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23

                                                                    EXHIBIT 10.1


                     EMPLOYEE BENEFITS ALLOCATION AGREEMENT


         This EMPLOYEE BENEFITS ALLOCATION AGREEMENT (this "Agreement"), dated
as of March 30, 1998, by and among W. R. Grace & Co., a Delaware corporation
("Grace"), W. R. Grace & Co.-Conn., a Connecticut corporation and a wholly owned
subsidiary of Grace ("Grace-Conn."), and General Specialty Chemicals, Inc. (to
be renamed W. R. Grace & Co.), a Delaware corporation and a wholly owned
subsidiary of Grace ("New Grace").


                                    RECITALS

         A. The Merger Agreement. Grace and Sealed Air Corporation, a Delaware
corporation ("SAC"), have entered into an Agreement and Plan of Merger, dated as
of August 14, 1997 (the "Merger Agreement"), pursuant to which, at the Effective
Time (as defined therein), a wholly owned subsidiary of Grace will merge with
and into SAC, with SAC being the surviving corporation (the "Merger"), and Grace
being renamed Sealed Air Corporation.

         B. The Distribution Agreement. The Distribution Agreement dated as of
March 30, 1997, by and among Grace, Grace-Conn. and New Grace (the "Distribution
Agreement") and the Other Agreements (as defined in the Distribution Agreement)
set forth certain transactions that SAC has required as a condition to its
willingness to consummate the Merger, and the purpose of the Distribution
Agreement is to make possible the Merger by divesting Grace of the businesses
and operations to be conducted by New Grace and its subsidiaries, including New
Grace-Conn.

         C. The Contribution. Prior to the Effective Time, and subject to the
terms and conditions set forth in the Distribution Agreement, Grace intends to
cause the transfer to a wholly owned subsidiary of Grace-Conn. ("Packco") of
certain assets and liabilities of Grace and its subsidiaries predominantly
related to the Packaging Business (the "Contribution"), as contemplated by the
Distribution Agreement and the Other Agreements.

         D. The Distribution. Following the Contribution and prior to the
Effective Time, subject to the conditions set forth in the Distribution
Agreement, (i) the capital stock of Packco will be distributed to Grace, (ii)
the capital stock of Grace-Conn. will be contributed to New Grace and (iii) all
of the issued and outstanding shares of the common stock of New Grace (together
with the New Grace Rights, "New Grace Common

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Stock") will be distributed (the "Distribution") to the holders as of the Record
Date of the common stock of Grace, par value $.01 per share ("Grace Common
Stock"), other than shares held in the treasury of Grace, on a pro rata basis.

         E. This Agreement. This Agreement is one of the Other Agreements
contemplated by the Distribution Agreement, and its purpose is to set forth the
agreement of Grace, GraceConn. and New Grace with respect to certain matters
relating to employees and employee benefit plans and compensation arrangements;

         NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.01 GENERAL. Capitalized terms used but not defined herein
shall have the meanings set forth in the Distribution Agreement or the Merger
Agreement, as applicable. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

         Agreement: has the meaning assigned to it in the preamble hereof.

         ABO: has the meaning assigned to it in Section 4.01(b).

         AICP: the Annual Incentive Compensation Program of Grace.

         Alternate Payee: an alternate payee under a domestic relations order
which qualifies under Section 414(p) of the Code and Section 206(d) of ERISA and
which creates or recognizes an alternate payee's right to, or assigns to an
alternate payee, all or a portion of the benefits payable to a participant under
any Plan, or an alternate recipient under a medical child support order which
qualifies under Section 609(a) of ERISA and which creates or recognizes the
existence of an alternate recipient's right to, or assigns to an alternate
recipient the right to, receive benefits for which a participant or beneficiary
is eligible under any Plan.

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<PAGE>

         ASA: has the meaning assigned to it in Section 4.01(b).

         Benefit Plan: any Plan established, sponsored or maintained by any
member of the Packco Group, any member of the New Grace Group, or any
predecessor or affiliate of any of the foregoing, existing as of the
Distribution Date or prior thereto, to which any member of the Packco Group or
the New Grace Group contributes, has contributed, is required to contribute or
has been required to contribute, on behalf of any employee of a member of the
Packco Group or a member of the New Grace Group, or under which any employee of
a member of the Packco Group or a member of the New Grace Group, former employee
of a member of the Packco Group or a member of the New Grace Group, or any
beneficiary or dependent thereof, is covered, is eligible for coverage or has
benefits rights.

         Change in Control Severance Agreements: the agreements listed on
Schedule I hereto.

         Change in Control Severance Plan: the Grace Change in Control Severance
Program for U.S. Employees (April 3, 1996-April 3, 1998).

         Current Performance Period: any three-year performance period under the
Grace LTIP that begins before and ends after the Effective Time.

         Current Plan Year: the plan year or fiscal year, to the extent
applicable with respect to any Plan, during which the Distribution Date occurs.

         Cypress 401(k) Plans: the Cypress Packaging, Inc. Union Employees
401(k) Pension Plan and the Cypress Packaging, Inc. 401(k) Retirement Plan.

         Deferred Compensation Plan: the W. R. Grace & Co. Deferred Compensation
Program.

         Distribution Agreement: has the meaning assigned to it in the fourth
paragraph hereof.

         Employee: with respect to any entity, an individual who is considered,
according to the payroll and other records of such entity, to be employed by
such entity, regardless of whether such individual is, at the relevant time,
actively at work or on leave of absence (including vacation, holiday, sick
leave, family and medical leave, disability leave, military leave, jury duty,
layoff with rights of recall, and any other leave of absence or similar
interruption of active employment

                                       3
<PAGE>

that is not considered, according to the policies or practices of such entity,
to have resulted in a permanent termination of such individual's employment),
but excluding any individual who is, as of the relevant time, on long-term
disability leave.

         Foreign Plan: has the meaning assigned to it in Section 6.01.

         Grace: has the meaning assigned to it in the first paragraph hereof.

         Grace Dependent Care Plan: the W. R. Grace & Co. Dependent Care Plan.

         Grace LTIP: the Grace Long Term Incentive Program.

         Grace Medical Expense Plan: the W. R. Grace & Co. Health Care
Reimbursement Account Plan.

         Grace Option: an option to purchase shares of Grace Common Stock
granted pursuant to any Grace Stock Incentive Plan.

         Grace Severance Pay Plan: the W. R. Grace & Co. Severance Pay Plan for
Salaried Employees, as amended effective July 1, 1996.

         Grace Stock Incentive Plans: the Grace 1996 Stock Incentive Plan, the
Grace 1994 Stock Incentive Plan, the Grace 1989 Stock Incentive Plan, the Grace
1986 Stock Incentive Plan, and the Grace 1981 Stock Incentive Plan.

         Hourly Non-Union Retirement Plan: the W. R. Grace & Co.-Conn.
Retirement Plan for Non-Union Employees of Subsidiary Corporations.

         Hourly SIP: the W. R. Grace & Co. Hourly Employee Savings and
Investment Plan.

         Insured Foreign Plan: a Foreign Plan that provides retirement or
pension benefits and that is funded through individually allocated insurance
contracts, each of which is identified as such in the Packaging Business
Disclosure Letter to the Merger Agreement.

         IRS: the Internal Revenue Service.

         Local Actuary: has the meaning assigned to it in Section 6.01.

                                       4
<PAGE>

         LTIP Awards: has the meaning assigned to it in Section 3(a) hereof.

         Newco Ratio: the amount obtained by dividing (i) the average of the
arithmetic mean between the highest and lowest sales prices of a share of Grace
Common Stock on the New York Stock Exchange Composite Tape on each of the five
trading days immediately preceding the ex-dividend date for the Distribution, by
(ii) the average of the arithmetic mean between the highest and lowest sales
prices of a share of Newco Common Stock on the New York Stock Exchange Composite
Tape on each of the five trading days beginning on the ex-dividend date for the
Distribution.

         New Grace Benefit Plan: any Benefit Plan that is sponsored or
maintained by a member of the New Grace Group as of the Distribution Date.

         New Grace Employee: any Employee who is allocated to the New Grace
Group pursuant to Section 2.01 of this Agreement and who is not hired by any
member of the Packco Group pursuant to Section 6.11(b) of the Merger Agreement.

         New Grace Participant: any individual who is a New Grace Employee or a
beneficiary, dependent or Alternate Payee of such an individual.

         New Grace Ratio: the amount obtained by dividing (i) the average of the
arithmetic mean between the highest and lowest sales prices of a share of Grace
Common Stock on the New York Stock Exchange Composite Tape on each of the five
trading days immediately preceding the ex-dividend date for the Distribution by
(ii) the average of the arithmetic mean between the highest and lowest sales
prices of a share of New Grace Common Stock on the New York Stock Exchange
Composite Tape on each of the five trading days beginning on the ex-dividend
date for the Distribution.

         Noninsured Foreign Pension Plan: a Foreign Plan that is a defined
benefit pension plan and is not an Insured Foreign Plan, each Noninsured Foreign
Pension Plan being identified as such in the Packaging Business Disclosure
Schedule to the Merger Agreement.

         Packco Benefit Plan: any Benefit Plan that is sponsored or maintained
by a member of the Packco Group following the Distribution Date.

         Packco Employee: any Employee who is allocated to the Packco Group
pursuant to Section 2.01 of this Agreement or who is hired by any member of the
Packco Group pursuant to Section 6.11(b) of the Merger Agreement.

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         Packco Health Plan: the Blue Cross Blue Shield Health Plan for Cryovac
and Formpac Employees.

         Packco Hourly Non-Union Retirement Plan: has the meaning assigned to it
in Section 4.01(d).

         Packco Medical and Dependent Care Expense Plan: the Health Care and
Dependent Care Spending Account Plan for Cryovac and Formpac Employees.

         Packco Participant: any individual who is a Packco Employee or a
beneficiary, dependent or Alternate Payee of such an individual.

         Packco Savings Plan: a Qualified Plan designated by Grace to receive a
transfer of assets from the Hourly SIP and/or the Salaried SIP pursuant to
Section 4.02(b).

         Pension Plan: any Benefit Plan that is an "employee pension benefit
plan" (within the meaning of section 3(2) of ERISA), whether or not that Plan is
a Qualified Plan.

         Plan: any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, company car, fringe
benefit, leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, medical, accident, disability, workman's
compensation or other insurance, severance, separation or other employee benefit
plan, practice, policy or other arrangement of any kind (including, but not
limited to, any "employee benefit plan" (within the meaning of section 3(3) of
ERISA)).

         Qualified Plan: any Benefit Plan that is an "employee pension benefit
plan" (within the meaning of section 3(2) of ERISA) and which is intended to
qualify under section 401(a) of the Code.

         Salaried Retirement Plan: the W. R. Grace & Co. Retirement Plan for
Salaried Employees.

         Salaried SIP: the W. R. Grace & Co. Salaried Employees Savings and
Investment Plan.

         Salary Protection Plan: the W.R. Grace & Co. Executive Salary
Protection Plan.

         Schurpack 401(k) Plan: the Schurpack Employees 401(k) Thrift Plan.

                                       6
<PAGE>

         SERP: the W. R. Grace & Co. Supplemental Executive Retirement Plan.

         Split Dollar Program: the W. R. Grace & Co. Executive Split Dollar Life
Insurance Program.

         Terminated Grace Employee: any individual who is, as of the
Distribution Date, a former Employee of any member of the New Grace Group or the
Packco Group.

         Terminated Grace Participant: a Terminated Grace Employee or a
beneficiary, dependent or Alternate Payee of a Terminated Grace Employee.

         Termination Benefits: has the meaning assigned to it in Section 2.02(a)
hereof.

         Union Retirement Plan: the Retirement Plan of W. R. Grace & Co.-Conn.
Chemical Group (Cedar Rapids Plant).

         U.S. Welfare Plan: a Welfare Plan other than a Welfare Plan that is
maintained outside of the United States primarily for the benefit of individuals
substantially all of whom are nonresident aliens with respect to the United
States.

         Welfare Plan: any Benefit Plan that is an "employee welfare benefit
plan" (within the meaning of section 3(1) of ERISA).


                                   ARTICLE II

                   TRANSFER OF EMPLOYEES; TERMINATION BENEFITS

         SECTION 2.01 TRANSFER OF EMPLOYEES. (a) Grace and New Grace shall take
all steps necessary or appropriate so that all of the Employees of Grace and its
subsidiaries are allocated between the New Grace Group and the Packco Group in
accordance with the principles set forth in the Section 2.01(b), and so that
each individual who is so allocated to the Packco Group is, as of the
Distribution Date, an Employee of a member of the Packco Group, and each other
individual who is, as of the Distribution Date, an Employee of Grace or any of
its Subsidiaries is an Employee of a member of the New Grace Group.

         (b) In making the allocation provided for in Section 2.01, Grace and
New Grace shall allocate each Employee who is exclusively employed in the
Packaging Business to the Packco Group and each Employee who is exclusively
employed in the New Grace Business to the New Grace Group. All other Employees

                                        7
<PAGE>

shall be allocated in a mutually agreeable manner that, to the extent possible,
takes into account the Employees' expertise, experience and existing positions
and duties and does not unreasonably disrupt either the Packaging Business or
the New Grace Business and maximizes the ability of each of the Packco Group and
the New Grace Group to manage and operate their respective businesses after the
Distribution Date, taking into account the respective needs of such businesses
as established by past practice.

         SECTION 2.02 CHANGE OF CONTROL BENEFITS; TERMINATION BENEFITS. (a) No
New Grace Employee and no Packco Employee shall be deemed, as a result of the
steps called for by Section 2.01 or otherwise as a result of the consummation of
the transactions contemplated by the Distribution Agreement and the Merger, to
have become entitled to any benefits under any Ben- efit Plan, contract,
agreement, statute, regulation or other arrangement that provides for the
payment of severance pay, salary continuation, pay in lieu of notice, unused
vacation pay, or similar benefits in connection with actual or constructive
termination or alleged actual or constructive termination of employment
(collectively, "Termination Benefits") . Without limiting the generality of the
foregoing, none of the transactions contemplated by the Distribution Agreement
and the Merger Agreement constitute a "change in control" for purposes of any
Benefit Plan. Grace shall take all steps necessary and appropriate so that any
Change in Control Severance Agreement between Grace and any Packco Employee
terminates before the Distribution Date.

         (b) All Liabilities (other than for Severance Costs as defined in
Section 8.04 of the Distribution Agreement) relating to or arising out of claims
made by or on behalf of New Grace Participants or Packco Participants for, or
with respect to, Termination Benefits relating to the actual or constructive
termination or alleged actual or constructive termination of employment of any
New Grace Employee or Packco Employee with any member of the Packco Group or the
New Grace Group, which claims arise as a result of the consummation of the
transactions contemplated by the Distribution Agreement, shall be considered
other Transaction Costs that are governed by clause (ii) of the first sentence
of Section 8.04 of the Distribution Agreement.

         (c) Except as specifically provided otherwise in Section 2.02(b) above
and in Section 8.04 of the Distribution Agreement, effective as of the
Distribution Date, the New Grace Group shall assume or retain, as appropriate,
all Liabilities relating to or arising out of claims made by or on behalf of New
Grace Participants for, or with respect to, Termination

                                       8
<PAGE>

Benefits relating to the actual or constructive termination or alleged actual or
constructive termination of employment of any New Grace Employee with any member
of the Packco Group or the New Grace Group, whether before, on or after the
Distribution Date. In addition, the New Grace Group shall assume or retain, as
appropriate, all Liabilities (including with respect to Packco Employees)
pursuant to the Change in Control Severance Plan and the Change in Control
Severance Agreements.

         (d) Except as specifically provided otherwise in Sections 2.02(b) and
(c) above and in Section 8.04 of the Distribution Agreement, effective as of the
Distribution Date, the Packco Group shall assume or retain, as appropriate, all
Liabilities relating to or arising out of claims made by or on behalf of Packco
Participants for, or with respect to, Termination Benefits relating to the
actual or constructive termination or alleged actual or constructive termination
of employment of any Packco Employee with any member of the Packco Group or the
New Grace Group, whether before (in the case of constructive termination), on or
after the Distribution Date.

                                   ARTICLE III

                                 INCENTIVE PLANS

         SECTION 3.01 GRACE LTIP. (a) The contingent awards for Current
Performance Periods held by New Grace Participants and Packco Participants (such
contingent awards, the "LTIP Awards") under the Grace LTIP shall be adjusted and
paid in cash by New Grace in accordance with such methodology as New Grace
determines in its sole discretion.

         (b) Effective as of the Distribution Date, the New Grace Group shall
assume or retain, as appropriate, all Liabilities relating to or arising out of
awards payable under the Grace LTIP.

         SECTION 3.02 GRACE OPTIONS. (a) New Grace shall assume and adopt,
effective as of the Distribution Date, each of the Grace Stock Incentive Plans,
with such changes as may be necessary to reflect the change in the issuer of
awards thereunder and such other changes as New Grace shall, in its sole
discretion, determine. As soon as practicable after and effective as of the
Distribution Date, all Grace Options that are then outstanding shall be adjusted
or replaced as set forth in this Section 3.02, or in such other manner as the
parties hereto shall agree.

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<PAGE>

         (b) Each such Grace Option that is held by a New Grace Employee or a
Terminated Grace Participant shall be replaced with an option (a "New Grace
Option") to acquire a number of New Grace Common Shares that equals the number
of shares subject to such Grace Option immediately before such replacement,
times the New Grace Ratio (rounded up to the nearest whole share), with a
per-share exercise price that equals the per-share exercise price of such Grace
Option immediately before such replacement, divided by the New Grace Ratio
(rounded up to the nearest one hundredth of a cent). Each New Grace Option shall
otherwise have the same terms and conditions as the Grace Option it replaces,
except that references to employment by or termination of employment with Grace
and its affiliates shall be changed to references to employment by or
termination of employment with New Grace and its affiliates. Effective as of the
Distribution Date, New Grace shall assume all Liabilities relating to or arising
under the New Grace Options or the Grace Stock Incentive Plans.

         (c) Each such Grace Option that is held by a Packco Employee shall be
adjusted so that the number of Newco Common Shares subject to such Grace Option
equals the number of shares subject to such Grace Option immediately before such
adjustment, times the Newco Ratio (rounded down to the nearest whole share), and
the per-share exercise price equals the per-share exercise price of such Grace
Option immediately before such adjustment, divided by the Newco Ratio (rounded
up to the nearest whole cent) . Each Grace Option as so adjusted shall otherwise
have the same terms and conditions as were in effect before such adjustment.
Effective as of the Distribution Date, Grace shall retain all Liabilities
relating to or arising under the Grace Options held by Packco Employees.

         SECTION 3.03 ANNUAL INCENTIVE COMPENSATION PLAN. (a) New Grace shall
pay, or cause to be paid by another member of the New Grace Group, all bonuses
earned by Packco Employees and New Grace Employees for the 1997 calendar year
under the AICP, in accordance with the terms of the AICP as interpreted by New
Grace in its sole discretion. Effective as of the Distribution Date, the New
Grace Group shall assume all Liabilities relating to or arising under the AICP.

         (b) Packco Employees shall not be eligible to earn bonuses under the
AICP for 1998 or any subsequent year. However, if the Distribution Date occurs
later than March 31, 1998, then Grace and New Grace shall use reasonable best
efforts to develop and implement an annual incentive program for Packco
Employees, the cost of which will be shared between the New Grace Group and the
Packco Group in a manner relating to

                                       10
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the relative portions of the 1998 calendar year that precede and follow the
Distribution Date.

                                   ARTICLE IV

                            PENSION M~D SAVINGS PLANS

         SECTION 4.01 RETIREMENT PLANS AND SUPPLEMENTAL RETIREMENT PLAN. (a)
Grace, New Grace and Grace-Conn. shall take all steps necessary or appropriate
so that, effective no later than the Distribution Date: (i) one or more members
of the New Grace Group are the sole sponsors of the Salaried Retirement Plan,
the SERP and the Hourly Non-Union Retirement Plan; and (ii) one or more members
of the Packco Group are the sole sponsors of the Union Retirement Plan. Such
steps shall include, without limitation, the appointment or reappointment by New
Grace (by action after the Distribution Date to approve or ratify such
appointment or reappointment) of all named fiduciaries, trustees, custodians,
recordkeepers and other fiduciaries and service providers to the Salaried
Retirement Plan, the SERP and the Hourly Non-Union Retirement Plan, and the
appointment or reappointment by Grace of all named fiduciaries, trustees,
custodians, recordkeepers and other fiduciaries and service providers to the
Union Retirement Plan.

         (b) Effective as of the Distribution Date, the Packco Employees shall
cease accruing benefits under the Salaried Retirement Plan, the SERP and the
Hourly Non-Union Retirement Plan. As promptly as practicable following the
Distribution Date, and effective as of the Distribution Date, Grace intends to
implement a program for Packco Employees who participated in the Salaried
Retirement Plan before the Distribution Date designed to substantially make up
for any anticipated material adverse impact on them resulting from the
termination of such participation as of the Distribution Date. Such program will
assume that each such Packco Participant works as an em- ployee until normal
retirement (age 65) and that he or she will achieve a reasonable investment
return on his or her account in the Sealed Air Corporation Profit Sharing Plan.
Upon the implementation of such program by Grace, New Grace shall (i) cause the
Salaried Retirement Plan to be amended so that, effective immediately before the
Distribution Date: (A) the accrued benefit of each Packco Employee who is a
participant therein is increased by crediting such Packco Employee with an
additional year of service; (B) the accrued benefit of each such Packco Employee
who is at least 40 years old as of the Distribution Date is also increased by an
amount equal to the lesser of (x) 13 percent of the amount of such accrued
benefit (after giving effect to the increase described in clause (A) of

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this sentence) or (y) the increase that results from crediting such Packco
Employee with an additional four years of service, and (C) the accrued benefits
of all such Packco Employees, as so increased, shall be fully vested as of the
Distribution Date; or (ii) provide additional retirement benefits to such Packco
Employees as a group having, in the aggregate, a value substantially equivalent
to the increased benefits described in clause (i); provided, that the aggregate
expense associated with the benefits described in clause (i) or (ii) (as
applicable) shall be limited to the extent necessary so that the Accrued Benefit
Obligation, calculated in accordance with FAS 87 ("ABO), of such benefits does
not exceed $15 million. Such ABO shall be determined by Actuarial Sciences
Associates ("ASA") in accordance with the actuarial assumptions set forth in
Schedule II hereto and in a manner consistent with past practice with respect to
the Salaried Retirement Plan.

         (c) Effective as of the Distribution Date, the New Grace Group shall
assume or retain (as applicable) all Liabilities relating to or arising under
the Salaried Retirement Plan and the SERP, including without limitation for
benefits payable thereunder to Packco Participants. Effective as of the
Distribution Date, the Packco Group shall assume or retain (as applicable) all
Liabilities relating to or arising under the Union Retirement Plan.

         (d) (i) Effective immediately after the Effective Time, Grace shall
establish, cause to be established or designate a defined benefit pension plan
(the "Packco Hourly NonUnion Retirement Plan") to provide benefits and assume
liabilities and accept a transfer of assets from the Hourly Non-Union Retirement
Plan, as provided for in this Section 4.01(d).

            (ii) As soon as practicable after the Effective Time, following (A)
the receipt by New Grace of a copy of a favorable determination letter or
Grace's certification to New Grace, in a manner reasonably acceptable to New
Grace, that the Packco Hourly Non-Union Retirement Plan is qualified under
Section 401(a) of the Code and the related trust is exempt from taxation under
Section 501(a) of the Code, and (B) the receipt by Grace of a copy of a
favorable determination letter or New Grace's certification to Grace, in a
manner reasonably acceptable to Grace, that the Hourly Non-Union Retirement Plan
is qualified under Section 401(a) of the Code and the related trust is exempt
from taxation under Section 501(a) of the Code, New Grace shall direct the
trustee of the trust funding the Hourly Non-Union Retirement Plan to transfer to
the trustee of the trust established to fund the Packco Hourly Non-Union
Retirement Plan the amount described in Section 4.01(d) (iii) below. Such
transfer shall be in cash unless otherwise agreed by

                                       12
<PAGE>

Grace and New Grace. As of the date of such transfer, and effective immediately
after the Effective Time, the Packco Group and the Packco Hourly Non-Union
Retirement Plan shall assume all Liabilities for benefits payable to Packco
Participants under the Hourly Non-Union Retirement Plan, and the New Grace Group
and the Hourly Non-Union Retirement Plan shall retain no Liabilities for such
benefits.

            (iii) The amount transferred pursuant to this Section 4.01(d) shall
be an amount equal to (A) less (B), as adjusted by (C); where (A) equals a
portion of the assets of the Hourly Non-Union Retirement Plan having a fair
market value equal to the ABO as of the Distribution Date attributable to Packco
Participants; where (B) equals the aggregate payments made from the trust
funding the Hourly Non-Union Retirement Plan in respect of Packco Participants
from the Effective Time through the date the transfer occurs; and where (C)
equals the amount of the net earnings or losses, as the case may be, from the
Effective Time through the date the transfer occurs, on the average of the daily
balances of the foregoing and based upon the actual rate of return earned by the
Hourly Non-Union Retirement Plan during such period. All of the foregoing
calculations shall be made by ASA in accordance with the assumptions set forth
on Schedule III hereto. Grace shall be entitled to review and comment on such
calculations as ASA is in the process of performing them. Notwithstanding the
foregoing, however, in no event shall the amount so transferred be less than the
amount necessary to comply with, nor more than the maximum amount permitted by,
Section 414(1) of the Code and the regulations promulgated thereunder, as
determined by ASA.

         (iv) Grace, New Grace and Grace-Conn. shall, in connection with the
transfer described in this Section 4.01(d), cooperate in making any and all
appropriate filings required under the Code or ERISA, and the regulations
thereunder and any applicable securities laws, and take all such action as may
be necessary and appropriate to cause such transfers to take place as soon as
practicable after the Effective Time. New Grace and Grace-Conn. agree, during
the period ending with the date of the transfer of assets to the Packco Hourly
Non-Union Retirement Plan, to cause distributions in respect of Packco
Participants to be made in the ordinary course from the Hourly Non-Union
Retirement Plan in accordance with applicable law and pursuant to plan
provisions.

         SECTION 4.02 Savings Plans. (a) Grace, New Grace and Grace-Conn. shall
take all steps necessary or appropriate so that, effective no later than the
Distribution Date: (i) one or more members of the New Grace Group are the sole
sponsors of the Hourly SIP and the Salaried SIP; and (ii) one or

                                       13
<PAGE>

more members of the Packco Group are the sole sponsors of the Cypress 401(k)
Plans and the Schurpack 401(k) Plan. Effective as of the Distribution Date, the
Packco Group shall assume all Liabilities relating to or arising under the
Cypress 401(k) Plans and the Schurpack 401(k) Plan. Such steps shall include,
without limitation, the appointment or reappointment by New Grace (by action
after the Distribution Date to approve or ratify such appointment or
reappointment) of all named fiducia-ries, trustees, custodians, recordkeepers
and other fiduciaries and service providers to the Hourly SIP and the Salaried
SIP, and the appointment or reappointment by Grace of all named fi-- duciaries,
trustees, custodians, recordkeepers and other fiduciaries and service providers
to the Cypress 401(k) Plans and the Schurpack 401(k) Plan.

         (b) Each of the transfers provided for in this Section 4.02(b) shall be
implemented only if both Grace and New Grace so agree after the Distribution
Date.

            (i) Grace, New Grace and Grace-Conn. shall take all steps necessary
or appropriate in order to transfer to a Packco Savings Plan and the related
trust, as soon as practicable after the Effective Time, all account balances
(including the pre-tax, after-tax and rollover account balances) under each of
the Hourly SIP and the Salaried SIP of all Packco Participants. Such assets
shall be transferred in kind, to the extent elected by New Grace with the
consent of Grace (which consent shall not be unreasonably withheld), and
otherwise shall be made in cash; provided, that in any event, unless the parties
agree otherwise, any outstanding participant loans and FMC American Depositary
Receipts shall be transferred in kind. It is the intention of Grace, New Grace
and Grace-Conn. to carry out such transfer so as to preserve, to the extent
practicable, the investment elections of participants as in effect immediately
before the transfer, unless the parties agree otherwise.

            (ii) Grace, New Grace and Grace-Conn. shall cooperate in making all
appropriate filings required under the Code or ERISA, and the regulations
thereunder and any applicable securities laws, implementing all appropriate
communications with participants, maintaining and transferring appropriate
records, and taking all such other actions as may be necessary and appropriate
to implement the provisions of this Section 4.02(b) and to cause the transfers
of assets pursuant to this Section 4.02(b) to take place as soon as practicable
after the Effective Time; provided, that each of such transfers shall take place
only after (A) the receipt by New Grace of a favorable determination letter or
Grace's certification, in a manner reasonably acceptable to New Grace, that the
relevant

                                       14
<PAGE>

Packco Savings Plan is qualified under Section 401(a) of the Code and the
related trust is exempt from taxation under Section 501(a) of the Code, and (B)
the receipt by Grace of a favorable determination letter or New Grace's
certification, in a manner reasonably acceptable to Grace, that the Hourly SIP
or the Salaried SIP, as applicable, is qualified under Section 401(a) of the
Code and the related trust is exempt from taxation under Section 501(a) of the
Code.

         (c) If Grace and New Grace agree to implement the transfers provided
for in Section 4.02(b), subject to the completion of such transfer and effective
as of the Distribution Date, the members of the Packco Group and the SAC Savings
Plan shall assume all Liabilities to or relating to Packco Participants relating
to or arising under the Hourly SIP and the Salaried SIP. Effective as of the
Distribution Date, the New Grace Group shall assume or retain (as applicable)
all Liabilities relating to or arising under the Hourly SIP and the Salaried
SIP, including without limitation for benefits payable thereunder to Packco
Participants, that are not assumed by the Packco Group and the relevant Packco
Savings Plan pursuant to the preceding sentence.

         SECTION 4.03 QUALIFICATION OF PLANS. The New Grace Group shall be
responsible for all Liabilities incurred by the Packco Group as a result of the
failure of any of the Hourly Non-Union Retirement Plan, the Union Retirement
Plan, the Hourly SIP, the Salaried SIP, the Cypress 401(k) Plans or the
Schurpack 401(k) Plan to be qualified under Section 401(a) of the Code on or
before the date assets are transferred from such Plan to a Packco Benefit Plan,
or the date sponsorship of such Plan is assumed by any member of the Packco
Group, as applicable. The Packco Group shall be responsible for all Liabilities
incurred by the New Grace Group as a result of the failure of the Packco Hourly
Non-Union Retirement Plan or any Packco Savings Plan to be qualified under
Section 401(a) of the Code on or before the date assets are transferred to such
Plan from a New Grace Benefit Plan. The parties hereto agree that to the extent
any of them becomes aware that any such Plan fails or may fail to be so
qualified, it shall notify the other parties and the parties shall cooperate and
use best efforts to avoid such disqualification, including using the Internal
Revenue Service's Voluntary Compliance Resolution program or similar programs,
and taking any steps available pursuant to such program to avoid
disqualification, as determined by the party who is made responsible under this
Section 4.03 for the Liabilities that would result from such disqualification
(and the Liabilities for which such party is responsible shall include all costs
and expenses resulting from such steps, including

                                       15
<PAGE>

fines, penalties, contributions, attorneys' fees and expenses and administrative
expenses).

                                    ARTICLE V

                           WELFARE AND OTHER BENEFITS

         SECTION 5.01 BENEFITS FOR ACTIVE EMPLOYEES. (a) Grace, New Grace and
Grace-Conn. shall take all steps necessary or appropriate so that, effective no
later than the Distribution Date, one or more members of the Packco Group are
the sole sponsors of the Packco Health Plan. Such steps shall include, without
limitation, the appointment or reappointment by Grace of all named fiduciaries,
trustees, custodians, recordkeepers and other fiduciaries and service providers
to the Packco Health Plan, to the extent such appointments or reappointments are
necessary.

         (b) Effective as of the Distribution Date, the New Grace Group shall
assume or retain (as applicable) all Liabilities relating to or arising out of
claims for benefits under U.S. Welfare Plans by New Grace Participants and
Terminated Grace Participants, whenever such claims are incurred, and (ii) by
Packco Participants to the extent such claims are incurred before the
Distribution Date and reported within 365 days thereafter. Effective as of the
Distribution Date, the Packco Group shall assume or retain (as applicable) all
Liabilities relating to or arising out of all other claims for benefits under
U.S. Welfare Plans by Packco Participants, except as specifically provided in
Section 5.02.

         SECTION 5.02 RETIREE WELFARE BENEFITS. Effective as of the Distribution
Date, the New Grace Group shall assume all Liabilities for providing
post-retirement medical and life insurance benefits under U.S. Welfare Plans
sponsored by Grace or any of its subsidiaries before the Distribution Date or
any members of the New Grace Group on or after the Distribution Date, to: (i)
Terminated Grace Participants; (ii) Packco Participants who would have been
eligible to receive such benefits if they had retired at any time on or before
the first anniversary of the Distribution Date (regardless of when they actually
do retire); and (iii) any New Grace Participants who become eligible for such
benefits after the Distribution Date pursuant to the Grace Severance Pay Plan as
a result of a termination of employment as of the Distribution Date. Effective
as of the Distribution Date, the Packco Group shall provide Packco Participants
who retire after the Distribution Date for whom the New Grace has not assumed
Liabilities for providing post-retirement medical and life insurance benefits
pursuant to the

                                       16
<PAGE>

preceding sentence with such benefits pursuant to one or more group insurance or
group self-insured programs; provided, that the Packco Group may require such
Packco Participants to bear the entire cost of such benefits, together with a
reasonable fee for their allocable share of the Packco Group's costs of
administering such programs.

         SECTION 5.03 SEVERANCE. The Packco Group shall adopt, effective as of
the Distribution Date, and shall maintain in effect without amendment adverse to
participants, at least through the first anniversary of the Distribution Date, a
severance plan providing Packco Employees with severance benefits as outlined in
Exhibit A hereto.

         SECTION 5.04 SPLIT DOLLAR PLAN; DEFERRED COMPENSATION PLAN; SALARY
PROTECTION PLAN. Effective as of the Distribution Date, each Packco Employee who
participates in the Split Dollar Plan, the Deferred Compensation Plan or the
Salary Protection Plan shall be treated as a terminated participant under such
Plan, and shall have the same options with respect to such Plan as are available
to any other participant in such Plan upon termination of employment, in
accordance with the terms of such Plan as in effect immediately before the
Distribution Date. Effective as of the Distribution Date, the New Grace Group
shall assume all Liabilities relating to or arising under the Split Dollar Plan,
the Deferred Compensation Plan and the Salary Protection Plan.

         SECTION 5.05 DEPENDENT CARE AND MEDICAL EXPENSE PLANS. (a) Grace, New
Grace and Grace-Conn. shall take all steps necessary or appropriate so that,
effective no later than the Distribution Date, one or more members of the New
Grace Group are the sole sponsors of the Grace Dependent Care Plan and the Grace
Medical Expense Plan, and the New Grace Group shall assume all Liabilities under
such Plans. Such steps shall include, without limitation, the appointment or
reappointment by New Grace (by action after the Distribution Date to approve or
ratify such appointment or reappointment) of all named fiduciaries, trustees,
custodians, recordkeepers and other fiduciaries and service providers to such
Plans, to the extent such appointments or reappointments are necessary.

         (b) Grace, New Grace and Grace-Conn. shall take all steps necessary or
appropriate so that, effective no later than the Distribution Date, one or more
members of the Packco Group are the sole sponsors of the Packco Medical and
Dependent Care Expense Plan, and the Packco Group shall assume all Liabilities
under such Plan. Such steps shall include, without limitation, the appointment
or reappointment by Grace of all named fiduciaries, trustees, custodians,
recordkeepers and other fiduciaries

                                       17
<PAGE>

and service providers to such Plan, to the extent such appointments or
reappointments are necessary. No employer contributions to such Plan shall be
made or promised with respect to the 1998 plan year unless the parties otherwise
agree.


                                   ARTICLE VI

                                 NON-U.S. PLANS

         SECTION 6.01 NON-U.S. PLANS GENERALLY. As soon as practicable after the
date of this Agreement, the parties hereto shall enter into one or more
agreements or memoranda of understanding (collectively, the "Foreign Plans
Agreement") regarding the treatment and allocation of Liabilities relating to or
arising under Benefit Plans (the "Foreign Plans") for Employees located outside
the United States, including without limitation expatriates, and to expatriate
employees located in the United States. The Foreign Plans Agreement shall
provide for the treatment of each Foreign Plan, which treatment may include
(without limitation) (i) the retention or assumption of such Foreign Plan by the
Packco Group, (ii) the retention or assumption of such Foreign Plan by the New
Grace Group, or (iii) an allocation of the liabilities and assets (if any) of
the Foreign Plan between a Plan (which may include the Foreign Plan) that is
intended to be maintained by the New Grace Group and a Plan (which may include
the Foreign Plan) that is intended to be maintained by the Packco Group, after
the Distribution Date; provided, that the insurance contracts funding each
Insured Foreign Pension Plan (and any assets related thereto) shall be divided
between the appropriate Packco Benefit Plan and New Grace Benefit Plan by the
insurer in accordance with applicable law, regulation and practice. Any
transfers of assets or liabilities from a Noninsured Foreign Pension Plan shall
be made on the basis of reasonable methods and assumptions determined by the
local actuarial firm that is, as of the date of this Agreement, serving as the
actuary for such Noninsured Foreign Pension Plan (or another actuarial firm if
the parties hereto so agree) (the "Local Actuary"), in accordance with
applicable legal and regulatory requirements, local practice and the past
practice of Grace; provided, that each of Grace, Grace-Conn. and New Grace shall
be entitled to review such methods and assumptions and object to them if they
are unreasonable, and to review all calculations and determinations of the Local
Actuary for accuracy. It is the intention of the parties hereto that the Packco
Group will assume or retain Liabilities for Packco Employees under Foreign Plans
and that to the extent permitted and practicable under legal and regulatory
requirements and local practice, assets transferred from Noninsured Foreign
Pension Plans pursuant to the Foreign

                                       18
<PAGE>

Plans Agreement shall equal the Projected Benefit Obligation, calculated in
accordance with FAS 87, for the liabilities assumed by Packco Benefit Plans
pursuant to the Foreign Plans Agreement.

                                   ARTICLE VII

                                     GENERAL

         SECTION 7.01 PRESERVATION OF RIGHTS TO AMEND OR TERMINATE PLANS AND TO
TERMINATE OR CHANGE TERMS OF EMPLOYMENT. No provision of this Agreement shall be
construed as a limitation on the rights of any member of the Packco Group or the
New Grace Group to amend or terminate any Benefit Plan or other plan, program or
arrangement relating to employees. No provision of this Agreement shall be
construed to create a right in any employee or former employee or beneficiary or
dependent of such employee or former employee under a Benefit Plan which such
employee or former employee or beneficiary would not otherwise have under the
terms of the Benefit Plan itself. Nothing contained in this Agreement shall
confer upon any individual the right to remain an employee of any member of the
Packco Group or the New Grace Group or restrain any member of the Packco Group
or the New Grace Group from changing the terms and conditions of employment of
any individual at any time following the Distribution Date, except as provided
in Section 5.03 of this Agreement.

         SECTION 7.02 OTHER LIABILITIES; GUARANTEE OF OBLIGATIONS. Effective as
of the Distribution Date, the New Grace Group shall assume or retain (as
applicable) all Liabilities relating to or arising out of claims for
compensation and benefits made by or on behalf of any New Grace Participant,
including salary, wages, bonuses, incentive compensation, severance benefits,
separation pay, accrued sick, holiday, vacation, health, dental or retirement
benefits, or other compensation under applicable law or otherwise, relating to
or arising out of employment by Grace or any of its subsidiaries before the
Distribution Date or employment by any member of the New Grace Group on or after
the Distribution Date. Effective as of the Distribution Date, the Packco Group
shall assume or retain (as applicable) responsibility for all Liabilities
relating to or arising out of claims for compensation and benefits made by or on
behalf of any Packco Participant, including salary, wages, bonuses, incentive
compensation, severance benefits, separation pay, accrued sick, holiday,
vacation, health, dental or retirement benefits, or other compensation under
applicable law or otherwise, relating to or arising out of employment by Grace

                                       19
<PAGE>

or any of its subsidiaries before the Distribution Date or employment by any
member of the Packco Group on or after the Distribution Date. Notwithstanding
the foregoing, this Section 7.02 shall not apply to any Liability that is
specifically provided for elsewhere in this Agreement.

         SECTION 7.03 ASSUMPTION OF PLANS; TERMINATION OF PARTICIPATION. Except
as specifically provided otherwise in this Agreement, Grace, New Grace and
Grace-Conn. shall take all steps necessary or appropriate so that, effective no
later than the Distribution Date, one or more members of the New Grace Group are
the sole sponsors of all Benefit Plans that are, as of the date of this
Agreement, sponsored by Grace, and the New Grace Group shall assume or retain
(as applicable) all Liabilities relating to or arising under such Benefit Plans.
Such steps shall include, without limitation and where appropriate, the
appointment or reappointment by New Grace (by action after the Distribution Date
to approve or ratify such appointment or reappointment) of all named
fiduciaries, trustees, custodians, recordkeepers and other fiduciaries and
service providers to such Benefit Plans. Except as specifically provided
otherwise in this Agreement or in the agreement provided for in Section 6.01 of
this Agreement, the accrual of benefits by Packco Participants in any New Grace
Benefit Plan shall cease not later than the Distribution Date.

         SECTION 7.04 INFORMATION. The parties hereto shall, before the
Distribution Date or as soon as practicable thereafter, provide each other with
all information as may reasonably be requested and necessary to administer each
Benefit Plan effectively in compliance with applicable law. Such information
shall be provided in the form requested if, at the time of such request, it
exists in such form or can readily be converted to such form. If a request would
require a party providing information to incur any expenses in order to receive
advice from any actuary, consultant or consulting firm, the information need not
be provided unless the requesting party reimburses the party providing the
information for all such expenses.

         SECTION 7.05 COMPLETE AGREEMENT; COORDINATION WITH TAX SHARING
AGREEMENT. (a) This Agreement, the Exhibits and Schedules hereto and the
agreements and other documents referred to herein, shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
(other than the Distribution Agreement, the Merger Agreement and the schedules
and exhibits thereto) and shall supersede all previous negotiations, commitments
and writings with respect to such subject matter.

                                       20
<PAGE>

         (b) This Agreement, and not the Tax Sharing Agreement, constitutes the
sole agreement of the parties regarding responsibility for any excise taxes,
penalties or similar levies that may be imposed by any taxing authority on, or
with respect to, any Benefit Plan, except as otherwise specifically provided in
the Tax Sharing Agreement with respect to payroll taxes.

         SECTION 7.06 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
(other than the laws regarding choice of laws and conflict of laws that would
apply the substantive laws of any other jurisdiction) as to all matters,
including matters of validity, construction, effect, performance and remedies,
except to the extent preempted by federal law.

         SECTION 7.07 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given as provided in
the Distribution Agreement.

         SECTION 7.06 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted assigns,
but neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party (which consent shall not be unreasonably withheld).
Without limiting the generality of the foregoing, it is expressly acknowledged
that at the Effective Time, the Certificate of Incorporation of Grace will be
amended (the "Newco Amendment") to change the name of Grace to "Sealed Air
Corporation" and that references herein to "Grace" include, from and after the
Effective Time, such corporation (which is also referred to in the Merger
Agreement as Newco). Accordingly, to the extent this Agreement calls for the
agreement of "Grace" or of "the parties" from and after the Effec- tive Time,
the agreement of Newco (as defined in the Merger Agreement) will be required.
This Agreement is solely for the benefit of the parties hereto and their
Subsidiaries and is not intended to confer, nor shall it confer, upon any other
Persons (including New Grace Participants and Packco Participants) any rights or
remedies hereunder.

         SECTION 7.09 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement signed by all of the
parties hereto.

                                       21
<PAGE>
         SECTION 7.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         SECTION 7.11 INTERPRETATION. The Article and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.

         SECTION 7.12 INDEMNITY PROCEDURES. The provisions of Article IV of the
Distribution Agreement shall apply with respect to Liabilities allocated under
this Agreement.

         SECTION 7.13 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.

         SECTION 7.14 REFERENCES; CONSTRUCTION. References to any "Article,"
"Exhibit," "Schedule" or "Section," without more, are to Articles, Exhibits,
Schedules and Sections to or of this Agreement. Unless otherwise expressly
stated, clauses beginning with the term "including" set forth examples only and
in no way limit the generality of the matters thus exemplified.

         SECTION 7.15 SAC REASONABLE CONSENT. The parties hereto agree that any
actions to be taken by Grace, Grace-Conn. or New Grace to implement the terms of
this Agreement that are not specifically required herein that relate to Packco
or the Packaging Business, and any actions that are to be taken pursuant to this
Agreement only by agreement of the parties, must be reasonably satisfactory to
SAC.

                                       22
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                       W. R. GRACE & CO.

                                       By:
                                          -------------------------------
                                          Name:  Larry Ellberger
                                          Title: Senior Vice President



                                       W. R. GRACE & CO.-CONN.

                                       By:
                                          -------------------------------
                                          Name:  Robert B. Lamm
                                          Title: Vice President



                                       GRACE SPECIALTY CHEMICALS, INC.

                                       By:
                                          -------------------------------
                                          Name:  W.B. McGowan
                                          Title: Senior Vice President


                                       23