<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SEALED AIR CORPORATION
- -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------
3) Filing Party:
--------------------------------------------
4) Date Filed:
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<PAGE>
[SEALED AIR LETTERHEAD]
May 21, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Sealed Air Corporation scheduled to be held on Friday, June 26, 1998 at
11:00 a.m. at the Saddle Brook Marriott, Garden State Parkway at I-80, Saddle
Brook, New Jersey. Your Board of Directors and senior management look forward
to greeting personally those stockholders able to attend.
At this meeting, you will be asked to elect three directors, to ratify the
selection of KPMG Peat Marwick LLP as the Company's auditors for 1998, to
approve additional shares for issuance under the Company's Contingent Stock
Plan as well as some other amendments to that Plan, and to approve the
Directors Stock Plan. All of these proposals are important, and we urge you
to vote in favor of them.
You will also be asked to vote on an amendment to the Company's charter to
repeal certain provisions that hamper the exercise by the stockholders of
their rights to influence the Company's corporate governance. The repeal of
these provisions requires the affirmative vote of more than 80% of the
Company's stock, so it is particularly important that you vote in favor of
this amendment.
Regardless of the number of shares of Common Stock or Preferred Stock you
own, it is important that they be represented and voted at the meeting.
Please sign, date and mail the enclosed proxy in the return envelope
provided. Your prompt cooperation is appreciated.
On behalf of your Board of Directors, we thank you for your continued
support.
Sincerely,
T. J. Dermot Dunphy
Chairman of the Board and
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 26, 1998
-------------
The Annual Meeting of Stockholders of Sealed Air Corporation, a Delaware
corporation (the "Company"), will be held on June 26, 1998 at 11:00 a.m.
local time, at the Saddle Brook Marriott, Garden State Parkway at I-80,
Saddle Brook, New Jersey 07663-5291, for the following purposes:
1. to consider and act upon a proposed amendment to the Company's
Amended and Restated Certificate of Incorporation that would repeal
certain provisions of the Certificate of Incorporation, including the
provision providing for a classified Board of Directors, which
amendment will require the affirmative vote of 80% in voting power of
the Company's capital stock;
2. to elect three directors of the Company as Class III directors;
3. to consider and act upon certain proposed amendments of the
Contingent Stock Plan of the Company, including an amendment
authorizing the issuance of an additional 2,049,550 shares of the
Company's Common Stock under such Plan;
4. to consider and act upon the proposed Restricted Stock Plan for
Non-Employee Directors of the Company;
5. to ratify the appointment of KPMG Peat Marwick LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1998;
and
6. to transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on May 5, 1998 as
the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.
A copy of the Company's 1997 Annual Report to Stockholders has been sent
to all stockholders of record. Additional copies are available upon request.
The Company invites you to attend the meeting so that management can
review the past year with you, listen to your suggestions, and answer any
questions you may have. In any event, because it is important that as many
stockholders as possible be represented at the meeting, please review the
attached Proxy Statement promptly and then complete and return the enclosed
proxy in the accompanying post-paid, addressed envelope. If you attend the
meeting, you may vote your shares personally even though you have previously
mailed the enclosed proxy.
By Order of the Board of Directors
H. KATHERINE WHITE
Secretary
Saddle Brook, New Jersey
May 21, 1998
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
General Information ............................................................ 1
The Merger and Related Transactions............................................. 2
Management...................................................................... 2
Voting Securities............................................................... 3
Repeal of Supermajority Provisions of the Sealed Air Charter.................... 7
Election of Directors........................................................... 8
Committees of the Board of Directors............................................ 10
Current Committees of the Board of Directors................................... 10
Committees of the Board Prior to the Merger.................................... 10
Compensation Committee Interlocks and Insider Participation.................... 11
Directors Compensation.......................................................... 12
Current Directors Compensation................................................. 12
Directors Compensation Prior to the Merger..................................... 12
Executive Compensation.......................................................... 13
Report of Old Sealed Air's Organization and Compensation Committee on
Executive Compensation ....................................................... 13
Common Stock Performance Comparison............................................ 18
Executive Officers.............................................................. 19
Approval of Amendments to the Contingent Stock Plan............................. 20
Approval of Restricted Stock Plan for Non-Employee Directors.................... 21
Selection of Auditors........................................................... 23
Stockholder Proposals for the 1999 Annual Meeting............................... 24
Other Matters................................................................... 24
Annex A--Proposed Amendments to the Certificate of Incorporation ............... A-1
Annex B--Summary Compensation Table for Old Sealed Air Prior to the Merger ..... B-1
Annex C--Executive Compensation for the Company Prior to the Merger ........... C-1
Annex D--Contingent Stock Plan of Sealed Air Corporation, As Proposed to Be
Amended............................................................... D-1
Annex E--Restricted Stock Plan for Non-Employee Directors of Sealed Air
Corporation............................................................ E-1
</TABLE>
<PAGE>
SEALED AIR CORPORATION
PARK 80 EAST
SADDLE BROOK, NEW JERSEY 07663-5291
PROXY STATEMENT
DATED MAY 21, 1998
------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 1998
------------------
GENERAL INFORMATION
This Proxy Statement is being furnished to the holders of the Common Stock
and Preferred Stock (as defined below) of Sealed Air Corporation, a Delaware
corporation formerly named W. R. Grace & Co. (the "Company"), in connection
with the solicitation of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Saddle Brook Marriott,
Garden State Parkway at I-80, Saddle Brook, New Jersey at 11:00 a.m. local
time on June 26, 1998, and at any adjournments thereof. The enclosed proxy is
being solicited by the Board of Directors of the Company. This Proxy
Statement and the enclosed proxy are first being mailed to stockholders on or
about May 21, 1998.
In order for shares of Common Stock or Preferred Stock to be voted at the
Annual Meeting, the record owner of such shares must either duly execute and
return a proxy representing such shares at or before the Annual Meeting or
vote such shares in person at the Annual Meeting. Shares represented by
proxies so executed and returned will be treated as being present for the
purpose of determining the presence of a quorum at the meeting. If a
stockholder specifies on the proxy the manner in which such stockholder's
shares of Common Stock or Preferred Stock are to be voted on a matter, the
shares represented by the proxy will be voted in accordance with such
specification. If a stockholder does not make such a voting specification,
such shares will be voted in the manner recommended by the Board of Directors
as indicated in this Proxy Statement and on the proxy.
Stockholders who own shares of Common Stock or Preferred Stock through a
brokerage firm, bank or other nominee should expect to be contacted by such
institution for voting instructions. Under the rules of the New York Stock
Exchange, Inc., brokers who hold shares in street name for customers have the
authority to vote on certain items when they have not received instructions
from their customers who are the beneficial owners of such shares. The
Company understands that, unless instructed to the contrary by the beneficial
owners of shares held in street name, brokers may exercise such authority to
vote on the election of directors, the amendment of the Contingent Stock
Plan, the adoption of the Restricted Stock Plan for Non-Employee Directors,
and the ratification of the appointment of the Company's auditors. However,
brokers may not exercise such discretionary voting authority with respect to
the proposed amendment to the Company's Amended and Restated Certificate of
Incorporation (the "Sealed Air Charter"). Stockholders holding shares of
Common Stock or Preferred Stock in street name or otherwise through a broker
who desire to vote in favor of the proposed amendment to the Sealed Air
Charter must provide their broker with instructions to vote their shares in
favor of such matter. Proxies marked as abstaining (including proxies
containing broker non-votes) on any matter to be acted upon by the
stockholders will be treated as present at the meeting for the purpose of
determining a quorum. Abstentions, but not broker non-votes, will be counted
as votes cast on such matters.
A holder of record of Common Stock or Preferred Stock giving the enclosed
proxy has the power to revoke it at any time before it is exercised by giving
written notice to the Company bearing a later date than the proxy, by
executing and delivering to the Company a subsequently dated proxy, or by
voting in person at the Annual Meeting. Any holder of Common Stock or
Preferred Stock may vote in person at the Annual Meeting whether or not he or
she has previously given a proxy.
For each participant in the Company's Profit-Sharing Plan, the proxy also
serves as a voting instruction card permitting the participant to provide
voting instructions to Bankers Trust Company,
<PAGE>
trustee for the Profit-Sharing Plan ("Bankers Trust"), for the shares of
Common Stock allocated to his or her account in such Plan. For each
participant in the Company's Thrift Plan for Cryovac Employees, the proxy
also serves as a voting instruction card permitting the participant to
provide voting instructions to Fidelity Management Trust Company
("Fidelity"), trustee for the Thrift Plan for Cryovac Employees, for the
shares of Common Stock and Preferred Stock allocated to his or her account in
such Plan. Bankers Trust and Fidelity will vote such shares as directed by
each participant who provides voting instructions to it. The terms of each
such Plan provide that shares allocated to the accounts of participants who
do not provide voting instructions will be voted by Bankers Trust or
Fidelity, as the case may be, in the same proportion as shares are voted on
behalf of participants who provide voting instructions.
THE MERGER AND RELATED TRANSACTIONS
On March 31, 1998, the Company and Sealed Air Corporation (US), a Delaware
corporation formerly known as Sealed Air Corporation ("old Sealed Air"),
completed a series of related transactions as a result of which, among other
things:
(a) The Company's specialty chemicals business was separated from its
packaging business, the packaging business was contributed to one wholly
owned subsidiary ("Cryovac"), and the specialty chemicals business was
contributed to another wholly owned subsidiary ("New Grace"), pursuant to
a Distribution Agreement dated as of March 30, 1998 among the Company, W.
R. Grace & Co.-Conn. and New Grace. The Company then distributed all of
the outstanding shares of common stock of New Grace to the Company's
stockholders at that time, and those stockholders became stockholders of
New Grace, which is now a separate publicly owned corporation. These
transactions are referred to in this Proxy Statement as the
"Reorganization".
(b) The Company recapitalized its outstanding shares of common stock, par
value $0.01 per share ("Old Grace Common Stock"), into the Common Stock
and the Preferred Stock (the "Recapitalization").
(c) A subsidiary of the Company merged into old Sealed Air, with old
Sealed Air being the surviving corporation (the "Merger"), pursuant to an
Agreement and Plan of Merger dated as of August 14, 1997 among the
Company, old Sealed Air and such subsidiary (the "Merger Agreement").
The Merger and the related transactions described above were approved by
the Company's stockholders at a special meeting held on March 20, 1998, and
the Merger was approved by the stockholders of old Sealed Air at a special
meeting held on March 23, 1998. As a result of these transactions, New Grace
became a separate publicly owned corporation named W. R. Grace & Co., which
is managed by the former management of the Company, and the Company, which
now operates the businesses of old Sealed Air and Cryovac and is managed
primarily by the former management of old Sealed Air, was renamed Sealed Air
Corporation.
In the Recapitalization, the outstanding shares of Old Grace Common Stock
were converted into approximately 40,648,000 shares of Common Stock and
36,000,000 shares of Preferred Stock, and pursuant to the Merger Agreement,
each of the 42,624,246 shares of the common stock, par value $0.01 per share,
of old Sealed Air ("old Sealed Air Common Stock") outstanding on March 31,
1998 was converted into one share of the Common Stock of the Company. In
addition, outstanding options to purchase Old Grace Common Stock that were
held by Cryovac's employees were converted into options to purchase
approximately 489,300 shares of the Company's Common Stock.
MANAGEMENT
Upon the completion of the Merger on March 31, 1998, in accordance with
the Merger Agreement, all of the directors of the Company other than Hank
Brown, Christopher Cheng, Virginia A. Kamsky and John E. Phipps resigned as
directors of the Company. These four remaining directors then elected as
additional directors in the classes set forth below under "Election of
Directors" the seven persons who were serving as directors of old Sealed Air
immediately prior to the Merger. The Board also elected T. J. Dermot Dunphy,
the Chairman of the Board and Chief Executive Officer of old Sealed Air, as
its Chairman.
2
<PAGE>
In addition, in accordance with the Merger Agreement, all of the persons
who had served as executive officers of the Company prior to the Merger other
than Mr. Kaenzig resigned effective upon the completion of the Merger. The
Board of Directors has appointed the persons listed under "Executive
Officers" on page 19 to serve as the executive officers of the Company.
VOTING SECURITIES
The voting securities of the Company are the outstanding shares of its
common stock, par value $0.10 per share ("Common Stock"), and its Series A
convertible preferred stock, par value $0.10 per share ("Preferred Stock").
As of the close of business on May 5, 1998, 83,272,061 shares of Common Stock
were issued and outstanding, each of which is entitled to one vote at the
Annual Meeting. As of the close of business on May 5, 1998, 36,000,000 shares
of Preferred Stock were issued and outstanding, each of which is entitled to
0.885 votes at the Annual Meeting, with the Preferred Stock being entitled to
an aggregate of 31,860,000 votes at the Annual Meeting. Only holders of
record of Common Stock and Preferred Stock at the close of business on May 5,
1998 will be entitled to notice of and to vote at the Annual Meeting.
A majority in voting power of the outstanding shares of Common Stock and
Preferred Stock present in person or represented by proxy will constitute a
quorum for the transaction of business at the Annual Meeting. Under the
Sealed Air Charter, the proposed amendments to the Sealed Air Charter must be
approved by the affirmative vote of at least 80 percent of the combined
voting power of the shares of Common Stock and Preferred Stock. Under the
Sealed Air Charter and By-Laws and the laws of the State of Delaware, the
directors are elected by a plurality of the votes cast in the election, and
the amendment of the Company's Contingent Stock Plan, the adoption of the
Restricted Stock Plan for Non-Employee Directors, and the ratification of the
appointment of auditors and any other matters to be considered at the Annual
Meeting must be approved by the affirmative vote of the holders of a majority
of the combined voting power of the shares of Common Stock and Preferred
Stock present in person or represented by proxy at the Annual Meeting.
3
<PAGE>
The following table sets forth, as of the date indicated in the applicable
Schedule 13G with respect to each person identified as having filed a
Schedule 13G and as of April 30, 1998 with respect to each current director,
nominee for election as a director and current executive officer named in the
Summary Compensation Tables set forth in Annexes B and C, the number and
percentage of outstanding shares of Common Stock and Preferred Stock (i)
beneficially owned by each person known to the Company to be the beneficial
owner of more than five percent of the then outstanding shares of each such
class, (ii) beneficially owned, directly or indirectly, by each current
director, nominee for election as a director and by each of the current
executive officers of the Company named in the Summary Compensation Tables
set forth in Annexes B and C, and (iii) beneficially owned, directly or
indirectly, by all such directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
CLASS OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED SHARES IN CLASS
- -------------------------------------------------- ------------------ ---------------
<S> <C> <C>
COMMON STOCK:
FMR Corp.(1) ...................................... 11,821,617 13.6%
82 Devonshire Street
Boston, Massachusetts 02109
Lincoln Capital Management Company (2) ............ 7,558,221 8.6
200 South Wacker Drive, Suite 2100
Chicago, Illinois 60606
Tiger Management L.L.C. and
Tiger Performance L.L.C.(3) ...................... 6,593,352 7.6
101 Park Avenue
New York, New York 10178
The Equitable Companies Incorporated (4) ......... 4,465,278 5.4
1290 Avenue of the Americas
New York, New York 10104
Hank Brown ........................................ 1,234 (5)(6) *
John K. Castle .................................... 12,936 *
Christopher Cheng ................................. 475 (5)(6) *
Lawrence R. Codey ................................. 5,800 *
Bruce A. Cruikshank ............................... 192,905 (7)(8) *
T. J. Dermot Dunphy ............................... 1,142,003 (6)(7)(8) 1.4
Charles F. Farrell, Jr ............................ 19,400 (6) *
David Freeman ..................................... 5,600 *
William V. Hickey ................................. 327,187 (5)(7)(8) *
J. Gary Kaenzig, Jr ............................... 44,989 (5)(7)(9) *
Virginia A. Kamsky ................................ 2,802 (5) *
Alan H. Miller .................................... 502,710 (6) *
Robert A. Pesci ................................... 77,613 (7)(8) *
John E. Phipps .................................... 31,768 (5)(6) *
Robert L. San Soucie .............................. 8,900 (6) *
All directors and executive officers as a group
(27 persons) ..................................... 3,031,925 (5)(7)(8)
(9)(10) 3.5
SERIES A CONVERTIBLE PREFERRED STOCK:
FMR Corp.(1) ...................................... 3,542,806 9.8
82 Devonshire Street
Boston, Massachusetts 02109
Lincoln Capital Management Company (2) ............ 3,754,732 10.4
200 South Wacker Drive, Suite 2100
Chicago, Illinois 60606
4
<PAGE>
SHARES OF PERCENTAGE
CLASS OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED SHARES IN CLASS
- -------------------------------------------------- ------------------ ---------------
Tiger Management L.L.C. and
Tiger Performance L.L.C. (3) ..................... 3,275,410 9.1
101 Park Avenue
New York, New York 10178
Hank Brown ........................................ 613 (11) *
Christopher Cheng ................................. 236 (11) *
J. Gary Kaenzig, Jr ............................... 2,645 (9)(11) *
William V. Hickey ................................. 142 *
Virginia A. Kamsky ................................ 1,392 *
John E. Phipps .................................... 15,781 (11) *
All directors and executive officers as a group
(27 persons) ..................................... 21,107 (9)(11) *
</TABLE>
- ------------
* Less than 1%.
(1) The ownership information set forth in the table is based on
material contained in Amendment No. 3 to Schedule 13G dated February
14, 1998 filed with the Securities and Exchange Commission (the
"SEC") by FMR Corp. ("FMR"), which indicated that FMR had sole
voting power as to 141,700 shares and sole dispositive power as to
4,690,000 shares of old Sealed Air Common Stock and a Schedule 13G,
dated August 8, 1997, filed with the SEC by FMR, which indicated
that FMR had sole voting power as to 64,107 shares of Old Grace
Common Stock and sole dispositive power as to 7,379,889 shares of
Old Grace Common Stock. The Company has adjusted such ownership
information to give effect to the Recapitalization and the Merger.
The number of shares of Common Stock beneficially owned includes the
right to acquire 3,133,840 shares of Common Stock upon conversion of
shares of Preferred Stock.
(2) The ownership information set forth in the table is based on
material contained in a Schedule 13G dated April 28, 1997 filed with
the SEC by Lincoln Capital Management Company ("Lincoln") with
respect to the ownership of shares of Old Grace Common Stock, which
indicated that Lincoln had sole voting power as to 3,583,300 shares
of Old Grace Common Stock and sole dispositive power as to 7,332,200
shares of Old Grace Common Stock. The Company has adjusted such
ownership information to give effect to the Recapitalization and the
Merger. The number of shares beneficially owned includes the right
to acquire 3,321,302 shares of Common Stock upon conversion of
shares of Preferred Stock.
(3) The ownership information set forth in the table is based on
material contained in a Schedule 13G dated February 13, 1998 filed
with the SEC by Tiger Management L.L.C., Tiger Performance L.L.C.
and Julian H. Robertson, Jr. (collectively, "Tiger") with respect to
the ownership of shares of Old Grace Common Stock which indicated
that Tiger had shared voting power and shared dispositive power as
to 6,895,600 shares of Old Grace Common Stock. The Company has
adjusted such ownership information to give effect to the
Recapitalization and the Merger. The number of shares of Common
Stock beneficially owned includes the right to acquire 2,897,311
shares of Common Stock upon conversion of shares of Preferred Stock.
(4) The ownership information set forth in the table is based on
material with respect to the ownership of shares of old Sealed Air
Common Stock contained in Amendment No. 1 to Schedule 13G dated
February 10, 1998 filed with the SEC by The Equitable Companies
Incorporated ("Equitable Companies"), AXA-UAP, which beneficially
owns a majority interest in Equitable Companies, and Mutuelles AXA,
which as a group beneficially own a majority interest in AXA-UAP.
The Schedule 13G stated that the shares were acquired solely for
investment purposes. The Company has adjusted such ownership
information to give effect to the Recapitalization and the Merger.
The shares are owned by the following subsidiaries of Equitable
Companies in the amounts indicated: The Equitable Life Assurance
Society of the United States, 30,700; Alliance Capital Management
L.P., 4,434,478; and Donaldson, Lufkin & Jenrette Securities
Corporation, 100.
5
<PAGE>
(5) The number of shares of Common Stock listed for Messrs. Brown,
Cheng, Hickey, Kaenzig and Phipps, for Ms. Kamsky and for all
directors and executive officers as a group includes the right to
acquire 542, 208, 125, 2,339, 13,959, 1,231 and 18,670 shares of
Common Stock, respectively, upon conversion of shares of Preferred
Stock.
(6) The number of shares of Common Stock held by Messrs. Brown, Cheng
and Phipps includes 82, 75 and 2,068 shares, respectively, held by
trusts of which they are beneficiaries. The number of shares of
Common Stock held by Mr. Dunphy includes 81,600 shares held by him
as custodian for certain of his children and 29,250 shares held by a
charitable foundation for which he shares voting and investment
power. The number of shares of Common Stock held by Mr. Farrell
includes 6,000 shares held in a revocable retirement trust of which
he is the trustee and sole beneficiary. All but 1,200 of the Common
Stock shares held by Mr. Miller are held indirectly through a
limited partnership for which he shares voting and investment power.
The number of shares of Common Stock held by Mr. Phipps includes
9,352 shares held by trusts over which he shares voting and
investment power, and 4,824 shares held in trust for his wife. Mr.
San Soucie shares investment and voting power as to 620 of the
shares of Common Stock beneficially owned by him with his wife.
(7) The number of shares of Common Stock listed for Messrs. Dunphy,
Hickey, Kaenzig, Cruikshank, Pesci and all directors and executive
officers as a group includes the right to acquire 80,000, 40,000,
23,500, 10,000, 10,000 and 191,500 shares, respectively, under the
Company's Contingent Stock Plan. The number of shares listed for Mr.
Kaenzig and all directors and executive officers as a group includes
the right to acquire 16,165 and 28,543 shares, respectively, upon
exercise of options granted by Old Grace.
(8) This figure includes approximately 67,353, 13,302, 20,615, 24,213
and 221,065 shares of Common Stock held in the Company's
Profit-Sharing Plan trust fund with respect to which Messrs. Dunphy,
Hickey, Cruikshank, Pesci and the executive officers of the Company
who participate in such Plan as a group, respectively, may, by
virtue of their participation in such Plan, be deemed to be
beneficial owners. The participants in such Plan include, in
general, all full-time employees of the Company except employees who
are covered by collective bargaining agreements that do not provide
for their participation. As of April 30, 1998, approximately
2,149,329 shares of Common Stock were held in the trust fund under
such Plan, constituting approximately 2.5% of the outstanding shares
of Common Stock. The Company has been advised that Bankers Trust
Company, the trustee of such Plan, does not deem itself the
beneficial owner of the shares of Common Stock held as trustee of
such Plan.
(9) The number of shares of Common Stock listed for Mr. Kaenzig and for
all directors and executive officers as a group, respectively,
includes approximately 6 and 342 shares, respectively, held in the
trust fund for the Company's Thrift Plan for Cryovac Employees. The
number of shares of Preferred Stock listed for Mr. Kaenzig and for
all directors and executive officers as a group, respectively,
includes approximately 5 and 303 shares of Preferred Stock,
respectively, held in the trust fund for the Company's Thrift Plan
for Cryovac Employees.
(10) This figure includes, without duplication, all of the outstanding
shares referred to in notes 6 and 8 above as well as 12,400 shares
for which voting and investment power is shared by an executive
officer of the Company and 3,580 shares held by or for family
members of executive officers of the Company who are not named in
the above table.
(11) The number of shares of Preferred Stock held by Messrs. Brown,
Cheng, Kaenzig and Phipps and all directors and executive officers
as a group includes 72, 66, 2,640, 1,833 and 4,611 shares of
Preferred Stock, respectively, held by trusts of which they are
beneficiaries. The number of shares of Preferred Stock held by Mr.
Phipps includes 8,288 shares of Preferred Stock held by trusts over
which he shares voting and investment power, and 4,275 shares held
in trust for his wife.
6
<PAGE>
REPEAL OF SUPERMAJORITY PROVISIONS
OF THE SEALED AIR CHARTER
In connection with the approval of the Merger and the related amendment
and restatement of its Certificate of Incorporation, the Company sought the
approval of its stockholders at the special meeting on March 20, 1998 to
repeal certain provisions of the Sealed Air Charter that are described below.
The proposal to repeal these provisions failed to receive the required 80%
affirmative vote for their repeal, although over 98% of the shares voted were
voted in favor of repealing such provisions.
These provisions, which are referred to below as the "Supermajority
Provisions," cannot be amended or repealed without the affirmative vote of
stockholders owning at least 80% of the combined voting power of the
outstanding Common Stock and Preferred Stock. The provisions limit the
ability of the holders of the Company's Common and Preferred Stock to
influence the corporate governance of the Company and to take certain actions
that they would otherwise be permitted to take under Delaware law. The
Chairman of the Board and Chief Executive Officer of the Company believes
that the absence of provisions such as the Supermajority Provisions was an
important part of the culture and success of old Sealed Air prior to the
Merger and that the repeal of the Supermajority Provisions would be similarly
beneficial to the Company.
The Supermajority Provisions provide that:
(a) the directors of the Company, other than those who may be elected by
the holders of any class or series of Preferred Stock or other capital
stock as set forth in the Sealed Air Charter, are to be divided into three
classes, as nearly equal in number as possible, with the members of each
class of directors to be elected for terms of three years;
(b) directors of the Company may be removed by the stockholders only for
cause, subject to the rights of the holders of any class or series of
Preferred Stock or other capital stock set forth in the Sealed Air
Charter;
(c) subject to the rights of the holders of any class or series of
Preferred Stock or other capital stock to elect additional directors under
specific circumstances, actions of the stockholders by written consent
pursuant to Delaware law are prohibited; and
(d) although the stockholders have the authority to amend or repeal the
by-laws of the Company, they may not exercise this right unless any such
proposed alteration, amendment or repeal of the by-laws is approved by
stockholders with at least 80% of the voting power of the outstanding
voting securities, voting as a single class.
The election of directors is the primary avenue for stockholders to
influence corporate policies and to hold management accountable for its
implementation of those policies. The Company's management and its Board of
Directors believe that the accountability of the Board of Directors to the
stockholders is enhanced when the directors are required to stand for annual
election. A classified board, one of the Supermajority Provisions, deprives
the stockholders of the ability to express their evaluation of the
performance of the whole Board of Directors annually by granting staggered
three-year terms to the directors. In keeping with the goal of maximizing
director accountability to the stockholders, the Board of Directors has
determined that having all of the Company's directors elected annually, as
was the case for old Sealed Air prior to the Merger, would best serve the
interests of the Company and its stockholders.
Although the authority of the stockholders to amend or repeal by-laws of a
publicly owned corporation such as the Company is rarely exercised, the
ability to exercise that right by a vote of a majority in voting interest of
the stockholders is an important element of corporate governance as are the
rights of the stockholders under Delaware law to act by written consent and
to remove directors, with or without cause.
For the reasons set forth above, the Company believes that the
Supermajority Provisions should be repealed. The forms of Articles SEVENTH,
FIFTEENTH and SIXTEENTH of the Sealed Air Charter attached to this Proxy
Statement in Annex A have been marked to show how these provisions of the
Sealed Air Charter would change if the Supermajority Provisions were
repealed.
7
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If the Supermajority Provisions are repealed:
(a) the stockholders will, as provided by Delaware law, be entitled to
alter, amend or repeal the Company's By-Laws by a majority of the voting
power of the then outstanding shares of Common Stock and Preferred Stock;
(b) the stockholders will be entitled to act by written consent in lieu
of a meeting; and
(c) Article SIXTEENTH of the Sealed Air Charter will be amended in its
entirety, thereby eliminating the provisions of the Sealed Air Charter
providing for the classification of the Board of Directors and prohibiting
the removal of Directors other than for cause.
If the repeal of the Supermajority Provisions is approved, in order to
provide for an orderly transition, the Class III Directors who are standing
for election at the Annual Meeting will be elected to one-year terms ending
at the 1999 Annual Meeting. The terms of the Class I Directors will continue
until the 1999 Annual Meeting, and the terms of the Class II Directors will
continue until the 2000 Annual Meeting. Thereafter, each of these directors
will stand for re-election for one-year terms.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
ELECTION OF DIRECTORS
As noted above, the Sealed Air Charter currently divides the Board of
Directors into three classes, with classes serving staggered terms of three
years. Currently, there are four directors in Class I, four directors in
Class II, and three directors in Class III.
The Class I Directors have a term of office that continues until the 1999
Annual Meeting, and the Class II Directors have a term of office that
continues until the year 2000 Annual Meeting. The current Class III
Directors, who have a term of office that expires at the 1998 Annual Meeting,
have been nominated by the Board of Directors to be elected to serve until
the 2001 Annual Meeting. However, as noted above, if the proposal to repeal
the Supermajority Provisions of the Sealed Air Charter is approved by the
requisite vote of the stockholders, the term of office of the Class III
Directors elected at the 1998 Annual Meeting will be the one-year period
until the 1999 Annual Meeting and until their successors are elected and
qualified.
Shares of Common Stock or Preferred Stock represented by a duly executed
proxy that is returned to the Company will be voted in favor of the election
as directors of the nominees for election as Class III Directors named below
unless otherwise specified on the proxy. If any nominee becomes unavailable
for any reason or if a vacancy should occur before the election (which events
are not anticipated), the shares represented by a duly executed proxy may be
voted in favor of such other person as may be determined by the holders of
such proxies.
The information appearing in the following table sets forth for each
nominee as a Class III Director and for each continuing Class I or Class II
Director his or her business experience for the past five years, the year in
which he or she first became a director of the Company or of old Sealed Air
(as indicated in footnotes to the table), and his or her age as of May 5,
1998.
Each current member of the Board of Directors of the Company who was a
member of the Board of Directors of the Company during 1997 attended at least
75% of the aggregate number of meetings of the Board and of the committees of
the Board on which they served during 1997 except for Mr. Cheng, who attended
71% of such meetings. Each current member of the Board of Directors of the
Company who was a member of the Board of Directors of old Sealed Air during
1997 attended at least 75% of the aggregate number of meetings of the Board
of old Sealed Air and of the committees of such Board on which they served
during 1997.
During 1997, the Board of Directors of the Company and the Board of
Directors of old Sealed Air each held eight meetings (excluding in each case
actions by unanimous written consent).
8
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME BUSINESS EXPERIENCE SINCE AGE
- -------------------------- ------------------------------------------------------------- ---------- -----
<S> <C> <C> <C>
NOMINEES FOR ELECTION--CLASS III DIRECTORS--TERMS EXPIRING IN 2001 (IF THE SUPERMAJORITY PROVISIONS ARE REPEALED,
TERMS EXPIRE IN 1999)
Lawrence R. Codey(1)....... President and Chief Operating Officer of Public Service Electric 1993 53
and Gas Company, a public utility. Director of Public Service
Enterprise Group Incorporated, The Trust Company of New Jersey
and United Water Resources Inc.
David Freeman(1)........... Chairman and Chief Executive Officer of Loctite Corporation, a 1993 54
manufacturer of adhesives and sealants. He has held senior management
positions with Loctite Corporation for more than five years.
Robert L. San Soucie(1) ... President and Chief Executive Officer of The Math Learning Center, 1971 71
a non-profit educational organization, since September 1997.
Previously Managing Director and President of MRV Financial
Associates, a financial and management consulting firm.
DIRECTORS CONTINUING IN OFFICE--CLASS I DIRECTORS--TERMS EXPIRING IN 1999
Hank Brown(2).............. Director of the Center for Public Policy at the University of Denver. 1997 58
Formerly a United States Congressman from 1981 until 1991 and a
United States Senator from 1991 until January 1997.
John K. Castle(1).......... Chairman and Chief Executive Officer of Castle Harlan, Inc., a 1971 57
merchant banking firm, and of Branford Castle, Inc., a holding
company. Director of Commemorative Brands, Inc., Morton's Restaurant
Group, Inc., Statia Terminals International, N.V. and Universal
Compression, Inc.
Charles F. Farrell, Jr.(1). President of Crystal Creek Partners, an investment management and 1971 67
business consulting firm.
Alan H. Miller(1).......... Private investor. Until his retirement in December 1994, President 1984 64
and Chief Executive Officer of Laird, Inc., a manufacturer of
specialty folding cartons and special commercial printing and a
distributor of rigid plastics.
Director of The Laird Group PLC (listed on the London Stock Exchange).
DIRECTORS CONTINUING IN OFFICE--CLASS II DIRECTORS--TERMS EXPIRING IN 2000
Christopher Cheng(2)....... Chairman and Managing Director of the Wing Tai Group of Companies, 1997 49
a garment manufacturer based in Hong Kong, and Chairman of USI
Holdings Ltd., a diverse holding company with interests in garment
manufacturing, property development, hospitality and
telecommunications. Director of The New World Infrastructure Limited
(listed on the Hong Kong Stock Exchange) and The Gieves Group PLC
(listed on the London Stock Exchange).
T. J. Dermot Dunphy(1) ... Chairman of the Board and Chief Executive Officer of the Company. 1969 66
Director of Public Service Enterprise Group Incorporated, Summit
Bancorp and Summit Bank.
9
<PAGE>
DIRECTOR
NAME BUSINESS EXPERIENCE SINCE AGE
- -------------------------- ------------------------------------------------------------- ---------- -----
Virginia A. Kamsky(2) ..... Founder, Chairman and Co-Chief Executive Officer of Kamsky Associates 1990 44
Inc., an advisory, consultancy and investment firm specializing
in The People's Republic of China.
John E. Phipps(2).......... Private investor. General partner of Phipps Ventures and Director 1975 65
of Bessemer Group, Bessemer Securities Corporation, Bessemer Trust
Company, Bessemer Trust Company of Florida and Bessemer Trust Company,
N.A.
</TABLE>
- ------------
(1) Director of old Sealed Air since the year indicated; became a director
of the Company in 1998.
(2) Director of the Company since the year indicated.
COMMITTEES OF THE BOARD OF DIRECTORS
Set forth below is a description of the current committees of the Board of
Directors and those that were maintained by the Company prior to the Merger.
CURRENT COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors currently maintains an Audit Committee
and an Organization and Compensation Committee (the "Organization and
Compensation Committee"). The members of such committees are directors who
are neither officers nor employees of the Company. These committees have the
same responsibilities as the corresponding committees previously maintained
by old Sealed Air. The Board of Directors has not established a nominating
committee.
The principal responsibilities of the Audit Committee are to advise the
Board of Directors as to the selection of auditors, to confer with the firm
appointed to audit the books and accounts of the Company and its subsidiaries
and to determine, and from time to time report to the Board of Directors
upon, the scope of such auditing. The current members of the Audit Committee
are Messrs. Brown, Cheng, Codey, Farrell and San Soucie (Chairman). During
1997, the members of the Audit Committee of old Sealed Air were Messrs.
Codey, Farrell and San Soucie (Chairman). Such committee held three meetings
during 1997 (excluding actions by unanimous written consent.)
The principal responsibilities of the Organization and Compensation
Committee are to determine the compensation of the officers of the Company
and of the other employees of the Company or any of its domestic subsidiaries
with a base annual salary of $100,000 or more, to administer the Company's
Contingent Stock Plan and all option plans and to authorize the issuance of
shares of the Company's Common Stock under the Contingent Stock Plan, to
perform the duties and responsibilities of the Board of Directors under the
Company's Profit-Sharing Plan (except the authority to determine the amount
of the Company's annual contribution to such Plan) and the other
tax-qualified retirement plans sponsored by the Company, and to consider and
advise the Board of Directors from time to time with respect to the
organization and structure of the management of the Company. The current
members of the Organization and Compensation Committee are Messrs. Castle,
Freeman, Miller (Chairman) and Phipps and Ms. Kamsky. During 1997, the
members of the Organization and Compensation Committee of old Sealed Air were
Messrs. Castle, Freeman and Miller (Chairman). Such committee held three
meetings during 1997 (excluding actions by unanimous written consent.)
COMMITTEES OF THE BOARD PRIOR TO THE MERGER
Prior to the Merger, the Company maintained an Audit Committee, a
Compensation, Employee Benefits and Stock Incentive Committee, a Nominating
Committee and a Committee on Corporate Responsibility.
10
<PAGE>
The Audit Committee was responsible for reviewing the financial
information that the Company provides to stockholders and others, the
Company's internal controls, and its auditing, accounting and financial
reporting processes generally. This Committee's specific responsibilities
included (a) recommending to the Board the selection of independent certified
public accountants to audit the annual financial statements of the Company
and its consolidated subsidiaries, (b) reviewing the annual financial
statements, and (c) meeting with the Company's senior financial officers,
internal auditors and independent certified public accountants to review the
scope and results of the audit and other matters regarding the Company's
accounting, financial reporting and internal control systems. Messrs. Brown
and Cheng were members of this committee, which met four times during 1997.
The Compensation, Employee Benefits and Stock Incentive Committee (the
"Old Grace Compensation Committee") made recommendations to the Board with
respect to the salary and annual and long-term incentive compensation of
certain officers and other high-level employees, as well as the Company's
benefit plans, programs and arrangements generally. This Committee also
administered the Company's stock incentive plans, determining the recipients
and terms of stock incentives. Mr. Phipps was a member of such committee,
which met eight times during 1997.
The Nominating Committee recommended to the Board candidates for
nomination as directors of the Company. Mr. Phipps chaired that committee,
which met once during 1997.
The Committee on Corporate Responsibility advised management on the
Company's role in the public sector and its responsibility with respect to
matters of public policy. Messrs. Brown and Cheng and Ms. Kamsky were members
of such committee, which met once during 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Organization and Compensation Committee or the
former Organization and Compensation Committee of old Sealed Air has been an
officer or employee of the Company or any of its subsidiaries. Until the end
of 1983, Mr. Miller was the President of Cellu-Products Company, a
corporation that old Sealed Air acquired in October 1983.
Mr. Dunphy is a member of the Organization and Compensation Committee of
the Board of Directors of Public Service Enterprise Group Incorporated, the
parent company of Public Service Electric and Gas Company. Such committee
administers the compensation program for executive officers of Public Service
Electric and Gas Company. Mr. Codey is the President and Chief Operating
Officer of Public Service Electric and Gas Company.
11
<PAGE>
DIRECTORS' COMPENSATION
Set forth below are descriptions of the Company's current non-employee
directors' compensation program as well as of the program that was in effect
for non-employee directors of the Company prior to the Merger.
CURRENT DIRECTORS COMPENSATION
Each member of the Board of Directors who is neither an officer nor an
employee of the Company (each a "non-employee director") receives an annual
retainer fee for serving as a director. The Board of Directors intends to pay
such retainer in the form of an annual grant of 1,200 shares of the Company's
Common Stock (subject to adjustment in certain events) to each eligible
director who is elected at each annual meeting of stockholders. Such grant is
intended to be made under the Restricted Stock Plan for Non-Employee
Directors (the "Directors Stock Plan"), subject to approval of the Directors
Stock Plan at the Annual Meeting. See "Approval of Restricted Stock Plan for
Non-Employee Directors" below for a description of the terms of the Directors
Stock Plan.
In addition, each member of the Audit Committee and the Organization and
Compensation Committee receives a retainer fee of $2,000 per year for serving
as a member of such committee. The chairman of each such committee receives
an additional retainer fee of $2,000 per year for serving as such. Each
non-employee director also receives a fee of $1,000 for each Board or
committee meeting attended. These fees are paid in cash in quarterly
installments. All directors are reimbursed for expenses incurred in attending
Board or committee meetings.
The current compensation program for non-employee directors of the Company
is substantially the same as the program for non-employee directors of old
Sealed Air during 1997. During 1997, each non-employee director of old Sealed
Air (which included all of the directors of old Sealed Air other than Mr.
Dunphy) received a retainer grant of 1,200 shares of Common Stock at a price
of $1.00 per share following his election at the 1997 Annual Meeting of
Stockholders of old Sealed Air. The non-employee directors of old Sealed Air
also received the cash fees described in the preceding paragraph.
DIRECTORS COMPENSATION PRIOR TO THE MERGER
Under the compensation program for non-employee directors of the Company
that was in effect prior to the Merger, (a) each non-employee director was
entitled to receive an annual retainer of $50,000, of which $35,000 was in
the form of Old Grace Common Stock, and the balance was in cash or Old Grace
Common Stock, at the election of the director, (b) each committee chair
received an additional annual retainer of $3,000 in cash or Old Grace Common
Stock, at the election of the director, and (c) each non-employee director
received $2,000 for each Board meeting and $1,000 for each committee meeting
attended (except that committee chairs received $1,200 per committee
meeting), in cash or Old Grace Common Stock, at the election of the director.
Each of Messrs. Brown, Cheng and Phipps and Ms. Kamsky participated in this
compensation program.
A non-employee director of the Company could defer payment of all or part
of the fees received for attending Board and committee meetings and/or the
cash retainers (or cash portions of the retainers) referred to above. The
deferred cash (plus an interest equivalent) was payable to the director or
his or her heirs or beneficiaries in a lump sum or in quarterly installments
over two to 20 years following a date specified by the director (but in no
event earlier than the director's termination from service). The interest
equivalent on deferred cash was computed at the higher of (a) the prime rate
plus two percentage points or (b) 120% of the prime rate, in either case
compounded semiannually. The portion of the annual retainer payable in Old
Grace Common Stock could be deferred and held, and the balance of the annual
retainer or other retainers and/or fees a director elected to receive in the
form of Old Grace Common Stock was deferred and held, in a deferred
compensation trust established by the Company. In connection with the Merger,
New Grace assumed responsibility for all deferred compensation payable to the
directors and has treated the transition of such program to New Grace as the
termination from service of Messrs. Brown, Cheng and Phipps and Ms. Kamsky.
12
<PAGE>
Prior to July 1, 1997, the Company maintained a retirement plan for
non-employee directors in which Messrs. Brown and Phipps had accrued benefits
as of that date. Upon the termination of that plan effective July 1, 1997,
benefits earned and accrued were frozen, vested and converted to present
value. The present value of this vested benefit was deferred in cash or in
Old Grace Common Stock, at the election of the director, on the basis
described in the preceding paragraph.
Non-employee directors of the Company were also reimbursed for expenses
they incurred in attending Board and committee meetings. The Company also
maintained business travel accident insurance coverage for them. In addition,
non-employee directors could receive $1,000 per day for work performed at the
request of the Company.
The Company previously had a consulting agreement with Kamsky Associates
Inc. (of which Ms. Kamsky is chairman and co-chief executive officer)
relating to its interests in The People's Republic of China. The agreement
expired on May 31, 1997 (and was not renewed) and provided for monthly fees
of $25,000, plus additional payments based on the extent to which the Company
established certain business relationships in The People's Republic of China.
In 1997, the Company paid fees totaling $125,000 under this agreement.
EXECUTIVE COMPENSATION
The regulations of the Securities and Exchange Commission ("SEC")
applicable to proxy statements require the inclusion of certain information
relating to executive compensation for the Company's most recently completed
fiscal year. Notwithstanding the Merger and the changes in the management of
the Company that have occurred in connection with the Merger, the rules of
the SEC require the Company to include in this Proxy Statement executive
compensation information concerning the Company's executive officers and
certain of its compensation plans and arrangements for 1997 and prior years,
even though most of such executive officers ceased to be affiliated with the
Company upon the effectiveness of the Merger.
Since all of the executive officers of old Sealed Air immediately prior to
the Merger have become executive officers of the Company and the Company
intends to adopt the executive compensation program of old Sealed Air to
replace the Company's previous executive compensation program, the Company
believes that it is important to include executive compensation information
relating to old Sealed Air for 1997 and prior years in order to provide a
full understanding of the Company. Accordingly, the Company has included in
this Proxy Statement both the executive compensation information for old
Sealed Air that would have been furnished in a proxy statement for an annual
meeting of the stockholders of old Sealed Air held in 1998 as well as
executive compensation information relating to the management of the Company
during 1997 to the extent that such information is available. Annex B to this
Proxy Statement contains a Summary Compensation Table and related
compensation information for old Sealed Air covering 1997 and prior years,
and Annex C to this Proxy Statement contains a Summary Compensation Table and
related compensation information for the Company covering 1997 and prior
years.
REPORT OF OLD SEALED AIR'S ORGANIZATION AND COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The following report of the Organization and Compensation Committee of old
Sealed Air sets forth information about the executive compensation program of
old Sealed Air, which is the executive compensation program being implemented
by the Company following the Merger, and the 1997 compensation of the
executive officers of old Sealed Air named in the Summary Compensation Table
attached to this Proxy Statement as Annex B. The Company does not have
available to it a report of the Old Grace Compensation Committee.
Compensation Philosophy
Old Sealed Air's executive compensation program consisted of salaries,
annual bonuses tied to performance, and awards under old Sealed Air's
Contingent Stock Plan, which was substantially the same as the 1998
Contingent Stock Plan of the Company, described below. Old Sealed Air's
executive
13
<PAGE>
compensation philosophy was to provide salaries that were modest when
compared with manufacturing companies of comparable size and annual bonuses
that were higher than those provided by such companies. Old Sealed Air also
made substantial awards of its common stock under its Contingent Stock Plan
as long-term incentive compensation to its executives when the Committee felt
such awards were appropriate. In reaching its decisions, the Committee was
guided by its own judgment and those sources of information (including
compensation surveys) that the Committee considered reliable.
This program was designed to provide appropriate incentives toward
achieving old Sealed Air's annual and long-term strategic objectives, to
support a performance-oriented environment based on the attainment of goals
and objectives intended to benefit old Sealed Air and its stockholders, to
create an identity of interests between old Sealed Air's executives and its
stockholders, and to attract, retain and motivate key executives. The
Committee believes that this program effectively provided these incentives as
shown by the long-term record of growth and enhancement of stockholder value
achieved by old Sealed Air.
Salaries and Annual Bonuses
The Committee was responsible for setting the compensation of old Sealed
Air's executive officers, including the executive officers listed in the
Summary Compensation Table set forth in Annex B, and other employees of old
Sealed Air or any of its domestic subsidiaries with base salaries of $100,000
or more. The Committee conducted an annual compensation review during the
first quarter of each year. The Chief Executive Officer of old Sealed Air
submitted salary and bonus recommendations to the Committee for the other
executive officers and employees whose compensation was set by the Committee.
Following a review of those recommendations, the Committee approved cash
bonuses for the prior year and salary rates and cash bonus objectives for the
current year for the other executive officers and employees with such
modifications to the Chief Executive Officer's recommendations as the
Committee considered appropriate. Also, the Committee could adjust salaries
for specific executive officers or employees at other times during the year
when there were significant changes in the responsibility of such officers or
employees.
The Committee based its decisions on adjustments to salary and cash bonus
objectives principally on changes in the responsibilities of the particular
executive and on the Committee's evaluation of the market demand for
executives of the capability and experience employed by old Sealed Air in
relation to the total compensation paid to the particular executive. The
Committee set annual cash bonus objectives at a level that linked a
substantial portion of each individual's annual cash compensation to
attaining the performance objectives discussed below in order to provide
appropriate incentives to attaining such objectives.
Cash bonuses were determined based upon the attainment of corporate and
individualized performance objectives for the year in question. The Committee
did not apply a fixed weight to corporate or individual performance goals in
deciding the amount of cash bonuses, although the Committee generally placed
greater emphasis on financial performance than on other personal performance
objectives.
The principal measure of corporate performance used to establish annual
cash bonuses was the extent to which old Sealed Air achieved its business
plan for the year in question. Such business plan was developed by management
and approved by the Board of Directors before the beginning of such year. The
Committee did not rely exclusively on any single measure of financial
performance to measure achievement of old Sealed Air's business plan.
However, the greatest weight was given to the achievement of budgeted targets
for net sales, operating profit, net earnings, and measures of expense
control and balance sheet management such as earnings before taxes, interest,
depreciation and amortization (commonly called "EBITDA"). Old Sealed Air did
not make its business plans public, nor did it make public projections of its
financial performance. Accordingly, the specific financial targets upon which
annual cash bonus objectives were based were not publicly available.
Executives other than the Chief Executive Officer were also evaluated based
upon their attainment of individualized management objectives within their
particular areas of responsibility. For each executive officer who had
overall responsibility for an operating unit of old Sealed Air, such
individualized objectives included the operating unit's achievement of its
own financial targets.
14
<PAGE>
During the first quarter of 1997, the Organization and Compensation
Committee of old Sealed Air conducted a compensation review for the executive
officers of old Sealed Air named in the Summary Compensation Table set forth
in Annex B other than the Chief Executive Officer, in connection with which
old Sealed Air's Chief Executive Officer submitted recommendations to the
Organization and Compensation Committee for 1996 cash bonuses, 1997 salary
adjustments and 1997 cash bonus objectives. The Committee approved such
recommendations with such modifications as the Committee deemed appropriate,
none of which was material. None of such executive officers received a salary
increase in 1997, although most of them had received increases during the
second half of 1996.
Cash bonuses for 1997 for the executive officers of old Sealed Air named
in the Summary Compensation Table set forth in Annex B were determined by the
Committee during the first quarter of 1998. These bonuses reflected old
Sealed Air's achievement of its principal financial objectives during 1997,
recognition of the role of certain of such officers in the pending Merger,
and the Committee's evaluation of each officer's degree of attainment of such
officer's other performance goals for 1997.
Compensation of the Chief Executive Officer
The Organization and Compensation Committee of old Sealed Air evaluated
the performance of the Chief Executive Officer, reviewed its evaluation with
him, and based on that evaluation and review decided his compensation and
performance and bonus objectives. The Organization and Compensation Committee
and the Chief Executive Officer believed that his cash compensation should be
weighted somewhat toward annual incentive compensation in the form of cash
bonuses rather than salary but that, on an overall basis, his compensation
should be weighted more heavily toward long-term incentive compensation
derived from equity ownership in old Sealed Air through its Contingent Stock
Plan. Accordingly, Mr. Dunphy's salary remained at the same rate in 1997 as
was established in 1991.
The Organization and Compensation Committee based its determination of the
annual cash bonus for the Chief Executive Officer on the corporate
performance goals discussed above and the Chief Executive Officer's
leadership in providing strategic direction to old Sealed Air, in developing
and maintaining an effective management team for old Sealed Air and in
communicating and implementing a strong corporate culture and vision within
and outside old Sealed Air. As a result of the annual compensation review
conducted in the first quarter of 1998, based upon old Sealed Air's
achievement of its principal financial objectives during 1997, Mr. Dunphy's
leadership in the Merger, and Committee's determination of Mr. Dunphy's
attainment of his other performance objectives for 1997, the Committee
established Mr. Dunphy's 1997 annual cash bonus at the level shown in the
Summary Compensation Table in Annex B.
Contingent Stock Plan
Old Sealed Air's Contingent Stock Plan, which was established in 1976, was
intended to provide an effective method of motivating performance of key
employees, including executive officers of old Sealed Air, and of creating an
identity of interests in participating employees with the interests of the
stockholders. The Plan provided for the award of shares of common stock to
such key employees of old Sealed Air or any of its subsidiaries as the
Organization and Compensation Committee determined to be eligible for awards.
It was expected that recipients of awards would retain a substantial portion
of the shares awarded to them to foster an identity of interests with the
stockholders of old Sealed Air.
Shares of common stock issued under this Plan were subject to an option in
favor of the Company for three years after they were awarded, or such longer
period as may have been determined by the Organization and Compensation
Committee, to repurchase the shares upon payment of an amount equal to the
price at which such shares were issued, which was always $1.00 per share.
This option was exercisable by the Company only upon the termination of an
employee's employment during such period other than as a result of death or
total disability. Such option terminates upon the occurrence of any of
certain events related to change of control of the Company specified in the
Plan. In connection with the Merger, the Plan was amended to provide that the
Merger would not constitute a change of control that would terminate the
Company's repurchase option with respect to the shares of old Sealed Air
Common Stock outstanding under the Plan. Shares of Common Stock issued
pursuant to this Plan may not be sold, transferred or encumbered by the
employee while the Company's option to repurchase the shares remains in
effect.
15
<PAGE>
Awards were made under the Contingent Stock Plan both to reward short-term
performance with equity-based compensation and to motivate the recipient's
long-term performance. The Organization and Compensation Committee did not
follow the practice of making annual or other periodic awards to individuals
who were determined to be eligible to participate in the Plan. However, the
Organization and Compensation Committee regularly reviewed the stock
ownership of key employees and, when it deemed it appropriate, made awards
under the Plan to reflect the contributions of those individuals to specific
Company achievements and to provide motivation toward the achievement of
additional strategic objectives.
During 1997, of the executive officers named in the Summary Compensation
Table, awards were made under the Plan to Messrs. Dunphy and Hickey. Such
awards were made to recognize their achievements and efforts related to
entering into the Merger Agreement and completing the transactions
contemplated by that Agreement.
Compliance with Section 162(m) of the Internal Revenue Code
Awards under old Sealed Air's Contingent Stock Plan were not subject to
the attainment of pre-established objective performance goals. Thus,
compensation associated with awards under such Plan to the executive officers
named in the Summary Compensation Table, when taken together with their other
annual compensation, could become subject to the limitations of Section
162(m) of the Internal Revenue Code of 1986, as amended, under which old
Sealed Air could deduct for federal tax purposes no more than $1 million of
annual compensation paid to any such executive officer. The compensation
related to awards made in prior years to one of the named executive officers
under the Contingent Stock Plan that were scheduled to vest during 1997, when
added to other compensation paid to such officer in 1997, would have been
partially non-deductible to old Sealed Air under Section 162(m). With the
approval of the Organization and Compensation Committee, the vesting schedule
for such award was amended so that old Sealed Air's option to repurchase the
shares covered by such award was extended into subsequent years. As a result,
non-deductible compensation under Section 162(m) in 1997, if any, was
minimal.
The Organization and Compensation Committee's policy was to structure
executive compensation to be deductible without limitation where doing so
would further the purposes of old Sealed Air's executive compensation
program. Thus, the Organization and Compensation Committee could authorize
additional extensions of vesting dates for awards under old Sealed Air's
Contingent Stock Plan. However, the Organization and Compensation Committee
believed that compensation of its executive officers could not always be
based upon fixed formulas and that the prudent use of discretion in
determining compensation would sometimes be in the best interests of old
Sealed Air and its stockholders. In some cases, the Organization and
Compensation Committee in the exercise of such discretion may have approved
executive compensation that was not fully deductible. However, the Company
does not expect the limitations on deductibility to have a material impact on
its financial condition.
Stock Performance
While the Organization and Compensation Committee took note of the
performance of old Sealed Air's Common Stock in its compensation decisions,
it did not consider such performance to be a principal determinant in making
such decisions, since total return to stockholders as reflected in the
performance of old Sealed Air's stock price was subject to factors affecting
the securities markets that were unrelated to old Sealed Air's performance.
Since management compensation was based upon factors relating to old
Sealed Air's growth and profitability and the contributions of each of its
executives to the achievement of old Sealed Air's objectives, the
Organization and Compensation Committee believed that appropriate incentives
were provided to align management's interests with the long-term growth and
development of old Sealed Air and the interests of its stockholders. The
Organization and Compensation Committee also believed that there were many
ways by which its executive officers and other executives contributed to
building a successful company. While the results of those efforts could
eventually appear in the financial statements or be reflected in old Sealed
Air's stock price, many long-term strategic decisions made in pursuing old
Sealed Air's growth and development may have had little visible impact in the
short term.
16
<PAGE>
The Organization and Compensation Committee notes that the performance of
the Common Stock of old Sealed Air in the five-year period ended December 31,
1997 exceeded that of both the Standard & Poor's 500 Stock Index and the peer
group index shown in the performance table appearing below. Stockholders of
old Sealed Air who held shares of the common stock of old Sealed Air
throughout the period had a total return of 392% (or an annual compounded
return of 38%). This total return compares to a five-year total return of
149% (or an annual compounded return of 20%) for the Standard & Poor's 500
Stock Index and a five-year total return of 27% (or an annual compounded
return of 5%) for the peer group index shown in the performance table
appearing below.
Organization and Compensation Committee
of the Board of Directors of old Sealed Air
Alan H. Miller, Chairman
John K. Castle
David Freeman
17
<PAGE>
COMMON STOCK PERFORMANCE COMPARISONS
The following graph compares for the five years ended December 31, 1997
the cumulative total return on an investment of $100 assumed to have been
made on December 31, 1992 in the common stock of old Sealed Air (trading
symbol: SEE) (after giving effect to a two-for-one stock split effected in
1995 for all periods presented) with that of comparable investments assumed
to have been made on such date in (a) the Standard & Poor's 500 Stock Index
and (b) an arithmetic average of the chemicals (specialty) segment and the
containers-paper segment of such index (the "peer group index"), the two
published Standard & Poor's market segments with which old Sealed Air was
usually compared by the investment community.
Total return for each assumed investment assumes the reinvestment of all
dividends on December 31 of the year in which such dividends were paid. Old
Sealed Air did not pay any cash dividends during this five-year period.
Following the Merger, the Company's Common Stock and Preferred Stock are
listed on the New York Stock Exchange (trading symbols: SEE and SEE PrA,
respectively).
The information necessary to show the performance of Old Grace Common
Stock during the same period is not available to the Company.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<CAPTION>
December 31, 1992 1993 1994 1995 1996 1997
------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Old Sealed Air $100 $125.87 $144.28 $222.89 $331.34 $491.54
Composite Chemicals (Specialty)/Containers-Paper Index 100 93.05 97.34 100.03 117.58 127.18
Composite S&P 500 100 109.94 111.36 152.68 187.32 249.32
</TABLE>
18
<PAGE>
EXECUTIVE OFFICERS
The information appearing in the table below sets forth the current
position or positions held by each current executive officer of the Company,
his or her age as of May 5, 1998, the year in which he or she first was
elected to the position currently held with the Company or with old Sealed
Air (as indicated in the footnote to the table), and the year in which he or
she first was elected an officer of the Company or of old Sealed Air (as
indicated in the footnote to the table).
All of the Company's officers serve at the pleasure of the Board of
Directors. All officers have been employed by the Company, old Sealed Air or
their subsidiaries for more than five years. There are no family
relationships among any of the Company's officers or directors.
<TABLE>
<CAPTION>
NAME AND AGE AS OF FIRST ELECTED TO FIRST ELECTED
CURRENT POSITION MAY 5, 1998 CURRENT POSITION AN OFFICER
- ----------------------------- ------------- ---------------- ---------------
<S> <C> <C> <C>
T. J. Dermot Dunphy........... 66 1971 1971
Chairman of the Board,
Chief Executive Officer
and Director
William V. Hickey............. 53 1996 1980
President and Chief
Operating Officer
J. Gary Kaenzig, Jr.*......... 52 1998 1995
Executive Vice President
Bruce A. Cruikshank........... 54 1996 1990
Senior Vice President
Robert A. Pesci............... 52 1997 1990
Senior Vice President
Jonathan B. Baker............. 45 1994 1994
Vice President
James A. Bixby................ 54 1990 1990
Vice President
Leonard R. Byrne*............. 56 1998 1998
Vice President
Mary A. Coventry ............. 44 1994 1994
Vice President
Jean-Luc Debry................ 53 1992 1992
Vice President
Paul B. Hogan................. 58 1995 1995
Vice President
James P. Mix ................. 46 1994 1994
Vice President
Abraham N. Reichental ........ 41 1994 1994
Vice President
Horst Tebbe................... 57 1997 1986
Vice President--Finance
and Chief Financial Officer
Alan S. Weinberg*............. 56 1998 1998
Vice President
Jeffrey S. Warren............. 44 1996 1996
Controller
H. Katherine White ........... 52 1998 1996
General Counsel and
Secretary
</TABLE>
- ------------
* Prior to the Merger, Mr. Kaenzig served as Senior Vice President of the
Company and as President of the Cryovac packaging business of the
Company, and Messrs. Byrne and Weinberg were executives of the Cryovac
packaging business of the Company. Prior to the Merger, all other
persons listed in the table were executive officers of old Sealed Air.
19
<PAGE>
APPROVAL OF AMENDMENTS TO THE CONTINGENT STOCK PLAN
In 1976, the stockholders of old Sealed Air adopted that company's
Contingent Stock Plan (the "1976 Contingent Stock Plan") to provide
incentives to permit those employees responsible for old Sealed Air's growth
to share directly in that growth and to further the identity of their
interests with those of the stockholders of old Sealed Air. On April 2, 1998,
the Board of Directors of the Company adopted the Contingent Stock Plan of
the Company (the "1998 Contingent Stock Plan"), which was substantially the
same as the 1976 Contingent Stock Plan of old Sealed Air in effect
immediately before the Merger. The 1998 Contingent Stock Plan as so adopted
provided for awards of up to 450,450 shares of Common Stock, which was the
number of shares of old Sealed Air Common Stock available for awards under
the 1976 Contingent Stock Plan immediately before the Merger.
On April 23, 1998, the Board of Directors unanimously approved amendments
to the 1998 Contingent Stock Plan, subject to the approval by the
stockholders of those amendments that require stockholder approval. These
amendments increase the maximum number of shares of the Company's Common
Stock that may be awarded under the 1998 Contingent Stock Plan and make
certain other changes in the 1998 Contingent Stock Plan as described below. A
copy of the 1998 Contingent Stock Plan as currently in effect and as proposed
to be amended is attached as Annex D to this Proxy Statement.
The 1998 Contingent Stock Plan provides for the award of shares of Common
Stock to such key employees of the Company or any of its subsidiaries as the
Organization and Compensation Committee determines to be eligible for awards.
Recipients of awards are expected to retain a substantial portion of the
shares awarded to them to foster an identity of interest with the
stockholders of the Company.
Shares of Common Stock issued under the 1998 Contingent Stock Plan are
subject to an option in favor of the Company for a period of three years
after they are awarded, or such longer period as may be determined by the
Organization and Compensation Committee, to repurchase the shares upon
payment of an amount equal to the price at which such shares were issued,
which will generally be $1.00 per share. This option is exercisable by the
Company only upon the termination of an employee's employment during such
period other than as a result of death or total disability. Such option
terminates upon the occurrence of any of certain events related to change of
control of the Company specified in the 1998 Contingent Stock Plan. Shares of
Common Stock issued under the 1998 Contingent Stock Plan may not be sold,
transferred or encumbered by the employee while the Company's option to
repurchase the shares remains in effect.
The proposed amendments to the 1998 Contingent Stock Plan are as follows:
(i) The number of shares authorized for awards under the 1998 Contingent
Stock Plan would be increased from 450,450 shares to 2,500,000 shares,
thereby authorizing the issuance of an additional 2,049,550 shares of
Common Stock under the 1998 Contingent Stock Plan.
(ii) The Organization and Compensation Committee would be authorized to
award shares of Common Stock subject to a shorter period during which such
shares are subject to the Company's repurchase option than the current
three year minimum period. This proposed amendment is intended to
introduce flexibility into the 1998 Contingent Stock Plan that would
permit it to be used as a vehicle to make awards of shares of Common Stock
that would be subject to performance-based criteria. For example, such
amendment would permit awards to be subject to performance-based criteria
that could be satisfied in less than three years, with the shares
remaining subject to the Company's repurchase option only during the
remainder of the three-year period. Awards under this Plan that are
subject to the satisfaction of performance-based criteria will be made to
executive officers of the Company only after a performance-based plan is
adopted by the Board of Directors, subject to stockholder approval.
(iii) The amendment provisions of the 1998 Contingent Stock Plan are
proposed to be amended so that stockholder approval will only be required
for amendments that increase the number of shares available for issuance
under the Plan, either in the aggregate or to any one person, or that
decrease the minimum price at which shares of Common Stock may be issued
under the Plan.
20
<PAGE>
Stockholder approval will no longer be required for amendments that
decrease the minimum three-year repurchase option period or that expand
the class of persons eligible to receive awards under the Plan. There are
no current plans to make any such amendments, but approval of this change
will introduce flexibility into the Plan.
The Board of Directors believes that the 1976 Contingent Stock Plan served
old Sealed Air as an effective method of motivating performance of key
employees and of creating an identity of interests in participating employees
with the interests of stockholders and that the 1998 Contingent Stock Plan
will serve the same objectives for the Company. To enable the 1998 Contingent
Stock Plan to fulfill its role in providing incentives to eligible employees,
the Board of Directors believes that additional shares of Common Stock should
be authorized for issuance under the 1998 Contingent Stock Plan and that the
other proposed amendments to the 1998 Contingent Stock Plan should be
approved.
Although no plans have been made for the grant of future awards to any
specific individual, if the proposed amendments are approved, the Company's
executive officers will be among the employees of the Company and its
subsidiaries eligible to receive awards in the future. Directors of the
Company who are not officers or employees of the Company or its subsidiaries
are not eligible to receive awards under the Contingent Stock Plan. Since
April 2, 1998, Messrs. Dunphy, Hickey, Kaenzig, Cruikshank and Pesci have
received awards of 80,000, 40,000, 23,500, 10,000 and 10,000 shares of Common
Stock, respectively, the executive officers as a group have received awards
of 191,500 shares (including the awards to such five named executive
officers), and approximately 300 employees other than executive officers have
received awards of 220,200 shares. These awards are not conditioned upon
stockholder approval of the proposed amendments to the Contingent Stock Plan.
On May [ ], 1998, the closing price per share of Common Stock was $[ ].
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
APPROVAL OF RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
On April 23, 1998, the Board of Directors approved the Restricted Stock
Plan for Non-Employee Directors (the "Directors Stock Plan") for submission
to the stockholders at the Annual Meeting. The Directors Stock Plan will
become effective upon its approval by the stockholders. A copy of the
Directors Stock Plan is attached to this Proxy Statement as Annex E. The
Directors Stock Plan is substantially the same as the Restricted Stock Plan
for Non-Employee Directors that was maintained by old Sealed Air prior to the
Merger.
If the Director Stock Plan is approved, each director of the Company who
is not an officer or employee of the Company (each a "Non-Employee Director")
will be eligible to receive grants of shares of Common Stock under the
Directors Stock Plan as described below.
The Directors Stock Plan is intended to enhance the ability of the Company
to attract and retain Non-Employee Directors of exceptional ability, to
motivate its Non-Employee Directors, and to promote the common interest of
Non-Employee Directors and stockholders in enhancing the value of the
Company's Common Stock. Each of the nominees for director and each of the
continuing directors other than Mr. Dunphy is eligible for grants of Common
Stock under the Directors Stock Plan.
If the Directors Stock Plan is approved by the stockholders, the Company
intends to use the Directors Stock Plan to provide for the payment of the
annual retainer paid to each Non-Employee Director for serving as a director
of the Company. Under the Directors Stock Plan, the annual Board retainer is
set at 1,200 shares of Common Stock, subject to adjustment in certain events,
and the Directors Stock Plan provides for proportionate grants to be made to
any Non-Employee Director first elected at other than an annual meeting based
upon the number of 30-day periods remaining until the next scheduled annual
meeting of stockholders. At the $ per share closing price of the Company's
Common Stock on May , 1998, the value of a grant of 1,200 shares made on
that date under the Directors Stock Plan to each of the ten Non-Employee
Directors would have been $ , and a total of 12,000 shares would have been
awarded to such directors as a group with a total market value of $ .
21
<PAGE>
Although the Directors Stock Plan does not prevent the Board from
exercising its authority to approve the payment of additional retainer fees
to Non-Employee Directors, the adoption of additional plans or arrangements
relating to the compensation of Non-Employee Directors, or the amendment of
the Company's existing cash fees paid to Non-Employee Directors, the Board of
Directors does not currently intend to make any such changes relating to the
compensation of Non-Employee Directors if the Directors Stock Plan is
approved by the stockholders. If the Directors Stock Plan is not approved by
the stockholders, the Board will adopt such alternative annual retainer fees
for Non-Employee Directors as it considers appropriate.
The Directors Stock Plan provides that each Non-Employee Director of the
Company will receive grants as follows:
(i) Annual Grants. Upon the adjournment of each annual meeting of the
stockholders of the Company, each Non-Employee Director who has been
elected a director of the Company at such annual meeting or who was not a
nominee for election at such annual meeting because his or her term
extends past such annual meeting shall receive a grant of 1,200 shares of
Common Stock.
(ii) Interim Grants. Any Non-Employee Director who is elected a director
at other than an annual meeting of the stockholders of the Company shall
receive on the date of such election a pro rata grant of shares of Common
Stock 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 Company provided for in
accordance with the By-Laws of the Company as then in effect. No shares
shall be included in such grant on account of any period of less than 30
days.
Prior to the issuance of Common Stock to an eligible director, the
director must pay the Company an issue price equal to the lesser of $1.00 per
share and ten percent (10%) of the market price per share, but not less per
share than the par value per share of the Common Stock. All grants under the
Plan are expected to be made at an issue price of $1.00 per share. Each grant
of Common Stock pursuant to the Plan is also contingent upon and subject to
the execution by the Non-Employee Director of an agreement to hold the shares
of Common Stock covered by such grant in accordance with the terms and
conditions of the Plan (including without limitation the restrictions on
disposition provided for in the Plan) and containing such other terms and
conditions as may be required by counsel to the Company in order to comply
with federal or state securities laws or other legal requirements.
Except as noted below, grants of shares of Common Stock pursuant to the
Plan are not transferable by the recipient of such award, 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 while such Non-Employee Director remains a
director of the Company. During this period, however, as a stockholder of
record, the Non-Employee Director is entitled to receive any dividends or
other distributions in respect of shares of Common Stock and has voting
rights with respect to such shares. Non-Employee Directors are permitted to
make gifts of shares issued under the Plan to certain family members or to
trusts or other forms of indirect ownership so long as the Non-Employee
Director would be deemed a beneficial owner of the shares with a direct or
indirect pecuniary interest in the shares and would retain voting and
investment control over the shares while the Non-Employee Director remains a
director of the Company.
The restrictions on the disposition of shares issued pursuant to the Plan
terminate upon the occurrence of any of certain events related to change of
control of the Company that are specified in the Plan. No such event that
would lead to the termination of such restrictions on disposition is
currently contemplated by the Company.
The number of shares issuable pursuant to the Plan and the number of
shares to be delivered pursuant to annual grants or interim grants are
subject to adjustment in the event of changes in the Common Stock of the
Company by reason of any stock dividend, split-up, combination of shares,
reclassification, recapitalization, merger, consolidation, reorganization or
liquidation. The Plan authorizes the issuance of 100,000 shares of Common
Stock for awards under the Plan.
22
<PAGE>
The Board of Directors may from time to time amend the Directors Stock
Plan or discontinue the Plan or any provisions thereof. However, no amendment
or modification of the Plan may, without the approval of the stockholders of
the Company, (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 the
Plan that deal with amendment or termination of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
SELECTION OF AUDITORS
On April 2, 1998, after the Merger, the Company engaged KPMG Peat Marwick
LLP ("Peat Marwick") as its independent accountants to examine and report on
the Company's financial statements for the fiscal year ending December 31,
1998, subject to ratification of such engagement by the stockholders at the
Annual Meeting. The engagement of Peat Marwick was approved by the Board of
Directors effective April 2, 1998. Peat Marwick had acted as the auditors for
old Sealed Air since 1963 and is considered well qualified. Old Sealed Air
consulted with Peat Marwick concerning the accounting treatment of the
Merger. In accordance with the advice of Peat Marwick, the Merger has been
treated as a purchase by the Company of old Sealed Air.
On April 2, 1998, the Company dismissed Price Waterhouse LLP ("Price
Waterhouse") as its independent accountants for the fiscal year ending
December 31, 1998. The reports of Price Waterhouse on the financial
statements of the Company for the fiscal years ended December 31, 1996 and
1997 contained no adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with the audits conducted by Price Waterhouse for
the fiscal years ended December 31, 1996 and 1997 and through April 2, 1998,
the Company had no disagreements with Price Waterhouse on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Price Waterhouse, would have caused them to make reference
thereto in their report on the financial statements for such years and
periods. During the years ended December 31, 1996 and 1997 and through April
2, 1998, there were no reportable events (as defined in the SEC's Regulation
S-K, Item 304(a)(1)(v)). On April 2, 1998, the Company requested that Price
Waterhouse furnish it with a letter addressed to the SEC stating whether or
not Price Waterhouse agreed with the above statements. A copy of such letters
dated April 2, 1998 and April 24, 1998 were filed as Exhibits to the Current
Report on Form 8-K, Date of Report April 2, 1998, filed by the Company with
the SEC on April 6, 1998, as amended by Form 8-K/A filed with the SEC on
April 29, 1998. Prior to the Merger, the Company consulted with Price
Waterhouse concerning the accounting treatment of the Merger. In accordance
with the advice of Price Waterhouse, the Merger has been treated as a
purchase by the Company of old Sealed Air.
Proxies received in response to this solicitation will, in the absence of
contrary specification, be voted in favor of ratification of the appointment
of Peat Marwick as the independent auditors of the Company for the year
ending December 31, 1998.
Representatives of Peat Marwick and Price Waterhouse are expected to be
present at the Annual Meeting. Such representatives will have the opportunity
to make statements if they desire to do so and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
23
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
In order for stockholder proposals for the 1999 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's Proxy Statement,
they must be received by the Company at its principal office in Saddle Brook,
New Jersey, directed to the attention of the Secretary, no later than January
21, 1999.
OTHER MATTERS
The expenses of preparing, printing and mailing this notice of meeting and
proxy material and all other expenses of soliciting proxies will be borne by
the Company. Morrow & Co., Inc., New York, New York, will solicit proxies by
personal interview, mail, telephone, facsimile, telex or other means of
electronic transmission and will request brokerage houses, banks and other
custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of the Common Stock or Preferred Stock held of record by
such persons. The Company will pay Morrow & Co., Inc. a fee of $20,000
covering its services and will reimburse Morrow & Co., Inc. for payments made
to brokers and other nominees for their expenses in forwarding soliciting
material. In addition, directors, officers and employees of the Company, who
will receive no compensation in addition to their regular salary, if any, may
solicit proxies by personal interview, mail, telephone, facsimile or other
means of electronic transmission.
The Company does not know of any matters to be presented at the meeting
other than those set forth in this Proxy Statement. However, if any other
matters come before the meeting, it is intended that the holders of the
proxies may use their discretion in voting thereon.
By Order of the Board of Directors
H. Katherine White
Secretary
Saddle Brook, New Jersey
May 21, 1998
24
<PAGE>
ANNEX A
PROPOSED AMENDMENTS* TO THE CERTIFICATE OF INCORPORATION
I. ARTICLE SEVENTH SHALL BE AMENDED TO READ AS FOLLOWS:
SEVENTH: In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
A. To adopt, amend or repeal the by-laws of the Corporation; [provided,
however, that the by-laws adopted by the Board of Directors under the
powers hereby conferred may be amended or repealed by the Board of
Directors or by the stockholders having voting power with respect thereto,
provided further that in the case of amendments by stockholders, the
affirmative vote of the holders of at least 80 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal any provision of the by-laws;]
B. To authorize and cause to be executed mortgages and liens, with or
without limit as to amount, upon the real and personal property of the
Corporation;
C. To authorize the guaranty by the Corporation of securities, evidences
of indebtedness and obligations of other persons, corporations and
business entities;
D. By resolution adopted by a majority of the whole board, to designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation, which, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation
and may authorize the seal of the Corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the
Board of Directors. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. The members
of any such committee present at any meeting and not disqualified from
voting may, whether or not they constitute a quorum, unanimously appoint
another member of the Board of Directors to act at the meeting in the
place of any absent or disqualified member.
All corporate powers of the Corporation shall be exercised by the Board of
Directors except as otherwise provided herein or by law. [Notwithstanding
anything contained in this Amended and Restated Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 80 percent
of the voting power of the then outstanding Voting Stock, voting together as
a single class, shall be required to amend, repeal or adopt any provision
inconsistent with paragraph A of this ARTICLE SEVENTH.]
II. ARTICLES FIFTEENTH AND SIXTEENTH SHALL BE AMENDED TO READ AS
FOLLOWS:
FIFTEENTH: Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this Amended and
Restated Certificate of Incorporation to elect additional directors under
specific circumstances, [any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing in lieu of a meeting of such stockholders.
Notwithstanding anything contained in this Amended and Restated Certificate
of Incorporation to the contrary, the affirmative vote of at least 80 percent
of the voting power of the then outstanding Voting Stock, voting together as
a single class, shall be required to amend, repeal or adopt any provision
inconsistent with this ARTICLE FIFTEENTH.] [whenever the vote of stockholders
at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action, the meeting and vote of stockholders
may be dispensed with if a written consent to such corporate action is signed
by
- ------------
*Language to be deleted is struck out and to be added is in brackets.
A-1
<PAGE>
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted; provided
that prompt notice must be given to all stockholders of the taking of
corporate action without a meeting and by less than unanimous written
consent.
SIXTEENTH: [Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this Amended and
Restated Certificate of Incorporation to elect additional directors under
specified circumstances, the number of directors of the Corporation shall be
fixed, and may be increased or decreased from time to time, in such manner as
may be prescribed by the by-laws.
Unless and except to the extent that the by-laws of the Corporation shall
so require, the election of directors of the Corporation need not be by
written ballot.
The directors, other than those who may be elected by the holders of any
series of Preferred Stock or any other series or class of stock as set forth
in this Amended and Restated Certificate of Incorporation, shall be divided
into three classes, as nearly equal in number as possible. One class of
directors shall be initially elected for a term expiring at the annual
meeting of stockholders to be held in 1997, another class shall be initially
elected for a term expiring at the annual meeting of stockholders to be held
in 1998, and another class shall be initially elected for a term expiring at
the annual meeting of stockholders to be held in 1999. Members of each class
shall hold office until their successors are elected and qualified. At each
succeeding annual meeting of the stockholders of the Corporation, the
successors of the class of directors whose term expires at that meeting shall
be elected by a plurality vote of all votes cast at such meeting to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of their election.
Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in this Amended and Restated
Certificate of Incorporation to elect additional directors under specified
circumstances, any director may be removed from office at any time by the
shareholders, but only for cause.
Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class, shall be required to amend,
repeal or adopt any provision inconsistent with this ARTICLE SIXTEENTH ]
[Each director shall hold office until a successor is elected at the next
succeeding annual meeting of stockholders (or, in the case of the directors
designated as Class II directors prior to the annual meeting of stockholders
held in 1998, until the annual meeting of stockholders held in 2000 and
thereafter at the next succeeding annual meeting of stockholders) and
qualified or until such director's earlier resignation or removal.]
A-2
<PAGE>
ANNEX B
SUMMARY COMPENSATION TABLE FOR
OLD SEALED AIR PRIOR TO THE MERGER
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
---------------------- --------------
CONTINGENT
STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(2) COMPENSATION(3)
- --------------------------- ------ ---------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
T. J. Dermot Dunphy ........ 1997 $363,600 $390,000 $2,733,750 $30,250
Chairman of the Board 1996 363,600 390,000 -0- 29,000
and Chief Executive
Officer 1995 363,600 340,000 1,590,000 29,000
William V. Hickey .......... 1997 $253,600 $225,000 $1,366,875 $23,850
President and Chief 1996 226,100 200,000 -0- 22,600
Operating Officer 1995 217,767 150,000 795,000 22,600
Elmer N. Funkhouser III ... 1997 $218,600 $120,000 $ -0- $27,250
Senior Vice President (4) 1996 217,433 120,000 -0- 26,000
1995 211,600 95,000 -0- 26,000
Bruce A. Cruikshank ........ 1997 $175,000 $ 80,000 $ -0- $23,650
Senior Vice President 1996 167,100 65,000 396,000 22,400
1995 153,267 52,000 -0- 22,400
Robert A. Pesci ............ 1997 $175,000 $ 75,000 $ -0- $23,250
Senior Vice President 1996 161,933 70,000 -0- 22,000
1995 145,183 60,000 270,000 22,000
</TABLE>
- ------------
(1) Annual compensation is reported in this table before deducting amounts
deferred pursuant to Section 401(k) of the Internal Revenue Code, as
amended (the "Code"), under the old Sealed Air Thrift and Tax-Deferred
Savings Plan (the "Thrift Plan") or other amounts excludible from
income for tax purposes. Perquisites, other personal benefits,
securities and property paid or accrued during each year not otherwise
reported did not exceed for any named executive officer the lesser of
$50,000 or 10% of the annual compensation reported in the Summary
Compensation Table for that individual.
(2) Represents the fair market value on the date of an award made under the
old Sealed Air Contingent Stock Plan after deducting the purchase price
of the shares of old Sealed Air Common Stock covered by such award. The
total number of unvested shares held by each of the named executive
officers as of December 31, 1997 is set forth in the following table,
and the fair market values of such unvested shares as of such date are
as follows: Mr. Dunphy -- $8,645,000, Mr. Hickey -- $4,847,375, Mr.
Cruikshank -- $741,000 and Mr. Pesci -- $617,500. As of such date, such
awards, all of which were granted with an original vesting period of
three years, which has been extended in certain cases, vested as
follows:
<TABLE>
<CAPTION>
1998 1999 2000
-------- -------- --------
<S> <C> <C> <C> <C>
T. J. Dermot Dunphy .... 80,000 -0- 60,000
William V. Hickey ....... 48,500 -0- 30,000
Elmer N. Funkhouser III -0- -0- -0-
Bruce A. Cruikshank .... -0- 12,000 -0-
Robert A. Pesci ......... -0- 10,000 -0-
</TABLE>
During the vesting period, pursuant to the terms of such Plan, recipients of
awards are entitled to receive any dividends or other distributions with
respect to the unvested shares they hold.
B-1
<PAGE>
(3) Includes company contributions to old Sealed Air's Profit-Sharing Plan,
matching contributions under old Sealed Air's Thrift Plan, and premiums
paid by old Sealed Air for supplemental universal life insurance
policies owned by the named executive officers. For 1997, such amounts
were as follows:
<TABLE>
<CAPTION>
PROFIT- INSURANCE
SHARING PLAN THRIFT PLAN PREMIUMS
-------------- ------------- -----------
<S> <C> <C> <C>
T. J. Dermot Dunphy .... $16,000 $4,750 $9,500
William V. Hickey ....... 16,000 4,750 3,100
Elmer N. Funkhouser III 16,000 4,750 6,500
Bruce A. Cruikshank .... 16,000 4,750 2,900
Robert A. Pesci ......... 16,000 4,750 2,500
</TABLE>
Old Sealed Air's Profit-Sharing Plan and its Thrift Plan were broad-based
defined contribution plans. Contributions to the Profit-Sharing Plan were
made only by old Sealed Air. For additional information about the
Profit-Sharing Plan, which is being continued by the Company, see note (8)
under "Voting Securities."
(4) Mr. Funkhouser retired at the end of 1997.
B-2
<PAGE>
ANNEX C
EXECUTIVE COMPENSATION FOR THE COMPANY PRIOR TO THE MERGER
The Summary Compensation Table and the related compensation information
set forth in this Annex C contains information relating to the compensation
of executive officers of the Company who served prior to the Merger,
including (a) Albert J. Costello, Chief Executive Officer, (b) Larry
Ellberger, Senior Vice President and Chief Financial Officer, who also served
as the Company's Acting Chief Executive Officer from October 11, 1997 (when
Mr. Costello suffered a heart attack) until January 5, 1998, and (c) the
other four most highly compensated executive officers of the Company who were
serving as such at December 31, 1997. Certain information has been omitted
from this Summary Compensation Table because it is not applicable or because
it is not required under the rules of the SEC. This information has been made
available to the Company by New Grace.
At the time of the Merger, Messrs. Costello, Ellberger and the other named
executive officers (other than Mr. Kaenzig) resigned their positions with the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- ----------------------------------------
AWARDS PAYOUTS
-------------------------- ------------
NO. OF
SHARES ALL
NAME AND OTHER RESTRICTED UNDERLYING OTHER
PRINCIPAL ANNUAL STOCK OPTIONS LTIP
COMPENSATION
POSITION YEAR SALARY BONUS COMPENSATION AWARD(A) GRANTED(B) PAYOUTS(C) (D)
- ------------------------- --------- ---------- ---------- -------------- ------------ ------------ ------------
--------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A.J. Costello............. 1997 $958,333 $762,271 $185,351 42,300 $3,346,724 $56,382
Chairman, President and 1996 900,000 582,075 12,872 77,625 799,116 27,250
Chief Executive Officer 1995(e) 600,000 900,000 106,599 465,750
L. Ellberger.............. 1997 302,083 280,000 21,904 8,100 779,717 14,767
Senior Vice President
and 1996 283,083 150,000 57,219 12,576 178,369 39,247
Chief Financial Officer 1995(e) 173,162 125,000 28,977 $92,438 111,780 2,853
R.H. Beber................ 1997 300,000 270,000 21,668 8,100 1,439,426 31,129
Executive Vice President 1996 297,475 165,000 12,788 16,767 927,518 33,380
and General Counsel 1995 282,713 200,000 5,456 37,260 99,589 49,695
R.J. Bettachi............. 1997 229,550 170,000 23,917 6,300 831,416 17,260
Senior Vice President 1996 214,100 170,000 478 9,781 205,183 16,552
1995 197,400 45,000 24,840 24,034 21,740
J.R. Hyde................. 1997 282,600 33,902 8,100 1,155,112 19,352
Senior Vice President 1996 272,600 130,000 5,194 16,767 670,596 25,374
1995 248,650 230,000 2,235 37,260 27,534 29,724
J.G. Kaenzig, Jr. ........ 1997 298,667 165,000 31,159 12,600 298,856 16,483
Senior Vice President 1996 252,817 100,000 8,851 45,183 237,431 20,058
1995 207,850 180,000 7,279 6,831 18,529 18,764
</TABLE>
(Footnotes appear on following page)
C-1
<PAGE>
- ------------
(a) Other than the award to Mr. Ellberger, no restricted stock awards
were made during the 1995-1997 period. The dollar value of Mr.
Ellberger's 1,500 restricted shares of Old Grace Common Stock shown
in the table has not been adjusted to give effect to (i) the
September 1996 separation of the Company's principal health care
business or (ii) the Reorganization or the Merger. At December 31,
1997, the dollar value of these restricted shares was $120,656,
excluding the value of additional securities received by Mr.
Ellberger in respect of these restricted shares in the September 1996
transaction and the Reorganization or the Merger. The restrictions on
these shares are to terminate on May 14, 1998 (see "Employment
Agreements") or earlier, in the event of Mr. Ellberger's death or
disability or the termination of his employment without cause
(including following a change of control), subject to the forfeiture
of the shares in certain circumstances. Mr. Ellberger receives all
dividends paid on, and has the right to vote, these restricted
shares.
(b) The share amounts shown in this column are in shares of Old Grace
Common Stock. They reflect adjustments made in September 1996 in
connection with the separation of the Company's principal health care
business. They do not reflect any adjustments for the Reorganization
or the Merger (see "Stock Options").
(c) The amounts in this column for 1997 represent awards earned under the
Long-Term Incentive Program ("LTIP") for the 1994-1996 Performance
Period. The amounts in this column for 1996 represent awards earned
under the LTIP for the 1993-1995 Performance Period. The amounts in
this column for 1995 represent the third and final installments of
awards earned under the LTIP for the 1990-1992 Performance Period.
(d) The amounts in this column for 1997 consist of the following: (i) the
actuarially determined value of company-paid premiums on
"split-dollar" life insurance, as follows: Mr. Beber -- $17,179; Mr.
Bettacchi -- $5,273; Mr. Hyde -- $6,984; and Mr. Kaenzig -- $4,523;
(ii) life insurance premiums of $10,170 for Mr. Costello and $1,204
for Mr. Ellberger, who do not participate in the split-dollar life
insurance program; (iii) payments made to persons whose personal
and/or company contributions to the Company's Salaried Employees
Savings and Investment Plan ("Savings Plan") would be subject to
limitations under federal income tax law, as follows: Mr. Costello --
$41,412; Mr. Ellberger -- $8,763; Mr. Beber -- $9,150; Mr. Bettacchi
-- $7,187; Mr. Hyde -- $7,568; and Mr. Kaenzig -- $7,160; and (iv)
company contributions to the Savings Plan of $4,800 for each of
Messrs. Costello, Ellberger, Beber, Bettacchi, Hyde and Kaenzig.
(e) Messrs. Costello and Ellberger joined the Company's predecessor in
May 1995.
Stock Options. The following table contains information concerning stock
options covering Old Grace Common Stock granted in 1997, including the
potential realizable value of each grant assuming that the market value of
Old Grace Common Stock were to appreciate from the date of grant to the
expiration of the option at annualized rates of (a) 5% and (b) 10%, in each
case compounded annually over the term of the option. The assumed rates of
appreciation shown in the table have been specified by the SEC for
illustrative purposes only and are not intended to predict future stock
prices, which will depend upon various factors, including market conditions
and future performance and prospects.
Options become exercisable at the time or times determined by the Old
Grace Compensation Committee; the options shown below become exercisable in
three approximately equal annual installments beginning one year after the
date of grant or upon the earlier occurrence of a "change in control" (see
"Employment Agreements" and "Severance Agreements"). All of the options shown
below have purchase prices equal to the fair market value of Old Grace Common
Stock at the date of grant.
In connection with the Reorganization and the Merger, all outstanding
options (other than those held by employees of Cryovac, including Mr.
Kaenzig) became options to purchase New Grace common stock, and the number of
shares covered by and purchase prices of such options were adjusted to
preserve their economic value; the options held by employees of Cryovac
(including Mr. Kaenzig) became options to purchase Common Stock of the
Company and were similarly adjusted. The following table does not reflect
such adjustments. However, after giving effect to such adjustments, 16,165
shares of the Company's Common Stock are subject to options granted to Mr.
Kaenzig in 1997 at a purchase price of $42.19 per share.
C-2
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
1997 GRANTS OPTION TERM
-------------------------------------------------- --------------------------
% OF
TOTAL
NO. OF OPTIONS
SHARES GRANTED
UNDERLYING TO PURCHASE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED IN 1997 ($/SHARE) DATE 5% 10%
- ------------------ ------------ ----------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
A. J. Costello..... 42,300 6.42% $54.125 3/4/07 $1,439,845 $3,648,853
L. Ellberger....... 8,100 1.23 54.125 3/4/07 275,715 698,717
R. H. Beber........ 8,100 1.23 54.125 3/4/07 275,715 698,717
R. J. Bettacchi ... 6,300 .96 54.125 3/4/07 214,445 543,446
J. R. Hyde......... 8,100 1.23 54.125 3/4/07 275,715 698,717
J. G. Kaenzig,
Jr................ 12,600 1.91 54.125 3/4/07 428,890 1,086,892
</TABLE>
The following table contains information concerning stock options covering
Old Grace Common Stock exercised in 1997, including the "value realized" upon
exercise (the difference between the total purchase price of the options
exercised and the market value, at the date of exercise, of the shares
acquired), and the value of unexercised "in-the-money" options held at
December 31, 1997 (the difference between the aggregate purchase price of all
such options held and the market value of the shares covered by such options
at December 31, 1997). The amounts in this table have not been adjusted to
reflect the Reorganization and the Merger.
<TABLE>
<CAPTION>
OPTION EXERCISES IN 1997 AND OPTION VALUES AT 12/31/97
--------------------------------------------------------------------------------
NO. OF SHARES VALUE OF
NO. OF UNDERLYING UNEXERCISED
SHARES VALUE UNEXERCISED IN-THE-MONEY
ACQUIRED ON REALIZED OPTIONS AT 12/31/97 OPTIONS AT 12/31/97
NAME EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ ------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
A. J. Costello..... -0- -0- 336,375/249,300 $15,250,917/9,863,581
L. Ellberger....... -0- -0- 91,132/41,324 3,653,257/1,465,236
R. H. Beber........ 60,000 $3,675,137 198,338/19,278 10,660,347/537,161
R. J. Bettacchi ... -0- -0- 116,593/12,821 6,248,964/354,801
J. R. Hyde......... -0- -0- 184,127/19,278 10,101,780/537,161
J. G. Kaenzig,
Jr................ -0- -0- 58,327/26,056 2,307,588/721,603
</TABLE>
LTIP. Under the LTIP as in effect during 1997, executive officers and
other senior managers were granted contingent "Performance Units" under which
awards could be earned based on shareholder value performance (measured by
appreciation in the price of Old Grace Common Stock and dividends paid), as
compared to that of the companies in the Standard & Poor's Industrials Index,
during a three-year "Performance Period." The number of Performance Units
earned under the LTIP could be decreased by up to 20%, at the discretion of
the Old Grace Compensation Committee, based upon individual performance.
Amounts, if any, earned under the Performance Units granted in 1997 were to
be paid as promptly as practicable following year-end 1999 (i.e., the end of
the 1997-1999 Performance Period), with up to 100% of any such payments being
made in shares of Old Grace Common Stock, as determined by the Old Grace
Compensation Committee. Cash payments under earned Performance Units may be
deferred, earning interest equivalents computed at the prime rate, compounded
semiannually; payments made in common stock may be deferred by means of a
deferred compensation trust established by the Company (and continued by New
Grace). Deferred amounts are generally payable to the participant following
termination of employment.
In connection with the Reorganization and the Merger, the Old Grace
Compensation Committee determined, in accordance with the LTIP, that (a)
Performance Units granted for the 1996-1998 and 1997-1999 Performance Periods
should vest on a pro rata basis upon completion of the Reorganization
C-3
<PAGE>
and the Merger; (b) the amounts earned under those Units should be calculated
based on results achieved through the date of completion of the
Reorganization and the Merger; (c) 75% of the estimated value of such vested
portions should be paid in cash prior to completion of the Reorganization and
the Merger; (d) the balance of such vested portions should be paid in cash
following completion of the Reorganization and the Merger; and (e) the value
of the unvested portions, which would be based on targeted Performance Units
and on the final average price of Old Grace Common Stock immediately prior to
completion of the Reorganization and the Merger, should be paid in cash
following the end of the respective Performance Periods (subject to continued
service). The Old Grace Compensation Committee has also determined that no
further grants will be made under the LTIP.
The following table shows the Performance Units granted during 1997 to the
executive officers named in the Summary Compensation Table. All of such
Performance Units relate to the 1997-1999 Performance Period.
<TABLE>
<CAPTION>
1997 AWARDS OF CONTINGENT PERFORMANCE UNITS UNDER
LTIP
-----------------------------------------------------
MAXIMUM
NUMBER OF THRESHOLD TARGET NUMBER OF
NAME UNITS (A)(B) (B)(C) UNITS
- ------------------ ----------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
A. J. Costello..... 14,100 $0 or $423,000 $1,057,000 35,250
L. Ellberger....... 2,700 0 or 81,000 202,500 6,750
R. H. Beber........ 2,700 0 or 81,000 202,500 6,750
R. J. Bettacchi ... 2,100 0 or 63,000 157,500 5,250
J. R. Hyde......... 2,700 0 or 81,000 202,500 6,750
J. G. Kaenzig,
Jr................ 4,200 0 or 126,000 315,000 10,500
</TABLE>
- ------------
(a) Refers to the minimum amount payable under the LTIP with respect to
the 1997-1999 Performance Period. Under the initial terms of the
grants, no payment would be made unless the minimum targeted level of
shareholder value performance was achieved. (However, see above for
information regarding the treatment of Performance Units for the
1997-1999 Performance Period in the Reorganization and the Merger.)
(b) The threshold and target payments shown in the table were calculated
on the basis of an assumed market price of $75 per share of the
Company's previously outstanding common stock at the end of the
1997-1999 Performance Period. (However, see above for information
regarding the treatment of Performance Units for the 1997-1999
Performance Period in the Reorganization and the Merger.)
(c) Refers to the amount payable under the initial terms of the grants
with respect to the 1997-1999 Performance Period if the targeted
level of shareholder value performance were achieved. (However, see
above for information regarding the treatment of Performance Units
for the 1997-1999 Performance Period in the Reorganization and the
Merger.)
Pension Arrangements. Salaried employees of designated units who are 21 or
older and who have one or more years of service are eligible to participate
in the Retirement Plan for Salaried Employees. Under this basic retirement
plan, pension benefits are based upon (a) the employee's average annual
compensation for the 60 consecutive months in which his or her compensation
is highest during the last 180 months of continuous participation and (b) the
number of years of the employee's credited service. For purposes of this
basic retirement plan, compensation generally includes nondeferred base
salary and nondeferred annual incentive compensation (bonus) awards; however,
for 1997, federal income tax law limited to $160,000 the annual compensation
on which benefits under this plan may be based. The participation of
employees of Cryovac (including Mr. Kaenzig) in this plan terminated upon the
effectiveness of the Merger.
The Company also had (and New Grace has) a Supplemental Executive
Retirement Plan under which a covered employee will receive the full pension
to which he or she would be entitled in the absence of the above and other
limitations imposed under federal income tax law. In addition, this
supplemental plan recognizes deferred base salary, deferred annual incentive
compensation awards and, in some cases, periods of employment during which an
employee was ineligible to participate in the basic retirement plan. An
employee will generally be eligible to participate in the supplemental plan
if he or she has an annual base salary of at least $75,000 and is earning
credited service under the basic retirement plan. The participation of
employees of Cryovac (including Mr. Kaenzig) in this plan terminated upon the
effectiveness of the Merger.
C-4
<PAGE>
The following table shows the annual pensions payable under the basic and
supplemental plans for different levels of compensation and years of credited
service. The amounts shown have been computed on the assumption that the
employee retired at age 65 on January 1, 1998, with benefits payable on a
straight life annuity basis. Such amounts are subject to (but do not reflect)
an offset of 1.25% of the employee's primary Social Security benefit at
retirement age for each year of credited service under the basic and
supplemental plans.
<TABLE>
<CAPTION>
HIGHEST YEARS OF CREDITED SERVICE
AVERAGE ------------------------------------------------------------
ANNUAL 10 15 20 25 30 35
COMPENSATION YEARS YEARS YEARS YEARS YEARS YEARS
- ------------- -------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500
200,000 30,000 45,000 60,000 75,000 90,000 105,000
300,000 45,000 67,500 90,000 112,500 135,000 157,500
400,000 60,000 90,000 120,000 150,000 180,000 210,000
500,000 75,000 112,500 150,000 187,500 225,000 262,500
600,000 90,000 135,000 180,000 225,000 270,000 315,000
700,000 105,000 157,500 210,000 262,500 315,000 367,500
800,000 120,000 180,000 240,000 300,000 360,000 420,000
900,000 135,000 202,500 270,000 337,500 405,000 472,500
1,000,000 150,000 225,000 300,000 375,000 450,000 525,000
1,100,000 165,000 247,500 330,000 412,500 495,000 577,500
1,200,000 180,000 270,000 360,000 450,000 540,000 630,000
1,300,000 195,000 292,500 390,000 487,500 585,000 682,500
1,400,000 210,000 315,000 420,000 525,000 630,000 735,000
1,500,000 225,000 337,500 450,000 562,500 675,000 787,500
1,600,000 240,000 360,000 480,000 600,000 720,000 840,000
1,700,000 255,000 382,500 510,000 637,500 765,000 892,500
1,800,000 270,000 405,000 540,000 675,000 810,000 945,000
1,900,000 285,000 427,500 570,000 712,500 855,000 997,500
2,000,000 300,000 450,000 600,000 750,000 900,000 1,050,000
2,100,000 315,000 472,500 630,000 787,500 945,000 1,102,500
2,200,000 330,000 495,000 660,000 825,000 990,000 1,155,000
</TABLE>
At December 31, 1997, Messrs. Costello, Ellberger, Beber, Bettacchi, Hyde
and Kaenzig had 3, 3, 10, 26, 35 and 26 years of credited service,
respectively, under the basic and supplemental retirement plans. For purposes
of those plans, the 1997 compensation of such executive officers was as
follows: Mr. Costello -- $1,540,408; Mr. Ellberger -- $452,083; Mr. Beber --
$465,000; Mr. Bettacchi -- $399,350; Mr. Hyde -- $412,600; and Mr. Kaenzig --
$398,666. Mr. Ellberger is entitled to certain pension benefits under his
employment agreement (see "Employment Agreements").
Employment Agreements. Mr. Costello had an employment agreement (which has
been assumed by New Grace) providing for his service as chairman, president
and chief executive officer through April 1999, subject to (a) earlier
termination in certain circumstances and (b) automatic one-year extensions
unless either party gives notice that the agreement is not to be extended.
The agreement also provides that Mr. Costello will stand for election as a
director during its term. Under the agreement, Mr. Costello is entitled to an
annual base salary of at least $900,000; an annual incentive compensation
award (bonus) of at least $900,000 for 1995 and awards thereafter based on
performance, in accordance with the annual incentive compensation program;
participation in the LTIP on the same basis as other senior executives;
grants of stock options; and participation in all other compensation and
benefit plans and programs generally available to senior executives. The
agreement also provides for payments in the case of Mr. Costello's disability
or death or the termination of his employment with or without cause,
including termination following a "change in control" and termination by Mr.
Costello for "good reason." For purposes of the agreement, "change in
control" means the acquisition of 20% or more of the New Grace
C-5
<PAGE>
common stock, the failure of Board-nominated directors to constitute a
majority of any class of the Board of Directors, the occurrence of a
transaction in which the shareholders of New Grace immediately preceding such
transaction do not own more than 60% of the combined voting power of the
corporation resulting from such transaction, or the liquidation or
dissolution of New Grace. In the event of the termination of Mr. Costello's
employment following a change in control, he will receive a multiple of the
sum of his annual base salary plus bonus, pro rata bonus and LTIP awards,
earned but unpaid compensation, and the balance of the LTIP awards for all
Performance Periods during which the change in control takes place. The
foregoing description of Mr. Costello's employment agreement does not purport
to be complete and is qualified in its entirety by reference to such
agreement, which was filed with the SEC as an exhibit to the Quarterly Report
on Form 10-Q of the Company's predecessor for the quarter ended June 30,
1995, and by reference to an amendment to such agreement, which was filed
with the SEC as an exhibit to the Company's Current Report on Form 8-K filed
on October 10, 1996.
Mr. Ellberger had an employment agreement (which has been assumed by New
Grace) providing for his service as senior vice president, strategic planning
and development, through May 14, 1998; at that time, the agreement will
terminate (except with respect to the retirement arrangements described
below) and his employment will be "at will." The agreement provides for an
initial annual base salary of $275,000; participation in the annual incentive
compensation program, LTIP, and other compensation and benefit plans and
programs; the grant of stock options; and the grant of the restricted stock
award shown in the Summary Compensation Table. The agreement also provides
that if Mr. Ellberger's employment is terminated without cause during the
term of the agreement (except in the event of a change in control), he will
receive 145% of his base salary for one year or, if longer, the remaining
term of the agreement. In addition, the agreement provides that, in
determining the benefits payable to Mr. Ellberger under the basic and
supplemental retirement plans, his service with his prior employer will be
recognized as if it were continuous service with the Company and/or New
Grace, with an offset for any retirement benefits payable from his prior
employer's retirement plans; however, this special pension arrangement will
apply only if Mr. Ellberger's employment ceases after the term of the
agreement (or during such term, if his employment is terminated without
cause, including termination without cause following a change in control).
The agreement also provides for standard relocation assistance arrangements
and for a leased car. For purposes of the agreement, "change in control" has
the same meaning as in Mr. Costello's agreement, described above. The
foregoing description of Mr. Ellberger's employment agreement does not
purport to be complete and is qualified in its entirety by reference to such
agreement and related agreements, which were filed as exhibits to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Severance Agreements. New Grace has severance agreements with all of its
executive and other officers (except for Mr. Costello, whose employment
agreement, discussed above, provides for severance arrangements). These
agreements generally provide that in the event of the involuntary termination
of the individual's employment without cause (including constructive
termination caused by a material reduction in his or her authority or
responsibility) following a change in control of New Grace, he or she will
receive a severance payment equal to three times the sum of his or her annual
base salary plus target annual incentive compensation (bonus), subject to pro
rata reduction in the case of an officer who is within 36 months of normal
retirement age (65). For purposes of the severance agreements, the definition
of "change in control" is identical to the definition contained in Mr.
Costello's employment agreement (see "Employment Agreements"), except that,
under the severance agreements, a "change in control" (a) does not include
the acquisition of 20% or more of New Grace's common stock as a result of a
sale of stock by New Grace and (b) includes a transaction in which the
shareholders of New Grace do not own 50% or more of the voting power of the
corporation resulting from such transaction (as compared to more than 60%
under Mr. Costello's agreement). This description of the severance agreements
does not purport to be complete and is qualified in its entirety by reference
to the form of such agreement, which was filed as an exhibit to the Form 10.
Executive Salary Protection Plan. All executive and other officers of New
Grace participate in the Executive Salary Protection Plan ("ESPP"), which
provides that, in the event of a participant's disability or death prior to
age 70, New Grace will continue to pay all or a portion of base salary to the
participant
C-6
<PAGE>
or a beneficiary for a period based on the participant's age at the time of
disability or death. Payments under the ESPP may not exceed 100% of base
salary for the first year and 60% thereafter in the case of disability (50%
in the case of death). This description of the ESPP does not purport to be
complete and is qualified in its entirety by reference to the text of the
ESPP, as amended, which was filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
Certain Relationships and Related Transactions. The following are
descriptions of certain relationships and transactions between Grace and its
directors and executive officers and/or businesses with which they are
affiliated.
Commercial Transactions. Mr. Costello is a director of Becton, Dickinson
and Company ("Becton Dickinson") and FMC Corporation ("FMC"). During 1997,
various business units of the Company sold approximately $270,000 of
materials and/or products to units of Becton Dickinson. In addition, during
1997 various business units of the Company purchased approximately $1.3
million of materials and/or products from, and sold approximately $125,000 of
materials and/or products to, FMC. These transactions were in the ordinary
course of business and were on terms believed to be similar to those with
unaffiliated parties.
Legal Proceedings; Indemnification. Messrs. Phipps and Cheng are
defendants in or may otherwise be involved in certain stockholder or other
litigation that was pending against the Company prior to the Merger. Under
the terms of the Merger Agreement, New Grace has assumed financial
responsibility for any liabilities incurred by the Company or its directors
or executive officers as a result of such legal proceedings.
C-7
<PAGE>
ANNEX D
CONTINGENT STOCK PLAN
OF
SEALED AIR CORPORATION,
<F1>
AS PROPOSED TO BE AMENDED*
Section 1. Purpose. he 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 that 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 $0.10 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 that
may be issued pursuant to the Plan is [450,450] [2,500,000] 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 condition the grant of Awards to specific Employees upon achievement of
performance measures under any plan or program adopted by the Corporation, 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
that 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 that 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
- ------------
* Language to be deleted is struck out and to be added is in brackets.
D-1
<PAGE>
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 that 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 the
Committee made the Award or, if no sales occurred on such date, the last
sales price on the consolidated transaction reporting system on the most
recent prior 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, the Issue
Price shall be reduced to an amount that shall represent ten percent (10%) of
the fair market value per share.
Section 8. Option of the Corporation to Reacquire Issued Stock. [Unless a
shorter period is specified by the Committee at the time an award is granted
and except] [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 Chief Executive Officer 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, no later than 90 days after the Employee's
termination of employment 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, if
any, 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. Such notice shall be sent to the Employee by registered or
certified mail, postage prepaid, or by any other delivery service that
provides written confirmation of delivery. 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
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 such certificates
any required
D-2
<PAGE>
stock transfer stamps. If 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
agent of such action.
Section 10. Legend on Stock Certificates. All shares of Common Stock
issued under the Plan shall, so long as the restrictions imposed by the Plan
remain in effect, be represented by certificates, each of which shall 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 that 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, or for a statement from the
Corporation representing such shares in book entry form free of such 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 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 or other information 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 that 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.
D-3
<PAGE>
Section 14. Subsidiaries. The subsidiaries of the Corporation referred to
in the Plan are those corporations, joint ventures or other entities in which
the Corporation owns, directly or indirectly, in the aggregate at least 50
percent of the voting power of the classes of stock of such entity entitled
to vote and those partnerships, joint ventures and other entities 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 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 that 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)
there occurs a reorganization, merger, consolidation, sale of all or
substantially all the Corporation's assets, or other corporate transaction
involving the Corporation (a "Corporate Transaction") and the stockholders of
the Corporation immediately prior to such Corporate Transaction do not,
immediately after the Corporate Transaction, beneficially own, in the
aggregate, directly or indirectly, at least 70% of the combined voting power
of the outstanding voting securities of the successor or resulting
corporation or other entity resulting from such Corporate Transaction, where
the term "beneficially own" shall be used as in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Securities Exchange
Act"), (ii) any "person" (as the term "person" is used in Sections 13(d) and
14(d) of the Securities Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing 30% or
more of the combined voting power of the Corporation's then outstanding
securities, (iii) 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 Continuing Directors of the Corporation then in
office is or are elected a director of the Corporation, or (iv) the
Corporation shall become subject for any reason to a voluntary or involuntary
dissolution or liquidation. A "Continuing Director" shall be a director of
the Corporation who is serving as such on the Effective Date and any person
who is approved as a nominee or elected to the Board of Directors by a
majority of Continuing Directors who are then members of the Board of
Directors of the Corporation. Upon any Change in Control, 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 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
D-4
<PAGE>
connection with any action, suit 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, whether
with or 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 shares 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)] [ and (ii)] 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 April 2,
1998 (the "Effective Date").
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<PAGE>
ANNEX E
RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
OF
SEALED AIR CORPORATION
Section 1. Purpose. The Restricted Stock Plan for Non-Employee Directors
(the "Plan") of Sealed Air Corporation ("Corporation"), formerly W. R. Grace
& Co., a Delaware 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 $0.10 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 100,000 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 he or she
becomes otherwise entitled to receive a grant of shares under the Plan, 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. Upon the adjournment of each annual meeting of the
stockholders of the Corporation, each Non-Employee Director who has been
elected a director of the Corporation at such meeting or who is then
serving as a director of the Corporation and was not a nominee for
election at such annual meeting because his or her term extends past such
annual meeting shall receive a grant of 1,200 shares of Common Stock.
(b) Interim Grants. If any Non-Employee Director is elected a director
other than at 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 for gifts of shares permitted
under this Section, 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. Any
Non-Employee Director of the Corporation may make a gift of 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 conditions that (i) 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 and (ii) the Permitted Transferee
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<PAGE>
shall execute an agreement with the Corporation on terms acceptable to
counsel to the Corporation providing that such shares shall be subject to
all terms and restrictions of this Plan. For the purpose of this Section
4(c), "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 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 10) 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. For the purpose of the foregoing sentence, "fair market value per
share" shall mean the last sales price of the Common Stock as reported on the
date of grant as reported on the consolidated transaction reporting system
for New York Stock Exchange listed issues on that date or, if no sales
occurred on that date, the last sales price on the consolidated transaction
reporting system on the most recent prior day on which a sale occurred. 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)
there occurs a reorganization, merger, consolidation, sale of all or
substantially all the Corporation's assets, or other corporate transaction
involving the Corporation (a "Corporate Transaction") and the stockholders of
the Corporation immediately prior to such Corporate Transaction do not,
immediately after the Corporate Transaction, beneficially own, in the
aggregate, directly or indirectly, at least 70% of the combined voting power
of the outstanding voting securities of the successor or resulting
corporation or other entity resulting from such Corporate Transaction, where
the term "beneficially own" shall be used as in Sections 13(d) and 14(d) of
the Securities Exchange Act, (ii) any "person" (as the term "person" is used
in Sections 13(d) and 14(d) of the Securities Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of the Corporation
representing 30% or more of the combined voting power of the Corporation's
then outstanding securities, (iii) 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 Continuing Directors of the
Corporation then in office is or are elected a director of the Corporation,
or (iv) the Corporation shall become subject for any reason to a voluntary or
involuntary dissolution or liquidation. A "Continuing Director" shall be a
director of the Corporation who is serving as such on the Effective Date and
any person who is approved as a nominee or elected to the Board of Directors
by a majority of Continuing Directors who are then members of the Board of
Directors of the Corporation. Upon any Change in Control, 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 unlegended
shares as set forth in the last sentence of Section 9 of the Plan.
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<PAGE>
Section 7. Adjustments. In the event of changes in the Common Stock of the
Corporation after the Effective Date 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. All shares of Common Stock issued
under the Plan shall, so long as the restrictions imposed by the Plan
(including without limitation Section 4(c)) remain in effect, be represented
by certificates, each of which shall 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,
or for a statement from the Corporation representing such shares held in book
entry form free of such 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
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<PAGE>
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 under the Securities Act, as the same may from time to time be
in effect, and the Corporation shall have received information 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 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.
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<PAGE>
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 be made without the approval of the stockholders of the Corporation
that would:
(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 shall become effective (the
"Effective Date") on the date of the Plan's approval by the stockholders of
the Corporation.
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<PAGE>
[X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL CLASS III
DIRECTORS AND FOR PROPOSALS 1, 3, 4 AND 5. IF NO CHOICE IS SPECIFIED, THIS
PROXY WHEN PROPERLY SIGNED AND RETURNED WILL BE VOTED FOR ELECTION
OF ALL CLASS III DIRECTORS AND FOR PROPOSALS 1, 3, 4 AND 5. PLEASE DATE AND
SIGN AND RETURN PROMPTLY.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. AMENDMENT OF CERTIFICATE OF INCORPORATION TO [ ] [ ] [ ]
REPEAL SUPERMAJORITY PROVISIONS.
FOR WITHHELD
2. ELECTION OF CLASS III DIRECTORS. (SEE REVERSE) [ ] [ ]
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
- ---------------------------
FOR AGAINST ABSTAIN
3. AMENDMENT OF THE CONTINGENT STOCK PLAN, [ ] [ ] [ ]
INCLUDING AN INCREASE IN THE SHARES OF COMMON
STOCK AVAILABLE THEREUNDER.
FOR AGAINST ABSTAIN
4. ADOPTION OF THE RESTRICTED STOCK PLAN FOR [ ] [ ] [ ]
NON-EMPLOYEE DIRECTORS.
FOR AGAINST ABSTAIN
5. RATIFICATION OF THE APPOINTMENT OF KPMG [ ] [ ] [ ]
PEAT MARWICK LLP AS THE INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1998.
6. IN ACCORDANCE WITH THE PROXY COMMITTEE'S
DISCRETION, UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
</TABLE>
Please let us know if you plan to attend the Special Meeting:
I plan to attend [ ] I do not plan to attend [ ]
Please mark this box if you have
noted a change of address or any [ ]
comments in the space on the
reverse side of this card.
The signer hereby revokes all
proxies previously given by the
signer to vote at the 1998
Annual Meeting and any adjournments
and acknowledges receipt of the
Proxy Statement dated May [ ], 1998.
SIGNATURE(S) DATE
-------------------------------------------------- ------
NOTE: Please sign EXACTLY as name appears on reverse side. When signing on
behalf of a corporation, estate, trust or other stockholder, please
give its full name and state your full title or capacity or otherwise
indicate that you are authorized to sign.
<PAGE>
PROXY
SEALED AIR CORPORATION PROXY/VOTING INSTRUCTION CARD
FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints T. J. Dermot Dunphy, William V. Hickey and H.
Katherine White, or a majority of them as shall act (or if only one shall
act, then that one) (the "Proxy Committee"), proxies with power of
substitution to act and vote at the Annual Meeting of Stockholders of Sealed
Air Corporation (the "1998 Annual Meeting") to be held at 11:00 a.m. local
time on June 26, 1998 at the Saddle Brook Marriott, Garden State Parkway at
I-80, Saddle Brook, New Jersey 07663 and at any adjournments thereof. The
Proxy Committee is directed to vote as indicated on the reverse side and in
their discretion upon any other matters that may properly come before the
1998 Annual Meeting.
If the undersigned is a participant in Sealed Air Corporation's Thrift and
Tax-Deferred Savings Plan or its Thrift Plan for Cryovac Employees and has
stock of Sealed Air Corporation allocated to his or her account, then the
undersigned instructs the trustee of such plan to vote such shares of stock,
in person or by proxy, in accordance with the instructions on the reverse
side at the 1998 Annual Meeting and any adjournments thereof and in their
discretion upon any other matters that may properly come before the 1998
Annual Meeting. The terms of each plan provides that shares for which no
voting instructions are received will be voted in the same proportion as
shares are voted for participants who provide voting instructions.
Election of Class III Directors,
Nominees:
Lawrence R. Codey
David Freeman
Robert L. San Soucie
Change of
address/comments:
- -------------------------
- -------------------------
- -------------------------
- -------------------------
(If you have written in
the above space, please
mark the corresponding
box on the reverse side
of this card)
PLEASE MARK, DATE AND SIGN YOUR PROXY ON THE REVERSE SIDE AND MAIL IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED. THE PROXY COMMITTEE CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. THIS PROXY WILL BE VOTED
AS INDICATED ON THE REVERSE SIDE.
SEE REVERSE
SIDE
