Document:

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                                                                    EXHIBIT 10.2

                              TAX SHARING AGREEMENT

         This TAX SHARING 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 Sealed Air Corporation, a Delaware corporation
("Sealed Air").

                                    RECITALS

         WHEREAS, Grace, Packco Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Grace, and Sealed Air have entered into an Agreement
and Plan of Merger (the "Merger Agreement");

         WHEREAS, Grace, Grace-Conn. and Grace Specialty Chemicals, Inc., a
Delaware corporation and a wholly owned subsidiary of Grace ("New Grace"), have
entered into the Distribution Agreement;

         AND WHEREAS, Grace, on behalf of itself and the Packco Group, and
Grace-Conn., on behalf of itself and the New Grace Group, wish to provide for
the allocation between the Packco Group and the New Grace Group of all
responsibilities, liabilities and benefits relating to or affecting Taxes (as
hereinafter defined) paid or payable by either of them for all taxable periods,
whether beginning before, on or after the Distribution Date (as hereinafter
defined) and to provide for certain other matters.

         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

         Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Distribution Agreement or the Merger
Agreement. As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined):

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         "Action": as defined in Section 5.3(a).

         "Active New Grace Businesses": as defined in Section 5.2(b).

         "Active Packo Business": as defined in Section 5.1(b).

         "Adjusted Item": as defined in Section 3.2(a)(v).

         "Adjusted Party" means the party for the account of which is an
Adjusted Item.

         "Affiliated Group" means the affiliated group of which Grace is the
common parent or any predecessor or successor thereto.

         "Agreed Date": as defined in Section 2.2(b).

         "Code" means the Internal Revenue Code of 1986, as amended, and shall
include corresponding provisions of any subsequently enacted federal tax laws.

         "Conn Prepared Returns": as defined in Section 2.2(a).

         "Conn Prior Payments": as defined in Section 3.2(c)(iii).

         "Consistency/Basis Disagreement": as defined in Section 2.2(b).

         "Corresponding Item": as defined in Section 3.2(a)(v).

         "Corresponding Party" means the party for the account of which is a
Corresponding Item.

         "Del Prepared Returns": as defined in Section 2.2(a).

         "Discontinued Businesses": shall mean (x) the can sealing and coating
portion of the New Grace Business which portion is described in the proviso to
the definition of the Packaging Business and (y) certain other businesses
currently accounted for as discontinued operations.

         "Distribution Date" means the date on which the Distribution occurs.
For purposes of this Agreement, the

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Distribution shall be deemed effective as of the close of business on the
Distribution Date.

         "Equity Securities" means any stock or other equity securities treated
as stock for tax purposes, or options, warrants, rights, convertible debt, or
any other instrument or security that affords any Person the right, whether
conditional or otherwise, to acquire stock.

         "Final Determination" means the final resolution of liability for any
Tax for a taxable period (i) by a duly executed IRS Form 870 or 870-AD (or any
successor forms thereto), on the date such Form is effective, or by a comparable
form under the laws of other jurisdictions; except that a Form 870 or 870-AD or
comparable form that reserves (whether by its terms or by operation of law) the
right of the taxpayer to file a claim for refund and/or the right of the taxing
authority to assert a further deficiency shall not constitute a Final
Determination with respect to the right so reserved; (ii) by a decision,
judgment, decree, or other order by a court of competent jurisdiction, which has
become final and unappealable; (iii) by a closing agreement or accepted offer in
compromise under Section 7121 or 7122 of the Code, or comparable agreements
under the laws of other jurisdictions; (iv) by any allowance of a refund or
credit in respect of an overpayment of Tax, but only after the expiration of all
periods during which such refund may be recovered (including by way of offset)
by the jurisdiction imposing Tax; or (v) by any other final disposition,
including by reason of the expiration of the applicable statute of limitations
or by mutual agreement of the parties.

         "Foreign Cap" shall mean $3 million.

         "Foreign Packco Subsidiary" means a Packco Subsidiary organized in a
foreign jurisdiction.

         "Foreign Packco Tax Item" means a Tax Item of a Foreign Packco
Subsidiary arising in the Pre-Distribution Period attributable to the Packaging
Business conducted by such Subsidiary other than any Tax Item of a Foreign
Packco Subsidiary arising as a result of a Foreign Transfer.

         "Foreign New Grace Subsidiary" means a New Grace Subsidiary organized
in a foreign jurisdiction.

         "Forwarding Party": as defined in Section 4.1.

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         "Forwarding Responsibilities": as defined in Section 4.1.

         "Hypothetical Pre-Distribution Tax": as defined in Section 2.2(d).

         "Hypothetical Pre-Distribution Overall Tax Benefit": as defined in
Section 2.2(d).

         "Indemnified Amount": as defined in Section 4.1.

         "Indemnitee": as defined in Section 4.2(a).

         "Indemnitor": as defined in Section 4.2(a).

         "Indemnity Issue": as defined in Section 4.2(a).

         "Interest": as defined under "Taxes" below.

         "IRS" means the Internal Revenue Service.

         "New Grace Tax Item" means a Tax Item arising in the Pre-Distribution
Period attributable to (i) New Grace, Grace- Conn., Packco, any Foreign New
Grace Subsidiary, any member of the Affiliated Group which was a member prior to
the Distribution Date or any member of the affiliated group for United States
federal income tax purposes of which W. R. Grace & Co., a New York corporation,
was the common parent or (ii) the New Grace Business conducted by any Foreign
Packco Subsidiary.

         "Overall Tax Benefit" shall mean, for any taxable period, the net
operating loss, unused credits (taking into account foreign tax credits when
realized regardless of the period for which the associated earnings and profits
were earned) and any other aggregate net unused Tax Benefit not used to reduce
Taxes for the period.

         "Packco Prior Payments": as defined in Section 3.2(c)(iii).

         "Packaging Tax Item" means a Tax Item attributable to Sealed Air, any
member of the Packco Group or otherwise relating to the Packaging Business or
the Packaging Assets that is not a New Grace Tax Item or a Foreign Packco Tax
Item.

         "Payee": as defined in Section 3.2(c).

         "Payor": as defined in Section 3.2(c).

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         "Post-Distribution Period" means the Post-Distribution Taxable Periods
and the portion of any Straddle Period beginning on the date after the
Distribution Date.

         "Post-Distribution Taxable Period" means any taxable period beginning
after the Distribution Date.

         "Pre-Distribution Period" means the Pre-Distribution Taxable Periods
and the portion of any Straddle Period ending on the Distribution Date.

         "Pre-Distribution Schedules": as defined in Section 2.2(b).

         "Pre-Distribution Taxable Period" means any taxable period ending on or
before the Distribution Date

         "Proceeding" shall mean any audit or other examination, judicial or
administrative proceeding relating to liability for or refunds or adjustments
with respect to Taxes.

         "Recipient Group": as defined in Section 4.1.

         "Restriction Period" means the period beginning on the date hereof and
ending on the two-year anniversary of the Effective Time.

         "Reviewing Party": as defined in Section 5.3(c).

         "Ruling/Opinion Exception": as defined in Section 5.1.

         "Sealed Air Parties" means Sealed Air and each of its past, present or
future Affiliates, other than any member of the Packco Group.

         "Straddle Period" means a taxable period that includes, but does not
end on, the Distribution Date.

         "Substantial Authority": as defined in Section 2.1.

         "Tax Benefit" means any item of loss, deduction, credit or any other
Tax Item which decreases Taxes paid or payable.

         "Tax Deficiency" means an assessment of Taxes, as a result of a Final
Determination.

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         "Tax Detriment" means any item of income, gain, recapture of credit or
any other Tax Item which increases Taxes paid or payable.

         "Tax-Free Status" means the qualification of the Distribution (i) as a
transaction described in Section 355(a)(1) of the Code, (ii) as a transaction in
which the stock distributed thereby is qualified property for purposes of
Section 355(c)(2) of the Code and (iii) as a transaction in which each of Grace,
Grace-Conn., Packco, New Grace and each member of the New Grace Group recognizes
no income or gain.

         "Tax Item" means any item of income, gain, loss, deduction, credit,
recapture of credit or any other item which increases or decreases Taxes paid or
payable, including an adjustment under Code Section 481 resulting from a change
in accounting method.

         "Tax Opinions" shall mean the tax opinions referred to in Section
7.1(e) of the Merger Agreement.

         "Tax Refund" means a refund of Taxes as the result of a Final
Determination.

         "Tax Return" means any return, filing, questionnaire, information
return or other document required to be filed, including requests for extensions
of time, filings made with estimated tax payments, claims for refund and amended
returns that may be filed, for any period with any taxing authority (whether
domestic or foreign) in connection with any Tax or Taxes (whether or not a
payment is required to be made with respect to such filing).

         "Taxes" means all forms of taxation, whenever created or imposed, and
whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, state, foreign, federation or other body, and, without
limiting the generality of the foregoing, shall include income, sales, use, ad
valorem, gross receipts, trade, license, value added, franchise, transfer,
recording, withholding, payroll, employment, excise, occupation, unemployment
insurance, social security, business license, business organization, stamp,
environmental, premium and property taxes, together with any related interest,
penalties and additions to any such tax, or additional amounts imposed by any
taxing authority (domestic or foreign) (such interest, penalties, additions and
additional amounts, "Interest").

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         "Transaction Party": as defined in Section 5.3(c).

                                   ARTICLE II.

                              FILING OF TAX RETURNS

         Section 2.1. Manner of Filing. All Tax Returns filed after the
Distribution Date and the Pre-Distribution Schedules shall be prepared on a
basis which is consistent with the consummation of the transactions as set forth
in the Distribution Agreement, the Grace Tax Matters Certificate, the Sealed Air
Tax Matters Certificate, the Tax Opinions and any opinions, rulings, agreements
or written advice relating to Foreign Transfers (in the absence of a controlling
change in law or circumstances) and shall be filed on a timely basis (including
extensions) by the party responsible for such filing under this Agreement. In
the absence of a controlling change in law or circumstances, all such Tax
Returns and Pre-Distribution Schedules shall also be prepared on a basis which
is consistent with the treatment of each of the Foreign Transfers in the
jurisdictions listed on Exhibit A hereto as a reorganization, pursuant to a plan
of reorganization, within the meaning of Section 368(a)(1)(D) of the Code. The
Pre-Distribution Schedules and all Tax Returns in respect of a Pre-Distribution
Taxable Period or portion, ending on the Distribution Date of any Straddle
Period, that include any member of the New Grace Group or the Packco Group shall
be prepared on the basis of substantial authority or on a reasonable basis with
(if applicable) appropriate disclosure (each, "Substantial Authority");
provided, however, that such Schedules and Returns shall be prepared on a basis
consistent with the elections (other than elections relating to carrybacks and
carryforwards described in Section 3.3(a)), accounting methods, conventions and
principles of taxation used for the most recent taxable periods of members of
the New Grace Group for which Tax Returns involving similar Tax Items have been
filed, to the extent that a failure to do so would result in a Tax Detriment, or
a reduction in a Tax Benefit, to a member of the Packco Group, as long as such
consistent position has Substantial Authority. All Tax Returns in respect of a
Post-Distribution Taxable Period or portion, beginning after the Distribution
Date, of any Straddle Period, shall be prepared with Substantial Authority;
provided, however, that such Returns shall be prepared on a basis consistent
with the elections (other than elections relating to carrybacks and
carryforwards described in Section 3.3(a)), accounting methods, conventions and
principles of taxation used for the most recent taxable periods of members of
the New Grace Group for which Tax Returns involving similar Tax Items have

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been filed, to the extent that a failure to do so would result in a Tax
Detriment, or a reduction in a Tax Benefit, to a member of the other Group, as
long as such consistent position has Substantial Authority. In the event of a
conflict with respect to a Straddle Period between the requirements of the
immediately preceding sentence and the second preceding sentence, the second
preceding sentence shall prevail. Subject to the provisions of this Agreement,
all decisions relating to the preparation of Tax Returns shall be made in the
sole discretion of the party responsible under this Agreement for such
preparation. Grace shall provide Grace-Conn. with copies of all Tax Returns
filed after the Distribution Date that relate to any member of the New Grace
Group. Grace-Conn. shall provide Grace with a copy of any portion of a Tax
Return necessary to confirm Grace-Conn.'s entitlement to payment hereunder in
respect of a carryback or refund.

         Section 2.2. Pre-Distribution and Straddle Period Tax Returns.

         (a) Grace shall prepare and file, or cause to be prepared and filed,
any Tax Returns required to be filed by a member or members of the New Grace
Group or the Packco Group for any Pre-Distribution Taxable Period and any
Straddle Period; provided, however, that Grace-Conn. shall prepare and file, or
cause to be prepared and filed, any Tax Returns relating solely to a member or
members of the New Grace Group or their respective assets or businesses (such
Tax Returns to be prepared and filed, or caused to be prepared and filed, by
Grace, the "Del Prepared Returns", and by Grace-Conn., the "Conn Prepared
Returns", respectively).

         (b) With respect to any Del Prepared Return that has not been filed as
of the Distribution Date and relates to a Pre-Distribution Taxable Period or a
Straddle Period, Grace-Conn. shall, 25 calendar days before the due date
(including extensions) for such Return, provide Grace with a schedule
(collectively, the "Pre-Distribution Schedules") detailing the computation of
(i) in the case of a Pre-Distribution Taxable Period, the Tax and/or Overall Tax
Benefit and (ii) in the case of a Straddle Period, the Hypothetical
Pre-Distribution Tax and/or Hypothetical Pre-Distribution Overall Tax Benefit,
in either case, attributable to the member or members of the New Grace Group or
the Packco Group included in such Return. Any Pre-Distribution Schedule relating
to a Pre-Distribution Taxable Period shall be delivered to Grace in the form of
a completed, but unexecuted Tax Return. If Grace so requests, Grace-Conn. shall
discuss with Grace the preparation of, and allow Grace

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periodically to review major issues with respect to, any Pre-Distribution
Schedule. In the event that Grace disagrees with any Tax Item reflected (or
anticipated to be reflected) on a Pre-Distribution Schedule and demonstrates (by
means of a written explanation in sufficient detail to permit such conclusion to
be verified) its conclusion that Grace-Conn. has failed to comply with the
requirements of the third sentence of Section 2.1 hereof (a "Consistency/Basis
Disagreement"), Grace-Conn. shall explain its calculation of such Tax Item
within 14 days of receipt of Grace's written explanation. The parties shall
attempt in good faith mutually to resolve any Consistency/Basis Disagreements
prior to the due date for filing the relevant Tax Return. Notwithstanding any
other provision of this Agreement, with respect to estimated Tax payments to a
foreign governmental authority for the first quarter of 1998 that are due before
the parties have agreed on the amount in connection therewith for which
Grace-Conn. is responsible hereunder, (I) Grace shall estimate in good faith and
in accordance with past practice and make such estimated Tax payment, (II) Grace
shall promptly provide such estimate to Grace-Conn., (III) Grace-Conn. shall
deliver to Grace the applicable Pre-Distribution Schedule reasonably promptly
after the Distribution Date (provided that Grace and its Affiliates reasonably
and promptly cooperate with Grace-Conn. in the preparation thereof), (IV)
Grace-Conn. shall not be required to make any payment in respect of such
estimated Taxes to Grace until five days after the date that the parties agree
on such Pre-Distribution Schedule (the "Agreed Date") (and such payment shall
not exceed the amount of such estimated Tax paid, shall otherwise be determined
based on the Pre-Distribution Schedule as distinguished from the estimated Tax
paid, and shall be made in immediately available funds), and (IV) such payment
shall bear interest from the time that payment is due to the applicable
governmental authority until the earlier of the date that payment is made by
Grace-Conn. and five days after the Agreed Date at the rate of interest charged
for Eurodollar or LIBOR loans under Grace-Conn.'s principal senior bank debt
agreement. If such payment by Grace-Conn. is not made by the fifth day after the
Agreed Date, then such payment shall bear interest from the fifth day after the
Agreed Date until the date that payment is made by Grace-Conn. at the rate that
is two percent in excess of the rate set forth in clause (IV) of the preceding
sentence.

         (c) Whether or not any Consistency/Basis Disagreements or any other
disagreements relating to a Tax Item on a Pre-Distribution Schedule have been
resolved by the

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applicable due date, Grace shall (i) prepare the Del Prepared Returns on the
basis of, and in a manner consistent with, the Pre-Distribution Schedules, (ii)
provide Grace-Conn. with a copy of each Del Prepared Return 14 calendar days
before such Return is filed and reflect any comments thereon provided in good
faith by Grace-Conn. and (iii) provide Grace-Conn. with a copy of each Del
Prepared Return two business days after such Return is filed. In the event that
any Consistency/Basis Disagreements relating to a Pre-Distribution Schedule have
not been resolved prior to the filing of the relevant Tax Return, such
disagreements shall be promptly resolved pursuant to Section 6.7 hereof.

         (d) The "Hypothetical Pre-Distribution Tax" shall mean the Tax that
would have been due for the taxable period ending on the Distribution Date if
the Distribution Date were the last day of the taxable period. The "Hypothetical
Pre-Distribution Overall Tax Benefit" shall mean the Overall Tax Benefit that
would have arisen in the taxable period ending on the Distribution Date if the
Distribution Date were the last day of the taxable period. Such Tax or Overall
Tax Benefit shall be computed by determining items of income, expense,
deduction, loss and credit on a "closing of the books" basis, reflecting tax
accounting principles as of the close of business on the Distribution Date.

         Section 2.3. Post-Distribution Tax Returns. Any Tax Return for a
Post-Distribution Taxable Period shall be the responsibility of the New Grace
Group if such Tax Return relates solely to a member or members of the New Grace
Group or their respective assets or businesses, and shall be the responsibility
of the Packco Group if such Tax Return relates solely to a member or members of
the Packco Group or Sealed Air or their respective assets or businesses.

                                  ARTICLE III.

                                PAYMENT OF TAXES

         Section 3.1. Allocation of Tax Liabilities With Respect to Unfiled
Returns.

         (a) All Taxes shall be paid by the party responsible under this
Agreement for filing the Tax Return pursuant to which such Taxes are due;
provided, however, that

              (i) in the case of Taxes due with respect to Del Prepared Returns
for Pre-Distribution Taxable Periods or

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Straddle Periods, Grace-Conn. shall pay Grace the amount, if any, of the Tax or
Hypothetical Pre-Distribution Tax, as the case may be, if any, reflected in the
Pre-Distribution Schedule relating to such Tax Return attributable to the member
or members of the New Grace Group or the Packco Group included in such Return
(and in the case of the Business Tax and Real Estate Tax due to France or a
political subdivision thereof (and other Taxes due to any jurisdiction based on
analogous principles), with respect to Post-Distribution Periods in 1998,
Grace-Conn. shall pay Grace the amount of any Tax liability attributable to the
New Grace Business). Such payment shall be made, at Grace-Conn.'s discretion,
either in immediately available funds on the morning of the relevant date when
payment is due to the governmental authority in respect of such Tax Return or,
if not in immediately available funds, two business days prior to such due date.
Grace shall forward any such payment that it receives from Grace-Conn. to the
appropriate taxing authority.

              (ii) in the case of Del Prepared Returns for any taxable period,
on the relevant date on which payment is due (or a refund is received) in
respect of such Tax Return, Grace shall pay Grace-Conn. the amount, if any, of
the actual reduction in Taxes, or the actual increase in the Tax refund, that
would have been payable or receivable with respect to such Tax Return but for
any Overall Tax Benefit (or Hypothetical Pre-Distribution Overall Tax Benefit)
that is for the account of Grace-Conn. under Section 3.2(a)(iii), below. In the
case of a payment by Grace in respect of a reduction in Taxes, such payment
shall be made in immediately available funds on the morning of the relevant due
date or, if not in immediately available funds, two business days prior to the
due date.

              (iii) the parties intend that, in implementing this Section
3.1(a), payment and reimbursement between the parties shall reflect the
principles of Section 3.2(a).

         (b) Notwithstanding anything to the contrary, any Tax Item resulting
from any act or omission not in the ordinary course of business (other than
transactions contemplated by this Agreement, the Distribution Agreement, the
Merger Agreement or the Benefits Agreement) on the part of any member of the
Packco Group or any of the Sealed Air Parties occurring on the Distribution Date
after the Effective Time shall be deemed to arise in a taxable period which
begins after the Distribution Date.

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         Section 3.2. Indemnities; Redetermined Tax Liabilities. Except as
otherwise provided in Article V:

         (a) Indemnities.

         (i) Grace-Conn. shall be responsible for (w) any Tax for a
Pre-Distribution Taxable Period (and any Hypothetical Pre-Distribution Tax for a
Straddle Period) of Grace, Grace-Conn., Packco, any Foreign New Grace
Subsidiary, any current or former member of the Affiliated Group which was a
member prior to the Distribution Date or any current or former member of the
affiliated group for United States federal income tax purposes of which W. R.
Grace & Co., a New York corporation, was the common parent, (x) any Tax for a
Pre-Distribution Taxable Period (and any Hypothetical Pre-Distribution Tax for a
Straddle Period) of a Foreign Packco Subsidiary attributable to the Packaging
Business reflected on a Tax Return filed by such Subsidiary on or before the
Distribution Date or on a Pre-Distribution Schedule, (y) any Tax of any member
of the New Grace Group or a Foreign Packco Subsidiary, in either case, to the
extent attributable to the New Grace Business and (z) 75% (or if the Packco
Group has borne an amount of Tax in respect of adjustments to Foreign Packco Tax
Items (and fees and expenses in Proceedings relating to such adjustments) that
exceeds the Foreign Cap, then 100%) of any increase in Tax of a member of the
Packco Group attributable to an adjustment to a Foreign Packco Tax Item.

              (ii) Grace shall be responsible for any Taxes (x) of any member of
the Packco Group or otherwise relating to the Packaging Business or the
Packaging Assets (except to the extent that Grace-Conn. is responsible for such
Taxes pursuant to clause (i) above) and (y) of any of the Sealed Air Parties,
whether arising before, on or after the Distribution Date.

              (iii) Any Overall Tax Benefit (or Hypothetical Pre-Distribution
Overall Tax Benefit) shall be for the account of Grace-Conn. to the extent that
such Overall Tax Benefit (or Hypothetical Pre-Distribution Overall Tax Benefit)
is attributable to (w) Grace, Grace-Conn., Packco, any Foreign New Grace
Subsidiary, any current or former member of the Affiliated Group which was a
member prior to the Distribution Date or any current or former member of the
affiliated group for United States federal income tax purposes of which W. R.
Grace & Co., a New York corporation, was the common parent, in each case, for
the Pre-Distribution Period, (x) the Packaging Business of a Foreign Packco
Subsidiary for the Pre-Distribution

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Period reflected on a Tax Return filed by such Subsidiary on or before the
Distribution Date or on a Pre-Distribution Schedule (other than the Foreign
NOLs), (y) a Pre-Distribution Period of any member of the New Grace Group or a
Foreign Packco Subsidiary, in either case, to the extent attributable to the New
Grace Business (other than the Foreign NOLs) or (z) any adjustment to a Foreign
Packco Tax Item.

              (iv) For purposes of determining the amount for which Grace or
Grace-Conn. is responsible for paying the other party, or entitled to receive
from the other party, in the event of any adjustment, including a Final
Determination, of a Tax Item of a Foreign Packaging Subsidiary (other than a Tax
Item that arises as a result of a Foreign Transfer), Tax Items that are clearly
attributable to the Packaging Business or the New Grace Business, respectively,
shall be allocated to such Business and Tax Items that are not so attributable
shall be allocated in the proportion that the earnings from operations of such
Business operated by such Subsidiary bears to the total earnings from operations
of such Subsidiary, as reflected in audited financial statements for the most
recent, as of the end of such taxable period, full-year accounting period. Tax
Items so allocated shall be treated for all purposes of this Agreement as
attributable to the Business to which they are allocated.

              (v) Timing Adjustments. In the event of any adjustment, including
a Final Determination, of a Tax Item (the "Adjusted Item") which results in a
Tax Benefit or Tax Detriment for the account of one party and a corresponding
Tax Detriment or Tax Benefit (the "Corresponding Item") for the account of the
other party, then (I) if the Corresponding Item is a Tax Benefit, the
Corresponding Party shall pay the Adjusted Party and (II) if the Corresponding
Item is a Tax Detriment, the Adjusted Party shall pay the Corresponding Party,
in either case, for each taxable period in which a member of the Group of the
party entitled to payment under this Section 3.2(a)(v) actually realizes the Tax
Benefit, in the case of (I), or the Tax Detriment, in the case of (II), by
reason of the adjustment, an amount equal to such realized Tax Benefit, in the
case of (I), or realized Tax Detriment, in the case of (II), including interest
(computed at a 5% annual rate) from the original due date (without extensions)
for filing of the Return for such taxable period through the date of payment
under this Section 3.2(a)(v).

         (b) Final Determinations. In the case of any Final Determination
regarding a Tax Return, any Tax Deficiency shall be paid to the appropriate
taxing authority by, and any Tax

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Refund received from the appropriate taxing authority shall be paid to, the
party which filed such Return; provided, however, that whether or not there is a
Tax Deficiency or Tax Refund and whether or not a payment is required to or from
the appropriate taxing authority, Grace shall make payments to, or receive
payments from, Grace-Conn. based upon the following principles:

              (i) Grace-Conn. shall make a payment to Grace in an amount equal
to (x) any increase in the Tax of any of the Sealed Air Parties or any member of
the Packco Group resulting from any adjustment to a New Grace Tax Item and (y)
75% (or, if the Packco Group has borne an amount of Tax in respect of
adjustments to Foreign Packco Tax Items (and fees and expenses in Proceedings
relating to such adjustments) that exceeds the Foreign Cap, then 100%) of any
increase in the Tax of any of the Sealed Air Parties or any member of the Packco
Group resulting from any adjustment to a Foreign Packco Tax Item, in either case
(x) or (y), together with any Interest relating thereto that is or has been
imposed by the relevant taxing authority (or would have been imposed but for an
offsetting Packaging Tax Item).

              (ii) Grace shall pay to Grace-Conn. an amount equal to (x) any
decrease in the Tax of any of the Sealed Air Parties or any member of the Packco
Group resulting from any adjustment to a New Grace Tax Item and (y) any decrease
in the Tax of any of the Sealed Air Parties or any member of the Packco Group
resulting from any adjustment to a Foreign Packco Tax Item, in either case (x)
or (y), together with any Interest relating thereto that is or has been paid by
the relevant taxing authority (or would have been paid but for an offsetting
Packaging Tax Item).

              (iii) The parties intend that, in implementing this Section
3.2(b), payment and reimbursement between the parties shall reflect the
principles of Section 3.2(a).

              (iv) Payments otherwise required to be made under this Section
3.2(b) with respect to a single Final Determination shall be netted and offset
against each other so that either Grace shall make a payment to Grace-Conn. or
Grace-Conn. shall make a payment to Grace, but not both.

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         (c) Calculation and Payment of Amounts.

              (i) All calculations and determinations required to be made
pursuant to this Article III shall initially be made by the party obligated to
make such payment (the "Payor") in its good faith. If the party entitled to
receive a payment (the "Payee") so requests, the Payor shall present its
calculations and determinations to the Payee in writing. The Payee shall be
deemed to consent to such calculations and determinations unless the Payee
notifies the Payor in writing within 30 days of receiving such calculations and
determinations. If the Payee disagrees with the Payor's calculations and
determinations, the parties shall attempt in good faith mutually to resolve the
disagreement. In the event that they cannot so resolve the disagreement, it
shall be resolved promptly pursuant to Section 6.7 hereof.

              (ii) For all tax purposes, the parties hereto agree to treat, and
to cause their respective affiliates to treat, (x) any payment required to be
paid to a member of the other Group by this Agreement as an adjustment to the
portion of the New Grace Capital Contribution that is contributed from Grace to
New Grace and (ii) any payment of interest or Taxes (other than U.S. Federal
income taxes) by or to a taxing authority as taxable or deductible, as the case
may be, to the party entitled under this Agreement to retain such payment or
required under this Agreement to make such payment, in either case except as
otherwise mandated by the law or a Final Determination. In the event of such a
Final Determination, the payment in question shall be adjusted to place the
parties in the same after-tax position that they would have enjoyed absent such
Final Determination. Any payment required by this Agreement that is not made on
or before the date required hereunder shall bear interest, from and after such
date through the date of payment, at the rate that is two percent in excess of
the rate of interest charged for Eurodollar or LIBOR loans under the principal
senior bank debt agreement of the party required to make such payment.

              (iii) Payment of any amount required to be made pursuant to this
Article III as a result of a Final Determination shall become due and payable
after such Final Determination has been made within ten business days of the
receipt of written notice from the party entitled to receive such payment to the
party required to make such payment. Any amounts required to be paid in respect
of Taxes or Overall Tax Benefits pursuant to this Article III shall be adjusted
to avoid duplication of payments and to take into account the sum of any

                                      -15-

<PAGE>

payments previously made by any member of the Packco Group on or prior to the
Distribution Date or by Grace-Conn. or any other member of the New Grace Group
at any time in respect of such Taxes or Overall Tax Benefits (the "Conn Prior
Payments") and the sum of any payments previously made by any member of the
Packco Group after the Distribution Date in respect of such Taxes or Overall Tax
Benefits (the "Packco Prior Payments"). Appropriate payments will be made
between the parties in the event that the Conn Prior Payments or the Packco
Prior Payments, respectively, exceed the amounts for which Grace-Conn. or
Packco, respectively, is responsible under the principles of Section 3.2(a).

         (d) Other Tax Liabilities and Refunds. Any Tax or Tax refund that is
not otherwise covered by Section 3.1 or 3.2(b) shall be allocated, and payment
shall be made by Grace-Conn. or Grace, using the principles of Sections 3.2(a);
provided, however, that any Tax refund (whether or not governed by Section 3.1
or 3.2(b)) arising as a result of an adjustment of a Foreign Packco Tax Item
shall be allocated in the same manner and to the same extent as Taxes and
expenses in respect of adjustments of Foreign Packco Tax Items have been borne
(it being agreed and understood that to the extent that the Foreign Cap has been
exceeded, such refund shall be entirely for the benefit of Grace-Conn. and to
the extent that refunds are shared 75% by Grace-Conn. and 25% by Grace the
Foreign Cap shall be increased by the amount refunded to Grace). Any Tax refund
received by one party that is for the account of the other party shall be paid
to such other party promptly upon receipt thereof. Any Tax paid by one party
that is the responsibility of the other party shall be reimbursed promptly by
the other party.

         Section 3.3. Carrybacks and Refund Claims. (a) Any Tax refund resulting
from the carryback by any member of the New Grace Group of any Tax Item arising
after the Distribution Date to a Pre-Distribution Taxable Period or a Straddle
Period shall be for the account of Grace-Conn., and Grace shall promptly pay
over to Grace-Conn. any such Tax refund that it receives. In the event that a
member of the New Grace Group, on the one hand, and a member of the Packco Group
or a Sealed Air Party, on the other hand, are each entitled to carryback a Tax
Item to a Pre-Distribution Taxable Period or a Straddle Period, the respective
Tax Items shall be utilized under the rules of applicable law (which shall be,
in the case of carrybacks to such periods of the Affiliated Group and carrybacks
under foreign or State law with respect to which there is no applicable rule
regarding the priority of such utilization, the rules contained in Treasury

                                      -16-

<PAGE>

Regulation (section)1.1502-21T). Any election affecting the carryback or
carryforward of any Tax Item of any member of the New Grace Group, or a payment
to or by such a member under this Agreement in respect of a carryback or
carryforward, including the elections under Section 172(b)(3) of the Code and
Treasury Regulation (section)1.1502-21T(b)(3) and 1.172-13(c) with respect to
the taxable years of the Affiliated Group that begin on each of January 1, 1997,
and January 1, 1998, shall not be made without the consent of Grace-Conn. and
shall be made if Grace-Conn. so requests.

         (b) Grace-Conn. shall be permitted to file, and Grace shall fully
cooperate with Grace-Conn. in connection with, any refund claim. To the extent
that such a refund claim (other than a claim arising from a carryback) does not
result in a Tax refund (or would not result in a refund if a claim were filed)
as the result of an offsetting Packaging Tax Item (including a Packaging Tax
Item carried back to a Pre-Distribution Taxable Period or a Straddle Period),
Grace shall remit to Grace-Conn. the amount of any decrease in Tax that results
or would have resulted from such refund claim.

         Section 3.4. Liability for Taxes with Respect to Post-Distribution
Periods. Unless otherwise specifically provided in this Agreement or the
Distribution Agreement, the New Grace Group shall pay all Taxes and shall be
entitled to receive and retain all refunds of Taxes with respect to periods
beginning after the Distribution Date which are attributable to the New Grace
Business. Unless otherwise provided in this Agreement, the Packco Group shall
pay all Taxes and shall be entitled to receive and retain all refunds of Taxes
with respect to periods beginning after the Distribution Date which are
attributable to the Packaging Business.

                                   ARTICLE IV.

               INDEMNITY, COOPERATION AND EXCHANGE OF INFORMATION

         Section 4.1. Breach. Grace-Conn. shall be liable for and shall
indemnify, defend and hold harmless the Packco Indemnitees from and against, and
Grace shall be liable for and shall indemnify, defend and hold harmless the New
Grace Indemnitees from and against, any payment required to be made as a result
of the breach by a member of the New Grace Group or the Packco Group,
respectively, of any obligation under this Agreement. If any member of the
Packco Group or the New Grace Group, fails to comply in any respect whatsoever
with any of its responsibilities under this Agreement relating to promptly

                                      -17-

<PAGE>

forwarding to any member of the other Group (the "Recipient Group") any
communications with and refunds received from any taxing authority ("Forwarding
Responsibilities"), then Grace or Grace-Conn., as the case may be, (the
"Forwarding Party") shall be liable for and shall indemnify and hold the New
Grace Indemnitees or the Packco Indemnitees, as the case may be, harmless from
and against any costs or expenses (including, without limitation, Taxes and
reasonably incurred lawyers' and accountants' fees) ("Indemnified Amount")
incurred by or imposed upon any member of the Recipient Group arising out of, in
connection with or relating to such communication; provided, however, that the
liability of the Forwarding Party with respect to any one such failure shall be
equal to that portion of the Indemnified Amount that a member of the Recipient
Group demonstrates is caused (directly or indirectly) by such failure.

         Section 4.2. Contests. (a) Whenever a party hereto (the "Indemnitee")
becomes aware of the existence of an issue that could increase the liability for
any Tax, or decrease the amount of any refund, of the other party hereto or any
member of its Group or require a payment hereunder (an "Indemnity Issue"), the
Indemnitee shall in good faith promptly give notice to such other party (the
"Indemnitor") of such Indemnity Issue. The failure of any Indemnitee to give
such notice shall not relieve any Indemnitor of its obligations under this
Agreement, except to the extent that such Indemnitor or its affiliate is
actually materially prejudiced by such failure to give notice.

         (b) The Indemnitor and its representatives, at the Indemnitor's
expense, shall be entitled to participate (i) in all conferences, meetings or
proceedings with any taxing authority, the subject matter of which is or
includes an Indemnity Issue in respect of a Pre-Distribution Period and (ii) in
all appearances before any court, the subject matter of which is or includes an
Indemnity Issue in respect of a Pre-Distribution Period.

         (c) Except as provided in Section 4.2(d), Grace-Conn. shall have the
right to decide as between the parties hereto how any Indemnity Issue for a
Pre-Distribution Taxable Period is to be dealt with and finally resolved with
the appropriate taxing authority and shall control all Proceedings relating
thereto. Grace agrees to cooperate with Grace-Conn. in the settlement of any
such Indemnity Issue; provided, however, that Grace-Conn. shall act in good
faith in the conduct of such Proceedings and shall keep Grace reasonably
informed of any developments which can reasonably be expected to affect
adversely Grace. Such cooperation shall include permitting Grace-Conn. to
litigate or

                                      -18-

<PAGE>

otherwise resolve any such Indemnity Issue. It is expressly the intention of the
parties to this Agreement to take, and the parties shall take, all actions
necessary to establish Grace-Conn. as the sole agent for Tax purposes of each
member of the Affiliated Group, as if Grace-Conn. were the common parent of the
Affiliated Group, with respect to all combined, consolidated and unitary Tax
Returns of the Affiliated Group for the Pre-Distribution Taxable Periods.

         (d) The parties jointly shall represent the interests of (i) the
Affiliated Group in any Proceeding relating to any Straddle Period and (ii) any
Foreign Packco Subsidiary in any Proceeding relating to any taxable period that
involves an Indemnity Issue. Neither party shall settle any dispute relating to
any such period without the consent of the other party (which consent shall not
be unreasonably withheld); provided, however, that if either party proposes a
settlement and the other party does not consent thereto, the nonconsenting party
shall assume control of the Proceeding (and bear all subsequently incurred
costs, fees and expenses relating thereto) and the respective liabilities of the
parties shall be determined pursuant to Section 6.7 based on the magnitude and
likelihood of success of the issues involved in the Proceeding, the
reasonableness of the settlement offer, the expense of continuing the Proceeding
and other relevant factors. Any other disputes regarding the conduct or
resolution of any such Proceeding shall be resolved pursuant to Section 6.7. All
costs, fees and expenses paid to third parties in the course of such Proceeding
shall be borne by the parties in the same ratio as the ratio in which, pursuant
to the terms of this Agreement, the parties would share the responsibility for
payment of the Taxes asserted by the taxing authority in its claim or assessment
if such claim or assessment were sustained in its entirety; provided, however,
that in the event that any party hereto retains its own advisors or experts in
connection with any Proceeding, the costs and expenses thereof shall be borne
solely by such party.

         Section 4.3. Cooperation and Exchange of Information.

         (a) Grace shall, and shall cause each appropriate member of the Packco
Group to, prepare and submit to Grace-Conn., as soon as practicable, but in no
event later than the date that is 30 days after a request from Grace-Conn. (i)
all information as Grace-Conn. shall reasonably request to enable Grace-Conn. to
file any Conn Prepared Return or prepare any Pre-Distribution Schedule (which
information shall be provided in the form and of the quality in which comparable
information was

                                      -19-

<PAGE>

provided prior to the Distribution) and (ii) any Del Prepared Return (including
any amended return) for any year within the carryback or carryforward period for
an Overall Tax Benefit or Hypothetical Pre-Distribution Overall Tax Benefit that
is for the account of Grace-Conn. or for any year with respect to which Grace is
entitled to a payment under Section 3.2(a)(v). Grace-Conn. shall bear any
out-of-pocket marginal expense paid by any member of the Packco Group in
preparing and submitting such information in respect of a Pre-Distribution
Schedule relating to a Pre-Distribution Taxable Period, and the parties shall
share equally any such expenses in respect of a Pre-Distribution Schedule
relating to a Straddle Period.

         (b) Each party on behalf of itself and each member of its Group, agrees
to provide the other party and the members of such party's Group with such
cooperation and information as the second party or its Group members shall
reasonably request in connection with the preparation or filing of any Tax
Return, Pre-Distribution Schedule or claim for refund not inconsistent with this
Agreement or in conducting any Proceeding in respect of Taxes. Such cooperation
and information shall include, without limitation, (i) execution and delivery of
a power of attorney by Grace or any other member of the Packco Group to
Grace-Conn. or another member of the New Grace Group or designation of an
officer of Grace-Conn. or another member of the New Grace Group as an officer of
Grace or any other member of the Packco Group for the purpose of signing Tax
Returns, cashing refund checks and conducting Proceedings if Grace-Conn. could
not otherwise exercise its rights under this Agreement with respect to such
Returns, refunds or Proceedings, (ii) promptly forwarding copies of appropriate
notices and forms or other communications received from or sent to any taxing
authority which relate to the Affiliated Group, the Packaging Business or the
New Grace Business and (iii) providing copies of all relevant portions of Tax
Returns, accompanying schedules, related workpapers, documents relating to
rulings or other determinations by taxing authorities, including, without
limitation, foreign taxing authorities, and records concerning the ownership and
Tax basis of property, which either party may possess. Each party shall make,
and shall cause the members of the Packco Group to make, their employees and
facilities available on a mutually convenient basis to provide explanation of
any documents or information provided hereunder.

         (c) Grace and Grace-Conn. agree to retain all Tax Returns, related
schedules and workpapers, and all material records and other documents as
required under Section 6001 of

                                      -20-

<PAGE>

the Code and the regulations promulgated thereunder relating thereto existing on
the date hereof or created through the Distribution Date, until the expiration
of the statute of limitations (including extensions) of the taxable years to
which such Tax Returns and other documents relate and until the Final
Determination of any payments which may be required in respect of such years
under this Agreement. Grace-Conn. and Grace agree to advise each other promptly
of any such Final Determination. Any information obtained under this Section
shall be kept confidential, except as may be otherwise necessary in connection
with the filing of Tax Returns or claims for refund or in conducting any audit
or other proceeding.

         (d) If (i) any member of the Packco Group fails to provide any
information requested pursuant to Section 4.3(a) by the dates and in the manner
specified in Section 4.3(a) hereof or (ii) with respect to information not
requested pursuant to Section 4.3(a) hereof, any member of either Group fails to
provide any information requested pursuant to this Section 4.3, within a
reasonable period, then the requesting party shall have the right to engage a
"Big Six" public accounting firm of its choice to gather such information. Each
party agrees upon two business days' notice, in the case of a failure to provide
information pursuant to Section 4.3 hereof to permit any such "Big Six" public
accounting firm full access to all appropriate records or other information in
the possession of any member of the party's Group during reasonable business
hours, and promptly to reimburse or pay directly all costs and expenses in
connection with the engagement of such public accountants.

         (e) If any member of either Group supplies information pursuant to this
Agreement and an officer of any member of the other Group signs a statement or
other document under penalties of perjury in reliance upon the accuracy of such
information and so requests, then a duly authorized officer of the member
supplying such information shall certify, under penalties of perjury, the
accuracy and completeness of the information so supplied. Grace agrees to
indemnify and hold harmless each New Grace Indemnitee, and Grace-Conn. agrees to
indemnify and hold harmless each Packco Indemnitee, from and against any cost,
fine, penalty or other expense of any kind attributable to the gross negligence
or willful misconduct of a member of the Packco Group, or New Grace Group, as
the case may be, in supplying a member of the other Group with inaccurate or
incomplete information.

                                      -21-

<PAGE>

                                   ARTICLE V.

                     CERTAIN POST-DISTRIBUTION TRANSACTIONS

         Section 5.1 Sealed Air and Packco Group Covenants.

         Unless, in the case of any of Sections 5.1(a) through (f) below, Grace
has obtained a ruling letter from the IRS or an opinion of nationally recognized
counsel to Grace, in either case, to the effect that, without material
qualification, such act or omission will not adversely affect the federal income
tax consequences of the Distribution to any of Grace, Grace-Conn. or the
stockholders of Grace-Conn., as set forth in the Tax Opinions, and the substance
of, and basis for, such conclusion in such ruling or opinion is reasonably
satisfactory to Grace-Conn. in its good faith solely with regard to preserving
the Tax-Free Status of the Distribution (the "Ruling/Opinion Exception"):

         (a) No Sealed Air Party at any time nor any member of the Packco Group
at any time after the Effective Time shall take any action, or fail or omit to
take any action, that would cause any representation made in the Sealed Air Tax
Matters Certificate or the Grace Tax Matters Certificate to be untrue in a
manner that would have an adverse effect on the Tax-Free Status of the
Distribution.

         (b) Until the first day after the Restriction Period, the Packco Group
shall continue the active conduct of the Packaging Business (the "Active Packco
Business"). The Packco Group shall not liquidate, dispose of, or otherwise
discontinue the conduct of any material portion of the Active Packco Busi-ness.
The Packco Group shall continue the active conduct of the Packaging Business
primarily through officers and employees of the Packco Group (and not through
independent contractors).

         (c) Until the first day after the Restriction Period, no Sealed Air
Party nor any member of the Packco Group shall sell or otherwise issue to any
Person, or redeem or otherwise acquire from any Person (other than any member of
the Packco Group), any Equity Securities of Grace or any other member of the
Packco Group; provided, however, that (i) purchases that, in the aggregate, meet
the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 shall not
constitute a redemption or acquisition of stock of Grace for purposes of this
Section 5.1(c), (ii) if required by law, any member of the Packco Group may
issue a de minimis number of Equity Securities of such member to any person
in order to qualify such person to serve as

                                      -22-

<PAGE>

an officer or director of such member and (iii) Grace may issue, as compensation
for services or pursuant to the exercise of compensatory stock options, Equity
Securities of Grace that do not exceed in the aggregate ten percent of the
Equity Securities of Grace.

         (d) Until the first day after the Restriction Period, no Sealed Air
Party nor any member of the Packco Group shall (i) solicit any Person to make a
tender offer for, or otherwise acquire or sell, the Equity Securities of Grace,
(ii) participate in or support any unsolicited tender offer for, or other
acquisition, disposition or issuance of, the Equity Securities of Grace or (iii)
approve or otherwise permit any proposed business combination or any transaction
which, in the case of (i), (ii) or (iii), individually or in the aggregate,
together with the transactions contemplated under the Distribution Agreement,
the Merger Agreement, the Benefits Agreement and this Agreement, results in one
or more Persons acquiring (other than in acquisitions not taken into account for
purposes of Section 355(e)) directly or indirectly stock representing a 50
percent or greater interest (within the meaning of Section 355(e) of the Code)
in Grace. In addition, no Sealed Air Party nor any member of the Packco Group
shall at any time, whether before or subsequent to the expiration of the
Restriction Period, engage in any action described in clauses (i), (ii) or (iii)
of the preceding sentence if it is pursuant to an arrangement negotiated (in
whole or in part) prior to the Distribution, even if at the time of the
Distribution it is subject to various conditions, nor shall any such Party or
member take any action, or fail or omit to take any action, that would cause
Section 355(d) or (e) to apply to the Distribution.

         (e) Until the first day after the Restriction Period, no Sealed Air
Party nor the members of the Packco Group shall sell, transfer, or otherwise
dispose of or agree to dispose of assets (including, for such purpose, any
shares of capital stock of a Subsidiary) that, in the aggregate, constitute more
than 60% of the gross assets of Packco, nor shall they sell, transfer, or
otherwise dispose of or agree to dispose of assets (including, for such purpose,
any shares of capital stock of a Subsidiary) that, in the aggregate, constitute
more than 60% of the consolidated gross assets of the Packco Group. The
foregoing sentence shall not apply to sales, transfers, or dispositions of
assets in the ordinary course of business. The percentages of gross assets or
consolidated gross assets of Packco or the Packco Group, as the case may be,
sold, transferred, or otherwise disposed of, shall be based on the

                                      -23-

<PAGE>

fair market value of the gross assets of Packco and the Packco Group as of the
Effective Time, and for this purpose, the values set forth in the Packaging
Business Disclosure Letter Balance Sheet shall be conclusive.

         (f) Until the first day after the Restriction Period, neither Packco
nor its Subsidiaries shall voluntarily dissolve or liquidate or engage in any
merger, consolidation or other re-organization. The foregoing sentence shall not
apply to transactions in which Grace or Packco acquires another corporation,
limited liability company, limited partnership, general partnership or joint
venture solely for cash or other consideration that is not Equity Securities.
Reorganizations of Grace or Packco or their respective Subsidiaries with their
Affiliates, and liquidations of Packco's Affiliates, are not subject to Section
5.1(b) or this Section 5.1(f) to the extent not inconsistent with the structure
necessary for the Distribution to qualify for Tax-Free Status.

         (g) Until the first day after the Restriction Period, Grace shall
furnish Grace-Conn. with a copy of any ruling request that Sealed Air, Grace or
any of their Affiliates may file with the IRS and any opinion received that
relates to or otherwise reasonably could be expected to have an effect on the
Tax-Free Status of the Distribution.

         Section 5.2 New Grace Covenants.

         Unless, in the case of any of Sections 5.2(a) through (e) below,
Grace-Conn. has obtained a ruling letter from the IRS or an opinion of
nationally recognized counsel to Grace-Conn., in either case, to the effect
that, without material qualification, such act or omission will not adversely
affect the federal income tax consequences of the Distribution to any of Grace,
Grace-Conn. or the stockholders of Grace-Conn., as set forth in the Tax
Opinions, and the substance of, and basis for, such conclusion in such ruling or
opinion is reasonably satisfactory to Grace in its good faith solely with regard
to preserving the Tax-Free Status of the Distribution:

         (a) No member of the New Grace Group shall take any action, or fail or
omit to take any action, that would cause any representation made in the Sealed
Air Tax Matters Certificate or the Grace Tax Matters Certificate to be untrue in
a manner that would have an adverse effect on the Tax-Free Status of the
Distribution.

         (b) Until the first day after the Restriction Period,

                                      -24-

<PAGE>

the New Grace Group shall continue the active conduct of one of the Active New
Grace Businesses. "Active New Grace Businesses" shall mean each of the Grace
Davison business and the Grace Construction Business. The New Grace Group may
dispose of, liquidate or discontinue the conduct of the Grace Davison business
or the Grace Construction Products business if it actively continues the conduct
of the other. The New Grace Group shall continue the active conduct of at least
one of the Active New Grace Businesses primarily through officers and employees
of the New Grace Group (and not through independent contractors).

         (c) Until the first day after the Restriction Period, no member of the
New Grace Group shall sell or otherwise issue to any Person, or redeem or
otherwise acquire from any Person (other than any member of the New Grace
Group), any Equity Securities of New Grace or any other member of the New Grace
Group; provided, however, that (i) purchases that, in the aggregate, meet the
requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 shall not
constitute a redemption or acquisition of stock of New Grace for purposes of
this Section 5.2(c), (ii) if required by law, any member of the New Grace Group
may issue a de minimis number of Equity Securities of such member to any person
in order to qualify such person to serve as an officer or director of such
member and (iii) New Grace may, pursuant to shareholder-approved equity
compensation plans, issue, as compensation for services or pursuant to the
exercise of compensatory stock options, Equity Securities of New Grace.

         (d) Until the first day after the Restriction Period, no member of the
New Grace Group shall (i) solicit any Person to make a tender offer for, or
otherwise acquire or sell, the Equity Securities of New Grace, (ii) participate
in or support any unsolicited tender offer for, or other acquisition,
disposition or issuance of, the Equity Securities of New Grace or (iii) approve
or otherwise permit any proposed business combination or any transaction which,
in the case of (i), (ii) or (iii), individually or in the aggregate, together
with the transactions contemplated under the Distribution Agreement, the Merger
Agreement, the Benefits Agreement and this Agreement, results in one or more
Persons acquiring (other than in acquisitions not taken into account for
purposes of Section 355(e)) directly or indirectly stock representing a 50
percent or greater interest (within the meaning of Section 355(e) of the Code)
in New Grace. In addition, no member of the New Grace Group shall at any time,
whether before or subsequent to the expiration of the Restriction Period, engage
in any action

                                      -25-

<PAGE>

described in clauses (i), (ii) or (iii) of the preceding sentence if it is
pursuant to an arrangement negotiated (in whole or in part) prior to the
Distribution, even if at the time of the Distribution it is subject to various
conditions, nor shall any such member take any action, or fail or omit to take
any action, that would cause Section 355(d) or (e) of the Code to apply to the
Distribution.

         (e) Until the first day after the Restriction Period, no member of the
New Grace Group shall sell, transfer, or otherwise dispose of or agree to
dispose of assets (including, for such purpose, any shares of capital stock of a
Subsidiary) that, in the aggregate, constitute more than 60% of the gross assets
of New Grace, nor shall they sell, transfer, or otherwise dispose of or agree to
dispose of assets (including, for such purpose, any shares of capital stock of a
Subsidiary) that, in the aggregate, constitute more than 60% of the consolidated
gross assets of the New Grace Group. The foregoing sentence shall not apply to
sales, transfers, or dispositions of assets in the ordinary course of business
or to a sale, transfer or disposition of any or all of the Discontinued
Businesses and either of the Active New Grace Businesses; provided, however,
that in the event of a sale, transfer or disposition of one of the Active New
Grace Businesses, the retained Active New Grace Business shall be conducted by a
member of the New Grace Group at substantially the same level as on the
Distribution Date. The percentages of gross assets or consolidated gross assets
of New Grace or the New Grace Group, as the case may be, sold, transferred, or
otherwise disposed of, shall be based on the fair market value of the gross
assets of New Grace and the New Grace Group as of the Effective Time, and for
this purpose, the values set forth in the Registration Statements shall be
conclusive.

         (f) Until the first day after the Restriction Period, Grace-Conn. shall
furnish Grace with a copy of any ruling request that Grace-Conn. or any of its
Affiliates may file with the IRS and any opinion received that relates to or
otherwise reasonably could be expected to have an effect on the Tax-Free Status
of the Distribution.

         Section 5.3. Responsibility for Taxes.

         (a) Sealed Air and Grace agree to indemnify and hold the Grace-Conn.
Indemnitees harmless from and against all Indemnifiable Losses resulting from
(x) any Action which causes the Distribution to fail to have Tax-Free Status or
(y) the Merger failing to qualify as a reorganization under Section 368

                                      -26-

<PAGE>

of the Code. An "Action" shall mean any act or omission which fails to comply
with any of the representations in the Sealed Air Tax Matters Certificate or the
covenants in Section 5.1 and any act or omission which would fail to comply with
any of the covenants in Section 5.1 but for compliance with the Ruling/Opinion
Exception. An "Action" shall also include an action or omission which would be a
breach of the covenant contained in the first sentence of Section 5.1(d), if
such covenant were in effect until the day which is five years after the
Effective Time instead of until the first day after the Restriction Period.

         (b) Grace-Conn. agrees to indemnify and hold the Packco Indemnitees
harmless from and against any Tax resulting from the failure of the Distribution
to have Tax-Free Status, except where such failure is attributable to an Action.

         (c) For purposes of Sections 5.1 and 5.2 hereof, when a tax opinion or
ruling of one party (the "Transaction Party") is required to be reasonably
satisfactory to the other party (the "Reviewing Party"), the Reviewing Party at
the request of the Transaction Party shall designate nationally recognized
counsel to review such opinion or ruling without revealing the substance of the
underlying transaction to the Reviewing Party and the concurrence of such
outside counsel to the sufficiency of such opinion or ruling shall constitute
"reasonable satisfaction" to the Reviewing Party for purposes of this Agreement.

         Section 5.4. Injunction. The parties hereto agree that the payment of
monetary compensation would not be an adequate remedy for a breach of the
obligations contained in Article V hereof, and each party consents to the
issuance and entry of an injunction against the taking of any action by it or a
member of its Group that would constitute such a breach; provided, however, that
the foregoing shall be without prejudice to and shall not constitute a waiver of
any other remedy either party may be entitled to at law or at equity hereunder.

         Section 5.5. Distribution. For purposes of this Article V only,
"Distribution" shall mean the contribution by Grace-Conn. of assets and
liabilities to Packco, the distribution of cash by Packco to Grace-Conn., the
distribution by Grace-Conn. of the stock of Packco to Grace, the contribution of
cash and the stock of Grace-Conn. to New Grace, the loan from New Grace to
Grace-Conn. and the distribution by Grace of the stock of New Grace to the
shareholders of Grace, each as provided in the Distribution Agreement.

                                      -27-

<PAGE>

                                   ARTICLE VI.

                                  MISCELLANEOUS

         Section 6.1. Expenses. Unless otherwise expressly provided in this
Agreement, the Distribution Agreement or the Merger Agreement, each party shall
bear any and all expenses that arise from their respective obligations under
this Agreement.

         Section 6.2. Foreign Transfer Taxes. Adjusted Foreign Transfer Taxes
shall be shared by the parties as provided in the Distribution Agreement. Audit
adjustments and Final Determina-tions of such Taxes shall be governed by the
Distribution Agree-ment. This Agreement governs responsibilities of the parties
with respect to filing Tax Returns relating to Foreign Transfer Taxes, paying
Foreign Transfer Taxes reflected on such Tax Returns to the applicable
governmental authority and conducting Proceedings relating to Foreign Transfer
Taxes. For purposes of determining indemnity and reimbursement obligations of
the parties under this Agreement, Tax Items arising as a result of the Foreign
Transfers (but not Tax Items arising from any actual distribution of Subsidiary
Excess Cash) shall be disregarded, and the Pre-Distribution Schedules shall not
reflect such Tax Items.

         Section 6.3. Payments Paid or Received on Behalf of Indemnitees; Right
to Designate Payee. Each of Grace-Conn. and Grace shall be entitled to designate
an Affiliate of such party as payee with respect to any payment that would
otherwise be made to Grace-Conn. or Grace, respectively, under this Agreement.
Any payment received by Grace-Conn. or Grace, respectively, or its respective
designees shall be received on behalf of the relevant Grace-Conn. Indemnitees or
Packco Indemnitees.

         Section 6.4. Foreign Exchange Rate. If any amount required to be paid
hereunder is determined by reference to a Tax, Tax refund, Tax Benefit or Tax
Detriment that is denominated in a currency other than United States dollars,
such payment shall be made in United States dollars and the amount thereof shall
be computed using the Foreign Exchange Rate for such currency determined as of
the date that such Tax is paid, such Tax refund is received or such Tax Benefit
or Tax Detriment reduces or increases the amount of Tax or Tax refund that would
otherwise be paid or received.

                                      -28-

<PAGE>

         Section 6.5. Amendment. This Agreement may not be amended except by an
agreement in writing, signed by the parties hereto. Anything in this Agreement
or the Distribution Agreement to the contrary notwithstanding, in the event and
to the extent that there shall be a conflict between the provisions of this
Agreement and the Distribution Agreement, the provisions of this Agreement shall
control.

         Section 6.6. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered by hand including overnight business
courier or mailed by registered or certified mail (return receipt requested) to
the parties at the following addresses (or at such other addresses for a party
as shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:

         (a)  To Grace-Conn. or any member of the New Grace Group:

              W. R. Grace & Co.-Conn.
              One Town Center Road
              Boca Raton, Florida  33486-1010
              Attention: Secretary
              Fax: (561) 362-1635

         with a copy to:

              Wachtell, Lipton, Rosen & Katz
              51 West 52nd Street
              New York, New York  10019
              Attention:  Andrew R. Brownstein, Esq.
              Fax:  (212) 403-2000

         (b)  To Grace or any member of the Packco Group:

              care of Sealed Air
              Park 80 East
              Saddle Brook, New Jersey  07663
              Attention: President
              Fax: (201) 703-4152

         with a copy to:

              Davis Polk & Wardwell
              450 Lexington Ave.
              New York, New York  10017
              Attention: Christopher Mayer, Esq.
              Fax: (212) 450-4800

                                      -29-

<PAGE>

         Section 6.7. Resolution of Disputes. Any disputes between the parties
with respect to this Agreement regarding the practice and preparation of returns
or the calculation of amounts shall be resolved by a "Big Six" public accounting
firm whose determination shall be conclusive and binding on the parties. The
fees and expenses of such firm shall be shared equally by Grace-Conn. and Grace,
except as otherwise provided herein. Any other disputes shall be resolved by a
"Big Six" public accounting firm or a law firm or by any other procedure that
the parties may choose.

         Section 6.8. Application to Present and Future Subsidiaries. This
Agreement is being entered into by Grace-Conn. and Grace on behalf of themselves
and each member of the New Grace Group and Packco Group, respectively. This
Agreement shall constitute a direct obligation of each such member. Grace-Conn.
and Grace hereby guarantee the performance of all actions, agreements and
obligations provided for under this Agreement of each member of the New Grace
Group and the Packco Group, respectively. Grace-Conn. and Grace shall, upon the
written request of the other, cause any of their respective Group members
formally to execute this Agreement. This Agreement shall be binding upon, and
shall inure to the benefit of, the successors and assigns of any of the
corporations bound hereby.

         Section 6.9. Term. This Agreement shall commence on the date of
execution indicated below and shall continue in effect until otherwise agreed to
in writing by Grace-Conn. and Grace, or their successors.

         Section 6.10. Titles and Headings. Titles and headings to Sections
herein are inserted for the convenience of reference only and are not intended
to be a part or to affect the meaning or interpretation of this Agreement.

         Section 6.11. Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the

                                      -30-

<PAGE>

obligations of the parties hereunder shall be specifically enforceable.

         Section 6.12. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware.

                                      -31-
<PAGE>

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

                              W. R. GRACE & CO.

                              By: ____________________________
                                  Name:
                                  Title:

                              W. R. GRACE & CO.-CONN.

                              By: ____________________________
                                  Name:
                                  Title:

                              SEALED AIR CORPORATION

                              By: ____________________________
                                  Name:
                                  Title:

                                      -32-
<PAGE>

                                    Exhibit A

                                    Argentina

                                    Australia

                                     Belgium

                                     Brazil

                                     Canada

                                      Chile

                                    Colombia

                                     Germany

                                    Hong Kong

                                      Italy

                                      Japan

                                     Mexico

                                   Netherlands

                                   New Zealand

                                     Poland

                                     Russia

                                  South Africa

                                      Spain

                                     Sweden

                                 United Kingdom

                                    Venezuela

                                      -33-<PAGE>
                                                                    EXHIBIT 10.4

                                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

<PAGE>
                                                                    EXHIBIT 10.4

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.

         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.
<PAGE>
                                                                    EXHIBIT 10.4

         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

<PAGE>
                                                                    EXHIBIT 10.4

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 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

<PAGE>
                                                                    EXHIBIT 10.4

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.

         (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

<PAGE>
                                                                    EXHIBIT 10.4

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 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

<PAGE>
                                                                    EXHIBIT 10.4

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 or the laws of descent and distribution and except, in the case
of a Nonstatutory Option, pursuant to a qualified domestic relations order (as
defined in the Code), unless otherwise provided in the Option Agreement.

         (f) An Option may, but need not, be an Incentive Stock Option. All
shares of Common Stock that may be made subject to Stock Incentives under this
Plan may be made subject to Incentive Stock Options; provided, however, that (i)
no Incentive Stock Option may be granted more than ten years after the effective
date of this Plan, as provided in section 9; and (ii) the aggregate Fair Market
Value (determined as of the time an Incentive Stock Option is granted) of the
shares subject to each installment becoming exercisable for the first time in
any calendar year under Incentive Stock Options granted on or after January 1,
1987 (under all plans, including this Plan, of his employer corporation and its
parent and subsidiary corporations) to the Key Person to whom such Incentive
Stock Option is granted shall not exceed $100,000.

         (g) The material terms of each Option shall be determined by the
Committee. Each Option shall be evidenced by a written instrument consistent
with this Plan, and shall specify whether the Option is an Incentive Stock
Option or a Nonstatutory Option. An Option may include restrictions and
limitations in addition to those provided for in this Plan.

         (h) Options shall be granted for such lawful consideration as may be
provided for in the Option Agreement.

         7. Combination of Stock Awards and Options. Stock Incentives authorized
by paragraph (c)(iii) of section 3 in the form of combinations of Stock Awards
and Options shall be subject to the following provisions: (a) A Stock Incentive
may be a combination of any form of Stock Award and any form of Option;
provided, however, that the terms and conditions of such Stock Incentive
pertaining to a Stock Award are consistent with section 5 and the terms and
conditions of such Stock Incentive pertaining to an Option are consistent with
section 6.

         (b) Such combination Stock Incentive shall be subject to such other
terms and conditions as may be specified therein, including without limitation a
provision terminating in whole or in part a portion thereof upon the exercise in
whole or in part of another portion thereof.

<PAGE>
                                                                    EXHIBIT 10.4

         (c) The material terms of each combination Stock Incentive shall be
determined by the Committee. Each combination Stock Incentive shall be evidenced
by a written instrument consistent with this Plan.

         8. Adjustment Provisions. (a) In the event that any reclassification,
split-up or consolidation of the Common Stock shall be effected, or the
outstanding shares of Common Stock are, in connection with a merger or
consolidation of the Company or a sale by the Company of all or a part of its
assets, exchanged for a different number or class of shares of stock or other
securities or property of the Company or for shares of the stock or other
securities or property of any other corporation or person, or a record date for
determination of holders of Common Stock entitled to receive a dividend payable
in Common Stock shall occur, (i) the number, kind and class of shares or other
securities or property that may be issued pursuant to Stock Incentives
thereafter granted, (ii) the number, kind and class of shares or other
securities or property that have not been issued under outstanding Stock
Incentives, (iii) the purchase price to be paid per share or other unit under
outstanding Stock Incentives, and (iv) the price to be paid per share or other
unit by the Company or a Subsidiary for shares or other securities or property
issued pursuant to Stock Incentives that are subject to a right of the Company
or a Subsidiary to re-acquire such shares or other securities or property, shall
in each case be equitably adjusted as determined by the Committee.

         (b) In the event that there shall occur any spin-off or other
distribution of assets of the Company to its shareholders (including without
limitation an extraordinary dividend), (i) the number, kind and class of shares
or other securities or property that may be issued pursuant to Stock Incentives
thereafter granted, (ii) the number, kind and class of shares or other
securities or property that have not been issued under outstanding Stock
Incentives, (iii) the purchase price to be paid per share or other unit under
outstanding Stock Incentives, and (iv) the price to be paid per share or other
unit by the Company or a Subsidiary for shares or other securities or property
issued pursuant to Stock Incentives that are subject to a right of the Company
or a Subsidiary to re-acquire such shares or other securities or property, shall
in each case be equitably adjusted as determined by the Committee.

         9. Term. This Plan shall be deemed adopted and shall become effective
on the date on which the Common Stock is distributed to the holders of the
common stock of W. R. Grace & Co., a Delaware corporation subsequently renamed
"Sealed Air Corporation." No Stock Incentives shall be granted under this Plan
after the tenth anniversary of such date.

         10. Administration. (a) This Plan shall be administered by the
Committee, which shall have full authority to act in the matter of selection of
Key Persons and in granting Stock Incentives to them and such other authority as
is granted to the Committee by this Plan. Notwithstanding any other provision of
this Plan, the Board of Directors may exercise any and all powers of the
Committee with respect to this Plan, except to the extent that the possession or
exercise of any power by the Board of

<PAGE>
                                                                    EXHIBIT 10.4

Directors would cause any Stock Incentive to become subject to, or to lose an
exemption from, Section 162(m) of the Code or Section 16(b) of the Exchange Act.

         (b) The Committee may establish such rules and regulations, not
inconsistent with the provisions of this Plan, as it deems necessary to
determine eligibility to be granted Stock Incentives under this Plan and for the
proper administration of this Plan, and may amend or revoke any rule or
regulation so established. The Committee may make such determinations and
interpretations under or in connection with this Plan as it deems necessary or
advisable. All such rules, regulations, determinations and interpretations shall
be binding and conclusive upon the Company, its Subsidiaries, its shareholders
and its directors, officers and employees, and upon their respective legal
representatives, beneficiaries, successors and assigns, and upon all other
persons claiming under or through any of them.

         (c) Members of the Board of Directors and members of the Committee
acting under this Plan shall be fully protected in relying in good faith upon
the advice of counsel and shall incur no liability in the performance of their
duties, except as otherwise provided by applicable law.

         11. General Provisions. (a) Nothing in this Plan or in any instrument
executed pursuant hereto shall confer upon any person any right to continue in
the service of the Company or a Subsidiary, or shall affect the right of the
Company or of a Subsidiary to terminate the service of any person with or
without cause.

         (b) No shares of Common Stock shall be issued pursuant to a Stock
Incentive unless and until all legal requirements applicable to the issuance of
such shares have, in the opinion of counsel to the Company, been complied with.
In connection with any such issuance, the person acquiring the shares shall, if
requested by the Company, give assurances, satisfactory to counsel to the
Company, in respect of such matters as the Company or a Subsidiary may deem
desirable to assure compliance with all applicable legal requirements.

         (c) No person (individually or as a member of a group), and no
beneficiary or other person claiming under or through him, shall have any right,
title or interest in or to any shares of Common Stock allocated or reserved for
the purposes of this Plan or subject to any Stock Incentive except as to such
shares of Common Stock, if any, as shall have been issued to him.

         (d) In the case of a grant of a Stock Incentive to a Key Person who is
employed by a Subsidiary, such grant may provide for the issuance of the shares
covered by the Stock Incentive to the Subsidiary, for such consideration as may
be provided, upon the condition or understanding that the Subsidiary will
transfer the shares to the Key Person in accordance with the terms of the Stock
Incentive.

         (e) In the event the laws of a country in which the Company or a
Subsidiary has employees prescribe certain requirements for Stock Incentives to
qualify for advantageous tax treatment under the laws of that country
(including, without limitation,

<PAGE>
                                                                    EXHIBIT 10.4

laws establishing options analogous to Incentive Stock Options), the Committee,
may, for the benefit of such employees, amend, in whole or in part, this Plan
and may include in such amendment additional provisions for the purposes of
qualifying the amended plan and Stock Incentives granted thereunder under such
laws; provided, however, that (i) the terms and conditions of a Stock Incentive
granted under such amended plan may not be more favorable to the recipient than
would be permitted if such Stock Incentive had been granted under this Plan as
herein set forth, (ii) all shares allocated to or utilized for the purposes of
such amended plan shall be subject to the limitations of section 4, and (iii)
the provisions of the amended plan may restrict but may not extend or amplify
the provisions of sections 9 and 13.

         (f) The Company or a Subsidiary may make such provisions as either may
deem appropriate for the withholding of any taxes that the Company or a
Subsidiary determines is required to be withheld in connection with any Stock
Incentive.

         (g) Nothing in this Plan is intended to be a substitute for, or shall
preclude or limit the establishment or continuation of, any other plan, practice
or arrangement for the payment of compensation or benefits to directors,
officers or employees generally, or to any class or group of such persons, that
the Company or any Subsidiary now has or may hereafter put into effect,
including, without limitation, any incentive compensation, retirement, pension,
group insurance, stock purchase, stock bonus or stock option plan.

         12. Acquisitions. If the Company or any Subsidiary should merge or
consolidate with, or purchase stock or assets or otherwise acquire the whole or
part of the business of, another entity, the Company, upon the approval of the
Committee, (a) may assume, in whole or in part and with or without modifications
or conditions, any stock incentives granted by the acquired entity to its
directors, officers, employees or consultants in their capacities as such, or
(b) may grant new Stock Incentives in substitution therefor. Any such assumed or
substitute Stock Incentives may contain terms and conditions inconsistent with
the provisions of this Plan (including the limitations set forth in paragraph
(d) of section 4), including additional benefits for the recipient; provided,
however, that if such assumed or substitute Stock Incentives are Incentive Stock
Options, such terms and conditions are permitted under the plan of the acquired
entity. For the purposes of any applicable plan provision involving time or a
date, a substitute Stock Incentive shall be deemed granted as of the date of
grant of the original stock incentive.

         13. Amendments and Termination. (a) This Plan may be amended or
terminated by the Board of Directors upon the recommendation of the Committee;
provided, however, that, without the approval of the stockholders of the
Company, no amendment shall be made which (i) causes this Plan to cease to
comply with applicable law, (ii) permits any person who is not a Key Person to
be granted a Stock Incentive (except as otherwise provided in section 12), (iii)
amends the provisions of paragraph (d) of section 4, paragraph (a) of section 5
or paragraph (a) or paragraph (f) of section 6 to permit shares to be valued at,
or to have a purchase price of,

<PAGE>
                                                                    EXHIBIT 10.4

respectively, less than the percentage of Fair Market Value specified therein,
(iv) amends section 9 to extend the date set forth therein, or (v) amends this
section 13.

         (b) No amendment or termination of this Plan shall adversely affect any
Stock Incentive theretofore granted, and no amendment of any Stock Incentive
granted pursuant to this Plan shall adversely affect such Stock Incentive,
without the consent of the holder thereof.

         14. Change in Control Provisions. (a) Notwithstanding any other
provision of this Plan to the contrary, in the event of a Change in Control:

              (i) Any Options outstanding as of the date on which such Change in
Control occurs, and which are not then exercisable and vested, shall become
fully exercisable and vested to the full extent of the original grant; and

              (ii) All restrictions and deferral limitations applicable to Stock
Incentives shall lapse, and Stock Incentives shall become free of all
restrictions and become fully vested and transferable to the full extent of the
original grant.

         (b) Notwithstanding any other provision of this Plan, during the 60-day
period from and after a Change in Control (the "Exercise Period"), unless the
Committee shall determine otherwise at the time of grant, the holder of an
Option shall have the right, in lieu of the payment of the purchase price for
the shares of Common Stock being purchased under the Option, by giving notice to
the Company, to elect (within the Exercise Period) to surrender all or part of
the Option to the Company and to receive cash, within 30 days after such notice,
in an amount equal to the amount by which the Change in Control Price per share
of Common Stock on the date of such election shall exceed the purchase price per
share of Common Stock under the Option (the "Spread") multiplied by the number
of shares of Common Stock subject to the Option as to which the right subject to
this Section 14(b) shall have been exercised.

         (c) Notwithstanding any other provision of this Plan, if any right
granted pursuant to this Plan to receive cash in respect of a Stock Incentive
would make a Change in Control transaction ineligible for pooling-of-interests
accounting that, but for the nature of such grant, would otherwise be eligible
for such accounting treatment, the Committee shall have the ability to
substitute for such cash Common Stock with a Fair Market Value equal to the
amount of such cash.

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