SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to_______
Commission file number 1-12139
SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 65-0654331
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Park 80 East
Saddle Brook, New Jersey 07663-5291
- ------------------------------- ----------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (201) 791-7600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
There were 83,619,100 shares of the registrant's common stock, par value $0.10
per share, and 35,758,634 shares of the registrant's Series A convertible
preferred stock, par value $0.10 per share, outstanding as of July 31, 1999.
<PAGE>
PART I
FINANCIAL INFORMATION
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Three and Six Months Ended June 30, 1999 and 1998
(In thousands of dollars except per share data)
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
--------- --------- ---------- -----------
Net sales $695,121 $670,005 $1,374,058 $1,101,040
Cost of sales 441,541 442,945 874,780 733,858
--------- --------- ---------- -----------
Gross profit 253,580 227,060 499,278 367,182
Marketing, administrative
and development expenses 131,969 124,084 260,583 218,537
Goodwill amortization 12,331 12,018 24,582 12,108
--------- --------- ---------- -----------
Operating profit 109,280 90,958 214,113 136,537
Other income (expense):
Interest expense (14,738) (20,642) (29,457) (20,724)
Other, net 1,143 (1,537) (1,021) (1,948)
--------- --------- ---------- -----------
Other expense, net (13,595) (22,179) (30,478) (22,672)
--------- --------- ---------- -----------
Earnings before
income taxes 95,685 68,779 183,635 113,865
Income taxes 44,493 33,214 85,829 51,248
--------- --------- ---------- -----------
Net earnings $ 51,192 $ 35,565 $ 97,806 $ 62,617
========= ========= ========== ==========
Less: Series A
Preferred stock dividends 17,879 18,011 35,789 18,011
Less: Retroactive
recognition of preferred
stock dividends -- -- -- 18,011
Add: Excess of book value
over repurchase price of
Series A preferred stock 29 -- 39 --
--------- --------- ---------- -----------
Net earnings ascribed to
common shareholders $ 33,342 $ 17,554 $ 62,056 $ 26,595
========= ========= ========== ===========
Earnings per common share
(See Note 4):
Basic $ 0.40 $ 0.21 $ 0.74 $ 0.43
========= ========= ========== ===========
Diluted $ 0.40 $ 0.21 $ 0.74 $ 0.43
========= ========= ========== ===========
Weighted average number of
common shares outstanding:
Basic 83,626 83,612 83,505 62,249
========= ========= ========== ===========
Diluted 83,758 83,746 83,637 62,426
========= ========= ========== ===========
See accompanying notes to consolidated financial statements.
2
<PAGE>
SEALED AIR CORPORATION
Consolidated Balance Sheets
June 30, 1999 and December 31, 1998
(In thousands of dollars except share data)
June 30, December 31,
1999 1998
(Unaudited)
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 60,027 $ 44,986
Notes and accounts receivable, net of allowances
for doubtful accounts of $19,076 in 1999 and
$17,945 in 1998 450,118 453,124
Inventories 269,065 275,312
Other current assets 72,226 71,192
---------- -----------
Total current assets 851,436 844,614
---------- -----------
Property and equipment:
Land and buildings 414,005 420,589
Machinery and equipment 1,322,147 1,349,716
Other property and equipment 115,308 121,252
Construction in progress 50,767 54,538
---------- -----------
1,902,227 1,946,095
Less accumulated depreciation and amortization 858,824 829,513
---------- -----------
Property and equipment, net 1,043,403 1,116,582
---------- -----------
Goodwill, less accumulated amortization of
$60,218 in 1999 and $36,083 in 1998 1,883,948 1,907,736
Other assets 177,859 170,998
---------- -----------
Total assets $3,956,646 $ 4,039,930
========== ===========
See accompanying notes to consolidated financial statements.
3
<PAGE>
SEALED AIR CORPORATION
Consolidated Balance Sheets
June 30, 1999 and December 31, 1998 (Continued)
(In thousands of dollars except share data)
June 30, December 31,
1999 1998
(Unaudited)
----------- ------------
LIABILITIES, CONVERTIBLE PREFERRED STOCK & SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings and current portion
of long-term debt $ 148,656 $ 85,131
Accounts payable 163,992 176,594
Other current liabilities 209,008 230,332
Income taxes payable 43,026 42,933
---------- ----------
Total current liabilities 564,682 534,990
Long-term debt, less current portion 845,332 996,526
Deferred income taxes 206,289 200,699
Other liabilities 82,002 79,577
---------- ----------
Total liabilities 1,698,305 1,811,792
---------- ----------
Series A convertible preferred stock, $50 per
share redemption value, authorized and issued
36,016,696 shares in 1999 and 36,021,851
shares in 1998, including 257,500 shares in
1999 and 200,000 shares in 1998 in treasury,
mandatory redemption in 2018 1,787,960 1,791,093
Shareholders' equity:
Common stock, $.10 par value. Authorized
400,000,000 shares, issued 84,009,118 shares in
1999 and 83,806,361 shares in 1998 8,401 8,380
Additional paid-in capital 622,958 610,505
Retained earnings (deficit) 54,051 (7,966)
Accumulated translation adjustment (172,884) (124,843)
---------- ----------
512,526 486,076
---------- ----------
Less: Deferred compensation 27,193 28,683
Less: Cost of treasury common stock, 331,904 shares
in 1999 and 494,550 shares in 1998 11,838 17,234
Less: Minimum pension liability 3,114 3,114
---------- ----------
Total shareholders' equity 470,381 437,045
---------- ----------
Total liabilities, preferred stock and
shareholders' equity $3,956,646 $4,039,930
========== ==========
See accompanying notes to consolidated financial statements.
4
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1999 and 1998
(In thousands of dollars)
(Unaudited)
1999 1998
---------- ----------
Cash flows from operating activities:
Net earnings $ 97,806 $ 62,617
Adjustments to reconcile net earnings to
net cash provided by operating activities,
net of effect of businesses acquired:
Depreciation and amortization 111,946 86,006
Amortization of senior debt discount 19 --
Deferred tax (benefit)provision (2,162) 5,673
Net loss on disposals of fixed assets 105 608
Changes in operating assets and liabilities,
net of assets and liabilities
acquired and transferred to/from Grace:
Notes and accounts receivable (11,253) (8,743)
Inventories (1,031) 5,320
Other current assets (422) 1,417
Other assets (1,542) (9,357)
Accounts payable (9,753) (2,243)
Other current liabilities (7,563) 9,301
Other liabilities 4,317 5,271
---------- ---------
Net cash provided by operating activities 180,467 155,870
---------- ---------
Cash flows from investing activities:
Capital expenditures for property and equipment (31,843) (32,462)
Proceeds from sales of property and equipment 2,155 4,191
Businesses acquired, net of cash acquired
and debt assumed (8,905) 48,994
---------- ---------
Net cash(used) provided by investing activities (38,593) 20,723
---------- ---------
Cash flows from financing activities:
Net advances to Grace -- (24,106)
Proceeds from long-term debt 298,175 1,258,807
Payment of long-term debt (455,053) (125,768)
Payment of senior debt issuance costs (1,950) --
Dividends paid on preferred stock (35,821) --
Purchase of treasury preferred stock (2,836) --
Proceeds from stock option exercises 1,663 --
Transfer of funds to New Grace -- (1,256,614)
Net proceeds from short-term borrowings 69,352 4,230
---------- ---------
Net cash used in financing activities (126,470) (143,451)
---------- ---------
Effect of exchange rate changes on cash and cash
equivalents (363) 922
---------- ---------
Cash and cash equivalents:
Increase during the period 15,041 34,064
Balance, beginning of period 44,986 --
---------- ---------
Balance, end of period $ 60,027 $ 34,064
========== =========
See accompanying notes to consolidated financial statements.
5
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1999 and 1998 (Continued)
(In thousands of dollars)
(Unaudited)
1999 1998
---------- ----------
Supplemental Cash Flow Items:
Interest payments, net of amounts capitalized $ 30,135 $ 13,745
========== ==========
Income tax payments $ 85,275 $ 11,016
========== ==========
Non-Cash Items:
Issuance of 36,021,851 shares of Series A
convertible preferred stock and
40,647,815 shares of common stock
in connection with the Recapitalization $ -- $1,801,093
========== ==========
Net assets acquired in exchange for the
issuance of 42,624,246 shares of common
stock in connection with the Merger, net
of cash balance of $51,259 acquired $ -- $2,110,752
========== ==========
See accompanying notes to consolidated financial statements.
6
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the Three and Six Months Ended June 30, 1999 and 1998
(In thousands of dollars)
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
-------- -------- -------- --------
Net Earnings $ 51,192 $ 35,565 $ 97,806 $ 62,617
Other comprehensive income:
Foreign currency translation
adjustments (7,362) (2,561) (48,041) (12,678)
-------- -------- -------- --------
Comprehensive income $ 43,830 $ 33,004 $ 49,765 $ 49,939
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
7
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1999 and 1998
(Amounts in thousands, except per share data)
(Unaudited)
(1) Reorganization, Recapitalization and Merger
On March 31, 1998, the Company (formerly known as W. R. Grace & Co.) and Sealed
Air Corporation ("old Sealed Air"), completed a series of transactions as a
result of which:
(a) The specialty chemicals business of the Company was separated from
its packaging business, the packaging business ("Cryovac") was
contributed to one group of wholly owned subsidiaries, and the
specialty chemicals business was contributed to another group of
wholly owned subsidiaries ("New Grace"); the Company and Cryovac
borrowed approximately $1.26 billion under two revolving credit
agreements (the "Credit Agreements") (which, as amended, are
discussed below) and transferred substantially all of those funds to
New Grace; and the Company distributed all of the outstanding shares
of common stock of New Grace to its shareholders. As a result, New
Grace became a separate publicly owned corporation that is unrelated
to the Company. These transactions are referred to below as the
"Reorganization."
(b) The Company recapitalized its outstanding shares of common stock, par
value $0.01 per share ("Grace Common Stock"), into a new common stock
and Series A convertible preferred stock, each with a par value of
$0.10 per share (the "Recapitalization").
(c) A subsidiary of the Company merged into old Sealed Air (the
"Merger"), with old Sealed Air being the surviving corporation. As a
result of the Merger, old Sealed Air became a subsidiary of the
Company, and the Company was renamed Sealed Air Corporation.
References to "Grace" in these notes refer to the Company before the
Reorganization, the Recapitalization and the Merger.
(2) Basis of Presentation
The Merger was accounted for as a purchase of old Sealed Air by the Company as
of March 31, 1998. Accordingly, the financial statements include the operating
results and cash flows as well as the assets and liabilities of Cryovac for all
periods presented. The operating results, cash flows, assets and liabilities of
old Sealed Air are included from March 31, 1998. See Note 8 for unaudited
selected pro forma statement of earnings information for the quarter and six
months ended June 30, 1998. For periods prior to the Merger, the financial
statements exclude all of the assets, liabilities (including contingent
liabilities), revenues and expenses of Grace other than the assets,
liabilities, revenues and expenses of Cryovac.
Subsequent to the Merger, the consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. In
management's opinion, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
position and results of operations for the quarter and six months ended June
30, 1999 have been made. The consolidated statements of earnings for the three
and six months ended June 30, 1999 are not necessarily indicative of the
results to be expected for the full year.
8
<PAGE>
Certain prior period amounts have been reclassified to conform to the current
year's presentation.
(3) Equity
In connection with the Recapitalization, the Company, among other things,
recapitalized the outstanding shares of Grace Common Stock into 40,647,815
shares of the Company's common stock and 36,021,851 shares of Series A
convertible preferred stock (convertible into approximately 31,900,000 shares
of the Company's common stock), each with a par value of $0.10 per share. In
the Merger, the Company issued 42,624,246 shares of common stock to the
shareholders of old Sealed Air.
The outstanding Series A preferred stock is convertible at any time into
approximately 0.885 share of common stock for each share of preferred stock,
votes with the common stock on an as-converted basis, pays a cash dividend, as
declared by the Board of Directors, at an annual rate of $2.00 per share,
payable quarterly in arrears, becomes redeemable at the option of the Company
beginning March 31, 2001, subject to certain conditions, and is subject to
mandatory redemption on March 31, 2018 at $50 per share, plus any accrued and
unpaid dividends. Because it is subject to mandatory redemption, the Series A
convertible preferred stock is classified outside of the shareholders' equity
section of the balance sheet. At its date of issuance, the fair value of the
Series A convertible preferred stock exceeded its mandatory redemption amount
primarily due to the common stock conversion feature of such preferred stock.
Accordingly, the carrying amount of the Series A convertible preferred stock is
reflected in the consolidated balance sheet at its mandatory redemption value.
The Company has authority to issue a total of 50,000,000 shares of preferred
stock, par value $0.10 per share.
(4) Earnings Per Common Share
In calculating basic and diluted earnings per common share for the first six
months of 1998, retroactive recognition was given to the Recapitalization as if
it had occurred on January 1, 1998 in accordance with SAB No. 98. Accordingly,
net earnings were reduced for preferred stock dividends for the first quarter
of 1998 (as if such shares had been outstanding during the period) to arrive at
net earnings ascribed to common shareholders. The weighted average number of
outstanding common shares used for the first six months of 1998 to calculate
basic earnings per common share was calculated on an equivalent share basis
using the weighted average number of shares of common stock outstanding for the
first quarter of 1998, adjusted to reflect the terms of the Recapitalization.
The weighted average number of common shares used to calculate diluted earnings
per common share also considers the exercise of dilutive stock options in each
period. The outstanding preferred stock is not assumed to be converted in the
calculation of diluted earnings per common share for all periods presented
because the treatment of the preferred stock as the common stock into which it
is convertible would be antidilutive (i.e., would increase earnings per common
share) in those periods.
The following table sets forth the reconciliation of the basic and diluted
earnings per common share computations for the three and six months ended June
30, 1999 and 1998 (amounts other than per share amounts in thousands).
9
<PAGE>
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic EPS:
NUMERATOR
Net earnings $ 51,192 $ 35,565 $ 97,806 $ 62,617
Add: Excess of book value over
repurchase price of preferred stock 29 -- 39 --
Less: Preferred stock dividends 17,879 18,011 35,789 18,011
Less: Retroactive recognition of
preferred stock dividends -- -- -- 18,011
- ----------------------------------------------------------------------------------------
Net earnings ascribed to common
shareholders $ 33,342 $ 17,554 $ 62,056 $ 26,595
- ----------------------------------------------------------------------------------------
DENOMINATOR
Weighted average common shares
outstanding - basic 83,626 83,612 83,505 62,249
- ----------------------------------------------------------------------------------------
Basic earnings per common share $ 0.40 $ 0.21 $ 0.74 $ 0.43
- ----------------------------------------------------------------------------------------
Diluted EPS:
NUMERATOR
Net earnings ascribed to common
shareholders $ 33,342 $ 17,554 $ 62,056 $ 26,595
- ----------------------------------------------------------------------------------------
DENOMINATOR
Weighted average common shares
Outstanding - basic 83,626 83,612 83,505 62,249
Effect of assumed exercise of stock
options 132 134 132 177
Weighted average common shares
Outstanding - diluted 83,758 83,746 83,637 62,426
- ----------------------------------------------------------------------------------------
Diluted earnings per common share $ 0.40 $ 0.21 $ 0.74 $ 0.43
- ----------------------------------------------------------------------------------------
</TABLE>
(5) Inventories
At June 30, 1999 and December 31, 1998, the components of inventories by major
classification (raw materials, work in process and finished goods) were as
follows:
June 30, December 31,
1999 1998
----------- ------------
Raw materials $ 61,579 $ 63,805
Work in process 51,294 50,714
Finished goods 172,364 176,965
----------- -----------
Subtotal 285,237 291,484
Reduction of certain
inventories to LIFO basis (16,172) (16,172)
----------- -----------
Total inventories $ 269,065 $ 275,312
=========== ============
10
<PAGE>
(6) Income Taxes
The Company's effective income tax rates were 46.5% and 48.3% for the second
quarters of 1999 and 1998, respectively. Such rates were higher than the
statutory U.S. federal income tax rate primarily due to the non-deductibility
of the goodwill amortization resulting from the Merger and state income taxes.
(7) Long-Term Debt
On May 18, 1999, the Company issued $300 million aggregate principal amount of
10-year 6.95% senior notes ("Senior Notes") under Rule 144A and Regulation S of
the Securities Act of 1933, as amended. Accrued interest on the Senior Notes is
payable semi-annually in cash on May 15 and November 15 of each year,
commencing on November 15, 1999. The net proceeds of $297,834 from the issuance
of the Senior Notes were used to reduce outstanding borrowings under the Credit
Agreements described below. At June 30, 1999, the outstanding borrowings under
the Senior Notes were $297,853 net of unamortized bond discount of $2,147.
At June 30, 1999, the Company's outstanding debt consisted primarily of
borrowings made under the Credit Agreements described below, the Senior Notes
and certain other loans incurred by the Company's subsidiaries. The Company's
outstanding debt balance as of December 31, 1998 primarily included borrowings
under the Credit Agreements and certain other loans incurred by the Company's
subsidiaries.
The Company's two principal Credit Agreements are a 5-year revolving credit
facility that expires on March 30, 2003 and a 364-day revolving credit facility
that expires on March 27, 2000. During the first six months of 1999, the
Company voluntarily reduced the amounts available under the Credit Agreements
from $1 billion to $650 million under the 5-year revolving credit facility and
from $600 million to $475 million under the 364-day revolving facility. As of
June 30, 1999, outstanding borrowings under the 5-year and 364-day revolving
credit facilities were approximately $537 million (included in long-term debt)
and $41 million (included in short-term borrowings), respectively. The Credit
Agreements provide that the Company and certain of its subsidiaries may borrow
for various purposes, including the refinancing of existing debt, the provision
of working capital and other general corporate needs.
The Company's obligations under the Credit Agreements bear interest at floating
rates. The weighted average interest rate under the Credit Agreements was
approximately 5.6% at June 30, 1999 and 5.8% at December 31, 1998. The Company
has entered into certain interest rate swap agreements that have the effect of
fixing the interest rates on a portion of such debt. The weighted average
interest rates at June 30, 1999 and December 31, 1998 did not change
significantly as a result of these derivative financial instruments.
The Credit Agreements provide for changes in borrowing margins based on
financial criteria and the Company's senior unsecured debt ratings, and impose
certain limitations on the operations of the Company and certain of its
subsidiaries. The limitations include financial covenants relating to interest
coverage and debt leverage as well as certain restrictions on the incurrence of
additional indebtedness, the creation of liens, mergers and acquisitions, and
certain dispositions of property and assets. The Company was in compliance with
these requirements as of June 30, 1999.
The Senior Notes impose certain limitations on the operations of the Company
and certain of its subsidiaries. The limitations include restrictions on the
creation of liens, entrance into sale-leaseback transactions, merger or
consolidation of the Company and disposition of substantially all of the
Company's assets. The Company was in compliance with these requirements as of
June 30, 1999.
On July 19, 1999, the Company issued euro 200 million (approximately $205
million) aggregate principal amount of 7-year 5.625% notes in the European
market ("Euro Notes")
11
<PAGE>
under Regulation S of the Securities Act of 1933, as amended. Accrued interest
on the Euro Notes is payable annually in cash on July 19 of each year,
commencing on July 19, 2000. The net proceeds of euro 198,624 (approximately
$203 million) were used to repay borrowings under the Credit Agreements.
(8) Pro Forma Information
The following table presents selected unaudited pro forma statement of earnings
information for the quarter and six months ended June 30, 1998 as a result of
the Reorganization, the Recapitalization and the Merger. Such information
reflects pro forma adjustments made in combining the historical results of old
Sealed Air and Cryovac as a result of such transactions for the three and six
months ended June 30, 1998. Such amounts include for the first quarter of 1998,
among others, incremental goodwill amortization of approximately $10 million
and incremental interest expense of approximately $20 million. This pro forma
information is not intended to represent what the Company's actual results of
operations would have been for such periods.
<TABLE>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------------
Reported Pro Forma Reported Pro Forma
1999 1998(1) 1999 1998(1)
---- ------- ---- -------
<S> <C> <C> <C> <C>
Net sales by business segment:
Food and specialty packaging $431,807 $419,932 $857,786 $820,802
Protective packaging 263,314 250,073 516,272 492,990
- --------------------------------------------------------------------------------------
Total net sales 695,121 670,005 1,374,058 1,313,792
Cost of sales 441,541 434,945 874,780 858,795
- --------------------------------------------------------------------------------------
Gross profit 253,580 235,060 499,278 454,997
Marketing, administrative and
development expenses 131,969 124,084 260,583 248,646
Goodwill amortization 12,331 12,018 24,582 23,939
- --------------------------------------------------------------------------------------
Operating profit 109,280 98,958 214,113 182,412
Other income (expense):
Interest expense (14,738) (20,642) (29,457) (43,095)
Other, net 1,143 (1,537) (1,021) (1,333)
- --------------------------------------------------------------------------------------
Other expense, net (13,595) (22,179) (30,478) (44,428)
Earnings before income taxes 95,685 76,779 183,635 137,984
Income taxes 44,493 35,787 85,829 64,187
- --------------------------------------------------------------------------------------
Net earnings 51,192 40,992 97,806 73,797
- --------------------------------------------------------------------------------------
Less: Preferred stock dividends 17,879 18,011 35,789 36,022
Add: Excess of book value over
repurchase price of preferred stock 29 -- 39 --
- --------------------------------------------------------------------------------------
Net earnings ascribed to common
shareholders 33,342 22,981 62,056 37,775
12
<PAGE>
Earnings per common share (2)
Basic 0.40 0.27 0.74 0.45
Diluted 0.40 0.27 0.74 0.45
- --------------------------------------------------------------------------------------
Weighted average number of common
shares outstanding:
Basic 83,626 83,612 83,505 83,443
Diluted 83,758 83,746 83,637 83,620
- --------------------------------------------------------------------------------------
(1) The second quarter of 1998 represents the actual operating results
resulting from the Merger of Sealed Air and Cryovac excluding the non-cash
inventory charge of approximately $8 million resulting from the turnover
of certain of the Company's inventories previously stepped-up to fair
value in connection with the Merger.
(2) For purposes of calculating basic and diluted earnings per common share in
the 1998 periods, net earnings have been reduced by the dividends that
would have been payable on the Company's Series A convertible preferred
stock for the first quarter of 1998 if such shares had been outstanding
during such period to arrive at net earnings ascribed to common
shareholders. The weighted average number of outstanding common shares
used to calculate basic earnings per common share is calculated on an
equivalent share basis using the weighted average number of shares
outstanding of the Company's common stock for the first quarter of 1998,
adjusted to reflect the terms of the Recapitalization. The assumed
conversion of the convertible preferred stock is not considered in the
calculation of diluted earnings per common share for all periods presented
as the effect is antidilutive (i.e. would increase the earnings per common
share for each period presented).
</TABLE>
(9) Restructuring and Other Charges
The Company's restructuring reserve, which arose primarily out of a
restructuring undertaken by the Company during the third quarter of 1998,
amounted to $10,579 at June 30, 1999 and $26,924 at December 31, 1998. The
components of the restructuring charges, spending and other activity through
June 30, 1999 and the remaining reserve balance at June 30, 1999 were as
follows:
<TABLE>
Employee Contract
Termination Plant/Office Termination
Costs Closures Costs Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Restructuring reserve at December 31, 1998 25,362 1,562 - 26,924
Cash payments during 1999 (16,004) (341) - (16,345)
- ---------------------------------------------------------------------------------------------
Restructuring reserve at June 30, 1999 9,358 1,221 - 10,579
- ---------------------------------------------------------------------------------------------
</TABLE>
The Company expects to incur approximately $43,289 of cash outlays to carry out
this restructuring program, of which approximately $32,710 was incurred through
June 30, 1999. These cash outlays include primarily severance and other
personnel related costs, costs of terminating leases and facilities and
equipment disposition costs. In connection with the restructuring, the Company
is eliminating 750 positions, or approximately 5% of its workforce, across all
functional areas. Through June 30, 1999, approximately 624 positions had been
eliminated, and all restructuring actions, including remaining asset
dispositions, are expected to be completed by the end of 1999 although certain
cash outlays will continue into future years.
(10) Business Segment Information
The Company operates in two reportable business segments: (i) Food and
Specialty Packaging and (ii) Protective Packaging. The Food and Specialty
Packaging segment comprises the Company's Cryovac(R) food and specialty
products. The Protective Packaging segment includes the aggregation of the
Company's packaging products, engineered products and specialty products, all
of which products are for non-food applications.
The Food and Specialty Packaging segment includes flexible materials and
related systems (shrink film products, laminated films and specialty packaging
systems marketed primarily under the Cryovac(R) trademark for a broad range of
perishable foods). This segment also includes rigid packaging and absorbent
pads (absorbent pads used for the packaging of
13
<PAGE>
meat, fish and poultry, foam trays for supermarkets and food processors, and
rigid plastic containers for dairy and other food products).
The Protective Packaging segment includes cushioning and surface protection
products (including air cellular cushioning materials, films for non-food
applications, polyurethane foam packaging systems sold under the Instapak(R)
trademark, polyethylene foam sheets and planks, a comprehensive line of
protective and durable mailers and bags, certain paper-based protective
packaging materials, suspension and retention packaging, and packaging systems)
and other products (principally specialty adhesive products).
<TABLE>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------- --------------------------------------
1999 1998 1999 1998
====================================================================================================================================
<S> <C> <C> <C> <C>
Net sales
Food and Specialty Packaging $ 431,807 $ 419,932 $ 857,786 $ 795,454
Protective Packaging 263,314 250,073 516,272 305,586
- ------------------------------------------------------------------------------------------------------------------------------------
Total segments $ 695,121 $ 670,005 $ 1,374,058 $ 1,101,040
====================================================================================================================================
Operating profit
Food and Specialty Packaging $ 72,688 $ 64,210 $ 140,252 $ 100,824
Protective Packaging 56,958 41,227 110,511 50,282
- ------------------------------------------------------------------------------------------------------------------------------------
Total segments 129,646 105,437 250,763 151,106
Corporate operating expenses(1) (20,366) (14,479) (36,650) (14,569)
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 109,280 $ 90,958 $ 214,113 $ 136,537
====================================================================================================================================
Depreciation and amortization
Food and Specialty Packaging $ 27,269 $ 31,112 $ 55,618 $ 53,725
Protective Packaging 15,218 13,299 30,132 19,892
- ------------------------------------------------------------------------------------------------------------------------------------
Total segments 42,487 44,411 85,750 73,617
Corporate (including goodwill amortization) 13,672 12,299 26,196 12,389
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 56,159 $ 56,710 $ 111,946 $ 86,006
====================================================================================================================================
(1) Includes goodwill amortization of $12,331 and $12,018 in the second
quarters of 1999 and 1998, respectively and $24,582 and $12,108 in the
first six months of 1999 and 1998, respectively.
</TABLE>
(11) Acquisitions
During the first six months of 1999, the Company made certain small
acquisitions. These transactions, which were effected in exchange for cash,
were accounted for as purchases and were not material to the Company's
consolidated financial statements.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
On March 31, 1998, the Company (formerly known as W. R. Grace & Co.)
and Sealed Air Corporation ("old Sealed Air") completed a series of
transactions as a result of which:
(a) The specialty chemicals business of the Company was separated from
its packaging business, the packaging business ("Cryovac") was
contributed to one group of wholly owned subsidiaries, and the
specialty chemicals business was contributed to another group of
wholly owned subsidiaries ("New Grace"); the Company and Cryovac
borrowed approximately $1.26 billion under two revolving credit
agreements (the "Credit Agreements") (which, as amended, are discussed
below) and transferred substantially all of those funds to New Grace;
and the Company distributed all of the outstanding shares of common
stock of New Grace to its stockholders. As a result, New Grace became
a separate publicly owned corporation that is unrelated to the
Company. These transactions are referred to below as the
"Reorganization."
(b) The Company recapitalized its outstanding shares of common stock,
par value $0.01 per share ("Grace Common Stock"), into a new common
stock and Series A convertible preferred stock (the "Series A
Preferred Stock"), each with a par value of $0.10 per share (the
"Recapitalization").
(c) A subsidiary of the Company merged into old Sealed Air (the
"Merger"), with old Sealed Air being the surviving corporation. As a
result of the Merger, old Sealed Air became a subsidiary of the
Company, and the Company was renamed Sealed Air Corporation.
References to "Grace" in this Management's Discussion and Analysis
refer to the Company before the Reorganization, the Recapitalization and the
Merger.
The Merger was accounted for as a purchase of old Sealed Air by the
Company as of March 31, 1998. Accordingly, the financial statements include
the operating results and cash flows as well as the assets and liabilities of
Cryovac for all periods presented. The operating results, cash flows, assets
and liabilities of old Sealed Air are included from March 31, 1998. For
periods prior to the Merger, the financial statements exclude all of the
assets, liabilities (including contingent liabilities), revenues and expenses
of Grace other than the assets, liabilities, revenues and expenses of Cryovac.
In order to facilitate a review of the factors that affected the
Company's operating results for the second quarter and first six months of
1999, the Company has included selected unaudited pro forma financial
information in Note 8 to the consolidated financial statements included in
this Form 10-Q.
15
<PAGE>
RESULTS OF OPERATIONS
Discussion and Analysis of Reported Operating Results
The Company's net sales increased 4% to $695,121,000 in the second
quarter of 1999 from $670,005,000 in the second quarter of 1998. A discussion of
the factors affecting this increase in net sales in the second quarter of 1999
is set forth below in the discussion and analysis of pro forma operating
results. For the six-month period, the Company's net sales increased 25% to
$1,374,058,000 in 1999 from $1,101,040,000 in 1998. This increase in net sales
as well as most of the increases in cost of sales, marketing, administrative and
development expenses and other costs and expenses, including the substantial
increases in interest expense and goodwill amortization, that the Company
experienced in the six-month period were due primarily to the inclusion of the
protective packaging business of old Sealed Air in the entire 1999 period, but
not in the first quarter of 1998, and adjustments arising from the Merger, the
Reorganization and the Recapitalization.
Gross profit increased as a percentage of net sales to 36.5% for the
second quarter of 1999 from 33.9% for the second quarter of 1998. For the
first six months of 1999, gross profit as a percentage of net sales was 36.3%
compared to 33.3% in the 1998 period. During the second quarter of 1998, the
Company incurred a non-cash inventory charge of approximately $8,000,000 (the
"Inventory Charge") resulting from the turnover of certain of the Company's
inventories previously stepped-up to fair value in connection with the Merger.
Excluding the Inventory Charge, gross profit as a percentage of net sales
would have been 35.1% and 34.1% for the second quarter and first six-months of
1998, respectively. The increases in both periods, excluding the Inventory
Charge, resulted primarily from the higher level of net sales, certain lower
raw material costs and cost reductions arising out of certain improvements in
the Company's operations.
The higher level of marketing, administrative and development
expenses reflects primarily the higher level of net sales and, as noted above
with respect to the six-month period, is due primarily to the inclusion of
old Sealed Air's operations for the full first six months of 1999 but only the
second quarter of 1998. Such expenses also reflect the absence in the first
six months of 1999 of $18,044,000 of corporate expenses that were allocated to
Cryovac by Grace in the first quarter of 1998 prior to the Merger. Such
allocations ceased upon the Merger. As a result of the Merger, the Company
recorded goodwill amortization of $24,582,000 in the first six months of 1999
compared to $12,108,000 in the first six months of 1998.
Other expense, net which reflects primarily interest expense on the
Company's indebtedness, decreased for the second quarter of 1999 due to the
lower level of debt outstanding during the 1999 period. The increase in
interest expense for the first six months of 1999 was due to the timing of
indebtedness entered into under the Credit Agreements on March 31, 1998,
whereby the debt under the Credit Agreements was outstanding for the full
six-month period of 1999 but only for the second quarter of 1998.
The Company's effective income tax rate for the quarter ended June
30, 1999 was 46.5% compared to 48.3% for the quarter ended June 30, 1998. The
effective tax rate for
16
<PAGE>
the first six months of 1999 was 46.7% compared to 45.0% for the 1998 period.
Such rates were higher than the statutory U.S. federal income tax rate
primarily due to the non-deductibility of the goodwill amortization resulting
from the Merger and state income taxes.
As a result of the factors discussed above, the Company's net earnings
increased to $51,192,000 from $35,565,000 for the second quarter of 1998 and to
$97,806,000 for the first six months of 1999 from $62,617,000 for the first six
months of 1998.
Basic and diluted earnings per common share for the quarter increased
to $.40 from $0.21 in the 1998 period and for the first six months of 1999
increased to $0.74 from $0.43 in the 1998 period.
Discussion and Analysis of Pro Forma Operating Results
The following discussion relates to the unaudited selected pro forma
financial information that appears in Note 8 to the consolidated financial
statements included in this Form 10-Q.
Reported net sales for the second quarter of 1999 increased 4% to
$695,121,000 compared with $670,005,000 for the second quarter of 1998. For
the six-month period, the Company's reported net sales increased 5% to
$1,374,058,000 compared with pro forma net sales of $1,313,792,000 in the 1998
period. The increases in net sales in both periods were primarily due to
higher unit volume, partially offset by the negative effect of foreign
currency translation.
The Company's net sales continued to be affected in the second
quarter and first six months of 1999 by the continued weakness of foreign
currencies compared with the U.S. dollar in Latin America, Europe and the
Asia-Pacific region. Excluding the negative effect of foreign currency
translation, net sales would have increased 6% for both the second quarter
and, on a pro forma basis, the first six months of 1999 compared to the
respective 1998 periods.
Net sales from domestic operations increased approximately 4%
compared with the second quarter of 1998 and, on a pro forma basis, 5%
compared to the first six months of 1998, primarily due to increased unit
volume. Net sales from foreign operations, which represented approximately 46%
of the Company's total net sales in both periods, increased approximately 3%
compared with the second quarter of 1998 and, on a pro forma basis, 5%
compared with the first six months of 1998, primarily due to increased unit
volume which more than offset the negative effect of foreign currency
translation.
Net sales of the Company's food and specialty packaging products
segment, which consists primarily of the Company's Cryovac(R) food packaging
products and Dri-Loc(R) absorbent pads, increased approximately 3% for the
second quarter and, on a pro forma basis, 5% compared to the first six months
of 1998. These increases were due primarily to higher unit volume partially
offset by the negative effect of foreign currency translation. Excluding the
negative effect of foreign currency translation, net sales of
17
<PAGE>
this segment would have increased by 6% for the second quarter and, on a pro
forma basis, 7% for the first six months of 1999 compared to the respective
1998 periods.
Net sales of the Company's protective packaging segment, which
consists primarily of Cryovac(R) performance shrink films, Instapak(R)
chemicals and equipment, air cellular and polyethylene foam surface protection
and cushioning materials and protective and durable mailers and bags,
increased 5% for the second quarter and, on a pro forma basis, 5% for the
first six months of 1999 compared to the respective 1998 periods. These
increases were due primarily to higher unit volume. The sales benefit
resulting from small acquisitions completed during the past year was largely
offset by changes in product mix and average selling prices and by foreign
currency translation for both the second quarter and, on a pro forma basis,
the first six months of 1999. Excluding the negative effect of foreign
currency translation, net sales of this segment would have increased 6% for
the second quarter and, on a pro forma basis, 5% for the first six months of
1999 compared to the respective 1998 periods.
On a pro forma basis (which excludes the effect of the Inventory
Charge), gross profit as a percentage of net sales was 36.5% for the second
quarter and 36.3% for the first six months of 1999 compared to 35.1% and 34.6%
for the respective 1998 periods. These increases resulted primarily from the
higher level of net sales, certain lower raw material costs and cost
reductions arising out of certain improvements in the Company's operations.
Marketing, administrative and development expenses and goodwill
amortization as a percentage of net sales were 20.8% for the second quarter of
1999 compared to 20.3% for the 1998 period and were 20.8% for the first six
months of 1999 compared to, on a pro forma basis, 20.7% for the 1998 period.
These increases reflect continuing integration and information system costs
partially offset by certain improvements in the Company's operations.
On a pro forma basis, other expense, net, which reflects primarily
interest expense on the Company's indebtedness, decreased compared to the
second quarter and first six months of 1998 primarily due to the lower level
of debt outstanding during the 1999 periods.
On a pro forma basis, the Company's effective income tax rates were
46.5% and 46.6% in the second quarters of 1999 and 1998, respectively, and
46.7% and 46.5% for the first six months of 1999 and 1998, respectively. These
rates are higher than the applicable statutory rates primarily due to the
non-deductibility for tax purposes of the goodwill amortization resulting from
the Merger and state income taxes. The Company expects that its effective tax
rate will remain higher than statutory rates for 1999.
As a result of the above, the Company recorded net earnings of
$51,192,000 for the second quarter of 1999 and $97,806,000 for the first six
months of 1999 compared to pro forma net earnings of $40,992,000 and
$73,797,000 for the respective 1998 periods.
Basic and diluted earnings per common share were $0.40 for the second
quarter of 1999 and, on a pro forma basis, $0.27 for the second quarter of
1998. Basic and diluted
18
<PAGE>
earnings per common share were $0.74 for the first six months of 1999 and, on
a pro forma basis, $0.45 for the first six months of 1998. The effect of the
conversion of the Company's outstanding convertible preferred stock is not
considered in the calculation of diluted earnings per common share because it
would be antidilutive (i.e., would increase earnings per common share for the
quarter ended June 30, 1999 and pro forma earnings per common share for the
quarter ended June 30, 1998 to $0.44 and $0.36, respectively, and for the six
months ended June 30, 1999 and pro forma earnings per common share for the six
months ended June 30, 1998 to $0.85 and $0.64, respectively).
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash flows from
operations and amounts available under the Company's existing lines of credit,
including principally the Credit Agreements mentioned above. Prior to the
consummation of the Merger, Cryovac participated in Grace's centralized cash
management system, whereby cash received from operations was transferred to,
and disbursements were funded from, centralized corporate accounts. As a
result, any cash flows from operations that were in excess of Cryovac's cash
needs were transferred to these corporate accounts and used for other
corporate purposes. In connection with the Reorganization, most of the
Company's net cash at March 31, 1998 (other than $51,259,000 of cash recorded
on the balance sheet of old Sealed Air immediately before the Merger) was
transferred to New Grace.
Net cash provided by operating activities amounted to $180,467,000
and $155,870,000 in the first six months of 1999 and 1998, respectively. The
increase in operating cash flows for the first six months of 1999 was
primarily due to the inclusion of the operations of old Sealed Air for the
full six month period, increased net earnings and higher levels of
depreciation and amortization partially offset by the change in operating
assets and liabilities due to the timing of cash receipts and payments and the
Company's higher level of operations.
Net cash used in investing activities amounted to $38,593,000 in the
first six months of 1999 compared to net cash provided by investing activities
of $20,723,000 in the 1998 period. The change in the first six months of 1999
compared to the 1998 period was primarily due to the absence in the 1999
period of the cash acquired from old Sealed Air in the Merger and the use of
$8,905,000 of cash to make various small acquisitions in 1999. Capital
expenditures were $31,843,000 in the 1999 period and $32,462,000 in the 1998
period.
Net cash used in financing activities amounted to $126,470,000 in the
first six months of 1999 and $143,451,000 in the first six months of 1998. The
net cash used in the first six months of 1999 was used primarily to repay
outstanding debt, principally under the Credit Agreements, and to pay
dividends on the Company's Series A Preferred Stock. Such amounts were
partially offset by the net proceeds from the Senior Notes, which were used to
reduce outstanding borrowings under the Credit Agreements, and net proceeds
from short-term borrowings. In the 1998 period, cash used in financing
activities primarily
19
<PAGE>
reflected the proceeds from borrowings under the Credit Agreements, offset by
the contribution of funds to New Grace in connection with the Reorganization
and the repayment of debt, principally relating to the Credit Agreements.
At June 30, 1999, the Company had working capital of $286,754,000, or
7% of total assets, compared to working capital of $309,624,000, or 8% of
total assets, at December 31, 1998. The decrease in working capital was
primarily due to increases in short-term borrowings and decreases in notes and
accounts receivable and inventory that were partially offset by an increase in
cash and a decrease in accounts payable and other current liabilities (which
related to accrued payroll and costs associated with the Company's
restructuring program).
The Company's ratio of current assets to current liabilities (current
ratio) was 1.5 at June 30, 1999 and 1.6 at December 31, 1998. The Company's
ratio of current assets less inventory to current liabilities (quick ratio)
was 1.0 at June 30, 1999 and 1.1 at December 31, 1998.
On May 18, 1999, the Company issued $300 million aggregate principal
amount of 10-year 6.95% senior notes ("Senior Notes") under Rule 144A and
Regulation S of the Securities Act of 1933, as amended (the "Securities Act").
Accrued interest on the Senior Notes is payable semi-annually in cash on May
15 and November 15 of each year, commencing on November 15, 1999. The net
proceeds of $297,834,000 from the issuance of the Senior Notes were used to
reduce outstanding borrowings under the Credit Agreements described below. At
June 30, 1999, the outstanding borrowings under the Senior Notes were
$297,853,000 net of unamortized bond discount of $2,147,000.
At June 30, 1999, the Company's outstanding debt consisted primarily
of borrowings made under the Credit Agreements described below, the Senior
Notes and certain other loans incurred by the Company's subsidiaries. The
Company's outstanding debt balance as of December 31, 1998 primarily included
borrowings under the Credit Agreements and certain other loans incurred by the
Company's subsidiaries.
The Company's two principal Credit Agreements are a 5-year revolving
credit facility that expires on March 30, 2003 and a 364-day revolving credit
facility that expires on March 27, 2000. During the first six months of 1999,
the Company voluntarily reduced the amounts available under the Credit
Agreements from $1 billion to $650 million under the 5-year revolving credit
facility and from $600 million to $475 million under the 364-day revolving
facility. Borrowings outstanding under the 5-year revolving credit facility
are recorded as long-term debt, and borrowings outstanding under the 364-day
facility are recorded as short-term borrowings. The Credit Agreements provide
that the Company and certain of its subsidiaries may borrow for various
purposes, including the refinancing of existing debt, the provision of working
capital and other general corporate needs. Amounts repaid under the Credit
Agreements may be reborrowed from time to time, up to the maximum $1.125
billion commitment amount under the Credit Agreements.
The Company's obligations under the Credit Agreements bear interest
at floating rates. The weighted average interest rate under the Credit
Agreements was approximately
20
<PAGE>
5.6% at June 30, 1999 and 5.8% at December 31, 1998. The Company has entered
into certain interest rate swap agreements that have the effect of fixing the
interest rates on a portion of such debt. The weighted average interest rate
at June 30, 1999 and December 31, 1998 did not change significantly as a
result of these derivative financial instruments.
The Credit Agreements provide for changes in borrowing margins based
on financial criteria and the Company's senior unsecured debt ratings, and
impose certain limitations on the operations of the Company and certain of its
subsidiaries. The limitations include financial covenants relating to interest
coverage and debt leverage as well as certain restrictions on the incurrence
of additional indebtedness, the creation of liens, mergers and acquisitions,
and certain dispositions of property and assets. The Company was in compliance
with these requirements as of June 30, 1999.
The Senior Notes impose certain limitations on the operations of the
Company and certain of its subsidiaries. The limitations include restrictions
on the creation of liens, entrance into sale-leaseback transactions, merger or
consolidation of the Company and disposition of substantially all of the
Company's assets. The Company was in compliance with these requirements as of
June 30, 1999.
At June 30, 1999, the Company had available lines of credit,
including those available under the Credit Agreements, of approximately $1.4
billion of which approximately $723 million were unused.
On July 19, 1999, the Company issued euro 200 million (approximately
$205 million) aggregate principal amount of 7-year 5.625% notes in the
European market ("Euro Notes") under Regulation S of the Securities Act.
Accrued interest on the Euro Notes is payable annually in cash on July 19 of
each year, commencing on July 19, 2000. The net proceeds of euro 198,624,000
(approximately $203 Million) were used to repay borrowings under the Credit
Agreements.
The Company's shareholders' equity was $470,381,000 at June 30, 1999
compared to $437,045,000 at December 31, 1998. Shareholders' equity increased
in 1999 due to the Company's net earnings of $97,806,000, which were partially
offset by the payment of the preferred stock dividends of $35,821,000 and by
an additional foreign currency translation adjustment of $48,041,000.
OTHER MATTERS
Quantitative and Qualitative Disclosures about Market Risk
For a discussion of market risks at December 31,1998, refer to Item
7a of the Company's Form 10-K for the year ended December 31, 1998.
21
<PAGE>
Interest Rates
The Company uses interest rate swaps to reduce exposure to
fluctuations in interest rates by fixing the rate of interest the Company pays
on a portion of the Company's debt. Interest collars are used to reduce the
Company's exposure to fluctuations in the rate of interest by limiting
fluctuations in the rate of interest. At June 30, 1999, the Company had
interest rate swap and collar agreements, maturing at various dates through
March 2003, with a combined notional amount of approximately $140,000,000
compared with a notional amount of $265,000,000 at December 31, 1998. On May
18,1999, the Company issued $300 million aggregate principal amount of 10-year
6.95% senior notes. The net proceeds of $297,834,000 were used to reduce
outstanding variable-rate borrowings under the Credit Agreements.
Foreign Exchange Contracts
The Company uses interest rate and currency swaps to limit foreign
exchange exposure and limit or adjust interest rate exposure by swapping
certain borrowings in U.S. dollars for borrowings denominated in foreign
currencies. At June 30, 1999 the Company had interest rate and currency swap
agreements, maturing through March 2002, with an aggregate notional amount of
approximately $4,500,000.
The Company uses foreign currency forwards to fix the amount payable
on certain transactions denominated in foreign currencies. At June 30, 1999
the Company had foreign currency forward contracts, maturing at various dates
through August 1999, with an aggregate notional amount of approximately
$13,100,000.
Environmental Matters
The Company is subject to loss contingencies resulting from
environmental laws and regulations, and it accrues for anticipated costs
associated with investigatory and remediation efforts when an assessment has
indicated that a loss is probable and can be reasonably estimated. These
accruals do not take into account any discounting for the time value of money
and are not reduced by potential insurance recoveries, if any. Environmental
liabilities are reassessed whenever circumstances become better defined and/or
remediation efforts and their costs can be better estimated. These liabilities
are evaluated periodically based on available information, including the
progress of remedial investigations at each site, the current status of
discussions with regulatory authorities regarding the methods and extent of
remediation and the apportionment of costs among potentially responsible
parties. As some of these issues are decided (the outcomes of which are
subject to uncertainties) and/or new sites are assessed and costs can be
reasonably estimated, the Company adjusts the recorded accruals, as necessary.
However,
22
<PAGE>
the Company believes that it has adequately reserved for all probable and
estimable environmental exposures.
Year 2000 Computer System Compliance
The Company is continuing to address various Year 2000 issues. Year
2000 issues arise from computer programs that utilize only the last two digits
of a year to define a particular year rather than the complete four-digit
year. As a result, certain computer programs may not properly process certain
dates, particularly those that fall into the year 2000 or subsequent years.
Year 2000 issues affect both computer-based information systems and systems
with embedded microcontrollers or microcomputers.
In addressing these issues, the Company has considered the following
four areas: (a) computer-based information technology systems, (b) other
systems not directly involving information technology, including embedded
systems, (c) packaging and dispensing equipment used by the Company's
customers, and (d) Year 2000 readiness of the Company's key suppliers and
customers. The Company's action plan for dealing with these issues consists of
the following four phases: (1) identifying the potentially affected items, (2)
assessing the effect of Year 2000 issues on these items, (3) remediating the
deficiencies of these items with updates, repairs or replacements, and (4)
testing these items.
State of Readiness
The Company has examined the hardware and software of its
computer-based information technology systems, including mainline systems,
personal computers and telephone systems. The Company has also examined other
devices incorporating electronic microchips that might fail as a result of the
Year 2000 issue. These include security and control systems in Company
facilities and programmable logic controllers and microcomputers embedded into
production and other equipment in the Company's plants and warehouses. The
Company has finished the identification and assessment phases of its Year 2000
action plan in these two areas. The Company has also completed approximately
95% of the remediation and testing phases of the plan for these areas. The
Company has substantially completed its work on Year 2000 issues for
computer-based information technology systems. The work remaining on Year 2000
issues primarily concerns non-information technology systems. The Company
expects to complete substantially all work on Year 2000 issues by September
30, 1999. The Company continues to test new equipment and software before
placing them into service.
The Company has examined certain packaging and dispensing equipment
that it has sold or leased to customers in order to identify Year 2000 issues.
This equipment often incorporates microprocessors as controllers. The Company
believes that no further remediation is necessary for these devices.
23
<PAGE>
The Company has completed a Year 2000 issue survey of key suppliers.
Remedial action is being requested as required. The Company has also contacted
certain customers to assess their overall Year 2000 readiness.
Costs
The Company estimates that the total costs to address the Company's
Year 2000 issues will be in the neighborhood of $6 million. No significant
information technology projects have been deferred by the Company due to Year
2000 issues.
Risks
While the Company believes that it is taking all steps reasonably
necessary to assure its ability to conduct business and to safeguard its
assets during the period affected by Year 2000 issues, risks cannot in every
case be eliminated. Utilities and other key suppliers, may disrupt one or more
of the Company's operations if they are unable to conduct business during this
period. Significant disruptions caused by Year 2000 issues in the industries
which the Company serves could impact its operations. Year 2000 issues in
other industries could have a ripple effect on the Company's business.
If the Company is unable to complete its remediation efforts
satisfactorily and on a timely basis, substantial business interruptions may
occur in its operations. These could include disruptions to manufacturing
operations, logistics, invoicing, collections and vendor payments. The
Company's efforts described herein are expected to reduce the Company's
uncertainty about Year 2000 issues. The Company believes that its efforts to
date in this regard have contributed to reducing the risk of significant
interruptions of its operations, and it intends to pursue these efforts as
described herein.
Contingency Plans
The Company has certain contingency measures in place, including in
some cases dual utility services, backup power equipment, backup data centers,
manual backup procedures and alternate suppliers. The Company has developed a
Year 2000 contingency plan to implement additional protection measures. The
Company is in the process of implementing this plan on a timely basis.
Euro Conversion
On January 1, 1999, eleven of the fifteen members of the European
Union (the "participating countries") established fixed conversion rates
between their existing currencies (the "legacy currencies") and introduced the
euro, a single common non-cash currency. The euro is now traded on currency
exchanges and is being used in business transactions.
24
<PAGE>
At the beginning of 2002, new euro-denominated bills and coins will
be issued to replace the legacy currencies, and the legacy currencies will be
withdrawn from circulation. By 2002, all companies operating in the
participating countries are required to restate their statutory accounting
data into euros as their base currency.
In 1998, the Company established plans to address the systems and
business issues raised by the euro currency conversion. These issues include,
among others, (1) the need to adapt computer, accounting and other business
systems and equipment to accommodate euro-denominated transactions, (2) the
need to modify banking and cash management systems in order to be able to
handle payments between customers and suppliers in legacy currencies and euros
between 1999 and 2002, (3) the requirement to change the base statutory and
reporting currency of each subsidiary in the participating countries into
euros during the transition period, (4) the foreign currency exposure changes
resulting from the alignment of the legacy currencies into the euro, and (5)
the identification of material contracts and sales agreements whose
contractual stated currency will need to be converted into euros.
The Company believes that it will be euro compliant by January 1,
2002. The Company has implemented plans to accommodate euro-denominated
transactions and to handle euro payments with third party customers and
suppliers in the participating countries. The Company plans to meet the
requirement to convert statutory and reporting currencies to the euro by
acquiring and installing new financial software systems. If there are delays
in such installation, the Company plans to pursue alternate means to convert
statutory and reporting currencies to the euro by 2002. The Company expects
that its foreign currency exposures will be reduced as a result of the
alignment of legacy currencies, and the Company believes that all material
contracts and sales agreements requiring conversion will be converted to euros
prior to January 1, 2002.
Although additional costs are expected to result from the
implementation of the Company's plans, the Company also expects to achieve
benefits in its treasury and procurement areas as a result of the elimination
of the legacy currencies. Since the Company has operations in each of its
business segments in the participating countries, each of its business
segments will be affected by the conversion process. However, the Company
expects that the total impact of all strategic and operational issues related
to the euro conversion and the cost of implementing its plans for the euro
conversion will not have a material adverse impact on its consolidated
financial condition or results of operations.
Recently Issued Statements of Financial Accounting Standards
In June 1999, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective date of FASB Statement No. 133." This Statement defers the
effective date of SFAS No. 133 , "Accounting for
25
<PAGE>
Derivative Instruments and Hedging Activities." This Statement, which the
Company expects to adopt beginning January 1, 2001, establishes accounting and
operating standards for hedging activities and derivative instruments,
including certain derivative instruments embedded in other contracts. The
Company is reviewing the potential impact, if any, of SFAS No. 133 on its
Consolidated Financial Statements.
Forward-Looking Statements
Certain statements made by the Company in this Form 10-Q and in
future oral and written statements by management of the Company may be
forward-looking. These statements include comments as to the Company's beliefs
and expectations as to future events and trends affecting the Company's
business, its results of operations and its financial condition. These
forward-looking statements are based upon management's current expectations
concerning future events and discuss, among other things, anticipated future
performance and future business plans. Forward-looking statements are
identified by such words and phrases as "expects," "intends," "believes,"
"will continue," "plans to," "could be" and similar expressions.
Forward-looking statements are necessarily subject to uncertainties, many of
which are outside the control of the Company, that could cause actual results
to differ materially from such statements.
While the Company is not aware that any of the factors listed below
will adversely affect the future performance of the Company, the Company
recognizes that it is subject to a number of uncertainties, such as business and
market conditions in Asia, Latin America and other geographic areas around the
world, changes in the value of foreign currencies against the U.S. dollar, the
ability of the Company to complete integration and restructuring activities
relating to the merger of old Sealed Air and Cryovac and the success of those
efforts as well as certain information systems projects, general economic,
business and market conditions, conditions in the industries and markets that
use the Company's packaging materials and systems, the development and success
of new products, the Company's success in entering new markets, competitive
factors, raw material availability and pricing, changes in the Company's
relationship with customers and suppliers, future litigation and claims
(including environmental matters) involving the Company, changes in domestic or
foreign laws or regulations, or difficulties related to the Year 2000 issue or
the euro conversion.
26
<PAGE>
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
(a) Certain provisions of the Certificate of Incorporation of the
Company affecting the rights of holders of the common stock and the Series A
convertible preferred stock of the Company were modified pursuant to the
approval of the stockholders by a vote taken at the annual meeting of
stockholders of the Company. (See Item 4 below and Exhibits 3.1 and 3.2.)
(b) On May 18, 1999, the Company issued $300 million aggregate
principal amount of 10-year 6.95% senior notes ("Senior Notes") under Rule 144A
and Regulation S of the Securities Act of 1933, as amended (the "Securities
Act"). The net proceeds from the issuance of the Senior Notes were used to
reduce outstanding borrowings under the credit agreements (the "Credit
Agreements") described under Liquidity and Capital Resources in the Management's
Discussion and Analysis of Results of Operations and Financial Condition in Part
I of this Form 10-Q. The Senior Notes impose certain limitations on the
operations of the Company and certain of its subsidiaries. The limitations
include restrictions on the creation of liens, entrance into sale-leaseback
transactions, merger or consolidation of the Company and disposition of
substantially all of the Company's assets. The Company was in compliance with
these requirements as of June 30, 1999.
On July 19, 1999, the Company issued euro 200 million (approximately
$205 million) aggregate principal amount of 7-year 5.625% notes in the European
market under Regulation S of the Securities Act. The net proceeds thereof were
used to repay borrowings under the Credit Agreements.
(c) In June 1999, the Company issued 425 shares of its common stock,
par value $0.10 per share, to the Profit-Sharing Plan of the Company as part of
its 1998 contribution to the Profit-Sharing Plan. The issuance of such shares to
the Profit-Sharing Plan was not registered under the Securities Act because
such transaction did not involve an "offer" or "sale" of securities under
Section 2(3) of the Securities Act.
Item 4. Submission of Matters to a Vote of Security Holders.
On May 21, 1999, the Company commenced its annual meeting of
stockholders. The annual meeting was thereafter adjourned until June 18, 1999
and further adjourned until July 16, 1999 in order to accept additional votes
and proxies from stockholders on the proposals to
27
<PAGE>
amend three provisions of the Certificate of Incorporation of the Company, as
discussed below.
At the first session of the meeting on May 21, 1999, the stockholders
elected four Class I directors for a three-year term and ratified the
appointment of KPMG LLP as the Company's independent public accountants for
1999. At the third session of the meeting on July 16, 1999, the stockholders
approved three amendments to the Company's Amended and Restated Certificate of
Incorporation that repealed certain provisions, which amendments required the
affirmative vote of 80% in voting power of the Company's capital stock. Such
provisions were as follows:
(a) provisions requiring a classified board and removal of directors
only for cause;
(b) a provision prohibiting stockholder action by written consent;
and
(c) a provision requiring 80% stockholder vote to amend the Company's
By-laws.
At the first session of the meeting on May 21, 1999, a total of
76,365,742 shares of common stock and 31,412,432 shares of Series A convertible
preferred stock ("preferred stock") were present in person or by proxy at the
annual meeting, representing approximately 104,165,763 votes, or approximately
90% of the voting power of the Company entitled to vote at such meeting. Each
share of common stock was entitled to one vote on each matter before the
meeting, and each share of preferred stock was entitled to 0.885 votes on each
matter before the meeting.
At the third session of the meeting on July 16, 1999, a total of
78,120,012 shares of common stock and 31,714,931 shares of preferred stock were
present in person or by proxy, representing approximately 106,187,726 votes, or
approximately 92% of the voting power of the Company entitled to vote at such
meeting.
The votes cast on the matters before the meeting, including the broker
non-votes where applicable, were as set forth below:
Nominees for Election Number of Votes
To Board of Directors: In Favor Withheld
Hank Brown 103,448,697 717,066
John K. Castle 103,498,153 667,610
Charles F. Farrell, Jr. 103,486,754 679,009
Alan H. Miller 103,497,650 668,114
28
<PAGE>
Approval of proposed amendments to Certificate of Incorporation:
(a) Classified board and For 93,587,234
removal for cause Against 1,145,119
Abstentions 568,423
Broker Non-Votes 10,886,950
(b) Stockholder action For 93,632,958
by written consent Against 909,208
Abstentions 758,609
Broker Non-Votes 10,886,951
(c) 80% stockholder vote For 93,266,401
to amend By-laws Against 1,255,442
Abstentions 778,933
Broker Non-Votes 10,886,950
Ratification of KPMG For 103,603,195
LLP as Independent Against 209,128
Accountants Abstentions 353,439
Item 5. Other Information.
Effective May 21, 1999, the Company amended Section 2.12 of its
By-laws to include an advance notice provision. Nominations of persons for
election to the Board of Directors of the Company and the proposal of business
to be considered by the stockholders at an annual meeting of stockholders may
be made (i) pursuant to the Company's notice of meeting, including matters
covered by Rule 14a-8 under the Securities and Exchange Act of 1934, as
amended, (ii) by or at the direction of the Board of Directors or (iii) by any
stockholder of the Company who was a stockholder of record at the time of
giving notice by the stockholder as provided in Section 2.12 of the Company's
By-laws. A notice pursuant to clause (iii) of the preceding sentence of the
intent of a stockholder to make a nomination or to bring any other matter
before an annual meeting must be made in writing and received by the Secretary
of the Company no earlier than the 119th day and not later than the close of
business on the 45th day prior to the first anniversary of the date of mailing
of the Company's proxy statement for the prior year's annual meeting. However,
if the date of the annual meeting has changed by more than 30 days from the
date it was held in the prior year or if the Company did not hold an annual
meeting in the prior year, then such notice must be received a reasonable time
before the Company mails its proxy statement. Each such notice by a stockholder
must set forth certain information as delineated in Section 2.12 of the
Company's By-laws.
29
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
3.1 Amendments to the Certificate of Incorporation of the
Company, effective July 20, 1999.
3.2 Unofficial Composite Copy of the Amended and Restated
Certificate of Incorporation of the Company, as amended to
date.
3.3 Amendments to the By-laws of the Company, effective May
21, 1999.
3.4 Complete copy of the Amended and Restated By-laws of the
Company, as amended to date.
10.1 Second Amendment, dated as of June 2, 1999, to Global
Revolving Credit Agreement (5-year), among the Company,
certain of the Company's subsidiaries as guarantors and/or
borrowers thereunder, ABN AMRO Bank N.V., as
Administrative Agent, and certain other banks party
thereto.
10.2 Second Amendment, dated as of June 2, 1999, to Global
Revolving Credit Agreement (364-Day), among the Company,
certain of the Company's subsidiaries as guarantors and/or
borrowers thereunder, ABN AMRO Bank N.V., as
Administrative Agent, and certain other banks party
thereto.
10.3 Agreement dated as of April 6, 1999, between the Company
and J. Gary Kaenzig, Jr.
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed the following Report on Form 8-K during the second quarter of
1999:
Date of Report Disclosures
May 13, 1999 Offering of $300,000,000 principal amount of
6.95% senior notes due 2009 pursuant to Rule 144A and
Regulation S under the Securities Act.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SEALED AIR CORPORATION
Date: August 12, 1999 By /s/ Jeffrey S. Warren
------------------------
Jeffrey S. Warren
Controller
(Authorized Executive Officer
and Chief Accounting Officer)
31
EXHIBIT 3.1
AMENDMENTS TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
SEALED AIR CORPORATION
Filed: July 20, 1999
I. ARTICLE SEVENTH HAS BEEN AMENDED TO READ IN ITS ENTIRETY 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;
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; and
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.
II. ARTICLE FIFTEENTH HAS BEEN AMENDED TO READ IN ITS ENTIRETY 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
<PAGE>
Incorporation to elect additional directors under specific circumstances,
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 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.
III. ARTICLE SIXTEENTH HAS BEEN AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
SIXTEENTH: Each director, 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
hold office until a successor is elected at the next succeeding annual meeting
of stockholders and qualified or until such director's earlier resignation or
removal. Regardless of the foregoing sentence, in the case of directors
designated as Class I directors elected at the annual meeting of stockholders
held in 1999, such directors shall hold office until a successor is elected at
the annual meeting of stockholders held in 2002 and qualified or until such
director's earlier resignation or removal, and in the case of directors
designated as Class III directors prior to the annual meeting of stockholders
held in 1999, such directors shall hold office until a successor is elected at
the annual meeting of stockholders held in 2001 and qualified or until such
director's earlier resignation or removal.
EXHIBIT 3.2
(Unofficial Composite Copy through filing of July 20, 1999)
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SEALED AIR CORPORATION
FIRST: The name of the corporation is Sealed Air Corporation (the
"Corporation")
SECOND: The registered office of the Corporation in the State of
Delaware is to be located at The Prentice-Hall Corporation System, Inc., 1013
Centre Road, Wilmington, New Castle County, Delaware 19805. Its registered
agent at such address is The Prentice- Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 450,000,000, consisting of 400,000,000 shares
of Common Stock, par value $0.10 per share (the "Common Stock"), and
50,000,000 shares of Preferred Stock, par value $0.10 per share (the
"Preferred Stock").
The Preferred Stock may be issued from time to time in one or more
series. The powers, designations, preferences and other rights and
qualifications, limitations or restrictions of the Preferred Stock of each
series shall be such as are stated and expressed in this Article Fourth and,
to the extent not stated and expressed herein, shall be such as may be fixed
by the Board of Directors (authority so to do being hereby expressly granted)
and stated and expressed in a resolution or resolutions adopted by the Board
of Directors providing for the initial issue of Preferred Stock of such
series. Such resolution or resolutions shall (a) fix the dividend rights of
holders of shares of such series, (b) fix the terms on which stock of such
series may be redeemed if the shares of such series are to be redeemable, (c)
fix the rights of the holders of stock of such series upon dissolution or any
distribution of assets, (d) fix the terms or amount of the sinking fund, if
any, to be provided for the purchase or redemption of stock of such series,
(e) fix the terms upon which the stock of such series may be converted into or
exchanged for stock of any other class or classes or of any one or more series
of Preferred Stock if the shares of such series are to be convertible or
exchangeable, (f) fix the voting rights, if any, of the shares of such series
and (g) fix such other powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof desired to be so fixed.
Except to the extent otherwise provided in the resolution or
resolutions of the Board of Directors providing for the initial issue of
shares of a particular series or expressly required by law, holders of shares
of Preferred Stock of any series shall be entitled to one vote for each share
thereof so held, shall vote share for share with the holders of the
<PAGE>
Common Stock without distinction as to class and shall not be entitled to vote
separately as a class or series of a class. The number of shares of Preferred
Stock authorized to be issued may be increased or decreased from time to time
by the affirmative vote of the holders of a majority of the voting power of
the then outstanding Voting Stock, and the holders of the Preferred Stock
shall not be entitled to vote separately as a class or series of a class on
any such increase or decrease. For the purposes of this Amended and Restated
Certificate of Incorporation, "Voting Stock" shall mean the outstanding shares
of capital stock of the Corporation entitled to vote generally in the election
of directors.
All shares of any one series of Preferred Stock shall be identical
with each other in all respects except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon shall
accumulate, and all series of Preferred Stock shall rank equally and be
identical in all respects except as specified in the respective resolutions of
the Board of Directors providing for the initial issue thereof.
Subject to the prior and superior rights of the Preferred Stock as
set forth in any resolution or resolutions of the Board of Directors providing
for the initial issuance of any particular series of Preferred Stock, such
dividends (payable in cash, stock or otherwise) as may be determined by the
Board of Directors may be declared and paid on the Common Stock from time to
time out of any funds legally available therefor and the Preferred Stock shall
not be entitled to participate in any such dividend.
One series of Preferred Stock authorized hereby shall be Series A
Convertible Preferred Stock, as follows:
1. Number of Shares and Designation. 36,021,851 shares of Preferred
Stock of the Corporation shall constitute a series of Preferred Stock
designated as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"). The number of shares of Series A Preferred Stock may be increased (to
the extent of the Corporation's authorized and unissued Preferred Stock) or
decreased (but not below the number of shares of Series A Preferred Stock then
outstanding) by further resolution duly adopted by the Board of Directors and
the filing of a certificate of increase or decrease, as the case may be, with
the Secretary of State of Delaware.
2. Rank. The Series A Preferred Stock shall, with respect to
payment of dividends, redemption payments and rights upon liquidation,
dissolution or winding up of the affairs of the Corporation, (i) rank senior
and prior to the Common Stock and each other class or series of equity
securities of the Corporation, whether currently issued or issued in the
future, that by its terms ranks junior to the Series A Preferred Stock
(whether with respect to payment of dividends, redemption payments or rights
upon liquidation, dissolution or winding up of the affairs of the Corporation)
(all of such equity securities, including the Common Stock, are collectively
referred to herein as the "Junior Securities"), (ii) rank on a parity with
each other class or series of equity securities of the Corporation (other than
the Common Stock), whether currently issued or issued in the future, that does
not by its terms expressly provide that it ranks senior to or junior to the
Series A Preferred Stock (whether with respect to payment of dividends,
redemption payments or rights upon liquidation,
<PAGE>
dissolution or winding up of the affairs of the Corporation) (all of such
equity securities are collectively referred to herein as the "Parity
Securities"), and (iii) rank junior to each other class or series of equity
securities of the Corporation, whether currently issued or issued in the
future, that by its terms ranks senior to the Series A Preferred Stock
(whether with respect to payment of dividends, redemption payments or rights
upon liquidation, dissolution or winding up of the affairs of the Corporation)
(all of such equity securities are collectively referred to herein as the
"Senior Securities"). The respective definitions of Junior Securities, Parity
Securities and Senior Securities shall also include any rights or options
exercisable or exchangeable for or convertible into any of the Junior
Securities, Parity Securities or Senior Securities, as the case may be.
3. Dividends.
(a) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out
of funds legally available for the payment of dividends, cash dividends at the
annual rate of $2.00 per share. Such dividends shall be payable quarterly in
arrears, in equal amounts, on April 1, July 1, October 1 and January 1 of each
year (unless such day is not a Business Day (as defined below), in which event
such dividends shall be payable on the next succeeding Business Day),
commencing July 1, 1998 (each such payment date being a "Dividend Payment
Date" and from the date of issuance until the first Dividend Payment Date and
each such quarterly period thereafter being a "Dividend Period"). Dividends on
shares of Series A Preferred Stock shall be cumulative from the date of issue,
whether or not in any Dividend Period there shall be funds of the Corporation
legally available for the payment of dividends. The amount of dividends
payable for each full Dividend Period shall be computed by dividing the annual
dividend rate by four. The amount of dividends payable on the Series A
Preferred Stock for the initial Dividend Period, or for any other period
shorter or longer than a full Dividend Period, shall be computed on the basis
of a 360-day year of twelve 30-day months. As used herein, the term "Business
Day" means any day except a Saturday, Sunday or day on which banking
institutions are legally authorized to close in the City of New York.
(b) Each dividend shall be payable to the holders of record of shares
of Series A Preferred Stock as they appear on the stock records of the
Corporation at the close of business on such record dates (each, a "Dividend
Payment Record Date"), which shall be not more than 60 days nor less than 10
days preceding the Dividend Payment Date thereof, as shall be fixed by the
Board of Directors. Accrued and unpaid dividends for any past Dividend Periods
may be declared and paid at any time, without reference to any Dividend
Payment Date, to holders of record on such date, not more than 60 days nor
less than 10 days preceding the payment date thereof, as may be fixed by the
Board of Directors. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A
Preferred Stock that may be in arrears.
(c) Except as described in the next succeeding sentence, so long as
any shares of Series A Preferred Stock are outstanding, (i) no dividends shall
be declared or paid or set
3
<PAGE>
apart for payment, or other distribution declared or made, on any Parity
Securities for any period unless the Corporation has paid or contemporaneously
pays or declares and sets apart for payment on the Series A Preferred Stock
all accrued and unpaid dividends for all Dividend Periods terminating on or
prior to the date of payment of such dividends, and (ii) no dividends shall be
declared or paid or set apart for payment, or other distribution declared or
made, on the Series A Preferred Stock for any Dividend Period unless the
Corporation has paid or contemporaneously pays or declares and sets apart for
payment on any Parity Securities all accrued and unpaid dividends for all
dividend payment periods terminating on or prior to the Dividend Payment Date
for such dividends. Unless and until dividends accrued but unpaid in respect
of all past Dividend Periods with respect to the Series A Preferred Stock and
all past dividend periods with respect to any Parity Securities at the time
outstanding shall have been paid in full or a sum sufficient for such payment
is set apart, all dividends declared by the Corporation upon shares of Series
A Preferred Stock and upon all Parity Securities shall be declared ratably in
proportion to the respective amounts of dividends accrued and unpaid on the
Series A Preferred Stock and Parity Securities.
(d) So long as any shares of Series A Preferred Stock are
outstanding, no dividends shall be declared or paid or set apart for payment,
or other distribution declared or made, upon any Junior Securities (other than
dividends or distributions paid in shares of, or options, warrants or rights
to subscribe for or purchase shares of Junior Securities), nor shall any
Junior Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of any employee or director incentive or benefit plans or
arrangements of the Corporation or any subsidiary of the Corporation) for any
consideration (nor shall any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such Junior Securities) by the
Corporation, directly or indirectly (except by conversion into or exchange for
Junior Securities), unless in each case (i) the full cumulative dividends on
all outstanding shares of Series A Preferred Stock and any other Parity
Securities shall have been paid or set apart for payment for all past Dividend
Periods with respect to the Series A Preferred Stock and all past dividend
periods with respect to such Parity Securities and (ii) sufficient funds shall
have been paid or set apart for the payment of the dividend for the current
Dividend Period with respect to the Series A Preferred Stock and for the
current dividend period with respect to such Parity Securities.
(e) The Corporation shall not, directly or indirectly, make any
payment on account of any purchase, redemption, retirement or other
acquisition of any Parity Securities (other than for consideration payable
solely in Junior Securities) unless all accrued and unpaid dividends on the
Series A Preferred Stock for all Dividend Payment Periods ending on or before
such payment for such Parity Securities shall have been paid or declared and
set apart for payment.
(f) If at any time the Corporation issues any Senior Securities and
the Corporation shall have failed to declare and pay or set apart for payment
accrued and unpaid dividends on such Senior Securities, in whole or in part,
then (except to the extent allowed
4
<PAGE>
by the terms of the Senior Securities) no dividends shall be declared or paid
or set apart for payment on the Series A Preferred Stock unless and until all
accrued and unpaid dividends with respect to the Senior Securities, including
the full dividends for the then-current dividend period, shall have been
declared and paid or set apart for payment.
4. Liquidation Preference.
(a) The liquidation preference for the shares of Series A Preferred
Stock shall be $50.00 per share, plus an amount equal to the dividends accrued
and unpaid thereon, whether or not declared, to the payment date (the
"Liquidation Value").
(b) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series
A Preferred Stock (i) shall not be entitled to receive the Liquidation Value
of such shares until payment in full or provision has been made for the
payment in full of all claims of creditors of the Corporation and the
liquidation preferences for all Senior Securities, and (ii) shall be entitled
to receive the Liquidation Value of such shares before any payment or
distribution of any assets of the Corporation shall be made or set apart for
holders of any Junior Securities. Subject to clause (i) above, if the assets
of the Corporation are not sufficient to pay in full the Liquidation Value
payable to the holders of shares of Series A Preferred Stock and the
liquidation preference payable to the holders of any Parity Securities, then
such assets, or the proceeds thereof, shall be distributed among the holders
of shares of Series A Preferred Stock and any such other Parity Securities
ratably in accordance with the Liquidation Value for the Series A Preferred
Stock and the liquidation preference for the Parity Securities, respectively.
Upon payment in full of the Liquidation Value to which the holders of shares
of Series A Preferred Stock are entitled, the holders of shares of Series A
Preferred Stock will not be entitled to any further participation in any
distribution of assets of the Corporation.
(c) Neither a consolidation or merger of the Corporation with or into
any other entity, nor a merger of any other entity with or into the
Corporation, nor a sale or transfer of all or any part of the Corporation's
assets for cash, securities or other property shall be considered a
liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 4.
5
<PAGE>
5. Redemption.
(a) Optional Redemption. The Series A Preferred Stock shall not be
redeemable prior to March 31, 2001. During the period from March 31, 2001
until March 31, 2003, the Corporation may redeem at its option shares of
Series A Preferred Stock in accordance with this Section 5 only if the last
reported sales price of a share of Common Stock in its principal trading
market for any 20 trading days within a period of 30 consecutive trading days
ending on the trading day prior to the date of mailing the notice of
redemption is at least $70.6563 (subject to equitable adjustment in
circumstances giving rise to adjustment of the Conversion Price under Section
7(c)). At any time on or after March 31, 2001, to the extent the Corporation
shall have funds legally available to redeem shares of Series A Preferred
Stock and if permitted by the immediately preceding sentence, the Corporation
may redeem shares of Series A Preferred Stock, in whole or in part, at the
option of the Corporation, at the applicable cash redemption price per share
set forth below for any redemption during the 12- month period beginning on
March 31 of the year indicated:
Year Redemption Price Per Share
---- --------------------------
2001 $51.40
2002 $51.20
2003 $51.00
2004 $50.80
2005 $50.60
2006 $50.40
2007 $50.20
Thereafter $50.00
plus, in each case, an amount equal to the dividends accrued and unpaid
thereon, whether or not declared, up to but not including the redemption date.
From and after March 31, 2008, the Corporation may redeem shares of Series A
Preferred Stock, at any time in whole or in part, at the option of the
Corporation, at a cash redemption price per share of $50.00 plus an amount
equal to the dividends accrued and unpaid thereon, whether or not declared, up
to but not including the redemption date.
(b) Mandatory Redemption. To the extent the Corporation shall have
funds legally available for such payment, on March 31, 2018 (the "Mandatory
Redemption Date"), the Corporation shall redeem all outstanding shares of
Series A Preferred Stock at a redemption price of $50.00 per share in cash,
together with accrued and unpaid dividends thereon, whether or not declared,
up to but not including such redemption date, without interest. If the
Corporation is unable or shall fail to discharge its obligation to redeem all
outstanding shares of Series A Preferred Stock on the Mandatory Redemption
Date (the "Mandatory Redemption Obligation"): (i) dividends on the Series A
Preferred Stock shall continue to accrue, without interest, in accordance with
Section 3, and (ii) the Mandatory Redemption
6
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Obligation shall be discharged as soon thereafter as the Corporation is able
to discharge such Mandatory Redemption Obligation. If and for so long as any
Mandatory Redemption Obligation with respect to the Series A Preferred Stock
shall not be fully discharged on the Mandatory Redemption Date, the
Corporation shall not (x) directly or indirectly, redeem, purchase, or
otherwise acquire any Parity Securities or discharge any mandatory or optional
redemption, sinking fund or other similar obligation in respect of any Parity
Securities (except in connection with a redemption, sinking fund or other
similar obligation to be satisfied pro rata with the Series A Preferred Stock)
or (y) declare or pay or set apart for payment any dividends or other
distributions upon any Junior Securities, or, directly or indirectly,
discharge any mandatory or optional redemption, sinking fund or other similar
obligation in respect of any Junior Securities.
6. Procedures for Redemption.
(a) If fewer than all of the outstanding shares of Series A Preferred
Stock are to be redeemed pursuant to Section 5, the shares shall be redeemed
on a pro rata basis (according to the number of shares of Series A Preferred
Stock held by each holder, with any fractional shares rounded to the nearest
whole share) or in such other manner as the Board of Directors may determine,
as may be prescribed by resolution of the Board of Directors. Notwithstanding
the provisions of Section 5 and this Section 6, unless full cumulative cash
dividends (whether or not declared) on all outstanding shares of Series A
Preferred Stock shall have been paid or contemporaneously are declared and
paid or set apart for payment for all Dividend Periods terminating on or prior
to the applicable redemption date, none of the shares of Series A Preferred
Stock shall be redeemed, and no sum shall be set aside for such redemption,
unless shares of Series A Preferred Stock are redeemed pro rata.
(b) In the event of a redemption of shares of Series A Preferred
Stock pursuant to Section 5, notice of such redemption shall be given by first
class mail, postage prepaid, mailed not less than 15 days nor more than 60
days prior to the redemption date, to each holder of record of the shares to
be redeemed at such holder's address as the same appears on the stock register
of the Corporation; provided that neither the failure to give such notice nor
any defect therein shall affect the validity of the giving of notice for the
redemption of any share of Series A Preferred Stock to be redeemed, except as
to the holder to whom the Corporation has failed to give said notice or except
as to the holder whose notice was defective. Each such notice shall state: (i)
the redemption date; (ii) the number of shares of Series A Preferred Stock to
be redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date. Any notice mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the
notice.
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(c) If a notice of redemption has been given pursuant to Section 6(b)
and if, on or before the redemption date, the funds necessary for such
redemption (including all dividends on the shares of Series A Preferred Stock
to be redeemed that will accrue to but not including the redemption date)
shall have been set aside by the Corporation, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares so
called for redemption, then on the redemption date, notwithstanding that any
certificates for such shares have not been surrendered for cancellation, (i)
dividends shall cease to accrue on the shares of Series A Preferred Stock to
be redeemed, (ii) the holders of such shares shall cease to be stockholders
with respect to those shares, shall have no interest in or claims against the
Corporation by virtue thereof and shall have no voting or other rights with
respect thereto, except the conversion rights provided in Section 7 (in
accordance with Section 6(e)) and the right to receive the monies payable upon
such redemption, without interest thereon, upon surrender (and endorsement, if
required by the Corporation) of their certificates, and (iii) the shares
evidenced thereby shall no longer be outstanding. Subject to applicable
escheat laws, any monies so set aside by the Corporation and unclaimed at the
end of two years from the redemption date shall revert to the general funds of
the Corporation, after which reversion the holders of such shares so called
for redemption shall look only to the general funds of the Corporation for the
payment of the redemption price, without interest. Any interest accrued on
funds so deposited shall belong to the Corporation and be paid thereto from
time to time.
(d) Upon surrender in accordance with the Corporation's notice of
redemption of the certificates for any shares so redeemed (properly endorsed
or assigned for transfer, if the Board of Directors shall so require and the
notice shall so state), such shares shall be redeemed by the Corporation at
the redemption price aforesaid. In case fewer than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(e) If a notice of redemption has been given pursuant to Section 6(b)
and any holder of shares of Series A Preferred Stock shall, prior to the close
of business on the Business Day preceding the redemption date, give written
notice to the Corporation pursuant to Section 7 of the conversion of any or
all of the shares to be redeemed held by the holder (accompanied by a
certificate or certificates for such shares, duly endorsed or assigned to the
Corporation, and any necessary transfer tax payment, as required by Section
7), then such redemption shall not become effective as to such shares to be
converted and such conversion shall become effective as provided in Section 7,
whereupon any funds deposited by the Corporation for the redemption of such
shares shall (subject to any right of the holder of such shares to receive the
dividend payable thereon as provided in Section 7) immediately upon such
conversion be returned to the Corporation or, if then held in trust by the
Corporation, shall automatically and without further corporate action or
notice be discharged from the trust.
7. Conversion.
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(a) Right to Convert.
(i) Subject to the provisions of this Section 7, each holder
of shares of Series A Preferred Stock shall have the right, at any
time and from time to time, at such holder's option, to convert any
or all of such holder's shares of Series A Preferred Stock, in whole
or in part, into fully paid and non-assessable shares of Common Stock
at the conversion price of $56.525 per share of Common Stock, subject
to adjustment as described in Section 7(c) (as adjusted, the
"Conversion Price"). The number of shares of Common Stock into which
a share of the Series A Preferred Stock shall be convertible
(calculated as to each conversion to the nearest 1/1,000,000th of a
share) shall be determined by dividing $50.00 by the Conversion Price
in effect at the time of conversion.
(ii) If shares of Series A Preferred Stock are called for
redemption in accordance with Section 5(a), the right to convert
shares so called for redemption shall terminate at the close of
business on the Business Day immediately preceding the date fixed for
redemption unless the Corporation shall default in making payment of
the amount payable upon such redemption, in which case the conversion
rights for such shares shall continue.
(b) Mechanics of Conversion.
(i) To exercise the conversion right, the holder of shares
of Series A Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares at the office of
the Corporation (or any transfer agent of the Corporation previously
designated by the Corporation to the holders of Series A Preferred
Stock for this purpose) with a written notice of election to convert
completed and signed, specifying the number of shares to be
converted. Unless the shares issuable upon conversion are to be
issued in the same name as the name in which such shares of Series A
Preferred Stock are registered, each share surrendered for conversion
shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or the holder's duly
authorized attorney and an amount sufficient to pay any transfer or
similar tax in accordance with Section 7(b)(vii). As promptly as
practicable after the surrender by the holder of the certificates for
shares of Series A Preferred Stock as aforesaid, the Corporation
shall issue and shall deliver to such holder, or on the holder's
written order to the holder's transferee, a certificate or
certificates for the whole number of shares of Common Stock issuable
upon the conversion of such shares and a check payable in an amount
corresponding to any fractional interest in a share of Common Stock
as provided in Section 7(b)(vii).
(ii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the first Business Day
(the "Conversion Date") on which the certificates for shares of
Series A Preferred Stock shall have been
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surrendered and such notice received by the Corporation as aforesaid.
At such time on the Conversion Date:
(w) the person in whose name or names any
certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have
become the holder of record of the shares of Common Stock
represented thereby at such time;
(x) such shares of Series A Preferred Stock shall
no longer be deemed to be outstanding and all rights of a
holder with respect to such shares surrendered for
conversion shall immediately terminate except the right to
receive the Common Stock and other amounts payable pursuant
to this Section 7;
(y) in lieu of dividends on such Series A Preferred
Stock pursuant to Section 3, such shares of Series A
Preferred Stock shall participate equally and ratably with
the holders of shares of Common Stock in all dividends paid
on the Common Stock; and
(z) the right of the Corporation to redeem such
shares of Series A Preferred Stock shall terminate,
regardless of whether a notice of redemption has been mailed
as aforesaid
All shares of Common Stock delivered upon conversion of the Series A
Preferred Stock will, upon delivery, be duly and validly issued and
fully paid and non-assessable, free of all liens and charges and not
subject to any preemptive rights.
(iii) Holders of shares of Series A Preferred Stock at the
close of business on a Dividend Payment Record Date shall be entitled
to receive the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the conversion thereof
following such Dividend Payment Record Date and prior to such
Dividend Payment Date. However, shares of Series A Preferred Stock
surrendered for conversion during the period between the close of
business on any Dividend Payment Record Date and the opening of
business on the corresponding Dividend Payment Date (except shares
converted after the issuance of a notice of redemption during such
period, which shall be entitled to such dividend on the Dividend
Payment Date) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such Dividend Payment Date;
provided that notwithstanding such surrender of shares for conversion
after such Dividend Payment Record Date, the holders thereof at the
close of business on such Dividend Payment Record Date shall be
entitled to receive the dividend payable on such shares on the
corresponding Dividend Payment Date. A holder of shares of Series A
Preferred Stock on a Dividend Payment Record Date who (or whose
transferee) tenders any such shares for conversion into shares of
Common Stock on such Dividend Payment
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<PAGE>
Date will receive the dividend payable by the Corporation on such
shares of Series A Preferred Stock on such date, and the converting
holder need not include payment of the amount of such dividend upon
surrender of shares of Series A Preferred Stock for conversion.
(iv) Except as provided in clause (iii) above and in Section
7(c), the Corporation shall make no payment or adjustment for accrued
and unpaid dividends on shares of Series A Preferred Stock, whether
or not in arrears, on conversion of such shares or for dividends in
cash on the shares of Common Stock issued upon such conversion.
(v) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, such number
of its authorized but unissued shares of Common Stock as shall be
required for the purpose of effecting conversions of the Series A
Preferred Stock. Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the
Series A Preferred Stock, the Corporation shall comply with all
applicable federal and state laws and regulations which require
action to be taken by the Corporation.
(vi) The Corporation will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issuance
or delivery of shares of Common Stock on conversion of the Series A
Preferred Stock pursuant hereto; provided that the Corporation shall
not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance or delivery of shares of Common
Stock in a name other than that of the holder of the Series A
Preferred Stock to be converted, and no such issuance or delivery
shall be made unless and until the person requesting such issuance or
delivery has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such
tax has been paid.
(vii) In connection with the conversion of any shares of
Series A Preferred Stock, no fractions of shares of Common Stock
shall be issued, but in lieu thereof the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal
to such fractional interest multiplied by the Daily Price (as defined
below) per share of Common Stock on the Conversion Date. In the
absence of a Daily Price, the Board of Directors shall in good faith
determine the current market price on such basis as it considers
appropriate, and such current market price shall be used to calculate
the cash adjustment. As used herein, "Daily Price" means (w) if the
shares of such class of Common Stock are then listed and traded on
the New York Stock Exchange, Inc. ("NYSE"), the closing price on such
day as reported on the NYSE Composite Transactions Tape; (x) if the
shares of such class of Common Stock are not then listed and traded
on the NYSE, the closing price on such day as reported by the
principal national securities exchange on which the shares are listed
and traded; (y) if the shares of such class of Common Stock are not
then listed and
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<PAGE>
traded on any such securities exchange, the last reported sale price
on such day on the National Market of the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ"); or
(z) if the shares of such class of Common Stock are not then traded
on the NASDAQ National Market, the average of the highest reported
bid and lowest reported asked price on such day, as reported by
NASDAQ.
(c) Adjustments to Conversion Price. The Conversion Price shall be
adjusted from time to time as follows:
(i) If, at any time after the date of issuance of the Series
A Preferred Stock, the Corporation shall (A) pay a dividend or make a
distribution on any class of its capital stock in shares of its
Common Stock, (B) subdivide its outstanding shares of Common Stock
into a greater number of shares or (C) combine its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price
in effect immediately prior thereto shall be adjusted as provided
below so that the Conversion Price thereafter shall be determined by
multiplying the Conversion Price at which the shares of Series A
Preferred Stock were theretofore convertible by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action, and the denominator of
which shall be the number of shares of Common Stock outstanding
immediately following such action. Such adjustment shall be made
whenever any event listed above shall occur and shall become
effective retroactively immediately after the record date in the case
of a dividend and immediately after the effective date in the case of
a subdivision or combination.
(ii) If, at any time after the date of issuance of the
Series A Preferred Stock, the Corporation shall issue rights or
warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date for determining
stockholders entitled to receive such rights or warrants) to
subscribe for or purchase shares of Common Stock at a price per share
less than the current market price per share of Common Stock at the
record date therefor (as determined in accordance with the provisions
of Section 7(c)(iv)), the "Current Market Price"), or in case the
Corporation shall issue to all holders of its Common Stock other
securities convertible into or exchangeable for Common Stock for a
consideration per share of Common Stock deliverable upon conversion
or exchange thereof less than the Current Market Price, then the
Conversion Price in effect immediately prior thereto shall be
adjusted as provided below so that the Conversion Price therefor
shall be equal to the price determined by multiplying (A) the
Conversion Price at which shares of Series A Preferred Stock were
theretofore convertible by (B) a fraction of which the numerator
shall be the sum of (1) the number of shares of Common Stock
outstanding on the date of issuance of the convertible or
exchangeable securities, rights or warrants and (2) the number of
additional shares of Common Stock that the aggregate offering price
for the number of shares of
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Common Stock so offered would purchase at the Current Market Price
per share of Common Stock, and of which the denominator shall be the
sum of (1) the number of shares of Common Stock outstanding on the
date of issuance of such convertible or exchangeable securities,
rights or warrants and (2) the number of additional shares of Common
Stock offered for subscription or purchase, or issuable upon such
conversion or exchange. Such adjustment shall be made whenever such
convertible or exchangeable securities, rights or warrants are
issued, and shall become effective immediately after the record date
for the determination of stockholders entitled to receive such
securities. However, upon the expiration of any right or warrant to
purchase Common Stock, the issuance of which resulted in an
adjustment in the Conversion Price pursuant to this Section 7(c)(ii),
if any such right or warrant shall expire and shall not have been
exercised, the Conversion Price shall be recomputed immediately upon
such expiration and effective immediately upon such expiration shall
be increased to the price it would have been (but reflecting any
other adjustments to the Conversion Price made pursuant to the
provisions of this Section 7(c) after the issuance of such rights or
warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights or warrants been made on the basis of
offering for subscription or purchase only that number of shares of
Common Stock actually purchased upon the exercise of such rights or
warrants. No further adjustment shall be made upon exercise of any
right, warrant, convertible security or exchangeable security if any
adjustment shall have been made upon issuance of such security.
(iii) If, at any time after the date of issuance of the
Series A Preferred Stock, the Corporation shall distribute to all
holders of its Common Stock (including any dividend paid in
connection with a consolidation or merger in which the Corporation is
the continuing corporation) any shares of capital stock of the
Corporation or its subsidiaries (other than Common Stock) or
evidences of its indebtedness, cash or other assets (excluding
dividends payable solely in cash that may from time to time be fixed
by the Board of Directors, or dividends or distributions in
connection with the liquidation, dissolution or winding up of the
Corporation) or rights or warrants to subscribe for or purchase any
of its securities or those of its subsidiaries or securities
convertible or exchangeable for Common Stock (excluding those
securities referred to in Section 7(c)(ii)), then in each such case
the Conversion Price in effect immediately prior thereto shall be
adjusted as provided below so that the Conversion Price thereafter
shall be equal to the price determined by multiplying (A) the
Conversion Price in effect on the record date mentioned below by (B)
a fraction, the numerator of which shall be the Current Market Price
per share of Common Stock on the record date mentioned below less the
then fair market value (as determined by the Board of Directors,
whose good faith determination shall be conclusive) as of such record
date of the assets, evidences of indebtedness or securities so paid
with respect to one share of Common Stock, and the denominator of
which shall be the Current Market Price per share of Common Stock on
such record date; provided, however, that in the event the then fair
market
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<PAGE>
value (as so determined) so paid with respect to one share of Common
Stock is equal to or greater than the Current Market Price per share
of Common Stock on the record date mentioned above, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
holder of shares of Series A Preferred Stock shall have the right to
receive the amount and kind of assets, evidences of indebtedness, or
securities such holder would have received had such holder converted
each such share of Series A Preferred Stock immediately prior to the
record date for such dividend. Such adjustment shall be made whenever
any such payment is made, and shall become effective retroactively
immediately after the record date for the determination of
stockholders entitled to receive the payment.
(iv) For the purpose of any computation under Sections
7(c)(ii) or 7(c)(iii), the Current Market Price per share of Common
Stock at any date shall be deemed to be the average Daily Price for
the 30 consecutive trading days commencing 35 trading days before the
day in question.
(v) No adjustment in the Conversion Price shall be required
unless the adjustment would require an increase or decrease of at
least 1% in the Conversion Price then in effect; provided, however,
that any adjustments that by reason of this Section 7(c)(v) are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section
7(c) shall be made to the nearest cent.
(vi) In the event that, at any time as a result of an
adjustment made pursuant to Section 7(c)(i) or 7(c)(iii), the holder
of any shares of Series A Preferred Stock thereafter surrendered for
conversion shall become entitled to receive any shares of the
Corporation or its subsidiaries, other than shares of the Common
Stock, thereafter the number of such other shares so receivable upon
conversion of any share of Series A Preferred Stock shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Common Stock contained in Sections 7(c)(i) through 7(c)(v), and the
other provisions of this Section 7 with respect to the Common Stock
shall apply on like terms to any such other shares.
(vii) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly file with the transfer agent
for the Series A Preferred Stock a certificate of an officer of the
Corporation setting forth the Conversion Price after the adjustment
and setting forth a brief statement of the facts requiring such
adjustment and a computation thereof. The certificate shall be prima
facie evidence of the correctness of the adjustment. The Corporation
shall promptly cause a notice of the adjusted Conversion Price to be
mailed to each registered holder of shares of Series A Preferred
Stock.
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(viii) In case of any reclassification of the Common Stock,
any consolidation of the Corporation with, or merger of the
Corporation into, any other entity, any merger of another entity into
the Corporation (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Corporation), any sale or transfer of
all or substantially all of the assets of the Corporation or any
compulsory share exchange pursuant to which share exchange the Common
Stock is converted into other securities, cash or other property,
then lawful provision shall be made as part of the terms of such
transaction whereby the holder of each share of Series A Preferred
Stock then outstanding shall have the right thereafter, during the
period such share shall be convertible, to convert such share only
into the kind and amount of securities, cash and other property
receivable upon the reclassification, consolidation, merger, sale,
transfer or share exchange by a holder of the number of shares of
Common Stock of the Corporation into which a share of Series A
Preferred Stock would have been convertible immediately prior to the
reclassification, consolidation, merger, sale, transfer or share
exchange. The Corporation, the person formed by the consolidation or
resulting from the merger or which acquires such assets or which
acquires the Corporation's shares, as the case may be, shall make
provisions in its certificate or articles of incorporation or other
constituent documents to establish such rights and to ensure that the
dividend, voting and other rights of the holders of Series A
Preferred Stock established herein are unchanged, except as permitted
by Section 9 and applicable law. The certificate or articles of
incorporation or other constituent documents shall provide for
adjustments, which, for events subsequent to the effective date of
the certificate or articles of incorporation or other constituent
documents, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The provisions of this
Section 7(c)(viii) shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
(d) Optional Reduction in Conversion Price. The Corporation may at
its option reduce the Conversion Price from time to time by any amount for any
period of time if the period is at least 20 days and if the reduction is
irrevocable during the period. Whenever the Conversion Price is so reduced,
the Corporation shall mail to holders of record of the Series A Preferred
Stock a notice of the reduction at least 15 days before the date the reduced
Conversion Price takes effect, stating the reduced Conversion Price and the
period it will be in effect. A voluntary reduction of the Conversion Price
does not change or adjust the Conversion Price otherwise in effect for
purposes of Section 7(c).
8. Status of Shares. All shares of Series A Preferred Stock that are
at any time redeemed pursuant to Section 5 or converted pursuant to Section 7
and all shares of Series A Preferred Stock that are otherwise reacquired by
the Corporation shall (upon compliance with any applicable provisions of the
laws of the State of Delaware) have the status of authorized but unissued
shares of Preferred Stock, without designation as to series, subject to
reissuance by the Board of Directors as shares of any one or more other
series.
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9. Voting Rights.
(a) The holders of record of shares of Series A Preferred Stock shall
not be entitled to any voting rights except as hereinafter provided in this
Section 9 or as otherwise provided by law.
(b) The holders of the shares of Series A Preferred Stock (i) shall
be entitled to vote with the holders of the Common Stock on all matters
submitted for a vote of holders of Common Stock (voting together with the
holders of Common Stock as one class), (ii) shall be entitled to a number of
votes equal to the number of votes to which shares of Common Stock issuable
upon conversion of such shares of Series A Preferred Stock would have been
entitled if such shares of Common Stock had been outstanding at the time of
the applicable vote and related record date and (iii) shall be entitled to
notice of any stockholders' meeting in accordance with the Certificate of
Incorporation and Bylaws of the Corporation.
(c) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Series A Preferred Stock have not been paid in
full or if the Corporation shall have failed to discharge its Mandatory
Redemption Obligation on or after the Redemption Date, the number of directors
then constituting the Board of Directors shall be increased by two and the
holders of shares of Series A Preferred Stock, together with the holders of
shares of every other series of preferred stock upon which like rights to vote
for the election of two additional directors have been conferred and are
exercisable (resulting from either the failure to pay dividends or the failure
to redeem) (any such other series is referred to as the "Preferred Shares"),
voting as a single class regardless of series, shall be entitled to elect the
two additional directors to serve on the Board of Directors at any annual
meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Series A Preferred Stock and the
Preferred Shares called as hereinafter provided. Whenever all arrears in
dividends on the Series A Preferred Stock and the Preferred Shares then
outstanding shall have been paid and dividends thereon for the current
quarterly dividend period shall have been paid or declared and set apart for
payment, or the Corporation shall have fulfilled its Mandatory Redemption
Obligation, as the case may be, then the right of the holders of the Series A
Preferred Stock and the Preferred Shares to elect such additional two
directors shall cease (but subject always to the same provisions for the
vesting of such voting rights in the case of any similar future arrearages in
six quarterly dividends or failure to fulfill any Mandatory Redemption
Obligation), and the terms of office of all persons elected as directors by
the holders of the Series A Preferred Stock and the Preferred Shares shall
forthwith terminate and the number of the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of shares of Series A Preferred Stock and the Preferred Shares,
the secretary of the Corporation may, and upon the written request of any
holder of Series A Preferred Stock (addressed to the secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Series A Preferred Stock and of the Preferred Shares for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of
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<PAGE>
the stockholders or as required by law. If any such special meeting required
to be called as above provided shall not be called by the secretary within 20
days after receipt of any such request, then any holder of shares of Series A
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock records of the Corporation. The
directors elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Series A
Preferred Stock and the Preferred Shares, a successor shall be elected by the
Board of Directors, upon the nomination of the then- remaining director
elected by the holders of the Series A Preferred Stock and the Preferred
Shares or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(d) So long as any shares of Series A Preferred Stock are
outstanding:
(i) the Corporation shall not, without the written consent
or affirmative vote at a meeting called for that purpose by holders
of at least 66-2/3% of the outstanding shares of Series A Preferred
Stock, voting as a single class, amend, alter or repeal any provision
of the Corporation's Certificate of Incorporation (by merger or
otherwise) so as to materially and adversely affect the preferences,
rights or powers of the Series A Preferred Stock; provided that any
such amendment, alteration or repeal to create, authorize or issue
any Junior Securities or Parity Securities, or any security
convertible into, or exchangeable or exercisable for, shares of
Junior Securities or Parity Securities, shall not be deemed to have
any such material adverse effect;
(ii) the Corporation shall not, without the written consent
or affirmative vote at a meeting called for that purpose of at least
66-2/3% of the votes entitled to be cast by the holders of shares of
Series A Preferred Stock and of all other series of Preferred Stock
upon which like rights to vote upon the matters specified herein have
been conferred and are exercisable, voting as a single class
regardless of series, create, authorize or issue any Senior
Securities, or any security convertible into, or exchangeable or
exercisable for, shares of Senior Securities; and
(iii) the Corporation shall not, without the written consent
or affirmative vote at a meeting called for that purpose of at least
a majority of the votes entitled to be cast by the holders of shares
of Series A Preferred Stock and of all other series of Preferred
Stock upon which like rights to vote upon the matters specified
herein have been conferred and are exercisable, voting as a single
class regardless of series, create, authorize or issue any new class
of Parity Securities; provided that this clause (iii) shall not limit
the right of the Corporation to issue Parity Securities in connection
with any merger in which the Corporation is the surviving entity;
17
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provided that no such consent or vote of the holders of Series A Preferred
Stock shall be required if at or prior to the time when such amendment,
alteration or repeal is to take effect, or when the issuance of any such
securities is to be made, as the case may be, all shares of Series A Preferred
Stock at the time outstanding shall have been called for redemption by the
Corporation and the funds necessary for such redemption shall have been set
aside in accordance with Sections 5 and 6.
(e) The consent or votes required in Sections 9(c) and 9(d) shall be
in addition to any approval of stockholders of the Corporation which may be
required by law or pursuant to any provision of the Corporation's Certificate
of Incorporation or Bylaws, which approval shall be obtained by vote of the
stockholders of the Corporation in the manner provided in Section 9(b).
10. No Other Rights.
(a) The shares of Series A Preferred Stock shall not have any
relative, participating, optional or other special rights and powers except as
set forth herein or as may be required by law.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be subject
to the payment of the corporate debts to any extent whatever except as
otherwise provided by law.
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;
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; and
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
18
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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.
EIGHTH: Any property of the Corporation constituting less than all of
its assets including goodwill and its corporate franchise, deemed by the Board
of Directors to be not essential to the conduct of the business of the
Corporation, may be sold, leased, exchanged or otherwise disposed of by
authority of the Board of Directors. All of the property and assets of the
Corporation including its goodwill and its corporate franchises, may be sold,
leased or exchanged upon such terms and conditions and for such consideration
(which may be in whole or in part shares of stock and/or other securities of
any other corporation or corporations) as the Board of Directors shall deem
expedient and for the best interests of the Corporation, when and as
authorized by the affirmative vote of the holders of a majority of the voting
power of the then outstanding Voting Stock given at a stockholders' meeting
duly called for that purpose upon at least 20 days notice containing notice of
the proposed sale, lease or exchange.
NINTH: A director or officer of the Corporation shall not be
disqualified by his office from dealing or contracting with the Corporation
either as a vendor, purchaser or otherwise, nor shall any transaction or
contract of the Corporation be void or voidable by reason of the fact that any
director or officer or any firm of which any director or officer is a member
or any corporation of which any director or officer is a stockholder, officer
or director, is in any way interested in such transaction or contract,
provided that such transaction or contract is or shall be authorized, ratified
or approved either (1) by a vote of a majority of a quorum of the Board of
Directors or of a committee thereof, without counting in such majority any
director so interested (although any director so interested may be included in
such quorum), or (2) by a majority of a quorum of the stockholders entitled to
vote at any meeting. No director or officer shall be liable to account to the
Corporation for any profits realized from any such transaction or contract
authorized, ratified or approved as aforesaid by reason of the fact that he,
or any firm of which he is a member or any corporation of which he is a
stockholder, officer or director, was interested in such transaction or
contract. Nothing herein contained shall create liability in the events above
described or prevent the authorization, ratification or approval of such
contracts in any other manner permitted by law.
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TENTH: Any contract, transaction or act of the Corporation or of the
Board of Directors which shall be approved or ratified by a majority of a
quorum of the stockholders entitled to vote at any meeting shall be as valid
and binding as though approved or ratified by every stockholder of the
Corporation; but any failure of the stockholders to approve or ratify such
contract, transaction or act, when and if submitted, shall not be deemed in
any way to invalidate the same or to deprive the Corporation, its directors or
officers of their right to proceed with such contract, transaction or act.
ELEVENTH: Each person who is or was or has agreed to become a
director or officer of the Corporation, and each such person who is or was
serving or who has agreed to serve at the request of the Board of Directors or
an officer of the Corporation as an employee or agent of the Corporation or as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans (including the heirs, executors, administrators or
estate of such person), shall be indemnified by the Corporation, in accordance
with the by-laws of the Corporation, to the fullest extent permitted from time
to time by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted prior to such
amendment) or any other applicable laws as presently or hereafter in effect.
Without limiting the generality or the effect of the foregoing, the
Corporation may enter into one or more agreements with any person which
provide for indemnification greater than or different from that provided in
this ARTICLE ELEVENTH. Any amendment or repeal of this ARTICLE ELEVENTH shall
not adversely affect any right or protection existing hereunder in respect of
any act or omission occurring prior to such amendment or repeal.
TWELFTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (1) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (3) under Section 174 of the General Corporation
Law of the State of Delaware, or (4) for any transaction from which the
director derived an improper personal benefit. Any amendment or repeal of this
ARTICLE TWELFTH shall not adversely affect any right or protection of a
director of the Corporation existing hereunder in respect of any act or
omission occurring prior to such amendment or repeal.
THIRTEENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for this corporation
under
20
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Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of
this corporation, as the case may be, to be summoned in such manner as the
said court directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders,
of this corporation, as the case may be, and also on this corporation.
FOURTEENTH: Meetings of stockholders and directors may be held within
or without the State of Delaware, as the by-laws may provide. The books of
account of the Corporation may be kept (subject to any provision contained in
the statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the by-laws of
the Corporation. Elections of directors need not be by written ballot unless
the by-laws of the Corporation shall so provide.
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, 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 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: Each director, 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
hold office until a successor is elected at the next succeeding annual meeting
of stockholders and qualified or until such director's earlier resignation or
removal. Regardless of the foregoing sentence, in the case of directors
designated as Class I directors elected at the annual meeting of stockholders
held in 1999, such directors shall hold office until a successor is elected at
the annual meeting of stockholders held in 2002 and qualified or until such
director's earlier resignation or removal, and in the case of directors
designated as Class III directors prior to the annual meeting of stockholders
held in 1999, such directors shall hold office until a successor is elected at
the annual meeting of stockholders held in 2001 and qualified or until such
director's earlier resignation or removal.
SEVENTEENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of incorporation,
in the manner now or
21
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hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
EXHIBIT 3.3
Amendments to By-laws of Sealed Air Corporation (the "Corporation")
Effective May 21, 1999
Section 2.05 of the Corporation's By-laws is
amended to read in its entirety as follows:
"Section 2.05. Special Meetings. Special meetings
of the stockholders may be called by the chairman of the
board, by the chief executive officer or by resolution of
the Board of Directors and, subject to the procedures set
forth in this section, shall be called by the chief
executive officer or the secretary at the request in
writing of stockholders owning a majority of the voting
power of the then outstanding Voting Stock. Any such
resolution or request shall state the purpose or purposes
of the proposed meeting. Such meeting shall be held at
such time and date as may be fixed by the Board of
Directors. The Board of Directors may postpone fixing the
time and date of a special meeting to be held at the
request of stockholders in order to allow the secretary to
determine the validity of such request, provided, that if
such request is determined to be valid, then the Board of
Directors shall fix the date of such special meeting to be
no later than 90 days after such determination. For the
purposes of these By-laws, the term "Voting Stock" shall
have the meaning of such term set forth in the Certificate
of Incorporation or, if not defined therein, "Voting
Stock" shall mean the outstanding shares of capital stock
of the Corporation entitled to vote generally in the
election of directors."
Section 2.12 is added to the Corporation's By-laws:
"Section 2.12. Notice of Stockholder Nomination
and Stockholder Business. At an annual meeting of the
stockholders, only such persons who are nominated in
accordance with the procedures set forth in this section
shall be eligible to stand for election as directors and
only such business shall be conducted as shall have been
brought before the meeting in accordance with the
procedures set forth in these By-laws. Nominations of
persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered
by the stockholders at an annual meeting of stockholders
may be made (i) pursuant to the Corporation's notice of
meeting, including matters covered by Rule 14a-8 under the
Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), (ii) by or at the direction of the Board
of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of
giving of notice by the stockholder as
<PAGE>
2
provided in this section, who is entitled to vote at the
meeting, and who complies with the notice provision set
forth in this section. A notice of the intent of a
stockholder to make a nomination or to bring any other
matter before an annual meeting must be made in writing
and received by the secretary of the Corporation no
earlier than the 119th day and not later than the close of
business on the 45th day prior to the first anniversary of
the date of mailing of the Corporation's proxy statement
for the prior year's annual meeting. However, if the date
of the annual meeting has changed by more than 30 days
from the date it was held in the prior year or if the
Corporation did not hold an annual meeting in the prior
year, then such notice must be received a reasonable time
before the Corporation mails its proxy statement for the
annual meeting. Every such notice by a stockholder shall
set forth (i) the name and address of such stockholder as
they appear on the Corporation's books and the class and
number of shares of the Corporation's Voting Stock that
are owned beneficially and of record by such stockholder,
(ii) a representation that the stockholder is a holder of
the Corporation's Voting Stock and intends to appear in
person or by proxy at the meeting to make the nomination
or bring up the matter specified in the notice; (iii) with
respect to notice of an intent to make a nomination, a
description of all arrangements or understandings among
the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the
stockholder, and such other information regarding each
nominee proposed by such stockholder as would have been
required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission had each nominee been nominated by the Board of
Directors of the Corporation; and (iv) with respect to
notice of an intent to bring up any other matter, a
description of the matter, the reasons for conducting such
business at the meeting and any material interest of the
stockholder in the matter. Notice of intent to make a
nomination shall be accompanied by the written consent of
each nominee to be named in a proxy statement as a nominee
and to serve as director of the Corporation if so elected.
Except as otherwise provided by law or by the Certificate
of Incorporation, the chairman of the meeting shall have
the power and authority to determine whether a nomination
or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance
with the procedures set forth in this By-law and whether
such matter is an appropriate subject for stockholder
action under applicable law, and, if it was not, to
declare that such proposal or nomination shall be
disregarded. Notwithstanding the foregoing provisions of
this section, a stockholder shall also comply with all
applicable requirements of the Exchange Act and the rules
and regulations thereunder with respect to the matters set
forth in this section. Nothing in this section shall be
deemed to
<PAGE>
3
affect any rights of stockholders to request inclusion of
proposals in the Corporation's proxy statement in
accordance with Rule 14a-8 under the Exchange Act or the
holders of any series of preferred stock to elect
directors under circumstances specified in the Certificate
of Incorporation.
The Corporation elects to be governed by paragraph (2) of
Section 141(c) of the Delaware General Corporation Law, and the
first sentence of Section 3.11 of the Corporation's By-laws is
deleted, and replaced by the following:
"The Board of Directors may, by resolution adopted by a
majority of the whole Board of Directors, designate one or
more committees, each committee to consist of two or more
of the directors of the Corporation. All committees may
authorize the seal of the Corporation to be affixed to all
papers which may require it. To the extent provided in any
resolution or by these By-laws, subject to any limitations
set forth under the laws of the State of Delaware and the
Certificate of Incorporation, any such committee shall
have and may exercise any of the powers and authority of
the Board of Directors in the management of the business
and affairs of the Corporation."
Section 6.06 of the Corporation's By-laws is added and
former Section 6.06 of the By-laws is renumbered as Section 6.07,
with such new Sections 6.06 and 6.07 to read in their entirety as
follows:
"Section 6.06. Record Date for Consents. In order
that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without
a meeting, the Board of Directors may fix, in advance, a
record date, which record date shall not be more than ten
days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors. Any
stockholder of record seeking to have the stockholders
authorize or take corporate action by written consent
shall, by written notice to the secretary, request the
Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten
days after the date on which such request is received,
adopt a resolution fixing the record date. If no record
date has been fixed by the Board of Directors within ten
days after the receipt of such request and no prior action
by the Board of Directors is required by applicable law,
then the record date shall be the first date on which a
signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by
delivery to its headquarters office to the attention of
the secretary. Delivery shall be by hand or certified or
registered mail, return receipt requested. If no record
date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by applicable
law, the record date for determining
<PAGE>
4
stockholders entitled to consent shall be at the close of
business on the date on which the Board of Directors
adopts the resolution taking such prior action. The Board
of Directors may postpone action by written consent in
order to allow the secretary to conduct a reasonable and
prompt investigation to ascertain the legal sufficiency of
the consents. The secretary may designate an independent
inspector of election to conduct such investigation."
"Section 6.07. Record Dates. In order that the
Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose
of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more
than sixty or less than ten days before the date of such
meeting, and not more than sixty days prior to any other
action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record
date for the adjourned meeting."
EXHIBIT 3.4
AMENDED AND RESTATED BY-LAWS
OF
SEALED AIR CORPORATION
As amended May 21, 1999
ARTICLE 1
OFFICES
SECTION 1.01. Registered Office. The registered office of the
Corporation shall be in Wilmington, Delaware.
SECTION 1.02. Other Offices. The Corporation may also have offices at
such other places within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Place. Meetings of the stockholders shall be held at
such place either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2.02. Annual Meetings. Annual meetings of stockholders shall,
unless otherwise provided by the Board of Directors, be held on the third
Friday in May each year if not a legal holiday, and if a legal holiday, then
on the next full business day following, at 11:00 A.M., at which the
stockholders shall elect directors, vote upon the ratification of the
selection of the independent auditors selected for the Corporation for the
then current fiscal year of the Corporation, and transact such other business
as may properly be brought before the meeting.
SECTION 2.03. Notice of Annual Meetings. Written notice of the annual
meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten nor more than sixty
days before the date of the meeting.
SECTION 2.04. List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make or cause to be prepared
and made, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order with the address of and the number of voting shares
registered in the name of each. Such list shall be open for ten days prior to
the meeting to the examination of any stockholders, for any purpose germane to
the meeting, during ordinary business hours, either at a place within the city
<PAGE>
where the meeting is to be held, which place shall be specified in the notice
of meeting, or, if not so specified, at the place where the meeting is to be
held, and shall be produced and kept at the time and place of said meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 2.05. Special Meetings. Special meetings of the stockholders
may be called by the chairman of the board, by the chief executive officer or
by resolution of the Board of Directors and, subject to the procedures set
forth in this section, shall be called by the chief executive officer or the
secretary at the request in writing of stockholders owning a majority of the
voting power of the then outstanding Voting Stock. Any such resolution or
request shall state the purpose or purposes of the proposed meeting. Such
meeting shall be held at such time and date as may be fixed by the Board of
Directors. The Board of Directors may postpone fixing the time and date of a
special meeting to be held at the request of stockholders in order to allow
the secretary to determine the validity of such request, provided, that if
such request is determined to be valid, then the Board of Directors shall fix
the date of such special meeting to be no later than 90 days after such
determination. For the purposes of these By-laws, the term "Voting Stock"
shall have the meaning of such term set forth in the Certificate of
Incorporation or, if not defined therein, "Voting Stock" shall mean the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors."
SECTION 2.06. Notice of Special Meetings. Written notice of a special
meeting of stockholders, stating the place, date, hour and purpose thereof,
shall be given by the secretary to each stockholder entitled to vote thereat,
not less than ten nor more than sixty days before the date fixed for the
meeting.
SECTION 2.07. Business Transacted. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
SECTION 2.08. Quorum. The holders of a majority of the voting power
of the then outstanding Voting Stock, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, so long as the adjournment is not for more than thirty days
and a new record date is not fixed for the adjourned meeting, until a quorum
shall be present or represented. If a quorum shall be present or represented
at such adjourned meeting, any business may be transacted which might have
been transacted at the original meeting. When specified business is to be
voted on by a class or series of stock voting as a class, the holders of a
majority of the voting power of the shares of such class or series shall
constitute a quorum of such class or series for the transaction of such
business.
2
<PAGE>
SECTION 2.09. Vote Required. When a quorum is present at any meeting,
the vote of the holders of a majority of the voting power of the Voting Stock
present in person or represented by proxy shall decide any questions brought
before such meeting, except as otherwise provided by statute or the
Certificate of Incorporation.
SECTION 2.10. Proxies, Etc. Except as otherwise provided by statute
or the Certificate of Incorporation, each stockholder shall at every meeting
of the stockholders be entitled to one vote in person or by proxy for each
share of the capital stock having voting power held by such stockholder, but
no proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. No proxy or power of attorney to vote
shall be used to vote at a meeting of the stockholders unless it shall have
been filed with the secretary of the meeting when required by the inspectors
of election.
SECTION 2.11. Inspectors of Election. In advance of any meeting of
the stockholders, the Board of Directors or the presiding officer of such
meeting shall appoint two or more inspectors of election to act at such
meeting or at any adjournments thereof and make a written report thereof. One
or more persons may also be designated by the Board of Directors or such
presiding officer as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the presiding officer of such meeting shall appoint one or more
inspectors to act at such meeting. No director or nominee for the office of
director at such meeting shall be appointed an inspector of election. Each
inspector, before entering on the discharge of the inspector's duties, shall
first take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of such
person's ability. The inspectors of election shall, in accordance with the
requirements of the Delaware General Corporation Law, (i) ascertain the number
of shares outstanding and the voting power of each, (ii) determine the shares
represented at the meeting and the validity of proxies and ballots, (iii)
count all votes and ballots, (iv) determine and retain for a reasonable period
and file with the secretary of the meeting a record of the disposition of any
challenges made to any determination by the inspectors, and (v) make and file
with the secretary of the meeting a certificate of their determination of the
number of shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.
SECTION 2.12. Notice of Stockholder Nomination and Stockholder
Business. At an annual meeting of the stockholders, only such persons who are
nominated in accordance with the procedures set forth in this section shall be
eligible to stand for election as directors and only such business shall be
conducted as shall have been brought before the meeting in accordance with the
procedures set forth in these By-laws. Nominations of persons for election to
the Board of Directors of the Corporation and the proposal of business to be
considered by the stockholders at an annual meeting of stockholders may be
made (i) pursuant to the Corporation's notice of meeting, including
3
<PAGE>
matters covered by Rule 14a-8 under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of notice by the stockholder as provided in
this section, who is entitled to vote at the meeting, and who complies with
the notice provision set forth in this section. A notice of the intent of a
stockholder to make a nomination or to bring any other matter before an annual
meeting must be made in writing and received by the secretary of the
Corporation no earlier than the 119th day and not later than the close of
business on the 45th day prior to the first anniversary of the date of mailing
of the Corporation's proxy statement for the prior year's annual meeting.
However, if the date of the annual meeting has changed by more than 30 days
from the date it was held in the prior year or if the Corporation did not hold
an annual meeting in the prior year, then such notice must be received a
reasonable time before the Corporation mails its proxy statement for the
annual meeting. Every such notice by a stockholder shall set forth (i) the
name and address of such stockholder as they appear on the Corporation's books
and the class and number of shares of the Corporation's Voting Stock that are
owned beneficially and of record by such stockholder, (ii) a representation
that the stockholder is a holder of the Corporation's Voting Stock and intends
to appear in person or by proxy at the meeting to make the nomination or bring
up the matter specified in the notice; (iii) with respect to notice of an
intent to make a nomination, a description of all arrangements or
understandings among the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, and such other information
regarding each nominee proposed by such stockholder as would have been
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had each nominee been nominated by
the Board of Directors of the Corporation; and (iv) with respect to notice of
an intent to bring up any other matter, a description of the matter, the
reasons for conducting such business at the meeting and any material interest
of the stockholder in the matter. Notice of intent to make a nomination shall
be accompanied by the written consent of each nominee to be named in a proxy
statement as a nominee and to serve as director of the Corporation if so
elected. Except as otherwise provided by law or by the Certificate of
Incorporation, the chairman of the meeting shall have the power and authority
to determine whether a nomination or any business proposed to be brought
before the meeting was made or proposed, as the case may be, in accordance
with the procedures set forth in this By-law and whether such matter is an
appropriate subject for stockholder action under applicable law, and, if it
was not, to declare that such proposal or nomination shall be disregarded.
Notwithstanding the foregoing provisions of this section, a stockholder shall
also comply with all applicable requirements of the Exchange Act and the rules
and regulations thereunder with respect to the matters set forth in this
section. Nothing in this section shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement in accordance with Rule 14a-8 under the Exchange Act or the holders
of any series of preferred stock to elect directors under circumstances
specified in the Certificate of Incorporation.
4
<PAGE>
ARTICLE 3
DIRECTORS
SECTION 3.01. Number. Subject to the rights of the holders of any
series or class of stock to elect directors under specified circumstances as
provided by the Certificate of Incorporation, the number of directors which
shall constitute the whole Board of Directors shall be fixed from time to time
by resolution of the Board of Directors, but no decrease in the number of
directors effected by any such resolution shall change the term of any
director in office at the time that any such resolution is adopted. The
directors shall be elected at the annual meeting of the stockholders, except
as otherwise provided by statute, the Certificate of Incorporation or Section
3.02 of these By-laws, and each director shall hold office until a successor
is elected and qualified or until such director's earlier resignation or
removal. Directors need not be stockholders.
SECTION 3.02. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and, except as otherwise provided by
statute or the Certificate of Incorporation, each of the directors so chosen
shall hold office until the next annual election and until a successor is
elected and qualified or until such director's earlier resignation or removal.
SECTION 3.03. Authority. The business of the Corporation shall be
managed by or under the direction of its Board of Directors, which shall
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute, by the Certificate of Incorporation or by these
By-laws directed or required to be exercised or done by the stockholders or
are not by these By-laws or by resolution of the Board of Directors or a
committee thereof, in either case not inconsistent with the statutes, the
Certificate of Incorporation or these By-laws, authorized or directed to be
done by the officers of the Corporation.
SECTION 3.04. Place of Meeting. The Board of Directors of the
Corporation or any committee thereof may hold meetings, both regular and
special, either within or without the State of Delaware.
SECTION 3.05. Annual Meeting. A regular meeting of the Board of
Directors shall be held immediately following the adjournment of the annual
meeting of stockholders. No notice of such meeting shall be necessary to the
directors in order legally to constitute the meeting, provided a quorum be
present. In the event such meeting is not so held, the meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.
5
<PAGE>
SECTION 3.06. Regular Meetings. Except as provided in Section 3.05,
regular meetings of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by the Board
of Directors.
SECTION 3.07. Special Meetings. Special meetings of the Board of
Directors may be called by the chairman of the board, the chief executive
officer or the president and shall be called by the president or the secretary
on the written request of at least two directors. Notice of special meetings
of the Board of Directors shall be given to each director at least three
calendar days before the meeting if by mail or at least the calendar day
before the meeting if given in person or by telephone, facsimile, telegraph,
telex or similar means of electronic transmission. The notice need not specify
the business to be transacted.
SECTION 3.08. Emergency Meetings. In the event of an emergency which
in the judgment of the chairman of the board, the chief executive officer or
the president requires immediate action, a special meeting may be convened
without notice, consisting of those directors who are immediately available in
person or by telephone and can be joined in the meeting in person or by
conference telephone. The actions taken at such a meeting shall be valid if at
least a quorum of the directors participates either personally or by
conference telephone.
SECTION 3.09. Quorum; Vote Required. At meetings of the Board of
Directors, a majority of the directors at the time in office shall constitute
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.
SECTION 3.10. Organization. The Board of Directors may elect one of
its members to be chairman of the board and may fill any vacancy in the
position of chairman of the board at such time and in such manner as the Board
of Directors shall determine. The chairman of the board may but need not be an
officer of or employed in an executive or other capacity by the Corporation.
The chairman of the board shall preside at meetings of the Board of Directors
and lead the Board of Directors in fulfilling its responsibilities as defined
in Section 3.03. In the absence of the chairman of the board or if there
should be no chairman of the board, the chief executive officer shall preside
at meetings of the Board of Directors.
SECTION 3.11. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation. All committees may authorize the seal of the Corporation to be
affixed to all papers which may require it. To the extent provided in any
resolution or by these By-laws, subject to any limitations
6
<PAGE>
set forth under the laws of the State of Delaware and the Certificate of
Incorporation, any such committee shall have and may exercise any of the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation. 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. Unless the Board of Directors designates
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 of such committee. At meetings of any such
committee, a majority of the members or alternate members of such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of members or alternate members present at any meeting at which there
is a quorum shall be the act of the committee.
SECTION 3.12. Minutes of Committee Meetings. The committees shall
keep regular minutes of their proceedings and, when requested to do so by the
Board of Directors, shall report the same to the Board of Directors.
SECTION 3.13. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto
is signed by all members of the Board of Directors or of such committee, as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
SECTION 3.14. Participation by Conference Telephone. The members of
the Board of Directors or any committee thereof may participate in a meeting
of the Board of Directors or such committee by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
SECTION 3.15. Compensation of Directors. The directors may be paid
their expenses of attendance at each meeting of the Board of Directors or of
any special or standing committee thereof. The Board of Directors may
establish by resolution from time to time the fees to be paid to each director
who is not an officer or employee of the Corporation or any of its
subsidiaries for serving as a director of the Corporation, for serving on any
special or standing committee of the Board of Directors, and for attending
meetings of the Board of Directors or of any special or standing committee
thereof. No such payment shall preclude any such director from serving the
Corporation in any other capacity and receiving compensation therefor.
7
<PAGE>
ARTICLE 4
NOTICES
SECTION 4.01. Giving of Notice. Notices to directors and stockholders
mailed to them at their addresses appearing on the books of the Corporation
shall be deemed to be given at the time when deposited in the United States
mail.
SECTION 4.02. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting except when
the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE 5
OFFICERS
SECTION 5.01. Selection of Officers. The officers of the Corporation
shall be chosen by the Board of Directors at its first meeting after each
annual meeting of stockholders and shall be a chief executive officer, who
shall be a director, a president, one or more vice presidents and a secretary.
Any number of offices may be held by the same person.
SECTION 5.02. Other Officers. The Board of Directors may appoint such
other officers, assistant officers and agents as it desires who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
SECTION 5.03. Term of Office, Etc. The officers of the Corporation
shall hold office at the pleasure of the Board of Directors. Each officer
shall hold office until a successor is elected and qualified or until such
officer's earlier resignation or removal. Any officer may resign at any time
upon written notice to the Corporation. Any officer elected or appointed by
the Board of Directors may be removed at any time by the Board of Directors.
Any vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.
SECTION 5.04. Chief Executive Officer. The chief executive officer of
the Corporation shall preside at all meetings of the stockholders, shall have
the responsibility for the general and active management and control of the
affairs and business of the
8
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Corporation, shall perform all duties and have all powers which are commonly
incident to the office of chief executive or which are delegated to the chief
executive officer by the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The chief
executive officer shall have the authority to sign all certificates of stock,
bonds, deeds, contracts and other instruments of the Corporation that are
authorized and shall have general supervision and direction of all of the
other officers and agents of the Corporation.
SECTION 5.05. President. The president, who may also be the chief
executive officer of the Corporation, shall perform all duties and have all
powers which are commonly incident to the office of president or which are
delegated to the president by the Board of Directors, and shall see that all
orders and resolutions of the Board of Directors are carried into effect. In
the absence or disability of the chief executive officer, the president shall
exercise perform the duties and exercise the powers of the chief executive
officer. The president shall have the authority to sign all certificates of
stock, bonds, deeds, contracts and other instruments of the Corporation that
are authorized.
SECTION 5.06. Vice Presidents. The vice presidents shall act under
the direction of the chief executive officer and in the absence or disability
of both the chief executive officer and the president shall perform the duties
and exercise the powers of the chief executive officer. They shall perform
such other duties and have such other powers as the chief executive officer or
the Board of Directors may from time to time prescribe. The Board of Directors
may designate one or more executive or senior vice presidents or may otherwise
specify the order of seniority of the vice presidents, and in that event the
duties and powers of the chief executive officer shall descend to the vice
presidents in such specified order of seniority.
SECTION 5.07. Secretary. The secretary shall act under the direction
of the chief executive officer. Subject to the direction of the chief
executive officer, the secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record the proceedings in a
book to be kept for that purpose, and the secretary shall perform like duties
for the standing committees of the Board of Directors when requested to do so.
The secretary shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, shall have charge
of the original stock books, stock transfer books and stock ledgers of the
Corporation, and shall perform such other duties as may be prescribed by the
chief executive officer or the Board of Directors. The secretary shall have
custody of the seal of the Corporation and cause it to be affixed to any
instrument requiring it, and when so affixed, it may be attested by the
secretary's signature. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing by such officer's signature.
9
<PAGE>
SECTION 5.08. Assistant Secretaries. The assistant secretaries in
order of their seniority, unless otherwise determined by the chief executive
officer or the Board of Directors, shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary. They
shall perform such other duties and have such other powers as the chief
executive officer or the Board of Directors may from time to time prescribe.
ARTICLE 6
CERTIFICATES OF STOCK
SECTION 6.01. Issuance. The stock of the Corporation shall be
represented by certificates, provided that the Board of Directors may provide
by resolution for any or all of the stock to be uncertificated shares.
Notwithstanding any resolution by the board of directors providing for
uncertificated shares, every holder of stock in the Corporation represented by
certificates and, upon request, every holder of uncertificated shares in the
Corporation shall be entitled to have a certificate signed by, or in the name
of the Corporation by, the chairman of the board (or the vice chairman of the
board, if any), the president or a vice president and the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number of shares owned by such holder in the
Corporation.
SECTION 6.02. Facsimile Signatures. If a certificate is countersigned
(a) by a transfer agent other than the Corporation or its employee, or (b) by
a registrar other than the Corporation or its employee, the signatures of the
officers of the Corporation may be facsimiles. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall cease to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent or registrar at the date of issue. The
seal of the Corporation or a facsimile thereof may, but need not, be affixed
to certificates of stock.
SECTION 6.03. Lost Certificates, Etc.. The Corporation may establish
procedures for the issuance of a new certificate of stock in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed and may in connection therewith require, among other
things, the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed and the giving by such
person to the Corporation of a bond in such sum as may be specified pursuant
to such procedures as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
SECTION 6.04. Transfer. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation, if it shall be satisfied
that all provisions of the Certificate of Incorporation,
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<PAGE>
the By-laws and the laws regarding the transfer of shares have been duly
complied with, to issue a new certificate to the person entitled thereto or
provide other evidence of the transfer, cancel the old certificate and record
the transaction upon its books.
SECTION 6.05. Registered Stockholders. The Corporation shall be
entitled to recognize the person registered on its books as the owner of
shares to be the exclusive owner for all purposes including voting and
dividends, and the Corporation shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except
as otherwise provided by the laws of Delaware.
SECTION 6.06. Record Date for Consents. In order that the Corporation
may determine the stockholders entitled to consent to corporate action in
writing without a meeting, the Board of Directors may fix, in advance, a
record date, which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders
authorize or take corporate action by written consent shall, by written notice
to the secretary, request the Board of Directors to fix a record date. The
Board of Directors shall promptly, but in all events within ten days after the
date on which such request is received, adopt a resolution fixing the record
date. If no record date has been fixed by the Board of Directors within ten
days after the receipt of such request and no prior action by the Board of
Directors is required by applicable law, then the record date shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by delivery to its
headquarters office to the attention of the secretary. Delivery shall be by
hand or certified or registered mail, return receipt requested. If no record
date has been fixed by the Board of Directors and prior action by the Board of
Directors is required by applicable law, the record date for determining
stockholders entitled to consent shall be at the close of business on the date
on which the Board of Directors adopts the resolution taking such prior
action. The Board of Directors may postpone action by written consent in order
to allow the secretary to conduct a reasonable and prompt investigation to
ascertain the legal sufficiency of the consents. The secretary may designate
an independent inspector of election to conduct such investigation.
SECTION 6.07. Record Dates. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty or less than ten
days before the date of such meeting, and not more than sixty days prior to
any other action. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided,
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however, that the Board of Directors may fix a new record date for the adjourned
meeting.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Declaration of Dividends. Dividends upon the shares of
the capital stock of the Corporation may be declared and paid by the Board of
Directors from the funds legally available therefor. Dividends may be paid in
cash, in property, or in shares of the capital stock of the Corporation.
SECTION 7.02. Reserves. The directors of the Corporation may set
apart out of any of the funds of the Corporation available for dividends a
reserve or reserves for such purposes as the directors shall think conducive
to the interest of the Corporation, and the directors may modify or abolish
any such reserve.
SECTION 7.03. Fiscal Year. The fiscal year of the Corporation shall
be fixed by resolution of the Board of Directors.
SECTION 7.04. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner
reproduced.
ARTICLE 8
INDEMNIFICATION
SECTION 8.01. In General. Any person who was or is a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or a person of whom he is the legal representative,
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation or for its benefit as a
director, officer, employee or agent of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless to the fullest extent legally
permissible under and pursuant to any procedure specified in or pursuant to
the General Corporation Law of the State of Delaware, as amended from time to
time, from and against any and all expenses, liabilities and losses (including
without limitation attorney's fees, judgments, fines and amounts paid or to be
paid in settlement) actually and reasonably incurred or suffered by such
person in connection therewith. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person.
Such right of indemnification shall
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<PAGE>
not be exclusive of any other right which such directors, officers, employees,
agents or representatives may have or hereafter acquire and, without limiting
the generality of the foregoing, they shall be entitled to their respective
rights of indemnification under any by-law, agreement, vote of stockholders or
the Board of Directors, provision of law or otherwise, as well as their rights
under this Article.
SECTION 8.02. Insurance. The Board of Directors may cause the
Corporation to purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or as its representative in a partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred in any such capacity, or arising out of such status,
whether or not the Corporation would have the power to indemnify such person
against such liability.
SECTION 8.03. Additional Indemnification. The Board of Directors may
from time to time adopt further by-laws with respect to indemnification and
may amend these By-laws and such by-laws to provide at all times the fullest
indemnification permitted by the General Corporation Law of the State of
Delaware, as amended from time to time.
ARTICLE 9
AMENDMENTS
SECTION 9.01. By the Stockholders. Except as otherwise provided by
statute or the Certificate of Incorporation, these By-laws may be amended by
the affirmative vote of the holders of at least a majority of the voting power
of the then outstanding Voting Stock, voting together as a single class at any
annual or special meeting of the stockholders, provided that notice of
intention to amend shall have been contained in the notice of the meeting.
SECTION 9.02. By the Board of Directors. The Board of Directors by a
majority vote of the whole Board of Directors at any meeting may amend these
By-laws, including by-laws adopted by the stockholders, but the stockholders
may, except as otherwise provided by statute or the Certificate of
Incorporation, from time to time specify particular provisions of the By-laws
which shall not be amended by the Board of Directors.
13
EXHIBIT 10.1
Second Amendment to Global Revolving Credit Agreement (5-Year)
The Second Amendment to Global Revolving Credit Agreement (5-Year) (the
"Amendment") dated as of June 2 1999 among Sealed Air Corporation (the
"Company"), the Subsidiary Borrowers party hereto, the Subsidiary Guarantors
party hereto, the Banks party hereto, and ABN AMRO Bank N.V., as Administrative
Agent;
W i t n e s s e t h:
Whereas, the Company (which was formerly known as W. R. Grace & Co.) and
the Subsidiary Borrowers, the Guarantors, the Banks and ABN AMRO Bank N.V., as
Administrative Agent, have heretofore executed and delivered a Global Revolving
Credit Agreement (5-Year) dated as of March 30, 1998 (as amended, the "Credit
Agreement"); and
Whereas, the parties hereto desire to further amend the Credit Agreement
as provided herein;
Now, therefore, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that the
Credit Agreement shall be and hereby is amended as follows:
1. Section 8.04 of the Credit Agreement is hereby amended by:
(a) deleting the word "and" at the end of clause (g) thereof;
(b) adding a new clause (h) reading in its entirety as follows:
"(h) Indebtedness of Foreign Subsidiaries denominated in Euros in
an aggregate principal amount at any time outstanding not exceeding
Euro 250,000,000; and" and
(c) re-lettering clause (h) as clause (i).
2. This Amendment shall become effective on the date the Administrative
Agent shall have received counterparts hereof executed by the Borrowers and the
Required Banks (or, in the case of any party as to which an executed counterpart
hereof shall not have been received, receipt by the Administrative Agent in form
satisfactory to it of facsimile or other written confirmation from such party of
execution of a counterpart hereof by such party).
3.1. To induce the Administrative Agent and the Banks to enter into this
Amendment, each Borrower and Guarantor represents and warrants to the
Administrative Agent and the Banks that: (a) the representations and warranties
contained in the Credit Documents, as amended by this Amendment (other than
Section 6.05 of the Credit Agreement), are true and correct in all material
respects as of the date hereof with the same effect as though made on the date
hereof (it being understood and agreed that any representation or warranty which
by its terms is made as of a specified date shall be required to be true and
correct in all material respects only as of such specified date); (b) after
giving effect to this Amendment, no Default exists; (c) this Amendment has been
duly authorized by all necessary corporate proceedings and duly executed and
delivered by each Borrower and each Guarantor, and the Credit Agreement, as
amended by this Amendment, and each of the other Credit Documents are the legal,
valid and binding obligations of the applicable Borrower or Guarantor,
enforceable against such Borrower or Guarantor in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of equity; and (d) no
consent, approval, authorization, order, registration or qualification with any
governmental authority is required for, and in the absence of which would
adversely effect, the legal and valid execution and delivery or performance by
any Borrower or any Guarantor of this Amendment or the performance by any
Borrower or any Guarantor of the Credit Agreement, as amended by this Amendment,
or any other Credit Document to which they are party.
3.2. This Amendment may be executed in any number of counterparts and by
the different parties on separate counterparts and each such counterpart shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same Amendment.
3.3. Except as specifically provided above, the Credit Agreement and the
other Credit Documents shall remain in full force and effect and are hereby
ratified and confirmed in all respects. The execution, delivery, and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power, or remedy of the Agent or any Bank
under the Credit Agreement or any of the other Credit Documents, nor constitute
a waiver or modification of any provision of any of the other Credit Documents.
3.4. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
<PAGE>
SEALED AIR CORPORATION, as
Borrower and Guarantor
By /s/ William V. Hickey
-----------------------------------
Title President
------------------------------
SEALED AIR CORPORATION (US),
as Borrower and Guarantor
By /s/ William V. Hickey
------------------------------------
Title President
------------------------------
CRYOVAC, INC., as Borrower and
Guarantor
By /s/ William V. Hickey
------------------------------------
Title Vice President
------------------------------
By /s/ H. Katherine White
------------------------------------
Title Vice President
------------------------------
ABN AMRO BANK N.V., individually
and as Administrative Agent
By /s/ Pauline McHugh
------------------------------------
Title Vice President
------------------------------
By /s/ John Deegan
------------------------------------
Title Group VP
------------------------------
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Deborah J. Graziano
------------------------------------
Title Vice President
------------------------------
BANKERS TRUST COMPANY
By /s/ Gregory Shefrin
------------------------------------
Title Principal
------------------------------
NATIONSBANK, N.A.
By /s/ Deborah J. Graziano
------------------------------------
Title Vice President
------------------------------
CITIBANK, N.A.
By /s/ William G. Martins
------------------------------------
Title VP
------------------------------
COMMERZBANK AG, NEW YORK BRANCH
By /s/ Robert Donohue
------------------------------------
Title Senior Vice President
------------------------------
By /s/ Peter Doyle
------------------------------------
Title Assistant Vice President
------------------------------
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Vladimir Labun
------------------------------------
Title First Vice President - Manager
------------------------------
FLEET NATIONAL BANK
By /s/ Christopher W. Criswell
-----------------------------------
Title SVP
------------------------------
SUMMIT BANK
By /s/ Thomas Browen
------------------------------------
Title Assistant Treasurer
------------------------------
TORONTO DOMINION (TEXAS) INC.
By /s/ Carol Brandt
------------------------------------
Title Vice President
------------------------------
BANCA DI ROMA
By /s/ Steven Paley
------------------------------------
Title VP
------------------------------
By /s/ Nicola Dell'Edera
------------------------------------
Title AT
------------------------------
<PAGE>
THE BANK OF NEW YORK
By /s/ Ernest Fung
------------------------------------
Title Vice President
------------------------------
THE BANK OF NOVA SCOTIA
By /s/ Stephen E. Lockhart
------------------------------------
Title Sr. Relationship Mgr.
------------------------------
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /s/ Martha Skimore
-----------------------------------
Title Vice President
------------------------------
By /s/ Albert Calo
------------------------------------
Title Vice President
------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Jeff Lubatkin
------------------------------------
Title VP
------------------------------
FIRST UNION NATIONAL BANK
By /s/ Peter Mace
------------------------------------
Title Senior Vice President
------------------------------
<PAGE>
HSBC BANK USA
By /s/ Diane M. Zieske
------------------------------------
Title Assistant Vice President
------------------------------
WACHOVIA BANK N.A.
By /s/ M. Eugene Wood III
------------------------------------
Title Senior Vice President
------------------------------
THE NORTHERN TRUST COMPANY
By /s/ Mark E. Taylor
------------------------------------
Title Second Vice President
------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ William D. Nicola
------------------------------------
Title Attorney-In-Fact
------------------------------
<PAGE>
BANQUE NATIONALE DE PARIS
By /s/ Richard L. Sted
------------------------------------
Title Senior Vice President
------------------------------
By /s/ Richard Pace
------------------------------------
Title Vice President
Corporate Banking Division
------------------------------
CARIPLO-CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE SPA
By /s/ Anthony F. Giobbi
------------------------------------
Title F.V.P.
------------------------------
By /s/ Maria Elana Greene
------------------------------------
Title A.V.P.
------------------------------
UNI CREDITO ITALIANO S.P.A.
By /s/ Gianscranco Bisagni
------------------------------------
Title First Vice President
------------------------------
By /s/ Sayed Abbas
------------------------------------
Title First Vice President
------------------------------
<PAGE>
KBC BANK N.V.
By /s/ Robert Snauffer
------------------------------------
Title First Vice President
------------------------------
By /s/ Robert M. Surdam, Jr.
------------------------------------
Title First Vice President
------------------------------
MELLON BANK, N.A.
By /s/ Maria Sisto
------------------------------------
Title AVP
------------------------------
BANCA MONTE DEI PASCHI DI SIENA,
S.P.A.
By /s/ G. Natalicchi
------------------------------------
Title S.V.P. & General Manager
------------------------------
By /s/ Brian R. Landy
------------------------------------
Title Vice President
------------------------------
NORDDEUTSCHE LANDESBANK
GIROZENTRALE
By /s/ Stephen K. Hunter
------------------------------------
Title SVP
------------------------------
By /s/ Josef Haas
------------------------------------
Title VP
------------------------------
SUNTRUST BANK, ATLANTA
By /s/ Ronald E. Alston
------------------------------------
Title Vice President
------------------------------
<PAGE>
ISTITUTO BANCARIO SAN PAOLO DI
TORINO ISTITUTO MOBILIARE
ITALIANO S.P.A.
By /s/ Luca Sacchi
------------------------------------
Title VP
------------------------------
By /s/ Carlo Pensico
------------------------------------
Title FVP
------------------------------
CREDIT AGRICOLE INDOSUEZ
By /s/ Craig Welch
------------------------------------
Title FVP
------------------------------
By /s/ Sarah McClintock
------------------------------------
Title VP
------------------------------
BANCA POPOLARE DI MILANO
By /s/ Anthony Franco
------------------------------------
Title Executive Vice President
& General Manager
------------------------------
By /s/ Patrick Dillon
------------------------------------
Title Vice President
Chief Credit Officer
------------------------------
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By /s/ Charles Dougherty
------------------------------------
Title VP
------------------------------
By /s/ Joseph Carlani
------------------------------------
Title VP
------------------------------
EXHIBIT 10.2
SECOND AMENDMENT TO GLOBAL REVOLVING CREDIT AGREEMENT (364-DAY)
The Second Amendment to Global Revolving Credit Agreement (364-Day)
(the "Amendment") dated as of June 2, 1999 among Sealed Air Corporation
(the "Company"), the Subsidiary Borrowers party hereto, the Subsidiary
Guarantors party hereto, the Banks party hereto, and ABN AMRO Bank N.V., as
Administrative Agent;
W I T N E S S E T H:
WHEREAS, the Company (which was formerly known as W. R. Grace & Co.)
and the Subsidiary Borrowers, the Guarantors, the Banks and ABN AMRO Bank
N.V., as Administrative Agent, have heretofore executed and delivered a Global
Revolving Credit Agreement (364-Day) dated as of March 30, 1998 (as amended
and extended, the "Credit Agreement"); and
WHEREAS, the parties hereto desire to further amend the Credit
Agreement as provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that the
Credit Agreement shall be and hereby is amended as follows:
1. Section 8.04 of the Credit Agreement is hereby amended by:
(a) deleting the word "and" at the end of clause (g)
thereof;
(b) adding a new clause (h) reading in its entirety as
follows:
"(h) Indebtedness of Foreign Subsidiaries
denominated in Euros in an aggregate principal
mount at any time outstanding not exceeding Euro
250,000,000; and" and
(c) re-lettering clause (h) as clause (i).
2. This Amendment shall become effective on the date the
Administrative Agent shall have received counterparts hereof executed by the
Borrowers and the Required Banks (or, in the case of any party as to which an
executed counterpart hereof shall not have been received, receipt by the
Administrative Agent in form satisfactory to it of facsimile or other written
confirmation from such party of execution of a counterpart hereof by such
party).
3.1. To induce the Administrative Agent and the Banks to enter into
this Amendment, each Borrower and Guarantor represents and warrants to the
Administrative Agent and the Banks that: (a) the representations and
warranties contained in the Credit Documents, as amended by this Amendment
(other than Section 6.05 of the Credit Agreement), are true and correct
in all material respects as of the date hereof with the same effect as though
made on the date hereof (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date); (b) after giving effect to this Amendment, no
Default exists; (c) this Amendment has been duly authorized by all
necessary corporate proceedings and duly executed and delivered by each
Borrower and each Guarantor, and the Credit Agreement, as amended by this
Amendment, and each of the other Credit Documents are the legal, valid and
binding obligations of the applicable Borrower or Guarantor, enforceable
against such Borrower or Guarantor in accordance with their respective
<PAGE>
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application affecting the enforcement of
creditors' rights or by general principles of equity; and (d) no consent,
approval, authorization, order, registration or qualification with any
governmental authority is required for, and in the absence of which would
adversely effect, the legal and valid execution and delivery or performance by
any Borrower or any Guarantor of this Amendment or the performance by any
Borrower or any Guarantor of the Credit Agreement, as amended by this
Amendment, or any other Credit Document to which they are party.
3.2. This Amendment may be executed in any number of counterparts and
by the different parties on separate counterparts and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Amendment.
3.3. Except as specifically provided above, the Credit Agreement and
the other Credit Documents shall remain in full force and effect and are
hereby ratified and confirmed in all respects. The execution, delivery, and
effectiveness of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power, or remedy of the Agent or any
Bank under the Credit Agreement or any of the other Credit Documents, nor
constitute a waiver or modification of any provision of any of the other
Credit Documents.
3.4. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
SEALED AIR CORPORATION, as
Borrower and Guarantor
By /s/ William V. Hickey
------------------------------------
Name: William V. Hickey
Title: President
SEALED AIR CORPORATION (US),
as Borrower and Guarantor
By /s/ William V. Hickey
------------------------------------
Name: William V. Hickey
Title: President
<PAGE>
CRYOVAC, INC., as Borrower and
Guarantor
By /s/ William V. Hickey
------------------------------------
Name: William V. Hickey
Title: Vice President
By /s/ H. Katherine White
------------------------------------
Name: H. Katherine White
Title: Vice President
CRYOVAC UK LIMITED, as Borrower
By /s/ Daniel S. Van Riper
------------------------------------
Name: Daniel S. Van Riper
Title: Director
CRYOVAC AG, as Borrower
By /s/ Daniel Costhesy
------------------------------------
Name: Daniel Costhesy
Title: Financial Director
CRYOVAC S.p.A., as Borrower
By /s/ Colin D. Parnell
------------------------------------
Name: Colin D. Parnell
Title: Managing Director
CRYOVAC AUSTRALIA PTY. LIMITED,
as Borrower
By /s/ H. Katherine White
------------------------------------
Name: H. Katherine White
Title: Director
<PAGE>
SEALED AIR S.A., as Borrower
By /s/ Stephen Froelich
------------------------------------
Name: Stephen Froelich
Title: Managing Director
SEALED AIR LIMITED, as Borrower
By /s/ William V. Hickey
------------------------------------
Name: William V. Hickey
Title: Director
CRYOVAC VERPACKUNGEN GmbH,
as Borrower
By /s/ Hans-Otto Bosse
------------------------------------
Name: Hans-Otto Bosse
Title: Managing Director
SEALED AIR (CANADA) INC., as borrower
By /s/ Andrea Schmidt
------------------------------------
name: Andrea Schmidt
Title: Director
SEALED AIR (NZ) LIMITED, as Borrower
By /s/ H. Katherine White
------------------------------------
Name: H. Katherine White
Title: Director
<PAGE>
CRYOVAC (NEW ZEALAND) LIMITED,
as Borrower
By /s/ H. Katherine White
------------------------------------
Name: H. Katherine White
Title: Director
SEALED AIR AUSTRALIA PTY LIMITED,
as Borrower
By /s/ H. Katherine White
------------------------------------
Name: H. Katherine White
Title: Director
SEALED AIR B.V., as Borrower
By /s/ H. Katherine White
------------------------------------
Name: H. Katherine White
Title: Director
<PAGE>
ABN AMRO BANK N.V., individually
and as Administrative Agent
By /s/ Pauline Mc Hush
------------------------------------
Name: Pauline Mc Hush
Title: Vice President
By /s/ John Deegan
------------------------------------
Name: John Deegan
Title: Group V.P.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Deborah J. Graziano
------------------------------------
Name: Deborah J. Graziano
Title: Vice president
BANKERS TRUST COMPANY
By /s/ Gregory Shefrin
------------------------------------
Name: Gregory Shefrin
Title: Principal
CITIBANK, N.A.
By /s/ William G. Martins
------------------------------------
Name: William G. Martins
Title: Vice President
<PAGE>
COMMERZBANK AG, NEW YORK BRANCH
By /s/ Fobert Donohue
------------------------------------
Name: Robert Donohue
Title: Senior Vice President
By /s/ Peter Doyle
------------------------------------
Name: Peter Doyle
Title: Assistant Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Vladimir Labun
------------------------------------
Name: Valdimir Labun
Title: First Vice President --
Manager
FLEET NATIONAL BANK
By /s/ Christopher W. Criswell
------------------------------------
Name: Christopher W. Criswell
Title: Senior Vice President
SUMMIT BANK
By /s/ Thomas Browen
------------------------------------
Name: Thomas Browen
Title: Assistant Treasurer
TORONTO DOMINION (TEXAS) INC.
By /s/ Carol Brandt
------------------------------------
Name: Carol Brandt
Title: Vice President
<PAGE>
BANCA DI ROMA
By /s/ Stephen Paley
------------------------------------
Name: Stephen Paley
Title: Vice President
By /s/ Nicola Dell 'edera
------------------------------------
Name: Nicola Dell 'Edera
Title: Assistant Treasurer
THE BANK OF NEW YORK
By /s/ Ernest Fund
------------------------------------
Name: Ernest Func
Title: Vice President
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /s/ Martha Skimore
------------------------------------
Name: Martha Skimore
Title: Vice President
By /s/ Albert Calo
------------------------------------
Name: Albert Calo
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Jeff Lubatkin
------------------------------------
Name: Jeff Lubatkin
Title: Vice President
FIRST UNION NATIONAL BANK
By /s/ Peter Mace
------------------------------------
Name: Peter Mace
Title: Senior Vice President
HSBC BANK USA
By /s/ Diane M. Zieske
------------------------------------
Name: Diane M Sieske
Title: Assistant Vice President
WACHOVIA BANK N.A.
By /s/ M. Eugene Wood III
------------------------------------
Name: M. Eugene Wood III
Title: Senior Vice President
<PAGE>
THE NORTHERN TRUST COMPANY
By /s/ Mark E. Taylor
------------------------------------
Name: Mark E. Taylor
Title: Second Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ William D. Nicola
------------------------------------
Name: William D. Nicola
Title: Attorney-in-Fact
BANQUE NATIONALE DE PARIS
By /s/ Richard L. Sted
------------------------------------
Name: Richard L. Sted
Title: Senior Vice President
By /s/ Richard Pade
------------------------------------
Name: Richard Pade
Title: Vice President
Corporate Banking Division
CARIPLO-CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE SPA
By /s/ Anthony F. Giobbi
------------------------------------
Name: Anthony F. Giobbi
Title: First Vice President
By /s/ Maria Elana Greene
------------------------------------
Name: Maria Elana Greene
Title: Assistant Vice President
<PAGE>
UNI CREDITO ITALIANO S.p.A.
By /s/ Gianscranco Bisagni
------------------------------------
Name: Giascranco Bisagni
Title: First Vice President
By /s/ Sayed Abbas
------------------------------------
Name: Sayed Abbas
Title: First Vice President
KBC BANK N.V.
By /s/ Robert Snauffer
------------------------------------
Name: Robert Snauffer
Title: First Vice President
By /s/ Robert M. Surinam, Jr.
------------------------------------
Name: Robert M. Surinam, Jr.
Title: Vice President
MELLON BANK, N.A.
By /s/ Maria Sisto
------------------------------------
Name: Maria Sisto
Title: Assistant Vice President
BANCA MONTE DEI PASCHI DI SIENA,
S.p.A.
By /s/ G. Natalicchi
------------------------------------
Name: G. Natalicchi
Title: Senior Vice President and
General Manager
By /s Brian R. Landy
------------------------------------
Name: Brian R. Landy
Title: Vice President
<PAGE>
NORDDEUTSCHE LANDESBANK GIROZENTRALE
By /s/ Stephen K. Hunter
------------------------------------
Name: Stephen K. Hunter
Title: Senior Vice President
By /s/ Josef Haas
------------------------------------
Name: Josef Haas
Title: Vice President
SUNTRUST BANK, ATLANTA
By /s/ Ronald E. Alston
------------------------------------
Name: Ronald E. Alston
Title: Vice President
ISTITUTO BANCARIO SAN PAOLO DI TORINO
ISTITUTO MOBILIARE ITALIANO S.p.A.
By /s/ Luca Sacchi
------------------------------------
Name: Luca Sacchi
Title: Vice President
By /s/ Carlos Pensico
------------------------------------
Name: Carlos Pensico
Title: First Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/ Craig Welco
------------------------------------
Name: Craig Welch
Title: First Vice President
By /s/ Sarah McClintock
------------------------------------
Name: Sarah McClintock
Title: Vice President
<PAGE>
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By /s/ Charles Dougherty
------------------------------------
Name: C. Dougherty
Title: Vice President
By /s/ Joseph Carlani
------------------------------------
Name: Joseph Varlani
Title: Vice President
EXHIBIT 10.3
AGREEMENT
---------
Date: April 6, 1999
To: J. Gary Kaenzig, Jr.
From: T. J. Dermot Dunphy
This memorandum sets forth our agreement related to your leaving
employment with Sealed Air Corporation and its subsidiary Cryovac, Inc.
(collectively, "Sealed Air").
1. Employment
We confirm that your last date of active employment will be June 11,
1999. Your salary will continue until that date, and your active Sealed
Air employee benefit coverages will also continue until that date
(provided you continue to pay any required premiums). Also, certain
benefit coverages will continue during the period that you are receiving
severance payments (see Section 3). If you have any questions regarding
Sealed Air employee benefits, please refer to the appropriate summary plan
descriptions or call Roger Deverman at Sealed Air's Park 80 office in
Saddle Brook, New Jersey.
You have advised that you will not be a candidate for appointment as an
officer of Sealed Air Corporation at the annual meeting of the Board of
Directors on May 21, 1999, even though you will continue to serve as an
employee until June 11, 1999.
2. Unused Vacation Payment
You will receive a lump sum payment for any 1999 vacation time (up to
25 days) remaining unused as of your last date of active employment, in
accordance with Sealed Air's Duncan, SC policy. Since you were hired prior
to January 1, 1983, you also will be paid the additional vacation
committed at the time of accrual conversion. This payment for unused
vacation will be made in the month following your last day of active
employment.
3. Severance Benefits
a) You will receive one and one-half weeks of pay for each full year of
service plus an additional 13 weeks of pay for a total of 55 weeks of
severance pay. You will
Page 1 of 4
<PAGE>
receive severance pay at your current base pay level of $26,191.67
per month during the period commencing immediately after your last
date of active employment and ending on June 30, 2000.
b) Until June 30, 2000, you will continue to participate in Sealed Air's
employee benefit coverages with respect to medical, dental, and life,
provided you continue to make the required contributions and the
plans continue to be available to employees.
c) The period that you receive severance payments hereunder will be
considered active employment for the purpose of determining your
eligibility to participate in the Sealed Air Corporation
Post-Retirement Medical and Life Insurance program. The period that
you receive severance payments hereunder will also be considered
service and active employment under the W. R. Grace & Co. Stock
Incentive Plans, subject to the approval of such modification by the
Organization and Compensation Committee (the "Compensation
Committee") of the Board of Directors of Sealed Air Corporation. The
period that you receive severance payments hereunder will be
considered service for the purpose of determining the timing of
payments of deferred compensation under the Sealed Air Corporation
Deferred Compensation Plan for Cryovac Employees and your stock
deferrals under the W. R. Grace & Co. 1994-1996 Long Term Incentive
Program as assumed by Sealed Air.
It is the intent of the Company that the provisions of this paragraph
(c) put you in the same position as an active employee who retires at
the date your severance payments end with regard to the specific plan
provisions mentioned above.
You agree that you shall be solely responsible for any federal,
state, or local income taxes or property taxes that accrue as a
result of the above.
4. Continuation of Medical and Dental Coverage After Severance Period
At the time you are to receive your last severance payment, you will be
notified of your right to elect coverage under the Sealed Air medical and
dental plans by paying the full cost of such coverage (which is sometimes
called "COBRA coverage") for a period of up to 18 months after your
severance payments cease.
5. Health Care Spending Account and Dependent Care Account
If you currently participate in the Health Care Spending Account and
the Dependent Care Spending Account, you may continue to participate until
the end of 1999.
Page 2 of 4
<PAGE>
6. Long Term Disability, Accidental Death and Dismemberment, Thrift Plan,
Profit-Sharing Plan and Deferred Compensation
Your participation in the Long Term Disability (LTD) Plan, the
Accidental Death and Dismemberment Plan, and contributions to the Thrift
Plan (401K) shall end on June 30, 1999. You may continue to repay Thrift
Plan loan balances, if any, during the period you receive periodic
severance payments. You may apply for conversion of the LTD Plan to a
private plan by making application for such conversion no later than 10
days following your last day of active employment.
You will not be eligible for a 1999 contribution to the Profit-Sharing
Plan, since you will not be actively employed (as provided in that plan)
on December 31, 1999.
Subject to the provisions of Section 3(c) above, your deferred
compensation accounts will be paid to you in accordance with your original
elections.
7. Bonuses
Your 1999 bonus will be prorated based on the months of your active
employment during 1999. Your bonus will be based on the corporate and
business unit performance for the entire bonus period as well as your
individual performance during the portion of the year during which you
were actively employed. Any payments will be made at the same time as such
payments are made to active employees. You will not be eligible for a
bonus for 2000.
8. Contingent Stock Award
On April 2, 1998, you were awarded the right to purchase 23,500 shares
of Sealed Air Common Stock under the Contingent Stock Plan of Sealed Air
Corporation. As provided in such Plan, such shares were issued subject to
Sealed Air's right to reacquire such shares if your employment ended prior
to June 1, 2001. The period ending on May 31, 2001 is referred to in this
letter agreement as the "Repurchase Period". Subject to the approval of
the Compensation Committee, Sealed Air will forego its right to repurchase
such shares of Common Stock upon termination of your employment on the
terms and conditions set forth below.
The 23,500 shares referred to in the preceding paragraph (the "Retained
Shares") will remain subject to Sealed Air's option to repurchase such
shares at your purchase price of $1 per share through the Repurchase
Period. Such option will become exercisable if you breach any of your
obligations referred to in Section 9 during the Repurchase Period. You
agree that Sealed Air also shall be entitled to enforce any other rights
or remedies available to it upon any such breach. You agree that you will
not sell, transfer or encumber the Retained Shares during the Repurchase
Period. You also agree that Sealed Air may place a legend on the
certificate representing the Retained Shares indicating (1) that during
the Repurchase Period the Retained Shares cannot be sold,
Page 3 of 4
<PAGE>
transferred or encumbered and (2) that Sealed Air has the right to
repurchase the Retained Shares in the event of your breach of such
obligations during the Repurchase Period. Upon any of the changes in the
Common Stock described in Section 15 of the Contingent Stock Plan, the
restriction, option and legend described in this paragraph shall apply to
any securities issued in connection with any such change in respect of the
Retained Shares. Following the expiration of the Repurchase Period, if you
have complied with such obligations, you may surrender to Sealed Air the
certificate representing the Retained Shares in exchange for a new
certificate free of the legend or for a statement from Sealed Air
representing the Retained Shares in book entry form free of such legend.
9. Obligations under "1970 Agreement" and State Law
Because of your management role in Cryovac's business for a number of
years and your position since March 31, 1998 as one of Sealed Air
Corporation's senior officers, you hold significant confidential
proprietary information of Sealed Air, such as information about Sealed
Air's finances, business plans and programs, research and development
projects, products, manufacturing processes, raw materials, suppliers,
customers, marketing and sales. You acknowledge and agree that disclosure
to or use by anyone other than Sealed Air of such information could cause
substantial damage to Sealed Air. You understand and agree that, after you
cease to be employed by Sealed Air, you will remain subject to the
obligations under the agreement that you signed on August 17, 1970 with W.
R. Grace & Co., a Connecticut corporation, (the "1970 Agreement"), with
Sealed Air the successor "Company" in the 1970 Agreement. You also
understand that this memo will not affect your obligations under the South
Carolina Uniform Trade Secrets Law or any other applicable obligations
that may limit your disclosure or use of Sealed Air's confidential
information.
10. Company Car
You may purchase your company car when you leave active employment on
the terms available to employees who leave employment in good standing. If
you do not choose to purchase your company car, you agree to make
arrangements to return the car to Sealed Air no later than July 16, 1999
at the Duncan, SC facility.
11. Entire Agreement
This letter agreement and the "1970 Agreement" set forth the entire
agreement between you and Sealed Air concerning the subject matters
discussed therein.
Agreed: SEALED AIR CORPORATION
/s/ J. Gary Kaenzig, Jr.
- ------------------------------ By /s/ T.J. Dermot Dunphy
-------------------------------
April 6, 1999 Chairman of the Board and
- ------------------------------ Chief Executive Officer
Date
Page 4 of 4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the consolidated
statement of earnings for the six months ended June 30, 1999 and the
consolidated balance sheet at June 30, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 60,027,000
<SECURITIES> 0
<RECEIVABLES> 450,118,000
<ALLOWANCES> 19,076,000
<INVENTORY> 269,065,000
<CURRENT-ASSETS> 851,436,000
<PP&E> 1,902,227,000
<DEPRECIATION> 858,824,000
<TOTAL-ASSETS> 3,956,646,000
<CURRENT-LIABILITIES> 564,682,000
<BONDS> 845,332,000
1,787,960,000
0
<COMMON> 8,401,000
<OTHER-SE> 461,980,000
<TOTAL-LIABILITY-AND-EQUITY> 3,956,646,000
<SALES> 1,374,058,000
<TOTAL-REVENUES> 1,374,058,000
<CGS> 874,780,000
<TOTAL-COSTS> 874,780,000
<OTHER-EXPENSES> 285,165,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,457,000
<INCOME-PRETAX> 183,635,000
<INCOME-TAX> 85,829,000
<INCOME-CONTINUING> 97,806,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,806,000
<EPS-BASIC> .74
<EPS-DILUTED> .74
</TABLE>
