ON OR ABOUT APRIL 1, 2001 THE DEBTORS FILED A PETITION FOR REORGANIZATION UNDER CHAPTER 11. ON OR ABOUT MARCH 28, 2003 THE UNITED STATES, ON BEHALF OF EPA, FILED A PROOF OF CLAIM AGAINST W.R. GRACE. ON OR ABOUT DECEMBER, 17,2004, THE UNITED STATES, ON BEHALF OF THE EPA, FILED A SUPPLEMENTAL PROOF OF CLAIM AGAINST THE DEBTOR. W.R. GRACE IS ONE OF SEVERAL POTENTIALLY RESPONSIBLE PARTIES AT THE SITE. SOME, BUT NOT ALL, OF THE OTHER POTENTIALLY RESPONSIBLE PARTIES HAVE FORMED THE WAUCONDA TASK GROUP (``WTG'') TO PERFORM CLEANUP WORK AT THE SITE. THE PROPOSED SETTLEMENT AGREEMENT WOULD WITHDRAW THE UNITED STATES' SUPPLEMENTAL PROOF OF CLAIM RELATED TO THE WAUCONDA SITE UPON PAYMENT OF $1.25 MILLION TO THE WTG, AT LEAST 55% OF WHICH SHALL ONLY BE USED TO FUND A
PUBLIC WATER SYSTEM IN WAUCONDA, ILLINOIS. GRACE'S PAYMENT TO WTG WOULD
BE MADE PURSUANT TO A SEPARATE STIPULATION BETWEEN GRACE AND THE WTG (TO WHICH THE UNITED STATES IS NOT A PARTY), AND MUST BE SEPARATELY APPROVED BY THE BANKRUPTCY COURT.