred to in the preceding clause (iii), the Option shall terminate three
  years after the date on which he ceased to serve. A leave of absence for
   military or governmental service or other purposes shall not, if approved
    by the Committee (which approval may be given before or after the leave of
absence commences), be deemed a                                       
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cessation of service within the meaning of this paragraph (d).        
     Notwithstanding the foregoing provisions of this paragraph (d) or any other
    provision of this Plan, no Option shall be exercisable after expiration of
  a period of ten years and one month from the date the Option is granted.
  Where a Nonstatutory Option is granted for a term of less than ten years
  and one month, the Committee may, at any time prior to the expiration of
  the Option, extend its term for a period ending not later than ten years
     and one month from the date the Option was granted. Such an extension shall
not be deemed the grant of a new Option under this Plan.              

         (e) No Option nor any right thereunder may be assigned or transferred
   except by will o