-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NlOz+BN7uHrTotOUs57j9y1ZQXbJoTeIyLahU3CKy5Djt6Mckak6oxKNETctTA7W 4mqrCY5CDqcZ6wzWW226Yg== 0000088204-97-000015.txt : 19971117 0000088204-97-000015.hdr.sgml : 19971117 ACCESSION NUMBER: 0000088204-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEALED AIR CORP CENTRAL INDEX KEY: 0000088204 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 221682767 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07834 FILM NUMBER: 97718015 BUSINESS ADDRESS: STREET 1: PARK 80 EAST CITY: SADDLE BROOK STATE: NJ ZIP: 07662 BUSINESS PHONE: 2017917600 FORMER COMPANY: FORMER CONFORMED NAME: CHAVANNES M A DATE OF NAME CHANGE: 19670406 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________ FORM 10-Q (Mark One) ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to_______ Commission file number 1-7834 SEALED AIR CORPORATION (Exact name of registrant as specified in its charter) Delaware 22-1682767 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) Park 80 East 07663-5291 Saddle Brook, New Jersey (Zip Code) (Address of Principal Executive Offices) Registrant's telephone number, including area code (201) 791-7600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO_____ There were 42,624,246 shares of the registrant's common stock, par value $0.01 per share, outstanding as of October 31, 1997. PART I FINANCIAL INFORMATION SEALED AIR CORPORATION AND SUBSIDIARIES Consolidated Statements of Earnings For the Three Months and Nine Months Ended September 30, 1997 and 1996 (In thousands of dollars except per share data) (Unaudited)
For the For the Three Months Ended Nine Months Ended September 30 September 30 1997 1996 1997 1996 Net sales $206,303 $196,532 $620,769 $575,578 Cost of sales 128,108 123,406 387,364 361,050 Gross profit 78,195 73,126 233,405 214,528 Marketing, administrative and development expenses 42,507 40,929 127,417 119,921 Operating profit 35,688 32,197 105,988 94,607 Other income (expense): Interest income 611 334 965 964 Interest expense (1,525) (3,314) (5,683) (10,653) Other, net 535 (879) 1,881 (1,269) Other income (expense), net (379) (3,859) (2,837) (10,958) Earnings before income taxes 35,309 28,338 103,151 83,649 Income taxes 13,912 11,197 40,642 33,045 Net earnings $ 21,397 $ 17,141 $ 62,509 $ 50,604 Net earnings per common share $ 0.50 $ 0.40 $ 1.47 $ 1.19 Weighted average number of shares outstanding (000) 42,624 42,473 42,609 42,445 See accompanying notes to consolidated financial statements.
2 SEALED AIR CORPORATION Consolidated Balance Sheets September 30, 1997 and December 31, 1996 (In thousands of dollars except share data) (Unaudited)
September 30, December 31, 1997 1996 ASSETS Current assets: Cash and cash equivalents $ 25,437 $ 2,985 Accounts receivable, less allowance for doubtful accounts of $6,233 in 1997 and $5,623 in 1996 127,801 124,204 Other receivables 6,132 8,258 Inventories 62,217 57,231 Prepaid expenses 2,644 1,095 Deferred taxes 12,786 13,193 Total current assets 237,017 206,966 Property and equipment: Land and buildings 82,005 81,629 Machinery and equipment 201,243 199,275 Leasehold improvements 7,807 8,409 Furniture and fixtures 11,137 12,029 Construction in progress 7,794 6,139 309,986 307,481 Less accumulated depreciation and amortization 143,025 132,919 Property and equipment, net 166,961 174,562 Patents, patent applications and rights, less accumulated amortization of $16,270 in 1997 and $15,139 in 1996 11,155 11,998 Excess of cost over fair value of net assets acquired, less accumulated amortization of $17,506 in 1997 and $12,966 in 1996 41,003 47,840 Other assets 27,092 25,753 $483,228 $467,119 See accompanying notes to consolidated financial statements.
3 SEALED AIR CORPORATION Consolidated Balance Sheets September 30, 1997 and December 31, 1996 (Continued) (In thousands of dollars except share data) (Unaudited)
September 30, December 31, 1997 1996 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable and current installments of long-term debt $ 24,599 $ 15,565 Accounts payable 47,295 46,934 Other accrued liabilities 70,872 69,849 Income taxes payable 10,147 15,708 Total current liabilities 152,913 148,056 Long-term debt, less current installments 48,718 99,900 Deferred income taxes 21,477 19,863 Other non-current liabilities 12,494 12,651 Total liabilities 235,602 280,470 Shareholders' equity: Preferred stock, no par value. Authorized 1,000,000 shares, none issued in 1997 and 1996 - - Common stock, $.01 par value. Authorized 125,000,000 shares in 1997 and 60,000,000 shares in 1996, issued 42,782,104 shares in 1997 and 42,747,704 shares in 1996 428 427 Additional paid-in capital 172,120 167,801 Retained earnings 78,530 16,021 Accumulated translation adjustment 740 8,615 251,818 192,864 Less deferred compensation and cost ($158 in 1997 and $227 in 1996) of 157,858 shares in 1997 and 226,758 shares in 1996 of common stock held as treasury stock 4,192 6,215 Shareholders' equity 247,626 186,649 $483,228 $467,119 See accompanying notes to consolidated financial statements.
4 SEALED AIR CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows For the Nine Months Ended September 30, 1997 and 1996 (In thousands of dollars) (Unaudited)
1997 1996 Cash Flows From Operating Activities: Net earnings $ 62,509 $ 50,604 Adjustments to net earnings to reconcile to net cash provided by operating activities: Depreciation and amortization 33,658 29,427 Deferred credits - income taxes and other 1,495 (3,400) Net losses on disposals of fixed assets 103 47 Other, net (5,506) (3,363) Cash provided (used) by changes in: Receivables (8,177) (7,375) Inventories (7,253) (668) Prepaid expenses (1,739) (443) Accounts payable 2,193 (41) Other accrued liabilities 8,200 12,388 Income taxes payable (5,398) (3,014) Net cash provided by operating activities 80,085 74,162 Cash Flows From Investing Activities: Capital expenditures for property and equipment (17,089) (11,816) Proceeds from sales of property and equipment 204 1,009 Net cash utilized in purchase of subsidiaries (2,744) (30,032) Net cash used in investing activities (19,629) (40,839) Cash Flows From Financing Activities: Proceeds from long-term debt 12,238 99,086 Payments of long-term debt (52,206) (132,080) Net proceeds on notes payable 5,617 271 Net cash used by financing activities (34,351) (32,723) Effect of exchange rate changes on cash and cash equivalents (3,653) (791) Cash and Cash Equivalents: Increase (decrease) during the period 22,452 (191) Balance, beginning of period 2,985 7,661 Balance, end of period $ 25,437 $ 7,470 Supplemental Disclosures of Cash Flow Information Cash paid during the period for: Interest $ 5,307 $ 10,737 Income taxes $ 47,928 $ 35,981 See accompanying notes to consolidated financial statements.
5 SEALED AIR CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 1997 and 1996 (Unaudited) (1) Principles of Consolidation The consolidated financial statements include the accounts of Sealed Air Corporation and its subsidiaries (the "Company"). All significant intercompany transactions and balances have been eliminated in consolidation. In management's opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented have been made. Where appropriate, financial statement amounts for prior periods have been reclassified to conform with their 1997 presentation. (2) Income Taxes An explanation of the differences between the effective income tax rate and statutory U.S. federal income tax rate expressed as a percentage of earnings before income taxes for the nine months ended September 30, 1997 and 1996 follows: 1997 1996 Statutory U.S. federal income tax rate 35.0% 35.0% Provision for foreign withholding taxes and additional U.S. taxes on the accumulated earnings of foreign subsidiaries 0.3 1.0 Tax effect of U.S. expenses not subject to tax benefit 0.5 0.2 State income taxes, net of U.S. federal income tax benefit 4.2 4.2 Taxes on foreign earnings at other than the statutory U.S. federal income tax rate 0.0 (0.2) Other miscellaneous items (0.6) (0.7) Effective income tax rate 39.4% 39.5% (3) Earnings Per Share Earnings per common share are computed on the basis of the weighted average number of shares of common stock outstanding during the year, including shares issued for contingent stock awards and non-cash compensation. 6 SEALED AIR CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 1997 and 1996 (Unaudited) (3) Earnings Per Share (continued) In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share", which is required to be adopted on December 31, 1997. Such statement is not expected to have a significant impact on the Company's consolidated financial statements. (4) Merger of Packaging Business of W.R. Grace & Co. On August 14, 1997, the Company and W.R. Grace & Co. announced they had entered into a definitive agreement to combine Grace's packaging business with the Company to create a new publicly owned company, to be called Sealed Air Corporation. The transaction, which is expected to be completed in early 1998, is intended to be a tax-free transaction that will be accounted for under the reverse purchase method of accounting. The definitive agreement is subject to customary conditions, including approval of both companies' shareholders and certain regulatory approvals. The Company anticipates that most of the costs to complete this transaction will be incurred in the fourth quarter of 1997 and in 1998. 7 Management's Discussion and Analysis Results Of Operations and Financial Condition Results of Operations Net sales increased 5% in the third quarter and 8% in the first nine months of 1997 compared to the third quarter and first nine months of 1996. The increase in net sales was due primarily to increased unit volume in the Company's major classes of products in the 1997 periods and, in the nine month period, the added net sales of businesses acquired during 1996. Foreign currency translation had a negative effect on the increase in net sales in all major classes of products in the 1997 periods. Excluding the negative effect of foreign currency translation, the increase in net sales would have been 9% and 10% compared with the third quarter and first nine months of 1996, respectively. Net sales from domestic operations increased 7% in the third quarter and first nine months of 1997 compared to the 1996 periods primarily due to increased unit volume. Net sales from foreign operations increased 2% in the third quarter and 10% in the first nine months of 1997 compared to the 1996 periods. These increases in net sales were due primarily to increased unit volume, partially offset by the negative effect of foreign currency translation. Excluding the negative effect of foreign currency translation, the increase in net sales from foreign operations would have been 12% and 16% compared with the third quarter and first nine months of 1996, respectively. The increase in net sales from foreign operations in the first nine months also reflected the added net sales of businesses acquired during 1996. 8 Management's Discussion and Analysis Results Of Operations and Financial Condition Net sales of engineered products, primarily Instapak (R) products and specialty polyethylene foams, increased 7% in the third quarter and 8% in the first nine months of 1997 primarily due to increased unit volume. Net sales of surface protection and other cushioning products, primarily air cellular products, other polyethylene foam products and protective and durable mailers and bags, increased 5% in the third quarter and 10% in the first nine months of 1997 primarily due to increased unit volume. The increase in the first nine months of 1997 also reflected the added net sales of businesses acquired during 1996. Net sales of food packaging products increased 1% in the third quarter but decreased 1% in the first nine months compared with the 1996 periods. In the third quarter of 1997, the increase primarily reflected changes in product mix. For the first nine months of 1997, the transfer of certain food packaging products during 1996 to a small unconsolidated joint venture in Australia more than offset increases in unit volume of certain products. Net sales of other products increased 8% in the first nine months of 1997, primarily due to the added net sales of businesses acquired during 1996 and increased unit volume. Net sales of other products decreased 4% in the third quarter of 1997 primarily due to lower sales of certain non-packaging products compared to the third quarter of 1996. Cost of sales increased 4% in the third quarter and 7% in the first nine months of 1997 primarily reflecting the Company's higher level of net sales partially offset by the effect of certain lower raw material costs. 9 Management's Discussion and Analysis Results Of Operations and Financial Condition As a result, cost of sales as a percent of net sales decreased modestly compared to the respective 1996 periods. Marketing, administrative and development expenses increased 4% in the third quarter and 6% in the first nine months of 1997 primarily reflecting the Company's higher level of net sales. As a percent of net sales, marketing, administrative and development expenses decreased modestly compared to the 1996 periods. Operating profit increased 11% in the third quarter and 12% in the first nine months of 1997 primarily reflecting the Company's higher level of net sales and the changes in costs and expenses discussed above. Interest expense, which is the principal component of other income (expense), net, decreased to $1,525,000 in the third quarter and to $5,683,000 in the first nine months of 1997 compared to $3,314,000 and $10,653,000 in the third quarter and first nine months of 1996, respectively, primarily reflecting the decrease in the Company's average outstanding indebtedness. The Company's effective income tax rate was 39.4% in the third quarter and first nine months of 1997 and 39.5% in the 1996 periods. Net earnings increased 25% to $21,397,000, or $0.50 per share, in the third quarter and 24% to $62,509,000, or $1.47 per share, in the first nine months of 1997 compared with net earnings of $17,141,000, or $0.40 per share, and $50,604,000, or $1.19 per share, in the third quarter and first nine months of 1996 primarily reflecting the Company's higher 10 Management's Discussion and Analysis Results Of Operations and Financial Condition level of operating profit and lower interest expense. On August 14, 1997, the Company and W.R. Grace & Co. announced they had entered into a definitive agreement to combine Grace's packaging business with the Company to create a new publicly owned company, to be called Sealed Air Corporation. The transaction is expected to be completed in early 1998. The Company anticipates that most of the costs to complete this transaction will be incurred in the fourth quarter of 1997 and in 1998. Liquidity and Capital Resources The Company's principal sources of liquidity are cash flows from operations and amounts available under the Company's existing lines of credit. The Company has met, and currently expects that it will continue to meet, substantially all of its working capital and capital expenditure requirements as well as its debt servicing requirements with funds provided by operations and borrowings made either under its available lines of credit or otherwise. Net cash provided by operating activities amounted to $80,085,000 in the first nine months of 1997 compared with $74,162,000 for the 1996 period. In each period, changes in operating assets and liabilities partially offset the Company's increased net earnings and higher levels of depreciation and amortization. The changes in operating assets and liabilities were primarily due to the timing of cash receipts and payments and the Company's higher level of operations. The strengthening of the U.S. dollar had a negative effect on cash and cash equivalents in the third quarter of 1997. 11 Management's Discussion and Analysis Results Of Operations and Financial Condition Net cash used in investing activities amounted to $19,629,000 and $40,839,000 for the first nine months of 1997 and 1996, respectively. Cash used for capital expenditures amounted to $17,089,000 in the first nine months of 1997 compared with $11,816,000 in the 1996 period primarily due to the timing of capital expenditures. The higher level of net cash used in investing activities in the 1996 period primarily reflects the higher amount of cash used for acquisitions made in such period. Net cash used in financing activities amounted to $34,351,000 in the first nine months of 1997 compared with $32,723,000 in the first nine months of 1996. Net repayments of long-term debt in the 1997 and 1996 periods more than offset borrowings incurred in such periods. At September 30, 1997, the Company's working capital amounted to $84,104,000, or 17% of total assets, compared with $58,910,000, or 13% of total assets, at December 31, 1996. This increase in working capital was due primarily to an increase in cash and a decrease in income taxes payable, partially offset by an increase in notes payable and current installments of long-term debt. Cash increased primarily due to operating cash flows which exceeded cash used for investing and financing activities during the 1997 period. Income taxes payable decreased primarily due to the timing of payments. Notes payable and current installments of long-term debt increased due primarily for the reasons discussed below. The Company's ratio of current assets to current liabilities (current ratio) was 1.6 at September 30, 1997 and 1.4 at December 31, 1996. The Company's 12 Management's Discussion and Analysis Results Of Operations and Financial Condition ratio of current assets less inventory to current liabilities (quick ratio) was 1.1 at September 30, 1997 and 1.0 at December 31, 1996. The Company's outstanding debt consists primarily of various foreign loans and borrowings under lines of credit. Long-term debt, less current installments, decreased to $48,718,000 at September 30, 1997 from $99,900,000 at December 31, 1996 reflecting the net repayment of long-term indebtedness. Notes payable and current installments of long- term debt increased to $24,599,000 at September 30, 1997 from $15,565,000 at December 31, 1996 primarily due to the timing of scheduled debt maturities and working capital borrowings. At September 30, 1997, the Company's available lines of credit amounted to approximately $261,852,000 of which approximately $233,712,000 were unused. Such lines of credit, which include an unsecured $200 million revolving credit facility with Bankers Trust Company, as agent for a syndicate of banks (the "BT Credit Agreement"), permit the Company and certain of its subsidiaries to borrow for working capital and other corporate purposes. The BT Credit Agreement provides for changes in borrowing margins based on financial criteria and imposes certain limitations on the operations of the Company and its subsidiaries that include restrictions on the incurrence of additional indebtedness, the creation of liens, the making of investments, dispositions of property or assets, certain transactions with affiliates, and the payment by the Company of cash dividends to its stockholders, as well as financial covenants relating to interest coverage and debt leverage. The Company was in compliance with these requirements as of September 30, 1997. 13 Management's Discussion and Analysis Results Of Operations and Financial Condition Certain of the Company's foreign loans and lines of credit, including the BT Credit Agreement, bear interest at floating rates. The Company utilizes interest rate swaps, currency swaps, and other derivative financial instruments to manage its exposure to fluctuations in interest rates and foreign exchange rates. The Company does not purchase, hold or sell derivative financial instruments for trading purposes. The Company's shareholders' equity increased to $247,626,000 at September 30, 1997 from $186,649,000 at December 31, 1996 primarily as a result of the Company's net earnings for the first nine months of 1997, partially offset by the net change in the accumulated translation adjustment balance due to the effect of foreign currency translation in the first nine months of 1997. 14 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description 2.1 Agreement and Plan of Merger dated as of August 14,1997 (the "Merger Agreement") by and among W.R. Grace & Co., Packco Acquisition Corp. and the Corporation. [Exhibit 2.1 to the Corporation's Current Report on Form 8-K, Date of Report August 14, 1997, File No. 1-7834, is incorporated by reference.] 2.2 Form of Distribution Agreement (the "Distribution Agreement") by and among Grace, W.R. Grace & Co.-Conn. ("Grace-Conn."), and Grace Specialty Chemicals, Inc. ("Grace Chemicals").[Exhibit 2.2 to the Corporations' Current Report on Form 8-K, Date of Report August 14, 1997, File No. 1-7834, is incorporated by reference.] 4.1 Term Sheet for Senior Convertible Preferred Stock of New Sealed Air (referred to therein as "Newco") (Exhibit E to the Merger Agreement). [Exhibit 4.1 to the Corporation's Current Report on Form 8-K/A, Date of Report August 14, 1997, File No. 1-7834, is incorporated by reference.] 4.2 Amendment No.1 dated August 14, 1997 to the Amended and Restated Credit Agreement among the Corporation, certain of its subsidiaries, Bankers Trust Company, as agent, and various financial institutions, dated as of June 8, 1994 and amended and restated as of August 22, 1996. 10.1 Form of Employee Benefits Allocation Agreement by and among Grace, Grace-Conn. and Grace Chemicals. [Exhibit 10.1 to the Corporation's Current Report on Form 8-K, Date of Report August 14, 1997, File No. 1-7834, is incorporated by reference.] 10.2 Form of Tax Sharing Agreement by and among Grace, Grace-Conn. and the Corporation (Exhibit B to the Distribution Agreement). [Exhibit 10.2 to the Corporation's Current Report on Form 8-K, Date of Report August 14, 1997, File No. 1-7834, is incorporated by reference.] 15 10.3 Contingent Stock Plan of the Company, as amended. 10.4 Restricted Stock Plan for Non-Employee Directors of the Company, as amended. 27 Financial Data Schedule. (b) Reports on Form 8-K On August 18, 1997, the Company filed a Current Report on Form 8-K, Date of Report August 14, 1997, as amended by a Current Report on Form 8-K/A filed on August 21, 1997, which reported under Item 5 that on August 14, 1997 the Corporation had entered into an Agreement and Plan of Merger with W.R. Grace & Co., a Delaware corporation, ("Grace") and Packco Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Grace. No financial statements were filed with the Report. 16 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SEALED AIR CORPORATION Date: November 14, 1997 By s/Jeffrey S. Warren Jeffrey S. Warren Controller (Authorized Executive Officer and Chief Accounting Officer) 17 EX-27 2
5 The schedule contains summary information extracted from the consolidated statements of earnings for the nine months ended September 30, 1997 and the consolidated balance sheet at September 30, 1997 and is qualified in its entirety by reference to such financial statements. 0000088204 SEALED AIR CORPORATION 9-MOS DEC-31-1997 SEP-30-1997 25437000 0 134034000 6233000 62217000 237017000 309986000 143025000 483228000 152913000 0 0 0 428000 247198000 483228000 620769000 620769000 387364000 387364000 127417000 0 5683000 103151000 40642000 62509000 0 0 0 62509000 1.47 0
EX-4.2 3 Exhibit 4.2 AMENDMENT NO. 1 TO THE AMENDED AND RESTATED CREDIT AGREEMENT AMENDMENT dated as of August 14, 1997 to the Amended and Restated Credit Agreement dated as of June 8, 1994 and as amended and restated as of August 22, 1996 (the "Credit Agreement") among Sealed Air Corporation (the "Company"), certain of its Subsidiaries, the banks party thereto (the "Banks"), the co-agents named therein and BANKERS TRUST COMPANY, as Agent (the "Agent"). WITNESSETH: WHEREAS, Section 8.02 of the Credit Agreement, among other things, limits the ability of the Company to merge or consolidate, subject to certain permitted transactions, and further provides that the Company may not even enter into an agreement to merge or consolidate at any future time; and WHEREAS, the Company has requested that the Banks amend Section 8.02 of the Credit Agreement to eliminate the restriction on agreements that the Company may enter into with respect to future transactions, but without prejudicing the Banks' rights to withhold their consent to the actual consummation of any merger or consolidation that is not permitted by Section 8.02; and WHEREAS, the Banks party hereto, subject to the terms and conditions hereof, are willing to so amend the Credit Agreement; NOW, THEREFORE, the parties hereto agree as follows: Section 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby. Section 2. Amendment of Section 8.02. Section 8.02 is amended by deleting the parenthetical phrase "(or agree to do any of the foregoing at any future time)". Section 3. Representations of Borrowers. Each Borrower represents and warrants that, assuming this Amendment has become effective, (i) the representations and warranties of the Borrowers set forth in Section 6 of the Credit Agreement are true and correct in all material respects on the date hereof as if they had been made on the date hereof (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date) and (ii) no Default or Event of Default has occurred and is continuing. Section 4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. Section 5. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 6. Effectiveness. This Amendment shall become effective as of the date hereof when the Agent shall have received from each of the Borrowers and the Required Banks a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Agent) that such party has signed a counterpart hereof. Section 7. Effect of Amendment. Except as expressly set forth herein, the amendment contained herein shall not constitute a waiver or amendment of any term or condition of the Credit Agreement, and all such terms and conditions shall remain in full force and effect and are hereby ratified and confirmed in all respects. Without limiting the generality of the foregoing, the Borrowers acknowledge and agree that the consummation of any merger or consolidation or conveyance, sale, lease or other disposition of property or assets that is not permitted by Section 8.02 shall constitute an Event of Default. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. SEALED AIR CORPORATION By: s/ William V. Hickey Title: President SEALED AIR B.V. By: s/ William V. Hickey Title: Managing Director SEALED AIR FINANCE B.V. By: s/ William V. Hickey Title: Director SEALED AIR (NZ) LIMITED By: s/ William V. Hickey Title: Director SEALED AIR LIMITED By: s/ William V. Hickey Title: Attorney-in-Fact BANKERS TRUST COMPANY, Individually and as Agent By:_____s/_______________________ Title: ABN AMRO BANK N.V. Individually and as Co-Agent By:_____s/________________________ Title: By:_____s/________________________ Title: THE BANK OF NOVA SCOTIA By:______s/_______________________ Title: BANQUE FRANCAISE DU COMMERCE EXTERIEUR By:______s/_______________________ Title: By:______s/_______________________ Title: COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE By:______s/_______________________ Title: By:______s/_______________________ Title: CORESTATES BANK, N.A. By:______s/_______________________ Title: CREDIT LYONNAIS, NEW YORK BRANCH, Individually and as Co-Agent By:______s/_______________________ Title: THE FIRST NATIONAL BANK OF BOSTON By:______s/_______________________ Title: FLEET NATIONAL BANK By:______s/_______________________ Title: MIDLAND BANK PLC, NEW YORK BRANCH By:______s/_______________________ Title: NATIONSBANK, N.A., Individually and as Co-Agent By:______s/_______________________ Title: THE NORTHERN TRUST COMPANY By:______s/_______________________ Title: TORONTO DOMINION (NEW YORK), INC. By:______s/_______________________ Title: SUMMIT BANK, Individually and as Co-Agent By:______s/_______________________ Title: EX-10.3 4 Exhibit 10.3 CONTINGENT STOCK PLAN OF SEALED AIR CORPORATION, AS AMENDED Section 1. Purpose. The purpose of the Contingent Stock Plan (the "Plan"") of Sealed Air Corporation (the "Corporation") is to assist the Corporation and its subsidiaries in attracting and retaining employees of outstanding competence by providing an incentive which permits those employees responsible for the Corporation's growth to share directly in that growth and to further the identity of their interests with those of the stockholders of the Corporation. Section 2. Administration. The Plan shall be administered by a committee (the "Committee") composed of not less than three persons chosen from time to time by the Board of Directors of the Corporation (the "Board") from among those directors of the Corporation who are not, and have not been for at least one year, employees of the Corporation or its subsidiaries. In addition to the powers granted to the Committee as elsewhere set forth in the Plan, and subject to the terms and conditions of the Plan, the Committee is authorized to interpret the Plan, to adopt and revise rules and regulations relating to the Plan and the conduct of the business of the Committee, and to make all determinations that it believes necessary or advisable for the operation and administration of the Plan. All decisions and determinations by the Committee with respect to the Plan shall be final, binding and conclusive upon all parties, including the Corporation, its stockholders and all employees of the Corporation and of its subsidiaries. If no Committee is appointed by the Board or if the Committee shall for any reason cease or become unable to act, the Board shall act as the Committee. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any award ("Award") of a right to purchase shares of the $.01 par value Common Stock of the Corporation (the "Common Stock") granted pursuant to the Plan. Section 3. Stock Available. The stock subject to the Plan shall be such authorized but unissued or treasury shares of Common Stock as shall from time to time be determined by the Committee. The total amount of Common Stock which may be issued pursuant to the Plan is 6,400,000 shares, subject, however, to adjustment in accordance with the provisions of Section 15. In the event that any Common Stock issued pursuant to the Plan is reacquired by the Corporation upon the exercise of an option described in Section 8, the shares of Common Stock so acquired will again become available for issuance pursuant to the Plan. Section 4. Eligibility. Each employee of the Corporation or any subsidiary of the Corporation, including officers, whom the Committee determines is in a position to make a significant contribution to the growth and success of the Corporation shall be eligible to participate under the Plan ("Employee"). An Employee may receive more than one Award under the Plan. Section 5. Terms, Conditions and Form of Purchase Agreements. The Committee shall have exclusive jurisdiction, except as otherwise limited by the Plan, to grant all Awards, to select the Employees to be granted Awards, to determine the number of shares of Common Stock to be covered by an Award, to determine the time or times for the grant of Awards, to determine the Issue Price (as such term is defined in Section 7) of the shares of Common Stock which are the subject of an Award, to determine the duration of the Corporation's option described in Section 8, to prescribe the form or forms of agreement for the purchase of the Common Stock which is the subject of an Award ("Purchase Agreement"), to modify any such form of Purchase Agreement, and to have full authority with respect to all other matters relating to the Plan except those matters as are expressly reserved herein to the stockholders of the Corporation. The Committee shall inform the appropriate officers of the Corporation of its determinations, and such officers shall inform the Employee to whom an Award has been made of the grant of such Award. The Committee may authorize any officer of the Corporation to enter into Purchase Agreements on behalf of the Corporation and to take all other action necessary or desirable to effectuate the determinations of the Committee. Purchase Agreements, which need not be identical, shall be in writing and shall not contain provisions inconsistent with provisions of the Plan. Section 6. Exercise of Right to Purchase Shares. An Employee who has been granted an Award may exercise his right to purchase shares of Common Stock during the 60 day period beginning immediately after the grant of the Award, provided that he is still an employee of the Corporation or of a subsidiary of the Corporation on the date of such exercise. In order to so exercise such right to purchase, an Employee shall give written notice to the Corporation of such election. The Issue Price of the shares to be issued shall be tendered in cash at the time such notice is given. No such right to purchase shares shall be transferable by an Employee to whom an Award has been granted. Section 7. Issue Price of Common Stock. Prior to the issuance of Common Stock to an Employee pursuant to the Plan, the Employee shall pay to the Corporation an amount of money per share ("Issue Price") to be determined by the Committee which shall take into consideration the value of the services performed and to be performed by the Employee, which amount shall not be less per share than the par value of the Common Stock nor more than ten percent (10%) of the fair market value per share thereof. For the purposes of the foregoing sentence, "fair market value per share" shall mean the last sales price of the Common Stock as reported on the consolidated transaction reporting system for New York Stock Exchange listed issues on the day prior to the day on which an Employee gives notice to the Corporation of his exercise of an award or, if no sales occurred on such date, the last sales price on the consolidated transaction reporting system on the most recent day prior to such previous day on which a sale occurred. If the Common Stock ceases to be listed on the New York Stock Exchange, Inc., fair market value per share shall be determined in such manner as shall be selected by the Committee. If the Issue Price (as determined by the Committee on the date of an award) shall exceed ten per cent (10%) of the fair market value per share determined as of the day prior to the exercise date of an award, the Issue Price shall be reduced to an amount which shall represent ten percent (10%) of the fair market value per share on such previous day. Section 8. Option of the Corporation to Reacquire Issued Stock. Except as provided below, for a period beginning on the date of the grant of an award and ending on the third anniversary of such date or such later date as the Committee shall determine, any Common Stock issued pursuant to the Plan shall be subject to an option in favor of the Corporation to reacquire such Common Stock at a price per share equal to the Issue Price. Neither the shares of Common Stock issued pursuant to the Plan nor any interest therein shall be sold, transferred or encumbered until such option may no longer become exercisable. The option of the Corporation to reacquire such Common Stock shall become exercisable only upon the termination of employment of the Employee with the Corporation or any of its subsidiaries other than as a result of the Employee's death or permanent and total disability. The decision whether or not to exercise such option as to all or part of the shares subject thereto owned by an Employee shall be made by the Committee and communicated to the President or other appropriate officer of the Corporation who shall be authorized to take any and all action necessary to effectuate such decision. Section 9. Exercise of Option to Reacquire Issued Stock. The option described in Section 8 shall be exercised in whole or part by the Corporation by its sending, if at all, within 90 days after the Employee's termination of employment, by registered mail, postage prepaid, written notice of such exercise to the Employee at the address specified by the Employee for such purpose, such notice also to set forth the address to which and the date on which the certificates representing the Common Stock in respect of which the option is being exercised, duly endorsed for transfer, should be sent. The date specified shall not be less than ten days nor more than thirty days from the date of such notice. The Employee or his successor in interest with respect to such shares shall have no further rights as a stockholder from and after the date so specified in such notice. If the certificates are duly delivered in accordance with the written notice, the Corporation shall promptly send to the Employee its check in repayment of the Issue Price for such shares. The Corporation shall affix to the certificates any required stock transfer stamps. If the certificates are not so delivered, the Corporation shall deposit the required amount of payment in an escrow account in the name of the Employee to be held therein until such certificates are delivered to the Corporation and the Corporation shall immediately advise its transfer gent of such action. Section 10. Legend on Stock Certificates. Every certificate of Common Stock issued pursuant to the Plan shall, so long as the restrictions imposed by the Plan remain in effect, bear a legend in substantially the following form: This certificate and the shares represented hereby are held subject to the terms of the Contingent Stock Plan of Sealed Air Corporation which Plan provides that the shares issued pursuant thereto are subject to an option in favor of Sealed Air Corporation to reacquire such shares at a price which may be significantly lower than their fair market value and that neither such shares nor any interest therein may be sold, transferred or encumbered until the expiration of such option. If such option is exercised, the holder of the shares represented by this certificate will have no further rights with respect to such shares and this certificate will be deemed void. A copy of such Plan is available for inspection at the executive offices of Sealed Air Corporation. Upon the expiration of the Corporation's option to reacquire shares of Common Stock, an Employee may surrender to the Corporation the certificate or certificates representing such shares in exchange for a new certificate or certificates, free of the above legend. Section 11. Government and Other Regulations and Restrictions. The obligation of the Corporation to issue Common Stock upon execution of a Purchase Agreement shall be subject to all applicable laws, rules and regulations and to such approvals by governmental agencies as may be required. Shares of Common Stock acquired pursuant to the Plan shall not be sold, transferred or otherwise disposed of unless and until either (a) such shares shall have been registered by the Corporation under the Securities Act of 1933, as amended (the "Securities Act"), (b) the Corporation shall have received either a "no action" letter from the Securities and Exchange Commission or an opinion of counsel acceptable to the Corporation to the effect that such sale, transfer or other disposition of the shares may be effected without such registration or (c) such sale, transfer or disposition of the shares is made pursuant to Rule 144 of the General Rules and Regulations promulgated under the Securities Act, as the same may from time to time be in effect, and the Corporation shall have received an opinion of counsel acceptable to the Corporation to such effect. In the event that at the time a Purchase Agreement is executed there shall not be on file with the Securities and Exchange Commission an effective Registration Statement under the Securities Act covering the shares of Common Stock to be issued pursuant thereto the Employee will execute and deliver to the Corporation upon receipt by him of any such shares an undertaking in form and substance satisfactory to the Corporation that (i) it is his intention to acquire and hold such shares for investment and not for the resale or distribution thereof, (ii) he will comply with the Securities Act with respect to such shares, and (iii) he will indemnify the Corporation for any costs, liabilities and expenses which it may sustain by reason of any violation of the Securities Act occasioned by any act on his part with respect to such shares. The Corporation may require that any certificate or certificates evidencing shares issued pursuant to the Plan bear a restrictive legend intended to effect compliance with the Securities Act or any other applicable regulatory measures. Section 12. Registration of Shares. The Corporation shall be under no obligation to register any shares of Common Stock under the Securities Act. However, a Purchase Agreement may make appropriate and reasonable provision for the registration of Common Stock acquired thereunder. The Corporation, at its election, may undertake to pay all fees and expenses of each such registration, other than an underwriter's commission, if any. Section 13. No Rights in Common Stock. No Employee shall have any interest in or be entitled to any voting rights or dividends or other rights or privileges of stockholders of the Corporation with respect to any shares of Common Stock unless, and until, shares of Common Stock are actually issued to such Employee following execution of a Purchase Agreement and then only from the date the Employee becomes the record owner thereof. Section 14. Subsidiaries. The subsidiaries of the Corporation referred to in the Plan are those corporations 50 per cent or more of whose outstanding voting stock is owned or controlled, directly or indirectly, by the Corporation and those partnerships and joint ventures in which the Corporation owns directly or indirectly a 50 percent or more interest in the capital account or earnings. Section 15. Adjustments. In the event of changes in the Common Stock of the Corporation after the effective date of the Plan by reason of any stock dividend, split-up, combination of shares, reclassification, recapitalization, merger, consolidation, reorganization, or liquidation: (a) the restrictions and the option provided in Section 8 and the requirement of a legend on stock certificates provided in Section 10 shall apply to any securities issued in connection with any such change in respect of stock which has been awarded under the Plan and (b) appropriate adjustments shall be made by the Committee as to (i) the number of shares to be delivered and the price per share to be paid by the Corporation upon the exercise, in whole or in part, of the option provided in Section 8, (ii) the number of shares to be delivered and the Issue Price where such change occurred after the date of the Award but before the date the stock covered by the Award is delivered and (iii) the number and class of shares available under the Plan in the aggregate. Section 16. Change in Control. A "Change in Control" shall occur when (i) the Corporation is merged into or consolidated with another corporation or other entity and as a result of such merger or consolidation less than 70% of the combined voting power of the outstanding voting securities of the surviving or resulting corporation or other entity shall, after giving effect to such merger or consolidation, be "beneficially owned" (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act")) in the aggregate, directly or indirectly, by the former stockholders of the Corporation (excluding from such computation any such securities beneficially owned, directly or indirectly, by "affiliates" of the Corporation (as defined in Rule 12b-2 under the Securities Exchange Act) and any such securities so beneficially owned, directly or indirectly, by a party to such merger or consolidation), (ii) the Corporation shall sell all or substantially all of its assets, (iii) any "person" is or becomes the "beneficial owner" (as the terms "person" and "beneficial owner" are used in Sections 13(d) and 14(d) of the Securities Exchange Act), directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation's then outstanding securities, (iv) as a result of any solicitation subject to Rule 14a-11 under the Securities Exchange Act (or any successor rule thereto) one or more persons not recommended by or opposed for election to the Board of Directors by one-third or more of the directors of the Corporation then in office is or are elected a director of the Corporation, or (v) the Corporation shall become subject for any reason to a voluntary or involuntary dissolution or liquidation, provided, that the combination of the packaging business of W.R. Grace & Co. with the Corporation through the Agreement and Plan of Merger approved by the Board of Directors on August 14, 1997 shall not be deemed a Change of Control for the purpose of this Section 16. If a Change of Control shall occur, then as of the close of business at the principal executive office of the Corporation on the business day immediately preceding the date on which such Change of Control occurs, for purposes of the Plan and to the extent that the provisions of the Plan remain applicable to shares awarded under the Plan, the option provided for in Section 8 of the Plan shall cease without further act to be exercisable with respect to any securities subject to an Award under the Plan, the restrictions provided for in Section 8 of the Plan shall without further act expire and cease to apply to any securities subject to an Award under the Plan, the requirement of a legend on stock certificates provided for in Section 10 of the Plan shall without further act expire and cease to apply to any securities subject to an Award under the Plan, and each Employee holding shares issued under the Plan shall thereupon have the right to receive an unlegended certificate as set forth in the last sentence of Section 10 of the Plan. Section 17. Successors. The provisions of the Plan shall be binding upon and inure to the benefit of all successors of any person receiving Common Stock of the Corporation pursuant to the Plan, including, without limitation, the estate of such person and the executors, administrators or trustees thereof, the heirs and legatees of such person, and any receiver, trustee in bankruptcy or representative of creditors of such person. Section 18. Indemnification of Committee Members. In addition to such other rights of indemnification as they may have as directors or as members of the Committee, the members of the Committee shall be indemnified by the Corporation against all costs and expenses reasonably incurred by them in connection with any action, sit or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith, provided that upon institution of any such action, suit or proceeding, the Committee member desiring indemnification shall give the Corporation an opportunity, at its own expense, to conduct and defend the same. Section 19. Corporation's Right to Terminate Employment. Nothing contained in the Plan or in any Purchase Agreement shall confer upon any Employee a right to continue in the employ of the Corporation or any of its subsidiaries or interfere in any way with the right of the Corporation or any of its subsidiaries to terminate the employment of any Employee at any time, without cause. Section 20. Tax Withholding. Each Purchase Agreement incident to the Plan shall make appropriate provisions for the withholding of any Federal, state or local taxes and any other charges that may be required by law to be withheld by reason of an Award, the issuance of Common Stock pursuant to the Plan or the reacquisition of such Common Stock by the Corporation. Section 21. Action by Corporation. Neither the existence of the Plan nor the issuance of Common Stock pursuant thereto shall impair the right of the Corporation or its stockholders to make or effect any adjustments, recapitalizations or other change in the Common Stock referred to in Section 15, any change in the Corporation's business, any issuance of debt obligations or stock by the Corporation or any grant of options on stock of the Corporation. Section 22. Reliance on Reports. Each member of the Committee shall be fully justified in relying or acting in good faith upon any reports or other information furnished in connection with the Plan by any person or persons. In no event shall any person who is or shall have been a member of the Committee be liable for any determination made or other action taken or any omission to act in reliance upon any such report or information or for any action taken or failure to act, if in good faith. Section 23. Expenses. The expenses of administering the Plan shall be borne by the Corporation. Section 24. Pronouns. Masculine pronouns and other words of masculine gender shall refer to both men and women. Section 25. Termination and Amendment of the Plan. The Committee shall have complete power and authority to amend, suspend or terminate the Plan and, if suspended, reinstate any and all provisions of the Plan except that without further approval of the stockholders of the Corporation and except as otherwise provided in Section 15, (i) the number of share available for issuance under the Plan either in the aggregate or to any one person shall not be increased, (ii) the minimum three year period specified in Section 8 shall not be decreased, (iii) the class of persons eligible to receive awards under the Plan shall not be expanded, and (iv) the minimum Issue Price shall not be decreased. Any Common Stock issued under the Plan with respect to which the period specified in or pursuant to Section 8 has not expired on or before the date of termination of the Plan shall remain subject to reacquisition by the Corporation pursuant to Section 8 until the expiration of such period. Section 26. Effective Date. The Plan shall become effective on May 21, 1976. EX-10.4 5 Exhibit 10.4 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS OF SEALED AIR CORPORATION, AS AMENDED Section 1. Purpose. The Restricted Stock Plan for Non-Employee Directors (the "Plan") of Sealed Air Corporation (the "Corporation") is designed to enhance the ability of the Corporation to attract, retain and motivate Non-Employee Directors (as defined in Section 3) of exceptional ability and to promote the common interest of directors and stockholders in enhancing the value of the Corporation's Common Stock. It is the intention of the Plan to provide for payment in shares of the Corporation's common stock, par value $0.01 per share ("Common Stock"), of all or a portion of the annual retainer paid to each Non-Employee Director for serving as a director of the Corporation. Section 2. Stock Available. The stock subject to the Plan shall be such authorized but unissued or treasury shares of Common Stock as shall from time to time be available for issuance pursuant to the Plan. The total amount of Common Stock which may be issued pursuant to the Plan is 75,000 shares, subject to adjustment in accordance with the provisions of Section 7. Section 3. Eligibility. Each Non-Employee Director of the Corporation shall be eligible to participate in the Plan. As used in the Plan, the term "Non-Employee Director" shall include any person who, at the time of his or her election to the Board of Directors of the Corporation, is not an officer or employee of the Corporation or any of its Subsidiaries (as such term is defined in Section 16). Any Non-Employee Director who becomes an officer or employee of the Corporation or any of its Subsidiaries shall cease to be eligible to participate in the Plan for so long as such person remains as such an officer or employee. Section 4. Grants of Shares. Grants of shares of Common Stock available for issuance under the Plan shall be made as follows: (a) Annual Grants. On each date on or after May 17, 1996 on which each Non-Employee Director is elected a director of the Corporation at each annual meeting of the stockholders of the Corporation held on or after May 17, 1996, such Non-Employee Director shall receive a grant of 1,200 shares of Common Stock. (b) Interim Grants. In the event that, on or after May 17, 1996, any Non-Employee Director is elected a director at other than an annual meeting of the stockholders of the Corporation, such Non-Employee Director shall receive on the date of such Non-Employee Director's election a grant of shares of Common Stock pursuant to the Plan in the amount of 100 shares of Common Stock for each full 30-day period during the period commencing on and including the date of such person's election as a director and ending on and including the date of the next annual meeting of the stockholders of the Corporation provided for in accordance with the By-Laws of the Corporation as then in effect. No shares shall be included in such grant on account of any such period of less than 30 days. (c) Non-Transferability of Grants. Except as provided in (i) or (ii) below, no grant of shares of Common Stock pursuant to the Plan shall be transferable by the recipient of such grant, and no shares of Common Stock issued pursuant to the Plan, or any interest therein, may be sold, transferred, pledged, encumbered or otherwise disposed of (including without limitation by way of gift or donation) by the Non-Employee Director to whom such shares are issued as long as such Non-Employee Director shall remain a director of the Corporation. (i) Each Non-Employee Director may provide the Corporation with a written designation in form satisfactory to the Corporation's counsel designating a person or persons ("Beneficiary") entitled to receive shares to be issued pursuant to a grant of shares under the Plan upon the death of such Non-Employee Director after such grant but prior to the issuance of shares pursuant to such grant. The Corporation shall honor each such written designation, provided that the Beneficiary named in such designation shall take all steps necessary to comply with the Plan, including the payment of the Issue Price (as defined below) for such shares if not paid by the Non-Employee Director and the execution of any agreement reasonably required by counsel to the Corporation in order to comply with the Plan or with federal or state securities laws or other legal requirements. (ii) Any Non-Employee Director of the Corporation may donate or transfer at cost any such shares to members of the immediate family of such Non-Employee Director or to a trust or other form of indirect ownership (a "Permitted Transferee") on the condition that the Non- Employee Director shall continue to be deemed a beneficial owner of such transferred shares and retain voting and investment control over such shares while the Non-Employee Director remains a director of the Corporation. Any such indirectly-owned shares shall be subject to all terms and restrictions of this Plan. For the purpose of this Section 4(c)(ii), "immediate family" shall have the meaning given in Rule 16a-1 under the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"), and "beneficial owner" shall have the meaning given in Rule 16a-1 under the Securities Exchange Act, other than for purposes of determining beneficial ownership of more than ten percent of any class of equity securities. (d) Execution of Agreement. Each grant of Common Stock pursuant to this Section 4 shall be contingent upon and subject to (i) payment by such Non-Employee Director pursuant to Section 5 of the Issue Price for the shares covered by such grant and (ii) the execution by the Non-Employee Director (or by his or her Beneficiary or Permitted Transferee, as the case may be) of a document agreeing to hold the shares of Common Stock covered by such grant in accordance with the terms and conditions of the Plan (including without limitation Sections 4(c) and 13) and containing such other terms and conditions as may be required by counsel to the Corporation in order to comply with federal or state securities laws or other legal requirements. Section 5. Issue Price of Common Stock. Prior to the issuance of Common Stock to a Non-Employee Director pursuant to the Plan, the Non-Employee Director shall pay to the Corporation an amount of money per share ("Issue Price") equal to the lesser of (a) $1.00 per share and (b) ten percent (10%) of the fair market value per share thereof; provided, however, that such amount shall not be less per share than the par value per share of the Common Stock. The Issue Price for shares of Common Stock granted pursuant to the Plan shall be tendered to the Corporation within thirty (30) days after notice of the amount thereof is given by the Corporation to the recipient of such shares. Section 6. Change in Control. A "Change in Control" shall occur when (i) the Corporation is merged into or consolidated with another corporation or other entity and as a result of such merger or consolidation less than 70% of the combined voting power of the outstanding voting securities of the surviving or resulting corporation or other entity shall, after giving effect to such merger or consolidation, be "beneficially owned" (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act) in the aggregate, directly or indirectly, by the former stockholders of the Corporation (excluding from such computation any such securities beneficially owned, directly or indirectly, by "affiliates" of the Corporation (as defined in Rule 12b-2 under the Securities Exchange Act) and any such securities so beneficially owned, directly or indirectly, by a party to such merger or consolidation), (ii) the Corporation shall sell all or substantially all of its assets, (iii) any "person" is or becomes the "beneficial owner" (as the terms "person" and "beneficial owner" are used in Sections 13(d) and 14(d) of the Securities Exchange Act), directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation's then outstanding securities, (iv) as a result of any solicitation subject to Rule 14a-11 under the Securities Exchange Act (or any successor rule thereto) one or more persons not recommended by or opposed for election to the Board of Directors by one-third or more of the directors of the Corporation then in office is or are elected a director of the Corporation, or (v) the Corporation shall become subject for any reason to a voluntary or involuntary dissolution or liquidation, provided, that the combination of the packaging business of W.R. Grace & Co. with the Corporation through the Agreement and Plan of Merger approved by the Board of Directors on August 14, 1997 shall not be deemed a Change of Control for the purpose of this Section 6. If a Change of Control shall occur, then as of the close of business at the principal executive office of the Corporation on the business day immediately preceding the date on which such event occurs, for purposes of the Plan and to the extent that the provisions of the Plan remain applicable to shares granted under the Plan, the restriction provided for in Section 4(c) of the Plan shall without further act expire and cease to apply to any securities granted under the Plan, the requirement of a legend on stock certificates provided for in Section 9 of the Plan shall without further act expire and cease to apply to any securities granted under the Plan, and each Non-Employee Director or Permitted Transferee holding shares issued under the Plan shall thereupon have the right to receive an unlegended certificate as set forth in the last sentence of Section 9 of the Plan. Section 7. Adjustments. In the event of changes in the Common Stock of the Corporation after the Effective Date of the Plan by reason of any stock dividend, split-up, combination of shares, reclassification, recapitalization, merger, consolidation, reorganization or liquidation: (a) the restrictions provided in Section 4(c) and the requirement of a legend on stock certificates provided in Sections 9 and 10(d) shall apply to any securities issued in connection with any such change in respect of stock which has been granted under the Plan and (b) appropriate adjustments shall be made by the Board of Directors as to (i) the number of shares to be delivered pursuant to grants made pursuant to Section 4(a) or 4(b) on or after the record date or other effective date of such change, (ii) the number of shares to be delivered and the Issue Price where such change occurred after the date of the grant but before the date the stock covered by the grant is delivered and (iii) the number and class of shares available under the Plan in the aggregate, which changes shall be made in the same manner as such items are adjusted for purposes of the Contingent Stock Plan of Sealed Air Corporation as then in effect. Section 8. Action by Corporation. Neither the existence of the Plan nor the issuance of Common Stock pursuant thereto shall impair the right of the Corporation or its stockholders to make or effect any adjustments, recapitalizations or other change in the Common Stock referred to in Section 7, any change in the Corporation's business, any issuance of debt obligations or stock by the Corporation or any grant of options on stock of the Corporation. Section 9. Legend on Stock Certificates. Every certificate of Common Stock issued pursuant to the Plan shall, so long as the restrictions imposed by the Plan (including without limitation Section 4(c)) remain in effect, bear a legend in substantially the following form: This certificate and the shares represented hereby are held subject to the terms of the Restricted Stock Plan for Non-Employee Directors of Sealed Air Corporation, which Plan provides that neither the shares issued pursuant thereto, nor any interest therein, may be sold, transferred, pledged, encumbered or otherwise disposed of (including without limitation by way of gift or donation) except in accordance with such Plan. A copy of such Plan is available for inspection at the executive offices of Sealed Air Corporation. Each Non-Employee Director and his or her Permitted Transferees may surrender to the Corporation the certificate or certificates representing such shares in exchange for a new certificate or certificates, free of the above legend, at any time after either such Non-Employee Director has ceased to be a director of the Corporation or the restriction set forth in Section 4(c) has otherwise ceased to apply to the shares covered by such certificate. Section 10. Government and Other Regulations and Restrictions. (a) In General. The issuance by the Corporation of any shares of Common Stock pursuant to the Plan shall be subject to all applicable laws, rules and regulations and to such approvals by governmental agencies as may be required. (b) Registration of Shares. The Corporation shall use its reasonable commercial efforts to cause the grants of shares of Common Stock to be made pursuant to this Plan to be registered under the Securities Act of 1933, as amended (the "Securities Act"), but shall otherwise be under no obligation to register any shares of Common Stock issued under the Plan under the Securities Act or otherwise. If, at the time any shares of Common Stock are issued pursuant to the Plan or transferred to a Permitted Transferee, there shall not be on file with the Securities and Exchange Commission an effective Registration Statement under the Securities Act covering such shares of Common Stock, the person to whom such shares are to be issued will execute and deliver to the Corporation upon receipt by him or her of any such shares an undertaking, in form and substance satisfactory to the Corporation, that (i) such person has had access or will, by reason of such person's service as a director of the Corporation, or otherwise, have access to sufficient information concerning the Corporation to enable him or her to evaluate the merits and risks of the acquisition of shares of the Corporation's Common Stock pursuant to the Plan, (ii) such person has such knowledge and experience in financial and business matters that such person is capable of evaluating such acquisition, (iii) it is the intention of such person to acquire and hold such shares for investment and not for the resale or distribution thereof, (iv) such person will comply with the Securities Act and the Securities Exchange Act with respect to such shares, and (v) such person will indemnify the Corporation for any costs, liabilities and expenses which the Corporation may sustain by reason of any violation of the Securities Act or the Securities Exchange Act occasioned by any act or omission on his or her part with respect to such shares. (c) Resale of Shares. Without limiting the generality of Section 4(c), shares of Common Stock acquired pursuant to the Plan shall not be sold, transferred or otherwise disposed of unless and until either (i) such shares shall have been registered by the Corporation under the Securities Act, (ii) the Corporation shall have received either a "no action" letter from the Securities and Exchange Commission or an opinion of counsel acceptable to the Corporation to the effect that such sale, transfer or other disposition of the shares may be effected without such registration, or (iii) such sale, transfer or disposition of the shares is made pursuant to Rule 144 of the General Rules and Regulations promulgated under the Securities Act, as the same may from time to time be in effect, and the Corporation shall have received an opinion of counsel acceptable to the Corporation to such effect. (d) Legend on Certificates. The Corporation may require that any certificate or certificates evidencing shares issued pursuant to the Plan bear a restrictive legend, and be subject to stop-transfer orders or other actions, intended to effect compliance with the Securities Act or any other applicable regulatory measures. Section 11. Corporation's Right to Terminate Retention; Non-Exclusivity. Nothing contained in the Plan shall prevent the Board of Directors from adopting other or additional compensation arrangements or modifying existing compensation arrangements for Non-Employee Directors, subject to stockholder approval if such approval is required by applicable statute, rule or regulation; and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan shall not confer upon any member of the Board of Directors of the Corporation any right to continued membership on the Board of Directors of the Corporation. Section 12. No Rights in Common Stock. No Non- Employee Director, Beneficiary or Permitted Transferee shall have any interest in or be entitled to any voting rights or dividends or other rights or privileges of stockholders of the Corporation with respect to any shares of Common Stock granted pursuant to the Plan unless, and until, shares of Common Stock are actually issued to such person and then only from the date such person becomes the record owner thereof. Section 13. Tax Withholding. The Corporation shall make appropriate provisions for the payment of any Federal, state or local taxes or any other charges that may be required by law to be withheld by reason of a grant or the issuance of shares of Common Stock pursuant to the Plan. Section 14. No Liability. No member of the Board of Directors of the Corporation, nor any officer or employee of the Corporation acting on behalf of the Board of Directors of the Corporation, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Board of Directors and each and any officer or employee of the Corporation acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Corporation in respect of any such action, determination or interpretation. Section 15. Successors. The provisions of the Plan shall be binding upon and inure to the benefit of all successors of any person receiving Common Stock of the Corporation pursuant to the Plan, including, without limitation, the estate of such person and the executors, administrators or trustees thereof, the heirs and legatees of such person, and any receiver, trustee in bankruptcy or representative of creditors of such person. Section 16. Subsidiaries. For the purposes of the Plan, the term "Subsidiaries" includes those corporations 50 per cent or more of whose outstanding voting stock is owned or controlled, directly or indirectly, by the Corporation and those partnerships and joint ventures in which the Corporation owns directly or indirectly a 50 per cent or more interest in the capital account or earnings. Section 17. Expenses. The expenses of administering the Plan shall be borne by the Corporation. Section 18. Pronouns. Masculine pronouns and other words of masculine gender shall refer to both men and women. Section 19. Termination and Amendment of the Plan. The Board of Directors may from time to time amend this Plan, or discontinue the Plan or any provisions thereof; provided that no amendment or modification of the Plan shall, without the prior approval of the stockholders of the Corporation: (a) increase the number of shares of Common Stock available for grant under the Plan; (b) materially increase the benefits accruing to participants under the Plan; (c) modify the requirements as to eligibility for participation under the Plan; or (d) change any of the provisions of this Section 19. No amendment or discontinuation of the Plan or any provision thereof shall, without the written consent of the participant, adversely affect any shares theretofore granted to such participant under the Plan. Section 20. Effective Date. The Plan became effective (the "Effective Date") on May 17, 1991 and was amended as of February 7, 1996. The amendments to the Plan set forth herein shall become effective on the date of their approval by the affirmative vote of a majority of the shares of the Corporation's Common Stock present in person or represented by proxy and entitled to vote at the meeting of the stockholders at which such amendments are submitted for approval. -----END PRIVACY-ENHANCED MESSAGE-----