W R GRACE & CO (Form: 8-K, Received: 02/09/2016 17:08:00)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) February 3, 2016

W. R. GRACE & CO.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)



1-13953		65-0773649
(Commission File Number)		(IRS Employer Identification No.)



7500 Grace Drive
Columbia, Maryland		21044
(Address of Principal Executive Offices)		(Zip Code)

(410) 531-4000

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

W. R. GRACE & CO.

FORM 8-K

CURRENT REPORT


Item 8.01	Other Events

W. R. Grace & Co. ("Grace") has adopted a form of stock option grant agreement, form of restricted stock unit grant agreement and form of performance-based unit grant agreement (collectively, the "Grant Agreements") that are to be used in connection with grants of equity compensation to officers, employees, and directors of Grace. The Grant Agreements are attached as Exhibits 10.1, 10.2 and 10.3 hereto and are incorporated by reference herein.


Item 9.01.	Financial Statements and Exhibits.

(b) Pro Forma Financial Information

As previously disclosed, on February 3, 2016, Grace completed the transfer of its construction products business, and its packaging technologies business operated under the “Darex” name, to GCP Applied Technologies Inc. (“GCP”), then a wholly-owned subsidiary of Grace (the “Separation”), and the distribution of all of the Grace-owned common stock of GCP to Grace’s stockholders in a distribution intended to be generally tax-free to Grace’s stockholders (the “Distribution”).

On February 9, 2016, Grace released certain unaudited pro forma consolidated financial information as of and for the period ended September 30, 2015, and for the periods ended December 31, 2014, 2013, and 2012, which is attached as Exhibit 99.1 hereto (the “Pro forma Financial Information”) and incorporated herein by reference. The Pro Forma Financial Information gives effect to the Separation and the Distribution, and is derived from Grace's historical financial information.

The Pro Forma Financial Information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

(d) Exhibits



Exhibit No.			Description of Exhibit
10.1			Form of Nonstatutory Stock Option Grant Agreement
10.2			Form of Performance Based Unit Grant Agreement (including Administrative Practices)
10.3			Form of Restricted Stock Unit Grant Agreement (including Administrative Practices)
99.1			Unaudited Pro Forma Condensed Consolidated Financial Information.

Forward-looking statements

This document and the exhibits hereto contain forward-looking statements, that is, information related to future, not past, events. Such statements generally include the words “believes,” “plans,” “intends,” “targets,” “will,” “expects,” “suggests,” “anticipates,” “outlook,” “continues” or similar expressions. Forward-looking statements include, without limitation, expected financial positions; results of operations; cash flows; financing plans; business strategy; operating plans; capital and other expenditures; competitive positions; growth opportunities for existing products; benefits from new technology and cost reduction initiatives, plans and objectives; and markets for securities. For these statements, Grace claims the protection of the safe harbor for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Like other businesses, Grace is subject to risks and uncertainties that could cause its actual results to differ materially from its projections or that could cause other forward-looking statements to prove incorrect. Factors that could cause actual results to materially differ from those contained in the forward-looking statements or that could cause other forward-looking statements to prove incorrect include, without limitation, risks related to: the cyclical and seasonal nature of the industries that Grace serves; the effectiveness of Grace’s research and development and new product introductions; the cost and availability of raw materials and energy;

foreign operations, especially in emerging regions; changes in currency exchange rates; developments affecting Grace’s outstanding liquidity and indebtedness, including debt covenants and interest rate exposure; developments affecting Grace’s funded and unfunded pension obligations; acquisitions and divestitures of assets and gains and losses from dispositions; warranty and product liability claims; hazardous materials and costs of environmental compliance; the separation, such as the costs of the separation, Grace’s ability to realize the anticipated benefits of the separation and distribution, and the value of Grace’s common stock following the separation; and those additional factors set forth in Grace’s most recent Annual Report on Form 10-K, quarterly report on Form 10-Q and current reports on Form 8-K which have been filed with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.



		W. R. GRACE & CO.
		(Registrant)

	By	/s/ Hudson La Force III

		Hudson La Force III
		President, Chief Operating Officer and
		Chief Financial Officer

Dated: February 9, 2016

EXHIBIT INDEX



Exhibit No.			Description of Exhibit
10.1			Form of Nonstatutory Stock Option Grant Agreement
10.2			Form of Performance Based Unit Grant Agreement (including Administrative Practices)
10.3			Form of Restricted Stock Unit Grant Agreement (including Administrative Practices)
99.1			Unaudited Pro Forma Condensed Consolidated Financial Information.

EXHIBIT 10.1

W. R. GRACE & CO. (the "Company")
NONSTATUTORY STOCK OPTION

The W. R. Grace & Co. 20__ Stock Incentive Plan ("Plan")

Granted To: [FIRST NAME LAST NAME]

Date of Grant: [OPTION DATE]

Expiration Date: [EXPIRE DATE]

In accordance with the Plan (a copy of which is attached), you have been granted an Option to purchase [TOTAL SHARES GRANTED] shares of Common Stock, as defined in the Plan ("Option"), upon the following terms and conditions:

(1) The purchase price is [OPTION PRICE]

(2) Subject to the other provisions hereof, this Option shall become exercisable as follows:

[# SHARES] shares on [VEST DATE 1]

[# SHARES] shares on [VEST DATE 2]

[# SHARES] shares on [VEST DATE 3]

Once exercisable, an installment may be exercised at any time, in whole or in part, until the expiration or termination of this Option.

(3) This Option shall not be treated as an Incentive Stock Option (as such term is defined in the Plan).

(4) This Option may be exercised only by accessing your account at www.etrade.com/stockplans. E*Trade Financial can also be reached by phone at (800) 838-0908 or (650) 599-0125 if calling from outside the United States and Canada. E*Trade Financial will coordinate the exercise with the Company. The purchase price shall be paid in cash or, with the permission of the Company (which may be subject to certain conditions), in shares of Common Stock or in a combination of cash and such shares (see section 6(a) of the Plan).

(5) Neither this Option nor any right thereunder nor any interest therein may be assigned or transferred by you, except by will or the laws of descent and distribution. This Option is exercisable during your lifetime only by you. If you cease to serve the Company or a Subsidiary (as defined in the Plan), this Option shall terminate as provided in section 6(d) of the Plan, subject, however, to the following:

(a) Notwithstanding section 6(d)(i) of the Plan, in the event of a voluntary cessation of your service without the consent of the Committee, any portion of this Option that is vested as of the date of such cessation of service shall terminate as of the 45th day following the date of such cessation of service;

EXHIBIT 10.1


(b)	Notwithstanding any provision of the Plan:

(i) If you retire or otherwise cease employment, and, as of your cessation of employment, you have attained the age of 55 but not age 62 (and the sum of your age and years of service equals or exceeds 60), then a pro-rated portion of this Option (pro-rated as specified in the next sentence) shall vest and become exercisable as of the date of your cessation of employment, provided that such portion shall terminate (and no longer be exercisable) the sooner of (1) the date such portion would expire in the normal course or (2) three years after the date of your cessation of employment. Such pro-rated portion shall equal the total number of shares underlying this Option multiplied by a fraction, the numerator of which is the number of whole calendar months elapsed since the Date of Grant and the denominator of which is [NUMBER OF WHOLE CALANDAR MONTHS IN VESTING PERIOD] .

(ii) If you retire or otherwise cease employment prior to the date on which the first installment of this Option becomes exercisable and, as of your cessation of employment, you have attained age 62, a pro-rated portion of this Option (pro-rated as specified in the next sentence) shall vest and become exercisable as of the date of your cessation of employment, provided that such portion shall terminate (and no longer be exercisable) the sooner of (1) the date such portion would expire in the normal course or (2) three years after the date of your cessation of employment. Such pro-rated portion shall equal the total number of shares underlying this Option multiplied by a fraction, the numerator of which is the number of whole calendar months elapsed since the Date of Grant and the denominator of which is [NUMBER OF WHOLE CALANDAR MONTHS IN VESTING PERIOD].

(iii) If you either (A) retire or otherwise cease employment on or following the date on which the first installment of this Option becomes exercisable and, as of your cessation of employment, you have attained age 62, or (B) die or become incapacitated, then this Option shall continue to vest and be exercisable in the normal course, provided that this Option shall terminate (and no longer be exercisable) three years after you cease employment.

(iv) Any portion of this Option that does not become exercisable in accordance with this section 5(b) shall terminate as of the date you cease employment.

(c)

In the event you should become incapacitated or die and neither you nor your legal representative(s) or other person(s) is entitled to exercise this Option to the fullest extent possible on or before its termination, then the Company shall pay you, your legal representative(s) or such other person(s), as the case may be, an amount of money equal to the Fair Market Value (as defined under the Plan) of any shares remaining subject to this Option on the last date it could have been exercised, less the aggregate purchase price of such shares.

(6) With respect to this Option, if you are an executive officer or any other employee of the Company who is subject to stock ownership guidelines (“Company Officers”), then you may elect “Net Settlement” (as defined in the next sentence) upon the exercise of any portion of this Option (which is otherwise vested and exercisable). “Net

EXHIBIT 10.1

Settlement” means the satisfaction (at the election of a Company Officer) of the exercise price and tax withholding due in respect to the exercise of any portion of this Option, by delivering shares of the Company’s common stock to the Company, which would otherwise be delivered to the Company Officer upon such exercise.

(7) If you are or become an employee of a Subsidiary, the Company's obligations hereunder shall be contingent on the Subsidiary's agreement that (a) the Company may administer this Plan on its behalf and, (b) upon the exercise of this Option, the Subsidiary will purchase from the Company the shares subject to exercise at their Fair Market Value on the date of exercise, such shares to be then transferred by the Subsidiary to you upon your payment of the purchase price to the Subsidiary. Where appropriate, such approval and agreement of the Subsidiary shall be indicated by its signature below. The provisions of this paragraph and the obligations of the Subsidiary so undertaken may be waived by the Company, in whole or in part, at any time or from time to time.

(8) The grant, vesting, and exercise of this Option shall be subject to your continued compliance with the restrictive covenants as set forth in Annex A hereto.

(9) The Plan is hereby incorporated by reference. Terms defined in the Plan shall have the same meaning herein. This Option is granted subject to the Plan and shall be construed in conformity with the Plan.

W. R. GRACE & CO.

By: ________________

Elizabeth Brown

This document constitutes part of a

prospectus covering securities that have

been registered under the Securities Act of 1933.

Annex A EXHIBIT 10.1

Restrictive Covenants-Option Grants


1.	Noncompetition .

(a) For a period of [____] months after you are no longer employed (for any reason whatsoever) by the Company, you will not, without the prior written consent of an authorized officer of the Company, (a) directly or indirectly engage in or (b) assist or have any active interest in (whether as a proprietor, partner, stockholder, officer, director or any type of principal whatsoever ( provided that ownership of not more than 2% of the outstanding stock of a corporation traded on a national securities exchange shall not of itself be viewed as assisting or having an active interest), or (c) enter the employment of or act as an agent, broker or distributor for or adviser or consultant to any person, firm, corporation or business entity that is (or is about to become) directly or indirectly engaged in the development, manufacture or sale of any product that competes with or is similar to any product manufactured, sold or under development by the Company at any time while you are employed by the Company, in any area of the world in which such product is, at the time you cease to be employed, manufactured or sold by the company; provided that this restriction shall apply only with respect to the products with whose development, manufacture, or sale you were concerned or connected in any way during the 12 month period immediately prior to your ceasing to be an employee of the Company.

(b) You hereby acknowledge and confirm that the business of the Company extends throughout substantial areas of the world. During the course of your employment with the Company, your involvement with the business of the Company may vary as to products and geographic area. It is the Company’s practice to enforce this noncompetition covenant only to the extent necessary to protect the Company’s legitimate interests commensurate with your involvement with the business of the Company during your employment, and you acknowledge and confirm that the Company may enforce this noncompetition covenant consistent with such practice.


2.	Nonsolicitation of Customers

(a) You agree that during the [___] period immediately following cessation of the your employment with the Company for any reason whatsoever, you shall not, on your own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, without the prior written consent of an authorized officer of the Company, solicit, contact, call upon, communicate with or attempt to communicate with any customer or prospect of the Company, or any representative of any customer or prospect of the Company, with a view to sell or provide any product, equipment, or service competitive or potentially competitive with any product, equipment, or service sold or provided or under development by Company during the 12 months immediately preceding cessation of your employment with the Company; provided that the restrictions set forth in this paragraph shall apply only to customers or prospects of the Company, or representative of customers or prospects of the Company, with whom you had contact during such 12-month period. The actions prohibited by this covenant shall not be

Annex A EXHIBIT 10.1

engaged in by you directly or indirectly, whether as manager, salesman, agent, sales or service representative, engineer, technician or otherwise.

Nonsolicitation of Employees . You agree that during the [____] period immediately following cessation of your employment with the Company for any reason whatsoever, you shall not, on your behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, without the prior written consent of an authorized officer of the Company, recruit, solicit, or induce, or attempt to recruit, solicit, or induce, any employee of the Company (with whom you had contact or supervised during the term of your employment with the Company) to terminate their employment relationship with the Company or to perform services for any other person, firm, corporation or business organization or entity.

You acknowledge that were you to breach the provisions of any of these restrictive covenants, the injury to the Company would be substantial, irreparable, and impossible to measure and compensate in money damages alone. You therefore agree that, in addition to provable damages, the Company may seek, and agrees that a court of competent jurisdiction should grant, preliminary and permanent injunctive relief prohibiting any conduct by you that violates any of these covenants.

5. Plan Terms . This Annex A shall be governed pursuant to the terms of the Plan.

EXHIBIT 10.2

20__-20__ PBU Grant Agreement

( Stock-Settled )

Granted to: «First» «Last» (“You”)

Effective Date of Grant: _____________, 20__

2016 PBU Grant “Value” $____________

Initial PBUs Granted: _____________

Performance Period: January 1, 20__ – December 31, 20__

Settlement: Shares of Company Common Stock

1. Grant of PBUs . Under the long-term incentive program of W. R. Grace & Co. (the “Company”), the Compensation Committee (the “Committee”) of the Board of Directors of the Company has granted you a number of “performance-based units” for the 20__–20__ Performance Period (“PBUs”), as specified above. Each PBU represents the right to receive one share of Company common stock. The PBUs are hereby granted pursuant to, and in accordance with, the 2014 Stock Incentive Plan (the “Plan”), the terms of which are made a part of this grant agreement (which grant agreement includes the Administrative Practices set forth in the attached Annex B , and the Restrictive Covenants set forth in the attached Annex C ). In the event of a conflict between this agreement and the Plan, the terms of the Plan will control. Capitalized terms used in this grant agreement but not defined herein are as defined in the Administrative Practices set forth in the attached Annex B or otherwise in the Plan.

2. Vesting of PBU Grant . Subject to your continued employment with the Company (or any Subsidiary thereof) through the applicable date specified on Annex B , you are eligible to earn an award of a number of shares of Grace common stock equal to the number of final PBUs awarded to you. The number of final PBUs to be awarded to you will be determined after the end of the Performance Period subject to the provisions of Annex B , based on the extent to which our performance objectives described in the attached Annex A for the Performance Period are met. If these performance objectives are not achieved, only partially achieved or are over-achieved, the number of shares of Grace common stock you have been awarded as Initial PBUs under this grant agreement will be decreased (or eliminated) or increased as set forth in Annex A .

3. Settlement of PBU Grant . Although the Company intends to settle your PBU Grant in shares of Grace common stock, the Company reserves the right to settle all or a part of your PBU Grant in cash (based on the closing price of a share of Grace common stock on December 31, 20__), based on the Company’s evaluation of the circumstances at the time of settlement (anticipated to be in March 20__).

4. Other Conditions to Vesting of PBU Grant . The consequences of a change in or termination of your employment status during the Performance Period are also described in the attached Administrative Practices.

In all matters regarding the administration of this PBU Grant, the Committee has full and sole jurisdiction, subject to the provisions of Annex A and Annex B . In addition, the grant, vesting, and settlement of the PBUs shall be subject to your continued compliance with the restrictive covenants as set forth in Annex C hereto, which are incorporated by reference herein.

EXHIBIT 10.2

PBUs are being granted only to a limited number of key employees of the Company and its subsidiaries. This grant should, therefore, be treated confidentially.

Please read and acknowledge this agreement through E-Trade as specified in the accompanying cover memo.

W.R. Grace & Co.

By: ___________________

Elizabeth Brown

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

Annex B EXHIBIT 10.2

W. R. Grace & Co.

Administrative Practices – PBU Grants

20__–20__ Performance Period

Definitions

“LTIP Adjusted EPS”: [To Be Determined]

“Board of Directors”: The Board of Directors of the Company

“Committee”: The Compensation Committee of the Board of Directors.

“Company”: W. R. Grace & Co., a Delaware corporation and/or, if applicable in the context, one or more of its Subsidiaries.

“Incomplete PBU Grants”: A PBU Grant for which the Performance Period has not been completed as of the date referenced.

“Key Employee”: An officer or other full-time employee of the Company, who, in the opinion of the Company, can contribute significantly to the growth and successful operations of the Company.

“Participant”: A Key Employee who is a recipient of a PBU Grant.

“PBU Grant”: A performance-based unit for the Performance Period granted to a Participant, as further specified in the PBU Grant Agreement applicable to the Participant.

“PBU Grant Documents”: (i) the written PBU Grant Agreement issued to each Participant, (ii) “Annex A” applicable to the PBU Grants, (iii) these Administrative Practices, “Annex B”, applicable to the PBU Grants, and (iv) the restrictive covenants, “Annex C”, applicable to the PBU Grants.

“Performance Period”: January 1, 20__ to December 31, 20__ (inclusive).

“Stock Incentive Plan”: the W. R. Grace & Co. 2014 Stock Incentive Plan.

“Subsidiary”: A corporation, partnership, limited liability company or other form of business association of which shares of common stock or other ownership interests (i) having more than 50% of the voting power regularly entitled to vote for directors (or equivalent management rights) or (ii) regularly entitled to receive more than 50% of the dividends (or their equivalents) paid on the common stock (or other ownership interests), are owned, directly or indirectly, by the Company.

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Annex B EXHIBIT 10.2

Administration and Amendment

The Committee has full and exclusive authority to administer the PBU Grant, and to interpret the provisions of each Grant Agreement and the Administrative Practices specified herein, as well as the provisions of each PBU Grant Agreement. Decisions of the Committee regarding the interpretation and administration of the PBU Grant shall be final and binding on all parties.

The Administrative Practices for the PBU Grant specified herein may be amended by the Committee, provided that, no amendment or discontinuance of PBU Grants shall, without a Participant’s consent, adversely affect his or her rights in any cash payment or stock award related thereto.

The PBU Grants

Each Participant’s PBU Grant shall be evidenced by a 20__–20__ PBU Grant Agreement that specifies the number of PBUs initially granted to the Participant, the manner of settlement related to any final PBUs earned, and such other terms and conditions as the Committee shall approve, inclusive of the provisions of this Annex B , which are incorporated into the RSU Grant Agreement to which this Annex B is attached.

In the case of a Key Employee who becomes a Participant after the beginning of the Performance Period, the Committee may ratably reduce the cash payout or stock award (as applicable) covered by such Key Employee’s PBU Grant, or otherwise appropriately adjust the terms of the PBU Grant, to reflect the fact that the Key Employee is to be a Participant for only part of the Performance Period.

Subject to the administrative practices that apply to termination or change in employment status and to the amendment or discontinuance of PBU Grants, the performance objectives applicable to PBU Grants will remain unchanged during the Performance Period except as specified herein.

Termination or Change in Employment Status

A Participant shall forfeit all rights to any cash payment (or stock award) related to a PBU Grant, if, prior to the date that such payments or awards are actually paid with respect to the PBU Grants to actively employed Participants, the Participant’s employment terminates for any reason other than as provided below, unless the Committee (or the designee of the Committee, which may include the Chief Executive Officer of the Company) determines to make an exception.

If a Participant ceases employment at or after age 55 (at a time that the sum of his or her age and years of service total at least 60), or at or after age 62, or as a result of death or disability, during the Performance Period, then his or her PBU Grant shall thereupon vest, and he or she (or his or her estate or legal representative, as appropriate) shall be entitled

B- 2

Annex B EXHIBIT 10.2

to receive any cash payment or stock award (as appropriate) he or she would otherwise have received (at the time he or she would have otherwise received such payment or award), except that the amount of any such payment or award shall be reduced ratably in proportion to the portion of the Performance Period during which the Participant was not an employee (measured in whole calendar months ). If a Participant ceases employment with the Company for any of the reasons specified in this paragraph, after the completion of the applicable Performance Period (but before the cash payment or stock award is made), then his or her rights to his or her PBU Grant shall thereupon vest, and he or she shall be entitled to receive such cash payment or stock award at the time he or she would have otherwise received such payment or award.

A leave of absence, if approved by the Committee, shall not be deemed a termination or change of employment status for the purposes of this PBU Grant, but, unless the Committee otherwise directs, any cash payment or stock award related to the PBU Grant that a Participant would otherwise have received shall be reduced ratably in proportion to the portion of the Performance Period during which the Participant was on such leave of absence.

Any consent, approval or direction that the Committee may give under this section in respect of an event or transaction may be given before or after the event or transaction.

Code Section 409A

Notwithstanding any other provision of any PBU Grant Agreement or this Annex B, PBU Grants shall be settled in a manner intended to comply with the provisions of Section 409A of the Code, which shall include the requirement that any PBUs held by a “specified employee” (as defined under Code Section 409A) that become vested, and are to be settled upon a Participant’s “separation from service” (as defined in Code Section 409A), being settled on the first business day following the date that is six months after the effective date of such separation from service.

Calculation of Cash Payments or Stock Awards Earned

The Committee shall determine the extent to which the applicable performance objectives have been achieved during the Performance Period, and the amount of any cash payment or stock award earned regarding the PBU Grants. All calculations in this regard shall be made by the Company’s Finance Department, in accordance with the accounting principles customarily applied by the Company’s Finance Department, and shall be submitted to the Committee for its review and approval. The final determinations of the Committee in this regard shall be final and binding on all parties.

Cash Dividends

B- 3

Annex B EXHIBIT 10.2

In the event the Company issues cash dividends on the common stock of the Company during the Performance Period, the Committee may, but shall not be obligated to, make any adjustments to PBU Grants, which the Committee deems appropriate in its sole discretion to account for such dividends.

Treatment of Corporate Acquisitions and Divestments and Extraordinary Events

Consistent with the provisions of Section 15 of the Stock Incentive Plan, in the event acquisitions or divestments, or substantial changes in tax or other laws or in accounting principles or practices, or natural disasters or other extraordinary events, render fulfillment of the performance objectives of the PBU Grants impossible or impracticable, or result in the achievement of the performance objectives without appreciable effort by the Participants, as determined by the Committee in its sole discretion, then the Committee may, but shall not be obligated to, change the composition of the LTIP Adjusted EPS calculation or amend any PBU Grant, in any manner the Committee deems appropriate, so that the Participants may earn a cash payment or stock award (as appropriate) consistent with the objectives of the PBU Grants, as determined by the Committee in its sole discretion.

Notwithstanding any other provision of these Administrative Practices to the contrary, in the event a Change in Control of the Company (within the meaning of the Stock Incentive Plan) shall occur during a Performance Period, then each Participant’s PBU Grant (with respect to that Performance Period) shall thereupon fully vest (which means that such PBU Grant shall not be subject to forfeiture as a result of any subsequent event, including but not limited to termination of employment) and he or she shall be entitled to receive any cash payment or stock award (as appropriate) he or she would otherwise have received, at the time he or she would have otherwise received such payment or award, under the original terms of such PBU Grant; provided that the Committee may (but shall not be required to) make any of the following adjustments to such original terms, as it deems appropriate in its own discretion: (i) reduce the length of the Performance Period, (ii) make ratable adjustments to performance objectives, (iii) change the methods of measuring the performance objectives, (iv) accelerate the cash payment (or stock award) related to any PBU Grant, and (v) take other action deemed by it to be in the best interests of the Company under the circumstances.

General

Nothing in this document nor in any instrument executed pursuant hereto shall confer upon a Participant any right to continue in the employ of the Company or a Subsidiary, or shall affect the right of the Company or a Subsidiary to terminate his or her employment with or without cause.

The Company or a Subsidiary may make such provisions as it may deem appropriate for the withholding or any taxes that the Company or a Subsidiary determines it is required

B- 4

Annex B EXHIBIT 10.2

to withhold in connection with any PBU Grant or any cash payment (or stock award) related thereto.

No PBU Grant, nor any cash payment or stock award related thereto, or other right thereunder, shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance or charge, except by will or the laws of descent and distribution, or by the terms of a Participant’s Designation of Beneficiary, if any, on file with the Company.

Nothing in a PBU Grant 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 employees generally, or to any class or group of employees, which the Company or a Subsidiary now has or may hereafter lawfully put into effect, including, without limitation, any retirement, pension, group insurance, annual bonus, stock purchase, stock bonus or stock option plan.

No cash amounts paid or stock awarded pursuant to any PBU Grant shall be included or counted as compensation for the purposes of any employee benefit plan of the Company or a Subsidiary where contributions to the plan, or the benefits received from the plan, are measured or determined in whole or in part, by the amount of the employee’s compensation.

A PBU Grant to an employee of a Subsidiary shall be contingent on the approval of the Subsidiary and the Subsidiary’s agreement that (a) the Company may administer the PBU Grant on its behalf and (b) the Subsidiary will make, or reimburse the Company for, the cash payments or stock awards related to the PBU Grant. The provisions of this paragraph and the obligations of the Subsidiary so undertaken may be waived, in whole or in the part, from time to time by the Company.

The Chief Executive Officer of the Company may approve such technical changes and clarifications to the PBU Grants as necessary, provided such changes or clarifications do not vary substantially from the terms and conditions outlined herein or from the provisions of Annex A .

B- 5

Annex C EXHIBIT 10.2

W. R. Grace & Co.

Restrictive Covenants – PBU Grants

1. Noncompetition

(a) For a period of [____] months after a Participant is no longer employed (for any reason whatsoever) by the Company, the Participant will not, without the prior written consent of an authorized officer of the Company, (a) directly or indirectly engage in or (b) assist or have any active interest in (whether as a proprietor, partner, stockholder, officer, director or any type of principal whatsoever (provided that ownership of not more than 2% of the outstanding stock of a corporation traded on a national securities exchange shall not of itself be viewed as assisting or having an active interest), or (c) enter the employment of or act as an agent, broker or distributor for or adviser or consultant to any person, firm, corporation or business entity that is (or is about to become) directly or indirectly engaged in the development, manufacture or sale of any product that competes with or is similar to any product manufactured, sold or under development by the Company at any time while the Participant was employed by the Company, in any area of the world in which such product is, at the time the Participant ceases to be employed, manufactured or sold by the company; provided that this restriction shall apply only with respect to the products with whose development, manufacture, or sale the Participant was concerned or connected in any way during the 12 month period immediately prior to the Participant ceasing to be an employee of the Company.

(b) The Participant hereby acknowledges and confirms that the business of the Company extends throughout substantial areas of the world. During the course of the Participant’s employment with the Company, the Participant’s involvement with the business of the Company may vary as to products and geographic area. It is the Company’s practice to enforce this noncompetition covenant only to the extent necessary to protect the Company’s legitimate interests commensurate with the Participant’s involvement with the business of the Company during the Participant’s employment, and the Participant acknowledges and confirms that the Company may enforce this noncompetition covenant consistent with such practice.

2. Nonsolicitation of Customers . The Participant agree that during the [____] period immediately following cessation of the Participant’s employment with the Company for any reason whatsoever, the Participant shall not, on the Participant’s own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, without the prior written consent of an authorized officer of the Company, solicit, contact, call upon, communicate with or attempt to communicate with any customer or prospect of the Company, or any representative of any customer or prospect of the Company, with a view to sell or provide any product, equipment, or service competitive or potentially competitive with any product, equipment, or service sold or provided or under development by Company during the 12 months immediately preceding cessation of the Participant’s employment with the Company; provided that the restrictions set forth in this paragraph shall apply only to customers or prospects of the Company, or representative

C-1

Annex C EXHIBIT 10.2

of customers or prospects of the Company, with whom the Participant had contact during such 12-month period. The actions prohibited by this section shall not be engaged in by the Participant directly or indirectly, whether as manager, salesman, agent, sales or service representative, engineer, technician or otherwise.

3. Nonsolicitation of Employees . The Participant agrees that during the [____] period immediately following cessation of the Participant’s employment with the Company for any reason whatsoever, the Participant shall not, on the Participant’s own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, without the prior written consent of an authorized officer of the Company, recruit, solicit, or induce, or attempt to recruit, solicit, or induce, any employee of the Company (with whom the Participant had contact or supervised during the term of the Participant’s employment with the Company) to terminate their employment relationship with the Company or to perform services for any other person, firm, corporation or business organization or entity.

4. The Participant acknowledges that were the Participant to breach the provisions of any of these restrictive covenants, the injury to the Company would be substantial, irreparable, and impossible to measure and compensate in money damages alone. The Participant therefore agrees that, in addition to provable damages, the Company may seek, and agrees that a court of competent jurisdiction should grant, preliminary and permanent injunctive relief prohibiting any conduct by the Participant that violates any of these covenants.

5. Plan Terms . This Annex C shall be governed pursuant to the terms of the Plan.

C-2

EXHIBIT 10.3

RSU Grant Agreement/Stock

Granted to: [FIRST NAME LAST NAME]

Date of Grant: [OPTION DATE]

Grant Value: [MARKET VALUE]

RSUs Granted: [TOTAL SHARES GRANTED]

Vesting/Stock Valuation Date: [ ]

Settlement: Stock

1. Grant of RSUs . Under the long-term incentive program of W.R. Grace & Co. (the “Company”), the Compensation Committee (the “Committee”) of the Board of Directors of Grace has granted you a number of restricted share units (“RSUs”), as specified above. Each RSU represents the right to receive one share of Company common stock. The RSUs are hereby granted pursuant to, and in accordance with, the 2014 Stock Incentive Plan (the “Plan”), the terms of which are made a part of this grant agreement (which grant agreement includes the Administrative Practices set forth in the attached Annex A, and the Restrictive Covenants set forth in the attached Annex C). In the event of a conflict between this agreement and the Plan, the terms of the Plan will control. Capitalized terms used in this grant agreement but not defined herein are as defined in the Administrative Practices set forth in the attached Annex B or otherwise in the Plan.

2. Settlement of RSU Grant . The stock award related to your RSU Grant will be made to you as soon as practical after the Vesting/Stock Valuation Date (but within 60 days of that Date, in any event), provided you are still employed on that Date by Grace. Note that the consequences of a change in or termination of, your employment status prior to the Vesting/Stock Valuation Date are described in Annex A, “Administrative Practices – RSU Grants”, which is attached hereto. However, please note that, while it is intended that your RSUs be settled in stock as described herein, Grace reserves the right to instead settle the RSUs in cash, based on the closing price of a share of its stock on the Vesting/Stock Valuation Date, depending on an evaluation of circumstances at that time.

3. Other Conditions to Vesting of RSU Grant . Your RSU Grant is governed by the terms of this Agreement and the attached Annex A and the Plan. In addition, the grant, vesting, and settlement of the RSUs shall be subject to your continued compliance with the restrictive covenants as set forth in Annex B hereto, which are incorporated by reference herein.

RSUs are being granted only to a limited number of key employees. This grant should, consequently, be treated confidentially.

A- 1

EXHIBIT 10.3

Please read and acknowledge this agreement through E-Trade as specified in the accompanying cover memo.

W. R. GRACE & CO.

By: ________________

Elizabeth Brown

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

A- 2

EXHIBIT 10.3

A- 3

Annex A EXHIBIT 10.3

W. R. Grace & Co.

Administrative Practices – RSU Grants

Definitions

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

“Committee”: The Compensation Committee of the Board of Directors.

“Company”: W. R. Grace & Co., a Delaware corporation and/or, if applicable in the context, one or more of its Subsidiaries.

“Key Employee”: An officer or other full-time employee of the Company, who, in the opinion of the Company, can contribute significantly to the growth and successful operations of the Company.

“Participant”: A Key Employee who is a recipient of a RSU Grant.

“RSU Grant”: A “restricted share unit” granted to a Participant, which would entitle him or her to a cash payment (or stock award), in accordance with his or her 2015 RSU Grant Agreement.

“Service Period”: [ ] to [ ] (inclusive).

“Stock Incentive Plan”: the W. R. Grace & Co. 2014 Stock Incentive Plan.

Administration and Amendment

The Committee has full and exclusive authority to administer the RSU Grant, and to interpret the provisions of each Grant Agreement and the Administrative Practices specified herein, as well as the provisions of each RSU Grant Agreement. Decisions of the Committee regarding the interpretation and administration of the RSU Grant shall be final and binding on all parties.

The Administrative Practices for the RSU Grant specified herein may be amended by the Committee, provided that, no amendment or discontinuance of RSU Grants shall, without a Participant’s consent, adversely affect his or her rights in any cash payment or stock award related thereto.

RSU Grant

Each Participant’s RSU Grant is made pursuant to a RSU Grant Agreement that specifies the number of RSUs granted to the Participant, the manner of settlement related to any RSU awards that become payable, and such other terms and conditions as the Committee shall approve, inclusive of the provisions of this Annex A, which are incorporated into the RSU Grant Agreement to which this Annex A is attached.

For the avoidance of doubt, the RSU Grants that are scheduled to be settled as a stock award shall be granted under the Stock Incentive Plan, and the terms of this Annex A shall be interpreted in a manner that is consistent with the terms of the Stock Incentive Plan such that the provisions contained in these Administrative Practices shall be in addition to, and not in replacement of, the applicable terms of such Plan.

A- 1

Annex A EXHIBIT 10.3

Termination or Change in Employment Status

A Participant shall forfeit all rights to any cash payment (or stock award) related to a RSU Grant, if, prior to the Vesting/Stock Valuation Date specified by his or her RSU Grant Agreement, the Participant’s employment terminates for any reason other than as provided below, unless the Committee (or the designee of the Committee, which may include the Chief Executive Officer of the Company) determines to make an exception.

If a Participant ceases employment at or after age 55 (at a time that the sum of his or her years of service and age total at least 60), or at or after age 62, or as a result of death or disability, prior to the Vesting/Stock Valuation Date specified by his or her RSU Grant Agreement, then he or she (or his or her estate or legal representative, as appropriate) shall be entitled to receive any cash payment or stock award (as appropriate), as soon as administratively practical after cessation of employment, calculated using the date of his or her cessation of employment as the Vesting/Stock Valuation Date, except that the amount of any such payment or award shall be reduced ratably in proportion to the portion of the Service Period during which the Participant was not an employee (measured in whole calendar months). If a Participant ceases employment with the Company for any of the reasons specified in this paragraph, after the designated Vesting/Stock Valuation Date (but before the cash payment or stock award is made), then his or her rights to his RSU Grant shall thereupon vest, and he or she shall be entitled to receive such cash payment or stock award at the time he or she would have otherwise received such payment or award.

A leave of absence, if approved by the Committee, shall not be deemed a termination or change of employment status for the purposes of this RSU Grant, but, unless the Committee otherwise directs, any cash payment or stock award related to the RSU Grant that a Participant would otherwise have received shall be reduced ratably in proportion to the portion of the Service Period during which the Participant was on such leave of absence.

Any consent, approval or direction that the Committee may give under this section in respect of an event or transaction may be given before or after the event or transaction.

Code Section 409A

Notwithstanding any other provision of any RSU Grant Agreement or this Annex A, RSU Grants shall be settled in a manner intended to comply with the provisions of Section 409A of the Code, which shall include (i) RSUs that become vested on the Vesting/Stock Valuation Date being settled not later than the last day of the calendar year of the applicable Vesting/Stock Valuation Date (as defined in the 2015 RSU Grant Agreement) and (ii) RSUs held by a “specified employee” (as defined under Code Section 409A) that become vested, and are to be settled upon a Participant’s “separation from service” (as defined in Code Section 409A), being settled on the first business day following the date that is six months after the effective date of such separation from service.

Calculation of Cash Payments or Stock Awards

The calculations to determine any cash payment (or stock award) associated with a RSU Grant shall be performed by a designee of the Committee.

Cash Dividends

In the event the Company issues cash dividends on the common stock of the Company during the Service Period, the Committee may, but shall not be obligated to, make any adjustments to RSU Grants, which the Committee deems appropriate in its sole discretion to account for such dividends.

Treatment of Corporate Acquisitions and Divestments and Extraordinary Events

A- 2

Annex A EXHIBIT 10.3

Notwithstanding any other provision of these Administrative Practices (or the Stock Incentive Plan, as appropriate) to the contrary, in the event a Change in Control of the Company (within the meaning of the Stock Incentive Plan) shall occur during a Service Period, then each Participant’s RSU Grant (with respect to that Service Period) shall thereupon fully vest, and he or she shall be entitled to receive any cash payment or stock award (as appropriate) he or she would otherwise have received as soon as administratively practical after the Change in Control, calculated using the date of such Change in Control as the Vesting/Stock Valuation Date.

General

Nothing in this document or in any instrument executed pursuant hereto shall confer upon a Participant any right to continue in the employ of the Company or a Subsidiary, or shall affect the right of the Company or a Subsidiary to terminate his or her employment with or without cause.

The Company or a Subsidiary may make such provisions as it may deem appropriate for the withholding or any taxes that the Company or a Subsidiary determines it is required to withhold in connection with any RSU Grant or any cash payment (or stock award) related thereto.

No RSU Grant, nor any cash payment or stock award related thereto, or other right thereunder, shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance or charge, except by will or the laws of descent and distribution, or by the terms of a Participant’s Designation of Beneficiary, if any, on file with the Company.

Nothing in a RSU Grant 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 employees generally, or to any class or group of employees, which the Company or a Subsidiary now has or may hereafter lawfully put into effect, including, without limitation, any retirement, pension, group insurance, annual bonus, stock purchase, stock bonus or stock option plan.

No cash amounts paid or stock awarded pursuant to any RSU Grant shall be included or counted as compensation for the purposes of any employee benefit plan of the Company or a Subsidiary where contributions to the plan, or the benefits received from the plan, are measured or determined in whole or in part, by the amount of the employee’s compensation.

A RSU Grant to an employee of a Subsidiary shall be contingent on the approval of the Subsidiary and the Subsidiary’s agreement that (a) the Company may administer the RSU Grant on its behalf and (b) the Subsidiary will make, or reimburse the Company for, the cash payments or stock awards related to the RSU Grant. The provisions of this paragraph and the obligations of the Subsidiary so undertaken may be waived, in whole or in the part, from time to time by the Company.

The Chief Executive Officer of the Company may approve such technical changes and clarifications to the RSU Grants as necessary, provided that such changes or clarifications do not vary substantially from the terms and conditions outlined herein.

A- 3

Annex B EXHIBIT 10.3

W. R. Grace & Co.

Restrictive Covenants – RSU Grants


1.	Noncompetition

(a) For a period of [____] months after a Participant is no longer employed (for any reason whatsoever) by the Company, the Participant will not, without the prior written consent of an authorized officer of the Company, (a) directly or indirectly engage in or (b) assist or have any active interest in (whether as a proprietor, partner, stockholder, officer, director or any type of principal whatsoever ( provided that ownership of not more than 2% of the outstanding stock of a corporation traded on a national securities exchange shall not of itself be viewed as assisting or having an active interest), or (c) enter the employment of or act as an agent, broker or distributor for or adviser or consultant to any person, firm, corporation or business entity that is (or is about to become) directly or indirectly engaged in the development, manufacture or sale of any product that competes with or is similar to any product manufactured, sold or under development by the Company at any time while the Participant was employed by the Company, in any area of the world in which such product is, at the time the Participant ceases to be employed, manufactured or sold by the company; provided that this restriction shall apply only with respect to the products with whose development, manufacture, or sale the Participant was concerned or connected in any way during the 12 month period immediately prior to the Participant ceasing to be an employee of the Company.


2.	Nonsolicitation of Customers

(a) The Participant agrees that during the [____] period immediately following cessation of the Participant’s employment with the Company for any reason whatsoever, the Participant shall not, on the Participant’s own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, without the prior written consent of an authorized officer of the Company, solicit, contact, call upon, communicate with or attempt to communicate with any customer or prospect of the Company, or any representative of any customer or prospect of the Company, with a view to sell or provide any product, equipment, or service competitive or potentially competitive with any product, equipment, or service sold or provided or under development by Company during the 12 months immediately preceding cessation of the Participant’s employment with the Company; provided that the restrictions set forth in this paragraph shall apply only to customers or prospects of the Company, or representative of customers or prospects of the Company, with whom the Participant had contact during such 12-month period. The actions prohibited by this section shall not be engaged in by the Participant directly or indirectly, whether as manager, salesman, agent, sales or service representative, engineer, technician or otherwise.

Nonsolicitation of Employees . The Participant agrees that during the [___] period immediately following cessation of the Participant’s employment with the Company for any reason whatsoever, the Participant shall not, on the Participant’s own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, without the prior written consent of an authorized officer of the Company, recruit, solicit, or induce, or attempt to recruit, solicit, or induce, any employee of the Company (with whom the Participant had contact or supervised during the term of the Participant’s employment with the Company) to terminate their employment relationship with the Company or to perform services for any other person, firm, corporation or business organization or entity.

B- 1

Annex B EXHIBIT 10.3

The Participant acknowledges that were the Participant to breach the provisions of any of these restrictive covenants, the injury to the Company would be substantial, irreparable, and impossible to measure and compensate in money damages alone. The Participant therefore agrees that, in addition to provable damages, the Company may seek, and agrees that a court of competent jurisdiction should grant, preliminary and permanent injunctive relief prohibiting any conduct by the Participant that violates any of these covenants.

5. Plan Terms . This Annex B shall be governed pursuant to the terms of the Plan.

B- 2

Exhibit 99.1

Unaudited Pro Forma Consolidated Financial Information

Separation and Distribution of GCP Applied Technologies Inc.

As previously disclosed, on February 3, 2016 (the “Distribution Date”), W. R. Grace & Co. and its consolidated subsidiaries (“Grace”) completed the transfer of its construction products business, and its packaging technologies business operated under the “Darex” name, to GCP Applied Technologies Inc. (“GCP”), then a wholly-owned subsidiary of Grace (the “Separation”), and the distribution of all of the Grace-owned common stock of GCP to Grace’s stockholders in a distribution intended to be generally tax-free to Grace’s stockholders (the “Distribution”). The Distribution, which was effective at 6:00 p.m., Eastern Time, on the Distribution Date, was made to Grace stockholders of record as of the close of business on January 27, 2016. In connection with the Separation, GCP made cash distributions of $750 million to Grace and its subsidiaries.

Prior to the completion of the Separation and the Distribution, Grace, W. R. Grace & Co.–Conn and GCP entered into a Separation and Distribution Agreement and certain related agreements that govern the post-Separation relationship between Grace and GCP. A description of such agreements is set forth in the Current Report on Form 8-K filed by Grace with the U.S. Securities and Exchange Commission (the “SEC”) on January 28, 2016.

As a result of the Separation and Distribution, GCP is now an independent public company and its common stock is listed under the symbol “GCP” on the New York Stock Exchange. Grace does not beneficially own any shares of GCP common stock and will not consolidate the financial results of GCP for its future financial reporting. Beginning with the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, GCP’s historical financial results through the Distribution Date will be reflected in Grace’s Consolidated Financial Statements as discontinued operations.

The following unaudited pro forma consolidated financial information consists of Unaudited Pro Forma Consolidated Statements of Operations for the nine months ended September 30, 2015, and for the years ended December 31, 2014, 2013, and 2012, and the Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2015, which were derived from Grace’s historical Consolidated Financial Statements and give effect to the Separation and Distribution. The unaudited pro forma consolidated financial information should be read together with Grace’s historical Consolidated Financial Statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2014, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.

The Unaudited Pro Forma Consolidated Statements of Operations for the nine months ended September 30, 2015 and for the years ended December 31, 2014, 2013 and 2012 reflect Grace’s results as if the Separation, Distribution, and related transactions described below had occurred as of January 1, 2012. The Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2015, reflects Grace’s financial position as if the Separation, Distribution and related transactions described below had occurred as of that date.

The unaudited pro forma consolidated financial information gives effect to the Separation, Distribution, and related transactions, including:


•	the transfer to GCP of Grace's assets and liabilities that are specifically identifiable or otherwise allocable to GCP;


•	the elimination of Grace’s equity interest in GCP;


•	the removal of certain non-recurring separation costs directly related to the Separation and Distribution;


•	the cash distribution from GCP to Grace; and


•	the reduction in Grace's debt using the cash received from GCP.

The unaudited pro forma consolidated financial information is not intended to be a complete presentation of Grace’s financial position or results of operations had the Separation, Distribution and related transactions occurred as of and for the periods indicated. In addition, the unaudited pro forma consolidated financial information is provided for illustrative and informational purposes only and is not necessarily indicative of Grace’s future results of operations or financial condition had the Separation and the Distribution been completed on the

dates assumed. The pro forma adjustments are based on available information and assumptions that Grace management believes are reasonable, that reflect the impacts of events directly attributable to the Separation and the Distribution, that are factually supportable, and for purposes of the Consolidated Statements of Operations, are expected to have a continuing impact on Grace. The pro forma adjustments may differ from those that will be calculated to report GCP as a discontinued operation in Grace’s future filings.

The discontinued operations adjustments to Grace's historical financial statements have been prepared on a basis consistent with U.S. GAAP and requirements of the SEC. The method for determining selling, general and administrative costs for discontinued operations is different from the method used for the carve-out financial statements that were included in GCP’s historical financial statements included in the Registration Statement on Form 10 filed by GCP with the SEC in connection with the Separation and the Distribution. For purposes of the carve-out financial statements selling, general and administrative costs are more fully allocated to GCP while under discontinued operations general corporate overhead is not allocated to the discontinued operations. Grace's pro forma results for the nine months ended September 30, 2015, include selling, general and administrative costs of approximately $33 million that were allocated to GCP in GCP's historical financial statements included in the Registration Statement on Form 10. For full year 2016, Grace currently expects corporate costs to be approximately $65 million to $70 million.

See the notes to the unaudited pro forma consolidated financial information for a more detailed discussion of the adjustments.

W. R. Grace & Co. and Subsidiaries

Unaudited Pro Forma Consolidated Statement of Operations

For the Nine Months Ended September 30, 2015



(In millions, except per share amounts)	Historical Grace (as reported)			Discontinued Operations(A)			Pro Forma Adjustments(B)			Pro Forma Grace Continuing Operations
Net sales	$	2,292.8		$	(1,089.4	)				$	1,203.4
Cost of goods sold	1,412.0			(690.1		)				721.9
Gross profit	880.8			(399.3		)				481.5
Selling, general and administrative expenses	409.4			(184.3		)				225.1
Research and development expenses	53.2			(16.8		)				36.4
Interest expense and related financing costs	74.9			(1.1		)	(11.9		)	61.9
Interest accretion on deferred payment obligations	0.6			—						0.6
Loss in Venezuela	60.8			(60.8		)				—
Repositioning expenses	34.3			(28.2		)	(6.1		)	—
Equity in earnings of unconsolidated affiliate	(12.1		)	—						(12.1		)
Gain on termination and curtailment of postretirement plans	(4.5		)	—						(4.5		)
Chapter 11 expenses, net	4.3			—						4.3
Other expense, net	13.1			(11.2		)	6.1			8.0
Total costs and expenses	634.0			(302.4		)	(11.9		)	319.7
Income from continuing operations before income taxes	246.8			(96.9		)	11.9			161.8
Provision for income taxes on continuing operations	(122.4		)	69.3			(4.4		)	(57.5		)
Net income from continuing operations	124.4			(27.6		)	7.5			104.3
Less: Net (income) loss attributable to noncontrolling interests	(0.5		)	0.6						0.1
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	123.9		$	(27.0	)	$	7.5		$	104.4
Earnings Per Share From Continuing Operations Attributable to W. R. Grace & Co. Shareholders
Basic earnings per share:
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	1.71								$	1.44
Weighted average number of basic shares	72.5									72.5
Diluted earnings per share:
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	1.69								$	1.43
Weighted average number of diluted shares	73.1									73.1

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

W. R. Grace & Co. and Subsidiaries

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2014



(In millions, except per share amounts)	Historical Grace (as reported)			Discontinued Operations(A)			Pro Forma Adjustments(B)			Pro Forma Grace Continuing Operations
Net sales	$	3,243.0		$	(1,485.7	)				$	1,757.3
Cost of goods sold	2,050.6			(957.0		)				1,093.6
Gross profit	1,192.4			(528.7		)				663.7
Selling, general and administrative expenses	664.0			(248.9		)				415.1
Research and development expenses	79.5			(27.9		)				51.6
Interest expense and related financing costs	61.5			(3.9		)	(15.3		)	42.3
Interest accretion on deferred payment obligations	65.7			—						65.7
Gain on termination of postretirement plans	(39.5		)	—						(39.5		)
Chapter 11 expenses, net	11.0			—						11.0
Asbestos and bankruptcy-related charges, net	7.1			—						7.1
Equity in earnings of unconsolidated affiliate	(19.7		)	—						(19.7		)
Other expense, net	28.5			(17.8		)				10.7
Total costs and expenses	858.1			(298.5		)	(15.3		)	544.3
Income from continuing operations before income taxes	334.3			(230.2		)	15.3			119.4
Benefit from (provision for) income taxes on continuing operations	(57.0		)	69.4			(5.6		)	6.8
Net income from continuing operations	277.3			(160.8		)	9.7			126.2
Less: Net income attributable to noncontrolling interests	(1.0		)	1.2						0.2
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	276.3		$	(159.6	)	$	9.7		$	126.4
Earnings Per Share From Continuing Operations Attributable to W. R. Grace & Co. Shareholders
Basic earnings per share:
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	3.67								$	1.68
Weighted average number of basic shares	75.3									75.3
Diluted earnings per share:
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	3.63								$	1.66
Weighted average number of diluted shares	76.2									76.2

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

W. R. Grace & Co. and Subsidiaries

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2013



(In millions, except per share amounts)	Historical Grace (as reported)			Discontinued Operations(A)			Pro Forma Grace Continuing Operations
Net sales	$	3,060.7		$	(1,451.2	)	$	1,609.5
Cost of goods sold	1,918.6			(945.5		)	973.1
Gross profit	1,142.1			(505.7		)	636.4
Selling, general and administrative expenses	505.7			(252.2		)	253.5
Research and development expenses	65.2			(24.3		)	40.9
Interest expense and related financing costs	43.8			(3.2		)	40.6
Chapter 11 expenses, net of interest income	15.3			—			15.3
Default interest settlement	129.0			—			129.0
Asbestos and bankruptcy-related charges, net	21.9			—			21.9
Equity in earnings of unconsolidated affiliate	(22.9		)	—			(22.9		)
Other expense, net	23.5			(14.3		)	9.2
Total costs and expenses	781.5			(294.0		)	487.5
Income from continuing operations before income taxes	360.6			(211.7		)	148.9
Provision for income taxes on continuing operations	(102.9		)	73.7			(29.2		)
Net income from continuing operations	257.7			(138.0		)	119.7
Less: Net income attributable to noncontrolling interests	(1.6		)	1.6			—
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	256.1		$	(136.4	)	$	119.7
Earnings Per Share From Continuing Operations Attributable to W. R. Grace & Co. Shareholders
Basic earnings per share:
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	3.35					$	1.57
Weighted average number of basic shares	76.4						76.4
Diluted earnings per share:
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	3.30					$	1.54
Weighted average number of diluted shares	77.7						77.7

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

W. R. Grace & Co. and Subsidiaries

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2012



(In millions, except per share amounts)	Historical Grace (as reported)			Discontinued Operations(A)			Pro Forma Grace Continuing Operations
Net sales	$	3,155.5		$	(1,417.7	)	$	1,737.8
Cost of goods sold	2,041.1			(945.8		)	1,095.3
Gross profit	1,114.4			(471.9		)	642.5
Selling, general and administrative expenses	635.2			(272.3		)	362.9
Research and development expenses	64.5			(24.2		)	40.3
Interest expense and related financing costs	46.5			(1.6		)	44.9
Chapter 11 expenses, net of interest income	16.6			—			16.6
Asbestos and bankruptcy-related charges, net	384.6			—			384.6
Equity in earnings of unconsolidated affiliate	(18.5		)	—			(18.5		)
Other expense, net	6.1			(2.2		)	3.9
Total costs and expenses	1,135.0			(300.3		)	834.7
(Loss) income from continuing operations before income taxes	(20.6		)	(171.6		)	(192.2		)
Benefit from (provision for) income taxes on continuing operations	61.6			58.2			119.8
Net income (loss) from continuing operations	41.0			(113.4		)	(72.4		)
Less: Net (income) loss attributable to noncontrolling interests	(1.0		)	1.1			0.1
Net income (loss) from continuing operations attributable to W. R. Grace & Co. shareholders	$	40.0		$	(112.3	)	$	(72.3	)
Earnings Per Share From Continuing Operations Attributable to W. R. Grace & Co. Shareholders
Basic earnings per share:
Net income (loss) from continuing operations attributable to W. R. Grace & Co. shareholders	$	0.53					$	(0.97	)
Weighted average number of basic shares	74.9						74.9
Diluted earnings per share:
Net income (loss) from continuing operations attributable to W. R. Grace & Co. shareholders	$	0.52					$	(0.95	)
Weighted average number of diluted shares	76.3						76.3

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

W. R. Grace & Co. and Subsidiaries

Unaudited Pro Forma Consolidated Balance Sheet

As of September 30, 2015



(In millions, except par value and shares)	Historical Grace (as reported)			Discontinued Operations(A)			Pro Forma Adjustments				Pro Forma Grace Continuing Operations
ASSETS
Current Assets
Cash and cash equivalents	$	331.1		$	(99.9	)	$	250.0		(C)	$	481.2
Trade accounts receivable, net	455.2			(234.4		)					220.8
Inventories	323.1			(114.2		)					208.9
Deferred income taxes	239.6			(8.5		)					231.1
Other current assets	77.3			(32.2		)					45.1
Total Current Assets	1,426.3			(489.2		)	250.0				1,187.1
Properties and equipment, net	813.9			(187.1		)					626.8
Goodwill	439.9			(102.8		)					337.1
Technology and other intangible assets, net	265.7			(34.2		)					231.5
Deferred income taxes	545.6			(15.7		)					529.9
Overfunded defined benefit pension plans	44.7			(44.7		)					—
Investment in unconsolidated affiliate	112.1			—							112.1
Other assets	59.3			(7.6		)	(8.0		)	(C)	43.7
Total Assets	$	3,707.5		$	(881.3	)	$	242.0			$	3,068.2
LIABILITIES AND EQUITY
Current Liabilities
Debt payable within one year	$	72.0		$	(10.2	)	$	(11.2	)	(C)	$	50.6
Accounts payable	262.3			(117.5		)					144.8
Other current liabilities	380.8			(126.3		)	47.8			(D)	302.3
Total Current Liabilities	715.1			(254.0		)	36.6				497.7
Debt payable after one year	2,143.8			—			(487.9		)	(C)	1,655.9
Deferred income taxes	17.7			(21.5		)					(3.8		)
Income tax contingencies	22.5			(12.5		)					10.0
Underfunded and unfunded defined benefit pension plans	440.0			(76.9		)					363.1
Other liabilities	111.0			(8.2		)					102.8
Total Liabilities	3,450.1			(373.1		)	(451.3		)		2,625.7
Equity
Common stock issued, par value $0.01; 300,000,000 shares authorized; outstanding: 71,354,446	0.8			—							0.8
Paid-in capital	491.1			—							491.1
Retained earnings	416.0			(592.2		)	693.3			(E)	517.1
Treasury stock, at cost: shares: 6,102,179	(581.3		)	—							(581.3		)
Accumulated other comprehensive loss	(73.6		)	87.1							13.5
Total W. R. Grace & Co. Shareholders' Equity	253.0			(505.1		)	693.3				441.2
Noncontrolling interests	4.4			(3.1		)					1.3
Total Equity	257.4			(508.2		)	693.3				442.5
Total Liabilities and Equity	$	3,707.5		$	(881.3	)	$	242.0			$	3,068.2

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

W. R. Grace & Co. and Subsidiaries

Unaudited Pro Forma Analysis of Operations



	Nine Months Ended September 30, 2015			Year Ended
(In millions, except per share amounts)	Nine Months Ended September 30, 2015			December 31, 2014			December 31, 2013
Net sales:
Catalysts Technologies	$	855.6		$	1,246.8		$	1,124.0
Materials Technologies	347.8			510.5			485.5
Total Grace net sales	$	1,203.4		$	1,757.3		$	1,609.5
Net sales by region:
North America	$	366.5		$	546.0		$	462.6
Europe Middle East Africa	463.9			701.0			702.7
Asia Pacific	286.0			366.5			318.5
Latin America	87.0			143.8			125.7
Total net sales by region	$	1,203.4		$	1,757.3		$	1,609.5
Profitability performance measures:
Adjusted EBIT(F)(G):
Catalysts Technologies segment operating income	$	246.7		$	378.3		$	327.5
Materials Technologies segment operating income	70.9			101.2			92.5
Corporate costs	(65.3		)	(95.3		)	(82.7		)
Gain on termination of postretirement plans related to current businesses	1.9			23.6			—
Certain pension costs(H)	(15.4		)	(24.5		)	(22.1		)
Adjusted EBIT	238.8			383.3			315.2
Benefit (costs) related to Chapter 11 and asbestos, net	0.9			(26.3		)	(46.1		)
Pension MTM adjustment and other related costs, net	(4.2		)	(137.6		)	58.8
Gain on termination of postretirement plans related to divested businesses	2.6			15.9			—
Restructuring expenses and asset impairments	(8.8		)	(4.1		)	(5.1		)
Repositioning expenses	(6.1		)	—			—
Gain (loss) on sale of product line	—			0.2			(1.0		)
Income and expense items related to divested businesses	1.0			(5.2		)	(4.1		)
Default interest settlement	—			—			(129.0		)
Interest expense, net	(62.3		)	(106.6		)	(39.8		)
Benefit from (provision for) income taxes	(57.5		)	6.8			(29.2		)
Net income from continuing operations attributable to W. R. Grace & Co. shareholders	$	104.4		$	126.4		$	119.7

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

W. R. Grace & Co. and Subsidiaries

Unaudited Pro Forma Analysis of Operations (Continued)



	Nine Months Ended September 30, 2015			Year Ended
(In millions, except per share amounts)				December 31, 2014			December 31, 2013
Adjusted profitability performance measures:
Adjusted Gross Margin:
Catalysts Technologies	41.9		%	42.8		%	40.1		%
Materials Technologies	38.4		%	37.9		%	36.3		%
Adjusted Gross Margin	40.9		%	41.4		%	38.9		%
Pension costs in cost of goods sold	(0.9		)%	(3.8		)%	0.7		%
Total Grace	40.0		%	37.6		%	39.6		%
Adjusted EBIT:
Catalysts Technologies	$	246.7		$	378.3		$	327.5
Materials Technologies	70.9			101.2			92.5
Corporate	(78.8		)	(96.2		)	(104.8		)
Total Grace	238.8			383.3			315.2
Depreciation and amortization:
Catalysts Technologies	$	51.2		$	66.3		$	54.2
Materials Technologies	17.6			26.2			25.7
Corporate	6.0			10.2			7.9
Total Grace	74.8			102.7			87.8
Adjusted EBITDA:
Catalysts Technologies	$	297.9		$	444.6		$	381.7
Materials Technologies	88.5			127.4			118.2
Corporate	(72.8		)	(86.0		)	(96.9		)
Total Grace	313.6			486.0			403.0
Operating margin:
Catalysts Technologies	28.8		%	30.3		%	29.1		%
Materials Technologies	20.4		%	19.8		%	19.1		%
Total Grace	19.8		%	21.8		%	19.6		%
Adjusted EBITDA margin:
Catalysts Technologies	34.8		%	35.7		%	34.0		%
Materials Technologies	25.4		%	25.0		%	24.3		%
Total Grace	26.1		%	27.7		%	25.0		%

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

Notes to the Unaudited Pro Forma Consolidated Financial Statements

The unaudited pro forma consolidated financial statements as of and for the nine months ended September 30, 2015, and the unaudited pro forma consolidated statements of operations for the years ended December 31, 2014, 2013, and 2012, include the following adjustments:


(A)	Reflects the discontinued operations of Grace. Includes the removal of the assets, liabilities, equity and results of operations of GCP and non-recurring costs directly related to the Separation and Distribution transactions. Does not adjust for certain general corporate overhead expenses that were not specifically related to GCP and did not meet the discontinued operations criteria.


(B)	Reflects a reduction of interest expense related to the repayment of debt by Grace as part of Grace’s post-separation capital structure. Interest expense was not adjusted for the years ended December 31, 2013 and 2012, as a result of Grace's status as a debtor under Chapter 11.


(C)	Reflects the $750 million cash distributions from GCP to Grace and the repayment of $500 million of U.S. dollar and euro term loans issued in February 2014. Also reflects the write-off of deferred financing fees associated with the term loans.


(D)	Reflects the expected one-time Separation-related costs incurred subsequent to September 30, 2015. These costs primarily relate to non-recurring professional fees incurred in connection with the Separation.


(E)	Reflects the impact to Grace's Retained Earnings from the pro forma adjustments described in notes (C) and (D) above.

(F)

In the above charts, Grace presents its results of operations by operating segment and for adjusted operations. Adjusted EBIT means net income from continuing operations adjusted for: interest income and expense; income taxes; costs related to Chapter 11 and asbestos; restructuring and repositioning expenses and related asset impairments; pension costs other than service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits; income and expense items related to divested businesses, product lines, and certain other investments; gains and losses on sales of businesses, product lines, and certain other investments; and certain other unusual or infrequent items that are not representative of underlying trends. Adjusted EBITDA means Adjusted EBIT adjusted for depreciation and amortization. Grace uses Adjusted EBIT as a performance measure in significant business decisions. Adjusted Gross Margin means gross margin adjusted for pension-related costs included in cost of goods sold. Adjusted EBIT, Adjusted EBITDA, and Adjusted Gross Margin do not purport to represent income or liquidity measures as defined under United States generally accepted accounting principles, and should not be considered as alternatives to such measures as an indicator of Grace's performance. These measures are provided to distinguish the operating results of Grace's current business base from the costs of Grace's Chapter 11 proceedings, asbestos liabilities, restructuring and repositioning activities, and divested businesses.


(G)	Grace's segment operating income includes only Grace's share of income from consolidated and unconsolidated joint ventures.

(H)

Certain pension costs include only ongoing costs recognized quarterly, which include service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits. Catalysts Technologies and Materials Technologies segment operating income and corporate costs do not include any amounts for pension expense. Other pension related costs including annual mark-to-market adjustments and actuarial gains and losses are excluded from Adjusted EBIT. These amounts are not used by management to evaluate the performance of Grace's businesses and significantly affect the peer-to-peer and period-to-period comparability of our financial results. Mark-to-market adjustments and actuarial gains and losses relate primarily to changes in financial market values and actuarial assumptions and are not directly related to the operation of Grace's businesses.