Document:

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                                                                    EXHIBIT 10.6

                                W. R. GRACE & CO.

                            1996 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;
(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 more than 60% 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. Notwithstanding any other provision
of this Plan, the distribution of all of the shares of Common Stock of the
Company to the Shareholders of W. R. Grace & Co., a New York corporation, shall
not be deemed a Change In Control.

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          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, Employee Benefits and Stock Incentive
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.

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

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

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

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

          Fair Market Value: (a) The mean between the high and low sales prices
of a share of Common Stock in New York Stock Exchange composite transactions on

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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 1996 Stock Incentive Plan of the Company herein set forth,
as the same may from time to time be amended.

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

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

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

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

          Subsidiary: A corporation (or other form of business association) of
which shares (or other ownership interests) having 50% or more of the voting
power regularly entitled to vote for directors (or equivalent management rights)
are owned, directly or indirectly, by the Company, or any other entity
designated as such

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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 seven million (7,000,000).

          (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 10% may be subject to Options
granted to any one Key Person and (ii) no more than 15% may be subject to Stock

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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

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pursuant to the Option being exercised and shares issued pursuant to a Stock
Award granted subject to restrictions as provided for in paragraph (c) of
section 5), or (ii) in a combination of cash and such shares; provided, however,
that no shares of Common Stock delivered in payment of the purchase price may be
"immature shares," as determined in accordance with generally accepted
accounting principles in effect at the time. Any shares of Common Stock
delivered to the Company in payment of the purchase price or withholding tax
shall be valued at their Fair Market Value on the date of exercise. No
certificate for shares of Common Stock shall be issued upon the exercise of an
Option until the purchase price for such shares has been paid in full.

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

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

          (d) Each Option shall be exercisable during the life of the holder
only by him and, after his death, only by his estate or by a person who acquires
the right to exercise the Option by will or the laws of descent and
distribution. An Option, to the extent that it shall not have been exercised or
canceled, shall terminate as follows after the holder ceases to serve: (i) if
the holder shall voluntarily cease to serve without the consent of the Committee
or shall have his service terminated for cause, the Option shall terminate
immediately upon cessation of service; (ii) if the holder shall cease to serve
by reason of death, incapacity or retirement under a retirement plan of the
Company or a Subsidiary, the Option shall terminate three years after the date
on which he ceased to serve; and (iii) except as provided in the next sentence,
in all other cases the Option shall terminate three months after the date on
which the holder ceased to serve unless the Committee shall approve a longer
period (which approval may be given before or after cessation of service) not to
exceed three years. If the holder shall die or become incapacitated during the
three-month period (or such longer period as the Committee may approve) referred
to in the preceding clause (iii), the Option shall terminate three years after
the date on which he ceased to serve. A leave of absence for military or
governmental service or other purposes shall not, if approved by the Committee
(which approval may be given before or after the leave of absence commences), be
deemed a cessation of service within the meaning of

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this paragraph (d). Notwithstanding the foregoing provisions of this paragraph
(d) or any other provision of this Plan, no Option shall be exercisable after
expiration of a period of ten years and one month from the date the Option is
granted. Where a Nonstatutory Option is granted for a term of less than ten
years and one month, the Committee may, at any time prior to the expiration of
the Option, extend its term for a period ending not later than ten years and one
month from the date the Option was granted. Such an extension shall not be
deemed the grant of a new Option under this Plan.

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

          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

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a provision terminating in whole or in part a portion thereof upon the exercise
in whole or in part of another portion thereof.

          (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 as of which it is approved by W. R. Grace & Co., a New York
corporation, as sole shareholder of the Company. 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. No director shall be designated as or continue to be a member of the
Committee unless he shall at the time of designation and at all times during
service as a member of the Committee be an "outside director" within the

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meaning of Section 162(m) of the Code. The Committee 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 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

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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, 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.

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          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, 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.

                                       11<PAGE>

                                                                   Exhibit 10.27

GRACE

                                          PAUL J. NORRIS
                                          Chairman, President & Chief Executive
                                          Officer

                                          W. R. Grace & Co.
                                          7500 Grace Drive
                                          Columbia, MD 21044

                                          (410) 531-4404
                                          Fax: (410) 531-4414
                                          email paul.j.norris@grace.com

November 17, 2003

Mr. Alfred E. Festa
14713 Goddingham Court
Midlothian, VA 23113

Dear Fred:

This letter agreement specifies the terms of your employment with W. R. Grace &
Co. (the "Company") as President and Chief Operating Officer (collectively, the
"COO"), which was approved by the Company's Board of Directors (the "Board") and
Compensation Committee of the Board on November 6, 2003. In addition, this
agreement was authorized by the U. S. Bankruptcy Court with jurisdiction over
the Company's Chapter 11 cases on November 13, 2003.

Also, please note that I have agreed with the Board to relinquish the title of
"President" of the Company, effective as of your first day of employment with
the Company, which is today, November 17, 2003. I am extremely pleased that you
will be joining the Company and believe you will make a valuable contribution to
our future.

If you agree with the terms of this letter agreement, please sign where
indicated below and return one fully executed copy to me. An additional copy of
this letter is also enclosed for your records.

RESPONSIBILITIES

Your employment with the Company begins today, November 17, 2003. (As all other
Company Headquarters employees, you will actually be employed by W. R. Grace &
Co.-Conn., but will be an elected officer of both W. R. Grace & Co. and W. R.
Grace & Co.-Conn.) Your title will be "President and Chief Operating Officer" of
the Company, and you will report directly to me.

Your principal obligations, duties and responsibilities will be those generally
inherent in the office and title of COO. In that regard, each of the Company's
businesses will report directly to you, including Davison Catalysts, Davison
Silicas and Grace Performance Chemicals. Your office will be located at the
Company's Headquarters in Columbia, Maryland.

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 2

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TERM OF AGREEMENT

The term of your employment under this letter agreement will be for a period of
three years, beginning on the date your employment with the Company commences,
November 17, 2003, and ending on November 16, 2006 (such period is referred to
in this agreement as your "Initial Employment Term").

If your employment as COO of the Company (or in any other position) continues
after the Initial Employment Term, and no other contrary arrangements have been
mutually agreed in writing between you and the Board, then the arrangements
described in this agreement will be discontinued and you will be an employee of
the Company "at will" subject to the same requirements as similarly situated
employees of the Company at that time, except as provided under the following
section entitled "Severance Pay Arrangement".

COMPENSATION

1.   Your initial annual base salary as COO will be $550,000.00. Thereafter,
     your base salary will be subject to periodic reviews on the same basis and
     at the same intervals as are applicable to other senior officers of the
     Company.

     Your salary will cease to accrue immediately upon your termination of
     employment with the Company, even if your termination occurs during your
     Initial Employment Term and whether or not your termination is voluntary.
     (Note, however, the provisions under "Severance Pay Arrangement.")

2.   You will be eligible to participate in the Company's Annual Incentive
     Compensation Program. For 2003 and 2004, your targeted award under the
     Program will be 100% of your base salary earned during the applicable
     calendar year. For 2005 and thereafter, your targeted award will be 75% (or
     greater, as determined by the Board) of your annual base salary earned
     during the applicable calendar year. Any payments to you under the Program
     will be made at the same time and in the same manner as payments to other
     participants in the Program. Under the Program, awards for a calendar year
     are generally paid during March of the following calendar year. A Program
     participant is not entitled to payment of an award for a calendar year, if
     the participant is not an active employee of the Company on the date the
     award is actually paid. Awards under this Program are subject to Board
     approval and are contingent upon individual performance and financial
     results of the Company. In general, the amount of award paid to any
     participant may range from 0% to 200% of the participant's targeted award
     for the year, depending on individual performance and the extent to which
     the Company achieves (or surpasses) certain financial goals. These and the
     other provisions of the Program will apply to you in the same manner as
     applicable to other Program participants, except as specified below with
     regard to an award for 2003.

3.   Notwithstanding the foregoing, the award payment you will receive under the
     Annual Incentive Compensation Program for 2003 will not be less than the
     result of the following calculation: your targeted award for that year
     (i.e., 100% of your annual base salary as of December 31, 2003), multiplied
     by a fraction where the numerator is the number of days during 2003 that
     you are an employee of the Company and the denominator is 365. However, as
     indicated above, you will only receive a payment

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 3

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     under the Program for 2003 if you are an active employee of the Company on
     the date that the payments for that year are made to all participants in
     March 2004.

4.   As described in this paragraph, you will be eligible for a targeted award
     under the Company's currently effective Long-Term Incentive Plans (the
     "LTIPs") for the following performance periods: 2002-2004 and 2003-2005.
     The amount of the targeted award applicable to you under each of those
     LTIPs shall be $687,000 (i.e., 125% of your starting annual base salary).
     However, any award payment to which you become entitled under any of the
     LTIPs shall be pro-rated to reflect the percentage of days during the
     applicable performance period that you were an active employee of the
     Company.

     In all other respects, the terms of each of your LTIP awards shall be the
     same as the terms governing the awards of the other participants under the
     applicable LTIP.

     You shall also be considered for awards under any other stock or cash based
     incentive programs maintained by the Company during your employment, at
     such times such awards are considered for other senior officers of the
     Company or at such other times the Board deems appropriate, at the sole
     discretion of the Board.

5.   Consistent with your election as an officer of the Company, the Company
     will enter into an Executive Severance Agreement with you. In general, the
     terms of that agreement would provide for a severance payment of 3 times
     the sum of your annual base salary plus your targeted annual incentive
     compensation award, and certain other benefits, in the event your
     employment terminates under certain conditions following a
     change-in-control of the Company.

     The form and provisions of your Executive Severance Agreement will be the
     same as applicable to other elected officers of the Company. A copy of the
     Agreement has previously been provided to you.

SEVERANCE PAY ARRANGEMENT

If your employment is terminated by the Company without "Cause" (as defined
below) or by you as a result of "Constructive Discharge" (as defined below),
during your Initial Employment Term, you will be entitled to the severance
payment described in the next sentence. The severance payment will be 1.5 times
a dollar amount equal to 175% of your annual base salary at the time your
employment is terminated. The severance payment may be made to you in
installments, at the same time and in the same manner as salary continuation
payments, over a period of 18 months beginning as of the date you are
terminated. However, at your option, the entire severance payment may be paid to
you in a single lump-sum as soon as practical after your termination (if
approved by the Compensation Committee). In all other respects, your severance
pay arrangement shall be governed by the terms of the W. R. Grace & Co.
Severance Pay Plan for Salaried Employees.

You will also be entitled to the severance payment described in the prior
paragraph if you decide to terminate your employment with the Company in the
event that the Board does not offer you the position of Chief Executive Officer
of the Company following my departure from the Company, and elects another
individual as my successor to that position; provided that you comply with the
notice requirements specified in the next sentence. In order to be

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 4

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entitled to the severance payment under these circumstances, you must comply
with the following notification requirements: (1) you must deliver to the
Chairman of the Compensation Committee of the Board (the "Comp Committee
Chairman") written notice of your intention to terminate your employment (your
"Termination Notice") no later than 30 days after the date the Company publicly
announces that the Board has elected another individual as my successor as Chief
Executive Officer and (2) your Termination Notice must specify your last date of
employment with the Company, which must be no earlier than 30 days, and no later
than 90 days, after the date your Termination Notice is delivered to the Comp
Committee Chairman. Of course, if and when these circumstances arise, you and
the Board may agree in writing to alternative arrangements regarding your
employment status and the appropriate notice requirements.

You will not, in any event, however, be entitled to the severance payment
described above if, at the time your employment terminates, your employment
terminates as the result of your death, or you are entitled to payments under
your Executive Severance Agreement described above, or to disability income
payments under the Grace "LTD Plan" and/or "ESP Plan" described below.

Also, if you receive a severance payment under this letter agreement, you will
not be entitled to any other severance pay from the Company.

DEFINITION OF CAUSE

"Cause", for purposes of this letter agreement, means:

(i)    Commission by you of a criminal act (i.e., any act which, if successfully
       prosecuted by the appropriate authorities would constitute a crime under
       State or Federal law) or of willful misconduct (including but not limited
       to violating written policies of the Company), which has had or will have
       a direct material adverse effect upon the business affairs, reputation,
       properties, operations or results of operations or financial condition of
       Company,

(ii)   Refusal or failure of you to comply with the mandates of the CEO or the
       Board (unless any such mandates by the CEO or the Board constitute
       Constructive Discharge, and you have determined to terminate your
       employment as a result thereof), or failure by you to substantially
       perform your duties as COO, other than such failure resulting from your
       total or partial incapacity due to physical or mental illness, which
       refusal or failure has not been cured within 30 days after notice has
       been given to you, or

(iii)  Material breach of any of the terms of this agreement by you, which
       breach has not been cured within 30 days after notice has been given to
       you.

DEFINITION OF CONSTRUCTIVE DISCHARGE

"Constructive Discharge," for purposes of this letter agreement, means the
occurrence of any of the following without your prior written consent:

(i)    any demotion from the position of COO of the Company (provided that this
       provision shall not apply if you are appointed or elected to one or more
       other positions within the Company that are in addition to your position
       as COO, at the same time that you retain the COO position);

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 5

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(ii)   the relocation of your principle office to a location more than 35 miles
       away from the current site of the Company's Headquarters in Columbia,
       Maryland;

(iii)  any material diminution in your level of authority from that of COO or
       any assignment to you of any duties that are not consistent with the
       position of COO; other than authority or duties that (i) may be
       appropriate to another position with the Company that you hold in
       addition to the position of COO, (ii) are assigned to you as a result of
       your election as CEO, (iii) result from any requirement or request from
       the CEO or the Board that is reasonably related to your position as COO
       (or any other position you may hold with the Company at the time you
       retain your position as COO), or (iv) results from an inadvertent failure
       or oversight of the CEO or Board that is remedied within 30 days after
       your written notice thereof has been received by the "Comp Committee
       Chairman" (as defined above);

(iv)   the Company imposes upon you compensation arrangements that do not comply
       with this letter agreement; or

(v)    any material breach of this letter agreement by the Company.

Notwithstanding the forgoing:

o      any termination of employment by you will not be deemed to be a
       termination as a result of Constructive Discharge, unless (i) you provide
       to the Comp Committee Chairman written notice of your decision to
       terminate your employment that sets forth in reasonable detail the
       specific conduct or occurrence that you deem constitutes Constructive
       Discharge and the specific provision of this letter agreement upon which
       you rely and (ii) the Company does not cure such conduct or occurrence
       within 30 days after such notice has been received by the Chairman;

o      your right to terminate your employment on the basis of Constructive
       Discharge shall be deemed waived by you if you do not provide such notice
       to the Comp Committee Chairman within 60 days after you become aware of
       all material facts regarding the conduct or occurrence that your deem
       constitutes Constructive Discharge.

OTHER BENEFIT PROGRAMS

As a senior officer of the Company, you will also be eligible to participate in
the following benefit plans and programs (subject to the continuation and the
actual provisions of the plans and programs, as amended from time to time):

o      The W. R. Grace & Co. Retirement Plan for Salaried Employees ("Grace
       Salaried Retirement Plan")
o      The W. R. Grace & Co. Supplemental Executive Retirement Plan
o      The W. R. Grace & Co. Salaried Employee Savings & Investment Plan
o      The W. R. Grace & Co. Savings & Investment Plan Replacement Payment
       Program
o      The W. R. Grace & Co. Long-Term Disability Income Plan ("LTD Plan")
o      Executive Salary Protection Plan ("ESP Plan")
o      The W. R. Grace & Co. Voluntary Group Accident Insurance Plan
o      The W. R. Grace & Co. Business Travel Accident Insurance Plan
o      The W. R. Grace & Co. Group Term Life Insurance Program
o      Personal Excess Liability Insurance

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 6

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o      The W. R. Grace & Co. Group Medical Plan
o      The W. R. Grace & Co. Dental Plan
o      Retiree Medical Coverage

In addition, during your employment with the Company, you shall also be entitled
to participate in all other employee/executive perquisite, pension and welfare
benefit plans and programs made available to the Company's senior level
executives or to its employees generally, as such plans or programs may be in
effect, and amended, from time to time.

INDEMNIFICATION

The Company shall to the extent permitted by applicable law, indemnify you and
hold you harmless from and against any and all losses and liabilities you may
incur as a result of your performance of your duties hereunder in accordance
with the provisions of this letter agreement (except those liabilities that
result from any behavior by you that is enumerated in the "Cause" definition of
this agreement). In addition, the Company shall indemnify and hold you harmless
against any and all losses and liabilities that you may incur, directly or
indirectly, as a result of any third party claims brought against you (other
than by any taxing authority) with respect to the Company's performance of (or
failure to perform) any commitment made to you under this agreement. The Company
shall obtain, if reasonably available, such policy or policies of insurance as
it reasonably may deem appropriate to effect this indemnification.

DISPUTE RESOLUTION

Any dispute, controversy or claim arising out of or relating to this letter
agreement, or a breach thereof, shall be settled by arbitration in accordance
with the laws of the State of Maryland, without respect to the conflict of laws
rules thereof, and the arbitration shall be conducted in Maryland or such other
location as the Company and you may mutually agree in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as such
rules are in effect in New York, NY on the date of the delivery of a demand for
arbitration, which shall be effectuated by the demanding party providing notice
to the other party in accordance with the provisions below under the heading
"Notices". The parties expressly acknowledge that they are waiving their rights
to seek remedies in court, including without limitation the right (if any) to a
jury trial.

There shall be three arbitrators, one to be chosen by each party at will within
10 business days from the date of delivery of demand for arbitration and the
third arbitrator to be selected by the two arbitrators chosen. If the two
arbitrators are unable to select a third arbitrator within 10 business days
after the last of the two arbitrators is chosen by the parties, the third
arbitrator shall be designated, on application by either party, by the American
Arbitration Association.

The decision of a majority of the arbitrators shall be final and binding on the
parties and their respective heirs, executors, administrators, personal
representatives, successors and assigns. Judgment upon any award of the
arbitrators may be entered in any court of competent jurisdiction, or
application may be made to any such court for the judicial acceptance of the
award and for an order of enforcement.

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 7

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RELOCATION

As specified above, your office will be located in Columbia, Maryland, which
will require you to relocate to the Columbia area. Therefore, you will be
entitled to receive principal residence relocation assistance under the
Company's relocation policy applicable to the relocation of active employees. A
copy of that policy has previously been provided to you.

FINANCIAL COUNSELING PROGRAM

As an officer of the Company, you will be eligible to participate in the
Company's Financial Counseling Program. This Program provides you with financial
and estate planning and income tax preparation assistance. The Company will pay
up to $4,000 per calendar year for reasonable, supportable expenses, except that
the maximum amount for the first year of your participation will be $9,000.

COMPANY CAR

The Company will arrange for you to lease, at the Company's expense, an
automobile for use on Company business and for your personal use. The terms of
the coverage will be the same as those provided for other officers of the
Company, including a purchase price cap of $50,000.

EXECUTIVE PHYSICAL PROGRAM

As an officer of the Company, you will be eligible to receive a Company-paid
annual executive physical examination.

NOTICES

Except as otherwise provided herein, you and the Company agree that any notices
and other communications permitted or required under this letter agreement shall
be in writing and shall be given by hand delivery to the other party or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight courier service, addressed as follows:

         If to you:

         Alfred E. Festa
         W. R. Grace & Co.
         7500 Grace Drive
         Columbia, MD 21044

         If to the Company:

         W. R. Grace & Co.
         Attention:  General Counsel
         7500 Grace Drive
         Columbia, MD 21044

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 8

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or to such other addresses as either party furnishes to the other in writing in
accordance with this notice provision. Notices and communications shall be
effective when actually received by the addressee.

NO MITIGATION; NO SET OFF

In the event of any termination of employment hereunder, you shall be under no
obligation to seek other employment and there shall be no offset against any
amounts due to you under this letter agreement on account of any remuneration
attributable to any subsequent employment you may obtain. The amounts payable
hereunder shall not be subject to setoff, counterclaim, recoupment, defense or
other right which the Company may have against you.

SUCCESSORS

Except as otherwise provided herein, this letter agreement is personal to you,
and without the prior written consent of the Company shall not be assignable by
you other than by will or the laws of descent and distribution. This agreement
shall inure to the benefit of and be enforceable by your legal representatives.
This agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns. Except as provided herein, this agreement shall not
be assignable by the Company without your prior written consent. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. "Company" means the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this agreement by operation of law
or otherwise.

SURVIVORSHIP

The respective rights and obligations of the parties hereunder shall survive any
termination of your employment to the extent necessary to effect those rights
and obligations.

VACATION

As an officer of the Company, you shall be entitled to four weeks paid vacation
per full calendar year of employment with the Company.

LEGAL FEES

The Company will also reimburse you for reasonable legal expenses, not to exceed
$10,000, which you incur with respect to reviewing this letter agreement.

CONFIDENTIALITY AND NON-COMPETE AGREEMENTS

In order to commence employment with the Company, you will be required to sign
the Company's standard employment agreement (the "Standard Agreement"), which
includes agreements regarding the confidentiality of Company information and
non-competition, and similar provisions.

<PAGE>

Alfred E. Festa                 November 17, 2003                         Page 9

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You and the Company agree that, to the extent that the terms the Standard
Agreement differ from the terms of this letter agreement, then the terms of this
letter agreement (and not the Standard Agreement) shall control your employment
relationship with the Company, and that the provisions of item 5 of the Standard
Agreement are not applicable to the terms of this letter agreement, in that the
Standard Agreement does not supercede any terms of this letter agreement. A copy
of the Standard Agreement that you will be required to sign has previously been
provided to you.

MISCELLANEOUS

You and the Company acknowledge this letter agreement, and the other written
agreements referred to herein, contain the entire understanding of the parties
concerning the subject matter hereof. You and the Company acknowledge that this
agreement supersedes any prior agreement between you and the Company concerning
the subject matter hereof. Except as expressly otherwise provided herein, this
agreement shall not adversely affect your right to participate in, or receive
any benefit under, any incentive, severance or other benefit plan or program in
which you may from time to time participate.

If any provision of this agreement is held invalid or unenforceable in whole or
in part, such provision, to the extent it is invalid or unenforceable, shall be
revised to the extent necessary to make the provision, or part hereof, valid and
enforceable, consistent with the intentions of the parties hereto. Any provision
of this agreement that is held invalid or unenforceable, in whole or in part,
shall not affect the validity and enforceability of the other provision of this
agreement, which shall remain if full force and effect.

This letter agreement may be amended, superseded or canceled only by a written
instrument specifically stating that it amends, supersedes or cancels this
agreement, executed by you and the Company.

If you have any questions regarding any expectations of your new position,
please call me.

If you have any questions regarding the compensation and Company benefit plans
and programs, please feel free to call W. Brian McGowan, Senior Vice President,
Administration, at (410) 531-4191.

<PAGE>

Alfred E. Festa                 November 17, 2003                        Page 10

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Fred, we are very excited about your joining the Grace organization and look
forward to a productive and mutually rewarding relationship.

Sincerely,

/s/ Paul J. Norris

Paul J. Norris
Chairman, President & Chief Executive Officer
W. R. Grace & Co.

Attachment

cc:    W. B. McGowan

AGREED AND ACCEPTED:

/s/ Alfred E. Festa

-------------------------------
Alfred E. Festa

11/17/2003
-------------------------------
Date

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